On June 29, 2012, the NRC issued a Notice Violation and Proposed Imposition of a Civil Penalty in the amount of $8,500 to the United States Air Force (USAF) for a Severity Level (SL) III problem. The SL III problem involved two violations: 1) the USAF’s failure to conduct a semiannual physical inventory of all sealed sources in their possession, as required by 10 CFR 35.67(g); and 2) the USAF’s failure to secure from unauthorized removal or access licensed materials that are stored in controlled or unrestricted areas, as required by 10 CFR 20.1801. Specifically, between November 2, 2004 and September 30, 2011, the USAF did not include a sealed source, which was believed to be in storage, in its semiannual physical inventory. The USAF believed the source was located in the low-level radioactive waste storage room, which is a controlled area; however, sometime between November 2, 2004, when the last physical inventory occurred, and September 30th 2011, the source was lost.