ML20072T517

Response to ASLB 830323 Memorandum & Order Memorializing 830223 Prehearing Conference.Motions for Summary Disposition of Contentions II & Xviii Should Be Dismissed.Burden to Show Absence of Genuine Dispute Not Met.Certificate of Svc Encl

ML20072T517
Person / Time
Site:	05000142
Issue date:	04/04/1983
From:	Hirsch D COMMITTEE TO BRIDGE THE GAP
To:
References
ISSUANCES-OL, NUDOCS 8304080169
Download: ML20072T517 (47)

Text

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CCD2TTEE TC 3 RIDGE THE CAF April 4, 1983 N $' U 1637 Butler Avenue, Suite 203 los Angeles, CA 90025 (213)478-0629 ,83 APR ~7 P2:27 Ct ,._ .

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i UNITED STATES CF AEERICA . ORANcy

, NUCLEAR REGULATCRY COM'ISSION 3EFCRE ThE ATCEIC SAFETY AND LICENSING BOARD In the Matter of Docket No. 50-142 OL THE REGENTS OF THE UNIVERSITY CF CALIFORNIA (Froposed Renewal of Facility License)

(UCIA Research Reactor) f RE5FONSE TO PREHEARING CONFERENCE EEKORANDUM AND CRDER OF MARCH 23, 1983 I. PREFACE On February 23, 1983, the Atomic Safety and Licensing Board held a prehearing conference in los Angeles. On Earch 23, 1983, the Beard issued a Eemorandum and Order, ruling on certain matters

discussed at the prehearing conference and in subsequent conference calls on Earch 9 and 11. That Eemorandum and Order, inter alia, directed CBG to brief certain matters identified therein, primarily with regards -

legal arguments as to Staff and Applicant motions for siimmary disposition as to Contentions II and XVIII, and to the Board's sua sponte consideration of dismissing subpart l' to Contention XIX. CBG respectfully complies with the Board's Order, despite certain reservations identified herein, and responds to certain other matters raised in the Board's Order.

1/ The due date was extended, by Board permission, from April 1 to April 4 8304080169 830404 PDR ADOCK 05000142 G _

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II. INTRODUCTICN I

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l A. Background '

On September 1 and 3,1982, the NRC Staff and the Applicant respectively submitted motions for summary disposition. These motions requested summary dismissal of, among others, Contentions II, XVIII, and XIX. The Board, in its Orders of October 22 and November 10, 1982, 5

established a bifurcated response procedure whereby a responding party would first indicate which asserted material facts it disputed and on what basis and then, if necessary, respond to legal issues of materiality and relevance of facts found nn+ in dispute.

rt January 12, 1983, CBG submitted, according to the bifurcated response procedure, a statement indicating which of the asserted material facts put forth by Staff and Applicant as undisputed CBG did in fact dispute. Citations to declarations and other documents were provided, as directed, to demonstrate that the facts were indeed' subject to dispute.

By Femorandum and Order of January 28, 1983, the Board tentatively concluded that genuine disputes of fact exist with respect to the key facts, i conclusions, and assumptions underlying UCIA's and -Staff's fundamental-i positions. This finding was detailed further in the Board's February 8,1983, j Kemorandum and Order, which denied the motions for summary disposition-of Contentions V, XIX, VII, XV, XII, and XIV and, to the extent indicated therein, XIII.

2] See p. 2, Order of-November 10, 1982: Judge Frye's sn=ry, TR 799, February 23, 1983, prehearing conference.

]/ " Response by the Committee to Bridge the Gap to Motions for Summary Disposition by the Staff and Appl.a. cant," dated January 12, 1983 3.>* r.&# .-

_3 At the February 23, 1983, prehearing conference, counsel for the Applicant requested an early hearing on Contentions II (" Wrong Class of License") and XVIII (" Financial Qualifications"), recommending Eay.

TR 922. The Board agreed to take up the Motions for Surnary Disposition -

of those two contentions as a first step to determining whether a hearing is required. The Board thus directed CBG to brief the legal matters (phase 2 in'the bifurcated procedures) not addressed in its phase 1 response to the facts asserted not to be in dispute.

CBG objected, indicating that the Board had not yet, as contemplated in its bifurcated procedure, ruled on which facts, if any, were subject to dispute. In its Parch 23 Memorandum and Order, the Board made the factual ruling, determining that UCLA's sole fact in support of its motion regarling Contention II was disputed, and that two of Staff's four facts as to that contention were likewise disputed, and similarly ruled .on the asserted facts regarding Contention XVIII. In that Order, and despite the determination that facts asserted by Staff and Applicant to be material were disputed, rather than denying summary disposition after Phase One, as it had regarding the inherent safety contentions, the Icard directed CBG to brief the legal consequences of the facts found to be subject of genuine dispute. CBG has certain objections to this procedure. outlined below, and remains somewhat confused as to whether the Board intends to rule now on the disputes or merely.whether the Applicant is _ entitled as a matter of law to grant of its summary disposition motions. If the former were the case, CBG would have additional-concerns.

Y The City of Santa Monica, is a- March 15, 1983, letter to the Board, likewise objected, noting that the sole " fact" put forth by Applicant in support of its Motion for Contention II appeared to be a legal conclusion, "in which case the motion must be denied because no facts whatsoever ,

have been put fotth to demonstrate lack of dispute or foundation for the legal conclusion." The City further indicated-that if_ the key facts were indeed disputed, then there was no need to go'to Thase 2.

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3. Objections to Procedure Regarding Contentions II and XVIII The Beard has ruled that the sole fact put forth by Applicant I

in support of its hotion for Summary Disposition of Contention II is subject

} to genuine dispute. On that basis alone the Applicant's Eotion must be 4 denied, as the Applicant has failed to demonstrate that a single materia _1 fact is undisputed. There is no need to go to Phase 2.

The Board has ruled that .the two key facts put forth by Staff are subject of genuine dispute. (CBG did not dispute the other two, judging them to be irrelevant, as they make no mention whatsoever of research, educational, or commercial uses or costs of the facility, but merely identify the total direct and indirect costs of operation.)

If the disputed facts are material and relevant, as asserted by Staff, then summary disposition must be denied, because the facts are subject to genuine dispute, as determined by the Board. If the Staff is wrong l and the facts are immaterial ard irrelevant, then grant of summary disposition must rest entirely on the two undisputed facts, which don't even address the commercial /research-educational issue of the Contention and are

.thus totally insufficient to support a grant of summary-disposition.

In either case, there is no need for Phase 2.

CBG has similar concerns about Contention XVIII. The Board has ruled that certain facts put forward as material and relevant and undisputed by Staff and Applicant are indeed disputed. But rather than denying the motiens for summary disposition, the Board has directed CBG to brief the relevance and materiality of the facts concerning the NEL budget about which there is argument. This appears to CBG to be a shifting of i

l burden from the movants to the respondents contrary to summary diseosition' rules.

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In establishing the bifurcated sumary disposition procedure, the Board explicitly indicated that Phase Two would consist of discussion of the legal consequences and materiality and relevance of any facts fourd not g dispute. See p. 2, November 10, 1982, Orders and statement by Judge Frye, TR 799 Howevir, the Earch 23 Order directs CBG to brief these legal matters with regards the facts found by the Board to be M dispute.

See p.14, e.g. , Farch 23 Order.

CBG's concern is not merely that this recent direction appears to be at variance with the procedures laid down by the Board earlier, but that there was good reason for those initial procedures.

The facts found to be in dispute by the Board were facts put forth by the movants in the summary disposition attempt, not by CBG.

Staff and Applicant have already asserted that the facts are relevant and material, and that their legal conclusions are dependent upon them.

The Board has ruled that these facts are subject of genuine dispute.

The moving party in summary disposition has the burden of demonstrating that its cited facts are both undisputed and material / relevant.

Summary disposition can be defeated by showing either that the facts arc disputed g that the undisputed facts are irrelevant or immaterial.

But it is not the burden of the responding party to show that. disputed facts put forth by the movant and asserted by the movant to be material and relevant are indeed material and relevant. The moving party has already admitted their materiality and relevance.

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-6a-Other elements of the procedure directed in the Earch 23 Mer appear to CBG to shif t burdens properly on the movant for suu:ary disposition to CBG, the respondent. As has several times been repeated in this case, such use of summary disposition to shift burdens is not permitted A summary judgment is neither a method.of_ avoiding the necessity of proving one's case nor a clever procedural gambit 4 whereby a claimant can shift to his adversary his burden of proof on one or more issues.

United f stes v. Dibble, 429 F. 2d 598, 601 (9,th Cir. 1970)

At several points in the March 23 hemorandum and Order, the Board appears to be directing CBG to demonstrate that a hearing is necessary to resolve the disputes the Board has determined to genuinely exist. While CBG is sympathetic to the desire to avoid hearings if not necessary (a matter addressed below), placing the burden on CBG to demonstrate that a hearing h required appears to shift normal summary disposition burdens away from the moving party, who has an affirmative duty to demonstrate the absence of material facts in dispute and the propriety, as a matter of law, of a ruling favorable to it on the contention, without a hearing. This the movants have failed to do, and their burden should not be shifted to CBG. The right of response should be preserved, but the burden remains with the moving party.

g When a response to a summary disposition motion has _been provided, the record and affidavits both supporting and opposing the motion must be viewed in the light most favorable to the opposing party. Moreover, i the party seeking summary disposition has the burden of showing the absence of a genuine issue of material facts if it fails to_ do so,' summary

. disposition will not be granted irrespective of the quality of any response.

' Fennsylvania Fower and Light Company and Allegheny Electric Cooperative. Inc.

(Susquehanna Steam Electric Station, Units 1 and 2), LBF-81-8,13 NRC 335 (1981).

-6b-Lastly, C3G perceives some confusion as to whether the Board intends merely to rule en the summary disposition motions, based on the papers, or to go further and rule on any of the disputed matters.

The latter course, as indicated by the City of Santa Eonica in its Farch 15 letter, "would go well beyond summary disposition rules." As we see it, what is before the Board is a determination as to whether the Staff and Applicant have met their respective burdens in their summary disposition motions and are thus entitled, as a matter of law, to dismissal of the contentions in questions. If there are material facts in dispute, or they are not entitled as a matter of law to the conclusion requested, then the motions must be denied.

Some of the confusion as to whether under consideration is a decision on the contention on the papers (i.e., without a hearing) or merely decision on the summary disposition motions is due to UCLA's desire for an early resolution of these matters, initially expressed as a request for a May hearing on the issues, and the understandable desire of all concerned to reduce .the buzdens associated with full hearing on all the various matters contested in this proceeding.

CBG shares-these concerns, perhaps as much or more than others in the proceeding, because of its very limited financial resources and the fact that the reactor continues to operate-in its current configuration until such time as these matters are finally resolved. Thus, CBG would not automatically be opposed to voluntarily giving up its right. to hearing on certain contested matters and resolving instead certain matters through submission of formal written material. _ .

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~7-However, the current arrangement (if irdeed the Board is contemplating going further than a summary disposition ruling on Contention II ani XVIII tased on the filings to date) would significantly prejudice CBG's interests in these matters.

CBG's January 12 response to the Staff and Applicant summary disposition motions was for the purpose of demonstrating disputes existed with regards the asserted material facts put forth by the movants.

The response was based en the procedures for summary disposition put in place by the Board. It was not inteided as a final and comprehensive pleading, detailing all the evidence that supported CBG's position in the dispute or identifying all the disputed facts, but merely a sufficient showing to demonstrate that the movants' facts were indeed disputed and thus summary disposition should be denied. To rely on CBG's factual presentation in its January 12 response to summary disposition for more than determining whether the asserted facts were disputed would prejudice CBG's ability to put before the Board the range of facts in its possession which would be useful to the Board in reaching its decision on the contested iss'tes.

A Furthermore, because CBG complied with the Board's requests made at the June 1982 prehearing conference to not move for summary disposition in any but narrow areas readily conducive to summary disposition, while the Staff and Applicant did not, to make evidentiary decisions based on CBG's responses in the absence of an affirmative presentation would be, in addition to going beyond normal summary di@ osition procedures, to effectively penalize CBG from complying with Board requests. -

CBG is entitled as a matter of law te hearing on any and all matters in contention for which Stcff and Applicant motions for summary disposition are legally insufficient to meet the substantial burden for grant of summary disposition. The motions in question'are clearly insufficient.

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in this regard, and CEG's right for hearing should not be involuntarily abrogated. CBG is willing to discuss procedures whereby certain catters in contest could be expeditiously decided by written submissions in lieu r

l of formal hearings, but use of the current summary disposition procedures l

for such an end is inappropriate and unfairly would damage C3G's rights in the proceeding. The burden of proof in these matters rests with the Applicant, even more so in summary disposition than at hearing, and CBG would object to any measures which serve to shift that buzden.

C. Legal Standards for Crant of Summary Disposition The Commission's Rules of Practice provide for suFJRary disposition of certain issues where it can be demonstrated incontrovertibly that there is no genuine issue as to any material fact and that the movant is entitled to a decision as a matter of law. 10 CFR 2 749(d).

s The Commission's rule authorizhg summary disposition is analogous to Rule 56 of the Federal Rules of Civil Procedure. Alabama Power Cn. (Joseph M. Farley Nuclear Plant, Unit 1 & 2), ALAB-182, 7 AEC 210, 217 (1974).

We standard for summary disposition is very high. 'De motion can only be granted where it is quite clear what the truth is and where there are no genuine issues of material fact that remain for hearing. Tennessee VaHey' Authority (Browns Ferry Nuclear Plant, Units -.

1,2,F3),LBP-73-29,6AEC682,688(1973).- The record will'be viewed in the light most favorable to'the party opposing the motion. Poller v.-

CBS, 368 U.S. 464, 473 (1962); Crest Auto Supplies.-Inc. v.- Ero hanufacturing Co.,

360 F. ~ 2d 896, 899 (7th Cir.1966) United Mine Workers of America,' Dist.- 22

v. Rnneco, 314 F. 2d 186, 188 (10th Cir. 1963). The Commission follows these same -standards with regards summary disposition motions filed under

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10 CFR 2.749. Cleveland Electric nluminating Co. et al. (Ferry irclear Fower Plant, Units 1 & 2). ALAE-443, 6 NRC 741, 754: Public Service'Co.

nf New Hant;sliire (Scatrock Station, Units 1 & 2) IJF 74-36, 7 EC 8'/'/, C79 (1974).

Furthermore,theburdenofproofliesuponthenovantfor,summarydirpositdon l

uho must demonstrate the ab ence of any genuine issue of raterial factJ

,. a Adickes v. Kress and Co. , 398 U.S.144,157 (1970): Eict, AIAS-443, sup, at 753: .

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determining, without a hearire;. Na merits c2' b.riues(ihere genuine T}

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to be used in ily the opposite situatio,n* Werp\o genuy. dippute' exists

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as to any material fact, so that no hearing on thd mater fp ndgr.sary.

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• 3 A contention will not be summarily dispose (.of, one way or angth)r.r: Where <

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of mterial fact. Enuston Lighting and Power Coi,cany Q.fisna Cree *t Nuclear v, . > i l ', - x.

Generating Station, Unit 'l), ~IEP-81-34,14 N NRC 637 (1981)i .0 .

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ultimate inferences might reasonably %e; drawn < acisab h,o phich. a reasouble' person might differ, the case ,is ddt, sai+$ble f spM$ \

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Sankovich v. Life Insurance Comiahy, of North, America, M3FF.

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disposition motions sud therefore 'aus't ,'t ss'a ratter's of laL4, te' des.V,d, }2 j~ ,.

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III. CONTENTICN II (*"ECI:C CLASS C7 LICENSE")

A. Introduction CBG has'shown, and will :h ow further herein, that the activities, 4

utilization, function, and purpose of the UCLA reactor have radically altered since the original class 104 license was granted, and that s

the purposes for which the license was originally granted (research and

.c education) have tecome almost non-exister.t, replaced instead with virtually I

4 exclusively commercial activity, in violation of the requirements for class 104 licenses. CBG will show that the commercial activity admitted by the Applicant exceeds by an order of magnitude the educational functions of the reactor, and that considerably more than 50% of the use of the reactor is, by Applicant's own admission, commercial (which the Applicant

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now calls " extramural.") CBG will show, further, that, the Applicant' has f#

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" ffj consistently attempted to disguise this fact, reporting the commercial activity for years as "research," even denying the existence of records of the commercial activity, records it clearly possessed. C3G will demonstrate, in addition, that the latest attempt by Applicant to disguise

the true use of its facility, which violates the requirements of Class 104 licenses, is through an accounting fiction which allocates close to 100%

/ of the costs of owning and operating the facility to an activity representing just a few hours per year and only 7 to 12% of the actual operation.

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t i The Applicant's accounting violates..both the spirit and letter of the applicable

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B. 3ackernund UCLA's Nuclear Energy Iab, which operates the reactor in question, has been reporting, both to the School of Engineering and to the NRC, its activity in three categories--research, education, and gaintenance.

C30, inits contentions, asserted that the bulk of the activity reported as "research" was not actually research as such but actually commercial activity for outside profit-making companies, activity primarily consisting of ore-assaying for a mining concern and gem-coloration for jewelers.

This assertion was confirmed in a Fay 13, 1980, reply by UCIA's Dr. Wegst to questions submitted by the NRC Staff requesting a more detailed breakdown after noting that classroom instruction accounted for only 8% of usage in 1979. Dr. Wegst's reply indicated that that year only 31 hours3.587963e-4 days <br />0.00861 hours <br />5.125661e-5 weeks <br />1.17955e-5 months <br /> were devoted to instruction, whereas 264 hours0.00306 days <br />0.0733 hours <br />4.365079e-4 weeks <br />1.00452e-4 months <br /> were, in the University's own classification, " commercial." That represents, in the Applicant's own terms, roughly 60% of usage as commercial, and only 7% for the licensed purpose, instruction. The remaining hours are in a gray area, j much of which is properly interpreted as commercial as well. Only 1 hour1.157407e-5 days <br />2.777778e-4 hours <br />1.653439e-6 weeks <br />3.805e-7 months <br /> was reported that year for experiments by the Nuclear Energy Iab.

This lack of actual research uses of the facility is made clear as early as the 1976 Annual Report (internal) for NEL, which states at page 38 Technological changes influence reactor demand, and adaptability to change through finding new markets for reactor services continues to influence reactor productivity. %e reactor is no longer new, and reactor physics research projects with the UCLA reactor have become non-existent. Se advent of the Medical Cyclotron on the UCIA campus has displaced the reactor in the field of medical radioisotope production. .

M Mr. Cormier at the February 23, 1983, preheming conference denied that the reactor has been used for gem coloration for commercial jewelers.

CBG is prepared to produce, if necessary, copies of the University's own records indicating such activity for gemologists A. Sirosi and S. Green.

Some of this reactor usage was classed as " commercial" or " extramural" and some as "NEL Experiments" all has been categorized under the general tegory "research response " ev nadmit dated 11'9-81 the hitAp licant nous in con o no res ibution nse to interrogator to sch61arl II-30 research by .the gem coloration and says it makes no such claim.

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Elsewhere in the same Annual Report it is indicated that the reactor staff have been " shopping around" for customers for its services because'the educational and research uses have dried up.

However, the NRC was not informed of the chancing use of the reactor, and the (external) annual reports to' the NRC simply grouped all the commercial activity into a "research" category. In answers to interrngatories II-30 through II-34, Applicant on Noventer 9,1981, admits that its use of "research" as a description for the commercial activity ,

is not the traditional university definition, that it knows of no scholarly benefit associated with the activity, and that the ere-assaying and' gem-coloration for outside profit-making firms was called "research"'because Applicant defined "research" for reactor purposes as any activity not educational or mintenance.

This unwillingness to be candid about the actual use to which the reactor was being put was characteristic of the Applicant throughout this case to date. It took three Orders to Compel from this Board to finally get answers to four interro6atories about commercial us '

use which the Applicant consistently denied.- When it, became clear that the records Applicant denied existed. documenting the commercial use, did indeed exist, the Board was forced to threaten the University with sanctions and its attorneys with contempt citations. Since that time the University has' reclassified its " commercial" category as " extramural activity" (although it has stipulated that- tne . sole " extramural" users .

arecommercialfirms)kcontinuedtoclassifysuch.useas"research" ,

// Orders of December 22,1980 ("Ve find it difficult to believe a sophisticated '

university does not have in its accounting records the information.being sought."):

Farch 10,1981,("Once again,- we direct UCLA to be open and candid... Ve will not' allow this duty to be compromised...by gamesmanship.")s May 29,1981,("UCLA's-letter...is' unacceptable and blatantly insulting from a great- university to this

-Beard. Enoughisenough.")

' 8] Eay 29,1981, Order directed UCLA to "show cause" within ten days why, sanctions shouldn't .be imposed and its attorneys cited.

of See, e.g., Applicatien amendmonts .of 4-30-82, P.1III/1-7;

ara clained thousands of " student-reactor-related heurs" which turn out, when checked against the actual operating records, to be vastly inflated.

The latest accounting deception is but part of a larger pattern of such deception on this issue by the Applicant, an attempt to obscure the insic fact that the purposes for which the reactor was originally designed and licensed essentially no longer exist, and that the basic function of the reactor is commercial.

i The Legal Standard for a Class 104 License C.

Sections 103 and 104 of the Atomic Energy Act established two basic classes of reactor licenses, one being commercial, and the nther being useful for, medical therapy or for research. The Atomic Energy Act mandated that the reactors licensed under Class 104 (e.g. for research) be given certain advantages over Class 103 licensees, because they were of greater social usefulness. The primary benefit they were to receiyu was that the oommission was directed to " impose only such minimum amount of regulation of the licensee as the Commission finds will permit the r Commission to fulfill its obligations under this' Act to promote the common defense and security and to protect the health and safety of the public and will permit the conduct of widespread and diverse research and development."

On December 19, 1970, Public Law 91-560 was enacted whi.ch made several amendments to the Atomic Energy Act. Nag of_ these amendments were focused on changing the provisions of sections 103 and 104 of the Act in order to facilitate the licensing of facilities which were actual commercial and industrial facilities.as class 103 commercial and industrial facilities. The legislative history of the Act clearly shows that Congress ' anticipated that some class 104(c) . licensees (e.g.

university-based non-power reactors) might be using th'eir facilities for industrial and commercial purposes'. and established ~ a " substantial. use"

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test for determining if such use was sufficient to require licensing under Section 103:

The committee is auare that university-licensees under subsection 104 c., and other licensees under subsections 104 a. or 104 c.,

snnetines use these reactors for industrial or commercial purposes. It is the intm tion of the committee that such insubstantial use nnt affect licensing under section 104 hewever. should the Commission find that any facility so licensed is being used substantially for industrtil or commercial purposes, then the Commission shall determine whether such use is sufficiently substantial ta entail licensing under section 103.

S. Rpt. 91-1247,12st Cong. , 2nd Sess. , September 29, 1970 Thus, the Congress clearly indicated that a university reactor could be sometimes (e.g., occasionally) used for commercial purposes without affecting its class 104 license, so long as such use was not substantial.

Hnwever, should the facility be used substantially for commercial' purposes, the facility would not be entitled to licensing under section 104 The reasons for this substantial use test, as intended by the Congress are clears that other commercial or industrial reactors should not be subjected to the unfair competition of reactors being similarly used but favored by the regulatory benefits of a Class 104 license, and that the public should not be subjected to the extra risks associated with minimally Class 104 regulated / reactors if the reactor is actually being primarily used for the less socially-useful purposes properly classed under Class 103 The Atomic Energy Commission, based on the directive received

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frm the legislative history quoted above, proposed and adopted amendments to 10 CFR 50.22 to define the circumstances under which research/ development /

training reactors 'would be considered to be used substantially for l'ndustrial and commercial purposes. This definition of the Congressionally-mandated

" substantial use" test is that currently found in 10 CFR 50.22:

...Provided, however, That in the case of a production or utilization facility which is useful in the conduct of research and development activities of the types specified in section 103 of the Act, such facility is deemed to' be for industrial or commercial purposes if the facility is to be used so that nere than 50 percent of the annual cost of owning ant Jua .w u.- - -- -- '

l l operating the facility is devoted to the production of raterials, products, or energy for sale or commercial distribution, or to the sale of services, other than research and developnent or education or training.

(emphasisadded)

Note that the enabling regulation, as in the legislative history, makes-the test one of how the reactor is used.

A useful analogy can be_found in IR5 regulations, where the Congress granted non-profit educational organizations under section 501(c)(3) special benefits because of the additional social benefits they provide as compared to profit-making organizations (these special benefits provided .

under the Code including freedom from certain fees and taxes), so long as they do not engage to any substantial' degree in any non-exempt activities such as for-profit business or involvement in electoral campaigns.

The IRS code defined " substantial" as approximately 20% for activities such as lobbying. In the NRC case, " substantial" was defined as 50%,

considerably more substantial.

The Atomic Energy Commission, when it published the rule in 1973 that defined the " substantial use',' test, as required by the Congress, explicitly anticipated the precise situation which is presented to the Board by UCLA. The following excerpts from the Federal Register set forth the reason for the rule ad the context in which it was promulgated:

On October 15,.1971, the Atomic Energy Commission published-in the Federal Register (36 FR 20051) proposed amendments to 10 CFR part 50 of its regulations which unuld define' the circumstances under which research and development an1 training reactors will be considered to be used "substantially for industrial ~  !

or commercial purposes", and thus licensable by the Commission l under section 103 of the Atomic Energy Act of.1954, as amended ('Ihe l Act)...

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

. . . The legislative history also shows that the Congress was aware that some applications for facilities to be licensed under section 104c. as research reactors might also be considered "for industrial or commercial purposes" if such reactors had such a purpose to a significant extent LS. Rept.

No. 91-1247, 91st Cong. , 2d Sess, at 28 (1970y. Such facilities might include. for example, research reactors that are used to produce radioisotopes for sale or that are used for neutron radiography on a commercial basis.

38 FR 11445 (Tuesday, Eay 8, 1973)

(emphasis added)

Thus, the Comnission and the Congress anticipated virtually the precise situation before this Boards a university "research" reactor used substantially for industrial or commercial purposes such as neutron activation analysis on a commercial basis.

Applicant is a university licensee holding a class 104(c) license. Sen. Rept. 91-1247 raises the precise issue of substatial commercial use by a class 104 licensee in the context of a university class 104 (c) licensee. In the final rule cited above, the Commission cites as its example a research reactor used substantially for neutron radiography on a commercial tasis. This closely parallels the type of. work which constitutes the majority of ih e use to which the UCIA reactor is put.

• Se question, then, is whether UCIA meets the " substantial use" test.

10 CFR 50.22 define that substantial use test as being met when the facility "is to be used so that more than 50 percent of-the annual cost of owning and operating the reacter is devoted to . . . ~ sale of services

. . . " This standard must be interpreted and applied in such a manner as to carry out the intent of Congress and the Commission as' set forth above. Applicant's and Staff's interpretation of the phrase when examined in light of the legislative history is clearly erroneous.

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

-_ ______-__.m_ _ . _ _ . _ _ _ _

L. Staff /Antlicant Wuld Nullify Both Law and Regulatien Staff and Applicant claim that in 1980-1981 the direct costs for use nf the reactor were $224,000, and that adding in the indirect costs trings the total to $337,000. CBG does not dispute these facts:

they are, in fact, the only facts put forth on this contention by the 3taff and Applicant that the Board has determined not to be genuinely disputed.

The Applicant's own records reveal, in addition, that in calendar year 1980 (the Applicant's usage figures are kept in calendar, as opposed to fiscal, year) 65% of the reactor usage was commercial, or " extramural." (360 hours0.00417 days <br />0.1 hours <br />5.952381e-4 weeks <br />1.3698e-4 months <br /> were categorized as cormercial, up from 264 the year before only 46 hours5.324074e-4 days <br />0.0128 hours <br />7.60582e-5 weeks <br />1.7503e-5 months <br /> were categorized as instructional,~.with the remaining users in the gray area referred to at page 11.) Ye't the Applicant asserts that this does not constitute " substantial use"!

In fact, the Applicant asserts that less than 2% of the costs of owning and operating the facility are properly attributable to'that 65% of the use. Applicant performs this accounting magic by attributing to the commercial use only the costs of turning the electricity and water on,-

and attributing all other costs to the educational functions of the facility, the 30-50 hours per year of instruction. By this charade the Applicant attempts to assert that more than 98% of the costs should be attributed to an activity that represents less than 10% of tha use.

Setting aside for the moment that this approach is inconsistent with accepted accounting principles, as demonstrated in the Baefsky ,

declaration, applying the Applicant's standard (and the -Staff's acceptance of it) in real life demonstrates its total absurdity.

% -ms -W b,,m' p,-

Applicant ani Staff assert that the 360 hours0.00417 days <br />0.1 hours <br />5.952381e-4 weeks <br />1.3698e-4 months <br /> in 1980 devoted, ty their own admission, to commercial activity, represent less than 2% of the costs of owning and operating the facility, as defined'in 10 CFR 50.22. How much cer w eial activity, then, would have to occur according to their proposed standard for the UCI.A reactor to indeed be properly classified as a Cla~ss 103 reactor? Obviously if 360 hours0.00417 days <br />0.1 hours <br />5.952381e-4 weeks <br />1.3698e-4 months <br /> of commercial use represents less than 2% of the costs, it would take rore than 25 ti:nes as many hours to exceed the 50% threshhold. 25 times 360 hours0.00417 days <br />0.1 hours <br />5.952381e-4 weeks <br />1.3698e-4 months <br /> is 9000 hours0.104 days <br />2.5 hours <br />0.0149 weeks <br />0.00342 months <br /> of commercial activity per year. There are, of course, only 8760 hours0.101 days <br />2.433 hours <br />0.0145 weeks <br />0.00333 months <br /> in a year.

Thus, were one to accept Applicant's and Staff's interpretation of the regulation, the UCIA reactor could operate twenty four hours a day, 365 days a year, for commercial purposes and still not lose its research reactor license! One day's worth of instructional use, accortiing to their interpretation, more than compensates for 364 days' worth of commercial activity. Their interpretation would obviously make both the Atomic Energy Act provisions and the regulations a nullity.

Taken to the other extreme, UCIA's argument is equally absurd.

If the 48 hours5.555556e-4 days <br />0.0133 hours <br />7.936508e-5 weeks <br />1.8264e-5 months <br /> of educational activity in 1980, or the 31' hours in 1979, qualify the reactor for a Class 104 license, no' matter how many commercial hours there are, how few hours could the UCLA reactor be used for educational uses and still be a Class 104 licensee. simply because UCIA declares that the primary purpose of the reactor is that educational use, no natter how minimal? Would only 20 hours2.314815e-4 days <br />0.00556 hours <br />3.306878e-5 weeks <br />7.61e-6 months <br /> per year so qualify it? Would.

10? One hour? Half an hour? ~ A few minutes?

Given the. UCIA and Staff interprehtion what is to prevent .

a commercial power plant'like San Onofre or Rancho Seco from using the

. facility one day a year for educational purposes like. bringing in students-frem the lecal college for lectures ~on nuclear engineering and declaring,

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___m____._.m_____-m---

as does UCLA, that the purpose of the reactor is education, that all the ecsts of nwninE and operating the reactor shnuld be attributed to those hours of education, and that the commercial use should only have attributed to it the incidental costs? What would prevent San Onofre, then, frem qualifying as a Class 104 licensee, Bettin6 exempt from all but the most miniral insurance under Price-Anderson, exempt from the various fees, mandatory hearing and ACRS and anti-trust review, and so on? Under the interpretation put forward, any reactor can be classed as Class 104, merely by declaring its purpose to be aducation or research, irrespective of theactual use to which the reactor is put. Such a charade makes a mockery of the law and is a patent attempt to circumvent the intent of Congress.

E. (Yfer of Prnnf CBC can demonstrate, by documents, testimony of witnesses, and other evidence,the following:

1. That research and educational uses of the reactor have in recent years sharply dropped.

2. That during the same period commercial use has sharply risen.

3 That in the last few yean education has represented about 10% of the reactor use, research has become non-existent, and commercial use has been considerably' above 50%.

4 That the reactor is no longer operated for the purposes for which it was originally licensed, that its true usefulness has shrunk to just a few hours' per year, and that; its primary -

activity now is commercial.

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'5 That its commercial activity, under the protection of a Class 104 license, produces unfair competition with commercial companies.

The above can be put forward a+ hearing or, by agreement of the parties, in some other fashion. It may not be necessary, however, as most of the material comes from documents of the Applicant and thus constitute admissions. There really is no dispute about the primarily.

commercial use to which the reactor is put, and the minimal educational uses the only dispute is whether the Applicant can properly allocate

- virtually all of the costs to the minimal educational function. If the Applicant truly wants a rapid resolution of this matter, it appears relatively simple--either it must apply for a Class 103 license, which it says it will never do, or it must accept conditions on a Class 104 license which will forbid it from engaging in substantial commercial use.

(Were such a condition contemplated by the Board, CBG would request an opportunity to brief the matter and proposa a suitable condition for consideration, due to the complexities of the Applicant's ' current use categorization.) As Mr. Cormier indicated in response to a question from Judge Luebke at the prehearing conference on February 23 (TR 933),

there is nothing in the application or license that. binds UCLA tn not using the reactor 90% of the time for commercial purposes, nothing.that is, but the re5ulations, a matter which hasn't seemed to be much'of an impediment to the Applicant in the past, in this and other areas.

The real choice,-as implied by the Board in its order of Farch 23, for the University is a Class 103 license'er conditions on a Class 104 license ~

that will keep it within the statutory bounds regarding commercial use..

Accounting fictions, 'or tortured interpretation of regulations that nullify .

their effect and run direct'ly counter. to- the intent of Congress, must'not

- be tolerated.

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F. Tractical Cansequences The Snard, in its or der of February 10, 1983, directed the parties to address "the practical ceasequences of a holding that UCLA should apply for a Class 103 license." While C3G had-and continues to have--

certain reservations discussed belnw abnut considering the consequences nf s ruling in the context of whether to nake the ruling, CBG complied with the ^rder. CBC indicated that amnng the practical consequences l nf such a ruling unuld be that the public unuld recover more of the costs of NRC inspections of the facility and of processing applications for license amendments and renewals, through higher fees and ends to exemptions from certain fees that the public would be provided a greater degree of-financial prntection in case of accident through a required higher degree i

of accident insurance, through Price Anderson and the enabling regulations; j that mandatory hearing, anti-trust review and ACRS review would have'been would be altered required the cost-benefit analysis under NEPA/and the weighing of the useful purpose under 10 CFR 50.42 would come into effect. Enre generally, unfair enmpetition with commercial firms providing the same services without the benefit of a university-tased Class 104 reactor would be eliminated, and the general requirement nf the Atomic Energy Act that genuine' Class 104 licensees be shielded frnm all but the most minimal regulations would cease to hold true for the UCIA reactnr. Furthermnre, additional requirements fnr Class 103 university reactors may well be imposed in the f sture by the -

Commission in carrying out, the intent of Congress discussed abover UCIA has requested the license through the turn of the century, .and as far as CBG is aware, the Commission has not had to face the imposition of further regulations en such Class 103 university licensees because this appears.to-be the first such case in which the Commission has been faced 1with applying

- the " substantial 'use" test to such a reactor. -

7 w , , .g -

22-Furthermnre, interpretation of the ALARA requirement for normal emissions unuld, in CEC's view, te necessarily stricter for. a Class 103 nnn-power reactnr than the same reactnr with a Class 104 license, and the provisions of Appendix C tn Part 50, regarding financial qualifications would come into effect.

But, as Mr. Cormier indicated at the prehearing conference (TR 945), the consequences "nught not to influence the decision, technically."

As he put it, "if we are .not properly classed, we are stuck with the consequences uhatever they may te." The Board must determine what the law requires, and apply the law to this case, whether it agrees with the consequences that ensue or not. 'lhe Atomic Energy Act requires that a licensee operate under the appropriate class of licenses a licensee cannnt be inappropriately classed, if the issue is put in controversy, whatever may be the consequences. If it is believed that enforcing the regulation will not bring the effect intended, the appropriate remedy is a petition for relief under 10 CFR 2.758. The law and the regulations are clear in this case and must be applied.

F. Cnnelusion As demonstrated in the ~ Baefsky (II and XVIII) and Aftergood '(I) declarations--the arguments and facts contained therein not having.not been repeated here but which should be considered in reaching:this matter--

the mathods of accounting for commercial use employed by the Appl.icant vinlato both traditional cost accounting principles and the-intent of the. law and regulations. Far more than 50% of the use of the facility - ,

directly in recent years (all' years since and including 1979) have been/ commercial ~

by admission of the - Applicant, with only a tiny. Traction- of_ overall use being for the licensed purpose of education. Cost allocation should follow

~

services rendered: CBT has demonstrated that _ the University's creative acenunting method by which 98% of the costs are charged off against 10%

k. a. c

l

. nf the activity unuld require commercial operation 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day for r.cre days than there are in a year in order to meet' the " substantial use"

~

test as defined by ' Applicant, ' essentially nullifying the law and regulation.

The prirary use of the reactorais commercials the law and regulation are clear that either that activity or the class of license must be altered.

Furthermore, since tne sole " fact" put forward by Applicant has been ruled to be subject to genuine dispute, and since the:only~" facts" put forward by Staff on this contention that are not disputed do not even deal with the allocation of costs between commercial and educational functions ard thus fail to provide the necessary foundation for grant of the motion, both the Applicant and Staff motions for summary disposition must, as a matter of law, be denied.

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l IV. CONTETION XVIII -

" FINANCIAL CUALIFICATICNS"-

A. Intrnduction This contention essentially alleges that the Applicant has failed to meet its affirmative duty to provide reasonable assurances of financial responsibility, i.e. that the Board can be reasonably assured-that if the requested license is grant,- sufficient funds will te available to safely operate the reactor. As such, this contention is,~ as Judge Frye pointed out at the February 23 prehearing conference, "The financial qualifications finding is a safety finding. I think the theory behind it is, you know, are there sufficient funds to keep the thing maintained in a safe condition?" -

CBG has maintained that the Applicant has not met its burden of pronf in this matter, and cites as basis two very important matters (1) that the Applicant has failed to provide sufficient funis in the past '

to safely maintain the reactor, and (2) that the Applicant'is currently in the midst of a massive fiscal crisis. The University admits to deferrir4..

maintenance and other repairs for financial reasons, but asserts that noi safety risks were involved because the reactor is inherently safe . i.e.

no matter how little money is spent on the facility, it argues. no one .

can be injured. This requires, in CBG's. view, resolution of the inherent-safety controversy scheduled for summer:before the correctness of. the Applicant's position with regards item (1).'is concerned. 'As'to the second item,

.the current fiscal crisis,- Applicant indicated that it doesn't " perceive 1

~

any insic factual disagreements' with CBG" (TR 978). - The Board, however,

- has asked CBG to brief the matter as 'to whether the actual financial situation ,

of the University is~ material, in light of its large size compared to the 4

reactnr budget, and whether the past, present, or future financial situation'

. at the Nuclear Energy lab (e.g. , whether' important safety: modifications '

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have not teen rade because of lack of availability of funds at EL) is relevant given the large assets of the University system as a whole.

CEG herein maintains that the regulations and case law take clear that a hard look at actual financial conditions is required and that the size of. the parent organization is insufficient alone to meet the " reasonable assurances" test that sufficient funds will be.actually available for safe maintenance and operation of the facility. CEG does not assert that the Applicant cannot provide such assurances merely that it has nnt provided such assurances to date and has thus not met an important safety burden. Finally, as indicated above, CEG views this matter as a safety issue which cannot properly be decided prior to a decision on the inherent safety questions. Applicant's position is' largely dependent upon its belief--a blind faith, in CBG's view--that no matter how little is spent on the reactor, no one can be harmed and that therefore it need make no showing regarding assurance of sufficient funding will be provided for safe operation. C3G contends the opposite--that Applicant's blind faith that no ratter how deeply the UEL budget may te cut, there can be-no adv_erse safety result, demonstrates clearly that the Applicant, at present, has failed to meet its burden to provide reasonable assurances that sufficient funding will be provided to protect public' health and safety.

B. Discussion The applicable standards for financial qualifications are found' primarily in the Seabrnok case. Public Service Co. of New liampshire

- (Seabroek Station, Units 1 and 2), CLI-78-1, ~ 7 NRC 1;(1978). In'that case, the Commission determined that the reasonable assurance test does -

not mean a demonstration of near certainty that an applicant will never be~ pressed for funds, but does mean that the applicant.must have a reasonable '

b__

plan in light of relevant circumstances. Furthermore, the "reasonatle assurance" requirement of 10 CFR 50 33 contemplates actual inouiry into the applicant's financial qualifications. It is not enough that the applicant is a reEulated public utility, for example.

These findings by the Commission make clear the answers to the questions posed by the Snard at page 20 of its Ihrch 23, 1983, Order.

First, the fact that the Applicant in this case is a public university is not sufficient, in and of itself, to meet the " reasonable assurance" requirement. Actual _ inquiry into the applicant's financial situation is mandated. This means that both the current financial crisis faced by the Applicant and its past financial situation are relevant and material to a finding in this contention.

Secondly, the Applicant has a burden of demonstrating that it has a reasonable plan in light of relevant circumstances.

In this case, that means that the University must show that it has a reasnnable plan for maintaining the funding of the proposed licensed activity at a level sufficient to maintain public ~ health and safety.

This the Applicant can do by showing cognizance of the connection between finances actually made available to NEL and safe operation of the facility.

As discussed above, the Applicant not only has no such plan, it has widely~

asserted it need have none because it can devote as little funds to, the reactor as it desires, in the mistaken belief that the facility is inherently safe and thus immune by the laws of nature from any deleterious ' effects of insufficient funding. q

~

10f The Commission has recently amended its regulations, removing the financial qualifications issue altogether for_ public utilities in states where public utility commissions must make an independent determination .

of financial qualifications. The Commission did so on, the basis of avoiding . )

duplication of reviews this new exemption is specific solely to. power reactor -

applicants which are:public utilities and explicitly does not apply to the UCLA' case, for. whom the financial. qualifications _ test, and. the Seabrook  ;

interpretation thereof, still hold. '

.- y <e

That a hard look at the actual availability of funds for safe operation of the reactor in questien is required, not merely a glance at the bottom line of the assets column for the parent organization, is clear because of the safety nexus of the financial qualifications test. What the Congress was concerned about in imposing Commission review of financial qualifications was some finding of reasonable assurance that enough funds unuld be available for the proposed activity to safely carry it out.

Were evidence that such was not the case deemed immaterial and irrelevant,-

the financial qualification review would lose all meaning.

As Mr. Baefsky has indicated in his declaration, the size of the University system assets are irrelevant to the actual availability of funds for the proposed activity. 3pendable furds come from income, not assets, and the magnitude of either assets or income cannot be reviewed apart from the magnitude of liabilities and expenses. To determine financial qualifications both sides of the ledger must be examined. Otherwise,

. Laker Airlines the day before it went into receivership would be considered financially qualified to operate a power reactor, merely because it assets were larger than the estimated costs of the proposed activity.

Size is insufficient alonen actual financial health and existence of reasonable plans for contingencies are required.

Furthermore, the best possible evidence as to whether reasonable assurance of actual availabil'ity of sufficient funds for safe operation in the proposed next license period is found by examination of the actual availability of sufficient funds for safe operation during the previous period. To refuse to consider evidence of financial irresponsibility

• adversely affecting public health and safety in the past in ruling on the same matter for the future would be to disregard the irAent of' Congress in imposing the financial qualification review in the first place.

C. Fe:r.e4y C3G is not asserting that no public university can meet the financial qualifications test. Quite the contrary. But it would be~

equally a challenge to the regulations to assert that all public universities, simply b/ virtue of their being public universities, automatically meet the financial qualifications test and no actual inquiry into financial situation is permitted. Were such an automatic exemption from the financial qualifications test intended by the Commission, it would be included in the regulations. The only such exemption is the recent one for public utilities applying for power reactor licenses. The University.

and Staff position that UCIA, by virtue of it being part of a public university system, is automatically financially qualified and that further inquiry into its true financial situation is impermissible, represents and impermissible attack upon th'e regulations, forbidden by 10 CFR 2 758.

Parties are, of course, free to petition for rulemaking to extend the public utility exemption-to public universities ( but until such amendments to the regulations are forthcoming, actual inquiry into financial qualifications is required and the Applicant is required to affirmatively demonstrate reasonable assurances that the funds necessary for safe operation of the reactor will actually be available (i.e., not budgeted elsewhere in the system, for a library for example, and thus unavailable for safe operation ofthereactor).

What CBG is asking for in this contention is the reasonable assurance mandated by the regulation-sufficient assurance by the Applicant that the Board can feel reasonably confident that sufficient funds for safe operation will be forthcoming, that there is a reasonable plan for >

dealing with the current financial crisis of the university in a way such that the proposed licensed activity will.not further be endangered (from a safety standpoint) by additional budget cuts.

._ ~.

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1 f

To neet its bunien, the Applicant can demonstrate that it hasn't curtailed maintenance or necessary repairs because of financial limitations in .the past. Or it can provide sufficient assurance that, although such problems may have occured in the past, it will not permit financial shortages for NEL to once again cut into safety margins.

The Applicant can demonstrate a commitment to not letting the EEL funds available drop below levels necessary for safety. It can provide binding commitments that, despite the financial crisis faced by the University as a whole, because of the unique safety risks posed by the reactor, it will not be cut, even if student enrollments continue to drop (because safety needs are not related to size of enrollment).

flowever, all the University has put forwarti to date is the assertion that it reserves "the right to make whatever proErammatic

~

decisions [1.e., cut the EEL budget when enrollment drops or the Engineering School budget is tighg we decide from time to time are proper." TR 986.

Furthermore, Appliant indicates at the same page it is not going,to introduce any evidence on those pro 6rammatic funding decisions, ar6uing that-whether " sufficient funds have been devoted to the facility, that's a safety question, it's not a financial question." As indicated above, and similarly iblicated- by Jud 6e Frye in his response to Mr. Cormier's remarks quoted above, the financial qualifications ftdin6 is, of course, a safety finding, and. it is precisely that lack of understanding on the part-of the Applicant that is so troubling and so clearly demonstrates that at this time the Applicant has not met its burden of demonstrating reasonable :

assurances of financial qualification.

The University has means available to it to meet its buzden.

' It can demonstrate a reasonable: plan to. protect the reactor from the effects of the massive financial-crisis faced by the University. It can:

demonstrate an. understanding of the safety. implications 'of failing to

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

q provide sufficient funding for the reactor, and comnit to providirg the necesscry funding. It can demonstrate it has not failed to provide sufficient fund!t6 in the past. But in the absence of such an affirmative shewing, the Applicant's burien of demonstrating reasonable assurances is in dispute, at best.

3. Offer of Proof C3G can, and if given the opportunity, will demonstrate (this need not necessarily be through hearing, as discussed above):

1. That important safety modifications of the reactor have not been undertaken, even ihough needed, because of. lack of funds, and that public health and safety have been put at cignificant additional risk therefor

2. That sufficient funds for maintenance and repair have not.

been available, likewise increasing risks

3. That the University's radiation protection program and safety pro 6 ram have been forced to fail to comply with important legal requirements of a safety nature because of lack of necessary funds 4 That injuries have resulted because of the University's inabilit by its own admission, to correct numerous safe ty ard life zard situations due to lack of available funds 5 That the University is in its 6ravest financial crisis in many decades, necessitating large budget cuts, and that the reactor is a likely target for additional substantial cuts

6. And that the Applicant has no safety criteria for determining whether cuts in funis available to the reactor should be tolerated, makin6 such decisions purely on programmatic, rather than safety 6 rounds.

1:uch of the above is either admitted by Applicant or comes from Applicant's own documents. CBG notes, for example,. the irony of Applicant's counsel ar6uing at the February prehearin6 conference for an immediate rulin6 on the financial qualifications issue because it cannot afford to remain for an additional extended period in the. hearing and elsewhere in the same hearing indicating that it could. not afford the $250,000 conversion cost.

were' the Board 'to decide that it was important~ for safety and/or proliferation

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

a,

l reacens to convert the reactor from HEU to LEU.- it would appear from these varinus adnissions that the Applicant has rade clear to the Board that it cannot, er will st, provide the Board with reasdnable assurances that funds necessary for safe operation will be available, that the University is financially strapped,and because of pre 8rammatic decisions making the 30 or so educational hours per year the reactor is used a very low budgetary priority, the University would rather shut the reactor down and withdraw the Application than devote, and commit to devoting, the funds necessary to safely operate it. ,

E. Cenclusinn All evidence to date indicates that the Applicant has not, or will not, provide the necessary " reasonable assurances" in the financial rehlm. Actual inquiry into the actual availability of funds for safe operation is mandated by the case law and re6ulations: actual inquiry includes review of the financial crisis of the Applicant and its past financial irresponsibility with regards the reactor in question.

The size of the Applicant's assets is insufficient alone to meet.the reasonable assurance tests the size of. the liabilities, 'expenditurs, and budget problems are also relevant and must be reviewed in light of the Applicant's lack of a reasonable plan to deal with these contingencies as they may affect the proposed licensed activity. And lastly, it is actual inquiry into the actual availability of necessary funds for the proposed activity, sufficient to safely conduct it, that is required by the Atomic Energy Act and the regulations, because financial qualifications are a safety matter, and failure of this Applicant to assure actual availability of the funds necessary for safe operation can significantly and unacceptably increase risks to public health and safety and the common defense and security.

r. . ,

- 'Ibe motions for summary disposition cuct be denied because facts have been determined to -be genuinely disputed, and those facts have been asserted even by the movants to be material and relevant.

As to a rapid resolution of the contested matters, or potential resoluO.on without a hearing, CBG is amenable to discussion of these possibilities.

Should the Applicant continue to be unwilling to provide further assurances

- than the mere size of the parent organization, without actual assurance.

about any of those assets or revenues actually being devoted to safe operation of the' facility, and should the Applicant continue to maintain that it can cut funding levels for the reactor at will without, damaging 3

public safety because of the inherent safety of the facility, the Board e

should be in a position to make the required ruling without further inquiryg i

but because it is a safety finding, contingent in some regards on the inherent 1

safety determination, it appears protahle resolution of the issue must await-the inherent safety determination. In the short run, the motions fo.r summary i

disposition must be denied, because the movants have failed to meet their burden.

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1 9 .

l V. SHOULD SABCTAGE 3E REECVED FRCM CONSIDEEATICN AS A " HAZARD SCENARIC" IU CON'ITrICN XIX?

A. Intreduction In Farch,1981, the Board admitted into this proceeding Conte 1 tion XIX, which asserts that certain "ha::ard scenarios" had been inadequately addressed and that these hazard scenarios posed unacceptable consequences to the public. Among these various scenarios was included sabotage.

The Board, in admitting the contention, ruled on objections by Staff and Applicant that (1) sabotage wasn't an " accident",

(2) that it was an attack on the regulations, as sabotage protection was a Part 73 matter and greater restrictions than those contained in Part 73 could not be imposed, (3) that it wasn't specific enough, and (4) that it was duplicative of Contention XX, dealing with security. The Board denied all of these objections, saying, We are considering a small research reactor tased in the heart of a large university campus. We are compelled to consider possible hazard scenarios. Contention XIX is accepted...

brch 20,1981, Order, at 10-11 11/

1 These objections are contained in the NRC Staff's Position on Contentions of the Committee to Bridge the Cap, dated September 16,1980, at 29-30:

NRC Staff Position on Unstipulated Contentions, dated December 1,1980, at 8-93 University's Statement of Position with Raspect to Unstipulated Contentions, dated November 28,1980, at 13-143 prehearing conference transcript, February 5,1981, TR 333-358: see also p. 19, Intervenor's

' Statement of Position on the Admissibility of Contentions Not Stipulated to in the November 28, 1980 Stipulation, dated November 28,1980s also p.18, Petitioner Bridge the Gap's Response to the NRC Staff's ani University's Position on Petitioner'.s Contentions. ' Note that, at the urging of Staff ard Aplicant, CBC provided a sample sabotage scenario to help scope

- the contention, and that the use of the terms " design insis accident" and " maximum credible accident" in the~ umbrella portion of contention was.

the result of dispute about the Staff use of the terns in the subparts and a suggestion. by Judge Luebke, with the terms later defined- as "the worst-possible event that is credible to occur at that facility." TR340,344.

On April 13, lc81, Staff submitted a Iwtion for Sumnary Disposition of Contention XX, tha security contention, in which the Staff asserted, inter alia, Intervenor's assertion that the Licensee's security plan must protect against sabotage is legally incorrect and sheuld be dismissed.

p. 11 This assertion, in addition to being legally erroneous, is surpassed in its irresponsibility only by the Staff assertions at the prehearing cenference of February of that year that UCIA likewise need not do-anything to protect against theft of its bomb-grade uranium except report the theft after the fact, that, as Judge Paris paraph:ased the Staff assertion, there would be no violation if someone broke into the UCIA reactor facility, stole the weapons-grade material, and got away with it, so long as UCLA could report the stuff was missing. TR396-7 UCLA has fully endorsed the Staff position, essentially announcing to the world

, that the UCLA reactor is open season for theft or sabotage, that no protective neasures are required.

CBG, in its responses to the Staff Kotion on Contention XX,_

has demonstrated that both assertions, in addition to being extremely dangerous from a policy standpoint, are legally incorrect. Furthermore, Cm has demonstrated that Staff knows these assertions are incorrect, that in fact both of the Staff's affiants knew at the time that they made their statements nder oath that those statements were not 2

l_2/ CBG has demonstrated that 10 CFR 73.40(a) requires protection against sabotage, in direct contradiction to-the Staff assertion, and that at.the tino of the Staff motion, UCLA had, as contended by CBG, a formula quantity of SNM necessitating protection under 10 CFR 73.60 In response to CBG's contention in this regard, and its Contention XIII regarding excessive quantity of SNM, UCIA has since shipped off some of its hEU. . Uncertainties remain as to .

whether UCIA is now below the 10 CFR 73 60 threshhold if and when that is firailly accomplished or confirmed. CBG will demonstrate the protection against theft' of 4 9 kg FIU required by 10 CFR 73.67. o

correct.b Ihe assertion that sabotage protection is not required was taced in part on the assertion by Staff affiant Carlson that

" preliminary results of studies performed for the NRC staff indicate that the abotage potential of non-pever raactors is very limited and except for certain high power, tank type reactors, sabotage protection is probably not necessary." (Carlson affidavit, fn.1, at page 4).

On September 1 and 3,1982, respectively, Staff and Applicant submitted motions for summary disposition of the other contentions (excluding emergency planning), including all of Contention XIX.

1 As basis for the Staff motion, Staff put forth the following asserted nateri&l fact (#7):

The SER 314 Analysis of severe core damage is equivalent to damage possible to the UCLA reactor from a heavy aircraft crash, or explosives placed in the reactor by a saboteur. i l

As insis for that asserted fact, Staff affiant Bernard asserted:

Because of the heavy concrete shielding surrounding the reactor, ext'ernally placed explosives detonated during reactor operation would constitute no greater effect on .the reactor than the effects of the severe hypothetical earthquake accident analyzed in the SER. This latter event produced no melting of the core and no significant exposure due to fission product

, release.

Sabotage with the shielding blocks off would involve decay time commensurate with_the 2-4 days required to remove the shielding blocks. This accident event wouldt produce lower doses than calculated in the abeve-mentioned earthquake event.

In my opinion, no risk to health and safety from radiological releases would occur from detonation of explosives, a heavy aircraft crash, a multiple mode failure or operator error at the UCLA research reactor.

On January 12, 1983, CBG filed its respense to these Eotions, in particular disputing these assertions. CBG declarant Kaku, in particular,

' indicated that sabotage could produce offsite consequences far in excess of those from other hazards scenarios considered.

1 Staff documents obtained by CBG under FCIA demonstrate that affiant Carlson afba 1 er 'CI1 ub'N N h _o sa Ny cok n .

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.l The Board, in its February 8,1983, ).emorandum ani Order, '

ruled that the Staff's ascerted material fact on the sabotage matter was l

genuinely disputed, and dismissed the summary disposition motions on Contention XIX in their entirety.

l~ At the February 23, 1983, prehearing conference, detailed discussion took place as to the usefulness of deferring certain subparts of the l inherent safety contentions to a later stage of hearing. Consideration l

l of deferral was based on whether certain subparts fit most. appropriately in the inherent safety hearings or in some later session of hearings.

Among the subparts considered for deferral was the sabotage subpart of Contention XIX.

In arguing for deferral of the sabotage portion of the cententien, the Applicant expressed some concern about what it perceived as unlimited scope to the sabotage possibilities. CBG offered to delineate rossonable bounds to that scope in order to meet Applicant concerns.

The Board requested CBG and the Applicant to confer abut such possibilities, which they did by phone some days after the close of the prehearing conference.

At that time CBG indicated to the Applicant its willingness to provide.

tounds for the sabotage scenarios. Applicant indicated, however, that this was not Applicant's problem with the contention , but rather that it thought the particular subpart should never have been admitted by the' Board to tegin with and said that no discussion of scoping was therefore '

either necessary or potentially fruitful.

W 'Ihe Applicant cited as sabotage scenarios that it' felt would be possible ,

under the contention that of a cruise missile coming down one of the reactor's t

beam ports and someone chopping the fuel into small pieces and sending-the fuel fragments to members of the public through the.U.S. mails. CBG indicated it was confident the' Board could"be entrusted to exclude such absurdities, l but offered' to suggest scoping itself.

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the Board had indicated at the prehearing conference and as CBG thought %as the ratter being discussed, er thether the issue was outright removal of the. contention subpart from the proceedings altogether. Judge'Luebke /

indicated theissue was merely whether to defer: Judge Frye indicated' that .

the consideration was removal of the contention subpart altogether. f 4 (Ju:!ge Paris was not heard to express his view ,

on the matter. The City  !,

of Santa Fonica, in light of the apparent division on the Board as to what was being considered, requested clarification in its letter of Parch 15,1983.) ,

CBG expressed during the latter conference call considerable

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objection to the Board considering removal of an important part 'of a "'

contention, properly admitted by the Board, particularly in light of the lack of any changed circumstances from the time of the previous Board ruling, and the lack of a motion for reconsideration before it. Judge Frye indicated lj Because of lack of a transcript, CBG is unsure whether this occurred' during the Farch 9 or Parch 11 conference call, bat believes -itwas on the lith.

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Jf/TR848: JUDGE FRYE do Er. Carmie d : Well, you are arguing against

- considering that at all. . I am justing talking about deferral now, that's all.

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< ine cor:tention subpart. CBG indicated that such consideration by the Beard wold be a significant matter which could significantly affect the proceedings and, therefore, desiring that a record be preserved, requested

< an opportunity to brief the matter in writing, which was granted to all parties by the Order of Farch 23,198). C3G's objections to consideration: .

I of striking part of Contention XIX at this late date, particularly after .

summry disposition has been denied on the Contention and without even a motion to that effect by any of the parties, are detailed infra.

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B. Objections j 'Ihese matters were fully end Drnterly litigated when the:

cnntention was admitted. The argument (s) raised by the Board as tasis for its sua sponte consideration of dismissal of subpart 1 to Contention XIX was considered by the Board in determining initially to admit the ,

centention. The current confusion is understandable in that t,he current presiding officer of the ASLB was not a Member of the ASLB ,

at the time these matters were previously litigated; yet the fact remains a

they were properly litigsted at the time and a Judge is bound by a predecessor's prior ruling unless there is good cause for reconsidering it. ~ CBG does not believe such goda cause has been demonstrated..

No changed circumstances have arisen necessitating reconsideration.

The situation with regards this contention

• has not altered since .the' initial ruling.

- Summary dispnsition has already been denied on this conter. tion.

The Board, in its February 8 Crder determined that genlune disputes ,of material fact existed with regards this matter and that a hearing was required.

The Board's sua spente authority is limited to taking up new.

ratters, not dismissing admitted natters where summary disposition has been

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. the parties themselves have not placed in controversy. Consolidated Blison Co. of NY Inc. (Indian Foint Nuclear Generating Station,1 Units 1,2.&3),

ALAB-319, 3 NRC 188, 190 (1976): 10 CFR 2 760a. Nowhere in the regulations or case law of which CBG is aware are Licensing Boards granted the authority

{ to sua spente dismiss. admitted contentions without either a hearing or proper grant 'of summary disposition. There is good reason for this.

The regulations set criteria for the admissibility of' contentions (among -

the criteria being the .2 758 proirision against attacks upon the regulations).

e nce admitted contentions can be resolved only. by summary disposition, according to the rules and procedures attendant- thereto, or through evidentiary hearing, which likewise must follow the rules of practice. Were licensing boards permitted, on their own motion, to dismiss contentions previously.

admitted and which had withstood tha test of summary disposition, the right to hearing would be nullified and the rules of summary disposition would have no effect.

f Notuithstanding the above objections, CBG complies with the! Board's Order and herein briefs the matters identified at pa6e 10 cf its Order.

C. -Discussion i

The Board has expressed. its concern as foll'ows:

The Board is concerned that the sabotage portions of i Contention XIX may constitute an impermissible challenge to  : l the regulations for the following reasons. Part 73 lays- , l

down the measures which _ licensees must implement in order

tol deal with potential sabotage'. Those measures-were-adopted by the Commission after lengthy' ami complex ,

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rulemaking proceedings ~ Were sabotage considered in connection with accident analyses, it appears 1that

no different measures- -

could be ordered as a consequence of. that analysis without . -

abrogating the Part' 73. requirements. Under these-circumstance's, 'l

- consideration of' sabotage in connection with ~ accident analyses' i seems pointless,lbecause the Part 73.' requirements could1 neither be relaxed nor strengthened as a result of that consideration.

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Tne 3 nard appears to raise two concerns. One is that censiderirg cabotage consequences as part of hazards arz. lysis is somehou prohibited by the regulations and thus an impermissible regulatory attack. 'Ihe second is that consideration of sabotage consequences is pointless, because sabota6e protection requirements mandated by Part 73 ceuld neither te enhanced nor relaxed as a result of such an analysis.

CEG believes neither concern to be a problem in this case.

First of all, there is no regulation prohibiting research reactors from considering sabotage as one of several hazards scenarios in hazards analysis. 1:either the Board nor the other parties has cited ar y such regulation. In fact, the original Hazards Analysis prepared for UCIA and submitted as part of the original application indeed did consider sabotage as one of the analyzed hazards scena~ios. UCLA Hazards Analyais , p. 63 The Staff, according to its summary disposition notion and affida rits, has likewise considered sabotage in the context of consequences of various hazards scenarios and drawn conclusions it has put forward. C:rtainly CBG should be permitted to address the adequacy of these reviews. No regulation prohibits it, and thus no attack upon the regulation exists.

Secondly, while the Board's argument that consideration of sabotage consequences could be pointless because of inability to require different security measures than those delineated in Part 73 mi6ht te true with regards power reactors, for which specific required countermeasures are spelled out in Part 73, it is not the casa fo;; research reactors, where the specific security requirements against sabotage are to be determined on a case-by-case basis. It is precisely because of the Board's duty under Part 73 to take a site-specific determination of the de6ree of sabotage protection necessary at UCIA is essential that consideratier/of site-specific consequences and assessment of the

assertions ty Staff and Applicant that no protecticn whatsoever is required tecause cf inherent self-limiting features of the reactor.

For power reactors, after detailed rule-rakirf proceedings, the Commission described a very :pecific set of measures that these facilities must take to protect against sabotage. See 10 CFR 73 55 For non-power reacters, as has teen the case in a number of other areas in this case (and in Onlumbia), no specific provisions have been estah11shed to determine compliance with the generalized ree.uirement of 10 CFR 73.40 (a), applicable to UCLA, to protect against sabotage.

Hnw UCLA, or other research reactors, are to meet that requirement of sabotage protection, is to be determined on a case-by-case basis by the Comnission as it reviews specific security plans for specific non-power reactors submitted to it for review. Of course, in this proceeding where the adequacy of that security plan has been placed in contest, it is the Atomic Safety and Licensing Board that must rake that determination.

And that is why, in order to reach the issue put in contest by Contention XX, the Board must also reach the issue put in contest by Contention XIX.1.

In order to rake the ultimate determination required of it by the regulations, that grr.nt of the proposed license poses no undue risk to public health and safety and common defesse and security, the Board must reach the issue whether the security plan is adequate to reduce those risks to an acceptably low level, given the physical characteristics of the reactor and its site. Risk, of course, is prohbility times consequences.

Security plans can reduce protabii! 9 of sabotage succeeding, but to determine whether the reduced protability is sufficient to make overall risk acceptable must, of necessity, require a determination of the other part of the formula, consequences.

If, as the Staff argues, consequences of sabotage are miniral, less than their presumed design basis accident, then their argument' that no sabotage protection is required ray have some validity. If CBG is correct, that sabotage could induced thryoid doses in the millions of Rem and cause

deces exceeding regulator /- limits out scores of kilometers. then either very substantial sabotage protection acacures must be imposed, additional en61neered safety features added, or the license denied because of unacceptable risks due in part to the site.

The Board cannot judge the adequacy of the site, of the l

engineered features designed to mitigate consequences of releases, or of procedures such as security plans intended to reduce protabilities to acceptable levels without reaching the issue whather Staff 'is correct that the fuel and reactor have inherently self-limiting features that make off-cite consequences from sabotage acceptable. The Board cannot rake a determination whether the existence of the UCLA reactor in the middle of a crowded campus in a vastly populated city, with neither containment structure nor exclusion zone, poses an -unacceptali e hazard or risk to the public without ascertaining that risk. .'Ihat risk cannot be ascertained without examining all credible hazard scenarios and the consequences attendant thereto. As the Board put it in ori61nally admitting the sabotage scenario as one of the hazards scenarios .to be considered in the proceeding: '"Je are considerin6 a small research' reactor b=sei in the heart of a large university campus. 'de are compelled to consider possible hazard scenarios." To do less would be, in CBG's view, to abrogate a primary duty of this Board. -

10 CFR 73.40(a) provides that the UCIA reactor must protect against sabotage. It is up_ to thisBoard to determine how much protection, and of what kind, to require of UCIA, or if 'the proposed protection is sufficient to adequately protect public health and safetys , "

1J/.Theprovisionsof10CFR73.40(b)comeintoeffectifUCLAis determined to have more than a formula quantity of SNK (the 73.60 vs. 67.

issue). Even when that issue is finally resolved by final demonstration tha t LEIA has at last gotten below the formula _ quantity, or it . ships off as promised if necessary a bit more SUM to' finally get below.that level, it will still have to~ meet 73.40(a). . Sato e protection necessity is of >

course,' independent of the amount of HEU a lable for treft or diversion.-

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Fach liensee shall provide physical protection against radiological sabotage and against theft of special nuclear material at the fixed sites where licensed activities are conducted. Physical security systems shall te established ard maintained in accordance with security plans approved by the Nuclear Regulatory Commission.

Thus, UC1.A mast adequately protect against radiolo6ical sabotago, and it is up to this Board to determine whether the physical security system is adequate to protect public health and safety from the risks of sabotage. As in Columbia, the Board ray impose conditions requirin6 additional precautions than those proposed if it is concerned that sabntage could pose unacceptatie consequences.

The issue of sabotage and whether, as Staff asserts, the reactor's siting and asserted self-limiting features prevent all but inconsequential results to the public, is properly within Contention XIX,and, properly within the inherent safety hearings. It is the same issue, requiring the same witnesses and dealing with the same physical laws and reactor characteristics. Does matrix-type fuel hold in sufficient fission products if cladding is daraged that, as Staff asserts, only a very srall fraction of the inventory can possibly be released? Are dispersion factors such that the maximum credible release fraction causes acceptable doses? Is the reactor physically incapable of catchin6 fire?

It is simply another credible initiating event of hazard, the risks from which must be analyzed to determine if the facility is inherent protected ani if not, whether add-on features such as containments, evacuation plans, security plans, Radiation Use Committee review, and so on reduce the risks to the public to acceptable levels.

The matter is hotly contested, is necessary for a determination as to whether rmsonable assurances of public health and safety protection can be given, and is necessary for a determination by the Board of the acceptability of the sabotage protection plan (if any) as per 73.40 mm mmm ul

Furthermore, there uculd te very serious public policy inplications were the Board to refuse, particiarly at this late date, to consider sabotage as a hazard scenario. Coupled with the public pronouncements by Staff and Applicant, erroneous though they are, that UCLt is neither required to protect against sabotage ror theft of its IEU, a dismissal of consideration of sabotage in the context of determining-whether undue risks are posed to the public from that hazard scenario, could have dangerous international repercussions. As the City of Santa l'.onica has indicated, the 1984 Olympics, with all the attendant fears of terrorist attack, is to be held in part at UCI.A. A dismissal of' consideration of sabotage would send the wrong siignal at the wrors time to the wrong people.

CLG recognizes that this is a sensitive area, and would' recommend that the specific discussion of sabotage in the context of Contention XIX be considered to be conducted in some i,n camera fashion.

The Board will note that Dr. Kaku purposely. in his declaration remained rather vague on this matter, and that Dr. Taylor submitted part of his declaration with a request that it not go to the FDR. Sabotage should be considered in a judicious fashion, but it should be considered, and.

it should be considered soon, so that firal determination of XIX.1 ani XX is reached before the extremely dangerous summer of 1984 arises. CBG ,

enntinues to recommend its inclusion in the summer 1983 hearings.

CONCLUSION CBG, despite numerous objections, has complied with the Board's :

- Farch 23 Order and briefed the issues so directed. CBG respectfully submits.

that the F.otions for Summary Disposition of Contentions II and XVIII have not met 'their burden and must be dismissed, and that no good cause exists to dismiss, after. summary disposition.on the matter has been denied, the.

sabotage subpart to Conte & ion ~XIX. CBG further argues that public safety

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~: Res[ectfully sub tted,

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- Danisl'Hirsch' President' Committee to Bridge the. Gap dated at Ben Lomond, CA' this 4th day of April, 1983 e ,

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i UNITED STATES OF APERICA 00C HETU-NUCIRAR REGULATORY CCMMISSION 'W' BEFORE THE ATOMIC SAFETY AND LICENSING BOARD ,83 AP In the Matter of a. . _.

THE REGENTS OF THE UNIVEISITY Docket No. 50-142e-Nfg'3"Q",

BRANCH

& CALIFORNIA (Proposed Renewal of Facility License)

(UCIA Research Reactor)

DECIARATION OF SERVICE

• I hereby declare that copies of the attached RESIOUSE TO PREliEARIEG CCEFERE CE MEECRANDUM AND CRDER OF FARCH 23, lyc) in the above-captioned proceeding have. been served on the following by deposit in the United States mail, first class, postage prepaid, addressed as indicated, on this date: April 4, 1983 .

John H. Frye, III, Chairman Christine Heluick Atomic Safety & Licensing Board Glenn R. Woods U.S. Nuclear Regulatory Commission Office of General Counsel 390 University Hall Dr. Emmoth A. Imebke 2200 University Avenue Admin $atrative 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 Dr. Oscar H. Paris Administrative Judge Atomic Safety and Licensing Board nn i f U.S. Nuclear Regulatory Commission uty Cit Attorney Washington, D.C. 20555 City M 1685 Main Street Chief, Docketing and Service Section "" " "'

Office of the Secretary U.S. Nuclear Re6ulatory Commission Dorothy Thompson Washington, D.C. 20555 6300 Wilshire #1200 Los Angeles, CA 90012 Counsel for NRC Staff U.S. Nuclear Regulatory Commission Vashington, D'C. 20555 attentions Ms. Colleen Woodhead William H. Cormier l Office of Administaative Vice Omncellor University of California '. i 405 Hilgard Avenue t Les Angeles, (klifornia 90024 ,

President 0079tITTEE TO BRIDGE TIE GAP 4