ML20056B510

Forwards Draft Staff Requirements Memo & SECY-89-321 Considered to Be Final Commission Decisions

ML20056B510
Person / Time
Issue date:	02/14/1990
From:	Chilk S NRC OFFICE OF THE SECRETARY (SECY)
To:	Carr, Roberts, Rogers NRC COMMISSION (OCM)
Shared Package
ML19336C343	List: ML20056B459 ML20056B466 ML20056B474 ML20056B480 ML20056B483 ML20056B487 ML20056B488 ML20056B495 ML20056B500 ML20056B509 ML20056B510 ML20056B511
References
FRN-55FR27645, RULE-PR-2 AD60-1-14, NUDOCS 9008290002
Download: ML20056B510 (22)

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UNITED STATES l

NUCLEAR REGULATORY COMMISSION

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SECRETARY I

MEMORANDUM FORT Chairman Carr Commissioner Roberts Commissioner Rogers Commissioner Curtiss i

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Commissioner Remick FROM:

J. Chilk, Secretary l

SUILTECT:

STAFF REQUIREMENTS MEMORANDUM i

Attached is the staff requirements memorandum on SECY-89-321.

In accordance with the Commission's' decision, the SRM will be issued to the staff by c.o.b. Friday. February 16. unless I hear otherwise.

t The attached SRM and the subject SECY paper are considered to be

" final Commission decisions" and as such will be released to the public upon publication of the Federal Register notice.

Attachment:

As Stated cc:

OGC EDO

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l 9008290002 900821 PDR PR 2 55FR27645 PDR

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/+susu\\'f UNITED 8TATES

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SECRETARY

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MEMORANDUM FOR:

William C. Parler, General Counsel FROM:

Samuel J. Chilk, Secretary

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SUBJECT:

SECY-89-321 - REVISIONS TO PROCEDURES TO ISSUE ORDERS - 10 CFR PART 2 This is to advise you that the commission (with all Commissioners agreeing) has approved the proposed revision to 10 CFR Part 2, subject to the following comments:

1.

The commission agrees with the general approach to j

separating orders that can affect a licensee from mere demands for information, and agrees that the latter need not provide an opportunity for hearing.

However, the rulemaking notice should be clear that this changes current practice under Part 2.202 and effectively overrules two earlier NRC decisions on the scope of I

hearing on an enforcement order.

Recommended text to cover this point is attached.

Because orders to show cause under the new Part 2.204 are to be used solely as demands for information and will no longer-carry hearing rights, we should not refer to them as " orders" so as to avoid any confusion with prior practice and to dispel any notion that these " orders" trigger adjudicatory procedures under the Atomic Energy Act and the Administrative Procedures Act.

The Commission suggests that these " orders" be relabelled " demands to show cause."

2.

The draft notice states at page 8 that a finding of immediate effectiveness is " final and not subject to administrative challenge."

This. sentence should be eliminated because it is seemingly contradicted by the next sentence in the notice which indicates that relief say be sought from the official who issued the order or from the presiding officer in a hearing on the order, n

NOTE:

THIS SRM AND THE SUBJECT SECY PAPER ARE CONSIDERED TO BE

" FINAL COMMISSION DECISIONS" AND AS SUCH WILL BE RELEASED TO THE PUBLIC UPON PUBLICATION OF THE FEDERAL REGISTER NOTICE.

The discussion also points to the need to determine whether the existing rules of practice are adequate to deal with challenges to the inaldiate effectiveness of an order, an issue that arose in the Finlay case in 1988.

l 9000744 3.

Because this rulemaking attempts a comprehensive revision of our rules of practice for issuing enforcement orders, the General Counsel should advise the Commission as to whether provisions for issuing i

orders in Subpart G to Part 110 can be eliminated.

The o

purposes of naving these separate procedures is not at r

all clear.

(OGC)

(SECY SUSPENSE:

3/9/90)

The Federal Register notice should be revised to accommodate the bove comments and the attached revisions; reviewed by the Regulatory Publications Branch, Office of Administration, for conformtnce to the Federal Register requirements, and returned for signature and publication.

Publication of this rule should l

cur at the same time as publication of the proposed changes to CFR which would hold unlicensed persons accountable for willful misconduct (SECY-90-22).

(OGC)

(SECY SUSPENSE 3/22/90) 9000745 cc:

Chairman Carr Commissioner Roberts Commissioner Rogers Commissioner Curtiss Commissioner Remick EDO l

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t Enclosure A 5

NUCbR REGULATORY CoptilSSION 10 C.F.R. Part 2 Revisions to Procedures tu Issue Orders t

Nuclear Regulatory Consission.

AGENCY:

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Proposed rule.

ACTIOu:

ise the The Nuclear Regulatory Comission (NRC)' proposes to re persons not licensed by

SIM4ARY

ld Counissions procedures for issuing orders to inc u ebjec the Commission but who are otherwise su ffect the Cunnission's existing The proposed revisions would more accurately re Therevision/

l the case.

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statutory authority to issue orders than is pmsent y i hts attach.

e. types of Commission orders to which heartng r g also lication in the The coment period expires on (60 days af ter pub d if it Coments received after this date will be co DATES:

cannot be given except Federal Register).

i is practical to do so, but assurar.ca of considerat on as to consents received on or before this date.

9 ission, U.S.

Send written coaments to the Secretary of the Conn Docketing and C 20555, Attention:

ADDRESSES:

Nuclear Regulatory Commission Washington, D f the Coments may also be delivered to the Office o One White Flint North,11555 Service Branch.

Secretary, U.S. Nuclear Regulatory Comission,7:30 a.m. anc 4:15 Rockville Pike, Rockville, Maryland, between l

t

i 1

i d for a fee at the

' Copics of any coments received may be examined and cop e i

DC between the hours NRC Public Document Room. 212D L Street, NW, Washington, i

of 7:4.5 a.m. and 4:15 p.m. weekdays.

i Mary E. Wagner, Office of the General t'

l FOR FURTHER INFORMATION CONTACT:

D.C. 20555, I

Counsel, U.S. Nuclear Regulatory Commission, Wasnington, f

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~ Telephone: 301-492-1683.

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SUPPL (NENTARY INFORMATION:

Background

to initiate formal The procedures to be followed by the Conaission f Practice set forth

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l enforcement action are found in the Comission's Ru es o j

These ac,tions include notices of violation, in 10 C.F.R. Part 2, Subpart B.

2 rders to oescribed in i 2.201, show cause orders, described f u i 2.20,

l penalties, described in modify licenses, described in i 2.204, and civi d

s in I 2.205.Until 1983, with the exception of the civil penalty proce ure At ll to licensees.

i 2.205, the language in these procedures referred so e yregu i

that tism, it was recognized that the Commiss on s i l tion to an unlicensed a procedura'.' mechanism to issue a formal notice of v o a d Comission requirenents.

person (corporateorindividual)whohadviolate d

in i 2.201 did not For example, by referring only to licensees, the proce ures sseo radioactive address issuing a notice of violation to a person who posse i

ion requirements or an material without a license in violation of Comm ss F R Part 21, which unlicensed person who violated provtsions of 10 C...

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l implements g.gon 206 of the En,J M& /2Mgy Reorganization Action of)1974. ; /kcr/ic MMwe/E us res 29 y

j Consequently, the Comission amended its regulations to permit the issuance ok

,y g notices of violations to unlicensed persons who violated Coanission requirements. Changes were published in the Federal Register on September 28, l

1983 (48 FR 44170) to amend i 2.200 (Scope of subpart) ano i 2.201 (Notice of violation) to add the phrase "or other person subject to the jurisdiction of the Consission."

As stated above, the provisions for issuing show cause orders only SHemossni.Ie Cor.nission's statutory tuthority to issue d V ! ass 11Censee orders, which is found in Section 161 of the Atomic Energy Act of 1954, as

.rde& 4 / w re u e6enden, 42 U.S.C. I 2201, is not,ftr limited In fact, the Counission's j

Atomic Energy Act authority' to issue orders is extremely broad,' extending to any person (defined in Section 11s to include, e.g., any incividual, y

corporation, federal, state end local agency) who engages in conduct within the Comission's subject matter jurisdiction. The few court cases which deal with the scope of the general authority Congress has granted the Comission usually do so in a general discussion or in passing and conclude that Section 161 confers uniquely broad and flexible authority on the Comission.

J See Power Reactor Dev. Co. v. International Union of Elec. Radio and Ilocn.

Workers.AFL-CIO,367U.S.396(1961); Connecticut Light and Power Co. v.

Nuclear Regulatory Comm'n, 673 F.2d 525, 527, n. 3 (D.C. Cir.1982);

New Hampshire v. Atomic Energy Conn'n, 406 F.2d 170,173-74 (1st Cir.1969);

Siegel v. Atomic Energy Conn'n, 400 F.2d 779, 783 (D.C. Cir.1968)] but ef.

Reynolds_ v. United States, 286 F.2d 433 (9th Cir.1960) (interpreting Section 1611 in detail ano holding, in the context of the AEC's bomb testing

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activities, that Section 1611(3) authorized the AEC to' aT$dsk[O50'governlg the activities of private licensees and not the activities of the Commission itself; the court's use of the word " licensee" is dictum with regard to the term in the context of this notice).

Cases analyzing the Federal.Cosmunications Comission's (FCC) enabling statute, which, in many ways, is analogous to the 1954 Act, also support the principle that the connission's authority is broad in scope. The Federal Comunications Act of 1934 (the 1934 Act) broadly authorizes the FCC to "aske such rules and regulations, and issue such orders, not inconsistent with [the 1934 Act), as may be necessary in the execution of its functions", 47 U.S.C.

I1541(1982). This provision is similar to Section 1611(3) of the Atomic,

Energy Act of 1954, which authorizes the Comissior, to " prescribe such rules,

• regulations, and orders as it may, deem ne,cessary, to govern any activity i

authori:edpursuanttothe[AtomicEnergyActof1954]...inorcerto protect hesith and to minimize aanger to life or property...." 42 U.S.C.

J l2201(1)(3)(1982). A number of cases have analyzed Section 1541 in detail and det' rmined that the FCC's orcering authority is necessarily broad.

e see Federal Comunications Connission v. !!ational Citizens Cor.nittee for Broadcasting,436U.S.775at793(1978); United States v. Storer Broadcasting Co. 351 U.S.192 at 203 (1955); National Broaacasting Co. v.

United States, 319 U.S. 190 at 196 (1943); Lincoln Telephone and Telegraph Co.

v. Federal Communications Comission, 659 F.2d 1092 (D.C. Cir.1981); American Telephone and Telegraph v. Federal Communications Comission, 487 F.2d 865 (2o Cir.1973); GTE Service Corp. v. Federal Communications Comission, 474 F.2d 724 (2d Cir. 1973); and Western Union Telegraph Co. v. United States, 267 F.2d

i 5-715,722(2ncCir.1959).

It has been held that the FCC has authority to issue orders under Section 1541 to persons whether licenwd or not. Uniteo States v. Southwestern Cable, 392 U.S. 157) 81(1968).

N Section 1611 provioes broad authority to issue orders as the Cocaiission deems necessary to govern any activitf authorized pursuant to the Atomic Energy Act in oroer tu protect the public health and safety. Section 161b similarly authorizes the Coinnission to issue orders to establish standards and instructions to govern the possession and use of special nuclear material, source material, and byproduct natorial. As relevant here, Section 161o authorizes the Coraission to order reports as may be necessary to effectuate the purposes of the Act.

biven this broad statutory authority, it is appropriate to amend 10 C.F.R. I 2.202 to have the procedural Jnechanism in place to issue orders, as necessary, to tnlicensed persons when such persons have demonstrated that future control over their activities subject to the NRC's jurisciction is deemed to be necessary or desirable to protect public health ano safety or to minimize danger to life or property or to protect the common defense anu security. This amendment would revise i 2.202 to establish that mechanism both as to a licensee, as the current i 2.202 provides, and to any person subject to the jurisdiction of the Consnission. Such a person includes, but is not limited to, a person who hela a license or who was otherwise engaged in licensed activities at the time of the conduct in question, but who no longer holds a license or is so engaged.

In addition, the procedural mechanism for issuing orders to show cause, licensees and other persons would be set forth in a separate section in order y d gf & fo S W % A

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~ na to sake it c1 ar that the right to a hearing does riot attach at the time of issuance of

hr m:: :-". Orders, including orders to show cause, currently are issued under i 161 of the Atomic Energy Act of 1954, as amended, which are implementra by li 2.202 (order to show cause), and 2.204 (order for fmodificationoflicense).

In addition ~, civil penalty orders are issued under Section234,implementedbyi2.205(civilpenalties). HRC practice consonly has been to issue a single order, an order to show cause, which requires that certain information be prnided to demonstrate why either a proposed or issne-dietely effective action modifying, suspending, or revoking a license should not be taken. The order affords a hearing with regard to these actions.

While i 189 of the Atomic Energy Act provides for the. granting of a hearing in i

connection with proceedings to modify, suspend, or revoke a license, neither the Act nor the Administrative Procedure Act would require a hearing in con-nection with an orcer to show cause which requires only the submission of information, but oues not by its terms modify, suspend or revoke a license, l

The Act does not explicitly set out the form or requirenents for an order i

to show cause. The Act ooes, however, authorize the Conunission to collect information pursuant to il 161c and o and the Coi.unission may issue show cause orders to implement this autnurity. Section 182 of the Act author 12es the Consnission to request information from licensees and the Conunission has implemented this authority by promulgating regulations such as 10 C.F.R.

I50.54(f). Licensees subject to Connission requests under 10 C.F.R.

I 50.54(f) or its equivalent in other parts of the NRC's regulations have no hearing rights under the Act regarding these information requests.

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4#4 Accordingly, to clarify that hearing rights do not attach to %how cause" cA& A 1 IO&

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Cor. mission proposes to separate its order 3 to show ca% )

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from the Commission's general orcering authority contained in i. 2.202.DetTib ausict q cafu.ias witksd.ers vh 8 rwised %2.2.023 M A h 5 w e Isw.ca.deef. h i

%M rovistons concerning gtu show cause are set forth in a new i 2.204 Under the propuseo rule changes, nidEiiiF^thshow cause will be issued only to e

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..a require the submission of information.

If esimesierr~ to show cause is issued as roue d 'fo )T.T.FL-part of an order requiring actiorf, hearing rights will be uffered but only with respect to the provisions of the order requiring action.M WJMSPAN In order to avoic unnecessary duplication in the regulations, it is i

proposed that the current i 2.204, " Order for modification of license," be 1

deleted fron Part 2, since procedures for modification of a license are included in proposed i 2.202. Proposed i 2.202(f) provices that if the action ordered by the Comission constitutes a b.ackfit of a Part 50 licensee, the procedures described in 10 C.F.R. I 50.109 must be followed. This provision currently appears in the last sentence of i 2.204.

Section 2.202 is also revised to provide that if the licensee or other person to whom an order is issued consents to its issuance, or the order confirms actions agreed to by the licensee or such other person, such consent or agreement constitutes a waiver by the licensee or such other person of a right to a hearing and any associated rights. Such orders will be imediately effective. This is not a departure from current Commission practice, but merely conforms the Comission's regulations to such practice. Section 2.202(d) also provides that the licensee's or other person's agreement to an order must be in writing.

The addition of this provision is intended tu minimize the possibility of issuance of a confirt.iatory orcer,which does not x c d e r k r % fe d ib Q e a

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This revision to the regulations governing orders changes the rule in J

Dairyland Power Cooperative LBP-80-26,12 NRC 367, 370-72 (1980) and Consumers Power company, CLI-73-38, 6 AEC 1082 (1973), by setting the pointatwhicha" proceeding"beginsforpurposesoftriggeringthe i

adjudicatory rights under 114g o<.the Atomic Energy Act to the point of

& issuance of an order compelling a licensee or other person to take or f

refrain from certain actions rather than the point where the agenc merely demands information to show why no action should be taken. yThe change in practice is consistent with the Connission's power to define the scope of its proceedings, see Bellotti v. NRC, 725 F.2d 1380 (D.C. Cir. 1983).

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3 accurately reflect the agreement reacheu by the parties. Whether or not the licensee or other person consents to any order, a person aaverseiy affected by an order issued unoer i 2.202 to modify, suspend or revoke a license will be offered an opportunity for a hearing pursuant to i 189 of the Atomic Energy Act, consistent with current practice,ano the authority of the Comnission to e 4.*Aw4r W #mpS*.

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, define the scope of the proceeding SeeBillottiv.IIRC,725F.2d1380(D.C.

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Cir. 1983). $ A !*1 UfS '* kN"' bfNUA *&

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Tie existing i 2.202 vests authority to issue orders in the Executive r

Director for Operations (EDO), and vartuus staff office directors. Currently.

the rule limits the ED0's authority to issue orders to emergency situations. y M

'b Existing i 2.204 vests authority to issue orcers in the Conrairsion[the-

• revised rules consistently vest such authority in the Comission,' leaving it to the Comission's internal delegation authority to delegate such authority k

to others. This thange will avoid tne need to amend the regulations each time j

the title of one of the currently enumerated officials is changed, anc it will also remove the unnecessary limitation on the ED0's authority.

The Comission is retaintrig, in new i 2.202(e), a provision that, upon a finding that the public health, safety or interest so requires or that the na.do violation is willful, the proposed action may be 1medi6tely effective [A 3

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1. effective order, on the ut r hand, may be sought under the relaxation provisions contained in that order, or by motion for e stay to the presiding l

officer if a hearing has been requested.

The proposed rule also continuessini2.202(f),thebackfitting

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I requirements of 5 50.109, including the provision therein that when immediately effective action is required, the documented evaluation may follow, rather then precede, the regulatory action.

Finally, consistent with the changes to il 2.202 and 2.204, i 2.1 is amenced to specify tnat the scope of Part 2 includes the issuance of orders

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and eneses to show cause to unlicensed persons, and i 2.700 is amended to specify that Subpart 6 (Rules of General Applicability) applies to all gl adjuuications initiated by an orcer, hJpMWpppggM Thv proposed. amendments are procedural in nature. They do not establish the substantive standards or conditions under which the NRC would issue an g4, order to a licensed or an unlicensed person.

The Commission intenos to propose, in a separate rulemaking, a substantive addition to its regulations in order to put unlicensed persons on notice that they may be hvid accountable

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I for willful misconduct which undermines, or calls into question, adequate protection of the public health and safety.

Once the proposed rules are in I

eft'ect, consistent with the Consission's statutory authority, there will be A

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precedural rules governing the issuance of an order or show cause order not only to a licensee, as currently provided, but also to an unlicensed person c

de willfully causes a licenses to be in violation of Cosmission requirements i

wr whose willful misconduct undermines, or calls into question, the adequate

• protection of tn public health and safety in connection with activities r

regulated by the NRC under the Atomic Energy Act of 1954, as amended.

An example of a situation in which it might be appropriate to issue an seder to an unlicensed person is where an employee of a corporate Itcensee setsht willfully cause that licensee to be in violation of Cummission a

requirements such tnat the Comaission does not have reasonable assurance that requirements to protect the public health and safety will be followee if that person continues to engage in activities licensed by the Cosmission. h,..;;..r

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Depending on the circumstances in thess=sur, cases, it might he appropriate to issue an order to such a person to either prohibit the person from being involved in activities licensed by the Connission or require the person to provide prior notice to the Commission before engaging in incensed activities. These types of conoitions have been used by the teamission in settlement of litigation in accordance with 10 C.F.R. 2.203.M i

Easard Hines, Jr. lledical Center, 27 NRC 477, ALJ-68-2 (October 7,1988), and Finlay Testing Labor 4 tories, Inc., LBP-88-17, 27 IIRC 586 (1988).

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This rulemaking establishes the procedures to be useo in issuing urders l

to licensed and unlicensed persons. The procedures establish the meenanism to provioe notice of the issuance of an order and to resolve, through adjuoica-tion, whether a particular orcer is appropriate under the circumstances.

Environmental Impact: Categorical Exclusion The NRC has deterinined that this proposed rule is the type of action described in categorical exclusion 10 C.F.R. 51.22(c)(1). Therefore neither an environmental impact statement nor an environmental assessment has been prepared for this proposeo rule.

Paperwork Reduction Act Statiment This proposed rule contains no information collection requirements and therefore is not subject to the requirements of the Peperwork Reduction Act of 1980(44U.S.C.3501etseq.).

Regulatory Analysis The existing regulations in 10 C.F.R. 2.202 authorize the IRC, through its designaten officials, to institute a proceeding to modify, suspend, er revoke a license by service of an oroer to show cause on a licensee. The regulations, as currently written, do not provide procedures for the NHC to -

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take direct action against unlicensed persons whose willful misconcuct euses a license

• to violate Commission requirements or places in questiori reasonable L

assurance of adequate protection of the public health ano safety, although such action is authorized by the atouic Energy Act of 1954, as amended. The l

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amendments will make the Commission's Rules of Practice more consistent with the Commission's existing statutory authority and provice the appropriate procedural framework to take activ), in appropriate cases, in order to protect the pubite nealtn and safety. The amendmun:s also will make clear that cheering rights do not attach to orders to slauw cause, consistent with i 189 of the atomic Energy Act of 1954, as amended, and the Administrative Procedure i

j Act.

The proposed rule constitutes the preferred cc,urse of action and the cost involved in its prosaulgation and application is necessary and appropriate.

The forvgoing discussion constitutes the regulatory enalysis for this proposed rule.

Regulatory Flex 1bility Cert.ification As requirea by tik Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)),

the Coeutission certifies that this rule, if aoopted, will not have a signif-icant economic impact on a substantial number of small entities. The proposea rule establishes the procedural racchanism to issue oroers to show cause to unlicensed persons in socition to licensed persons, who were previously covered. The proposed rule, by itself, does not ingse any obligations on entities including any regulated entities that may fall within the definition

.of "small entities" as set forth in i 601(3) of the Regulatory Flexibility Act, or within the definition of "small business" as found in i 3 of the Small Business Act,15 U.S.C. I 632, or within the Small Business Size Standards I

found in 13 C.F.R. Part 121. Such obligations would not be created until an

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order is issued, at which time the person subject to the order would have a right to a hearing in accordance with the regulations.

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Backfit Analysis This proposed rule does not-involve any new provisions which would impose t

backfits as defined in 10 C.F.k. 50.109(a)(1). Accordingly no backfit analysis pursuant to 10 C.F.R. 50.109(c) is required for this proposed rule.

List of Subjects in 10 C.F.R. Part 2 Aaministrative practice and procedure, Antitrust, Byproduct material, Classified information, Environmental protection, Nucleer materials, Nuclear power plants and reactors, Penalty, Sex discrimination, Source material, Special nuclear material, Waste tr.vatment 'and disposal.

For the reasons set out tu the preamble and under the authority of the Atomic Energy Act of 1954, as amenced, the Energy Reorganuation Act of 1974, as amended, ana 5 U.S.C. 552 and 553, the NRC is proposing to adopt the following amenoments to 10 C.F.R. Part 2.

Part 2 -- Rules of Practice for Domestic Licensing Proceecings 1.

The authority citation for Part 2 is revised to read as follows:

Authority: Sacs 161, 181, 68 Stat. 948, 953, asamended(42U.S.C.

2201, 2231); sec.191, as amended, Pub. L.87-615, 76 Stat. 409 (42 U.S.C.

2241);- sec. 201, 86 Stat.12t2, as amendeu (42 U.S.C. 5841); 5 U.S.C. 552.

Sec. 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105, 68 Stat. 930, 932, 933, 935, 936, 937, 938, as emenced (42 U.S.C. 2073, 2092, i

18 %

093, 2111, 2133, 2134, 2135); sec. 102, Pub. L.91-190, 83 Stat. 853, as amended (42 U.S.C. 4332); sec. 301, 88 Sta t.1248 (42 U.S.C. 531). Sections 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 1

183, 189, 68 Stat. 936, 937,'930, 954, 955, as amended (42 U.S.C. 2132, 2133, 2134,2135,2233.E239). Section-2.105 also issued under Pub. L.97-415, 96 Stat.2073(42U.S.C.2239). Sections 2.200-2.206 also 'ssued under secs.

161b,1,]186,234,68 Stat.948-931,955,83 Stat.444,esamended(42 U.S.C. 2201(b), (1), (o), 2236, 2282); sec. 206, 88 Stat.1246 (42 U.S.C.

5846). Sections 2.600-2.606 also issued under sec. 102, Pub. L.91-190. 83 Stat. 853, as mended (42 U.S.C. 4332).

Sections 2.700s, 2.710 also issued under 5 U.S.C. 554. Sections 2.754, 2.760, 2.770, 2.780 also issued under 5 0.S.C.557 Svetion 2.764 and Table 1A of Appendix C are also issued under secs.135,141, Pub.L.97-425,96. Stat.,2232,2241(42U.S.C.10155,10101).

Section 2.790 also issued under sec.103, 68 Stat. 936, as emendeu (42 U.S.C.

2133)and5U.S.C.552. Sections 2.800 and 2.808 also issued under 5 U.S.C.

553.

Section 2.809 also issued under 5 U.S.C. 553 and sec. 29, Pub. L.85-256, 71 Stat. 579, as asi>nded (42 U.S.C. 2039). Subpart K also issueo under sec.189, 68 Stat. 955 (42 U.S.C. 2239); sec.134 Pub. L.97-425, 96 Stat.2230(42U.S.C.'10154). Appendix A also issued under sec. 6. Puo. L.91-560, 84 Stat.1473 (42 U.S.C. 2135). Appendix 8 also issued under sec. 10..

Pub. L. 99 240, 99 Stat.1842 (42 U.S.C. 2021b et seq.).

2.

I 2.1 is reythed to read as follows:

E 2.1 Scope.

_ -.... - - ~, _. - -,..

2.

lj,

This part governs the conduct of all proceedings, other than export and g

import licensing proceedings cescribed in under the Atumit Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, for:

(a) 10 w

granting, suspending, revoking, amending, or taking other action with respect Wth

, to any license, construction permit, or application to transftr a license; (b) t issuing orders and -

show cause to persons subject to the Commission's jurisdiction, including licensees and persons not licensed by the Comission; (c) imposingcivilpenaltiesundersection234oftheAct;and(d) public l

rulemaking.

3.

I 2.202 is revised to read as follows:

5 2.202 Orders.

(a) The Commis'si sti,tute a, proceeding to modify, suspend, or revoke a license or der such other action as may be proper by serving on the licensee or other person subject to the jurisdiction of the Comission an I

croer that will:

(1) Allege the violations with which the licensee or other person subject to the Comission's jurisciction is charged, or the potentially l

l hazardous conditions or other facts deemed to be sufficient ground for t' l

proposed action, and specify the action proposed; (2) Provide that the licensee or other person must file a written answer to the orcer under oath or affirmtion within twenty (20) days of its cate, ur I

such other time as may be specified in the orde gA erperson/ofhisriW within twenty (20)

(3)

Inform the licensee or o

. days of the date of the order, or such other time as may be specified in the i

1-o order, to demand a hearing on all or part of the order, except in a case whe're m wn+i%

the licensee or other person nas consented,to tne order; M bi%

(4) Specify the issuej; and (5) State the effective datu of the order.

(b) A licensee or other per. son to whom the Cossnission has issued en order under this section must respond to the order by filing a written enswer under oath or affirmation. The answer shall specifically admit or deny mech allegation or charge neos in the order, and shall set forth the matters of fact end law on which the licensee or other person relies, and, if the order is not consented to, the reasons as to why the order should not have been issued. Except as provided in (d) below, the answer ray demand a hvering.

(c) If the answer denianas. hearing, the Connission will issue an order 3

avsignating the time and place of hearing.

(d) An answerb

", ' ^r2may consent to the entry of an order in substantially the form proposed in the order with respect to all or some of 4

the actions proposed in the order.

The consent of the licensee or other person to whom the order has been issued to the entry of an order shall I

constitute a weiver by the licensee or other person of a hearing, finuings of fact and conclusions of law, and of all right to seek Commission and judiciel review or to contest the validity of the order in any forum as to those matters which have been consented to or agreed to or on which a nearing has not been requested. The orcer shall have the same force and effect as en i

order mede ofter hearing by a presiding officer or the C waission,'and shall be effective as provicea in the order.

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(e) When the Cussission finos that the public health, safety, or j

l

- interest so requires or that the violation or conduct causing the violation is uillful, the order may provide, for stated reasons, that the propused action

]

he immediately effectiveg*y hber'dV!

r (f) If the order involves the modification of a Part 50 license 6no is a lbackfit, the requirements of i 50.109 of this chapter shall be followed, i

saless the licensee has consented to the action required.

4 I 2.204 is revised to read as follows:

- 1 2.204 ThowD (a) The Comission may issue to a licensen or other person subject to bed

' P-

'the Jurisdiction of the Conaission ei =r to show cause why such actions as may be proper should not be teken, which.will:

l' (1) Allege the violations with which the licensen or other person is charged, or the potentially hazardous conditions or other facts deehed to be sufficient ground for the proposed 6ction, and specify the action' proposed;

'and (2)' Provide that the licensee or other person must file a written answer ete& 4o ML to the om show cause under oath or affirmation within twenty (20) days g

3 denu4 of its date, or such other time as may be specified in the onder to show cause.

(b) A licensee or other person to whom the Cumnission has issued a0 clemaM

• (e

• 6L t

(amur to show cause under this section must respond to the enden-by filing a

)

written answer under oath or affirmation. The answer shall specifically admit l

L or ceny each allegation or charge made in the order to show cause, and shall

(

i

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.------.----,----n

- - -, - -, +, - -, - - -, - -

I-18 -

set forth the matters of fact and law on which the licensee or other person relies.

(c) An answer hti,,.;....f may consent to the entry of an order in I

substantially the form proposed in the order to show cause.

(d) Uponreviewoftheanswerfiledpursuanttoparagraph(a)(2)ofthis section, or if no answer is filed, the Connission may institute a proceeding Ama pursuant to 10 C.F.R. 2.202 to take the action proposed in the 'M'%

show 4$neGEk cause or such other action as may be proper, j

4e 4cdce, 5.

I 2.700 is revised to read as follows:

l 6 2.700 Scope of subpa:'t.

The general rules in this subpart govern proced'ure in all adjuuications siittiated by the issuance of an orcer pursuara, to i 2.202, an order pursuant to 9 2.205(e), a notice of nearing, a notice of proposed action issued pursuant to i 2.105, or a notice issued pursuant to i2.102(d)(3).

ated at Rockville, Maryia@m fpc[g,d is day of 1989 g g

Ib-FOR THE NUCLEAR REGULATORY COHitISS10tl 1

l Satauel J. Chilk Secretary of the Conaission

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}lpc>o-l pg, t

k 1C RULEMAKING ISSUnsecv-89-sn Mr 18, 1989 (Notation Vote)--

F_0R_: -

The Commissioners 0

FROM:

William C. Parler General Counsel 1

SUBJECT:

REVISIONS TO PROCEDURES TO ISSUE ORDERS - 10 C.F.R. PART 2 l

2 l

PURPOSE:

To obtain approval to initiate-a rulemaking to revise the Comission's procedures in 10 C.F.R. Part 2, Subpart B, for issuing orders to include persons not. licensed by the i

c Comission but who are otherwise subject to the i

Commission's jurisdiction. The proposed amendments would

~j more fully reflect the Comission s existing statutory authority to issue-orders than is presently the case. The proposed amendments'also would clarify-the types of Commission orders to which hearing rights attach. -

BACKGROUND:

The proposed rulemaking recommended for Comnission approval

,~oposes procedural changes to 10 C.F.R. Part 2, Subpart B,

._ l regarding the issuance of orders and orders ~to show cause

~

to persons (corporate and individuals) not licensed by the Comission but who engage in activities subject to the Comission's jurisdiction.' These changes will make the-1 Comission's Rules of Practice.more consistent with our

' existing statutory authority.

The proposed rules are proc @al in nature. They do not~

establish the substantive strdards or conditions under which the NRC would issue an order to a licensed or 1

unlicensed person. The staff has been directed to submit j

to the Commission, in a separate rulemaking, a substantive addition to its regulations in order to put unlicensed i

persons on notice that they may be held accountable for willful misconduct which undermines, or calls into CONTACT:

Jack.R. Goldberg 4

x21681 Mary E. Wagner x21683

% : fh 7 y;I( W.3 W 1

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question -adequate' protection of-the-public health and safety.- The intended scope of the substantive rule will be set forth in that rulemaking, q

The proposed change to i 2.202. establishes the procedural mechanism to issue orders to unlicensed persons. The procedural mechanism for issuing orders to show cause to

~

licensees and other persons would be set forth in a separate section (revised i 2.204) in order to make it:

clear that the right to a hearing does not attach at the time of issuance of a show cause order which requires only

.1 J

that information be provi6ed in order to determine whether an order to modify, suspend or revoke a license or for other appropriate action should be issued.

Further, the:

ED0's authority tn issue such orders would not be limited.

I to emergencies, as-in the current regulations.

To conform to the changes to il 2.202 and 2.204, conforming changes are also proposed to 99 2.1.(scope) and 2.700 (scope of subpart).

Portions of this proposed rulemaking to revise the procedures to issuo orders to include persons not licensed 1

-dlso are responsive in part to a memorandum dated June 29, 1989 from Samuel J. Chilk to Victor Stello, Jr.,

"SECY-89-151 -- Identifying,and informing Others of Wrongdoers and Initia' ting Rulemaking to Permit the Issuance

• j of Orders to Non-Licensees."

As mentioned above, the i

staff intends to submit,-in accordance with SECY-89-151, Option 1, and Secretary Chilk's June 29,1989 memorandum, a proposed rulemaking containing a substantive addition to j

the regulations in. order to put unlicensed individuals on

- j notice that they may be held accountable for willful l

misconduct:which causes a licensee to violate an NRC' requirement or which places in question reasonable

(

assurance of adequate protection of the public health and safety.

However, the changes to 10 C.F.R. Part 2 proposed here have a utility _ independent of the staff's need to 4

track wrongdoers, as discussed below.

]

Horaover, the establishment of the procedural mechanism to issue orders to individuals also should resolve a concern raised some time ago in response to the Commission's proposed adoption of regulations on ':ompleteness and Accuracy of information.

In those comments, the United States Department of Justice expressed concern that in its civil enforcement program the Connission does not impose civil penalties against individuals, but only against licensees, resulting in a particular problem in a marginal criminal case where a civil pulty against the individual j

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x could be the preferred resolution. See letter dated -

December 18, 1986 from Victoria Toensing, U.S. Department

.i of Justice, to William C. Parler,- U.S. Nuclear Regulatory Commission..

DISCUSSION:

The current provisions in the Commission's Rules of Practice for issuing show cause orders only address l

licensees. However, the Commission's statutory authority to-issue orders, which is found n Section 161 of the 1

Atomic Energy Act of 1954, as amended, is not so limited.'

In f act, the. Commission's Atomic Energy Act authority to '

issue orders is extreuely broad, extending to' any person-(defined in Section 11s to include, for example, any individual,- corporation, federal, state and local agency). '

who engages in conduct within the Comission's subject-matterjurisdiction. The few court cases which deal with the scope of the general authority Congress has'

+

granted the Commission usually do so in a. general ciscus-sion or in passing and conclude that. Section 161 confers uniquely broad and flexible authority on the Comission. -

See Power Reactor Dev. Co. v. International Union of ETec. Radio and Mach. Workers, AFL-CIO, 367 U.S. 396 (1961); Connecticut Light and Power Co. V. Nuclear 3

Reculatory com'n, 673 F.2d 525, 527, n. 3 (D.C. Cir.

1902); llew Hampshire v. Atomic Energy Com'n, 406 F.2d 170, 173-74'(1st Cir.1965T); Siegel v. Atomic Energy Com'n,

-d l'

40J F.2d 779~, 783 (D.C. Cir. 1968); but cf. Reynolcs v.

United States, 286 F.2d 433 (9th 'Cir.1960) (interpreting Section 1611 in detail and holding in the context of the AEC's bomb testing activities, that Section 1611(3) i authorized the' AEC to take' action to govern the activities g'

of private licensees and not the activities of the i

Comission itself;.the court's use of the word " licensee" is. dictum with regard to the term in the context of this paper).

+

g Section 161i provides broad authority to issue orders as the Comission deems necessary to govern any actaity authorized pursuant to the Atomic Energy Act in order to protect the public health and safety. Section 161b similarly authorizes the Commission to issue orders to establish such standards and instructions to govern the possession and use of special nuclear material, source L

g" material, anc byproduct material, as may be necessary or desirable to provide for the comon defense and security j

and protect the public health and safety. As relevant here, Section 161o authorizes the Commission to order reports as may be necessary to effectuate the purposes of the Act.

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- Given this broad authority,'it is appropriate to amend..

10 C.F.R.o6 2.202 to have the procedural mechanism'in place-to issue orders, as necessary, to unlicensed persons, both corporate and individual, when such persons have demon.

strated that future control over.their activities subject to the NRC's jurisdiction is necessary or desirable to protect public health and safety or to minimize.canger to life or property or to protect the common defense and security.

This amendment would revise i 2.202. to establish-

-i that mechanism both as to a licensee, as the current 5 2.202 provides, and' to any person subject to the jurisdiction of the Commission. Such a person includes, but is not limited to, a person who held a license or who was otherwise engaged in licensed activities at the time of the conduct in question, but who no longer holds a license or'is so engaged, and to vendors, contractors, and certificate holders.

i In addition, the procedural mechanism for issuing orders to I

show cause to licensees and other persons would be set l

forth in a separate section (revised 9 2.204) in order to make it clear that the right to a hearing does not attach 1

at the time of issuance of a show cause order. Orders, l

including orders to show cause, currently are issued under Section 161-~of. the Atomic' Energy Act of 1954, as amended, which are implemented by 55 2.202 (order to show cause) and

~

~

2.204(orderformodificationlicense)..In addition, civil penalty orders are issued under-Section 234, implemented by a

62.205(civilpenalties).

NRC practice commonly has been to issue a single order, an order to show cause, which requires that certain information be provided to oemonstrate why either a proposed or immeciately effective action modifying, suspending, or revoking a license or a proposed orde:r for such other action as may be appropriate,-

should not be ta N.

The order affords' a hearing with regard to these ations. While Section 189 of the Atomic Energy Act provides for the granting of a hearing in 1

connection with proceedings to modify, suspend, or revoke 4 license and certain other enumerated actions, neither the Act nor.the Administrative Procedure Act would require a hearing in connection with an order to show cause which requires only the submission of information, but does not by its terms modify, suspend or revoke a license.

The Atomic Energy Act does not explicitly set out the form or requirements for an order to show cause. The Atomic Energy Act does, however, authorize the Comission to collect information pursuant to Sections 161c and o and the L

Comission may issue show cause orders to implement this l

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?

L Lauthority. Section 182 of the Act authorizes the' j

Comission to request information from licensees and.the j

Comissicn has implemented this. authority by promulgating regulations such as 10 C.F.R. $ ~ 50.54(f). Licensees q

subject to Comission requests under 10_C.F.R. l 50.54(f),

q or its equivalent in -other parts of the 'NRC's regulations, have'no hearing rights under the Act regarding these information: requests.

Separation of the Comission's order to show cause authority from the Comission's general ordering authority,

-e contained in revised i 2.202, will-clarify that hearing rights do not attach to the former. The provisions concerning orders to show cause are set forth in a revised i 2.204. Under the proposed rule changes, an order to show i

cause will be issued only to require the submission of 1

information.

If an order to show cause is issued as part 1

of an order requiring action, hearing rights will be l

offered but only with respect to' the provisions of the order requiring action.- The order will provide that'the o

answer, if not consenting to the required action, may explain why the order should not have been issueo.

In order to avoid unnecessary duplication in the regulations, it is proposed that the current language of

- G 2.204, " Order for ntodifica' tion of license," be deleted i

from Part 2, since procedures-for modification of a license have been included in revised 6 2,202. ' Revised 5 2.202(f).

provides that if the action ordered by the Comission constitutes a backfit of a Part 50 licensee, the procedures described in 10 C.F.R. 0 50.109 must be followed, unless i

the action'is consented to. This provision currently, appears in the last sentence of 9 2.'204 1

Section 2.202 is also revised to provide. that -if the

' licensee or other person to whom an order is issued consents to its issuance, or the order confirms actions

^ agreed to by the licensee or such other person, such consent or agreement constitutes a waiver by the licensee or such other person.of a right to a hearing and any associated rights.

Such orders will be immediately effec-tive. This is not a departure from current Commission a

practice, but merely conforms the Commission's regulations to such practice. See, e.g., Minnesota Mt..ing.and l

Manufacturing Co., F Center 220-2E-02, Confirmatory Order

~

Hodifying License, Ettective Imediately, December 21, 1988, 53 Fed. Reg. 52534 (1988).

Section 2.202(d) also provides that the licensee's or other person's agreement to an order must be in writing. The addition of this i

,7 w

+

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provision is. intended to minimize the possibility. of f il issuance of a confirmatory order which does not accurately

.l reflect the agreement reached by the parties. Whether or not the licensee or other person consents to any order, a.

person adversely affected ay an order issued under 9 2.202' to modify, suspend or revoke a license will be offered an-cpportunity for a hearing pursuant to Section 189 of. the Atomic Energy Act, consistent with' current practice and the.

authority of the Comission to define the scope of; the q

proceeding.

See Bellotti v. NRC, 725 F.2d 1380-(D.C. Cir.

f 1983).

The existing 6 2.202 vests authority to issue orders in the Executive Director for Operations (EDO) and various staff office directors. The existing rule limits the ED0's

-authority to issue orders only during an emergency.

Existing i 2.204 vests authority to issue orders in the Comission.- The revised rules consistently vest such-authority in the Comission, leaving it to the Commision's internal delegation authority to delegate such authority to-others.: This change'will avoid the need to amend the-regulation each time the title of one of the currently enumerated officials is changed, and will also. remove. the unnecessary. limitation on the ED0's authority. However, the Commission's existing de. legations should undergo a review to.-assure.thati they are clear, complete, and current.

Finally, to confonn to the changes to $$ 2.202 and 2.204, 5 2.1 is amended ~ to specify that the scope of Part 2 includes the issuance of orders and orders to show cause' to unlicensed persons, and 9 2.700 is amended to specify that -

Subpart G (Rules of General Applicability) applies to all 1

adjudications initiated by an order rather than just an order to show cause.

RECOMMENDATION:.

That the Comission:

1.

Approve publication in the Federal Register of the notice of proposed rulemaking in Enclosure-A; 2.

Direct the staff to undertake a review of the Comission's existing delegations to assure they are clear, complete, and current, and promptly revised when necessary

9-

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3.

Noter i

.a.

The notice of. proposed rulemaking in Enclosure A will.be published in the Federal Register ~

t allowing 60 days for public' connent. -

b.

The Comission may wish to consider publishing 1

this notice of. proposed rulemaking in conjunction ;

=,

with publication of the proposed rulemaking containing.the substantive changes imposing-requirements on unlicensed persons.

i c.

The. issue of procedural changes to the regulations to clarify the Connission's authority to issue orders to persons who-do not hold licenses was discussed before the House Subcomittee.on Environment, Energy and Natural-Resources during its deconnissioning _ hearings on August 3, 1989.

d.

-Since this proposed rule qualifies as a

~

categoricalexclusionunder10C.F.R.55.22(c),

neither an environmental. impact statement nor an assessment has been prupared.

i e.

The 'Subconnittee 'o'n Nuclear Regulation of the

-l Senate Committee un Environment and Public Works, the Subcommittee on Energy and the Environment of-the House Interior and Insular Affairs Comittee, the Subcommittee on Energy Conservation and Power of the House Energy;and Connerce Connittee, and the Subcommittee on Environment, Energy and Natural Resources of the House Committee on-i L

Government' Operations will;be informed of the rulemaking by letter such as Enclosure B.

f.

The Federal Register: notice of proposed rulemaking will be distributed to affected licens ees. -

i g.

A public announcement will be issued by -the R'

Office of Public Affairs when the proposed 1

L rulemaking is filed with the Office of the Federal Register.

h.

Since the proposed rule is administrative in nature, and therefore does not result in the L

" modification of or addition to systems, structure, components, or design of a facility i

in

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... or the procedures or organization required to design, construct, or operate a facility.the staff believes that the backfit rule,10 C.F.R. 50.109, does not' apply to the proposed-rule, f

,e

&hadY.V.. ; q, ;-

William C. Pdler i

General Counsel

Enclosures:

A.

Draft Federal Register 140tice

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B.-

-Draft Congressional Letter

[

-Commissioners' comments or consent should be provided'directly to the Office'of the Secretary by COB Friday, November 3, 1989.

i

. Commission Staff Office comments, if any, should be submitted to the Commissioners NLT Friday, October 27, 1989,-with an information copy.to the Office of the Secretary.. If'the paper 3

is of such a nature that it requires additional time for j

. analytical" review and comment, the Commissioners and the Secretariat should-be apprised of when' comments may-be expected.

DI'STRIBUTIONs.

Commissioners-OGC

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'i 1 REGIONAL OFFICES

-EDO-ACRS ACNW ASLBP L4 ASLAP' l

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SECY-1 1

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Enclosure A NUCLEAR REGULATORY COMMISSION j

~

10 C.F.R. Part 2 Revisions to Procedures tu Issue Orders AGENCY:

Nuclear Regulatory Corivaission.

'ACT10H:

Proposed rule.

SUHliARY: The Nuclear Regulatory Connission (NRC) proposes to revise the.

j Comissions procedures for issuing orders to include persons n'r licensed by' j

the Comission but who are otherwise subject to the Comission's jurisdiction. -

The proposed revisions would more accurately reflect the Comission's existing

- statutory authority to. issue orders than is presently the case. The-revisions also clarify the types of Comission orders-to which hearing rights attach.

j l

i DATES: : The coment period expires on -(60 days after publication in thel Federal Register). Connents received after this date will be considered if Lit-is' practical, to-do so, but assurar ce of consideration cannot be given except as to coments received on or before this date.

Send written coments to the Secretary of the Commission, U.S.

ADDRESSES:

Nuclear Regulatory Comission, Washington, DC 20555, Attention:. Docketing and

-Service Branch. Coments may also be delivered to the Office of the y

Secretary, U.S. Nuclear Regulatory Comission, One White Flint North,11555

-Rockville Pike, Rockville, Maryland, between 7:30 a.m. and 4:15 p.m. weekdays.

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Copies of any comerits received may be examined and' copied for a fee at the l

l liRC' Public Document Room, 2120 L Street, NW, ' Washington, DC between the hours j

of;7:45 a.m and.4: 15 p.m. weekdays.-

J J

FOR FURTHER INFORMATI0d CONTACT: Mary E. Wagner, Office of the General.

1 Counsel, U.S. Nuclear Regulatory Comission, Washington, D.C. 20555, Telephone:

301-492-1683.

+h SUPPLEMENTARY INFORMATION:

Background

The procedures to be followed by' the Comission to initiate formal enforcement action are found in the Cotamission's Rules of Practice set-forth cin 10 C.F.R. Part 2,-Subpart B.

These acticas include notices of violation,

cescribed in 6 2.201, show cause orders, described in 9 2.202, orders to.

modify licenses, described in 6.2.204, and civil penalties, described in I

i 2.205..

Until 1983, with the exception of the civil-penalty' procedures -in

.5 2.205, the language in' these procedures referred solely to. licensees. At:

L that time, it was recognized that the Comission's regulations did not provide ia-procedural raechanism to issue a formal notice of violation: to an unlicensed pers'on (corporate or individual) who had violated Comission requirements.

For example,-by referring only to licensees, the procedures in 6 2.201 did not address issuing a notice of violation to a person who possesseo radioactive

-material without a license in violation of Comission requirements or an unlicensed person who violated provisions of 10 C.F.R. Part 21, which l

l l.

,< implements Section 206 of the Energy Reorganization Action of 1974 Consequently, the Comission amended its regulations to permit the issuance of

- notices of violations to unlicensed persons who violated Comission-requirements. Ch6nges were published in the Federal Register on September 28, I

1983 (48 FR 44170) to amend 5 2.200 (Scope of subpart) and 9 2.201 (Notice of violation) to add the phrase "or other person subject to the.' jurisdiction of the Comission."

As stated above, the provisions' for issuing show cause orders only address licensees. However, the Comission's statutory authority to issue orders, which is found in Section 161 of the Atomic Energy Act of 1954, as dh6enden, 42 U.S.C. 5 2201, is not so limited.

In fact, the Comission's Atomic Energy Act authority to issue orders is extremely broad, extending to any person (defined in Section 11s to include, e.g., any inoividual, corporation, fede^ral, state and local agency) who engages in conduct within the Comission's subject matter jurisdiction. The few court' cases which deal with the scope of the general authority Congress has granted the Comission usually do so in a general discussion or in passing and conclude that -

Section 161 confers uniquely broad and flexible authority on the Commission.

See Power Reactor Dev. Co. v. International Union of Elec. Radio and Hocn.

Workers, AFL-CIO, 367 U.S. 396 (1961); Connecticut Light and Power Co.- v.

~

Nuclear Regulatory Comm'n, 673 F.2d 525, 527, n. 3 (D.C. Cir.1982);

New Hampshire v. Atomic Energy Com'n, 406 F.2d 170,173-74 (1st Cir.1969);

4 Siegel v. Atomic Energy Com'n, 400 F.2d 779,.783 (D.C. Cir.1968); but cf.

Reynolds_ v. United States, 286 F.2d 433 (9th Cir. 1960) (interpreting Section _1611 in detail and holding, in the context of the AEC's bomb testing

w

)

activities, that Section.1611(3) authorized the AEC to take action to govern the activities of private ' licensees and not the activities of the Commission itself; the court's-use of the word " licensee" is dictum with regard to the term in the context of this notice).

Cases analyzing the Federal Connunications Comission's (FCC) enabling statute, which, in many ways, is analogous to the 1954 Act, also support the principle that the Connission's. authority is broad in scope. The Federal Coununications Act df 1934 (the 1934 Act) broadly authorizes the FCC to "make such rules and regulations, and issue such orders, not inconsistent with [the 1934 Act], as may be necessary in the execution of its functions", 47 U.S.C.

I 1541 (1982). This provision is similar to Section 161i(3) of the Atomic Energy Act of 1954, which authorizes'the ::onnission to " prescribe such rules',

regulations, and orders as it may deem necessary to govern any activity authorized pursuant to the [ Atomic Energy Act of 1954]... In order to protect health and to minimize danger to life or property...." 42 U.S.C.

52201(1)(3)-(1982). A number of cases-have analyzed Section 1541 in detail and determined that the FCC's ordering authority is.necessarily broad.

See Federal Connunications Commission v. llational Citizens Cor.nittee for-Broadcasting, 436 U.S. 775 at 793 (1978); United States v. Storer Broadcasting Co., 351 U.S.192 at 203-(1955); National Broadcasting Co. v..

United States, 319 U.S. 190 at 196 (1943); Lincoln Telephone and Telegraph Co.

{

v. Federal Communications Connission, 659 F.2d 1092 (D.C. Cir.1981); American Telephone and Telegraph v. Federal Communications Connission, 487 F.2d 865 (2u Cir.1973); GTE Service Corp. v. Federal Communications Connission, 474 F.2d-724 (2d Cir. 1973); and Western Union Telegraph Co. v. United States, 267 F.2d

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715; 722 (2no Cir. 1959).

It has been held that the FCC has authority to t

issue or'ders under Section 1541 to persons whether licensed or not. Uniteo Statesv.SouthwesternCable,392U.S.157at180-81(1968).

Section 1611 provices broad authority to issue orders as the Cocsitssion deems necessary to govern any activity authorized pursuant to the Atomic 4

Energy Act in oroer to protect the public health _and safety. Section 161b similarly authorizes the Commission to issue orders to establish. standards and instructions to govern the possession and use of special nuclear mater.ial, source. material, and byproduct naterial. As relevant here, Section 161o

.l authorizes the Commission to order reports as may be necessary to effectuate the purposes of the Act.

Given this broad statutory authority, it is appropriate to qmend 10 C.F.R. 9 2.202 to have the procedural, mechanism in place to issue orders, as' necessary, to unlicensed persons when such persons have demonstratec that future control over their activities subject to the 11RC's jurisai tion is deemed to be necessary_ or desirable to protect public health ano safety or to minimize danger to life or property or to protect the common defense and security._ This amendment would revise 9 2.202 to establish that raechanism both as to a licensee, as tne current 5 2.202 provides, and to any person subject.to the jurisdiction of the Commission. Such a person includes, but is not limited to, a person who helo a license or who was otherwise engaged in licensed activities at the time of the conduct in question, but who no longer holds a license or is so engaged.

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In addition, the procedural mechanism for issuing orders to show cause to licensees and other persons would be set forth in a separate section in order l

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to make it clear that the right to a hearing does not attach at the time of

. issuance of a show cause order. Orders, including orders to show cause,

currently are issued under 9161 of the Atomic Energy Act of 1954, as auended, whicn are implementea by 95 2.202 (order to show cause), and 2.204 (order for modification of license).

In addition, civi'l penalty orders are issued under Section 234,. implemented by 5 2.205 (civil penalties). NRC practice comonly has been to issue a single order, an order to show cause, which requires that certain Information be provided.to demonstrate why either a proposed or ime-diately effective action modifying, suspending, or revoking a license.hould' not be taken. The order affords a hearing with regard to these actions.

i While i 189 of the Atomic Energy Act provides for the granting of a hearino in connection _with proceedings to modify, suspend, or revoke-a license,~neither-the Act nor the Administrative Procedure Act wou.ld require a hearing in con-nection with an oroer to show cause which requires only the submission vf information, but does not by its terms modify, suspend or revoke a license.

The Act does not explicitly set out the form or requirements for an order to show cause. The Act ooes, however, authorile the Comission-to collect information pursuant to 56 161c and o'and the Commission may issue shr.w cause orders to implement this autnority.

Section 182 of the Act authorizes the Comission to request information from licensees and the Commission has 1

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implemented this authority by promulgating rep lattuns such as 10 C.F.R. 9 50.54(f).

Licensees cubject to Comission requests under 10 C.F.R. 5 50.54(f) or its equivalent in nther parts of the NRC's regulations have no hearing rights under the Act regarding these information requests.

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Accordingly,:to clarify that hearing rights do not attach to show cause orcers, the Coumission proposes to separate its' order to show cause authority-from'the Commission's general ordering authority contained in i 2.202. The provisions concerning orders to show cause are set forth in a new 9 2.204 Under the proposec rule _ changes, an order to show cause will be issued only' to require the submission of information.

If on order to show cause is issued as a

port of an order requiring action, hearing, rights will be offered but only with respect' to the provisions of the order requiring action.

In order to avoid unnecessary duplication in the regulations, it is proposed that the current 5 2.204, " Order for modification of license," be deleted fron Part 2, since procedures for modification of a license are included in proposed 6 2.202.

Proposed 5 2.202(f).provides that if the action ordered by the Cummission constitutes a backfit of a Part 50 licensee, the procedures described in 10 C.F.R. 6 50.109 must be followed. This provision t

currently appears in the last sentence of 5 2.204.

Section 2.202 is also revised to provide that if the licensee or other person r.o whom an order is issued consents to its issuance, or the ordar confirms actions agreed to by the licensee or such other person, such-consent

-ur agreement constitutes a waiver by the licensee or such other person of a right to a hearing and any associated rights. Sucn orders will be imediately effective. This is not a departure from current Commission _ practice, but merely conforms the Comission's regulations to such practice. Section 2.202(d) also provides that the licensee's or other person's agreement to an order must be in writing.

The addition of this provision is intended tu minimize the possibility of issuance of a confirmatory order wnich does not l

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' accurately reflect the agreement reached by the parties. Whether or not the i

licensee or other person consents to any order, a person aoversely affected by-an order issued unoer 5 2.202 tu mooify, suspend'or revoke a. license will be offered an opportunity for a hearing pursuant to i 189 of the Atomic Energy

.c Act, consistent with current practice and the authority of the Commission to f

define the scope of the proceeding. See Bellotti v. IIRC, 725 F.2d 1380 (D.C.-

Cir. 1983).

The existing 6 2.202 vests authority to issue orders in the Executive

.i Director for Operations-(EDO), and various staff office directors. Currently, the rule limits the ED0's authority to issue orders to emergency situ 6tions.

l Existing 9 2.204 vests authority to issue orders in the Commission., The revised rules consistently vest iuch authority in the Commission, lec.ving it to the Commission's-internal delegation authority to delegate'such outhority to others. This change will avoid tne need to amend' the regulations each time the title of one of the' currently enuraerated officials is changed, ano it will j

R 61so remove the unnecessary limitation on the ED0's authority.

The Commission is retainiiig, in new 6 2.202(e), a provision that, upon a finding that the public health, safety or interest so requires or that the

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3 violation'.is willful, the proposed action may be immediutely effective. A similiar. provision appears in current 992.202(f)and2.204 A finding, in an

- order, of the need for immediate effectiveness is final and not subject to I

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administrative challenge. 1/ Relief from the requirements of an immediately q

effective order, un the other hand, may be sought under the relaxation

. provisions contained in that order, or by motion for o stay to the presiding officer if a hearing has been requested.

The proposed rule also continues, in 9 2.202(f), the backfitting requirements of 5 50.109,. including the provision therein that when immediately effective action is required, the documented evaluation may follow, rather then precede, the regulatory action.

Finally, consistent with the' changes to 59 2.202 and 2.204, i 2.1 is

-omended to specify tnat the scope of Part 2 includes the issuance of orders and orders to shnw ceuse to unlicensed persons, and i 2.700-is amended to spccify that Subport G (Rules of General Applicability) applies to all adjudications initiated by an order, rather than just an order to show cause.

L The proposed-amendments are procedural in nature. They do not establish the substantive standards or conditions under which the llRC would issue an l

oroer to a licensed or an unlicensed person. The Commission intenos to

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propose, in a separate rulemak1ng, a substantive addition to.1ts regulations in order to put unlicensed persons on notice that they may be held accountable for willful misconduct which undermines, or calls into question, adequate protection of the public health and safety. Once the proposed rules ore in effect, consistent with the Commission's statutory authority, there will be L

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Of' course, the Commission has the inherent power to review, sua p g,

orders issued by those to whom it has delegated autnority.

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i procedural rules governing the issuance of on orde,r or show cause order not only to a licensee, as currently provided, but also to an unlicensed person s

t who willfully causes a licensee to be in violation of Commission requirements-t er whose willful misconduct undermines, or calls into question, the adequate

. protection of the public health and safety in connection with activities r'egulated' by'the HRC under the Atomic Energy Act of 1954, as amended.-

An example of a situation in which it might be appropriate to issue an order to an unlicensed person is where an employee of a_ corporate licensee night willfully cause that licensee to be in violation of Commission requirements such that the Commission does not have reasonable assurance that requirements to protect the public health and safety will be followed if that-person continues to engage in activities licensed by the Commission. Another example woula be on unlicensed per. sun whq willfu.11y provides the Commission with materially false information; this would not, of course, include such -

persons who, in good faith, bring information or make allegations to the HRC.

concerning safety metters which, af ter review, are found to be.

unsubstantiated. Depending on the circumstances in these two cases, it might-be appropriate to issue an order to such a person to either prohibit the person from being involved in activities licensed by the Commission or require the person to provide prior notice to the Cummission before engaging in licensed activities. These types of concitions have been used tur the Commission in settlement of litigation in accordance with 10 C.F.R. 2.203.

Euward Hines, Jr. Iledical Center, 27 NRC 477, ALJ-88-2 (October 7,1988), and Finlay Testing Laborotories, Inc., LBP-88-17, 27 HRC 586 (1988).

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- This rulemaking establishes the procedures to be used in issuing orders

'to' licensed and unlicensed persons. The procedures establish the. mechanism to provice notice of.the issuance of an order and to resolve, through adjudica-tion.- whether a particular order is appropriate under the circumstances.

Environmental Impact: Categorical Exclusion The NRC' has-determined that this proposed rule is the type of action -

described in categorical exclusion 10 C.F.R. 51~.22(c)(1). Therefore neither-I an environmental impact statement nor an environmental assessment has been prepared for this-proposed rule.

Paperwork Reduction Act Statement This proposed rule contains no information collection requirements and therefore is not subject to the requirements of the Paperwork Reduction Act of 1

1980 (44 U.S.C. 3501 et seq.).

Regulatory Analysis The existing regulations in 10 C.F.R. 2.202 authorize the URC, through its designated officials, to institute a proceeding to modify, suspend, or revoke a license by service of an orcer to show cause on a licensee. The regulations, as currently written, do not provide procedures for the NRC to take direct action against unlicensed persuns whose willful misconouct causes a licensee'to violate Commission requirements or places in question reasonable assurance of adequate protection of the public health ano safety, although such action is authorized by the Atouic Energy Act of 1954, as amended. The

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1 emendments will' make the Connission's -Rules of Practice inore ' consistent with the Conaission's existing statutory authority and provide the appropriate procedural framework to take activo, in ' appropriate cases, in order to protect the public nealtn and.. safety. The amendments also will make clear that-(

hearing rights do not attach to orders to show cause, consistent with 9189 uf

' the atomic Energy Act of 1954, as amended, and the Administrative Procedure Act.

The proposed rule constitutes the preferred course of action.and the cost f

involved in. its promulgation and application is necessary and appropriate.

. Theiforegoing discussion constitutes the regulatory analysis for this proposed rule.-

Regulatory Fl.exibili,ty Certification As requireo-by tne Regulatory Flexibility Act of 1980-(5 U.S.C. 605(b)),

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the Conn'ission certifies that this rule, if acopted, will not have a signif-icant economic. impact on a substantial number of small entities. The proposeo rule establishes the' procedural mechanism to issue oroers to show cause to

. unlicensed persons in acoltion to licensed persons, who were previously covered. The proposed rule, by itself, does not impose any obligations on entities including any regulated entities that may fall within the definition 1

of "small entities" as set forth in 5 601(3) of the Regulatory Flexibility

Act,' or within the' definition of "small business" as found in 6 3 of the Small' i

Business Act,15' U.S.C. 5 632, or within the Small Business Size Standards

..found in 13 C.F.R. Part 121. Such obligations would not be created until an

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[' I order is 'ssued, at which time the person subject to the order would-ha"e a.

-f right to a hearing _in accordance with the regulations.

Backfit Analysis This proposed rule does not involve any new provisions which would impose-backfits as defined in 10 C.F.R. 50.'109(a)(1). Accordingly no backfit analysis pursuant to 10 C.F.R. 50.109(c) is required for this ' proposed rule.

List of Subjects in 10 C.F.R. Part 2 Aoministrative practice and procedure, Antitrust, Byproduct material, Classified information, Environmental protection, Nuclear nieterials, Nuclear power plants and reactors, Penalty, Sex discrimination, Source material, Special nuclear material, Waste treatment and disposal.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amenced, the Energy Reorganization Act of 1974, as amended, afic 5 U.S.C. 552 and 553, the NRC is proposing to adopt the following amenoments to 10 C.F.R. Part 2.

Part 2 -- Rules of Practice for Domestic Licensing Proceedings 1.

The authority citation for Part 2 is revised to read as follows:

l Authority:

Secs. 161, 181, 68 Stat. 948, 953, os amended (42 U.S.C.

2201, 2231); sec. 191, as amended, Pub. L.87-015, 76 Stat. 409 (42 U.S.C..

2241); sec. 201, 86 Stat. 1242, as amendeu (42 U.S.C. 5841); 5 U.S.C. 552.

Sec. 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105, 68 Stat. 930, 932, 933, 935, 936, 937, 938, as amended (42 U.S.C. 2073, 2092,

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E 2093, 2111, 2133, 2134, 2135); sec.102, Pub. L.91-190, 83 Stat. 853, as.

amended (42 U.S.C. 4332); sec. 301, 88 Sta t. 1248 (42 U.S.C. 58'1). Sections 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183, 189,.68 Stat. 936, 937, 938, 954, 955, asamended(42U.S.C.2132,2133, 2134,2135,2233,2239). Section 2.105 also issued under Pub. L.97-415, 96 l

Stat.2073(42U.S.C.2239). Sections 2.200-2.206 also issued under secs.

161b,1, o 106, 234, 68 Stat. 948-951, 955, 83 Stat. 444, os amended (42 U.S.C. 2201(b), (1)', (o), 2236, 2282); sec. 206, 88 Stat.1246 (42 U.S.C.

5846). Sections 2.600-2.606 also issued under sec. 102, Pub. L.91-190, 83 Stat. 853, as omended (42 U.S.C. 4332). Sectiov. 2.700a, 2.710 also issued under 5 U.S.C.-554.

Sections 2.754, 2.760, 2.770, 2.780 also issued under 5

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U.S.'C. 557. Section 2.764 and Table 1A of Appendix C are also issued under secs.135,141, Pub. L.97-425, 96 Stat. 2232, 2241 (42 U.S.C.10155,10161).

Section 2.790 ~ also issued under sec.103, 68 Stat. 936, as amended (42 U.S.C.

2133) and 5 U.S.C. 552. Sections 2.800 and 2.808 also 1ssued under 5 U.S.C.

553. -Section 2.809 also issued under 5 U.S.C. 553 and sec. 29, Pub. L.

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85-256, 71 Stat. 579, as amended (42 U.S.C. 2039). Subpart K also issueo under sec. 189, 68 Stat. 955 (42 U.S.C. 2239); sec. 134, Pub. L.97-425, 96 Stat.-2230 (42 U.S.C. 10154). Appendix A also issued under sec. 6, Puo. L.91-560, 84 Stat. 1473 (42 U.S.C. 2135). Appendix B also issued unde.r sec. 10, Pub. L.99-240, 99 Stat. 1842 (42 U.S.C. 20210 et seq.).

2.

s 2.1 1s revised to read os follows:

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$ 2.1 Scope.

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This part governs the conduct of'all proceedings, other than export and I

1mport licensing proceedings described in Part 110, under the Atumic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, for:

(a)-

granting, suspending, revoking, amending, or taking other action with respect to any license, construction permit, or application to transfer a license; (b) l issuing orders and orders to show cause to persons subject to the Comission's-j jurisdiction, including licensees and persons not licensed by the Commission;-

(c) imposing civil penalties under section 234 of the Act; and (d)- public rulema king.

3 3.

A 2.202 is revised to read as follows:

5 2.202 Orders.

(a) The Commission may institute a proceeding to modify, suspend, or

- revoke a. license or for such other action as nay be proper by serving on the licensee or:other person subject to the jurisdiction of the Conaission an

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order that will:

(1) Allege the violations with which the licensee 'or other person l

subject to the Conaission's jurisdiction is charged, or the potentially hare.rdous conditions or other facts deemed to be sufficient ground for the.

proposed action, and specify the action proposed; (2) Provide that the licensee or other person must file a written answer

-t to the oroer under oath or offirmation within twenty (20) days of its date, or such other time as may be specified in the order; (3)

Inform the licensee or other person of his right, within twenty (20) days of the date of the order, or such other time as may be specified in the i

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{ order, to dem6

_d' hearing on all or part of the order, except in a case whe're the licensee or other person nas consented to tne order;

-(4) Specify the_ issues; and (5) State the effective date of the order.

(b) A licensee or other person to whom the Commission has issued on l

order 'under this section must respond to the order by filing a written answer under oath or affirmation. The answer shall specifically admit or deny each allegation or charge made in the order, and shall set forth the matters of fact ocid law on whicn the licensee or other person relies, and, if the order.

.t is not consented to, the reasons as to why the order should not have been i

issued. Except as provided in (d) below, the answer mey demand a hearing.

i (c)

If the answer demands a hearing, the Commission will issue an order desigreating the time and place of, hearing.

(d): An answer or stipulation may consent to the entry of an order in substantially the form proposed in the order with respect to all or some of

'the actions proposed in the order.

The consent of the licensee or other person to whom the order has -been issued to the entry of an order shall constitute a woiver by the licensee or other person of a hearing, finuings of fact.and conclusions of law, and of all right to seek Commission and judicial-a review or to contest the validity of the oraer in any forum as to those uatters which have been consented to or agreed to or on which a nearing hos not'been requested. The order shall have the same force and effect as on order made af ter hearing by a presiding officer or the Conraission, and shall be effective as proviaed in the order.

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- 171-(e) When the Comission finas that the public health, safety, or-interest so requires or that the violation or conduct. causing the violation is willful, the order may provide, for stated reasons, -that the proposed action J

be immediately effective.

(f)

If tts crder involves the modification of a Part 50 license and is a I

backfit, the raquirements of 9 50.109 of this chapter shall be followed, i

unless the licensee has consented to the action required.

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'l 2.204 is revised to read as follows:

l 9 2.204 Order 2 show-cause.

. (a) The Commission may issue to a licensee or other person subject to the jurisdiction of the Commission on order to show cause why such actions as may be proper should 1ot be taken, which,will:

(1)' Allege ~the violations' with which the licensee or other person is charged, or the potentially hazardous conditions or other facts deeloed to be sufficient' ground _ for the proposed action, and specify the action proposed; and (2) Provide that the licensee or other person must file a written answer to the order to -show cause under oath or affirmation within twenty (20) days

'of its date, or such other time as may be specified in the order to show-

)

cause, (b) A licensee or other person to whom the Commission has issued an order to show cause under this section must respond to the order by filing a written answer under oath or affirmation.

The answer shall specifically admit or deny each allegation or charge made in the order to show cause, and shall 4

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set forth the matters of fact ond law on wilich the litersee or other person relies.

(c) An answer or stipulation raay consent to th+ entry of an order in substantially the form proposed in the order to snow cause.

(d) Upon review of the onswer filed pursuant to paragraph (a)(2) of'this section, or if no answer is filed, the Commission m6y institute a proceeding pursuant to 10 C.F.R. 2.202 to toke the action proposed in the order to show s

cause or such other action as may be proper.

-5.

5 2.700 is revised to read as follows: 2.700 Scope of subpart.

The general rules in this subpart govern procedure in all adjudications initiated by,the issuance of an'orcer pursuant to 5 2.202, an order pursuant to 5 2.205(e), a.

1 notice of nearing, a notice of proposed action issued pursuant to 5-2.105, or a notice ' issued pursu6nt to 52.102(d)(3).

Dated at Rockville, llaryland, this

' day of 1989.

u FOR THE UUCLEAR REGULATORY COMlUSSION j

j Sarauel J. Chi l k Secretary of the Commission l

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Enclosuro B-W d-q

~i DRAFT CONGRESSIONAL LETTER

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Dear Mr. Chairman:

Enclosed for your information are copies of a proposed rule ltd be published in the FederaltRegister.

-i The Comission is proposing to initiate a rulemaking to revise the

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. Commission's procedures in:10 C.F.R. Part 2, Subpart B, for issuing oroers to

-include persons not licensed by the Comission but who are otherwise subject to the Comission's-jurisdiction. 'The proposed amendnents would more _ fully reflect the Comission's existing statutory authority to issue orders than is

- presently the case, and will also clarify the _ types of Comission orders to which hearing rights attach.

r Sincerely,

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William C. Parler i

General: Counsel i

Enclosure:

- As stated j

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