ML20141J360

Ack Receipt of 970121 Request for NRC to Conduct Expedited Agreement State Program Review of Utah.Requests That Info on Assessment of Adequacy of Amount of Financial Assurance Required to Be Established by Envirocare

ML20141J360
Person / Time
Issue date:	02/11/1997
From:	Bangart R NRC OFFICE OF STATE PROGRAMS (OSP)
To:	Sinclair W UTAH, STATE OF
Shared Package
ML20140B594	List: ML20140B588 ML20141J295 ML20141J353 ML20141J360 ML20141J365
References
FOIA-97-68 NUDOCS 9705280053
Download: ML20141J360 (1)

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c g% W 8 ELW.F 4 i UNITED STATES g j NUCLEAR RE2ULATORY COMMISSION CASHIN17eN. D.C. 30006-0001 ee ,,e* yj'N i

Mr. William J. Sinclair, Director Division of Radiation Control Department of Environmental Quality 168 Ncrth 1950 West Post Office Box 144850 l

Salt Lake City, UT 84114-4850

Dear Mr. Sinclair:

We are in receipt of the January 21,1997 letter to Mr. Robert J. Hoffman, Chairman, Utah Radiation Control Board from Dr. Carol S. Marcus, President of the California Chapter l of the American College of Nuclear Physicians (CAACNP). She has requested, in her letter to Chairman Jackson, dated January 21,1997, that NRC conduct an expedited Agreement State Program review of Utah based on the issues raised in the letter to Mr. Hoffman.

We will reply to Dr. Marcus' letter. Our current planned approach would result in NRC endorsement of the Division of Radiation Control's (DRC) licensing action,if appropriate.

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' To accomplish this we request a copy of the 1996 license amendment application for disposal of resins and any DRC safety evaluations or other information that supports the license amendment. Based on Dr. Marcus' letter, we specifically request information on the decision by the DRC to authorize dilution and disposal of non-containerized ion exchange resins. Additionally, please indicate whether the Envirocare license authorizes l

receipt of any waste that, before dilution, would be categorized as class B or C, pursuant to 10 CRF 61.55 and the guidance in the January 17,1995 Branch Technical Position on l

Concentration and Encapsulation of Waste, enclosed. Also, we specifically request I

information on your assessment of the adequacy of the amount (s) of financial assurance required to be established by Envirocare as each amendment to the Envirocare license was issued to increase the volumes and types of waste received for disposal.

Since Dr. Marcus addressed the same concerns to the Utah Radiation Control Board and l

the NRC, I request that you keep us informed as to the State of Utah's response to the CAACNP letter to Mr. Hoffman. You will be informed of our actions to respond to Dr. Marcus. If you have any questions, please contact me at 301-415 3340.

Sincerely, P

Richard L. Bangart, Director Office of State Programs

Enclosure:

1 As stated i

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i I l1555 Rockville Pike Rockville, Maryland 20852-2738 RE: Request for Review of Director and Staff Decisions Denying

. NRDC 10 CFR 6 2.206 Petition Recardine Envirocare of Utah. Inc.

Dear Commissioners:

We are writing to request that you review in part, and take action with respect to, the February 7, i 1997, decisions of the Nuclear Regulatory Commission ("NRC") Staff and the Director of the  !

Office of Nuclear Material Safety and Safeguards' to deny the petition submitted under 10 CFR l

s 2.206 by Dr. Thomas B. Cochran on behalf of the Natural Resources Defense Council, Inc. l

("NRDC").2 The NRDC petition requested, in pertinent part, that the NRC take the following actions:

1. Suspend the agreement with the state of Utah under which regulatory authority has been

, . transferred from the NRC to the Utah's Bureau of Radiation, until the state of Utah can .

demonstrate that it can operate the Bureau of Radiation in a lawful manner, and without

' Letter from Hugh L. nompson, Jr., NRC Acting Executive Director for Operations, to Dr. Thomas B. Cochran, Ph.D., Director, NRDC Nuclear Program (February 7,1997).

Enclosure 1: NRC StafT Evaluation of Nitural Resources Defense Council Request to Suspend Section 274 Agreement With the State of Utah (undated)("NRC Staff Evaluation")

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Enclosure 2: In the Matter of Envirocare orUtah. Inc.. (Docket No. 40-8989) Director's Decision Under 10 C.F.R. l 2.206 (February 5,1997)(" Director's Decision").

t Enclosure 3: U.S. Nuclear Regulatory Commission, Natural Resources Defense Council, Receipt of Petition and issuance of a Director's Decision Under 10 C F.R. I 2.206 (copy of notice filed for publication with the Office of the Federal Register)(February 7,1997).

8 Letter to Hugh L. nompson, Jr., NRC Acting Executive Director for Operations, from Thomas B. Cochran, b ., Director, NRDC Nuclear Program (January 8,1997).

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• 71 Stevenson Street 6310 San Vicente Blut. 'Visst us at:

• New York, New York 10011 Suite 182S Suite 250

+ http:llwww.ntdcorg 112 727-2700 San Francisco. CA 9410S los Angeles. CA 90048 Fax 212 7271773 415 777 4220 213 9M-6900 Tax 41S 495-5996 Fax 213 9341210 CRC-97-0179 - To OGC for Appropriate Action (3/26/97) f

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'2 the participation oflicensees, or employees oflicensees, in Bureau of Radiation oversigh roles;

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2. Immediately revok'e or cause the state of U.tah to revoke Envirocare's license or licenses to receive low-level radioactive waste and mixed waste; and

• 3. Immediate revoke the NRC 11e.(2) byproduct material license under which Envirocare is I

currently permitted to accept uranium mill tailings for disposal.3

.The NRC Staff evaluated NRDC's first and seednd requests above and determined not to tak'e the actions requested by NRDC,' The Director's Decision denied NRDC's third request.above.'

l As detailed below, we believe that the denial of NRDC's petition by the Director and the NRC Staff constitutes an abuse of discretion because the petition, and the court papers upon which it is based, provide undisputed evidence that both the State of Utah and Envirocare have violated a host of NRC regulations designed to ensure the integrity of the licensing process and prevent conflicts ofinterest. Given the State's egregious failure to comply with the requirements of the

' Atomic Energy Act, and the incompatibility ofits program with that of the NRC, we submit that it is an abuse of discretion for the NRC to refuse to begin proceedings for the suspension of the state's Agreement State Program. If after conclusion of these proceedings, NRC decides to suspend the state's Agreement State program, NRC would have ample authority to revoke Envirocare's license to receive low-level radioactive waste and mixed waste. Moreover, Envirocare's willful violation of NRC regulations is grounds for immediate license revocation of its Ile.(2) byproduct materials license.

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As provided in 10 CFR 2.206(c), the Commission has 25 days from the issuacce of the Director's Decision to review this decision, in whole or in part, to determine if the Director has abused his discretion. We assume that the Commission has similar authority to review the decision of the NRC Staff. While we recognize that under NRC regulations, the Commission does not have to. consider our urgent. request for such review, we ask that under the circumstances you do so nonetheless. The reason we fee; so strongly about this matter is aptly stated in Part I of Executive Order 11222.

' NRDC also requested the NRC to immediately revoke any other NRC or Utah license held by Envirocare owner, or related entities; and prohibit the future issuance of any license by NRC or the state of Utah to Envirocare's owner or related entities. NRDC is not seeking Commission review of the denial of these requests.

• NRC's denial of NRDC's request for a suspension of Utah's Agreement State program is in the form of a Staff determination rather than a Director's Decision, apparently on the grounds that the request does not fall squarel within the scope of matters ordinarily considered under the 10 C.F.R. I 2.206 process. NRC Staff Evaluation at note

. l. Yet in 1995, NRC issued a Director's Decision with respect to another petition for revocation of Utah's l Agreement State status. In the Matter of State of Utah. DD 95-01, Director's Decision Under 10 CFR 2.206 l

(January 26,1995). NRDC will consider any denial ofits petition for suspension of Utah's Agreement State Status to be final agency action for purposes of review.

' Director's Decision, nr.g note 1.

3 Where g2vernment is' b: sed on the consent of the governed, ,

l every citizen is entitled to have complete confidence in the l integrity of his government. Each individual officer, employee,

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'or adviser of government must help to earn and must honor that tru'st by his own integrity and conduct in all official i

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actions.' l l

l (emphasis added). The NRC has irreluded this policy statement in its own regulations at 10 CFR

{ 0.735-20(a). These regulations further state: (10 CFR 0.735-20);

(b) The elimination of conflicts ofinterest in the Federal service is one of the most important objectives in establishing general standards of conduct. A conflict ofinterest situation may exist where a Federal employee' private interests, usually of r

. an economic form, conflict, or ' aise a reasonable question of conflict, with his public duties and responsibilities. The potential conflict is of concern whether it is real or only apparent.

(c) An employee, including special Government employee, shall not: (1) Have a direct or indirect financial interest that-conflicts substantially, or appears to conflict substantially, with

. his Government duties and responsibilities: or (2) engage in, directly or in directly, a financial transaction as a result of, or primarily relying on,information obtained through his Government employment.

(emphasis added). As noted in 10 CFR 0.735-1(a):

The Atomic Energy Act requires the Commission to assure itself that the character, associations, and loyalty of workers in atomic energy are of a high order. Conduct and self discipline, both.on and off the job, must measure up to unu.sual standards.

Thus, when the Commission hands over its regulatory responsibility to a state--in this care the state of Utah--the Commission has a legal obligation to ensure that the state' maintains the same high standards of conduct in all official actions that the Commission maintains on behalf of the U.S'. Government. Agreement States must have, and enforce, regulations fully compatible with those in 10 CFR Part 0. We believe there has been a breakdown in this NRC oversight responsibility. Nowhere in the decisions of the Director or the NRC Staffis there any reference to the extensive employee code of con' duct set forth in 10 CFR Part 0. Aside from these legal requirements, as a matter of good government it is equally, if not more, important for the Commission to ensure that Agreement States have and enforce compatible standards of employee conduct, then it is to ensure that'the states have and enforce compatible health and safety regulations.

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e I. Suspension of Utah's Agreement State Program 1

As the NRC Staff Evaluation notes, the NRC has authority under 274j of the Atomic Energy Act, '

l 42 U.S.C. f 2021(j) ("AEA"), to terminate orsuspend Utah's Agreement State Program, if the Commission finds thati .

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l "(1) termination or suspension of a State's program is required to-

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protect the public health and safety, OR .

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? , -(2) the State has' not complied with one or more requirements of l

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Section 274 of the AEA, (e.g., the requirement for the State

! program to be compatible with the NRC program)."

(emphasis added'). ~1n other words, apart from any question of public health and safety, the Commission must consider whether any actions of the state of Utah in establishing or enforcing )

its Agreement State program are incompatible with the requirements of the NRC's own program. '

In this case, it is cbandantly clear that actions by the then-Director of Utah's Division of Radiation Control are incompatible with~the following.NRC regulations:

10 CFR 0.735-20(a)-(c) General.

10 CFR { 0.735-21(a) Acts affecting a personal financial interest (based on 18 U.S.C.

208) .

10 CFR @ 0.735-22(a) Future employment (based on 18 U.S.C. 208).

10 CFR @ 0.735-24(a) Receiving salary from sources other than the U.S. Government (based on 18 U.S.C. 209).

l 10 CFR 0.735 '!5(a) Compensation to employees in matters affecting the Government (based on 18 U.S.C. 203) 10 CFR 0.735-28(a) Confidential statements of employment and financial interests.

10 CFR { 0.735-28a Financial disclosure reports under the Ethics in government Act.

10 CFR 0.735-4'!(a) Gifts, entertainment, and favors.

l Two of these regulations,10 CFR 0.735-21(a) and 0.735-42(a), are of particu!ar s'3nificance:

l Except as permitted by paragraphs (b), (c) and (d) of this section, no employee, or special Government employee, shall participate personally and substantially as a Government officer or employee,

'though deci.sion, approval, disapproval, disapproval, recommendation, the rendering of. advice, investigation, or .

otherwise, in a judicial or other proceeding, application, reque.st for

.a ruling or other determination...or other particular matter in which, to the employee's knowledge,-the employee, ... or any person or organization'with whom the employee is. negotiating or has any arrangement conceming prospective employment, has a financial interest upon which the outcome of the particular matter .

will have a direct and predictable effect.10 CFR 0.735-21(a)

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5 Except as provided in paragraph (b) or;(e) of this section, an employee should not solicit o'r accept,' directly or indirec.tly, any gift, gratuity, favor, entertainment, loan, or any other thing of monetary value, from a person who:

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(1) Has, or is seeking to obtain, vontractual or other b .:'... :.; or financial relations with the NRC; '

(2) Conducts operations or activities that are regulated by the NRC . .

or by an applicant for a license from the NRC; or (3) Has interests that may be substantially affected by the performance or nonperformance of his official duty.10 CFR s' O.735-42(a)

In a complaint filed in Utah's Third District Court o'f Salt Lake County, former Director of the

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Utah' State Board of Radiation Control Larry F'. Anderson claims that while in office he set up a comoration to advise Mr. Khosrow Semnani, owner of Envi,rocare, about how to license a low level radioactive waste site in the state of Utah.' Mr. Anderson further alleges that Mr. Semnani, President of Envirocare, agreed to pay a consulting fee of 100,000 dollars and an ongoing remuneration of 5 percent of all direct and indirect revenues that Mr. Semnani would realize from such a facility, if the site were successful.In his counterclaim, Mr. Semnani stated that Mr. Anderson requested the above fees while Mr. Semnani's application was before the Utah State Board of Radiation Control, ahd that Mr. Semnani paid the requested amounts and more. '

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Under either party's statement of the facts, it is clear that the payments took place and that Mr.

Anderson's pardeipation in any matters concerning Envirocare were therefore incompatible with these NRC requirements.

Moreover, in 1991, as one of eight members of the Northwest Compact, Mr. Anderson is reported to have represented Mr. Semnani's interest in seeking Northwest Compact approval to permit Envirocare to accept low-level radioactive waste.' We believe this conduct is incompatible with at least two NRC regulations, namely 10 CFR s 0.735-21(a), discussed above, and 10.CFR 0.735-49a, which requires employees to avoid any action, whether.or not specifically prohibited by Peut 0, which might result in, or create the appearance of, using a

• In the Matter of Larry F. Anderson and Lavicka v. Khosrow B. Semnani and Envirocare. Civil No. 96090727, Third Judicial District Court of Salt Lake County at g 10 and 11 (October 12,1996).

' M. at i l4.

' M., Defenilants' Answer and Counterclaim at Q 18', 4

' See e US Ecolocv. Inc. v. Northwest Interstate Compact on Low. Level Radioactive' Waste Manacement. No. C92-5091B (W.D. Wash.), Plaintiff's Memorandum in Opposition to the Utah Defendant's Motion to Dismiss, at 3 (Noted for: Aug.20,1992).

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' o public office for private gain, giving preferential treatment to any person, or losing com independence or impartiality. -

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In evaluating NRDC's petition for the suspension of Utah's Agreement State status, the' N Staff abused its discretion by failing to evaluate whether the undisputed payments by M Semnani to Mr. Anderson, and the failure of the State program to prevent dr detect s abuses, are incompa'ible with NRC program requiremems designed to ensure the' ag.

licensing process and prevent conflicts ofinterest. The Staff merely. points to routine NRC reviews of the Utah Agreement State program in 1994. Yet these reviews took place over tw years before any evidence ofimproper conduct came to light. They cannot se'rve to shield NR from its obligation to conduct a new, independent review of the State program in ligh't of new evidence.

Nor may the NRC waive its independent. obligation to enforce its own regulations on t that the rah State Attorney General is investigating the matter. As stated above, the Atomic <

Energy Act requires the Commission to assure itself that the character, association of workers in atomic energy are of a high order. Relying on the Utah State Attorney Gene investigation is particularly inappropriate here since the Utah State Attorney General also appears to have a confli~ct ofinterest in two respects. First, Ms. Jan Graham, the current Utah State Attomey General, is alleged to have accepted $2,750 in political contributions from Mr.

Semnani, President'and owner of Envirocare. Second, Larry F. Anderson claims that he receiv informal approval from the Utah State Attorney General's office to seg up a corporation

.he could advise Mr. Semnani about how to license a low level radioactive w of Utah.'

Finally, the NRC Staff abused its discretion by denying NRDC's request that it suspend U program until the state demonstrates that it can operate its radiation control program without the participation oflic,ensees, or employees oflicensees, in an oversight capacity. The Staff bases its denial on a belief that Utah has adopted satisfactory conflict-of-interest procedures, and on the fact that Mr. Semnani has taken a two-month leave of absence from the Utah Board pending the completion of the criminal investigation. It appears from these statements that absent a criminal indictment, Mr. Semnani will be permitted to continue serving on the Board, despite the fact that he is the President and owner of a major licensee of the Board.

either Utah's conflict-of-interest regulations are inadequate or they have not been applied properly to Mr. Semnani. In either case, the State program is clearly incompatible with that of

'the NRC.

" In the Matter of Larry F. Anderson and Lavicka v. Khosrow B. Semnani and Envirocare. Civil N i 10 (Third Judicial District Court of Salt Lake County)(October 12,1996).

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, II. Revocation of Envirocare's Low-Level Radioactive Waste and Mixed Waste Lic'ense The NRC Staff denied NRDC's petition that it revoke, or cause the state of' Utah'to revoke, the license or licenses under which Envirocare is currently permittsd to ' accept low-level radioacti've waste and mixed waste for permanent disposal. The Staff based its denial on the fact that NRC currently has no direct en+ority over licensing of these activities ir Utah. However, if the Commission were to suspend Utah's Agreement State status, as discussed above, it would then have ample authority to revoke Envirocare's licenses'for low-level ra'd ioactive waste and mixed .

waste. By denying NRDC's petition regarding Utah's. Agreement State program, the NRC staff.

. .has inappropriately, foreclosed any consideration.of this licensing issue.

III. Revocation of Envirocare's Byproduct Materials License

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The Director of the Office of Materials Safety and Seebrity denied NRDC's petition to revoke Envirocare's 11e.(2) byproduct materials license on the grounds that NRDC has not provided any information that Would provide a basis for imme'diate suspension of the license.- This decision also constitutes an abuse of discrenon. The NRC Enforcement Policy provides that Revocation Orders may be used for any reason for which revocation is authorized under Section 186 of the Atomic Energy Act, including any condition that would warrant refusal of a license on an original application. The Director noted that "this matter involves potential issues ofintegrity,

' which, if proven, may raise questions as to whether the NRC should have the requisite reasonable assurance that Envirocare will comply ..;m Commission requirements."" Yet, no further proofis necessary, since both Mr. Anderson and Mr. Semnani admit that payments were

' made under circumstances that are illegal under either parties' interpretation. Surely this irformation would, if known, have provided sufficient cause for NRC to refuse to grant an original license to Mr. Semnani, and therefore sufficient cause to revoke the present license.

The Director's Decision is also ' faulty in its, conclusion that immediate revocation is inappropriate because NRDC's petition does not raise any " substantial health and safety issues." NRC regulations specifically provide an altemative ground for revocation in cases where the conduct

, causing the violation was willful.10 C.F.R. 2.202(a)(5). Surely that is the case here, when the .

li. cense.e arid its owner have admitted in court to making payments that it knew were illegal.

III. Conclusion We strongly urge the Commission to preserve its own integrity,'and that of the entire national radiation licensing program, by reviewing the decisions made by the NRC Staff and the Director in the matter of Envirocare. We further urge the Commission to ensure that the NRC Office of Investigations is promptly notified'of the allegations of suspected wrongdoing made in our petition, as required.by Management Directive 8.11, " Review Process for 10 C.F.R. Q 2.206 .

l Petitions." Finally, we request the Commission to conduct an informal public hearing on this l matter.

" Director's Decision on NRDC Petition, supra note 1, at 8.

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We thank you for your immediate consideration of this request.

Sincerely, * *

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,pr -- '

Barbara A. Finamore

• Thomas B. Cochran, Ph.D.

Senior Attorney

- Director, Nuclear Program '

'cc.

. Hugh L. Thompson, Jr., N,RC Acting Executive Director for Operations l

Carl J. Paperiello, NRC Director, Office of Nuclear Materia] Safety and Safeguards S

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