Print Issue: November 2016
A few D.C.–based GAO investigators invented and incorporated “two bogus businesses” in two nearby states, so that they could submit applications to the Nuclear Regulatory Commission (NRC) to obtain a license to obtain radioactive materials, according to GAO officials who later testified about the operation before a U.S. Senate subcommittee. “Using fictitious identities, one investigator represented himself as the company president in the applications, and another investigator represented himself as the radiation safety officer,” the testimony saysAs it happened, approval for the license came fairly easily for both bogus businesses. In fact, except for picking up and sending mail from the nearby states, “GAO investigators did not need to leave their office in Washington, D.C., to obtain the license from NRC,” GAO’s testimony said. But the wily GAO investigators weren’t done quite yet.
The two approved licenses listed limits on how much radioactive material the sham companies could buy. But the GAO investigators altered the licenses so it appeared that the companies could purchase an unrestricted quantity of radioactive material. Then, the investigators submitted requests to buy radioactive material to two suppliers, attaching the altered licenses to the requests.
The suppliers responded with price quotes and commitments to ship a generous amount of radioactive material. As it happened, the amount of radioactive material that the suppliers were willing to sell reached the International Atomic Energy Agency’s (IAEA) definition of a category 3 amount, the lowest of the three dangerous categories, defined as: dangerous if not safely managed or securely protected.
And buying even more than a category 3 amount from the suppliers would not have been a problem. “With patience and the proper financial resources, we could have accumulated substantially more radioactive source material,” GAO officials said in their testimony, adding that they did not actually purchase more. “We did not think the cost borne by the government would be necessary to prove the point of our work,” GAO said. “We did not have the proper facilities to safely store the radioactive materials,” they added.
The GAO’s operation, which was staged in 2007, led the NRC to suspend its licensing program until it could take corrective action and strengthen its screening practices. NRC took a series of actions to improve its program; a key one was to eliminate its practice of a “good faith presumption” that assumed applicants would be truthful in providing information and did not have malicious intentions.
Fast forward to the present. GAO investigators recently decided to go undercover again, to test the NRC’s revised program. In a new report, GAO released the details of this second undercover operation.
In the new operation, GAO investigators went a few steps further in their inventions of bogus companies. They established not two but three bogus firms, and instead of just giving them a post office address, they leased vacant space in offices in industrial parks in three different states for each company.
However, the investigators kept the office sites vacant, assuming that NRC visitors would visit the site and, seeing nothing, reject the application. “We designed our test to fail the prelicensing state visit. In each case, we took no actions to prepare the leased space for the site visit,” GAO officials write in the new report, NRC has Enhanced the Controls of Dangerous Radioactive Materials, but Vulnerabilities Remain.
For two of the three bogus firms, NRC scrutinized the applications and grilled the applicants; when the applicants flailed for answers, NRC rejected the requests. “They asked us numerous detailed questions about the nature of our business and our past business experience,” GAO investigators say in the new report. “We had difficulty answering some of these questions because of the fictitious nature of our business.”
However, in the third case, NRC regulators showed greater leniency. They did make a site visit, and found that the site was empty. But GAO investigators, posing as the site’s owners, assured NRC regulators that they would construct facilities, establish safety procedures, hire staff, and maintain secure storage areas—once the license was approved. The NRC bought it.
“We had taken no actions to implement any of these steps when regulators approved our application,” GAO investigators said.
Once the license was granted, GAO investigators again contacted some vendors. This time the investigators secured commitments that, if fulfilled, would qualify as a larger, category 2 amount of radioactive materials—a “dangerous quantity,” that includes one of the 20 radionuclides “considered attractive for use in a dirty bomb,” according to the GAO report.
Radioactive material, of course, is not always used for evil. It’s used in hospitals to treat cancer, by the energy industry in the fracking process, and to irradiate food. “It’s much more common than most people realize,” David Trimble, a director for GAO’s Natural Resources and Environment Team, said recently in a discussion of the report on the GAO’s podcast: Watchdog Report.
But used in a weapon, its effects can be devastating. “The threat of a dirty bomb is very, very serious. The image you can think of a dirty bomb is, if you think of the Boston Marathon bomb, if that bomb had radiological material, it would have been a very different scene, and set of consequences,” Trimble explained.
Trimble also noted that the United States has invested millions in border security to prevent a terrorist from smuggling in a dirty bomb at the border. “It’s critical when facing this threat that we also improve our licensing process and the security measures in the U.S. at the sites that use these materials, so it doesn’t get diverted and used in a bomb,” Trimble said. “The point is, why bother smuggling it, when you can just order it with a fake license?”
After the operation, GAO notified NRC about its findings. In response, NRC said it was updating its training and its self-assessments so that it provides adequate scrutiny before granting licenses. In addition, GAO officials recognized that NRC had taken several corrective actions since the first operation in 2007. These corrective actions include tighter controls on radioactive materials, such as new data systems that track category 1 and 2 quantities of radioactive materials.
However, these tighter controls generally do not apply to category 3 amounts of radioactive material. And so in the new report, GAO is recommending that NRC take further actions, such as requiring vendors of category 3 quantities of radioactive material confirm the purchasing license with the NRC, and requiring on-site security reviews for all unknown license applicants.
Will the NRC take these further actions? Right now, it is unclear. “NRC neither explicitly agreed or disagreed with our recommendations, but noted that the agency has formal evaluations underway,” the GAO report says. Perhaps GAO will be staging Undercover Operation III in the not-too-distant future.