§ 1017.29 Civil penalty. ( a ) *Regulations.* Any person who violates a UCNI security requirement of any of the following is subject to a civil penalty under this part: ( 1 ) 10 CFR Part 1017—Identification and Protection of Unclassified Controlled Nuclear Information; or
( 2 ) Any other DOE regulation related to the safeguarding or security of UCNI if the regulation provides that violation of its provisions may result in a civil penalty pursuant to section 148 of the Act.
( b ) *Compliance order.* If, without violating a requirement of any regulation issued under section 148, a person by an act or omission causes, or creates a risk of, the loss, compromise or unauthorized disclosure of UCNI, the Secretary may issue a compliance order to that person requiring the person to take corrective action and notifying the person that violation of the compliance order is subject to a notice of violation and assessment of a civil penalty. If a person wishes to contest the compliance order, the person must file a notice of appeal with the Secretary within 15 days of receipt of the compliance order.
( c ) *Amount of penalty.* The Director may propose imposition of a civil penalty for violation of a requirement of a regulation under paragraph (a) of this section or a compliance order issued under paragraph (b) of this section, not to exceed $329,408 for each violation.
( d ) *Settlements.* The Director may enter into a settlement, with or without conditions, of an enforcement proceeding at any time if the settlement is consistent with the objectives of DOE's UCNI protection requirements.
( e ) *Enforcement conference.* The Director may convene an informal conference to discuss any situation that might be a violation of the Act, its significance and cause, any correction taken or not taken by the person, any mitigating or aggravating circumstances, and any other useful information. The Director may compel a person to attend the conference. This conference will not normally be open to the public and there shall be no transcript.
( f ) *Investigations.* The Director may conduct investigations and inspections relating to the scope, nature and extent of compliance by a person with DOE security requirements specified in these regulations and take such action as the Director deems necessary and appropriate to the conduct of the investigation or inspection, including signing, issuing and serving subpoenas.
( g ) *Preliminary notice of violation.* ( 1 ) In order to begin a proceeding to impose a civil penalty under this part, the Director shall notify the person by a written preliminary notice of violation sent by certified mail, return receipt requested, of: ( i ) The date, facts, and nature of each act or omission constituting the alleged violation;
( ii ) The particular provision of the regulation or compliance order involved in each alleged violation;
( iii ) The proposed remedy for each alleged violation, including the amount of any civil penalty proposed;
( iv ) The right of the person to submit a written reply to the Director within 30 calendar days of receipt of such preliminary notice of violation; and,
( v ) The fact that upon failure of the person to pay any civil penalty imposed, the penalty may be collected by civil action.
( 2 ) A reply to a preliminary notice of violation must contain a statement of all relevant facts pertaining to an alleged violation. The reply must: ( i ) State any facts, explanations, and arguments that support a denial of the alleged violation;
( ii ) Demonstrate any extenuating circumstances or other reason why a proposed remedy should not be imposed or should be mitigated;
( iii ) Discuss the relevant authorities that support the position asserted, including rulings, regulations, interpretations, and previous decisions issued by DOE;
( iv ) Furnish full and complete answers to any questions set forth in the preliminary notice; and
( v ) Include copies of all relevant documents.
( 3 ) If a person fails to submit a written reply within 30 calendar days of receipt of a preliminary notice of violation: ( i ) The person relinquishes any right to appeal any matter in the preliminary notice; and
( ii ) The preliminary notice, including any remedies therein, constitutes a final order.
( 4 ) The Director, at the request of a person notified of an alleged violation, may extend for a reasonable period the time for submitting a reply or a hearing request letter.
( h ) *Final notice of violation.* ( 1 ) If a person submits a written reply within 30 calendar days of receipt of a preliminary notice of violation, the Director must make a final determination whether the person violated or is continuing to violate an UCNI security requirement.
( 2 ) Based on a determination by the Director that a person has violated or is continuing to violate an UCNI security requirement, the Director may issue to the person a final notice of violation that concisely states the determined violation, the amount of any civil penalty imposed, and further actions necessary by or available to the person. The final notice of violation also must state that the person has the right to submit to the Director, within 30 calendar days of the receipt of the notice, a written request for a hearing under paragraph (i) of this section.
( 3 ) The Director must send a final notice of violation by certified mail, return receipt requested, within 30 calendar days of the receipt of a reply.
( 4 ) Subject to paragraphs (h)(7) and (h)(8) of this section, the effect of final notice shall be: ( i ) If a final notice of violation does not contain a civil penalty, it shall be deemed a final order 15 days after the final notice is issued.
( ii ) If a final notice of violation contains a civil penalty, the person must submit to the Director within 30 days after the issuance of the final notice: ( A ) A waiver of further proceedings; or
( B ) A request for an on-the-record hearing under paragraph (i) of this section.
( 5 ) If a person waives further proceedings, the final notice of violation shall be deemed a final order enforceable against the person. The person must pay the civil penalty set forth in the notice of violation within 60 days of the filing of waiver unless the Director grants additional time.
( 6 ) If a person files a request for an on-the-record hearing, then the hearing process commences.
( 7 ) The Director may amend the final notice of violation at any time before the time periods specified in paragraphs (h)(4)(i) or (h)(4)(ii) of this section expire. An amendment shall add 15 days to the time period under paragraph (h)(4) of this section.
( 8 ) The Director may withdraw the final notice of violation, or any part thereof, at any time before the time periods specified in paragraphs (h)(4)(i) or (h)(4)(ii) of this section expire.
( i ) *Hearing.* ( 1 ) Any person who receives a final notice of violation under paragraph (h) of this section may request a hearing concerning the allegations contained in the notice. The person must mail or deliver any written request for a hearing to the Director within 30 calendar days of receipt of the final notice of violation.
( 2 ) Upon receipt from a person of a written request for a hearing, the Director shall: ( i ) Appoint a Hearing Counsel; and
( ii ) Select an administrative law judge appointed under 5 U.S.C. 3105, to serve as Hearing Officer.
( j ) *Hearing Counsel.* The Hearing Counsel: ( 1 ) Represents DOE;
( 2 ) Consults with the person or the person's counsel prior to the hearing;
( 3 ) Examines and cross-examines witnesses during the hearing; and
( 4 ) Enters into a settlement of the enforcement proceeding at any time if settlement is consistent with the objectives of the Act and DOE security requirements.
( k ) *Hearing Officer.* The Hearing Officer: ( 1 ) Is responsible for the administrative preparations for the hearing;
( 2 ) Convenes the hearing as soon as is reasonable;
( 3 ) Administers oaths and affirmations;
( 4 ) Issues subpoenas, at the request of either party or on the Hearing Officer's motion;
( 5 ) Rules on offers of proof and receives relevant evidence;
( 6 ) Takes depositions or has depositions taken when the ends of justice would be served;
( 7 ) Conducts the hearing in a manner which is fair and impartial;
( 8 ) Holds conferences for the settlement or simplification of the issues by consent of the parties;
( 9 ) Disposes of procedural requests or similar matters;
( 10 ) Requires production of documents; and,
( 11 ) Makes an initial decision under paragraph (n) of this section.
( l ) *Rights of the person at the hearing.* The person may: ( 1 ) Testify or present evidence through witnesses or by documents;
( 2 ) Cross-examine witnesses and rebut records or other physical evidence, except as provided in paragraph (m)(4) of this section;
( 3 ) Be present during the entire hearing, except as provided in paragraph (m)(4) of this section; and
( 4 ) Be accompanied, represented, and advised by counsel of the person's choosing.
( m ) *Conduct of the hearing.* ( 1 ) DOE shall make a transcript of the hearing.
( 2 ) Except as provided in paragraph (m)(4) of this section, the Hearing Officer may receive any oral or documentary evidence, but shall exclude irrelevant, immaterial, or unduly repetitious evidence.
( 3 ) Witnesses shall testify under oath and are subject to cross-examination, except as provided in paragraph (m)(4) of this section.
( 4 ) The Hearing Officer must use procedures appropriate to safeguard and prevent unauthorized disclosure of classified information, UCNI, or any other information protected from public disclosure by law or regulation, with minimum impairment of rights and obligations under this part. The UCNI status shall not, however, preclude information from being introduced into evidence. The Hearing Officer may issue such orders as may be necessary to consider such evidence *in camera* including the preparation of a supplemental initial decision to address issues of law or fact that arise out of that portion of the evidence that is protected.
( 5 ) DOE has the burden of going forward with and of proving by a preponderance of the evidence that the violation occurred as set forth in the final notice of violation and that the proposed civil penalty is appropriate. The person to whom the final notice of violation has been addressed shall have the burden of presenting and of going forward with any defense to the allegations set forth in the final notice of violation. Each matter of controversy shall be determined by the Hearing Officer upon a preponderance of the evidence.
( n ) *Initial decision.* ( 1 ) The Hearing Officer shall issue an initial decision as soon as practicable after the hearing. The initial decision shall contain findings of fact and conclusions regarding all material issues of law, as well as reasons therefor. If the Hearing Officer determines that a violation has occurred and that a civil penalty is appropriate, the initial decision shall set forth the amount of the civil penalty based on: ( i ) The nature, circumstances, extent, and gravity of the violation or violations;
( ii ) The violator's ability to pay;
( iii ) The effect of the civil penalty on the person's ability to do business;
( iv ) Any history of prior violations;
( v ) The degree of culpability; and,
( vi ) Such other matters as justice may require.
( 2 ) The Hearing Officer shall serve all parties with the initial decision by certified mail, return receipt requested. The initial decision shall include notice that it constitutes a final order of DOE 30 days after the filing of the initial decision unless the Secretary files a Notice of Review. If the Secretary files a Notice of Review, he shall file a final order as soon as practicable after completing his review. The Secretary, at his discretion, may order additional proceedings, remand the matter, or modify the amount of the civil penalty assessed in the initial decision. DOE shall notify the person of the Secretary's action under this paragraph in writing by certified mail, return receipt requested. The person against whom the civil penalty is assessed by the final order shall pay the full amount of the civil penalty assessed in the final order within 30 days unless otherwise agreed by the Director.
( o ) *Collection of penalty.* ( 1 ) The Secretary may request the Attorney General to institute a civil action to collect a penalty imposed under this section.
( 2 ) The Attorney General has the exclusive power to uphold, compromise or mitigate, or remit any civil penalty imposed by the Secretary under this section and referred to the Attorney General for collection.
( p ) *Direction to NNSA.* ( 1 ) Notwithstanding any other provision of this part, the NNSA Administrator, rather than the Director, signs, issues, serves, or takes the following actions that direct NNSA employees, contractors, subcontractors, or employees of such NNSA contractors or subcontractors: ( i ) Subpoenas;
( ii ) Orders to compel attendance;
( iii ) Disclosures of information or documents obtained during an investigation or inspection;
( iv ) Preliminary notices of violation; and,
( v ) Final notice of violations.
( 2 ) The Administrator shall act after consideration of the Director's recommendation. If the Administrator disagrees with the Director's recommendation, and the disagreement cannot be resolved by the two officials, the Director may refer the matter to the Deputy Secretary for resolution.
[73 FR 32641, June 10, 2008, as amended at 74 FR 66033, Dec. 14, 2009; 79 FR 20, Jan. 2, 2014; 81 FR 41796, June 28, 2016; 81 FR 96353, Dec. 30, 2016; 83 FR 1293, Jan. 11, 2018; 83 FR 66084, Dec. 26, 2018; 85 FR 831, Jan. 8, 2020; 86 FR 2957, Jan. 14, 2021; 87 FR 1065, Jan. 10, 2022; 88 FR 2194, Jan. 13, 2023; 89 FR 1029, Jan. 9, 2024]