ML20154H513

Us NRC Testimony Before Subcommittee on Strategic Forces

ML20154H513
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Issue date:	09/01/1998
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l U.S. NUCLEAR REGULATORY COMMISSION TESTIMONY DEFORE THE SUBCOMMITTEE ON STRATEGIC FORCES Mr. Chairman and members of the Committee, I am pleased to appear before you today to discuss the Department of Energy's low level radioactive and mixed low level waste disposal practices. I l

l You have requested that we address three topics which we will do in turn.

What is the leaal authority for DOE to transfer ownershin of defense low level waste to commercial discosalentitles?

l The Low-Level Radioactive Waste Policy Amendments Act of 1985 makes the federal i government responsible for the disposal of: low-level radioactive waste owned or generated by ;

DOE, low level radioactive waste owned or generated by the U.S. Navy, and low-level ,

radioactive waste owned or generated by the federal government as a result of research, development, testing, or production of any atomic weapon. For tha most part, DOE has disposed of its low level waste at its own sites. The Low Level P.adioactive Waste Policy Amendments Act of 1985, however, also recognizes that DOE may dispose of waste owned or generated by the federal government'at non-federal facilities. The statute provides that such disposal shall be subject to the same conditions, requirements, and charges as commercial low level waste disposed of in such facilities.

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.,. .- l What is the authority of the Nuclear Reaulatorv Commission (NRC) to reaulate DOE-orlain low level and mixed low level radioactive wastes?

The Atomic Energy Act authorizes the NRC to issue licenses for LLW disposal sites and to exempt certain activities from licensing. DOE itself is not a " person" subject to the licensing requirements of the Atomic Energy Act and therefore need not have a license for its own work involving byproduct, source or special nuclear materialincluding waste disposal. However, NRC and Agreement States have licensed activity at commercial low-level waste disposal facilities that dispose of wastes generated by commercial entities as well as DOE waste.

l One question which has been, raised is whether DOE contractors are exempt from the materials licensing requirements of the Atomic Energy Act, which are those which govern licensing of low levelwaste disposal, under the provisions of section 110a of the Atomic Energy Act. The appropriate interpretation to be given to Section 110a., and the extent to which it provides an exemption from the licensing requirements in the Atomic Energy Act of 1954, as amended, have been matters of some dispute. The range of arguments on this and related questions '

were discussed at some length in the responses provided by the Commission to questions '

asked by Senator Bumpers earlier this year and which are attached as background information to this testimony. In brief, the section provides that "Nothing in this subchapter shall be deemed

- (a) to require a license for *" (2) the construction or operation of facilities under contract with and for the account of the Commission." " Commission" here refers to the Atomic Energy Commission which was succeeded by the Energy Research and Development Administration and eventually by the DOE. Section 110 appears in subchapter IX of the Atomic Energy Act, which is concemed with " Atomic Energy Licenses" for " utilization" and " production facilities".

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Utilization and production facilities use or produce significant quantities of special nuclear l

material, that is, they are primarily power plants and weapons production facilities that use or produce certain enriched isotopes of uranium and plutonium. Subchapter IX does not pertain to the licensing of facilities such as LLW disposal facilities , which is governed primarily by section l

81 of the Atomic Energy Act which is found in Subchapter Vil of the Act.

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i The Commission's regulations, however, do contain exemptions for a broad range of activities. '

which could include low level waste disposal, conducted for DOE by certain entities. These l regulations contain, among other things, generic exemptions for DOE prime contractors conducting certain activities on government owned or controlled sites including disposal of low )

i level waste. The regulations also allow for case by case exemptions of entities (not i automatically exempt by the terms of the regulation) if the Commission determines that such an exemption " ...is authorized by law; and that, under the terms of the contract or subcontract, there is adequate assurance that the work thereunder can be accomplished without undue risk to the public health and safety". E.g.,10 C.F.R. 30.12. I The exemptions in the Commission's regulations were originally developed and promulgated by I

the Atomic Energy Commission (AEC) in 1964 when that agency was performing the dual j l

functions of licensing entities for the commercial use of source, byproduct, and special nuclear materials and contracting with private entities for the performance of work for the AEC itself. ,

i For the latter contracting matters, the AEC exempted its contractors from normal licensing requirements since the AEC itself would oversee and impose health and safety requirements on contractors doing work for the agency. Following enactment of the Energy Reorganization Act j i

and its transfer of licensing and related regulatory functions to the NRC, the agency continued i

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the exemptions in effect under NRC authority as part of a general adoption of the technical and .

conforming amendments.

Although these exemptiol.s have continuously been part of the NRC's regulations, there do not  ;

- appear to be any instances in which NRC has sought to regulate DOE contractors or i

subcontractors at a DOE owned or controlled site on the grounds they did not qualify for an I

exemption. This history of not licensing DOE contractors or subcontractors at DOE owned or j controlled sites as well as the exemptions in the regulations for prime contractors on such sites l flows from the regulatory framework established in the 1946 Atomic Energy Act, the AEA of 1954, and the Energy Reorganization Act, that any DOE contract for activities (rather than a license) would contain the provisions necessary for adequate health and safety protection for activities conducted pursuant to contract (including activities conducted through subcontract).

This history reflects a view that, as a general matter, the NRC has not regulated DOE contractors and subcontractors conducting activities for DOE on DOE owned or controlled sites.

l Instead, DOE has had the authority and responsibility to exercise safety oversight through its own contracts with the various entities conducting activities for the Department at sites it owns or controls. This practice was reinforced by the adoption of a provision as part of the Defense Auuorization Act in 1980 which precluded NRC from using any appropriated funds for any purpose related to licensing of any defense activity or facility of the Department of Energy by the NRC. Although there has been some debate about the continuing applicability of this provision, the Commission has been of the view that it would be prudent to obtain a specific legislative waiver before it would undertake licensing of a DOE defense activity or facility.

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j What is the authoritv of States to reaulate DOE orlain low level svula, ; red low level  ;

i radioactive waste under the NRC's aareement state oroaram? i l

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l Under the Atomic Energy Act the NRC may relinquish to states, by agreement, its authority to l license and regulate certain activities, including LLW disposal facilities. Among other things, an

" agreement state" must certify to the NRC that it has a program for the control of radiation l

hazards adequate to protect the public health and safety and that its public health, safety and environmental standards are equivalent. to the extent practicable, or more stringent than the NRC's corresponding standards.

NRC and Agreement States have licensed commercial low-level waste disposal facilities that l

dispose of wastes generated by commercial entities as well as DOE waste. Neither the Atomic L Energy Act nor NRC regulations address the question of Agreement State regulatory authority i- -

over DOE contractors. The criteria under which NRC reviews a State's program set forth that the State should provide exemptions for NRC and DOE contractors which are substantially ,

equivalent to those of the NRC. Thus, Agreement States would be expected to provide exemptions to DOE contractors and subcontractors that are substantially similar to those described above which are provided by NRC's regulations.

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. . . . ' . ' .' UNITED STATES 1

j NUCLEAR REGULATORY COMMISSION g wAsHINGTSN, D.C. 20555 4 001 ~

• % February 18, 1998

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CHARMAN The Honorable Dale Bumpers Committee on Energy and Natural Resources United States Senate .

Washington, D.C. 20510

Dear Senator Bumpers:

This letter responds to your letter of December 9,1997, regarding a possible proposal by the Department of Ener.gy (DOE) to use private companies to dispose of DOE waste on private property.

Your letter expresses serious policy concems with DOE's proposal and encloses questions for the Commission to answer. Your letter also encloses a legal memorandum prepared by Committee staff.

Enclosed are responses to the questions prepared by our Office of General Counsel. If the Commission can provide any additional assistance, please let us know.

Sincerely, M

Shirley Ann Jackson

Enclosure:

As stated cc: Senator Frank H. Murkowski l'

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.;  :.l* i, QUESTION 1. Does section 110a. of the Atomic Energy Act of 1954 exempt DOE contractors from the materials licensing requirements of Chapters 6,7, and 8 or only the facilities licensing requirements of chapter 107 ANSVvER.

The appropriate interpretation to be given to Section 110a., and the extent to which it provides an exemption from the licensing requirements in the Atomic Energy Act of 1954, as amended, are matters of some dispute. Section 110a. excludes certain activities conducted under contract with the " Commission" [formerly referring to the AEC, now referring to the DOE and the NRC]

from the Act's requirement for a license:

Sec.110. Exclusions. - Nothing in this chapter [ Chapter 10] shall be deemed

a. to require a license for (1) the processing, fabricating, or refining of special nuclear material, or the separation of special nuclear material, or the separation of special nuclear taterial from other substances, under contract with and for the account of the Commission; or (2) the construction or operation of facilities under contract with and for the account of the Commission; . . . .

As noted in the legal memorandum accompanying these questions to the NRC, litigation on this issue is pending between the Department of Energy (DOE) and Waste Control Specialists, LLC (WSC) in the United States District Court for the Northern District of Texas, in a preliminary ruling, the Court appeared to hold that.any facility which DOE uses for disposal of low-level waste (LLW) must be self-regulated by DOE and, thus, exempt from licensing under Section 110a See Waste Control Soecialists. LLC v. United States Deoartment of Enerav. et al.,

Preliminary injunction Order at 5-6 (October 3,1997). DOE, which has appealed the ruling, appears to take a narrower view that Section 110a. is limited to " utilization and production facilities" and therefore does not exempt other facilities, such as LLW disposal facilities, from licensing. See Brief for Appe4 ants at 33-34, Waste Control Soecialists. LLC v. United States Deoartment of Enerav. et al., No. 97-11353 (5th Cir.., filed November 26,1997). The legal memorandum accompanyir'g these questions to the NRC also appears to favor the narrower view.

Since Section 110a. is located in Chapter 10 of the Act and refers only to Chapter 10 (i.e.,

• [n]othing in this chapter shall be deemed. . . to require a license. . . ."), it is certainly possible to interpret the exclusion in the section narrowly, so as to apply only to the requirement for a production and utilization facility license (i.e., the subject of Chapter 10), and not to the license requirements in Chapter 6 (special nuclear material), Chapter 7 (source material), and Chapter 8 (byproduct material). However, the rest of the language used .a the section is very broad. When the NRC rendered a formal opinion on the scope of its jurisdiction over Energy Research and Development Administration (ERDA, subsequently, DOE) facilities, it appeared to follow this broader view.'

' in deciding that high-level waste tanks under construction at Hanford and Savannah River by DOE's predecessor, the Energy Research and Development Administration (ERDA),

were not subject to NRC licensing , the Commission said:

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QUESTION 1 (Cont'd) It can also be argued that Section 110a. reflects a structure which Congress intended for the Act as a whole, that is, that the AEC did not need to license its contractors through which, historically, it carried out its activities. Under the predecessor Atomic Energy Act of 1946, the AEC had not required the licensing of contractors involved in the operation of Commission-o vned facilities including those involved in the acquisition, transfer, use, and disposal of radioactive materials related thereto.8 Further, the history of Section 110a. of the 1954 Act does not demonstrate any Congressional determination to narrow the AEC practice

• Thus, according to the logic of the argument, alllicensing provisions of the 1954 Act continue the structure established under the 1946 Act of not requiring AEC contractors to be licensed, including Section 110a.

l The AEC issued regulations under the Atomic Energy Act of 1954 which granted exemptions I

from licensing to AEC contractors but, in doing so, did not provide an explanation or analysis of Section 110a., or any other statutory authority for the AEC's action. In 1956, the AEC adopted license exemptions for AEC production and utilization facilities contractonf and also asserted Since ERDA facilities are generally exempt from the licensing requirements of the Atomic Energy Act,42 U.S.C. $2140 [i.e., citing Section 110], licensing the new ERDA waste tanks is required only if they come within the scope of Section 202(4) of the Energy Reorganization Act of 1974,42 U.S.C. @5842(4).

Natural Resources Defense Council (Request Concerning ERDA High-l.evel Waste Storage Facilities),5 NRC 550,552 (1977). However, the Commission's decision, which mainly dealt with the language and legislative history of Section 202(4) of the Energy Reorganization Act of 1974, did not discuss Section 110a. The high-level waste in the tanks at Hanford and Savannah River was generated by production activities at those sites. Thus, the Commission could have considered that the storage tanks were part of the production facilities and, as such, were exempt from licensing under Section 110, 8 See the AEC's notice, promulgated under the Atomic Energy Act of 1946, adopting 10 CFR Part 30 on distribution of radioisotopes (16 FR 3251 (1951)):

930.10 Persons operating Commission-owned facilities. The regulations in this past do not apply to persons to the extent that such persons operate Commission-owned facilities in carrying out programs on behalf of the Commission. In such cases, the acquisition, transfer, use, and disposal of radioisotopes are governed by the contracts between such persons and the Commission, and internal bulletins, instructions and directives issued by the Commission.

8 See the Report of the Joint Committee on Atomic Energy on the 1954 Act which included the following statement: "Section 110 clearly excludes the contract operations of the l Commiesion from the licensing provisions of the bill. ." S. Rep. No. 1699, 83d Cong., 2d Sess. 21 (1954).

• See 21 FR 355,356 (1956):

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l QUESTION 1 (Cont'd) l the authority to extend license exemptions to AEC contractors involved in activities other than production and utilization facilities.5 Although the AEC did not make the basis explicit, it could be argued that the AEC license exemptions simply reflected the AEC practice, codified by Congress in the 1954 Act, not to require the licensing of AEC contractors involved in the i i

operation of Commission-owned facilities including the acquisition, transfer, use,'and disposal of l

radioactive materials related thereto, in 1964, the AEC revised the contractor license

! exemptions to clarify their scope? The revised exemptions contained specific exemptions for I AEC prime contractors performing functions under the contract at a U.S. Government-owned or controlled site (10 CFR 30.12,40.11,50.11 and 70.11). For other prime contractors and subcontractors, a license exemption was permitted if the Commission determined that there was adequate assurance under the terms of the contract or subcontract that public health and safety were protected. l The AEC license exemptions for AEC contractors appear to be based on the principle implicit in Section 110a., that any AEC contract would contain the necessary health and safety protection provisions which could be enforced as easily by the terms of a contract as by license conditions, and therefore, that both types of control should not be required. Furthermore,if facilities were to be exempt from licensing and subject to safety controls through the contracts, it made little sense to require the nuclear materials used on such sites to be licensed rather than subject to contractual controls.

S 50.11 Exceptions and exemptions from license. Nothing in this part shall be deemed to require a license for: . . .

@ The construction or operation of production or utilization facilities under contract with and for the account of the Commission; . . . .

5 The exemptions to AEC contractors involved in activities other than production and utilization facilities exempted the contractors from the requirements for a license for special nuclear material, source material, and byproduct material (Chapters 6,7, and 8 of the Atomic Energy Act). See, e.g.,21 FR 764,765 (1956):

$ 70.11 Persons using special nuclear material under contract with and for the account of the Commission. The regulations in this part do not apply to any person to the extent that such person receives, possesses, uses, or transfers special nuclear material under, and in accordance with, a contract with and for the account of the Commission. In any such case, such person's obligations with respect to the special nuclear material are governed by the applicable contract between such person and the Commission.

I 5 See 29 FR 14401 (1964).

QUESTION 2. Does the Commission, as opposed to the Department of Energy, have the i

authority under sections 57d.,62, and 81 to make an independent ,

l judgment on whether to exempt certain " kinds of uses or users from the l l requirements for a license" under those sections?

ANSWER.

l l As a general matter, the Commission has authority under Section 57d.,62, and 81 to grant i exemptions from the requirements for a license under those sections. However, whether that l l

Commission authority includes the authority to grant license exemptions to DOE contractors is a l more complicated question because Commission authority to exempt would imply that the Commission has authority to license the contractors.

i l The Energy Reorganization Act of 1974 transferred "alllicensing and related regulatory functions of the Atomic Energy Commission" to the NRC.7 The legislative history of the Act l states that the licensing and related regulatory functions transferred to the NRC relate to

" facilities, materials and activities in the civilian nuclear industry which . . [were] under the )

jurisdiction of the regulatory side of the AEC.'" Section 202 of the Act further provided as l follows: J l

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Notwithstanding the exclusions provided for in section 110a. or any other provisions of <

l the Atomic Energy Act of 1954, as amended (42 U.S.C. 2140(a)), the Nuclear Regulatory Commission shall, except as othenvise provided by section 110b. of the Atomic Energy Act of 1954, as amended (42 U.S.C. 2140(b)), or other law, have licensing and related L

regulatory authority pursuant to chapters 6,7,8, and 10 of the Atomic Energy Act of l 1954, as amended, as to the following facilities of the Administration:

i (1) Demonstration Liquid Metal Fast Breeder reactors when operated as part of the power generation facilities of an electric utility system, or when operated in any other manner for the purpose of demonstrating the suitability for commercial application of such a reactor.

(2) Other demonstration nuclear reactors - except those in existence on the effective date of this Act -when operated as part of the power generation facilities of an electric utility system, or when operated in any other manner for the purpose of demonstrating l the suitability for commercial application of such a reactor.

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7 Public Law 93-438, @201(f) (1974).

• S. Rep.No.93-980,93d Cong.,2d Sess. 57 (1974).

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QUESTION 2 (Cont'J) (3) Facilities used primarily for the receipt and storage of high-level radioactive wastes resulting from activities licensed under such Act. l (4) Retrievable Surface Storage Facilities and other facilities authorized for the express purpose of subsequent long-term storage of high-level radioactive waste generated by the Administration, which are not used for, or are part of, research and development activities.

The Energy Reorganization Act also created the Energy Research and Development Administration (ERDA - now DOE), and in Section 107(a), entitled " Powers," stated as follows:

. . . Such functions of the Administrator under this Act as are applicable to the nuclear activities transferred pursuant to this title shall be subject to the provisions of the Atomic Energy Act of 1954, as amended, and to other authority applicable to such nuclear activities.

Moreover, Congress intended for ERDA, in carrying out its functions, to have the responsibility .

for assuring that its programs are conducted in a manner which protects the environment and I public health and safety. The Report of the Senate Committee on Government Operations included the following statement:

The Committee also intends that tfie Assistant Administrator for Environment and Safety should have an inspection and audit function which reache.; throughout ERDA to ensure the establishment and enforcement of appropriate health, public safety and environmental protection standards for all activities of the agency. Such a function is esoeciativ imoerative in the noncommercial nuclear R & D area because the new INRC1 yyj,ll have no licensina iurisdiction over such ERDA nuclear activities. [ Emphasis added.]'

Thus, the language of the statute and the legislative history support the view that, when Congress enacted Section 202, Congress was extending the authority previously exercised by the regulatory side of the AEC beyond that which was transferred by Section 201(f) cited above.'

After NRC's creation,it adopted all of the existing regulations of the AEC, including the AEC

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exemption provisions, without any reexamination of their bases. The exemption provisions were modified only to reflect the Energy Reorganization Act Section 202 exceptions and to refer to l l

' S. Rep.No.93-980,93d Cong.,2d Sess. 30 (1974).  !

' "Section 202 extends the licensing and related regu!atory authority of [the NRC) beyond the present provisions of the Atomic Energy Act. ." S. Rep.93-980,93d Cong.,2d Sess. 59 (1974).  !

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OUESTION 2 (Cont'd) both ERDA (now DOE) and NRC contractors. In the Federal Reaister notice adopting these l regulations, the Commission included the following statement:

. . . The primary purpose of these technical and conforming amendments. . . is to reflect wording, organizational and procedural changes effected or made necessary by that Act.

. . . Adoption of.these technical amendments does not reflect any judgment by the Commission on the merits of the existing rules and is, of course, without prejudice to modification of those rules by the Commission in the future."

It is against this statutory and regulatory structure and background, that the question of Commission authority to grant exemptions from licensing to DOE contractors would need to be l addressed. i l

A strong argument can be made that the Commission generally has no authority to license (or

, exempt from licensing) DOE contractors except with respect to the DOE facilities in Section 202 of the Energy Reorganization Act of 1974. In other words, it can b argued that Section 202 of the Act, itself, defines the scope of NRC regulatory authority over DOE contractor activities in general. As to other DOE contractor activities, DOE generally would have responsibility to self-regulate under the Atomic Energy Act of 1954 and other authority applicable to such nuclear activities, and the Commission accordingly would not have authority to regulate (or grant exemptions) to the DOE contractors.

The argument that NRC lacks authority to license (or exempt) DOE contractors is supported by the historical practices of the NRC and DOE. Excluding the facilities listed in Section 202 of the Energy Reorganization Act of 1974, both the NRC and the DOE appear to have generally regarded activities under DOE contracts (or subcontracts) to be outside the scope of NRC licensing requirements.i2 Although NRC maintained the AEC exemptions for contractors in its regulations, there do not appear to be instances in which NRC sought to regulate DOE contractors (or subcontractors) on the ground they did not qualify for specific exemption.

Similarly, there do not appear to be instances in which NRC (or DOE) made exemption determinations for DOE contractors (or subcontractors) on the ground that contract terms provided adequate protection of public health and safety, under those provisions. (See the response to Question 4 discussing instances when NRC considered the exemptions.) This practice was, of course, reinforced by the adoption of 42 U.S.C. S7272 which, beginning in 1980, precluded the NRC from using any appropriated funds "for any purpose related to licensing of any defense activity or facility of the Department of Energy" by the NRCP At the

" 40 FR 8774 (1975) 5 The NRC and Agreement States have licensed activity at facilities which perform a

• mixed-use" activity - that is, some of the nuclear-related work is of a commercial nature and

! similar work is performed under DOE contracts (e.g., low-level waste disposal facilities).

" See Department of Energy National Security and Military Applications of Nuclear Energy Authorization Act of 1981, Public Law 96-540 (1980). See also Public Law 96-164, Title 11, $210 (1979).

i QUESTION 2 (Cont'd) 4-time this provision was adopted, as indicated in the legislative history, Congress intended to

" continue current policy with respect to NRC licensing of DOE defense programs until the Congress addresses certain concerns raised by the NRC in its report'on ' Regulation of Federal Radioactive Waste Activities.'" H.R. Rep. No.96-702,96th Cong.,1st Sess. 30-31 (1979)

(Conference Report).

However, if it is argued that the NRC lacks authority to grant licensing exemptions to DOE contractors, then it might be questioned why NRC would have adopted the AEC licensing exemptions for contractors when it was created in 1975 (and why it still retains them today)!'

We believe a supportable explanation is that, in retaining the AEC exemptions, the NRC was simply maintaining the status.q@. At the time of the Energy Reorganization Act of 1974, a very limited set of AEC activities were being conducted under license'5 and, in addition, the AEC was using some licensees to perform activities that the licensees were performing commercially under license.'8 Further, given that Section 201(f) of the Act transferred to the NRC "all licensing and related regulatory functions of the [AEC),"'7 it may have seemed doubtful that Congress intended not to transfer the regulatory authority exercised by the AEC (and the Agreement States) with respect to tnese activities. Thus, by adopting the same AEC exemptions, as they were written, it could therefore be made apparent in NRC regulations that NRC (and the Agreement States) had licensing and regulatory authority over ERDA (and now DOE) activities as AEC had in the past. However, beyond this simple " place-holder" status, continuing the status.qua as to NRC (and Agreement State) licensing authority with respect to DOE activities that historically involved licensing, the exemptions would have no continuing significance.is

" As noted in the answer to Question 1, the AEC exemptions, at least arguably, were a codification of an AEC practice subsequently adopted in the Atomic Energy Act of 1954, not to require the licensing of AEC contractors involved in the operation of Commission-owned (or controlled) facilities including the acquisition, transfer, use and disposal of radioactive materials related thereto. Under this argument, the NRC's continuation of the exemptions would not imply the authority to license AEC contractors.

'5 The AEC licensed naval fuel-cycle and mixed-oxide pilot program activities conducted at facilities not on Govemment-owned sites (e.g., NFS Erwin, B&W Lynchburg, UNC Windsor, and CE Wood River JuncJon). NRC continued to license these activities.

For a period beginning in the mid-1960's, the AEC sent unclassifid low-level wastes (LLW) to commercial facilities already licensed by either the AEC or Agreement States for disposal of LLW. These facilities continued to be licensed by NRC erine Agreement States.

DOE stopped shipping LLW to commercial sites in 1979 apparently to preserve disposal capacity for waste generated by NRC and Agreement State licensees. Recently, DOE began using the Envirocare facility which is licensed by the State of Utah, an Agreement State.

" Section 201(f) also provides that "all of the licensing and related regulatory functions of the [AEC). . . are excepted from the transfer to [ERDA)."

Under this view, the NRC (and Agreement States) would have regulatory authority over (1) the specific (formerly AEC) licensees conducting (formerly AEC) naval fuel-cycle and mixed-oxide pilot program activities under license (e.g., NFS Erwin, B&W Lynchburg, UNC

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! OUESTION 2 (Cont'd) Although the Act and historical practices are consistent with the view that NRC generally lacks

! authority to license or grant licensing exemptions to DOE contractors, it should be recognized l

there is also room to rnake the argument that NRC has authority to interpret and apply the l, licensing exemptions. Thus, for example, a DOE contracting arrangement that did not contain ,

health and safety protection provisions in the contract and that authorized activity on a site that r l was controlled by the contractor might provide a basis for the NRC to interpret that performance ,

of work would not take place "at a United States Government-owned or controlled site" and,  !

j therefore, to find that the DOE contractor is subject to licensing. An analysis of the specific facts in each case would need to be done for each individual situation.

However, it should be recognized that it is questionable whether the NRC would be able to achieve any consistency in regulating DOE contractors including, most particularly, DOE I

contractors engaged in apparently similar activities. We note that a waste solidification project i at Savannah River is proceeding under DOE self-regulation, without NRC participation.

l However, at DOE's discretion, apparently identical projects could be structured by DOE in such a way as to appear to require licensing. It is also unclear, as more importance b:; gins to be l placed on the terms of DOE's contractual arrangements, whether it might be argued that NRC or an Agreement State, as appropriate, should begin to examine existing contracting arrangements and factual circumstances surrounding the work of current DOE prime contractors and subcontractors, in order to achieve a more consistent application of the licensing exemptions.

Given the scope of DOE activities, this could create a substantial, unanticipated burden on the NRC and Agreement States.

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Windsor, and CE Wood River Junction) ed (2) ERDA's (and now DOE's) use of commercial facilities for activities the facilities are already performing under license by NRC or an Agreement State (e.g., LLW disposal).

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! Although it would appear logical to conclude that the authority to determine the extent of any exemption from licensing was given to the NRC as an inherent part of the licensing function transferred to the NRC, under the AEC, it was the General Manager side (now in DOE)

which made the decisions to proceed by contract oversight rather than by licensing.

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. 1 OUESTION 3. What is a " United States Government. . controlled site" for purposes of sections 30.12,40.11, and 70.11 of the Commission's rules? .

l ANSWER.

l Section 30.12 of the Commission's regulations provides, in pertinent part, as follows:  ;

l Except to the extent that Department facilities or activities of the types subject to '

licensing pursuant to section 202 of the Energy Reorganization Act of 1974 are involved, any prime contractor of the Department is exempt from the requirements for a license set forth in sections 81 and 82 of the Act and from the regulations in this part to the extent that such contractor, under his prime contract with the Department manufactures, produce.:, transfers, receives, acquires, owns, possesses, or uses byproduct material I for:

(a) The performance of work for the Department at a United States Government-owned or controlled site, including the transportation of byproduct material to or from such site and the perforrr.ance of contract services during temporary interruptions of such transportation; . . . . (emphasis added.)

The Commission adopted this regulatory language (as well as comparable language in Section 40.11, for source material, and in Section 70.11, for special nuclear material) shortly after it was created as an agency in 1975, and in the course of adopting all the existing AEC regulations. At that time, the Commission said it was adopting the AEC regulations without any judgment on the merits, and it neither explained the exemptions nor the meaning of " United States Government. . . controlled site."

The AEC, when it clarified the exemption provisions in 1964 (29 FR 14401), included the following statement:

The phrase " Government controlled site" means a site leased or otherwise made available to the Government under terms which afford to the Commission rights of access and control substantially equal to those which the Commission would possess if it were the holder of the fee as agent of and on behalf of the Government.20 2

Prior to adopting the 1964 clarification, the AEC had found a practice within the AEC of contracting on a non-licensed basis with otherwise licensed commercial facilities (i.e., mixed facilities), and that the practice created and perpetuated inconsistencies related to health and safety standards, approvals and inspections. The 1964 clarification did away with these problems by extending AEC regulatory control to cover AEC contract operations in commercial facilities. AEC licensing requirements were traditionally inapplicable at United States Government-owned or controlled sites.

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QUESTION 3 (Cont'd) i it might be possible to conclude in an appropriate case that a site could be regarded as a l l- " United States Govemment. . . controlled site" if the Department of Energy exercised sufficient l l~ safety oversight over activities at the site.8' i i

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2 See Letter to Joe Egan, Esq., from Martin G. Malsch, Deputy General Counsel; dated

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QUESTION 4. Does the Commission decide whether a specific site is exempt from licensing under sections 30.12, 40.11, and 70.11 or does it leave that decision to the Department and its contractors?

i ANSWER l l To our knowledge, the Commission has not been presented with the question of whether a specific site is exempt from licensing under Sections 30.12,40.11, or 70.11. As indicated in response to Question 2, since 1974 the NRC and DOE (formerly, ERDA) have generally i regarded activities under DOE contracts (or subcontracts) to be outside the scope of NRC l licensing requirements. i in the late 1970's, the NRC considered whether certain nuclear generators used for the National Aeronautics and Space Administration's space program should be subject to licensing under the Atomic Energy Act of 1954. The devices, which are not subject to NRC licensing, are carried on spacecraft that are federally-owned vehicles launched from U.S. Government-owned sites. In 1996, the NRC staff decided not to require licensing of a DOE subcontractor preparing isotopes at DOE's Idaho National Engineering Laboratory because the subcontractor's contract included l sufficient health and safety protection.  !

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l l QUESTION 5. Has the Commission ever exempted a low-level waste site owned by a private company on the basis that it was a " United States Government.

l controlled site?"

l ANSWER.

. No. To our knowledge, the Commission has not been presented with the question of whether to exempt from licensing a low-level waste site owned by a private company.

in correspondence discussing in general terms NRC licensing authority over a private entity l disposing of DOE low-level radioactive waste under DOE contract on a non-DOE site, the view l was expressed that the need for an NRC license would depend on whether DOE would exercise sufficient safety oversight over disposal activities so that the site could be regarded as a DOE controlled site, and that if the oversight were such that the site would be controlled by DOE, the disposal would be exempt from licensing under 10 CFR 30.12.22 In 1993, the NRC found acceptable an exemption to the land ownership requirement in 10 CFR 61.59(a) granted to Envirocare of Utah, Inc., by the State of Utah. However, in that case, the State, using the exemption authority in its regulations, issued the exemption when it issued a license to Envirocare in March 1991.

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22 Letter to Joe Egan, Esq., from Martin G. Malsch, Deputy General Counsel; dated

November 21,1996.

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OUESTION 6. Do sections 30.12,40.11, and 70.11 of the Commission's rules still provide an independent basis for exempting low-level waste disposal from NRC licensing or have those exemptions been superseded by part 61 so

)

far as low-level waste disposal is concerned?

ANSWER The question of the extent to which Sections 30.12,40.11, and 70.11 of the Commission's l regulations provide a basis for exempting the activities of DOE contractors from NRC licensing and regulation is addressed in the answer to Question 2.

i There is no indication in the Commission's rufemaking on Part 61 that the Commission intended Part 61 to supersede Sections 30.12,40.11, or 70.11. Because the Commission's licensing' l l authority under Section 202 of the Energy Reorganization Act does not extend to DOE LLW

! disposal facilities, it seems likely that the Part 61 rulemaking was understood not to apply to the LLW disposal activities of DOE contractors at those facilities.23 l

l 23 l

l See 10 CFR 61.7(c)(4) (Part 61 LLW disposal license will be terminated (rather than transferred to the Federal government that owns the disposal site after satisfactory disposal site closure)if the Federal agency administering the land on behalf of the Federal government is DOE *because the Commission lacks regulatory authority over the Department for this activity.")

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QUESTION 7. Does the exemption for a " United States Government. . . controlled site" apply under part 61 in view of the government ownership requirements of section 61.59?

ANSWER.

As discussed in response to Question 3, the exemptions for contractor activities on a " United l States Government-owned or controlled site" were adopted by the AEC which explained that

" United States Government. . . controlled site" meant a site leased or otherwise made available under terms that gave the AEC rights of access and control substantially equal to those possessed by an owner. The exemptions appeared to reflect the historical fact that AEC licensing requirements were traditionally inapplicable at such sites. Although the Energy Reorganization Act of 1974 gave the NRC licensing and regulatory jurisdiction over certain DOE l facilities, DOE low-level waste disposal facilities were not among them.

l The governmental ownership requirement in Section 61.59 is one of the lionsing requirements l applicable to commercial land disposal facilities subject to the Commission's jurisdiction.

Federal or State governmental ownership of the land has been a licensing requirement for

disposal of waste at a land disposal facility since the inception of commercial land disposal operations. It was adopted as a requirement by the AEC in 1961 for persons engaged in i commercial radioactive waste disposal activities. See 26 FR 352 (1961)("The Commission will i not approve any application for a license to receive licensed material from other persons for l disposal on land not owned by the Federal government or by a State government.")

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l OUESTION 8. Do agreement states have the authority to license and regulate private companies receiving low-level radioactive wastes from the Department of Energy for disposal on private land under section 274 of the Atomic Energy Act and part 150 of the Commission's rules?

, ANSWEB.

As discussed below, neither Section 274 nor NRC regulations in 10 CFR Part 150 address the question of Agreement State regulatory authority over DOE contractors. However, it is clear that a State entering into an agreement with NRC under Section 274 can have no greater authority to license DOE or its contractors than possessed by NRC at the time authority is relinquished to a State. Agreement States are expected to provide exemptions to DOE contractors that are j substantially equivalent to Sections 30.12,40.11 and 70.11 of the Commission's regulations.

Section 274b. of the Atomic Energy Act of 1954, as amended, provides that:

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Except as provided in subsection c.,8' the Commission is authorized to enter into l l agreements with the Governor cf any State providing for discontinuance of the regulatory authority of the Commission under chapters 6,7, and 8, and section 161 of this Act with respect to any one or more of the following materials within the State -- )

(1) byproduct materials as defined in section 11e.(1): j (2) byproduct materials as defined in section 11e.(2); -

(3) source materials; (4) special nuclear materials in quantities not sufficient to form a critical mass. ,

1 During the duration of such an agreement it is recognized that the State shall have authority to regulate the materials covered by the agreement for the protection of the public health and safety from radiation hazards.

In the course of implementing Section 274, the AEC issued regulations in 10 CFR Part 150 which the NRC adopted as part its regulations. Under Part 150, a person who possesses radioactive materials in an Agreement State is exempt from the requirements for a Commission j license for the radioactive materials covered by the agreement. However, the exemption does .

not apply to agencies of the Federal government (10 CFR 150.10). Part 150 does not address i the status of DOE (or NRv) contractors within the Agreement State. '

l 2'

Section 274c. of the Act directs the NRC not to discontinue its authority with respect to the regulation of production and utilization facilities, exports and imports of certain nuclear I materials and facilities, disposal of nuear materials into the ocean or sea, and disposal of I materials determined to require a licens From the Commission.

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QUESTION 8 (Cont'd) .

Under Section 274d., an agreement shall be entered into between the State and the 1

Commission after-l l

. . . (2) the Commission finds that the State program is . . . in all other respe' cts compatible with the Commission's program for regulation of such materials, and that the State program is adequate to protect the public health and safety with respect to the materials covered by the proposed agreement.

Criteria developed by the NRC in 1981 to assist in the implementation of Section 274 envisions that a State entering into an agreement with NRC will provide licensing exemptions for DOE (and NRC) contractors.2s The NRC criteria include model language for the State's licensing I exemptions that essentially repeats the language of NRC's licensing exemptions in Sections I 30.12,40.11, and 70.11 of NRC regulations.2s Under the criteria, which remain in effect today, the State is to have exemptions that are "substantially equivalent" to the model language.

Thus, Agreement State authority to license and regulate persons disposing of raricactive wastes from DOE depends on the meaning of the NRC licensing exemptions for DOE contractors.27 As discussed in response to Question 2, while the scope of the licensing authority reflected in the NRC exemptions is open to some dispute, we believe that the adoption of these licensing exemptions by the NRC merely preserved the.glaM. gyp, reflecting NRC (and Agreement State) licensing authority with respect to DOE activities that historically involved licensing, and otherwise having no continuing significance. While it might be argued that the licensing exemptions include the authority to interpret and apply the exemptions depending on the factual circumstances and contractual arrangements in a particular case, we do not believe they are indicative of broad authority on the part of NRC to license or exempt DOE contractors.

2s See NRC Statement of Policy on " Criteria for Guidance of States and NRC in Discontinuance of NRC Regulatory Authority and Assumption Thereof by States Through Agreement" (46 FR 7540 (1981), as amended (46 FR 36969 (1981); 48 FR 33376 (1983)("NRC and Department of Enegy Contractors. The State should provide exemptions for NRC and DOE contractors which are substantially equivalent to the following exemptions: ...").

2s in the case of a prime contractor or subcontractor whose exemption depended on a determination, the model language calls for the State and NRC to " jointly determine" that the l exemption is appropriate.

I 27 it should be recognized that, in some instances, a federal contractor may be able to assert immunity from State regulation under the Supremacy Clause of the U.S. Constitution.

i See. e.a., Goodyear Atomic Coro. v.Rik,486 U.S.174 (1988).

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QUESTION 9. What role is the Commission playing in the review of the Waste Control Specialists (WCS) proposal?

ANSWER

On various occasions, members of the NRC staff and Commission offices received information or briefings on the status of the proposal of Waste Control Specialists, LLC (WCS). In November 1996, Martin G. Matsch, then Deputy General Counsel of the NRC, wrote a letter to

attorneys for WCS. The letter is cited in footnote 14 of the legal memorandum enclosed with the

! letter transmitting these questions to NRC and in our responses to Questions 3 and 5.

Apart from these activities, the Commission is playing no role in the review of the WCS proposal.

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QUESTION 10. How does the WCS proposal relate to NRC and DOE efforts to bring DOE nuclear facilities under NRC regulation?

ANSWER.

It appears that the WCS propesal has generated a great deal of interest in a number of issues. 1 Some of the issues raised by the WCS proposal might be seen as overlapping issues that r:eed I to be, addressed in the context of considering possible NRC regulation of DOE facilities. For )

example, in the answer to Question 2, we noted that a waste solidification project at Savannah River is proceeding under DOE self-regulation,'without NRC participation, but that DOE might structure apparently identical projects in such a way as to appear to require i 1

licensing. We understand the WCS proposal to suggest how DOE might structure contractual arrangements and, in that sense, to raise issues that might be seen as potentially overlapping i issues in NRC's regulation of DOE facilities.

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,,,,y==gr4=A=,y,jy;;;ga wn .~crou.oc resio-oso December 9,1997 The Honorable Shirley Ann Jackson Chairman U.S. Nuclear Regulatory Commission Washington, D.C. 20555 0001

Dear Madam Chairman:

Last month, you and Secretary Pena initiated a pilot program under which the Nuclear Regulatory Commission will begin regulating the Department of Energy's nuclear facilities. The Appropriations Committees have already endorsed this initiative and have directed that future DOE nuclear facilities be constructed in accordance with NRC licensing standards. ,

l Meanwhile, the Department is giving serious consideration to invoking its self. regulatory authority to shield commercial low-level waste disposal firms from NRC or agreement state i licensing. While DOE waste contractors have historically been exempt from NRC or state l l

i licensing for waste disposal activities on DOE sites, DOE is now entertaining a proposal to' extend this exemption to private companies disposing of DOE waste on private property.

I have serious policy concems with this proposal. Moreover, my staff has given me a legal memorandum, a copy of which is enclosed, which questions its legal basis.

I would be grateful if you would review the enclosed memorandum and provide me with the Commission's views on this matter. In puticular, I would appreciate the Commission's answers to the attached questions.

Thank you for your assistance.

Sincerely,

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\ .. , )b W Dale Bumpers Ranking Democrat

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l QUESTIONS i .

1. Does section lloa. of the Atomic Energy Act of 1954 exempt DOE contractors from the materials licensing requirements of chapters 6,7, and 8 or only the facilities licensing requirements of chapter 107 l

2. Does the Commission, as opposed to the Department of Energy, have the authority under sections 5?d.,62, and 81 to make an independentjudgment on whether to exempt certain >

" kinds of uses or users from the requirements for a license" under those sections?

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3. What is a " United States Govemment ... controlled site" for purposes of sections 30.12,40.11, and 70. I1 of the Commission's rules?

4. Does the Commission decide whether a specific site is exempt from licensing under l

' sections 30.12,40.11, and 70.11 or does it leave that decision to the Department and its contractors?

l S. Has the Commission ever exempted a low-level waste site owned by a private company on the basis that it was a " United States Government ... controlled site"?

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6. Do sections 30.12,40.11, and 70.11 of the Commission's rules still provide an

. mdependent basis for exempting low-level waste disposal from NRC licensing or have those exemptions been superseded by part 61 so far as low-level waste disposal is concemed?

7. Does the exemption for a " United States Govemment ... controlled site" apply under l

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!_ part 61 in view of the govermnent ownership requirements of section 61.597 l

8. Do agreement states have the authority to license and regulate private companies i

receiving low-level radioactive wastes from the Department of Energy for disposal on private land under section 274 of the Atomic Energy Act and part 150 of the Commission's rules?

9. What role is the Commission playing in the review of the Waste Control Specialists (WCS) proposal?

10. How does the WCS proposal relate to NRC and DOE efforts to bring DOE nuclear facilities under NRC regulation?

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November 12,1997

-MEMORANDUM i: To: Senator Bumpers From: - Sam Fowler l

Subject:

Waste Control Specialists and the Regulation of DOE Low-Level Waste Disposal

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Mary Anne Sullivan's nomination to be the General Counsel of the Department of Energy (DOE) has been blocked by Waste Control Specialists (WSC), a waste disposal company located in Texas. _ WCS is engaged in an ongoing dispute with DOE over WCS's ability to compete for contracts to dispose of DOE's low-level radioactive wastes at the company's site. DOE has been unwilling to award WCS a contract because the company does not have a low-level waste disposal license and does not qualify for one under Texas law. WCS argues that it does not need one.

lI nis dispute is significant to the Committee on Energy and Natural Resources for ressons that go beyond Ms. Sullivan's nomination. WCS is saying that "if a private entity makes itself a

! DOE contractor " it is exempt from Nuclear Regulatory Commission (NRC) and state regulation. l In fact, DOE can dispose ofits low-level wastes on its own sites without a license from either the NRC or the host state. But wher DOE contracts with commercial finns to bury its low-level '

) wastes on private land, it requir:s the firm to have an NRC or a state license. WCS argues that DOE's policy is not only unnecessary but unlawful. WCS proposes that DOE hire a university, national laboratory, or some other entity to oversee its operations in place of state or NRC regulation.

Acceptance of WCS's view could have far-reaching consequences. It would significantly expand DOE's ability to shield its nuclear operations from external regulat'on at a time when DOE, the NRC, and Congress are working to bring those operations under NRC regulation.' It would constrict the power of the states to regulate the siting and operation oflow-level waste l

disposal facilities at a time when the states are already stmggling to meet their commercial low-level waste disposal responsibilities. It would enable private companies to evade state or federal l l

L licensing conditions that they cannot meet.

' The Secretary of Energy and the Chairman of the NRC agreed in June to have the NRC begin regulating DOE nuclear facilities "on a pilot project basis." Both the House and the l Senate Appropriations Committee endorsed this effort, ne Managers' Statement on the FY 1998 Energy and Water Development Appropriations Act " directs that all new nuclear facilities

- for which constmetion starts in the year 2000 or beyond are to be constructed in accordance with L

! Nuclear Regulatory Commission (NRC) licensing standards."

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. WCS has already found acceptance for its view in the courts. In August, WCS sued DOE

-in federal district court in Texas to prevent DOE from denying it a waste disposal contract on the grounds that it did not have a license. WCS argued that section 110a.(2) of the Atomic Energy Act of 1954 exempts any private company working "under contract with and for the account of" DOE from NRC and state regulation.  :

WCS also told the court that the independent-overseer approach it proposed for itself is the only way that DOE can lawfully dispose oflow-level waste at any private site. In WCS's view, since the states are preempted from regulating DOE contractors, DOE cannot rely on a state license. WCS went so far as to accuse DOE of breaking the law by sending waste to it chief competitor, Envirocare. The Envirocare site is located on private land in Utah and is licensed by the State of Utah.

i In October, the court granted WCS a preliminary injunction. The court ruled that DOE  !

waste contractors are shielded from state and NRC regulation on private sites and called into question the legality of DOE's use oflicensed waste disposal sites like Envirocare.' ,

in view of the serious implications of WCS's claims, I have reviewed the governing law  ;~

and its legislative history. Based upon my review, I believe that WCS and the district court have misread the Atomic Energy Act's section 110a. exemption. I think their broad reading of the exemption is supported by neither the plain meaning of the text nor its legislative history. Other provisions of the Act give the NRC the power to exempt DOE contractors in cases like this, but that power lies with the NRC and not DOE. ,

l NRC AND STATE REOULATION OF DOE CONTRACTORS l

The statutory framework The Atomic Energy Act of 1954 regulates three kinds of nuclear material and two kinds of nuclear facilities. Chapter 6 of the Act requires a license to possess "special nuclear material" (i.e., plutonium or enriched uranium). Chapter 7 requires a license to possess " source material" (i.e., uranium or thorium ores). Chapter 8 requires a license to possess " byproduct material" (i.e.,

radioisotopes resulting from nuclear fission or uranium mill tailings). Chapter 10 requires a license to build, possess, or operate a " production facility" (i.e., a uranium enrichment plant, plutonium production reactor, or reprocessing plant) or a " utilization facility" (i.e., a power j reactor or test reactor). l 2

The court mled that "[t]he existence of a state or NRC license is neither a necessary prerequisite nor a sufficient basis for the receipt by a DOE contractor of DOE low-level or mixed radioactive wastes for disposal at a private site," and that the Atomic Energy Act "does not relinquish to a state any federal ... power to license DOE low-level radioactive waste disposal contractors." Waste Control Specialists v. Department of Energy, No. 7-97CV-202-X,

p. 5 (N.D. Tex. Oct. 3,1997) (order granting preliminary injunction).

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The Atomic Energy Act does not regulate low-level radioactive waste as such. Low-level waste is waste that contains special nuclear material, source material, and byproduct material.2 It is licensed and regulated under the special nuclear, source, and byproduct material provisions of chapters 6,7, and 8, rather than the facility licensing provisions of chapter 10.4 Annlintion of the licemino reauirements to DOE contractors The Atomic Energy Act of 1954 makes it unlawful for any " person" to " acquire, own, possess, [or] receive possession of or title to" nuclear materials without a license or an applicable ,

• l exemption.'

DOE is exempt from the Act's licensing requirements because section 11s. of the Act excludes it from the definition of" person."' Private companies doing work for DOE are

" persons" and are subject to the Act's licensing requirements if they " acquire, own, possess, [or] .

receive possession of or title to" nuclear materials. A contractor that buries DOE low-level waste I on a DOE site does not need a license because DOE continues to "own, possess," and hold " title to" the waste. A contractor that takes possession of and title to low-level waste, on the other i hand,would need a license.

WCS would " receive possession of (and] title to" low level waste under its proposal. '

Thus, WCS must either obtain a license or qualify for an exemption. The Atomic Energy Act and NRC rules implementing it offer three possible sources for an exemption: the contractor exemption in section 110a. of the Act, the materials licensing exemptions in sections 57d.,62, l and 81 of the Act, and the low-level waste exemption in part 61 of the NRC's rules. l l

l The contractor exemotion WCS claims that it is exempt under the contractor exemption in section 110a.(2) of the Atomic Energy Act. Section 110a. states:

)

10 C.F.R. 61.2 (definition of" waste").

10 C.F.R. 61.l(a) and 61.3(a).

5 Section 57a. (special nuclear material); 62 (source material); and 81 (byproduct material). See also 10 C.F.R. 61.3 ("No person may receive, possess, and dispose of radioactive waste containing source, special nuclear, or byproduct material at a land disposal facility unless" licensed by the NRC.).

Section Ils. defines " person" to include any individual, corporation, or other  ;

entity other than DOE and the NRC.

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4 f Nothing in this chapter shall be deemed-i a. to require a license for (1) the processing, fabricating, or refining of special nuclear material, or the separation of special nuclear material, or the separation of special nuclear material from other substances, under contract with and for the account of the Commission; or (2) the construction or operation of facilities under contract with and for l

the account of the Commission....

Neither the text of section 110a. nor its legislative history supports WCS's claim. By its l

1 terms, section 110a. does not provide an exemption from all NRC licensing requirements, only those in "this chapter." As used in section 110, "this chapter" means chapter 10 of the Act '

Since low-level waste disposal is licensed under chapters 6,7, and 8, and not chapter 10, section

110a. does not offer WCS an applicable exemption.

r i Moreover, section 110a. provides an exemption for only two types of activities: (1) those associated with the production of special nuclear material; and (2) "the construction or operation of facilities." Neither encompasses low-level waste disposal. A low-level waste disposal site is not a facility within the meaning of section 110a.(2).

The Atomic Energy Act does not define " facilities," but it is clear from the context of chapter 10 that, as used in section 110a., the term means " utilization" or " production" facilities.'

The preceding nine sections of chapter 10 apply only to utilization and production facilities.'

Moreover, since no other facilities are subject to NRC licensing under chapter 10, there is no reason for section 110 to exempt any other " facility" from the licensing requirements of chapter 10.

' If Congress had wanted to exempt waste disposal activities from the materials licensing requirements, it could have said "nothing in chapters 6, 7, 8, and 10," as it did in section 202 of the Energy Reorganization Act of 1974, or it could have simply said ' nothing in this Act,"

as the witness who originally proposed section 110 suggested. (Sg Appendix.)

Section 202 of the Energy Reorganization Act of 1974 uses the term " facilities" more broadly to apply to both reactors and high-level waste storage sites. But, unlike section 110 of the Atomic Energy Act, section 202 of the 1974 Act identifies the licensing authority for this broader classes of" facilities" as including the materials licensing provisions of chapters 6,7, and 8 as well as the facilities licensing provisions of chapter 10. Thus, the broad use of the term in the 1974 Act cannot be equated with its narrow use in the Atomic Energy Act.

' The subsequent section, section 111, relates to special nuclear, source, and byproduct materials, but it was added by the Nuclear Non-Proliferation Act of 1978,24 years after section 110 was enacted.

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5 He legislative history of section 110a. also supports a narrow reading of" facilities."

During the Joint Committee's consideration of the bill in 1954, two members of the Joint Committee, Chairman Cole and Rep. Hinshaw, asked what the term " facilities" in section 110a.

meant. Lewis Strauss, the chairman of the Atomic Energy Commission, responded by asking if the term was defined in the bill. Chairman Cole replied that it was *[s]o long as we' understand that the word ' facilities' here refers to either a production facility or utilization facility." Harold L. Price, the deputy general counsel of the Atomic Energy Commission, agreed that it did."

The materials licensing exemptions Chapters 6,7, and 8 of the Atomic Energy. Act permit the NRC" to exempt "certain ...

kinds of uses or users" of special nuclear material, source material, and byproduct material.'2 NRC rules based on these chapters exempt DOE contractors from materials licensing requirements for " work for the Department at a United States Govemment-owned or controlled site..u The rules do not define a "Govemment . . controlled site," and the NRC has expressed no opinion on "how or whether DOE should choose to exercise such control.""

" Hearings before the Joint Committee on Atomic Energy on S.3323 and H.R. -

8862,83d Cong. 2d Sess., part 2,927-928 (June 8,1954), reprinted in 2 Losee, Legislative 1Dstory of the Atomic Enerev Act of 1954 2565-2566 (1955). (Sn Appendix.)

" The Atomic Energy Act uses the word " Commission," meaning the Atomic Energy Commission. The Energy Reorganization Act of 1974 abolished the Atomic Energy Commission and transferred its nuclear research and weapons responsibilities to the Energy Research and Development Administration,42 U.S.C. 5814(c), and its licensing and regulatory authorities to the Nuclear Regulatory Commission,42 U.S.C. 5841(f). The DOE Organization Act abolished the Energy Research and Develop;nent Administration in 1977 and transferred its nuclear research and weapons responsibilities to DOE. 42 U.S.C. 7151. In any event, the Act's licensing authority now resides with th: NRC.

" Section 57d. authorizes the Commission to exempt "certain ... kinds of uses or users" from the licensing requirements for special nuclear material if the exemption "would not be inimical to the common defense and security and would not constitute an unreasonable risk to l

the health and safety of the public." Section 62 provides that " licenses shall not be required for l

quantities of source material which, in the opinion of the Commission, are unimportant." Section 81 permits the Commission to exempt "certain . . kinds of uses or users" from the licensing requirements for byproduct material if the exemption "will not constitute an unreasonable risk to the common defense and security and the health and safety of the public."

" 10 C.F.R. 30.12(a) (byproduct material); 40.11 (source material); and 70.11(a)

(special nuclear material).

I " Letter from Martin G. Malsch to Joe Egan (November 21,1996).

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A former deputy general counsel of the NRC (who is now an attomey representing WCS) has ventured that "it seems conceptually feasible ... for sufficient DOE control to be manifested by an agreement between DOE and a State whereby the State would exercise sufficient safety oversight on DOE's behalf" to satisfy the NRC's rules." Even so, the NRC has expressed no 1 opinion on whether DOE would exercise sufficient safety oversight over disposal activities at WCS's site for the site to be considered " controlled" by DOE.

The low-level waste exemption l

l Part 61 of the NRC's rules appears to take precedence over the matedals licensing rules in parts 30,40, and 70. Part 61 states that no person may dispose oflow-level waste at a land disposal facility unless licensed " pursuant to ihis part" or exempt under section 61.6." Unlike the materials licensing rules, part 61 does not provide an exemption for " work for the Department at L a United States Govemment-owned or controlled site." To the contrary, section 61.59 provides that low-level waste disposal "may be permitted only on land owned by the Federal or a State government."

Section 61.6 authorizes the NRC to grant any exemption that "it determines is authorized l _

by law, will not endanger life or property or the common defense and security, and is otherwise in the public interest." While the NRC could conceivably exempt a contractor disposing of DOE

' low-level waste on private land under this broad provision, the NRC has not done so in WCS's

. case.

I State regulation l In general, the Atomic Energy Act of 1954 preempted state regulation of nuclear materials and facilities. Section 274 of the Act, however, permits the NRC to enter into l agreements to tum over licensing and regulatory authority over nuclear materials to the states

! with " coordinated and compatible" regulatory programs. More than half the states have entered into such agreements.

L Texas entered into such an agreement and has the responsibility for licensing and regulating nuclear materials, including low-level waste. Texas law prohibits, a " person" from disposing oflow level waste in the state without a license. Texas law defines " person" to exclude the NRC and " federal agencies the [NRC) licenses or exempts."

' " Id.

" 10 C.F.R. 61.3. Sections 30.11(d),40.14(d), and 70.14(d) of the NRC rules J'

!' exempt persons from byproduct, source, and special nuclear material licensing requirements, L respectively, "to the extent that [they] are subject to the requirements of part 61...." l 1

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1 7 WCS argues that since section 110a. of the Atomic Energy Act exempts DOE contractors from NRC regulation, and since the NRC cannot transfer to Texas regulatory authority it does not have, Texas has no jurisdiction over DOE contractors operating in the state."

WCS errs, however, in assuming that section 110a. exempts private companies that l accept title to DOE low-level waste and bury it on private land. For the reasons stated above, j section 110a. provides no such exemption. If WCS is not exempt from NRC licensing, and the

NRC has tumed over regulatory authority to the state, then WCS is not exempt from Texas law.

I DOE USE OF LICENSED SITES L WCS asserts that DOE cannot lawfully send its low level waste to a state licensed disposal site. Its theory is that since section I10a. of the Atomic Energy Act exempts DOE l

contractors from NRC regulation, and since the NRC cannot cede to the states regulatory authority it does not have, the states are preempted from licensing or regulating DOE contractors, l

l The law does not support WCS's claim. There is nothing in the Atomic Energy Act or any other law that bars DOE from using commercial waste disposal sites so long as those sites are licensed and willing to accept DOE's waste. To the contrary, DOE has broad power to enter into contracts to cany out its missions" and to decide how to conduct its nuclear research and weapons activities." The U.S. Court of Appeals for the District of Columbia Circuit has said that the Atomic Energy Act "is virtually unique in the degree to which broad responsibility is reposed in the administering agency, free of close prescription in its charter as to how it shall proceed in achieving the statutory objectives. 2o l

l

" Transcript in WCS v. DOE at 84 (Sept. 30,1997) (testimony of Howard  !

Shapar).

" Section 646 of the DOE Organization Act,42 U.S.C. 7465, authorizes the  !

Secretary of Energy "to enter into and perform such contracts ... as he may deem to be necessary l or appropriate to cany out functions now or hereafter vested in the Secretary." l

" Section 161i. of the 1954 Act authorizes DOE to " prescribe such regulations or orders as it may deem necessary ... (3) to govem any activity authorized pursuant to this Act,

, including standards and restrictions goveming the design, location, and operution of facilities l used in the conduct of such activity, in order to protect health and to minimize danger to life or property." -

2o Siegel v. Atomic Enerav Commission. 400 F.2d 778,783 (D.C. Cir.1968).

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8 The Supreme Court has held that the Atomic Energy Act preempts state regulation of nuclear safety. But,in doing so, the Court said that "the Federal Govemment has occupied the entire field of nuclear safety concems, gxcept the limited oowers expressly ceded to the States The Court noted that " agreements with the NRC" under section 274 of the Atomic Energy Act are the principal source of these powers.22

)

Section 274 authorizes the NRC "to enter into agreements" with the states to discontinue NRC regulation of special nuclear, source, and byproduct materials under the Atomic Energy Act. Section 274b. plainly states that "[d]uring the duration of such an agreement it is recognized that the State shall have authority to regulate the materials covered by the agreement for the protection of the public health and safety from radiation hazards."

DOE use of state-licensed commercial disposal site is not unprecedented. DOE's predecessor, the Atomic Energy Commission, began disposing oflow-Icvel waste from its nuclear weapons, naval reactor, and research programs at a state-licensed commercial low-le waste disposal site (Maxey Flats, Kentucky) in 1963.

Moreover, the Low-Level Radioactive Waste Policy Act allows DOE to send its low-level wastes to state-licensed disposal sites. Section 4(b)(1) of the Act states that "[l]ow-level radioactive waste owned or generated by the Federal Govemment" may be disposed ofin a state-licensed site " subject to the same conditions, regulations, [and] requirements ... imposed by the compact commission, and by the State in which such facility is located, in the same manne to the same extent as any low-level radioactive waste not generated by the Federal Government.""

CONCLUSION Conventional wisdom holds that section 110a. preempts all DOE contractors from all NRC licensing requirements for work performed "under contract with and for the account of" '

DOE. WCS's expert witnesses, two former NRC lawyers, testified to this effect. DOE and the Justice Department have conced.d as much. The federal district court in Texas so ruled.

28 Pacific Gas & Electric Co. v. State Energy Resources Conservation and Development Commission,461 U.S.190,212 (1983) (emphasis added).

22 461 U.S. at 212 n.25.

" 42 U.S.C. 2021d (b)(1)(B). State and regional low-level waste disposal sites formed under the Act are not required to accept low-level waste owned or generated by DOE U.S.C. 2021c(a)(1), and the regional compacts may not regulate DOE waste disposal a sites. 42 U.S.C. 2021d(b)(1)(A) and (2). But the Act does not preempt any licensing authority the state has under a section 274 agreement with the NRC. 42 U.S.C. 2021d(b)(5).

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9 The fact remains that neither the text of section 110a. nor its legislative histon supports the conventional wisdom. By its terms, section 110a. exempts only the production of special nuclear material and the construction and operation of production and utilization facilities by

. con t rac t orsf rom the facility licensing provisions of the Atomic Energy Act. It does not exempt receipt and disposal oflow-level waste by a private company at a privately owned commercial disposal site.

l l While other provisions of the Atomic Energy Act may permit the NRC to exempt WCS l from NRC and state licensing requirements, the NRC has not granted WCS such an exemption.

l Moreover, the discretion to grant such an exemption lies with the NRC and not DOE.

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10 APPENDlX THE LEGISLATIVE HISTORY OF THE CONTRACTOR EXEMPTION IN SECTION lloa. l The Army's Manhattan Engineering District relied heavily on private contractors to produce nuclear materials and build and operate nuclear facilities during World War II. When Congress transferred the Army's nuclear program to the Atomic Energy Commission in the Atomic Energy Act of 1946, it expressly authorized the Commission to continue to use contractors. The Act made the Commission the owner of all production facilities and fissionable material.2' The Act did not require the Commission to license its contractois, but the contractors only operated facilities owned by the Commission, not themselves.25 e.

In the spring of 1954, the Joint Committee on Atomic Energy began considering a bill to amend the Atomic Energy Act of 1946. The bill authorized the Atomic Energy Commission to license persons to possess and use nuclear materials and facilities in order to encourage wider u and ownership by the private sector.

As originally introduced, the bill did not exempt contractors performing work for the l

Atomic Energy Commission fmm licensing requirements. On May 14,1954, one of the '

Commission's contractors, the General Electric Company, testified in favor of a broad exemption for contractors. Since "everything done by the contractors is done on behalf of the Commission,"

the General Electric Company official argued,"it would seem wholly unnecessary to require a contractor to obtain a license." To avoid "any possible ambiguity," however, he suggested that the committee add a new provision stating that the licensing requirements "of this act" shall not apply to anyone building or operating nuclear facilitics or using nuclear materials " pursuant to a contract with the Commission."26 I On May 21,1954, the Joint Committee on Atomic Energy produced a revised bill that incorporated many of the changes proposed by witnesses at its hearings the week before. Th May 21 draft included the text of section 110 (though it was originally numbered 109). The new section exempted contractors but was narrower than the General Electric Company had 2* Atomic Energy Act of 1946, sections 4(c)(1) and 5(a)(2).

25 . Atomic Energy Act of 1946, section 4(c) authorized the Atom ci Energy l

Commission "to make, or to continue in effect, contracts with persons obligating them to produce

' fissionable materialin facilities owned by the Commission" and authorized it *to enter into research and development contracts authorizing the contractor to produce fissionable material i facilities owned by the Commission...."

26 Hearings before the Joint Committee on Atomic Energy on S.3323 and H.R.

8862,83d Cong.,2d Sess., part 1,333 (May 14,1954), repnnted in 2 Losce, Legislative Historv of the Atomic Energy Act of19541967 (1955).

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suggested. The revised draft exempted only contractors that either (1) produced special nuclear material or (2) built or operated facilities. Moreover, it exempted them only from the licensing requirements for facilities, not those for materials.2' On June 17,1954, the General Electric Company submitted written comments on the l

May 21 draft bill. The company said the exemption was too narrow because contractors may L

perform activities other than the production of special material or the construction and operation of facilities. The company asked that "the exclusion from the licensing system explicitly be made coextensive with the Commission's contracting authority."2' Despite the company's concerns, the Joint Committee made no changes in the exemption. l The only recorded discussion of section 110 prior to its enactment occurred at a hearing before the Joint Committee on June 8,1954. During the Joint Committee's line-by-line scrutiny of the bill, the following exchange toox place between members of the Joint Committee and Lewis Strauss, Chairman of the Atomic Energy Commission, William Mitchell, the AEC's General Counsel, and Harold Price, the AEC's Deputy General Counsel:

l Rep. IDNSHAW. What is intended by the language in line 5 on page 47 which says '%e

! construction or operation of facilities under contract with and for the account of the Commission"? It says " facilities." It does not say production facilities or utilization facilities. It does not say anything except " facilities," which is very broad.

Chairman COLE. I know lots of answers, but I do not, I confess, know the answers to

! everything. l Mr. MITCHELL. I do not think it extends our authority otherwise than we have it elsewhere in the bill. It rimply says as I read it that where we do have authority to contract we do not have to issue a license for the operation.

Rep. DURHAM. You do nothave to get a license to build a reactor if you want to build it yourself?

Mr. MITCHELL. 'Ihat is my understanding.

I Sen. PASTORE. Where are we reading?

Mr. STRAUSS. Page 47, Senator, line 5, starting with (2):

"Nothing in this chapter shall be deemed to require a license for the construction or operation of facilities under contract with and for the account of the Commission." -

In other words, if we are doing a piece of work ourselves we do not have to go to all the trouble of issuing a license for that particular piece of work.

2' Joint Committee Print, May 21,1954, at 46-47, reprinted in 1 Losee, Lecislative Historv of the Atomic Enerav Act of 1954 302-303 (1955).

28 - Hearings before the Joint Committee on Atomic Energy on S.3323 and H.R.

i 8862,83d Cong.,2d Sess., part 1,348 and 351 (comments submitted on June 17,1954),

reprinted in 2 Losee, Legislative History of the Atomic Energy Act of19541982 and 1985 (1955).

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12 Rep. DURHAM. Why is that necessary?

Chairman COLE. Because in the bill a construction license is required for the constructisn of a utilization facility.

Mr PRICE. And a production facility.  ;

Chairman COLE. Here it says that if a construction is for the Commission- i Mr. STRAUSS. We like to see it in the bill so that if the question is ever raised it is I l

answered.

Chairman COLE. I though Mr. Hinshaw's question was raised as to what do you mean l t when you say" facilities"? l Rep. HINSHAW. I understand. I Chairman COLE. I do not. What do you mean when you say " facilities"? l Rep. HINSHAW. Production operation, utilization, any kind of facility.  !

Mr. PRICE. I assume any facilities that are otherwise required to be licensed in this act. j Ifit is something being built f8r'the Commission, then a license is not necessary.

Mr. STRAUSS. Is it in the definitions at all? i l

Chairman COLE. So long as we understand that the word " facilities here refers to either a productica facility or utilization facility.

Mr. PRICE. Yes. 29 Section 110a. was subsequently enacted without change.

I 2' Hearings before the Joint Committee on Atomic Energy on s.3323 and H.R. 8862, 83'd Cong.,2"d Sess., part 2,927-928 (June 8,1954), reprinted in 2 Losee, Lsgislative History of the Atomic Energy Act of 1954 2565-2566 (1955).

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