ML20055J189
| ML20055J189 | |
| Person / Time | |
|---|---|
| Site: | 05000603, 05000604 |
| Issue date: | 07/24/1990 |
| From: | Margulies M, Paris O, Shon F Atomic Safety and Licensing Board Panel |
| To: | NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| References | |
| CON-#390-10664 87-596-01-OM-SC, 87-596-1-OM-SC, LBP-90-26, OM-SC, NUDOCS 9008010174 | |
| Download: ML20055J189 (17) | |
Text
n q (b(ob LBP-00-26hcW UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION g) A 25 NO:15 ATOMIC SAFETY AND LICENSING BOARD Before Administrative Judges:
{C 3 RANCH Chairman Morton B. Margulies, Oscar H. Pari's Frederick J. Shon .
. SEWED JUL 2 5 1990' ,
, )
In the Matter of ) Docket Nos. 50-603 g SC_ - *
) 50-604 ALL CHEMIR L. ISOTOPE )
ENRICHMENT,-INC. ) ASLBP No. 87-596-01-OM/SC '
)
(Construction PerhJt Nos. )
CPEP-1 and CPEP-2) ) July 24, 1990
)
MEMORANDUM AND ORDER (Ruling On NRC Staff Motion For Summary Disposition And Dismissal Of Proceeding)
I. INTRODUCTION NRC Staff (Staff), on May 18, 1990, filed a motion requesting summary disposition of the issues of material fact in l
dispute and dismissal of the proceeding. -
l Licensee All Chemical Isotope Enrichment, Inc. (AlChemIE) had been ordered to show cause on August 18, 1989 why its Construction Permit No. CPEP-1, allowing modification of an existing U. S. Department of Energy (DOE) facility at Oak Ridge, Tennessee, for operation as a stable isotope enrichment ,
l production plant and Construction Permit No. CPEP-2, allowing construction of an additional facility at Oliver Springs, Tennessee, using DOE furnished equipment for the same production purpose, should not be revoked.
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'The Staff alleges that AlchemIE had failed to fully and accurately disclose to Staff or the Licensing Board its true financial condition during the original licensing review period, that it had not demonstrated that it is financially qualified to l conduct the activities under its license, and that AlCh6mIE cannot obtain from DOE the classified centrifuge equipment upon which the projects depend.
Staff claims it would not have recommended issuance of the permits had these matters been known. Revocation is sought under Section 186(a) of the Atomic Energy Act.
Licensee denied the allegations and requested a hearing on the issues. Based on its request for a hearing, this proceeding was instituted. AlchemIE has not filed a response to the subject motion.
In this Memorandum and Order, we grant the motion for ,
summary disposition, find that an order for the revocation of the construction permits should be sustained and dismiss the ,
proceeding. ;
l II. BACKGROUND l
A. The Construction Permits Construction Permit No. CPEP-1 was issued to AlChemIE on February 10, 1989. It authorizes the licensee to modify the existing Centrifuge Demonstration Facility at DOE's Oak Ridge Gaseous Diffusion Plant for operation as a stable isotope enrichment production plant. AlChemIE is permitted to acquire l
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ownership and take possession of DOE security-classified gas centrifuge machines and associated classified equipment capable of enriching uranium. They are to be used in the production of-the stable isotopes. Licensee is also allowed to possess uranium as calibration sources and as contamination on the machines. The license provides for AlchemIE to implement security and safeguard ~
measures at the facility.
Construction Permit No. CPEP-2 was issued to AlChemIE on February 10, 1989. It is similar to CPEP-1 in that it permits the same type of operation, under similar conditions, using DOE security-classified gas centrifuge machines obtained from the agency's Gas Centrifuge Enrichment Plant at Piketon, Ohio.
AlchemIE is authorized to construct a new facility at Olivtr Springs, Tennessee to house the operation.
The enrichment of stable isotopes is not ordinarily within the Commission's regulatory authority.
However, the classified
! . gas centrifuge machines that were to be obtained from DOE are l
made to-enrich uranium thereby bringing them under the definition i
L of a production facility subject to the Atomic Energy Act and NRC's regulations.
B. The Construction Permits Hearing The applichtion for the construction permits was filed ,
November 17, 1987. Also filed was an application for an '
operating license for the Oak Ridge facility. A Licensing Board was appointed on May 3, 1988 to consider the applications.
AlchemIE and Staff were the only parties to the mandatory hearing l
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on the construction permits. The hearing was held on January-4 and 17, 1989. An initial decision authorizing the granting of I
the construction permits was issued February'1, 1989. LBP-89-5, 29 NRC 99. The Appeal Board affirmed the decision on March 20, 1989. ALAB-913, 29 NRC 267.
Because the operating license application was unopposed and a hearing unwarranted, the Licensing Board informed the ;
commission that the operating license should be issued upon AlChemIE's modification of the Oak Ridge facility in accordance with its construction permit. {
On hearing, the Licensing Board took evidence and made findings in accordance with the Commission's hearing notice. In r
its decision, the Licensing Board, as a conclusion of law, inter alla, found that AlchemIE was technically and financially l
j qualified to modify the existing facility at Oak Ridge, Tennessee and to construct the facility at oliver Springs, Tennessee in such a way as to ensure adequate protection of the common defense and security. 29 NRC 121, 122. It.was a requisite finding'for the issuance of the licenses-under the Commission's Notice of Opportunity for Hearing. Id. at 104.
The conclusion of law was based in part on the following findings of fact: ,
- 23. Staff concluded in its review that Applicant )
demonstrated that it possesses or has reasonable I
assurance of obtaining the funds for the modifications to Facility 1 and that it is financially qualified to I make the modifications. Funding would come from saleable surplus equipment (appraised at $28 million) l
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and from bank financing, if needed. Staff Exh. 10.
Id. at 112.
- 25. ... Staff concluded that if the avr<nts do occur as
' planned, -(success of ' isotope production at Facility 1, profitable sales of . isotopes and additional sales of substantial surplus equipment) then the Applicant has a reasonable financinc plan for Facility 2 construction costs and would be financially qualified to construct the facility under 10 CFR 550.33(f) and Appendix C to Part 50. Staff Exh. 10. Id. at 112.
Staff had found that AlchemIE was financially qualified to construct the proposed facilities in such a way as to ensure adequate protection of the common defense and security. Its finding was based on AlchemIE furnished information including the identification of sources upon which AlchemIE was relying for necessary funding. Id.
The construction permit applications were premised on the expectation that DOE would lease its facility at Oak Ridge to A1 Chem.'E and sell it the classified gas centrifuge machines to be used at Oak Ridge and Oliver Springs for enriching the stable isotopes'. The proposed operations were based on the expectation that DOE would provide one of its facilities and the essential technology that would make the operation possible. Id. at 103.
C. The Order To Show Cause The Deputy Executive Director for Nuclear Materials Safety, ,
Safeguards, and Operations Support on August 8, 1989 issued the
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subject Order To Show Cause Why The Licenses Should Not Be Revoked.' 54 Fed. Reg. 35544-35546.
The Order To Show Cause alleges that the Licensee failed to fully and accurately disclose to the Staff or the Licensing Board its true financial condition during the .icensing review period when it was presenting documents and testimony before the Licensing Board. It further alleges that the incomplete and im, trate information which the licensee supplied led the Staff ;
to find that tra 1.i;ensee was financially qualified to modify and construct the facllities in such a way as to assure adequate protection of the common defense and security, and to issue the construction permits. Had the Staff known Licensee's true financial condition, the Staff would not have issued construction ,
permits to AlchemIE. I Staff cites certain events and information that " materially affect the findings and conclusions required for issuance of the construction permits."
Staff claims that AlChemIE failed to notify the Staff or the Licensing Board that its loans with the Anderson County Bank were delinquent during the period of the licensing review. The Order )
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' The order also modified the licenses to require 30 days notice to the Commission prior to the Licensee's caking possession of classified equipment. The modification was made immediately effective under 10 CFR S2.201(c) because of the public interest. AlchemIE was permitted to show cause why its construction permits should not have been modified !
but it chose not to do so. The modification of the I construction permits is not a matter at issue in this proceeding.
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-4 To show cause cites a letter of June 14, 1989 from the bank to '
AlchemIE asserting that certain loans were due and payable on November 4, 1988 and that they were seven months delinquent on June 4, 1989. The Order To Show cause further states that l
contrary to the assertions the Licensee's submittals to the NRC Staff and the Licensing Board of November and December, 1988 and ,
January,'1989 consistently presented an optimistic picture of its ability to obtain bank loans.
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Further, reliance is placed on a letter dated June 26,.1989 by which AlChemIE notified the Commission that, for protection-from creditors, Licensee had filed for reorganization in the
_ United States. Bankruptcy Court for the Eastern District of-Tennessee. Pursuar., to NRC request, AlchemIE on August.15, 1989 submitted documents for the purpose of determining whether or not AlChemIE was in compliance with the licensing basis for the construction permits. Based on a review of the documents, Staff ,
conclv.ded that AlChemIE had not demonstrated that it was financially qualified to conduct the activities under the licenses.
The Order To Show cause further alleges that the issuance of the construction permits to AlChemIE was based upon the 1
Licensee's taking possession of.the classified gas centyifuge equipment from DOE. It'is asserted that AlChemIE failed to take ;
possession of the equipment and based upon a decision of DOE not to extend the agreement with AlchemIE, the projected activities I
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- for which AlchemIE sought licenses cannot occur. Thus,-there is.
-no longer any~ purpose'for the construction permits.
In support of the allegation, staff relies on a letter of August 11, 1989 in which DOE advised AlchemIE that the contract-for the transfer of-gas centrifuge-machines that was to expire on August 15,.1989 would not be extended because of AlchemIE's failure to meet contractual commitments. DOE further stated that in addition to not~ extending the sales agreemet.t with.AlchemIE, it would discontinue any-discussions on the sale of the centrifuge equipment and the lease of the Oak Ridge-Plant.
.In seeking revocation, Staff relies on 10 CFR 550.9(a) which specifies that information provided to the Commission shall be ;
complete and accurate in all material respects. It also relies ,
on Section 186(a) of the Atomic Energy Act, which provides for revocation of any license for any material false statement in the application or upon obtaining other information which would warrant the commission to refuse to grant a license on an i original application.
III. THE MOTION Staff filed its motion pursuant to 10 CFR $2.749. As required by 2.749(a) it attached a statement of the material .
facts as to which it contends that there is no genuine issue to be heard. They are as follows:
- 1. The Licensee's creditors have successfully converted the reorganization of AlchemIE, under Chapter 11 of the
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.I; Bankruptcy Act, which AlchemIE had sought in the United .
1 States Bankruptcy Court' for the Eastern District of.
Tennessee, to a liquidation proceeding to dispose of l AlchemIE's assets,-under Chapter 7 of the Bankruptcy Act.
- 2. As a result.of the Chapter 7 bankruptcy proceeding,:tho.
Licenses has ceased to exist as a legal entity. A windup of its affairs and sale of its assets has been +
assigned to a Trustee in Bankruptcy, who-is in the 4 process of liquidating the Licensee's assets'.
I L 3. DOE, by letter of February 8, 1990, reconfirmed the- ,
August 15, 1989 expiration of the agreement to transfer gas centrifuge machines to ALChemIE.
- 4. The DOE access permit to all DOE technology regarding all Gas Centrifuge Enrichment Plant technology expired on March 10, 1990.
- 5. As a result of DOE's action, the Staff's findingLmade in the August Order To Show Cause is uncontroverted. '
This finding stated that L
...the issuanca of the construction ,
permits to ths [ Licensee) was based on the licensee taking possession of the classified gas centrifuge equipment under the terms of the ,
- u. Sales Agreement. [ Licensee] has
! failed to take possession of the L
equipment and, based upon DOE's decision not to extend the said Sales Agreement, has no further opportunity to take possession of said equipment. Without possession of the gas centrifuge machines, the
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i projected activities for which-AlchemIE sought licenses cannot at occur. Thus, there is no longer '
o .any purpose for construction Permits CPEP-1 and CPEP-2.
_6.' If the above-described events had occurred at or during
.the Staff's review of the construction permit applications,.the Staff would not have recommended l issuance of said permits.
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The motion.is supported by an affidavit from the NRC Project-
-Manager for.the AlchemIE licenses. He attests to the best of1his knowledge.and belief that the matters recited in the Statement Of
> Material-Facts As To Which There Is No Genuine Issue are true and correct..
Staff asserts that the Order To Show causw was issued
~because it lacked reasonable assurance that the Licensee could proceed with operations in compliance with the Commission's c Lrequirements and in such a way as to assure adequate protection
'of the common defense and security of the. United States.
Staff points to its alleged Statement Of Material Facts As
'To Which There Is No Genuine Issue, which is supported by affidavit, as establishing that AlchemIE has not demonstrated that it is financially qualified to conduct the activities authorized under its construction permits, presently or the .
F future, because of its being liquidated by a Trustee in Bankruptcy under Chapter 7 of the Bankruptcy Act.
Further, Staff claims that the record establishes that the DOE technology, upon which both projects are dependent is no
i longer available.to AlChemIE as.the result of the expiration'of their contract. Because the. gas centerfuge machines are no longer available there is no purpose for Construction Permits CPEP-1 and CPEP-2.
t Staff's-position is that if the bankruptcy and unavailability of equipment had occurred during the Staff's review of the construction permit applications, it would not have '
recommended issuance-of the permits. It cites Section 186(a) of .!
the Atomic Energy Act-as authority for revoking the permits under the circumstances.
AlChemIE did not file a response to or otherwise oppose the Staff's motion-for summary disposition and dismissal of the proceeding.
IV. DISCUSSION 10 CFR S2.749 grants presiding officers authority to dispose I of all or part of the matters at issue in a proceeding by way of .
summary disposition.
Summary disposition provides a way to= avoid unnecessary hearings and their various attendant costs. Section 2.749(d)-
L states that a motion for summary disposition shall be granted where the supporting record shows that.there is no genuine issue ,
as to material fact and the moving party is entitled to a decision as a matter of law.
The section permits summary disposition to be used to decide the ultimate issue in all types of proceedings except in the case
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of the-issuance of constraction permits for a production or
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utilization facility. 'there summary disposition only may be used. i
_for the determination of specific subordinate issues but not to- ;
determine the cicimate. issue as to whether the permit shall be issued. Becaura the fetare issuance of a-construction permit is not at issue in this revocation proceeding, the exception is inapplicable, and'the ultimate issue may be decided by summary disposition. I Staff relies on Section 186(a) of the Atomic Energy Act, 49 4
U.S.C. 2236(a), as the statutory basis-for revocation of the_
licenses. As pertinent it provides:
Any license-may be revoked for any material false statement in the application or any statement of fact required under section 2232 of this title or because of conditions revealed by such application-or statement of fact or any report, record, or inspection or other ,
means which would warrant the Commission to refuse to '
grant a license on an original application,...
Section 2232, as pertinent provides:
i Each application for a license hereunder shall be in writing,-and shall specifically state such information as the Commission, by rule or regulation, may determine to be necessary to decide such of the technical and financial qualifications of the applicant,...
Section-49 U.S.C. 2236(a) not only permits license H revocation for material misrepresentation during the' licensing
-procass but cenders licenses for nuclear facilities subject to ,
post licensing review and revocation for post licensing failures.
Ft. Pierce Utilities Authority of City of Ft. Pierce v. U. S.,
606 F.2d 986, 996 (1979), cert. denied 444 U.S. 852; Cities of
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Statesville, et al'. v. Atomic Energy Commission, 441'F.2d 962, 974 (1969).
Section 2236(a) would permit revocation of.the AlchemIE licenses on any of the three grounds allt.ged by Staff. They are-tho' failure to disclose its true financial condition during the original review period; that it has not demonstrated that it is financially qualified to conduct the activities under the license and that AlchemIE cannot obtain from DOE the classified centrifuge equipment upon which the projects depend.
At the. time of the licensing and presently NRC regulations requir9 thatLan applicant for a construction permit for a I
production facility shall submit information that demonstrates, inter alla, that the applicant possesses or has reasonable.
assurance of obtaining the funds necessary to cover estimated construction costs. It must submit estimates of the total construction costs and shall indicate the sources of funds to cover those costs. 10 CFR 550.33 (f) . and Appendix C to . Part 50.
Staff's allegation that the Licensee misrepresented the status of its bank loans and its ability to obtain others during the licensing period could provide a valid basis for revoking the license,Lif proven. However, Staff never gave any consideration to this aspect of the case in its motion for summary disposition ,
and dismissal. 'It remains as an unproven allegation for the purpose of deciding the motion and would be a matter to be decided on hearing if one were to be held.
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l Staff's case for revocation rests on the claims that AlChemIE has not demonstrated financial qualifications to conduct the activities and that the inability of the Licensee tc obtain the DOE equipment renders meaningless the need for the Licenses.
Through its Statement Of Material Facts As To Which There Is No Genuine Issue, which is supported by affidavit, Staff has established the underlying facts that support its claim.
The affidavit supported Statement proves that AlChemIE is an i involuntary bankrupt in liquidation, only looking to have its assets sold. It also proves that the DOE classified gas centrifuge equipment, which was to provide the means for conducting the operations at the facilities for which the construction permits were issued, is not available for use by the Licensee.
The affidavit of the Project Manger alone was sufficient to establish the foregoing. It was not necessary to rely on the provision of 10 CFR 2.749 that states that all material facts contained in the Statement Of Material Facts As To Which There Is No Genuine Issue will be deemed to be admitted unless controverted by the statement required to be served b', the l opposing party. AlChemIE never filed a statement in opposition, thus providing another basis to find that the cited facts are not 1
at issue. j It is patent on its face that an involuntary bankrupt l
undergoing liquidation and looking to its dissolution, not only does not have the financial means to remain in business but is I
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i V w c not, financially qualified to perform the licensed activity. i AlChemIE's: post hearing financial condition is such that it would-not be"possible to find that it is financially qualified to:
modify?the existing facility at Oak Ridge, Tennessee and'to t construct.the facility at Oliver Springs, Tennessee in'such'a way:
as'to ensure adequate protection of the common defense and security. It cannot demonstrate that it is financially qualified to modify or construct the facilities as provided by 10;CFR S50.33(f) and Appendix C to Part 50. These were requisite findingsito the issuance of the licenses.
If AlchemIE's financial condition were the same as it is-
'today at the time of the original application, it would have warranted the Commission to refuse to grant the construction permit-on'the original applications. Staff has satisfied'the.
requirement of 49 U.S.C. 2236(a) for revocation of AlChemIE's construction permits.
Equally patent on its face is that without the availability of the DOE classified equipment, with which AlchemIE was to conduct its operations, there is no need for the facilities to house the equipment and for the licenses to permit their modification or construction. The reason for licensing has entirely disappeared. This too is a sound basis for revocation ,
of the licenses.
Certainly, the absence of the need for the facilities because the production equipment is no longer available would have warranted the Commission to refuse to grant the construction
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permits onlthe original applications. ThUs staff has established i a second and separate' basis under 49 U.S.C. 2236(a) for revocation of the AlchemIE construction permits.' ,
We find'.that'on(the basis of undisputed fact that Staff is j entitled tota decision as a matter of In' under 10 CFR 2.749, in f
that it has satisfied tho requirements of 49 U.S.C. 2236(a) for i revocation of-the construction permits on'the separate grounds that AlchemIE is-not-financially _ qualified to conduct the q licensed activity and the need for the construction permits no a longer exist.-
ORDER
- i Based upon all of the foregoing, it is hereby ordered: ,
~ d L That Staff's motion for summary disposition is' granted. +
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That an order revoking Construction Permits CPEP-1 and i
CPEP-2 shall be sustained; and That the proceeding is dismissed. ,
THE ATOMIC SAFETY AND-LICENSING' BOARD Morton B. Marguli , Chairman 3 ADM ST IVE LAW JUDGE, f
Paris, ember ,
A RATIV G F c h. on Member ADMINISTRATIV JUDGE Dated at Bethesda, Maryland this 24th day of July, 1990.
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UNITED STATES OF AMERICA-
- UC NUCLEAR RESULATORY COMMISSION 1
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.In the Matter of I
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Mll ALL CHEMICAL ISOTOPE- :
Docket No. (si 50-603/604-0M/SC fi= ENRICHMENT, INC. t
$'p ii (Construction Permit Nos. CPEP-1 and m,n CPEP-2)- I 1
is
, 8 CERTIFICATE OF SERVICE l'hereoy certify that copies of the foregoing L8 Mb0 LBP-90-26 (RULING ON..L have been served upon the following persons by U.S. mail,.first class, except
{,1 as otherwise noted and in accordance with the requirements of 10 CFR Sec. 2.712.
ypc Atomic Safety and Licensing Hopeal Administrative Judges Board Morton 6. Margulies Chairman U.Si Nuclear keoulatorv Commission Atomic Safety and Licensino Board-
. Wasninoten DC 20555 U.S. Nuclear Regulatory Commissten Washinoton OC 20555 Administrative Judge Administrative Judge
-Oscar H. Parts Frederick J. Shen Atomic Safety and Licensing Board Atostc Safety and Licensing Board U.S. Nuclear Reculatory Commission U.S. Nuclear Regulatory Commission 3- Washington. DC .20555, Wasnington. DC 20555 Bernard M. Bordenick Escutre Steonen 4 Irving, J.
J Jii!ce of the Gener41. Counsel -All Cheatcai Isotone Enrtenmert. Inc.
'U.S. Nuclear Regulatory Cometssion- Pine Ridge Office Park Wasnington, DC 20555 702 lilinois Avenue, Suite 202 B Oak Ridget TN 37B30 io
'Datec at Rockville, Md. this 1
25 day of July 1990 1 n/
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Offic u 'ha h:retar/ H t h e C::,nmi s s t ;r.
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