ML20196D644

Recommends That Final Rule Amending 10CFR0 & 2,revising Agency Procedures Governing Ex Parte Communications & Separation of Functions,Be Issued

ML20196D644
Person / Time
Issue date:	02/11/1988
From:	Parler W NRC OFFICE OF THE GENERAL COUNSEL (OGC)
To:
References
TASK-RIA, TASK-SE SECY-88-043, SECY-88-43, NUDOCS 8802170361
Download: ML20196D644 (65)

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RULEMAKING ISSUE February 11, 1988 SECY-88-43 (Affinnation)

For: The Commission From: William C. Parler i General Counsel

Subject:

PROPOSED FIllAL RULE REVISING AGEllCY PROCEDURES GOVERt1ING EX PARTE COMMU1ICATIONS AllD SEPARATIO!1 OF FU11CTIONS Prior History: SECY-85-328; SECY-86-39 Summary: On March 26, 1986, the Commission published in the Federal Register a proposed rule that would revise its ex parte and cep ration of functions rules. 51 Fed. Reg. 10393 (1986).

The proposed revisions would update the existing rules to incorporate requirements imposed by the Government in the Sunshine Act as it relates to ex parte communications and to allow members of the NRC staff to serve as confidential advisors to the Commission with respect to a contested proceeding so long as those staf f mem:2ers did not act as investigators or litigators in the proceeding. Eleven comments were received on the proposed rule. The attached draft Federal Register notice, which sets forth the Commission's responses to those comments, would adopt a final rule that is substantially unchanged from the proposed rule.

Discussion: As was described in SECY-85-328, the proposed revised ex parte and separation of functions restrictions are designed to serve a number of purposes. Initially, they would make CO!1 TACT:

Paul Bollwerk, OGC 4-3224 -

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2 clear the distinction between those communications to or from adjudicatory decisionmakers and their advisors that are restricted as ex parte (i.e., those involving persons outside the agency) and those that

• are restricted because of separation of functions considerations (i.e., those involving members of the NRC staff). In addition, the rule would complete the process of conforming agency regulations with the specific terms of the ex parte provision of the Administrative Procedure Act, 5 U.S.C.

S 557(d), which was enacted as part of the Government in the Sunshine Act, Pub. L. No.  :

94-409, 90 Stat. 1241 (1976). Finally, the new regulations would enhance communications between adjudicators and the NRC staff by l repealing the present total ban on communications from any member of the NRC ,

staff with respect to contested issues in a l formal adjudication. Instead, members of the i staff not involved in "investigating" or i "litigating" in that proceeding would be ,

permitted to consult privately with the l Commissioners and their adjudicatory i advisors. ...-

i Eleven letters of comment were received on the proposed rule that set forth the views of interested utilities, professional organizations, private counsel, and individual members of the public. Ten of the commenters expressed general support for the revision of the ex parte and separation of functions regulations and provided particular -

l suggested revisions. One commenter expressed j total dissatisfaction with the proposed 1 separation of functions rule based upon an apparent misunderstanding of the rule's I provisions. The attached proposed Federal Recister notice contains a detailed l discussion of the various comments.

(Attachment 1) We also have attached a line-in, line-out version of the final rule showing the changes that were made to the text of the regulations. (Attachment 2)

The following were the major issues of concern as expressed by the commenters:

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1. Definition of "Relevant to the Merits"  ;

In its notice of proposed rulemaking, the Commission requested comments on the appropriate interpretation of the phrase "relevant to the merits" as it is used in the Administrative Procedure Act to define the subject matter of those communications from or to persons outside the agency that will be considered ex parte. Specifically, the Commission asked for comments on whether the l phrase should be interpreted to include (1) any issue that must be considered in a mandatory reactor construction permit proceeding without intervening parties even though the issue is not the object of a dispute between the NRC staff and the applicant and (2) any issue in an operating license proceeding that is raised by a presiding officer sua sponte, see 10 CFR I S 2.760a. Of the five commenters who l expressed a view on this issue, three l indicated that both types of communications i should not be considered ex parte because they did not relate to issues put into controversy by the parties to the proceeding.

In contrast, two commentefs expressed the i view that private communications between a '

, person outside the agency and an adjudicatory 1 employee should not be permitted with respect to any substantive issue that is considered in a proceeding, whether that consideration results from the mandatory construction l

permit provision of the Atomic Energy Act or through the efforts of a party or the ' -

presiding officer.

In resolving this matter, we believe appropriate guidance lies in the existing ex l parte provision, which speaks in terms of a l contested proceeding in which there is a controversy between the parties, 10 C.F.R. l SS 2.4(n), 2.780(a), over a substantive l matter at issue, id. S 2.780(e). In the context of a mandatory construction permit proceeding, as to those issues in which there is no controversy among the parties, we see no reason to bar private communications to adjudicators from persons outside the agency.

On the other hand, if a specific issue has a

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becomo the legitimate object of controversy in a contested operating license proceeding, whether it is introduced by the NRC staff, an intervenor, or a presiding officer sua sponte, we believe that private communications to the presiding officer from parties outside the agency should be barred.

This is particularly so since, unlike mandatory construction permit proceedings, )

the Commission has the option in operating i license proceedings of having sua sponte I issues treated informally outside of the j adjudicatory process through resolution by I

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the NRC staff. Having chosen instead to '

resolve sua sponte issues in the context of a I formal adjudicatory hearino, it makes little i sense to then abandon an important component of that process, the protection against off-the-record communications from outsiders, such as the applicant or intervenors.

Ultimately, however, which interpretation to adopt is a policy choice the Commission is ,

free to make, based upon its perceptions of 1 the extent to which restraints upon i on-the-record communications serve to enhance <

the confidence of the part'ie's and the public l in the overall fairness of the adjudicatory  !

process. ,

2. Public Designation As an Adjudicatory Employee Only for Advisors Consulted "On a continuing Basis" The proposed rule allowed those staff members who previously were not involved as investigators or litigators in a proceeding to act as advisors to the Commission and, if they were to be used on a "continuing basis,'

required that their appointment as adjudicatory employees be publicly noticed.

As we indicated in SECY-86-39, at 3-5, this was intended to create a de minimis exception that would permit a very limited number of contacts with otherwise uninvolved staff members to gain information without going through the process of designating the person 1 as an adjudicatory employee and, thereby, formally make them subject to the ex parte 1

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5 and separation of functions restrictions. As we also indicated at that time, persuasive arguments can be made both for and against such an exception. Two of the utility conmenters challenged the proposed provision on the grounds it would allow the Commission without the knowledge of the parties to the proceeding to receive advice from staff personnel who, though uninvolved in the proceeding, may nonetheless be biased because of their institutional positions or otherwise.

Upon further consideration, and on the basis of our experience with staff advisors over the past year since the elimination of the Office of Policy Evaluation, we would recommend that any differentiation on the basis of whether the advisor will be used on a "continuing basis" be removed from the final rule. While this provision does give flexibility, it also could unnecessarily complicate each licensing proceeding by raising the question whether it had been invoked and to what extent. These are potential issues ripe for Freedom of Information Act requests ehd additional litigation. Moreover, we would expect that if individual Commissioners have questions

, about a particular proceeding, those NRC

! staff members designated to act as adjudicatory advisors for that proceeding would be able to respond, making additional communications with other, undesignated staff members unnecessary.' Thus, we now would -

suggest eliminating this provision, which has the potential to create a controversy in every proceeding while affording little practical advantage in terms of information flow to the commission.

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3. Limiting Designation As an Adjudicatory Employee to Particular Issues in a Proceeding Two commenters suggested that because the ex parte prohibition on private contacts with persons outside the agency will attach to any f

6 staff member designated as an adjudicatory employee, the Commission should move to limit the impact of such a designation by making it applicable only to the specific issues about which the Commission wishes advice. We see little advantage in providing such designations, however, because it would  ;

enmesh the Commission in a potentially ,

complex line drawing exercise for which there are no legal or practical guidelines.

Indeed, the commenters fail to provide any legal authority for their cuggestion that proceedings can be fragmented issue by issue and what authority we can find supports the opposite conclusion. The Statement of Considerations thus rejects this suggestion.

Attachment 1, at 8-9,

4. Retaining Restriction on Communications Between Members of the Licensing Board and Appeal Panels The proposed rule requested comments on whether to retain the prohibition under existing agency practice, 10 C.F.R.

S 2.719(c); id. Part 2, App. A, S IX(c), on 4

consultations batween members of the Atomic Safety and Licensing Board assigned to a proceeding and members of the Atomic Safety and Licensing Appeal Panel on any fact in issue in the proceeding. 51 Fed. Reg. 10393, 10398 (1986). The six comments received on i i this issue all suggested that the present l practice he retained, citing the decisionmaking function of the Boards and the

• i 1 need to ensure fair review procedures that protect the integrity of the administrative l i

process. It also is our understanding thdt i neither the Appeal Board nor the Licensing i Board are in favor of any rule change in this j area.

Given the substantial legal uncertainty that ,

exists in allowing lower level adjudicators l who have taken a public position in a l proceeding by issuing a written decision to I then privately advise on the appeal of that decision, see 51 Fed. Reg. at 10398, and the

absence of any interest in such a change by l either the NRC's adjudicatory boards or those i

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l commenting on the proposed rule, we do not l recommend that the existing practice be -

changed.

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5. Proposed Exemptions for Private Staff j Consultations with the Commission  ;

Regarding Late-filed Contentions and l Motions to Reopen On the basis of an expansive reading of two  !

decisions of the United States Court of l Appeals for the District of Columbia circuit, the proposed rule provided an exemption from the separation of functions bar on private communications from NRC staff investigators and litigators to the Commissioners and their advisors for discussions relating to the reopening of a proceeding or the filing of contentions after issuance of an initial decision. In proposing these t .ans, we  ;

noted that because the cases re,. y could be confined to their facts, whether they would l support the broad interpretation we were l

proposing was doubtful. SECY-85-328, at '

21-22. The three commenters that addressed  ;

these exemptions all vigo'6usly r questioned '

their validity, at least in so far as the  ;

i commission was interpreting the cases to l allow private communications prior to the  :

l time a final agency decision is rendered.

l After carefully considering the matter, we i l believe thct the exemptions do indeed depend l upon an impermiscibly broad reading of the '

l cases and, therefore, would recommend that -

they not be retained.

He also agree with the suggestion of several  !

commenters that one of these cases, RSR Corp. .

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v. FTC, 656 F.2d 718 (D.C. Cir. 19817, l strongly supports the proposition that once an agency adjudicatory proceeding has become administrative 1y final, the separation of functions bar effectively ends for the purpose of considering any later requests to reopen or otherwise reinstitute the proceeding. We thus'have added a sentence to l proposed section 2.781(d) that indicates any  !

separation of functions restriction on communications ends at the conclusion of any I

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Commission discretionary review of Appeal Board decisions under 10 C.F.R. S 2.786. A parallel provision also has been placed in the ex parte rule.

6. Miscellaneous Revisions In addition to these changes, we have revised the proposed rule's definition of "Commission adjudicatory employee' to reflect the abolition of OPE and the consolidation of the Office of the General Counsel and the Office of the Executive Legal Director. In the interest of administrative convenience, we also have added language to this definition that would allow the Secretary or the General Counsel as well as the Commission to designate staff members as "Commission adjudicatory employees" for a particular proceeding.

Further, taking up on the suggestion of one commenter, we are proposing the deletion of the provision in S VII of paragraph (c)(2) of Appendix A to part 2 providing an exemption from separation of functi66s restrictions for "matters certified" pursuant to 10 C.F.R.

.SS 2.720(h), 2.744(e). This provision, which declares that such certified matters were not considered substantive matters at issue, apparently was a product of the former practice under sections 2.720(h) and 2.744(e) by which the Commission, as a matter of discretion, had decreed that any order of a -

presiding officer that allowed discovery against the NRC staff automatically was certified to an Atomic Safety and Licensing Appeal Board or to the Commission.- However, the legal basis for this exemption is somewhat questionable (i.e., discovery disputes seemingly can go to heart of the decisional process) and, in any event, mandatory interlocutary review is no longer afforded if a presiding officer grants a discovery request for NRC staff materials.

Accordingly, we see no reason to retain this exemption.

9 The Appeal Board, the Licensing Board, and the Division of Rules and Records reviewed a draft of the proposed final rule. Their comments are incorporated in this proposed final rule.

Recommendation: 1. Authorize the Secretary to issue the final rule amending 10 C.F.R Parts 0 and 2. .

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2. Note that:

a. The final rule will become effective l thirty days after publication in the Federal Register.

b. The final rule contains the requisite Regulatory Flexibility Act certification.

c. This final rule contains no information collection requirements and therefore is not subject to the Paperwork Reduction Act.

d. The final rule comes within the categorical exclusion in 10 C.F.R.

S 51.22(c)(1) and no environmental

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assessment has been prepared.

e. A regulatory analysis regarding the final rule is incitied in the Statement of Considerations,

f. The final rule does not require a backfit analysis pursuant to 10 C.F.R.

S 50.109(c).

9 The Subcommittee on Nuclear Regulation of the Senate Comnittee on Environment and Public Works, the Subcommittee on -

Energy and the Environment of the Housa Interior and Insular Affairs Committee, and the Subcommittee on Energy and Power of the House Energy and Commerce Committee will be informed of the final  !

rule by letter from the Office of l Congressional Affairs, 1

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h. A public announcement will be issued j when the final rule is filed with the .

j Office of the Federal Register. l

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1 General Counsel i  !

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Attachment:

As stated l

1 Commissioners' comments or consent should be provided directly ,

to the Office of the Secretary by c.o.b. Monday, February 29, '

1988.

] Commission Staff Office comments, if any, should be submitted

, to the commissioners 1 LT !!onday, February 22, 1988, with an j information copy to the Office of the Secretary. If the paper

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

analytical review and comment., the Commissioners and the S.ecretariat should be apprised of when comments may be expected.

This paper is tentatively scheduled for affirmation at an Open

., Meeting during the Week of February 29, 1988. Please refer to the appropriate Weekly Commission schedule, when published, for a specific date and time.

DISTRIBUTION:

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Attachment 1 4

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[7590-01]

NUCLEAR REGULATORY COMMISSION

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10 CFR Parts 0 and 2 t

Revision to Ex Parte and Separation of Functions Pules Applicable to Formal Adjudicatory Proceedings AGENCY: Nuclear Regulatory Comission. l ACTION: Final rule.

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SUMMARY

This final rule amends the Comission's rules of practice by revising those regulations dealing with ex parte comunications and separation  ;

of functions in fonnal adjudicatory proceedings. This amendment updates the existing rules by incorporating requirements imposed by the Governrrent in the i Sunshine Act as it relates to ex parte comunications.,,The final rule also j allows members of the NRC staff to serve as confidential advisors to the Comission with respect to a contested proceeding so long as those staff j members do not act as investigators or litigators in the proceeding. This  ;

I rule is intended to aid in maintaining effective comunication between l 1

decisionmaking officials and NRC staff personnel and ind;viduals outside the l NRC while ensuring that proceedings are conducted in an impartial manner, i

i EFFECTIVE DATE: (Insert date 30 days after date of publication in the Federal

Register.)

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FOR FURTHER INFORMATION CONTACT: Paul Bollwerk, Senior Attorney, Office of j the General Counsel, U.S. Nuclear Regulatory Comission,  ;

Washington, DC. 20555. Telephone: (202) 634-3224.  !

SUPPLEMENTARY INFORMATION:

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I. Background.

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On March 26, 1986, the Nuclear Regulatory Comission published in the Federal Re9hter (51 FR 10393-10402) proposed amendments to its Rules of Practice (10 CFR Part 2) that would revise substantially its regulatory restrictions on private comunications between agency adjudicatory decisionmakers and members of the NRC staff or persons outside the agency with j regard to matters that are the subject of a formal adj6dicatory hearing. By 1 notice published in the Federal Register on May 27,1986(51FR'19067),the date for submitting coments on the proposed revisions was extended to i

June 26, 1986. 1 j

i The Comission's March 1986 rulemaking proposal was the culmination of an -

1 extended agency effort to address concerns about its existing rules governing l private comunications with agency adjudicatory decisionmakers.

On March 7, 1979 (44 FR 12428), in response to the adoption of the Government in the Sunshine Act with its provisions placing specific l restrictions on ex parte comunications between adjudicatory decisionmakers andpersonsoutsidetheagency(5U.S.C.551(14),556(d),557(d)),the Comission published a proposed rule to revise its existing regulations to a incorporate the new statutory provisions. Thereafter, as a result of the l

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i j accident in March 1979 at Three Mile Island, Unit 2, the Comission's j j operating procedures came under intense scrutiny. Recomendations were j received from several quarters, including Three Mile Island inquiry groups, the American Bar Association, and the Comission's Office of the General 3

Counsel and its Regulatory Reform Task Force, that suggested the Comissicn's

! existing rules on separation of adjudicatory and nonadjudicatory functions, which barred private contacts between any member of the NRC staff and the Comission regarding contested issues in an adjudicatory proceeding, were overly stringent as compared to the specific requirements of the i Administrative Procedure Act (APA) (5 U.S.C. 554(d)). According to several of j these reports, this too strict interpretation was impeding the agency's 1

ability to protect the public health and safety by isolating the ". omission i unnecessarily from NRC staff knowledge and expertise.

! Recogni:irg these concerns, a proposed rule was p6Blished in March 1986 I

that superseded and withdrew the 1979 proposed rule. This new proposal l contained a number of suggested organizational and substantive changes in tt.e 1

existing regulations,10 CFR 2.719 and 2.780, regarding comunications l

precluded by ex parte and separation of functions considerations. In addition -

f to censolidating these provisions into consecutive secticns, il 2.780 and 2.781, comon definitior.s were proposed for inclusion in i 2.4 in an effort to

make both the ex parte and separation of functions strictures more j

{ understandable. Section 2.780 was to become the vehicle for implementation of the Sunshine Act's restrictions on ex parte comunications, while private contacts between the NRC staff and Comission adjudicatory decisionmakers were

to be restricted under i 2.781 to cortply with the APA's separation of i

! functions prohibition.

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II. Coments and Cecnission Responses.

The Ccmission received eleven letters of comment that set forth the views of interested utilities, professional organizations, private ccunsel, and individual members of the public. Ten of the eleven comenters expressed general support for the Commission's effort to revise its ex parte and separation of functions strictures and provided specific coments on particular provisions of the rule. One comenter expressed total dissatisfaction with the proposed rule as an improper attempt to give the NRC staff an opportunity to advise the Commission's hearing boards privately about Comission policy and "what the Comissioners want . . . ." A review of the I specific coments and the Ccmission's responses to those coments follows.

A. Definition of "Relevant to the Merits" l Five comenters provided their views on the Ccmission's discussicr. of l the phrase "relevant to the merits of the proceeding" as it is used in the l

Sunshine Act, 5 U.S.C. 557(d), and the propcsed rule, 9 2.780(a), to define 1

those matters raised in the context of a hearing that are subject to the ex i l

parte restriction. In the proposed rule, the Comission requested coments on whether this phrase should be interpreted to include any issue that must be

. considered in an uncontested construction permit proceeding even though it is not the object of a dispute among the NRC staff, the applicant, and any intervenors, and any issue that was not raised by any party but nonetheless is considered in an operating license hearing sua sponte by the presidirg officer. Three of the commenters thought that the phrase should be

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interpreted to bar only those private communications relating to issues put I into controversy by the parties to the proceeding. Two other comenters expressed the view that private communications should be barred with respect to any issue that a party or the presiding officer proposed to have considered in a particular proceeding, whether consideration is due to the Atomic Energy Act mandate to conduct a hearing on a construction permit or consideration is proposed by a party or the presiding officer.

Under existing practice, ex parte restrictions apply to any substantive matter at issue in a contested proceeding (10 CFR 2.780(a), (e)). A contested proceeding, in turn, is defined as one in which there is a controversy between the staff and the applicant concerning the issuance of or any of the terms and conditions of a license or is one in which a petition for leave to intervene I to oppose the application is granted or is pending (10 CFR 2.4(n)). Under this definition, the elements of "controversy" and "mat't'ers at issue" are central. We believe this approach also should be applied in interpreting the section 557(d) phrase "relevant to the merits." Accordingly, in the context of a statutorily mandated construction permit proceeding in which no intervenor has sought to contest the application, private corcunications to adjudicatory employees from interested persons outside the agency relating to matters that are not the subject of controversy in the proceeding between the applicant and the NRC staff would not be considered ex parte. On the other hand, because the Cemission has chosen as a matter of policy to allow issues in operating license proceedings to be admitted sua sponte by a presiding officer, as opposed to being resclved infonnally by the NRC staff, it makes ,

1 little sense to abandon an important component of that process--the protection 1

against off-the-record connunications. Once a matter is "at issue" in an I

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operating license proceeding, whether at the behest of the presiding officer or because it was admitted as a party's contention, a requirement that public disclosure of all comunications to the presiding officer relative to the resolution of that contested issue serves to ensure that the proceedings are fairly and impartially conducted. Therefore, private communications to the presiding officer from persons outside the agency concerning sua sponte issues j will be considered ex parte.

It should be added that the term "disputed issue" as it is used in the separation of functions provision relating to NRC staff contacts with a presiding officer also would be interpreted in a mandatory construction permit l

proceeding without intervening incerested persons, to include only those l matters that are the object of dispute between the applicant and the NRC staff and, in any operating licensing proceeding, those "sua sponte" issues properly

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raised by a presiding officer.

2. Distinction between Accusatory and Nonaccusatory Proceedings In the proposed rule, the Comission indicated that, for purposes of '

applying the separation of functions bar, it would interpret APA section 554(d) as making separation of functions applicable both to accusatory preceedings, i.e., those in which the primary concern is the lawfulness of party conduct, and to nonaccusatory proceedings, such as initial licensing, in which the decision typically is reached on the basis of legislative facts and general policy considerations. (51 FR at 10395) As a result, separation of functions is applicable to anyone performing a "litigating" function in a particular proceeding, rather than being limited only to those acting as

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"prosecutors," as the language of section 554(d) might be read to suggest.

Three commenters asserted that the Commission should not adopt such a narrow reading but rather should limit separation of functions only to accusatory proceedings. This effectively would permit private consultations between NRC staff members involved in litigating a case and adjudicatory officials regarding contested issues in at least some initial licensing cases, including reactor construction pemit and operating license proceedings.

As the Commission indicated previously in the proposed rule (51 FR at 10395), to attempt to differentiate between accusatory and nonaccusatory proceedings would require the Comission to apply subtle and difficult distinctions in an effort to determine to what extent the focus of a particular proceeding will be "prosecutorial." We continue to believe that such an attempt is not a worthwhile use of Commission resources, particularly because considerable uncertainty exists about whether the application of the accusatory /nonaccusatory distinction is appropriate under section 554(d)

(51 FR at 10397). Further developments in the case law governing this l 1

distinction may cause the Commission to revisit this issue in the future. At present, however, the Comission will impose separation of functions restrictions on private comunications between agency adjudicatory officials and the NRC staff in til fomal adjudicatory proceedings conducted under 10 CFR Part 2, Subpart G, without regard to whether the proceeding otherwise might appear to be accusatory or nonaccusatory.

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C. Public Designation As an Adjudicatory Employee Only for Staff Advisors Consulted "On a Continuing Basis" l

l Although the Commission will not apply the separation of functions i restriction on the basis of the accusatory /nonaccusatory distinction,'it will limit that restriction as it applies to private communications with the )

1 Cc mission solely to those staff members who have performed "investigating or )

litigating" functions in a particular proceeding. Thus, a member of the NRC staff who was not involved in conducting or supervising the technical review of an application that is the subject of an adjudicatory proceeding or the litigation of the matter before an Atomic Safety and Licensing Board or an I 1

Atomic Safety and Licensing Appeal Board can serve as a confidential advisor 1

to the Commission with respect to the application and the merits of the i 1

adjudication. Section 2.4(9) of the proposed rule state'd'that if a staff member was to be consulted by the Commission with respect to the issues in a particular proceeding "on a continuing basis," that person would be appointed i as an adjudicatory employee and the parties to the proceeding would be given notice of that appointment. Two corrrenters asserted that public designation only for staff advisors consulted "on a continuing basis" was unfair and created a great potential for abuse. Upon further consideration, the ,

Comission has decided that the purposes of the rule would be better served if I

each member of the staff who will be used as an advisor in an adjudication is appointed publicly as an adjudicatory employee without regard to the duration of anticipated service.

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D. Limiting Designation As an Adjudicatory Employee to Particular Issues in a Proceeding Two comenters also suggested that because the ex parte prohibition on private contacts with persons outside the agency will attach to any staff member designated as an adjudicatory employee, the Comission should act to limit the impact of the designation by making it applicable only to the specific issues about which the Comission wishes advice from the employee.

After reviewing this coment carefully, the Comission has decided not to adopt such a provision.

This proposal for issue by issue adjudicatory advisors arguably would avoid the ex parte ban on outside contacts regarding the nondesignated issues.

It also appears that, carried to its logical conclusion, this proposal would sanction staff members simultaneously assuming the dual 7 ole of adjudicator and investigator / litigator in the same proceeding, at least so long as different issues were involved. Neither the language of section 554(d), which l states that a person performing an investigative or litigating function is not to advise in a "case or a factually related case," nor the Attorney General's -)

Manual on the APA, which speaks of the bar in terms of "cases" or "proceedings" rather than "issues," see United States Dep't of Justice, Attorney General's Manual on the Administrative Procedure Act 54-55 & n.6 (1947), suggests that such an issue by issue application of the separation of functions bar is appropriate. Similarly, judicial precedent suggests that the separation of functions bar should be applied to prohibit participation in all aspects of a proceeding by a staff member performing an investigative or litigative function in that proceeding, not just with respect to those issues

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with which the individual has particular involvement. See Trans World Airlines, Inc. v. CAB, 254 F.2d 90, 91 & n.2 (D.C. Cir.1958). This authority, in combination with the practical complications involved in drawing lines to separate investigating or litigating participation in part of a proceeding from decisionmaking participation in other parts, convinces the Comission that it should not adopt this suggestion.

E. Allowing Former Adjudicatory Advisors to Perform Litigative or Investigative Functions In the Same Proceeding Related to the question of issue by issue designation of adjudicatory employees is the issue whether an employee who has put aside the mantle of adjudicatory employee can thereafter become a staff litigator or investigator in the same proceeding. The proposed rule did not conta'in any provision that addressed this question. However, in response to a Comission request for l I

ccments on the propriety of including language that would pennit a switch in l roles, three comenters supported the addition of a provision. Two comenters, however, opposed the suggestion citing the unfair advantage a I former advisor would give the staff in accusatory proceedings because of the insights he or she had gained in the decision making process and the detrimental effect allowing such a switch in roles would have in public j l

confidence in the fairness of the proceeding. 1 The Comission is not convinced that the change from the role of an adjudicatory decisionmaker's advisor to a litigator or investigator necessarily is one the APA or constitutional due process would preclude.

Nonetheless, we do agree with the observation of one of the comenters opposed i

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1 to allowing this type of role change that present staffing levels make it  !

unlikely that NRC staff members who previously have provided advice to agency adjudicatory decisionmakers will need to be pressed into service as liticators or investigators in the same proceeding. Accordingly, the Comiscion believes that the best course is to leave this issue for determination if and when it arises in a particular case.

F. Restriction on Comunications Between Members of the Licensing Board and the Appeal Panel l

The proposed rule would not change existing agency practice, embodied in i

6 2.719(c) and Part 2, App. A, IX(c), that precludes consultations between members of the Atomic Safety and Licensing Board assigned to a proceeding and members of the Atomic Safety and Licensing Appeal Panelon any fact in issue I in the proceeding. The Ccmission, however, requested concents on whether this bar to comunications was necessary or appropriate (51 FR at 10398). Six of the comenters addressed this issue and all supported retaining the present practice, citing the decisionmaking function of the Boards and the need to ensure fair review procedures that protect tha integrity of the administrative record. The Comission will do so.

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l G. Exemptions for Private Staff Consultations with the Comission Regarding Late-filed Contentions and Motions to Reopen 1 l

l In setting out a number of possible exemptions to the separation of l functions provision of the proposed rule, the Comission proposed that private consultations between the NRC staff and Comission be permitted in instances l when a request was made to add issues to a proceeding after an initial decision is rendered or to reopen the record after an initial or final decision. Proposed i 2.781(b)(2)(v)-(vi). In support of each cf these exemptions, the Comission referenced judicial decisions allowing agency staff contacts with agency heads about the addition of issues to a proceeding or aboutreopeningtherecord(51 Frat 10399). The three comenters that addressed these exemptions all questioned their validity, asserting that the Comission was going beyond what was sanctioned by the"c'a'ses, at least prior to the time a final agency decision is rendered. Upon further consideration, I the Comission has decided to delete these proposed exemptiens as they relate l to attempts to add issues or reopen the record prior to a final agency decision. -

Nonetheless, the United States Court of Appeals for the District of Columbia Circuit's decision in RSR Corp. v. FTC, 6.56 F.2d 718 (D.C. Cir. 1981)

(percuriam),fairlycanbereadasholdingthatonceanagencyadjudicatory proceeding, or a discrete portion of that proceeding, has become administratively final, which would include the conclusion of any Commissicn discretionary review of Appeal Board decisions under 10 CFR 2.786, the separation of functions bar effectively ends for the purpose of considering ny later requests to reopen or otherwise reinstitute the proceeding. Two

13 [7590-01]

l commenters suggested the Commission include a provision in its proposed rule indicating when the separation of functions prohibition would end. In response to that coment, and in line with RSR Corp., we have decided to add a sentence to % 2.781(d) that accomplishes this purpose. Moreover, a parallel provision has been added to 9 2.780 to indicate that the ex parte prohibition will be terminated at the same point.

H. Additional Comments by Particular Parties In addition to the matters discussed above that were the subject of multiple comments, other commenters raised the specific issues addressed below.

1. Scientists and Engineers for Secure Energy, Ih'c.

The Scientists and Engineers for Secure Energy, Inc., ("SESE") questioned in general the agency's use of "accusatory" adversarial, trial-type procedures for nuclear power plant licensing. According to SESE, the trial-type hearing -

required by 10 CFR Part 2, Subpart G is unnecessarily legalistic and stands in the way of getting to the appropriate factual and analytical bases for making infomed judgments about those technical disputes that fom a great portion of the controversy in power plant licensing proceedings. This comment relates to matters that are beyond the bounds of this rulemaking proceeding; however, the Comission would note that in the context of its consideration of the certification process for standardized designs for nuclear power plants, it has been considering ways to simplify the procedural aspects of any hearings l l

. ___ _ _ - _ . ._ _ __._.a

4 14 [7590-01]

held as part of that process. In addition, it recently has taken steps in the area of materials licensing hearing procedures that are intended to address some of the criticisms of the formal adjudicatory process raised by SESE (52 FR 20089; May 29,1987 (proposed rule on infonnal hearing procedures for materials licensing adjudications)).

2. Pars Associates, Inc.

Pars Associates, Inc ("PAI") suggested that the proposed definition of "interested persons" subject to ex parte restrictions somehow acts to restrict unduly the participation of large numbers of the public in the adjudicatory j process. In fact, that definition does not limit participation at all, but merely identifies those persons outside the agency whose comunications to an adjudicatory decisionmaker must be made on the record to' avoid being considered as improper ex parte comunications.

1

3. Marvin Lewis Comenter Marvin Lewis stated that he opposed the proposed rule because it would provide an opportunity for the Comission and the NRC staff to discuss policy matters and those discussions could be used by the staff to "continuously" update the hearing boards on the Comission's position with respect to particular hearings. This clearly is incorrect. As the discussion accompanying the proposed rule made apparent (51 FR at 10399), under l 6 2.781(e) staff members who become adjudicatory advisors cannot be the conduit for otherwise improper comunications from the Comission to those -

1

O 15 [7590-01]

. l staff members serving as litigators or investigators in a hearing proceeding, j That provision is retained in the final rule.

4. Shaw, Pittman, Potts & Trowbridge l

The law firm of Shaw, Pittman, Potts & Trowbridge, on behalf of its utility clients, noted that paragraph (6) of the proposed definition of )

"Comission adjudicatory employee" in 9 2.4 should be revised to reflect the consolidation and reorganization of the Office of the General Counsel and the Office of the Executive Legal Director and suggested that the phrase "in a l

proceeding" be added to paragraph (8) to make it clear that the appointment of '

a staff member to serve as an adjudicatory employee applies only to the j particular proceeding for which the appointment is made. This has been done.

Further, in response to another of the fim's coninentsTegarding the scope 'of the phrase "interested person" as it is used to define those outside the agency who are subject to the restriction on ex parte communications, the Commission r.;tes that the phrase is intended to include coverage of the representative of an interested State, county, municipality, or an agency -

thereof, participating in a proceeding in accordance with 10 CFR 2.715(c).

5. Bishop, Liberman, Cook, Purcell & Reynolds On behalf of several utility clients, the law firm of Bishop, Liberman, Cook, Purcell & Reynolds suggested that proposed 992.780(f)(4)and 2.701(b)(iv), which provide an exception from the ex parte and separation of

16 [7590-01]

functions restrictions for communications on generic issues, be revised to delete language indicating that the communication must not be "associated by" the Commission adjudicatory employee, the NRC officer or employee performing investigative or litigating fuctions, or the person outside the agency "with the resolution of any proceeding under [10 CFR Subpart G] pending before the NRC." According to the commenter, this language improperly places the focus on how the NRC adjudicatory officials reviewing the communication or the NRC staff member or interested person making the communication view the generic l

issue in relation to an ongoing Subpart G fornal adjudicatory proceeding, j l

As was explained in the proposed rule (51 FR at 10397), this language was added to make it clear that off the record communications regarding generic matters are not to be presented or used as a basis for resolving issues in a formal, "on the record" proceeding. Thus, a communicator's attempt to associate a communication purportedly relating to a ge'fric n matter with the resolution of matters in a proceeding or an adjudicator's association of an otherwise proper communication on generic matters with the resolution of issues in a formal proceeding would make those communications subject to the ex parte or separation of functions restrictions and require that the agency -

take appropriate measures, such as public disclosure of the communication, in accordance with 5 2.780(c) or 5 2.781(c). It was the Commission's intention, however, that a determination about whether a "generic" matter was in fact associated with the resolution of contested issues in a proceeding should not be governed solely by the perceptions of those making or using the communication. Accordingly, the suggested deletion will be made with the intent that it is only to dispell any ambiguity about the standard for r -

17 [7590-01]

determining whether a "generic" communication was, in fact, one actually associated with a licensing proceeding.

7. LeBoeuf, Lamb, Leiby & MacRae On behalf of a number of itr utility clients, the law firm of LeBoeuf, Lamb, Leiby & liacRae questioned whether, given-the designation of duties in 10 CFR 1.33 that suggests they are not involved in the decisional process, the Secretary of the Commission and employees of the Office of the Secretary should be designated as "Commission adjudicatory employees." The involvement of employees of the Office of the Secretary in the decision making process is in major part administrative. The Secretary nevertheless does have the authority to issue certain procedural orders that can have an important impact on a proceeding, see 10 CFR 2.772. Employees of that' 6ffice also have access to otherwise confidential information concerning Commission decisions and oft times aid the Commission's decisional process by facilitating the exchange of views between Commissioner offices. Employees of the Office of the Secretary therefore will continue to be designated as adjudicatory employees. -

This commenter also suggested that the~ Commission delete 6 2.780(d) that provides for sanctions against outside parties who knowingly make ex parte communications. The commenter opines that this provision is unnecessary because the appropriate remedy for these communications is to make them public and notify the parties. It has been the Commission's experience that this is the appropriate remedy for an ex parte communication. Nonetheless, it is not inconceivable, as the Congress recognized in adopting APA section 557(d)(1)(D), the statutory basis for 5 2.780(d), that some violations may

18 . [7590-01]

warrant the types of sanctions against the offending party that i 2.780(d) authorizes. The Comission therefore declines to delete this provision.

This comenter also declared that proposed 6 2.781(b)(3), which states that "[n]one of the comunications permitted by paragraph (b)(2) of this section is to be associated . . . with the resolution of any proceeding . . . ." is unclear and suggested the substitution of the word "used" for "associated." The term "associated," which also is utilized in

! 2.780(f)(4), is intended to have a somewhat broader meaning than "used" to the extent that it covers not only the use of the prohibited comunication, but also the act of making the comunication, even if it is not used by the adjudicatory employee. The Comission likewise declines to change this provision.

Finally, this comenter suggested that in section VII of paragraph (c)(2) of Appendix A to Part 2 the reference to "matters certified" pursuant to l 66 2.720(h) and 2.744(e) should be deleted because neither referenced section calls for certification of anything. Previously, these sections did provide for automatic certification to an Atomic Safety and Licensing Appeal Board or to the Cemission of a presiding officer's order allowing discovery against -

the NRC staff under a subpoena or request for the production of documents (37 FR 15127, 15132, 15135; July 28, 1972). Under the terms of Appendix A, however, such a discovery dispute was not considered a substantive matter at issue in the proceeding requiring that there be no intraagency consultations and comunications regarding the dispute (37 FR at 15124). Upon further l consideration, we see no reason to retain this discovery distinction given the later revision of the Comission's discovery rules to provide the presiding

~

officer with the discretion to order discovery against the NRC staff withou.t

- . _ , . ~ . - ,

19 [7590-01] ,

4 mandatory Comission interlocutary review (40 FR 2973; Jan.17,1975).

Accordingly, this discovery certification provision now is being deleted from Appendix A, section VII(c)(2).

8. Baltimore Gas And Electric Company  !

i l

Comenter Baltimore Gas and Electric Company questioned the propriety of proposed 5 2.781(f), which requires that the substance of a comunication between an adjudicatory decisionmaker and an advisor that is properly made under the separation of functions bar nonetheless may be required to be disclosed if the adjudicatory decisionmaker's initial or final decision is stated to rest in whole or in part on infonnation made known in the communication. The commenter suggests that this is insufficient because the communication is made public only if it is relied upon'." However, this comment fails to recognize that the scope of this provision goes only to communications that otherwise are made in confonnance with the separation of functions restriction. Under 9 2.781(c) all private comunications from a litigator or investigator to an adjudicatory decisionmaker barred by -

separation of functions considerations must be publicly disclosed. The 6 2.781(f) provision is a different, broader protection. It is designed to ensure that an adjudicatory decision is based upon the record developed during the hearing, not upon the otherwise proper but nonetheless private revelations of an adjudicatory advisor that provide a new factual or analytical basis for the decision. The Commission sees no basis for deleting this provision.

v' _

. 20 [7590-01]

9. GPU Nuclear Corporation GPU Nuclear Corporation suggested that the Commission include a definition of the conditions under which a licensee may participate in ex parte communications with the NRC staff on issues relating to an adjudicatory proceeding. Because it is clear frcm 55 2.780 and 2.781 that the only ex parte / separation of functions restraint upon communications between an applicant or licensee and members of the NRC staff is for those staff members 1

who are appointed as adjudicatory advisors, no further definition is needed to reiterate this point. Also unnecessary, the Commission finds, is this

]

ccmmenter's suggestion that a specific provision be included to allow the j Commission to decide and announce the termination of the appointment of a I

staff member as an adjudicatory advisor. This power is inherent in the 1 Commission's administrative authority to direct the acti'vities of members of the NRC staff crd need not be spelled out further.

Environmental Impact: Categorical Exclusion The NRC has determined that this final rule is the type of action described in categorical exclusion 10 CFR 51.22(c)(1). Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this proposed regulation.

4 9

?.1 ,

[7590-01]

Papemork Reduction Review This final rule contains no information collection requirements and therefore is not subject to the requirements of the Papemork Reduction Act of 1980 (44 U.S.C. 3501, et seq.).

Regulatory Analysis Under the APA, 5 U.S.C. 554(d), 557(d), in formal adjudicatory proceedings, restrictions apply to comunications between adjudicators and agency employees performing investigative or litigating functions or interested persons cutside the agency. The revisions in this final rule's provisions on ex parte communications will conform the language of the agency's present regulations more closely to the Sunshirie Act's provisions restricting comunications with persons outside the agency. This amendment dces not affect the substantive restrictions on outside comunications applicable under present regulations. Under the revised separation of functions rule, however, there will be an increased possibility for adjudicator / staff communications because those staff members not involved in an investigative or litigating function in a particular proceeding can advise decisionmakers on matters at issue in that proceeding. The potential for increased infomation to adjudicators nakes this rule change preferable to existing requirements. While other possible rule change options exist, notably invocation of the "initial licensing" exemption in the APA or reading the section 554(d) restriction to apply only to "prosecutors" rather than "litigators," serious questions about the efficacy of these particular

. 22 [7590-01]

revisions make them unacceptable both in term; of agency resources to defend the rules and the possibility of judicial reversal of licensing actions based on the application of the rules. The final rule thus is the preferred alternative and the cost involved in its promulgation and application is i necessary and appropriate. The foregoing discussion constitutes the regulatory analysis for this final rule.

l Regulatory Flexibility Certification This final rule will not have a significant economic impact upon a substantial number of small entities. Most entities seeking or holding construction permits or Commission licenses that would be subject to the revised ex parte provisions would not fall within the definition of small 1

businessesfoundinsection34oftheSmallBusinessAEt$15U.S.C.632,in l i

the Small Business Size Standards set out in regulations issued by the Small l Business Administraticn at 13 CFR Part 121, or in the NRC's size standards l published December 9, 1985 (50 FR 50241). Although intervenors subject to the provision on ex parte communications likely would fall within the pertinent -

Small Business Act definition, the ex parte rule would not reduce or increase the litigation burden of intervenors because it is substantially the same as the restrictions now in effect. Although the revised restrictions on intraagency comunications found in the separation of functions provision l might result in some cost reduction in proceedings in that the increased availability to adjudicators of staff expertise may shorten the proceedings, that reduction probably will be negligible. Thus, in accordance with the Regulatory Flexibility Act, 5,U,S.C. 605(b), the NRC hereby certifies that

V 23 , [7590-01]

this rule does not have a significant economic impact upon a substantial number of small entities.

Backfit Analysis This final rule does not modify or add to systems, structures, components, or design of a facility; the design approval or manufacturing license for a facility; or the procedures or organization required to design, construct, or operate a facility. Accordingly, no backfit analysis pursuant l l

to 10 CFR 50.109(c) is required for this proposed rule. j

\

l

v e 24 [7590-01]

. List of Subjects in 10 CFR Parts 0 and 2 l Part 0 - Conflict of interest, Penalty.

1 l

Part 2 - Administrative practice and procedure, Antitrust, I Byproduct material, Classified information, Environmental protection, Nuclear materials, Nuclear power plants and reactors, Penalty, Sex di,scrimination, Source material, Special nuclear material, Waste l l

treatment and disposal.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act j of 1974, as amended, and 5 U.S.C. 553, the NRC is preposing to adopt the i following amendments to 10 CFR Parts 0 and 2:

PART 0 -- CONDUCT OF EMPLOYEES l

1. The authority citation for Part 0 is revised to read as j folicws: -l Authority: Secs. 25, 161, 68 Stat. 925, 948, as amended (42 U.S.C. 2035, 2201); sec. 201, 88 Stat. 1242, as amended (42 U.S.C. 5841); E 0, 11222, 30 FR 6469, 3 CFR 1964-1965 COMP., p. 306; 5 CFR 735.104.

Sections 0.735-21 and 0.735-29 also issued under 5 U.S.C.

552, 553. Section 0.735-26 also issued under secs. 501, 502, Pub. L.95-521, 92 Stat. 1864, 1867, as amended by secs. 1, 2, Pub. L. 96-28, 93 Stat. 76, 77 (18 U.S.C. 207).

2. Section 0.735-48 is revised to read as follows:

e

. 25 [7590-01]

5 0.735-48 Restricted Communications.

Certain employee communications are prohibited in formal adjudica-tory proceedings under 69 2.780 and 2.781 of this chapter.

PART 2 - RULES OF PRACTICE FOR DOMESTIC LICENSING PROCEEDINGS

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

Authority: Secs. 161, 181, 68 Stat. 948, 953, as amended (42 U.S.C. 2201, 2231); sec. 191, as amended, Pub.L.87-615, 76 Stat. 409 (42 U.S.C. 2241); sec. 201, 88 Stat. 1242, as amended (42U.S.C.5841);5U.S.C.552.

Section 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105, 68 Stat. 930, 932, 933, 935, 936, 937, 938, as l amended (42 U.S.C. 2073, 2092, 2093, 2111, 2133, 2134, 2135); l sec. 102, Pub.L.91-190, 83 Stat. 853, as amended (42 U.S.C. l 4332); sec. 301, 88 Stat. 1248 (42 U.S.C. 5871). Sections l 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183, 189, 68 Stat. 936, 937, 938, 954, 955, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2233, 2239).

Section 2.105 also issued under Pub.L.97-415, 96 Stat. 2073 (42U.S.C.2239). Sections 2.200-2.206 also issued under secs. 186, 234, 68 Stat. 955, 83 Stat. 444, as amended (42 U.S.C. 2236, 2282); sec. 206, 88 Stat. 1246 (42 U.S.C. 5846).

Sections 2.600-2.606 also issued under sec. 102, Pub.L.91-190, 83 Stat. 853 as amended (42 U.S.C. 4332). Sections 2.700a, 2.781 also issued under 5 U.S.C. 554. Sections 2.754, 2.760, 2.770, 2.780 also issued under 5 U.S.C. 557. Section 2.790 also issued under sec. 103, 68 Stat. 936, as amended (42 U.S.C. 2133) and 5 U.S.C. 552. Sections 2.800 and 2.808 also issued under 5 U.S.C. 553. Section 2.809 also issued under 5 U.S.C. 553 and sec. 29, Pub.L.85-256, 71. Stat. 579, as amended (42 U.S.C. 2039). Subpart K also issued under sec. 189, 68 Stat. 955 (42 U.S.C. 2239); sec. 134, Pub.L. 97 425, 96 Stat. 2230 (42 U.S.C. 10154). Appendix A also issued under sec. 6, Pub L.91-560, 84 Stat. 1473 (42 U.S.C. 2135).

Appendix B also issued under sec. 10, Pub.L.99-240, 99 Stat.

1842 (42 U.S.C. 2021b et seq.)

26 [7590-01]

4. Section 2.4.is amended by removing the alphabetical paragraph l designators, alphabetizing all words defined, and adding three new definitions to read as follows:

6 2.4 Definitions.

"Commission adjudicatory employee" means --

(1) The Commissioners and members of their personal staffs; l (2) The members of the Atomic Safety and Licensing Appeal Panel and staff assistants to the'P'anel; (3) The members of the Atomic Safety and Licensing Board Panel and staff assistants to the Panel; (4) A presiding officer appointed under 6 2.704, including an administrative law judge, and staff assistants to a presiding officer; (5) Special assistants (as defined in 6 2.772);

(6) The General Counsel, the Solicitor, the Deputy General Counsel for Licensing and Regulation, and employees of

, 27 [7590-01]

the Office of the General Counsel under the supervision of the Solicitor or the Deputy General Counsel for Licensing and Regulation; (7) The Secretary and employees of the Office of the Secre-tary; and (8) Any other Commission officer or employee who is appointed by the Commission, the Secretary, or the General Counsel to participate or advise in the Commission's consideration of an initial or final decision in a proceeding. Any other Commission officer or employee who, as permitted by 6 2.781, participates or advises in

~

the Connission's co'nsideration of"ah initial or final i decision in a proceeding must be appointed as a Commission adjudicatory employee under this paragraph and the parties to the proceeding must be given written notice of the appointment.

l l

"Ex parte communication" means an oral or written comnunication not on the public record with respect to which reasonable prior notice to all parties is not given.

28 [7590-01]

l "Investigative or litigating function" means --

)

(1) Personal participation in planning, conducting, or super-vising an investigation; or l (2) Personal participation in planning, developing, or presenting, or in supervising the planning, development or presentation of testimony, argument, or strategy in a proceeding.

6 2.719 [ removed]

5. Section 2.719 is removed.

6. Part 2 is amended by revising the undesignated centerhead immediately after 6 2.772 to read as follows:

RESTRICTED COMMUNICATIONS -

7. Section 2.780 is revised to read as follows:

6 2.780 Ex parte communications.

In any proceeding under this subpart --

?.9 ,

[7590-01]

(a) Interested persons outside the agency may not make or knowingly cause to be made to any Comission adjudicatory employee, any ex parte comunication relevant to the merits of the proceeding.

(b) Comission adjudicatory employees may not request or entertain from any interested person outside the agency or make or knowingly cause to be made to any interested person outside the agency, any ex parte comunication relevant to the merits of the proceeding.

(c) Any Comission adjudicatory employee who receives, makes, or knowingly causes to be made a comunication prohibited by this j sectionshallensurethatitandanyris'ponsestothe comunication promptly are served on the parties and placed in l 1

the public record of the proceeding. In the case of oral l comunications, a written sumary must be served and placed in the public record of the proceeding. ' '

(d) Upon receipt of a comunication knowingly made or knowingly caused to be made by a party in violation of this section, the Comission or other adjudicatory employee presiding in a proceeding may, to the extent consistent with the interests of justice and the policy of the underlying statutes, require the party to show cause why its c1?im or interest in the

30 [7590-01]

.. 'ing should not be dismissed, denied, disregarded, or

'herwise adversely affected on account of the violation.

(e) (1) The prohibitions of this section apply--

s (i) When a notice of hearing or other comparable order is issued in accordance with 592.104(a),2.105(e)(2),

2.202(c),2.204,2.205(e),or2.703;or (ii) Whenever the interested person or Commission adjudicatory employee responsible for the communication has knowledge that a notice of hearing or other comparable order will be issued in accordance with 502.104(a),2.105(e)(2),

2.202(c),2.204,2.205(e),or2.707.

(2) The prohibitions of this section cease to apply to ex parte communications relevant to the merits of a full or partial initial decision when, in accordance with 9 2.786, the -

time has expired for Commissior review of the Atomic Safety and Licensing Appeal Board's decision on the full or partial initial decision.

(f) The prohibitions in this section do not apply to --

(1) Requests for and the provision of status reports;

31 [7590-01]

(2) Communications specifically permitted by statute or regulation; (3) Comunications made to or by Cct.eission adjudicatory employees in the Office of the General Counsel regarding matters pending before a court or another agency: and (4) Coimunications regarding generic issues involving public health and safety or other statutory responsibilities of the agency (e.g., rulemakings, congressional hearings on legislation, budgetary planning) not associated with the resolution of any proceeding under this subpart pending before the NRC.

8. New i 2.781 is added to read as follows:

9 2.781 separation of functions.

(a) In any proceeding under this subpart, any NRC officer or employee engaged in the performance of any investigative or litigating function in that proceeding or in a factually related proceeding may not participate in or advise a Comis-sion adjudicatory employee about the initial or final decision I

on any disputed issue in that proceeding, except --

(1) As witness or counsel in the proceeding;

32 [7590-01]

(2) Through a written communication served on all parties and l made on the record of the proceeding; or (3) Through an oral communication made both with reasonable prior notice to all parties and with reasonable oppor-tunity for all parties to respond.

(b) The prohibition in paragraph (a) of this section does not apply to --

(1) Communications to or from any Commission adjudicatory employee regarding --

(1) The status of a proceeding; "

(ii) Matters with regard to which the communications specifically are permitted by statute or regulation; (iii) Agency participation in matters pending before a court or another agency; or (iv) Generic issues involving public health and safety or other statutory responsibilities of the agency (e.g.,rulemakings,ci  :..ional hearings on legislation, budgetary planning) not associated with

=y. ,

33 [7590-01]

r the resolution of any proceeding-under this subpart pending before the NRC.

(2) Comunications to or from Comissioners, members of their personal staffs, Comission adjudicatory employees in the Office of the General Counsel, and the Secretary and employees of the Office of the Secretary, regarding --

(i) Initiation or direction of an investigation or l initiation of an enforcement proceeding; (ii) Supervision of agency staff to ensure compliance I

with the general policies and procedures of the agency; (iii) Staff priorities and schedules or the allocation of agency resources; or

~

i I (iv) General regulatory, scientific, or engineering principles that are useful for an understanding of the issues in a proceeding and are not contested in the proceeding, q (3) None of the comunications permitted by paragraph (b)(2)(i)-(iii) of this section is to be associated by '

the Comission adjudicatory employee or the NRC officer

._, , .--,.y---

.. \

l 34 [7590-01]

or employee performing investigative or litigating functions with the resolution of any proceeding unoer this subpart pending before the NRC.

i (c) Any Comission adjudicatory employee who receives a comunica-tionprohibitedunderparagraph(a)ofthissectionshall ensure that it and any responses to the comunication are placed in the public record of the proceeding and served on the parties. In the case of oral comunications, a written sumary must be served and placed in the public record of the proceeding. )

1 (d) (1) The prohibitions in this section apply--

(i) When a notice of hearing or other comparable order is issued in accordance with $$ 2.104(a), 2.105(e)(2),

2.202(c), 2.204, 2.205(e), or 2.703; or (ii) Whenever an NRC officer or employee who is or has reason-able cause to believe he or she will be engaged in the performance of an investigative or litigating function or a Comission adjudicatory employee has knowledge that a notice of hearing or other comparable order will be, issued in accordance with 992.104(a),2.105(e)(2),

i 2.202(c), 2.204, 2.205(e), or 2.703, 4

35 [7590-01]

(2) The prohibitions of this section will cease to apply to the disputed issues pertinent to a full or partial initial decision when, in accordance with 6 2.786, the time has expired for Comission review of the Appeal Board's decision on the full or partial initial decision.

(e) Comunications to, from, and between Comission adjudicatory employees not prohibited by this section may not serve as a conduit for a comunication that otherwise would be prohibited by this section or for an ex parte comunication that otherwise would be prohibited by 6 2.780.

(f) If an initial or final decision is stated to rest in whole or in part on fact or opinion obtained as N esult of a comunication authorized by this section, the substance of the comunication must be specified in the record of the  ;

proceeding and every party must be afforded an opportunity to controvert the fact or opinion. If the parties have not had an opportunity to controvert the fact or opinion prior to the filing of the decision, a party may controvert the fact or opinien by filing an appeal from an initial decision, or a petition for reconsideration of a final decision that clearly and concisely sets forth the informatien or argument relied on to show the contrary. If appropriate, a party may be afforded the opportunity for cross-examination or to present rebuttal evidence,

36 [7590-01]

9. Appendix A to Part 2 is amended by revising paragraph (c) of section VII and paragraph (c) of section IX to read as follows:

Appendix A - Statenent of General Policy and Procedure: Conduct of Proceedings for the Issuance of Construction Permits and Operating Licenses for Production and Utilization Facilities for Which a Hearing Is Required Under Section 189A of the Atomic Energy Act of 1954, As Amended

• VII. General i

l

"~

l l

1 (c) Section 2.781 specifies when consultation between Commis-sioners or board:, on the one hand, and the staff, on the other hand, is permitted in licensing proceedings conducted under Subpart G. Section 2.781 also permits a board, in the same type of proceeding..to consult with members of the panel  !

l from which the members of the board are drawn.

i

, - . _ - - - - - - - . . ,,--c-- --

37 [7590-01]

IX. Licensing Proceedings Subject to Appellate Jurisdiction of Atomic Safety and Licensing Appeal Board.

l (c) Consultation between members of the Atomic Safety and Licens-  ;

ing Appeal Board for a particular proceeding and the staff is permitted on the conditions specified in 10 CFR 2.781.

l However, members of the atomic safety and licensing boards for l 1

particular proceedings may not consult on any disputed issue in those proceedings with members of the Appeal Panel.

l l

l Dated at Washington, D.C., this day of , 1988.

For the Nuclear Regulatory Commission.

SAMUEL J. CHILK, Secretary of the Commission, i

l 1

Attachment 2 f

s:e i

I

)

Addition / PAUL 4 [7590-01] >

kist-9F-EWSJECTS-EW-10-GFR-PART-9 List of Subjects in 10 CFR Parts 0 an/. 2 -

i Part 0 - Conflict of interest, Penalty. ,

I kist-9F-SWSJECTS-IN-19-GFR-PART-2 Part 2 - Administrative practice and procedure, Antitrust, Byproduct material, Classified information, Environmental protection, Nuclear materials, Nuclear power plants and reactors, Penalty. Sex discrimination, Source material, Special nuclear material, Waste I treatment and disposal.

For the reasons set' out in the preamble and,under the authority of l the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 553, the NRC is proposing to adopt the l following amendments to 10 CFR Parts 0 and 2:

l PART 0 -- CONDUCT OF EMPLOYEES l

1. The authority citation for Part C is revised to read as j fellows:

• Authority: Secs. 25, 161, 68 Stat. 925, 948, as amended 42 U.S.C. 2035, 2201); sec. 201, 88 Stat. 1242, as amended 42 U.S.C. 5841); E.O. 11222, 30 FR 6469, 3 CFR 1964-1965 COMP., p. 306; 5 CFR 735.104.

Sections 0.735-21 and 0.735-29 also issued under 5 U.S.C.

552, 553. Section 0.735-26 also issued under secs. 501, 502, Pub. L 95-521, 92 Stat. 1864, 1867, as amended by secs. 1, 2, Pub. L. 96-28, 93 Stat. 76, 77 (18 U.S.C. 207).

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2. Section 0.735-48 is revised to read as follows:

$ 0.735-48 Restricted Comunications.

Certain employee comunications are prohibited in fomal adjudica-tory proceedings under il 2.780 and 2.781 of this chapter.

PART 2 - RULES OF PRACTICE FOR DOMESTIC LICENSING PROCEEDINGS

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

Authority: Secs. 161, 181, 68 Stat. 948, 953, as amended (42 U.S.C. 2201, 2231); sec. 191, as amended, Pub.L.87-615, i 76 Stat.409(42U.S.C.2241);sec.201,88 Stat.1242,as amended (42 U.S.C. 5841); 5 U.S.C. 552. ,,

Section 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105, 68 Stat. 930, 932, 933, 935 936, 937, 938, as amended (42 U.S.C. 2073, 2092, 209 , 1 R 2133, 2134, 2135);

sec. 102, Pub.L.91-190, 83 Stat. 853, a. amended (42 U.S.C.

4332); sec. 301, 88 Stat l'248 (42 U.S.C. o871). Sections 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183, 189, 68 Stat. 936, 937, 938, 954, 955,.as amended (42U.S.C.2132,2133,2134,2135,2233,2239). .

Section 2.105 also issued under Pub.L.97-415, 96 Stat. 2073 (42U.S.C.2239). Sections 2.200-2.206 also issued under secs. 186, 234, 68 Stat. 955, 83 Stat. 444, as amended (42 U.S.C. 2236, 2282); sec. 206, 88 Stat. 1246 (42 U.S.C. 5846).

Seet4 ems-2,399-2,899-alse-4ssued-# der-Pubek,-97-415,-96-Stat, 2971-f42-W,S,G,-2183), Sections 2.600-2.606 also issued under i sec. 102, Pub.L.91-190, 83 Stat. 853 as amended (42 U.S.C.  ;

4332). Sections 2.700a, 2.781 also issued under 5 U.S.C. 554. I Sections 2.754, 2.760, 2.770, 2.780 also issued under 5 U.S.C.

557. Section 2.790 also issued under sec. 103, 68 Stat. 936, i as amended (42 U.S.C. 2133) and 5 U.S.C. 552. Sections 2.800 and 2.808 also issued under 5 U.S.C. 553. Section 2.809 also issued under 5 U.S.C. 553 and sec. 29, Pub.L.85-256, 71 Stat.

579, as amended (42 U.S.C. 2039). Sub art K also issued under Sec. 189, 68 Stat. 955 (42 U.S.C. 2239 ; sec. 134, Pub.L.97-425,96 Stat.2230(42U.S.C.10154. Appendix A also issued under sec. 6, Pub.L. 91-5860, 84 Stat. 1473 (42 U.S.C.

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2135). Apaendix B also issued under sec. 10, Pub. L.99-240, 99 Stat.1342 (42 U.S.C. 2021b, et seq.).

4. Section 2.4 is rev4 sed amended by removing the alphabetical paragraph designators, alphabetizing all words defined, and adding three new definitions to read as follows:

5 2.4 Definitions. ,

"Commission adjudicatory employee" means --

(1) 4The Commissioners and members of,their personal staffs; (2) tThe members of the Atomic Safety and Licensing Appeal Panel and staff assistants to the Panel; i

(3) tThe memb3rs of the Atomic Safety and Licensing Board Panel and staff assistants to the Panel; i

(4) aA presiding officer appointed under i 2.704, including an administrative law judge, and staff assistants to a i presiding officer; i

(5) sSpecial assistants (as defined in 6.2.772);

_m__ r_w. ----y .--4 .-,, g e 1

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(6) tThe General Counsel, the Solicitor, the Deputy General Counsel for Licensing and Regulation, and employees of the Office of the General Counsel under the supervision ,

of the Solicitor or the Deputy General Counsel for Licensing and Regulation; (7)--the-94 rester-ef-the-9ff4ee-ef-pelley-Evaluatien-and employees-ef-that-eff4eet (81) the Secretary and employees of the Office of +,he Secre: ,

tary; and (98) Any other Comission officer or emploWe teho is appointed by the Comission, the Secretary,'o'r the Genafjdoy *yg to participate or advise in the Conntssien's ,

consideration of an initial or final decision in .7 proceeding. Any sveh other Comissiott wSicer or employee who, as permitted by 6 2.781, participates or advises in the Comission's consideration of an initial or. final decision en-a-sent4nv4ng-basis in a proceeding must be appointed as a Comission adjudicatory employee under this paragraph and the parties to the proceeding must be given written notice of sveh the appointment.

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"Ex parte communication" means an oral or written communication not on the public record with respect to which reasonable prior notice to all parties is not given.

"Investigative or litigating function" means --

(1) pPersonal participation in planning, conducting 2 or

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supervising an investigation; or

, (2) pPersonal participatinn in plann!ng, developing 2 or presenting, or in supervising the planning, development or presentation of testimony, arg0ient2 or strategy in a proceeding.

Subpart-G-ERemoved3 5,---part-2-4s-amended-by-remov4Rg-Subpart-G,

,; 52.719[ Removed]

61. Section 2.719 is removed.

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76. Part 2 is amended by revising the undesignated centerhead imediately after i 2.772 to read as follows:

RESTRICTED COMMUNICATIONS

87. Section 2.780 is revised to read as follows:

$ 2.780 Ex parte comunications.

l In any proceeding under this subpart --

i (a) Interested persons outside the agency may not make or knowingly cause to be made to any Comission adjudicatory i

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employee, any ex parte comunication r51'evant to the merits of )

the proceeding.

(b) Ccmission adjudicatory employees may not request or-entertain from any interested person outside the agency or make or -

knowingly cause to be made to any interested person outside j the agency, any ex parte conrunication relevant to the merits l of the proceeding.

l (c) Any Comission adjudicatory employee who receives, makes2 or knowingly causes to be made a comunication prohibited by this section shall ensure that it and any responses therete to the comunication promptly are served on the parties and placed in

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the public record of the proceeding. In the case of oral comunications, a written sumary shall must be served and placed in the public record of the proceeding.

(d) Upon receipt of a comunication knowingly made or knowingly caused to be made by a party in violation of this section, the Comission or other adjudicatory employee presiding in a proceeding may, to the extent consistent with the interests of justice and the policy of the underlying statutes, require the party to show cause why its claim or interest in the proceeding should not be dismissed, denied, disregarded 2 or otherwise adversely affected on account of sveh the violation.

(e) (1) The prohibitions of this section &ielapp44eable apply--

(1j) wyhen a notice of hearing or other comparable order is issued i

inaccordancewith$!2.104(a),2.105(e)(2),2.202(c)2 2.204, l 1

2.205(e), or 2.703 q or l (Eii;) wyhenever the interested person or Comission adjudicatory employee responsible for the comunication has I knowledge that a notice of hearing or other comparable order will be issued in accordance with il 2.104(a), 2.105(e)(2),

2.202(c), 2.204, 2.205(e h or 2.703.

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(2) The prohibitions of this section cease to apply to ex parte communications relevant to the merits of a full or partial initial decision when, in accordance with 6 2.786, the time has expired for Commission review of the Atomic Safety and Licensing Appeal Board's decision on the full or partial-initial decision.

I (f) The prohibitions in this section do not apply to --

(1) PRequests for and the provision of status reports; (2) eCommunications specifically permitted b' tatute or regulation; m..

(3) eCommunications made to or by members-ef Commission adjudicatory employees in the Office of the General Counsel regarding matters pending before a court or another agency; and -

(4) eCommunications regarding generic issues involving public 4 health and safety or other statutory responsibilities of the agency (e.g., rulemakings, congressional hearings on legislation, budgetary planning) not associated by-the Gemmiss4en-adjud4 eatery-employee-er-the-4nterested-persen with the resolution of any proceeding under this subpart pending before the NRC.

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98. New i 2.781 is added to read as follows:

i 2.781 Separation of functions.

(a) In any proceeding under this subpart, any NRC officer or employee engaged in the performance of any investigative or litigating function in that proceeding or in a factually related proceeding may not participate in or advise a Comis-sion adjudicatory employee about the initial or final decision on any disputed issue in that proceeding, except --

(1) aAs witness or counsel in the proceeding; (2) tThrough a written comunication sEved on all parties I and made on the record of the proceeding; or '

(3) qhrough an oral comunication made both with reasonable prior notice to all parties and with reasonable oppor- -

tunity for all parties to respond.

(b) The prohibition in paragraph (a) of this section does not apply to --

(1) Comunications to or from any Comission adjudicatory employee regarding --

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10 [7590-01] j (i) tThe status of a proceeding; i

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(ii) mMatters with regard to which sweh the  :

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comunications specifically are permitted by statute l or regulation;  ;

l (iii) aAgency participation in matters pending before a l court or another agency; or l

l (iv) gGeneric issues involving public health and safety l or other statutory responsibilities of the agency (e.g., rulemakings, congressional hearings on  ;

l legislation, budgetary planning) not associated by i the Comission adjudicatory iniployee or 'the liRC officer or employee performing investigative or litigating functions with the resolution of any proceeding under this subpart pending before the fiRC. -

(2) Comunications to or from Comissioners, members of their personal staffs, the-General-Gewnsel-and Comission adjudicatory employees of jn the Office of the General l

Counsel, the-94reeter-ef-the-9ff4ee-of-pelley-Evaluat4en and-employees-ef-that-eff4ee, and the Secretary and l

, employees of the Office of the Secretary, regarding --

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l (1) (Initiation or direction of an investigation or l initiatien of an enforcement proceeding; (ii) sSupervision of agency staff to ensure compliance with the general policies and procedures of the agency; i

(iii) sStaff priorities and schedules or the allocation of agency resources; g (iv) gGeneral regulatory, scientific 2or engineering principles that are useful for an understanding of l

the issues in a proceeding and are not contested in l

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the proceedingt.

l (v)--the-need-te-add-4ssues-te-a-preeeed4mg-after-rend 4-t4en-ef-the-4m444al-deefs4ent-er (v4)-the-need-te-reepen-a-preseeding-after-rend 444en-ef the-4mit4al-er-f4 mal-deets4en, I

(3) None of the comunications permitted by paragraph '

(b)(2)(1)-(iii) of this section is to be associated by the Comission adjudicatory employee or the NRC officer or employee performing investigative or litigating

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functions with the resolution of any proceeding under this subpart pending before the NRC.

(c) Any Comission adjudicatory employee who receives a comunica-tion prohibited under paragraph (a) of this section shall ensure that it and any responses therete to the comunication are placed in the public record of the proceeding and served on the parties. In the case of oral comunications, a written sumary shall must be served and placed in the public record of the proceeding.

(d) (1) The prohibitions in this section are-applieable apply--

(li,)wyhenanoticeofhearingorothercomka'rableorderisissued inaccordancewithil2.104(a),2.105(e)(2),2.202(c)2 2.204, 2.205(e), or 2.703 q or (2,i_i,)wyhenever an NRC officer or errployee who is or has reasonable '

cause to believe he or she will be engaged in the performance of an investigative or litigating function or a Comission adjudicatory employee has knowledge that a notice of hearing ,

or other comparable order will be issued in accordance with li2.104(a),2.105(e)(2),2.202(c),2.204,2.205(e),or2.703. ,

i (2) The prohibitions of this section will cease to apply to the disputed issues pertinent to a full or partial initial l

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, decision when, in accordance with 6 2.786, the time has l

expired for Comission review of the Atomic Safety and '

Licensing Appeal Board's decision on the full or oartial initial decision, i (e) Comunications to, from, and between Comission adjudicatory employees not prohibited by this section may not serve as a conduit for a comunication that otherwise would be prohibited by this section or for an ex parte comunication that i otherwise would be prohibited by 6 2.780.

r (f) If an initial or final decision is stated to rest in whole or in part on fact or opinion obtained as a result of a comunication authorized by this secti6'n','the substance of the l communication must be'specified in the record of the proceeding and every party must be afforded an opportunity to -

controvert the fact or opinion. If the parties have not had an opportunity to controvert the fact or opinion prior to the filing of the decision, a party may controvert the fact or opinion by filing an appeal from an initial decision, or a i petition for reconsideration of a final decision that clearly and concisely sets forth the information or argument relied on to show the contrary. If appropriate, a party may be afforded the opportunity for cross-examination or to present rebuttal l evidence.

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9. Appendix A to Part 2 is amended by revising paragraph (c) of section VII and paragraph (c) of section IX to read as follows:

Appendix A - Statement of General Policy and Procedure:

I Conduct of Proceedings for the Issuance of Construction Permits and Operating Licenses for Production and Utilization Facilities for Which a Hearing Is Required Under Section 189A of the Atomic Energy Act of 1954, As Amended

• 19,--En-i-VEE-ef-Append 4x-A-to-Part-23-paragraph-fe)-4s-rev4 sed-te read-as-fellows +

VII. General l

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l (c)(1) Section 2.781 specifies when consultation between Commis-sioners or boards, on the one hand, and the staff, on the other hand, is permitted in licensing proceedings conducted under Subpart G. Section 2.781 also permits a board, in the same type of proceeding, to consult with members of the panel from which the members of the board are drawn, l

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(2)----The-prev 4s4 ens-ef-4-2,781-restr4eting-4mtraaeeney-eensul-tat 4 ens-and-eemwnie644en-are-Met-appI4eable-te-mat %ers

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eert4ffed-te-the-Gem 4ss4en-er-te-the-Atem4e-Safety-and hisensing-Appeal-panel-under-the-Genen4ss4en-rules-4n l

li-2,720(ht-and-2,744(e)-s4 nee-these-matters-are-met-deemed-te I invelve-substantive-matters-at-4sswe-4n-a-preseed4mg-en-the reserd, 1

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1 IX. Licensing Proceedings Subject to Appellate Srlsdiction of Atomic '.fety and Licensing Appeal Board. I (c) Consultation between members of the Atomic Safety and Licens-ing Appeal Board for a particular proceeding and the staff is permitted on the conditions specified in 10 CFR 2.781.

However, members of the atomic safety and licensing boards for I 1

particular proceedings shall gy not consult on any fast-4n disputed issue in those proceedings with members of the Appeal Panel. l

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Dated at Washington, D.C., this day of ,1988.

For the Nuclear Regulatory Comission.

SAMUEL J. CHILK, Secretary of the Comission.

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