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Responses & Objections to Proposed Findings of Fact & Conclusions of Law.Declaration of Svc Encl
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Issue date:	06/30/1983
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COMMITIEE TO BRIDGE TE GAP June 30,1983 1637 Butler Avenue, Suite 203 Ios Angeles, CA 90025 (213) 478-0829 UNITED STATES T AKERICA NUCIEAR REGUIATORY C0KMISSION EFORE TE ATOMIC SAFETY AND LICENSING BOARD In the Matter of Docket No. 50-142 TE REGENTS T TIE UNIVERSITY T CALIFORNIA (Proposed Renewal of Facility License)

(UCLA Research Reactor)

CBC'S RESPONSES AND 4BJECTIONS TO PROPOSED FINDINGS OF FACT AND CONCLUSIONS T IAV I.

Introduction Cn April 22, 1983, the Atomic Safety and Licensing Board rejected arguments by the Applicant in this case that more than 50% of the costs of owning and operating the UCIA reactor could be allocated to an activity representing less than 50% of the use of the reactor, and set for hearing before Alternative Board Member James Iaurenson the factual dispute as to the extent to which the reactor has been used for sale of services as opposed l

to research and development or education and training.

That hearing commenced on Pay 24, 1983, and heard evidence from Applicant, Staff, and CBG. Proposed findings of fact and conclusions of i

law were submitted by all parties, to which responses are being filed this 8307060369 830630 PDR ADOCK 05000142 O

PDR

. day. What follows represents the responses and objections of CBC.

i Burden of Proof Rests With Applicant It has long been established that the burden of proof in an NRC proceeding on a request for issuance of a license reets with the Applicant in the case. 10 CFR 2.732. This burden for the Applicant was made somewhat more complicated in this case because the overwhelming preponderence of the Applicant's own evidence and documents demonstrated conclusively that licensed functions for the reactor, primarily classroom instruction, represented about one tenth of total reactor use, with sale of services, particularly to private businessmen, representing considerably more than 50%

of total use.

Applicant chose to defend itself against these admissions against interest by attacking its own documents, its own methods raul procedures for recording use, and even at times its own staff who were responsible for preparing the records. If for over a decade UCLA had reported reactor usage to the Commission in terms of port hours (see CBG Exhibit C-18, for example, and Applicant's Exhibit 1), it spent much time at hearing attacking the accuracy of its own use representations. Understandable, perhaps, because its own usage tables showed only 31 hours3.587963e-4 days 0.00861 hours 5.125661e-5 weeks 1.17955e-5 months per year for class instruction in 1979 and 264 hours0.00306 days 0.0733 hours 4.365079e-4 weeks 1.00452e-4 months it itself labeled " commercial": for the following year its own records showed only 46 hours5.324074e-4 days 0.0128 hours 7.60582e-5 weeks 1.7503e-5 months for instruction and 360 for commercial users.

UCLA tried to change its own category " commercial" to " extramural" or " nonacademic".

It tried to compensate for the imbalance in use between commercial activity and instructional activity in its own charts by proposing a new measure for instruction (student-reactor-dependent hours), permitting the epxansion of the 30-50 actual instructional hours into one hundred times as many (even though the reactor is restricted to 438 hours0.00507 days 0.122 hours 7.242063e-4 weeks 1.66659e-4 months of full operation annually).

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

-lii-This masquerade didn't last long because Applicant's own witness (Ashbaugh),

who was to sponsor the new tabulation with the factor of 100 multiplier, admitted the new units (student-reactor-related hours) couldn't be compared with commercial usage in port-hours, that it was " apples and oranges," and that to be consistent UCLA would have to count in "down time" for commercial users as well, which ruined any advantage to UCIA by multiplying actual instructional use by a fudge factor, if a similar factor had to be applied as well to conmercial uses, which were far more numerous than instructional to begin with.

If anything, UCIA made C3G's case for it.

The least that can be said is that the Applicant failed to carry its burden to affirmatively and conclusively demonstrate that its reactor was used prirarily for what it claimed was its sole function, instruction.

Prefatory Comments Regarding Applicant and Staff Proposed Findings and Conclusions Because Applicant has the burden of proof, and because Staff's findings and conclusions are largely duplicative of Applicant's, CBG has chosen, in order to avoid being excessively repititious, to responi in detail to Applicant's proposed findings and conclusions. ~he responses and objections to Applicant's findings and conclusions are equally applicable to Staff's. A few general comments are in order regarding Staff's and Applicant's pleadings.

Both Staff and Applicant, in addition to proposing findings of fact ani conclusions of law, present lengthy material purporting to accurately summarize the contents of three days of hearings. These summaries badly mischaracterize the evidentiary record, presenting only those " facts" favorable to Applicant and leaving out any contrary evidence.

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iv-CBG, in its proposed findings and conclusions, did not attempt to do likewise, trusting the evidentiary record itself to be thoroughly scrutinized and be able to speak for itself. Moreover, CBG believes that a party has an obligation to present to a presiding officer facts of record even when one disagrees with them or they are contradicted by one's own evidence elsewhere in the record.

It was for that reason that CBG, in its proposed findings, put forth facts asserted by Staff or Applicant witnesses with which CBG disagrees and which were effectively disproven or rebutted by CBG witnesses or other evidence.

If, for example, Applicant's Mr. Robinson made assertions on the stand about allocating costs according to benefits or usefulness, one should not pretend that such opinions were not placed on the record, even if, as in that case, the weight of the evidence demonstrates that costs must follow usage, not usefulness, in this particular matter, as well as the clear language of the regulations.

Thus, CBG did not put forva::d, As did Staff and Applicant, a one-sided mischaracterization of the evidence and testimony introduced at hearing, nor will it burden the presiding officer with a lengthy correction of all asserted by Staff and Applicant to have characterized the hearings. CBG believes the record clearly demonstrates that the original purposes for which the reactor was built have markedly shifted in recent years, with scholarly research having become, by UCIA's own admission, "non-existent," and instructional uses, by its own records, limited to less than an hour a week, while sale of services has escalated to become far more than half of reactor usage.

UCIA attempted to counter these undisputable facts by throwing into the instructional tabulation everything but the kitchen sink, and trying to shrink its own count of commercial uses.

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-v-It should then not be taken as a sign of assent with Staff and Applicant's " summaries" of the hearing record that CIG does not burden the presiding officer with a point-by-point refutation, but instead focuses on the mitter before the Board, the proposed findings of fact and conclusions of law. And it should not be taken as a sign of a6reement with certain opinions expressed by Staff and Applicant witnesses that CBG has referred to them in its own findings of fact. CBG strongly telieves that the overwhelmin6 weight of the evidence goes against those opinions by Staff and Applicant, but that contrary facts or opinions of record should not be treated as though they didn't exist. The presidin6 officer is to be presented with all releva.nt facts of record, armi then decide where the weight of the evidence lies.

C3G is confident that, after reviewing the full record, the presiding officer will determine that the reactor has been used substantially for non-licensed purposes and is not entitled, witn the current profile of use, to a Class 104 license.

Brief Response to Staff Findings Most of CBG's response to Staff is basically the same as that to Applicant and is included in the detailed response that follows.

However, a few general comments are in culer.

i Staff correctly indicates that to assess cost allocation, comparable unt's of measurement must be used.

It then proceeds, however, to propese non-compa.rable units for measuring instructional uses versus commercial uses.

Staff proposes that Mr. Robinson.'s suggestion be adopted of adding "down time" to instructional uses, but not doing so for commercial users. Applicant's uitness Ashbaugh, as discussed in more detall later, who was responsible for preparing the data used by Mr. Robinson, said such units were " apples and oranEes" and not co: parable, and that to be comparable, "down time" (pre-start

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-vi-check-off, lab analysis time, etc. ) would have to be included for the commercial users as well., which would produce 3000 reactor-related hours of commercial use compared to the 440 reacter-related hours of academic use proposed by Mr. Robinson. Furthermore, Mr. Robinson said his opinion was based on his understanding, received in conversation with Applicant's counsel, that thecolumnoftotalhours/quarteronApplicant'sExhibit6wasactually the hours of each class truly dependent upon the reactor.

However, as testified to by the author of that chart, that column actually re resented all hours in the class, whether those hours were related to the reactor or not, that most of those courses only used the reactor a few hours, and t!u.t only one of the courses, currently with three students in it, coulnd't be taught if the reactor component of the class were not available.

Staff in findings atout actual time devoted to various uses inappropriately uses the 1976-1979 period, when the more appropriate period is 1976-1981, because comnercial activity did not begin in a big way at NEL until nearly the end of the period Staff uses. The acre recent period shows sale of services to private businesspeople averaging 232 5 port-hours per year, and instructional uses averaging only 47 5 per year, out of a total of 429 25 annually. Thus, instruction is about 11%, and sale to businesses (without consideration of other sales) 54% during the more recent. period.

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-vii-Alternative Remedies The Staff, despite the direction by the presiding officer to suggest an alternative remedy, has not done so.

The only discussion of the matter by Applicant is a short passage suggesting that UCIA report usage in the future in port-hou a of sale of service and student-reactor-related hours of instruction.

CBG's response to the apples-and-oranges accounting is detailed elsewhere. But it need hardly be said that a proposal to merely require UCLA to report _ usage, particularly in such obviously absurd units, is hardly a serious proposal.

UCIA has been in violation of the Atoaic Energy Act ani the NRC regulations with regards the terms of its research reactor licenses it has engaged in substantial use for sale of services, despite prohibitions to the contrary for any licensee with a Class 104 license.

It still refuses to take the regulatory requirements of such a license seriously.

The University has consistently claimed that thegritary purpose of the reactor--even though actual usage is contrary to that purpose--is instruction, and tlat there would be nothing but an incidental effect on that primary mission were the university to be forbidden from engaging in other activities such as sale of irradiation services.

(TR 162). The University should either be so restricted--which it has said would have nothing but an incidental effect upon it-or it must apply for the proper class of license, Class 103, if it continues to refuse to take seriously the requirements for and obligations of a Class 104 licensee.

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~ CBG'S RESPONSES AND OBJECTIONS TO FINDINGS & FACT AND CONCLUSIONS & LAW AS PRTOSED BY ApFLICAhT CBG's objections and responses are numbered to correspond to the appropriate finding or conclusion by Applicant, as follows:

1 Bis proposed finding, as it stands, is incomplete and thus irrelevant, because the issue to be resolved is not whether there is support of educational programs by the reactor, but rather how much educational usage there is in contrast to usage for sale of services.

Ib not be misleading, the finding should be restated:

One of the uses of the Nuclear Energy Iaboratory (NEL) reactor is for laboratory class instruction in support of educational programs at the School of Engineering and Applied Sciences as well as the Departments of Chemistry, Physics, and Earth and Space Sciences at UCLA.

(TR 12-13, 289-307, Applicant's Exhibits 5 and 6). Se reactor was operated an average of 47 5 hours5.787037e-5 days 0.00139 hours 8.267196e-6 weeks 1.9025e-6 months per year, or less than one hour per week, for class instruction over the 1978-1981 period, out of an average of 347 total hours of operation and 429 total port hours per year. Class instruction thus represents 11% of total port hours annually and 13 7% of total operating hours, 1978-1981 (Exhibit C-18, UCLA NEL Annual Reports 1978-1981; TR ff. 485, p. 5,6).

t For the period 1976-1979, the NRC Staff concluded, " Class instruction accounts for only 8% of the total hours of operation." (Applicant's Exhibit 1:TR 29).

No r.atter whether measured in port hours or operating hours, class instruction represents less than 15% of total reactor operation.

(ibid. )

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' 2.

Same objection as for the previous finding.

It is misleading to say the reactor is used for the named course without indicating how much or how little that use is.

The findin6 shoult! be restated:

Four courses offered by the School of En61neering use the reactor En6 neering 135 AL and BL, 1

during some portion of the course. These ares half courses offered once per year with approximately 8 students each; Engineering 135 F, also a half course offered once per year, currently with three students in its and En61neerin6 139A, a full course in Chemical, Therm 3. and Nuclear Engineerin6 in which one of the eight experiments conducted durin6the class uses the reactor, required of 25 students per quarter.

(TR 288-307, 346, 349, and Applicant's Exhibit 6). Aside from 135F, only a stall part of the courses involve the reactor.

(Applicant's Exhibit 5, p. 1,2,4).

Reactor academic hours for the classes (which includes non-power " console time") are estimated by Applicant as 9 hours1.041667e-4 days 0.0025 hours 1.488095e-5 weeks 3.4245e-6 months arnually for 135 AL and EL, 28 hours3.240741e-4 days 0.00778 hours 4.62963e-5 weeks 1.0654e-5 months annually for 135F, and 3 hours3.472222e-5 days 8.333333e-4 hours 4.960317e-6 weeks 1.1415e-6 months annually for 139A, for a total of 49 reactor academic hours per year.

(Applicant's Exhibit 6). Actual reactor operating time for the classes would be approxir.:ately half of the " reactor academic hours".

(TR366,488-492).

3.

Same objection. The finding should be restated:

The reactor is used approximately one hour per year by each of the following three courses offered by departments outside the School of Engineering Chemistry 184, Earth and Space Sciences 298, and Physics 180A. Those courses average approximately 16, 6, and 10 students per year respectively.

(Applicant's Exhibit 6).

4 This finding could readily be misread to indicate that the reactor performs research, whereas the record clearly established that it no longer performs research and that its primary activity is sale of irradiation services to others, in competition with commercial labs. Furthermore, the phrase " supports research" is misicading because the applicable regulations define acceptable activity for research reactors as conduct of research.

(10 CFR 50.21 and 22), sale of services g researchers (i.e., what Applicant attempts to call support of research, as opposed to conduct of research) does not make the seller of those services engaged in the conduct of the research performed by a researcher who purchases the services.

To more accurately reflect the facts, the finding should be restated as follows:

The reactor no longer performs research its principal usage now is sale of irradiation services to businessmen as well as academic customers, in competition with commercial labs.

(CBG Exhibits C-15, p. 4: C-20, p. 3, 35:

C-21, -23, -24, -25. -32: Applicant's Exhibit 1: TR 19, 113-114, ff 485, p. 1-6, TR 239, 241).

A commercial firm selling conputer software, lab equipment, lab analysis services, or tacos to entities involved in research does not cease to be involved in commercial sale of services because its customers may use those services for research.

(TR 713, 725, 567-571, 577-581).

It is the nature of the activity, not for whom it is provided, that determines whether sale of service is occurring. (ibid. ) This is particularly true when, as in the UCLA case, UCLA is co mpeting with commercial firms for the same customers for the same service.

(Exhibit C-32: C-20, p. 35: TR ff 485, p. 5: TR 239, 241)

No one on the Nuclear Energy Laboratory staff even holds a research appointrent at UCIA.

(TR 113).

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. 5 This finding is misleading because the overwhelming evidence at hearing was that these uses were improperly categorized as "research."

Er. Ostrander testified that the "research" category was a catch-all for anything that didn't fit under instruction or maintenance that NEL means by the term "a quantity that is available to somebody" that "almost anything that involves a sample of radiation, it gets classified as research": that

'we don't mean that we are essentially conducting research in some aspect of reactor physics at.y more." qR19.135)Er. Ostrander testified further that no scholarly research is conducted at NEL (TR 114) and that the " experiments" categorized as research under "NEL users" on Applicant's Exhibit 2 included such matters as gem irradiations, which Mr. Ostrander indicated was not

" scholarly research" (TR 118) but was included under "research" because it was something that caught the fancy of one of the NEL staffpeople. (TR 117).

Mr. Ostrander further indicated he defined " experiments" as used in context of NEL staff users' research as something that meets the fancy or interest of an NEL staff person, so long as it isn't unsafe and can be done in connection with some other run.

(TR117).

It was also demonstrated that included in Applicant's Exhibit 2 as research were considerable numbers of hours of

" parametric variation" (adjustment of two valves to reduce Argon-41 emissions from the reactor) that Mr. Detrander admitted should not be categorized as research.

(TR115-116). Thus. both the designation of Applicant's Exhibit 2 l

l and data contained therein are inaccurate. A more accurate representation is contained in the Table at pa6e 4 of the CBG testimony following TR 465, i

and therefore the proposed finding should more properly read:

The table at page 4 of the testimony following p. 485 of the transcript shows the number of port-hours by various cust mers in the sale of services category of activity for the NEL.

(TR ff. 485. p. 3 -6).

. 6.

Same objection as for 5 above.

It was undisputed that the category "research" was merely a catch-all category for all uses not maintenance or instruction, that it did not involve scholarly research at NEL and was primarily if not exclusively devoted to providing of irradiation services.

(see citations for 5). The finding should read:

The recipients of the irradiation services provided by the EL reactor ares private businesses, individuals at colleges and universities other than the University of California, UCLA users, and NEL staff users.

During the 1978-1981 period, irradiation services were provided an average of 232 5 port-hours per year for private businesses, 37 port-hours for other colleges and universities. 91 for UCIA users, and 17 for NEL staff users.

over 50% of all port-hours were for private businesses: over 80% of all usage was involved in sale of services if customers at other departments or other colleges are included.

(TR ff. 485, p. 4 and 6).

7. As for previous findings, this is objected to because it is irrelevant and misleading to indicate that the reactor has been used in support of educational programs at other colleges without indicating how much or how little such use there has been. Board Question 5 explicitly directs parties to address the extent to which the reactor is used to support educational programs at other universities.

The finding should be restated The reactor has been used an average of 7 hours8.101852e-5 days 0.00194 hours 1.157407e-5 weeks 2.6635e-6 months per year d.: ring the 1976-1979 period and an average of 4.25 hours2.893519e-4 days 0.00694 hours 4.133598e-5 weeks 9.5125e-6 months in the 1978-1981 period for support of instructional programs at other colleges and universities, as well as high schools, in the Southern California area.

(Applicant's i

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In addition, UCIA does "a few jobs" of sample irradiations for students from other institutions through a Reactor-Sharing Program.

(TR151-152).

8.

Same objection as to mischaracterization as research.

In addition, tm.

discussion of the fees received by UCIA for sale of sample irradiation services is incomplete. The finding should be restated:

The hEL provides sample irradiation services for a fee to academic users from UCIA, acadenic users from others institutions, and to private businessmen. The se.wice is the same, the billing format is the same, and the $65 fee per port-hour is the same, whether assessed for academic or non-academic users., (TR 43,44,49,139,121.) If the Applicant's claim is correct that it costs $13 per hour to provide the service, then the Applicant is making a profit.

(TR89-91, 638, 718).

If Staff's witness Peterson is correct that it costs $722 per hour to operato the reactor for commercial customers, then there is a substantial subsidy from the taxpayer that produces unfair competition with commercial firns providing the same service.

(TR ff636,

p. 4, supplement p. 2: TR717). UCIA undercuts the price of commercial competitors by an order of magnitude.

(Exhibit C-32, TR ff 485, p. 5: TR 239, 241).

This program is for irradiations for students, not faculty, of other universities, and does not involve instructional uses of the reactor for other institutions, which is included under " Demonstrations" in UCLA's charts. The category "other colleges and universities" is for sanple irradiations for individuals st other academic institutions. (TR 151-152, 20)

. 9. The second sentence in this proposed finding is irrelevant.

There was considerable evidence presented at hearing that use of the reactor means operation of the reactor, that consideration of "down time" would be a " morass" because there is no way to accurately quantify it, and that if one were to consider "down time," one would have to do so for all users (commercial as well as instructional) which would more than cancel out any gain to the instructional category (Dr. Kalil alone said he spent more than ten times as much time working at the reactor facility when the reactor wasn't operating as when it was, for a total of 60 hours6.944444e-4 days 0.0167 hours 9.920635e-5 weeks 2.283e-5 months per week).

(TR 719-722, 254, 564-565). Furthermore, the NRC's jurisdiction is limited to licensed functions, which is operation (the requested license is for an operating license). The tours of the facility, as opposed to demonstration of the reactor operations, could be conducted whether UCLA had a license or not. (572-573). For these reasons the finding should be restated:

Demonstrations of reactor' operations are conducted for high school students and various engineering organizations. These are included in the UCLA usage charts under " demonstrations," along with instructional uses for other colleges and universities, and account for between approximately 4 and 7 hours8.101852e-5 days 0.00194 hours 1.157407e-5 weeks 2.6635e-6 months per year.

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l See discussion and citations for finding 7 above.

-e-10 Same objection as for 9 above. Applicant is trying to i

cover up the reality of its own data that instructional uses of thereactor account for only 10% of actual reactor uses.

It does so by throwing in hundreds of unrecorded hours of "down time" for the instructional side, while refusing to consider "down time" for the commercial side.

As witness Baefsky put it, cost allocation must be done in units that are comparable and measurable, and these non-reactor uses are neither.

If one is to consider down time, one must allocate it based upon usa 6e of operating time.

(TR 647,648). Applicant attempts to convert four classes which only used the reactor an hour into over 100 hours0.00116 days 0.0278 hours 1.653439e-4 weeks 3.805e-5 months of reactor-dependent instruction l

(Exhibit 6), whereas its own sponsor of that data indicated that none of those L

classes were dependent upon the reactor, all could continue to be offered were the reactor not operable, that those lecture and lab hours were on other portions of the course unrelated to the reactor, ard that coccaring these "down time' hours for instruction to port hours or operating hours for commercial users would be inappropriate, because they are " apples and oranges."

(Exhibit 5.

Ta347-9,369-373,377-379).

ft. Ashtaugh further testified that he included all the hours that a class meets per year in the category " reactor dependent,"

even if the reactor were only used one hour, or in the case of his extension I

class, three hours, during the quarter.

(TR381-384). Applicant's witness Ash'mugh further testified that if one were to be consistent, one would have I

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to include " reactor-dependen t" down time in measuring commercial users as well, i

which UCIA has not done, which would account for 3000 reactor-dependent hours for Dr. Kalil alone, far in excess of the total class time ascumed for all the supposedly " reactor-dependent" classes. (TR 392-393).

TM roposed finding should be restated:

Use of the reactor is limited to the time it is actually operated.

9 If one were to consider "down time" (i.e., supposed benefits when the reactor is off), one would have to do so equally for commercial uses as well as instructional uses, and commercial uses would remain far in excess of instructional ones.

11.

Misleading and irrelevant. There are only three student reactor operators.

(TR 349).

Most of their console operating time is included in the charts already under Engineering 135F, the class for reactor operators in which they get credit for their training. Any additicnal console time is minimal, as witness Ashbaugh indicated that they wculd come, watch a start-up, and then leave when the reactor became operational "because there's not much educational value in watching a reactor at full power." (TR 324). The finding should be restated:

There are currently three students being trained as reactor operators most of their training takes places in Engineering 135 F, the course fcr reactor operator trainees.

In addition to formal training, they may on occasion watch reactor start-up and then leave when the reactor becomes operational.

(In 324, 349).

12 Irrelevant and nisleading. Again Applicant refers to a supposed

citations in paragraph above.

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l use of the facility (as opposed to the reactor) when the reactor is off, without indicating the minical nature of such activity. As indicated above, students from other institutions use the reactor only 4-7 hours per year.

And the radiation safety " instruction" students using the NEL facility receive is just the brief required indoctrination of anyone who must visit a radiation area--equivalent to the " lecture" provided by airline stewards in where emergency exits are and how to use oxygen masks in case of problem in flight.

Furthernore, no data are provided as to the extent of such supposed

" instruction."

(TR 162) 13 Incomplete.

It was undisputed at hearing that maintenance of the reactor when it is not operating is vital to the use of the facility for educational and commercial activity. Restated:

Paintenance of the reactor when it $s not operating is vital to the use of the facility for educational activity as well as sale of services.

Maintenance costs are incurred whether or not the reactor is operating and must be allocated according to use of the reactor when it is operatirg.

(TR649: 650 654: Eaefsky supplemental prepared testimony, I 5: 574).

14 Same objection as for findings 9 and 10 The reactor functions when it functions: it is not functioning when it is off.

The record indicates that its support of the education program when not operating is restricted to being available to be operated, although it is likewise also available to be operated for commercial purposes. (TR 648, 719-722,727-728). Restated :

The UCLA reactor functions like other educational tools of the University in that it performs its function when it is operating, and is not performing its function, but rather is available for use, when not operating.

When available for use, it is available for commercial as well as educational uses.

(TR648,719-722,727-728).

15. This is clearly and thoroughly contradicted by the evidence, including by the Applicant's own witness who made the original statement.

Furthermore, what the stated justification is for the reactor is irrelevant to the proceeding at bar, which is to determine reactor usage.

Mr. Ostrander testified that actual usage was just the opposite of his assertions about reactor purpose, that primary usage in terms of reactor activity was commercial.(TR98)

Mr. Baefsky testified that the purpose of cost accounting was dollar accountability, determining that the purposes for which money had been authorized had been met by expenditure of that money for that purpose.

Based on his review of the data, usage had changed so that the ori6 nal purpose for the reactor 1

was no longer being met.

(Baefsky written testimony, p. 2-5).

Restated:

The original purpose for the UCLA reactor was education, but usage has dramatically altered so that education now represents only approximately 10% of use and sale of services, other than research and development or education and training, represents considerably more than 50% of use.

Sale of services to commercial firms alone represents more than 50% of reactor us e.

(Baefsky written testimony, p. 2-5: Hirsch/Aftergood testimony,

p. 1-6, TR 98).

16.

slight error of fact. Correctly stated:

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Reactor operation is limited by the terms of its license to no more than 438 full power operating hours per year, or about 8 5 full power hours per week.(TR 23).

. 17-19 No disagreement.

20.

Neither citation supports the statement. Furthermore, the stated purpose is but one of several purposes for recording hours "at-power."

Restated:

Purposes for recording hours "at-prver" include reporting requirements to the NRC, keeping track of uranium fuel burn-up and Argon-41 production, billing, and cost allocation among various components or uses of operation. TR 247-248, 256-255-257, Exhibit C-18, 596-597) 21.

The finding would be more accurately stated as follows:

" Port-hours" are a neasure of user demani for the reactor.

TR 503-504 The reactor has several sample irradiation ports and the three vertical ports could be in use at the same time. Both academic and businessmen users are billed on the basis of the number of ports they use per operating hour.

The university receives $65/ hour from each user of a port, so it could receive

$65, $130, or $195 for one hour of reactor operation, depending on the number of ports in use. Fort-hours are measured at power. TR 27-28, 30, 33, 35.

22 This proposed finding is strongly disputed in the record Restated:

Port-hours are the only measure of reactor i

use the Applicant has hept its records in, are a good and fair method of measuring usage, and, as indicated in finding 1 atove,even if measured in operating hours as opposed to port-hours, instructional uses of the reactor (claimed to be the cole purpose) represent less than 15% of reactor operation.

(citations for finding 18 7T2565-566:582-582,653,662-663,707.7c9,703-704). The only l

better way of measuring usage might be kilowatt hours, as that is an accurate measure of the consumption of the licensed commodity: uranium.

(TR663,594-6).

23. While billing is one purpose of the supervisor's logs, or use logs, it ic not the sole purpose. Should be restated:

The reactor supervisor raintains his own records of reactor use, referred to as the supervisor's log or use log, which record use in porthours.

Among the uses of the log is billing the various reactor users for service irradiation and summarizing reactor usage for annual reports to the NRC.

(TR 549, 602, 740, 589, 597, Applicant's Exhibit 1, CBG Exhibit C-lS).

24 Same objection as for finding 10 As indicated there, usage must be tied to operation or else it becomes a morass.

If "down-time" is included in u mge, it must for all users. All users require pre-start check-off, and post-shutdown lab analysis, which would more than cancel out any such "down time" for classes. Furthermore, the "down-time" truly dependent upon the reactor in the class instruction category is very srall, (Mr. Ashbaugh testified that of his 50 or so " console hours" half or more were at power. Exhibit 6 TR 366,488-492). UCLA has included the entire l

course as reactor-dependent, even if only one of the eight experiments involved the reactor or only one of twelve clasc sessions involved the reactor, as in the cases of Eng 139A and Engr-Ext 497.17 respectively.

(citations for finding 2: TR381-383).

Restated: as in finding 10 i

1

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25. To be more precise, the finding should' be restated:

approximately 920 of the 940 port-hours reported for commercial users for the period 1978-1981 were for sample irradiations done for a single customer.

Dr. Eail Kalil's Uranium West Company. (TR 45, 205, p. 4 Hirsch/Af tergood testimony). This represented an average of osar 50% of all porthours operated by the reactor during those years.

(pc 4, Hirsch/Aftergood testimony).

26. Irrelevant. The previous four years, as indicated above, were greater than 50% of operation. Should be restated:

Over 50% of the reactor usage 1978-1981 in the category "research" (representing sale of service irradiations) were sale of services to private businessmen.

(p. 4,6 Hirsch/Aftergood testimony). Even if averaged over j

the 1972-1981 period, sale of services, excluding to NEL Staff Users or other UCLA Users, was more than 50% of the so-called "research" category.

(TR7243 Exhibit 2).

27. Incomplete and thus misleading.

Mr. Ostrander testified the running meter was installed only recently, so all records of concern are uniform in method of recording uses also he testified that any variation in method of recording use would account for only a few minutes difference anyway.

The following should be added to the proposed findings i

Dr. Kalil testified that his business didn't begin until around 1978. TR 206

. The running time meter was only installed in February of 1983, so all records prior to that time would be uniform in method of recording operations the remainir.g differences would only account for a few minutes.

(TR157-158,130). Any discrepancy in recording operations would apply equally to commercial as well as instructional uses, and the discrepancy for instructional uses was not particularly exaggerated one way or another.

TR 130

28. Absolutely irrelevant. While UCIA might be interested in gau61ng " educational productivity" of the reactor (and the one attempt to do so concluded it was very unproductive compared to most other such lab tools--Exhibit C-15, p. 4), the regulatory test is not one of productivity but of usve.

(10 CFR 50.22: see also legislative history and statement of consideration for the regulation, discussed in CBG previous b ting. )

han Applicant's own accountant disagreed with such a method for allocating costs.

(TR445-6). Such a method inflates the 1 hour1.157407e-5 days 2.777778e-4 hours 1.653439e-6 weeks 3.805e-7 months per quarter of reactor use for Engineering 139A into 1500 " annual student hours of reactor dependent instruction" (in part by inflating reactor operating hours into " console" hours, adding to that all other hours a particular class meets, whether those sessions are related to the reactor or not, and then multiplying by the number of students in the class.) The result is more hours than the reactor is permitted to run, by nearly an order of magnitude.

Kr. Baefsky called such an approach a "potpurri," saying "they've thrown everything in the hopper is what it amounts to,"and that to do so without using similar units for measuring commercial usage (i.e., including all down time for connercial users and multiplying, for example, by the number of their cli*nts or employees dependent upon the reactor) is comparing " apples and oranges."

Er. Eaefsky said, "if you want to ;;::,tch apples and oranges and come up with a compote,

. you can do that, but you could not do this in accounting.

They're not compatible in that sense..."

(TR357-8,374-379). Applicant's witness Ashtaugh admitted that commercial hours in port-hours and educational hours in student-reactor-related hours were not comparable. " apples and oranges",

and that if one were to use such units in measuring educational usage one would have to do so for commercial users as well, which would ond up with the educational side at not advantage.

(TR374-379,390-393). Should read:

The educational usage of the reactor cannot be measured by adding to operating time all hours listed in the course catalogue for courses using the reactor, no matter how small that use may be, and multiplying by the number of students in those classes. Educational usage of the reactor must be measured in the same units as commercial usage--hours of operation.

(citation above).

29. Same objection as to 14,24, and 28 above.

In addition, the regulation says the reactor is deemed to be a Class 103 licensee if it is to be used so that more than 50% is devoted to sale of services. While allonting costs according to benefits (as crqcasd by Applicant's accountant) er stated wrpose (as proposed by Staff's analyst) might be a permissible form of accounting (although this is strenuously disputed by CIC's accountant),

it is irrelevant to the proceeding at hand. The Regulation (10 CFR 50.22) has already defined the method of cost accounting to be used--not allocation ksed on benefits derived, not allocation based on stated purpose, but allocation of costs tased on use of the reactor facility for which the operating license has teen requested'.

Mr. Eaefsky eloquently indicated that allocation according to tenefits or stated purpose is " absolutely incorrect". (TR 720).

He nald it is incorrect "because morality and subjective judgment cannot be a tat:ia for acco unting financial reports..." (T: 720).

You cannot measure benefit

._- or usefulness in accounting terminology, Mr. Baefsky saids if you want to assess benefits or usefulness, you need a " philosopher or a sociologist,"

not an accountant. TR 720, 652 The regulation requires the costs be allocated according to usage, and fund amental accounting principles make it impossiblo and incorrect to attempt to allocate costs according to some subjective judgment (as opposed to objective, comparable and measurable means).

To start assessing " benefits" would nullify the regulation and the Atomic Energy Act provisions at issue here, because a stated purpose of education, no matter how minimal the actual usage, or inflated non-objective judgments al:out

" educational benefits" could also be used to be claimed to cutweigh commercial usage, no matter how many times larger that actual use was than the educational, as in the UCLA case. The regulation specifies the measurs is one of use, arri purpose and benefits are thus irrelevant to the proceeding.

Lastly, it has already been indicated that the educational benefits exist only when the reactor is on, and that if one were to attempt to assess "down-time",

one would have to do so also for comnercial users, who clearly, as in Dr. Kalil's case where most of his work and thus income comes from lab analysis when the reactor run, would far outweigh any increase for the educational side.

30 Previously objected that " console time" is irrelevant because only part of the time involves the licensed arena of the reactor, operation, and that if it is to be considered (and it is found nowhere in the logs) it must be considered for commercial users as well, who require the same pre-start check-offs, etc.

l 1

i I

31. and 32. No disagreement.

\\

33. Absolutely not. The sole supposed support for this statement is a single unsupported statement of intent by an employee of the facility, j

who on cross-examination admitted that the actual utilization of the facility i

was such that only 10% of actual use was in the educational arena.

(TR 93) l 1

This is totally conclusionary, and c ontradicted by the weight of the evidence which says that costs of staffing the NEL must be allocated according 5

to usage (Baefsky testimony, 1-6).

The Board has already ruled on this, j

that 50% of the costs cannot to allocated to an activity comprising less than 4

j 50% of the use, as Pr. Ostrander (with no training in accounting) attempta to do by this statement. Costs must follow usage, as the Board has already l

determined: the only issue at hearing is what has been the usage.

Pr. Ostrander 4

l admits that only 10% of the usage has been educational, thus only 10% of I

the costs can be allocated to educational use, with the reasining 90% to I

other activities, primarily sale of irradiation services, which it. Ostrander j

admits is the primary activity of the reactor, (as ho agreed, " selling neutrons.")

f TR 121, 98). The statement should read:

i 10% of the costs of staffing the NEL are incurred in order to maintain the reactor as an educational tool.

(citations above: 689,696-8).

34 Totally irrelevant and misleading.

If commercial activity by the reactor were eliminated (as CBG urges), there would be substantial change in allocation of costs from the sale of service activity to other uses.

As Mr. Baefsky stated in his test,imony, the fbcal point of the reactor has changed and staff activities formerly devotod to research or education

. _ - are now devoting their activities to support of sale of services. TR 696.

The elimination of research from activities conducted by the reactor (one of its original purposes, now dried up) and replacement with commercial activity resulted in a change in where and for what costs were being expended.

If commercial activity were to cease, or research activity commence once again, that would have to be reflected in the allocation of costs.

(TR 718)

Furthermore, Mr. Baefsky concluded that "if the commercial usage declines, unless the educational usage increases, there'll be a very embarassing situation for the University, in terms of unit costs of education." TR 726.

Correctly stated:

If sale of services by the reactor was eliminated, or scholaziy research commenced once again at the reactor, or educational usage increased substantially, the allocation of costs for these various activities would change. If there were sufficient change in usage, the reactor could move f2na the current situation where it is used so that more than 50% of costs are devoted to sale of services, other than research and development or education and training.

Note once again that the regulation makes very clear which cost allocation l

method to use (allocation according to use), and that Applicant's assertion I

that only indirect costs be allocated goes squarely against the regulation and proper cost accounting methods furthermore, the Board has almady so ruled.

l i

. l

35. should read:

The primary businessman user of the UCIA reactor is Dr. Emil Kalil.

Non-businessmen also purchase irradiation services from the UCIA reactors the services received, the fees charged, are the same. These are services available from commercial labs, who are underbid by UCIA's sales price.

TR 44-48, and citations for finding 4).

36. Irrelevant. The issue is not what he did when a graduate student (which is a legitimate educational or research function), but UCIA's letting him " set up shop" as a commercial business at the reactor and becoming its primary user. Restated:

After Dr. Kalil lef t graduate school, he was permitted by UCIA to " set up shop" at the UCIA reactor, out of which he runs his commercial business.

Dr. Kalil's Uraniua West Company has been in the last few years the reactor's largest user.

(TR 44,48,201, 45, 205).

37. Irrelevant.

Mr. Ostrander testified that there is so little class instruction, and it is scheduled so far in advance, that there aren't conflictslikely.(TR 131-132). And it is irrelevant to how much Dr. Kalil uses the reactor.

38.

Irrelevant.

Dr. Kalil made very clear that he acted as a commercial lab on contract to Bendix Corporation, selling lab analysis services, and that his involvement was purely as a businessman.

(TR 223-224, 226, 244-245).

Restated:-

'--w+g-

+-

-r t

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,ye sew--

cc--

,-e y

w

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. Dr. Kalil's company, Uranium West, is solely and entirely a for-profit business enterprise, engaged in selling laboratory analysis services for a fee.

(same citations as above).

39. Totally irrelevant and largely misleading.

Dr. Kalil testified he has no academic appointment at the university, he lectures once or twice a year in someone's class as a favor, no one at NEL knows how to use the equipment he has left there in storage for his own use in his business, and that he viewed the few hours of time he gives informally outside of normal academic classes to students as part of the exchange with NEL for letting him run his business out of their reactor.

(TR226,235-238).

Restated:

In exchange for $65/ port-hour and some in-kind transfers, Uranium West Company has been permitted to " set up shop" at the UCIA reactor and operate its business out of the reactor. The charge to Dr. Kalil's company is far less than the several hundred dollars per hour charged by commercial labs, and operation of the reactor for sale of services to customers such as Uranium West has represented more than 50% of total reactor use, with class instruction representing approximately 10% of total use.

(Hirsch/Aftergood testimony, p.1,3-6 226, 235-238, 44, 48, 201, 45, 205).

l l

RESPONSES TO APPLICANT'S PR@0 SED CONCLUSIONS & IAW 40 Absurd. The fact that Dr. Kalil is an alumnus in no way justifies tuxler the applicable regulation permitting his company to set up shop at the UCLA reactor and make sale of services the primary usage of the reactor. 10 CFR 50.22 forbids more than 50% of use for sale of services:

there is no exemption for altucli. -

The fact that only a portion of operating costs are recovered from the sale of services in no way makes it not a sale of service.

Dr. Kalil testified that he is a commercial enterprise whether he makes a profit or not.

(fR 235). Furthermore, UCLA has asserted (Exhibit 4), that it costs $13 per hour to operate the reactor for users such as Dr. Kalil, yet they charge

$65 per port-hour (i.e. $65, $130, or $195 per hour, depending upon how many ports are being used). Applicant's own witnesses admitted that was a profit (TR89,91). CBG's accountant confirmed this (Baefsky testimony, p.TR 587:8,718).

If Mr. Peterson's figures are correct as to what it costs to operate the reactor for an hour, then there is a substantial subsidy by the taxpayers for the commercial enterprise, unfairly competing with commercial companies

((Baefsky testimony and supplemental testimony, TR717).

In either case, the UCLA reactor is being operated in violation of 10 CFR 50.22, which was designed to prevent reactors at universities, protected under Class 104 licenses, from unfairly competing with commercial firms.

Fore than 50% of the usage is sale of services, and morethan 50% of the costs of ownir4 and operating the reactor are thus devoted to sale of services, according to the regulations ani the Board's decisions in this matter to date.

( _ _

~ ~ ~~~ ~ ~

l

)

- 41. Similarly absurd. The University's own usage records indicate that the reactor is no longer used for scholarly research, only used a few hours per quarter for instructional purposes, and that far more than 50% of its use is sale of services to private businessmen (more than 80% of total use is sale of services irrespective of customer). The University's "in 11ght of all the circumstances" tells nothing, and its assertion that a detailed allocation of the costs is not required is in direct centradiction of 10 CFR 2.732, which places the burden of proof squarely upon the Applicant, a burden it has not met. The vast weight of the evidence demonstrates conclusively that UCIA is in violation of 10 CFR 50.22, exceeds the Atomic Energy Act's " substantial use" test, and that the reactor simply isn't used for the purposes licensed.

Its research function has vanished, instruction is less than an hour per week, and hundreds of hours per year are spent in sale of services, in direct competition with commercial firms not similarly protected and subsidized.

42. The Boari has already ruled that this leads to an absuri conclusion.

UCIA wishes one to believe that 98% of the costs of operating the UCLA reactor are devoted to less than 10% of its activity. As indicated previously, and agreed to by the Board in this case, such an interpretation of the regulations would nullify both the rule and the law, requiring the reactor to operate core hours than there are in the year for commercial purposes to ever be considered a Class 103 licensee.

30 hours3.472222e-4 days 0.00833 hours 4.960317e-5 weeks 1.1415e-5 months of instructional use would be larger than 8760 hours0.101 days 2.433 hours 0.0145 weeks 0.00333 months of commercial sales use under UCLA's formula, which is abstrd and contrary to law and accepted accounting principles, as has already been decided by this Board. The issue to be resolved is merely how much reactor j'

use has been commercial as opposed to instructional; the matter of the

i appropriate accounting method has already been resolved by the Board.

And the answer to the use question is clears more than five times as much use is for commercial customers as is for the licensed educational function, only 10% of use is instructional and more than 50% is sale of services to businesspeople.

43. Same response. Substantially more than 50% of the use of the UCIA reactor is devoted to the sale of services, other than research and development or education and training, and thus more than 50% of the costs.

The UCIA reactor is not entitled to a Class 104 license. It has violated the applicable regulations and statutes, and refuses to even suggest a license condition that would requize it to start obeying a regulation it should have been obeying from the beginning. UCIA is not entitled to a Class 104 license. Unless drastic changes are enforced in UCIA'r. usage profile (hundreds c.f hours per year for sale of services, less than 50 for instruction and none for scholarly research), and obedience to the regulations strictly enforced under penalty of loss of license, the law prohibits grant of a Class 104 license.

1 e

Respectfully, submitted.

[b h-t%7Cb sch Dated at Ben Lomond, CA COEKITTEE TO ERIDGE TliE GAP this 30th day of June,1983 l

UNITED STATES OF APERICA NUCIRAR REGUIATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of Docket No. 50-142 THE RECElffS OF THE UNIVERSITY

& CALIFORNIA (Proposed Renewal of Facility License)

(UCIA Research Reactor)

DECIARATION OF SERVICE I hereby declare that copies of the attached: CEG'S RESPONSE TC PRCPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW in the above-captioned proceeding have been served on the following trf deposit in the United States mail. first class, postage prepaid, addressed as indicated, on this dates & 10. 1083 John H. Frye, III, Chairman Christine Helwick Atomic Safety & Licensing Board Glenn R. Woods U.S. Nuclear Regulatory Commission Office of General Counsel

$90 University Hall Dr. Emmoth A. Imebke 2200 University Avenue Adminis trative Judge Berkeley, CA 94720 Atomic Safety & Licensing Board U.S. Nuclear Regulatory Commission Mr. John Bay,

Washington, D.C. 20555 3755 Divisadero #203 San Francisco, CA 94123 l

Dr. Glenn O. Bright

)

Administrative Judge Atomic Safety and Licensing Board g,, g ggf U.S. Nuclear Regulatory Commission Deputy City Attorney Washingtai, D.C. 20555 City Hall 1685 min Street Chief. Docketing and Service Section Office of the Secretary Dorothy Thompson U.S. Nuclear Regulatory Commission Nuclear Law Center Washington, D.C. 20555 6300 Wil eire alvd., #1200 Ios Angeles, CA 90048 Counsel for E SM U.S. Nuclear Regulatory Commission Judge James A. Iaurenson Washington, D.C. 20555 Atomic Safety ani Licensing Soard Fanel attention:

Ms. Colleen Woodhead U.S. Nuclear Regulatory Commission Washington, D.C. 20555 f

William H. Cormier Ms. Carole Kagan, Esq.

Office of Administ:ative Vice Chancellor University of California Atomic Safety and Licensing Ecard Fanel U.S. Nuclear Regulatory Commission 405 Hilgard Avenue Washington, D.C. 20555 Los Angeles, California 90024

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Daniel Hirsch President COMEITTEE TO BRIDGE THE CAF

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ML20072K664

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