ML20202E227

Nuclear Regulatory Commission Issuances for October 1997. Pages 195-256

ML20202E227
Person / Time
Issue date:	02/28/1998
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References
NUREG-0750, NUREG-0750-V46-N04, NUREG-750, NUREG-750-V46-N4, NUDOCS 9802180103
Download: ML20202E227 (69)

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! NUREG-0750 i Vol. 46, No. 4 Pages 195-256 1

. o NUCLEAR REGULATORY:

A fCOMMISSIONtlSSUANCES.

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October 1997 i s.

U S. NUCLEAR REGULATORY COMMISSION * -

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Avsilable from Superintendent of Documents U.S. Government Printing Office RO Box 37082 Washington, DC 20402-9328 A year's subscription consists of 12 softbound issues, 4 indexes, and 2-4 hardbound editions for this publication.

Single copies of this publication are available from National Technical Information Service Springfield, VA 22161 Errors in this publication may be reported to the Office of the Chief Information Officer U.S. Nuclear Regulatory Cornmission Washington, DC 20555-0001 (301-415-6844)

NUREG-0750 Vol. 40, No. 4 Pages 105-250 N UCLEAR REGULATORY COMMISSION ISSUANCES October 1997 1

This report includes the issuances received during the specified period from the Commission (CU), the Atomic Safety and Ucensing Boards (LDP), the Administrative Law Judges (AlJ), the Directors' Decisions (DD), and the Decisions on Petitions for Rulemaking (DPRM)

The summaries and headnotes preceding the opinions reported herein are not to be deemed a part of those opinions or have any independent legal significance.

U S. NUCLEAR REGULATORY COMMISSION Prepared by the Office of the Chief information Officer U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 (301-415-6844)

COMMISSIONERS Shirley A. Jackson, Chairman Greta J. Dieus Nils J. Diaz Edward McGaffigan, Jr.

D. Paul Cotter, Jr., Chief Administrative Judge, Atomic Safety & Ucensing Board Panel

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CONTENTS ~

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leemance et the Nuclose Regulatory Comumles6on f SEQUOYAll FUELS CORPORATION and OENERAL ATOMICS (Gore, Oklahoma Site)

Docket 40 8027 EA (Decontamination and Decomrnissioning Ibnding)  !

- MEMORANDUM AND ORDER, CLI 9713, October 8, 1997... .. 195 issuances of the Atonale Safety and Licensing Boards f AHARON HEN.llAIM, Ph.D.

(Uger Montclair, New Jersey) _ i Docket IA 97 068 (ASLilP No. 97 73101.EA)

(Order Superseding Order Proliibiting involvement !n NRC Licensed Activities (Effective inunediately))

MEMORANDUM AND ORDER, LilP 9718 October 22,1997 .... 234 IIARNE*!T INDUSTRIAL X RAY, INC.

(Stillwater, Oklahoma)

Docket 030 30691 CivP (ASLHP No. 97 730-02-CivP)

MEMORANDUM AND ORDER, LHP.9719, October 24,1997 ,,.. 237.

NORTifERN STATES POWER COMPANY i (Independent Spent Ibel Storage Installation)

Docket 7218 ISFSI (ASLilP No. 97 720-01 ISFSI)

MEMORANDUM AND ORDER LilP 9717. October 15,1997 .... 227 Innuance of Director's Ikelslon

• VERMONT YANKEG NUCLEAR POWER CORPORATION (Vermont Yankee Nuclear Ibwer Station)

Docket 50-271 (License No. DPR 28) l PARTIAL DIRECTOR'S DECISION UNDER 10 C.F.R. I 2.206, DD.97 25. October 8,1997,................................ 243. ,

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Cito se NRC 195 (1997) CU 9713 UNITED STATES OF AMERICA e NUCLEAR REGULATORY COMMISSION COMMIS$40NERS:

Shirley Ann Jackson, Chairman Greta J. Dieue Nils J. Dies Edward McGefflSen, Jr.

In the Matter of Docket No. 40 8027 EA (Docontamination and Decommletioning Funding)

SEQUOYAH FUELS CORPORATION and GENERAL ATOMICS (Gore, Oklahoma Site) October 8,1997

'the Commission affirms the Licensing !!oard's approval of settlements be-tween the Staff and both Ocneral Atomics (GA) and Sequoyah Ibels Corporation (SFC). The settlements addressed the two companies' financial responsibility for cleaning up the Gore, Oklahoma facility owned and operated by G A's subsidiary, SIC in approving the settlements, the Commission sets forth in considerable detail the factors it considers when evaluating a settlement of an enforcement proceeding.

RUI.ES OF PRACTICEt SE'ITI.EMENT OF CONTESTED PROCEEDING The Commission, like other adjudicatory bodies, looks with favor upon settlements. 'Ihe Commission considers the facts in the light most favorable to a settlement and is loath to second guess the parties' (including Staff's) evaluation of their own interests. On the other hand, the Commission does not simply rubber stamp all enforcement settlements, but rather looks independently at such settlements to see whether they meet the public interest.

195

RULES OF PRACTICE: SETTLEMENT OF CONTESTED l PROCEEDING ADJUDICATORY llOARDS: MOLE REGULATIONS: INTERPRETATION (10 C.F.R. I 2.203) .

Section 2.203 of the Cornmission's rules of practice sets forth the Hoard's function in reviewing settlements in enforcemen: cases, i.e., that (1) settlements are subject to the Board's approval; (2) the Doard, in considering whether to approve a settlement, should " accord l) due weight to the position of the 6taff";

and (3) the Board may " order such adjudication of the issues as [it] may deem to be required in the public interest to dispose of the proceeding."

RULES OF PRACTICE: SE1TLEMENT OF CONTESTED PROCEEDINGt APPELL/.fE REVIEW (SETTLEMENT); STANDARD OF REYlEW COMMISSION PRO'cEEDINGSt APPELLATE REVIEW Comm;.i;. review of Board decisions on legal and policy matters such as the adequacy of a settlement is de runo, although the Commission gives respectful attention to the Board's views. In conducting its review, the Commission uses the "due weight to . . . staff' and "public interest" standards set forth in 10 C.F.R. 5 2.203 and New Fort Shipbudding Corp.,1 AEC 842 (1961). Moreover, the Commission remains mindful that the enforcement context of this proceeding necessarily restricts the r, cope of remedies that Intervenors may demand to those set out by the NRC Staff in its enforcement order.

RULES OF PRACTICE: SETTLEMFNT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, DEFERENCE TO STAFF POSITION)

The Staff's position, while entitled to due weight, is not itself dispositive of whether an enforcement settlement should be approved.

RULES OF PRACTICE: SETTLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, DEFERENCE TO STAFF 10SITION) llaving " lived" with the case as a litigant, the NRC Staff necessarily knows the record as well as, and probably better than, the Board and the Commission, The Staff has a similarly close familiarity with the strengths nd weaknesses 1%

of its own factual and legal contentions. In addition, it is the Staff - not the floard or the Commission - who has negotiated with the enforcement targets and who consequently is in the strongest position at the egency to assess what those agency targets are willing to concede and how much they are willing to Pay.

RUtES OF PRACTICE: SE1TLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, DEFERENCE TO STAFF POSITION)

'Ihe Staff has the best sense of how it should allocate its limited enforce-ment resources, as measured against other priori:les, to provide the masimum protection of the public health and safety, and whether the investment of further time and money in litigating (as compared with settling) a particular case is a responsible use of those scarce resources.

RULFS OF PRACTICE: SE1TLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, DEFERENCE TO STAFF POSITION)

The Commission is willing to presume that its Staff acted in the agency's best interest in agreeing to the settlements. Only if the settlements' opponents show some " substantial" public interest reason to overcome that presumption will the Commission undo the settlements, RULES OF PRACTICE: SETTLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING. PUllLIC INTEREST)

In examining a settlement of an enforcement proceeding, the Commission divides its public interest inquiry into four parts: (1) whether, in vn.,v of the agency's original order and the risks and benefits of further litigation, the settle-ment result cppears unreasonable;(2) whether the terms of the $cttlement appear incapable of effective implementation and enforcement; (3) whether the settle-ment jeopardites the public health and safety; and (4) whether the settlement approval process deprives interested parties of meaningful participation.

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RUllS OF PRACTICE: SETTI.EMENT OF CONTESTED PROCEEDING The Commission tends to kwk more favorably up(m settlements that will reduce the amount of money spent on litigation over liability issues and make that money available for cleanup.

RULES OF PRACTICEt SE1TI.EMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, PUllLIC INTEREST.

MISKS AND HENEFITS)

In reviewing tists and benefits, the Commission considers (1) the likehhood (or uncertainty) of success at trial; (2) the range of possible recovery and the related risk of uncollectibility of a larger trial judgment; and (3) the complexity, length, and expense of continued litigation.

MUI.ES OF PRACTICEt SE1TLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, PUBLIC INTEREST, RISKS AND HENEFITS)

The test for approval of a settlement is not whether it grants a particular party everything it theoretically might have won had the case been fully litigated. Such a to.4 would be indistinguishable from a merits judgment based on a judicial finding of liability and would deprive the remaining parties of all incentive to settic.

RULES OF PRACTICE: SETTLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, PUllLIC INTEREST, IMPLEMENTATION AND ENFORCEMENT)

Were the Staff to discern a pattern of improper disbursements, the agency could then require the licensee to obtain Staff's preapproval of all disbursements in excess of a certain dollar figure; If the recipient of improper disbursements were aware of the settlement with licensee, the Staff could seek reimbursement from the recipient. In addition, any willful violations of the Commission's orders may lead to criminal sanctions.

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RULES OF PRAC11CE: SETTLEMENT OF CONTESTED PROCEEDING (FNFORCEMENT PROCELDING, PUpl.lc INTEREST.

IMPLEMENTATION AND ENFORCEMENT)

The Commission is loath tojeopardire a settlement by adding a new require-ment of little demonstrable worth.

RUI.ES OF PRACTICEt SETI1.EMENT OF CONTESTED

- PROCEEDING (ENFORCEMENT PROCEEDING, PUHLIC INTEREST) 1hc adjudidtor's function is not to determine whether the resulting array of rights and liabilities is the one that will brst serve society, but only to confirm that the resulting settlement is within the rearhrs of the public interest.

NUCLEAR REGULATORY COMMISSION: AUTHORITY The Commission lacks authority to nullify private debts.

RULES OF PRACTICE: SE1TLEMENT OF CONTESTED PROCEEDING

'the essence of settlements is compromise and the Cornmission will not judge them oa the basis of whether the Staff (or any other party) achieves in a settlement everything it could possibly attain from a fully and successfully litigated prtweeding.

RULES OF PRACTICE: SE1TLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, PUHLIC INTEREST, PUBLIC HEALTil AND SAFETY)

NUCLEAR REGULATORY COMMISSION: HEALTil AND SAFE 1T RESN)NSlHILITIESt RESPONSlHillTIES UNDER AEA 1he Commission would not accept a settlement of an enforcement adjudica-tion where the settlement in actuality jeopardized the public health and safety.

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i RULES OF PRACTICEt SETTLEMENT OF CONTESTED {

PROCEEDING (ENFORCEMENT PROCEEDING, PUBLIC ,

INTEREST)

. NUCLEAR REGULATORY COMMISSION: RESPONSIBILITIES i UNDER AEA J

'Ihe NRC is not required under the AEA to adhere without compromise to the temedial plan of an enforcement order. Such a restriction would effectively preclude settlement because, by prohibiting any meaningful compromise as to remedy, it would climinate the element of exchange which is at the heart of settlement of any litigation.

AUI,ES OF PRACTICEt SETTLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, PUBLIC INTEREST, PUBLIC HEALTH AND SAFETY)

NUCLEAR REGULATORY COMMISSION: IIEALTil AND SAFE 1T RESPONSIMILITIES An NRC licensed facility's compliance with the Commission's safety rules can be an important indicator that the facility does not jeopardite public health and safety, liut this does not preclude the Commission, when settling enforcement controversies, from agreeing to alternate devices to protect health and safety, s RULES OF PRACTICE: - SETTLEtGNT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, PUHLIC INTEREST.

PUBLIC llEALTH AND SAFETY): WAIVER OF RULES OR REGULATIONS ENFORCEMENT ACTIONS: ENFORCEMENT DISCRETION

- Where the Staff in an enforcement settlement does not insist on strict

- compliance with a particular Commission regulation, it is neither waiving that regulation at issue nor amending it, but is instead merely exercising discretion I to allow an alternative means of meeting the regulation's goals.

- RULES OF PRACTICE: SETTI.EMENT OF CONTESTED PROCEEDING A settlement itself has no precedential value.

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RULES OF PRACTICE: NONTIMELY SUMMIS5ilON OF ARGUMENT: APPELLATE REVIEW (SCOPE OF REYlEW)

COMMISSION PROCEEDINGS APPELLATE REVIEW

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If a party fails to raise an argument before the Board, it may not do so on appeal, i

RULES OF PRACTICE: SETTLEMENT OF CONTESTED  !

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PROCEEDING (ENI ORCEMENT PROCLEDING, PUNLIC INTEREST, ,

MEANINGFUL PARTICIPATION)

Intervenors in an enforcement proceeding may only intervene with respect to matters found to be within the scope of the Staff's enforcement order and may not expand the breadth of the order or proceeding, in other words, in'.crvenors take enforcement cases as they find them. They may not control how such cases are prosecuted or compromised. Nor may they simply object to settlement in order to block it.

RULES OF PRACTICE: SETTLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING PUllLIC INTEREST.

MEANINGFUL PARTICIPATION)

Although it is useful for intervenors, based on available information, to raise objections to enforcement settlements as outside the public interest, it would not be sound practice, or even possible, for the Commission to place in intervenors' hands the same information and considerations that may htye influenced the NRC Staff to strike a compromise with SFC and GA.

RULES OF PRACTICE: SETTLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING, PUllLIC INTEREST, MEANINGFUL PARTICIPATION)

Less information is available when a case settles than would be if the case were fully litigated. Ilut this fact of life does not undercut the viability of a settlement.

RULES OF PRACTICE: SETTLEMENT OF CONTESTED PROCEEDING (ENFORCEMENT PROCEEDING. PUllLIC INTEREST.

MEANINGFl!L PARTICIPATION)

Where a grant of discovery into the merits of a settlement would create a second major litigation, such a grant would serve as a major disincentive to 201

engaging in the arduous, yet desirable, task of settling comples enforcement j cases.

g MEMORANDUM AND ORDER i

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j- On January 22,1997, the Commission issued an (vder (CLI 971,45 NRC - ,

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- 1) granting both a joint petition of Native Americans for a Clean Environment 1

("NACE") and the Cherokee Nation (collectively "Intervenors") and a petition of the State of Oklahoma (" Oklahoma") for Commission review of an Atomic Safety and Licensing Board Memerandum and Order, LBP 96 24,44 NRC 249 -

(1996). He Board order had approved a settlement agreement between the NRC -

a-Staff and General Atomics ("04") regarding OA's financial responsibility fcw <

cleaning up the Gore, Oklahoma facility owned and operated by GA's subsidiary, Sequoyah Puels Corp. (" SIC").  ;

Earlier in this proccaling, the Board had issued a similar order approving the Staff's settlement with SIC regarding SIC's own responsibility for the cleanup

- of the Gore site, LDP 9518,42 NRC 150(1995). He Commission had granted Intervenors' petitions for review of that order, and had also granted Oklahoma permission to file with the Commission a brief amicus curlac. CLl%3,43 ,

NRC 16 (1996).

All parties have 8iled briefs with the Commission regarding both LBP 18 and LBP 96-24, with Oklahoma and intervenors (collectively " opponents")

objecting to the settlements and urging reversal of those two orders, and with th Staff, SIC, and GA urging their affirmance. For the reasons set forth below, we affirm LBP 9518 and LBP 96-24 and approve both the GA and SIC settlements

- without rnodification.

- Background

His proceeding stems from an October 15,1993 enforcement order in which the Staff held SIC and GA jointly and reverally responsible for providing financial assurance for the decommissioning of the Gore facility under 10 C.F.RJ I40.36. 58 Fed. Reg 55,087 (Oct. 25,1993). De Staff considered SIC responsible under the terms of its license and GA respu,sible under the theory that it " exercised and exercises de facto control over the day to-day business

. of SIC." Id. at $5,089-91, ne Staff ultimately negotiated separate settlements with SIC and GA.--- l q

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I. Tile SFC SETTLEMENT Ui.Jer this settlement agte: ment, SFC agreed to commit all of its present and future net assets and net revenues to funding the decontamination and de-commisioning of the SFC site. In exchange, the Staff agrred to forgo further enforcement or other action against SFC to secure any additional decommis-sioning funding beyond that specifial in the settlement.

In LilP-95-18, a majority of a three-judge lloard approved the SFC settlement as being in the public interest. 'lhe majority rejected Intervenors' arguments that the settlement would permit SFC's assets to be consumed by creditors or GA, rather than used to fund decom.missioning. According to the majority, neither the agr ement nor the unde lying enforcement action could affect the status of legitimate SFC debts, and therefore Intervenors' line of argument was outside the scope of the enforcement pmceeding. Moreover, the majority found that the C funds originally set aside for decommissioning were committed by SFC to be d used for that purpose under the agreement. 42 NRC at 152 54. The majority also reasoned that the "avcidance of protracted and needless litigation is in the public iaterest. 14. at 155.

In a separate statement, Judge Ilollwerk declined to join in approving the settlement without knowing more about the Staff's periodic review of SFCs financial records contemplated by the agreement and the NRC's position as a creditor in the event that SFC filed for bankruptcy. Id. at 156-59.

On appeal, the opponents challenge the settlement agreement on I..o ground that it does not actually ensure that SFC will commit 01 possible financial re-sources to decontaminate a'id decommission the SFC facility. More specifically, they argue that the settlement fails to provide a decommissioning cost estimate l for the Gore site, to establish a fixed dollar amount as SFC's contribution to the l decommissioning costs, and to prevent SFC from improperly disbursing those funds that are earmarked for cleanup to instead pay the debts of GA, includ-ing an outstanding $10.6 million loan from Kerr-McGee Chemical Corporation (GA's predecessor as owner of SFC) or other unnecessary expenses.

The Staff and SFC respomi that the NRC has obtained the maximum possible assurances from SIC, that the Staff can take action to enforce the terms of the agreement if necessary, and that there is consequently no point in expending further agency and SFC resources on litigation.

11. Tile 'IA SETTLEMENT Under the Staff's settlement agreement with GA, the company agreed to pay either $9 million or $5.4 million (depending on the results of a still-pending query to the IRS on the tax statm of such payments), to create a decommissioning 2e, 1

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trust fund for such monies, to relinquish all control over both the fund and the monies, to permit the Staff to approve the distribution of all such monies, and to remove two GA officers from SIC's Board of Directors. 'the Staff in turn agreed to forgo further enforcement or other sction against GA based on either GA's affiliation with SIC or the Staff's theory that GA's exercise of defacto control over SIC's day-to-day business activities renders it a " defacto licensee."

In L11P-96-24, 44 NRC 249, the same two-judge majority of the Board approved the GA settlement as in the public interest. The Board reasoned that the j GA and SIC settlements combined to provide sufficient assurance of adequate i

funding for the decommissioning. He Board also concluded that approval of the settlement was supported by a balancing of various public-interest factors

- intensity of negotiations, complexity of legal and factual questions, value of immediate recovery as compared with possibility of recovery after extensive litigation, and the parties' own judgments as to the fairness and reasonableness of the settlement. 44 NRC at 257.

Judge Bollwerk again dissented. explaining that, to vo'e for approval of the GA settlement, he would first nee.d to see the Staff's carent best estimate of (a) the total decommissioning costs for the Gore facility, (b) the maximum revenue that will be generated for decommissioning work under the ConverDyn agreement,' and (c) the funds available for such work from other sources. He also asked, assuming that SIC and GA funds were insufficient to pay for the complete decommissioning of the Gore facility, what additional cleanup mechanisms would be available to complete that decommissioning, and whether the GA settlement would have any adverse effect on the availability of those mechanisms. 44 NRC at 259-62.

On appeal, the opponents argue that the settleme,t is contrary to the public interest because: it fails to ensure that GA will com.ait sufficient resources to decontaminate and decommission the Gore facility; it fails to disclose the terms of a secret " global settlement" with GA involving the company's facilities in both Gore and San Diego, California; it fails to correct numerous problems created in the SFC settlement; and it unlawfully grants GA an unconditional and indefinite waiver of decommissioning funding requirements without public notice and opportunity for a hearing.

The Staff and GA disagree. They consider the agreement an acceptable compromise, given each side's vulnerabilities. They also argue that the " global I

ConverDyn is a r,eneral partnenhsp formed in 1992, ty General Atonue Energy Services. GAES IJnuted Putneruup, and Albed signal Era r,.* services. ConverDyn's purpop- 4 to rnarket UF, conversion and other services worldwide to uuhry companies. When SIC ceased punficau and convenkm operanons at its Gore facihty la 1992, it signed a Standby Asxernent with ConverDyn under wtuch ConverDyn would provide ongoing UF, convenion nervices on behalf of SFC. Under the Standby Agreenent (as anwnded in 1994 ConverDyn pays SFC vwious fees each pw. According to the stafr. these fees are espected to provide SFC mith s72 nulhan of its s59 nulhon anticiputrd revenue through the yen 2001 204

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settlement" is a fiction and that the Commission's approach to addressing the decommissioning of GA's San Diego facilities is beyond the scope of this enforcernent proceeding. Finally, they consider the settlement an exercise of enforcement discretion rather than a waiver of regulations.

Discussion It is axiomath that the Commission, like other adjudicatory bodies, looks with favor upon settlements.3 We consider the facts in the light most favorable to a settlement and are loath to second-guess the parties' (including our Staff's) evaluation of their own interests. On the other hand, we do not simply rubber-stamp all enforcement settlements. As explained below, we look independently at such settlements to see whether they meet the public interest. See, e.g.,

l'andall C. Orem, D.O., CLI-93-14,37 NRC 423 (1993). As the Second Circuit has stated, "[tlhe evaluation of a proposed settlement requires an amalgam of delicate balancing, gross approximations and rough justice."3

1. TIIE STANDARD FOR llOARD AND CONIN115SION REVIEW OF SETTLEh1ENTS Section 2.203 of the Commission's rules of practice sets forth the Boa:d's function in reviewing settlements in enforcement cases. 'this section provides that (1) settlements are subject to the Board's approval; (2) the Boa d, in considering whether to approve a settlement, should " accord [] due weight to the position of the staff"; and (3) tne Board may " order such adjudication of the issues as [itl may deem to be required in the public interest to dispose of the proceeding." See also 27 Fed. Reg. 377, 380 (Jan.13,1962). The third element of section 2.203 means, as we stated earlier in this proceeding, that the NRC Staff has no "untra nmeled discretion" to accept compromises once an enforcement case is before the Board, and that "the presiding officer's approval of settlement is a matter that must give due consideration to the public interest."

Sequoyah fuels Corp. (Gore, Oklahoma Site), CLI-9412,40 NRC 64,70-71 (1994). Accord New York Shipbuilding Corp., i AEC 842 (1%l).

23,, ggcg,,gg g,,,,,,,,,,g c,,p (Rocketdyne Dmdon). CLIAo 5. 31 NRC 337. 340 (1990), 3rarement of Polecy en %nduct ( bctn.nna Proceedinsi. CLI-818.13 NRC 452. 456 (198t h 10 C r R. H 2.759, 2.1241; hhv v. Saw 75 F 3J 1191.11% (7th Cir.1996)(hby).

3 City ofDernnr v Gnnarlf. 495 I2 2d 448,468 (1974)(Gnnnsth, casat SayW t undsley, 456 F.2d 896. 941 (2d Cir.1972).

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Commission review of Board decisions on legal and policy matters such as the adequacy of a settlement is de novo,8 although we of course give respectful attention to the Board's views. In conducting our review, we use the "due weight to . . . staff" and "public interest" standards set forth in 10 C.F.R. 6 2.203 and New brk Shipbuilding. Moreover, we remain mindidl that the enforcement context of this proceeding necessarily restricts the scope of remedies that intervenors may demand to those set out by the NPC Staff in its enforcement ofder. See, e.g., Bellotti v. NRC, 725 F.2d 1380,1381 (D.C. Cir.

, 1983); Sequoyah Fuels Corp., CL1-94-12,40 NRC at 70; l'ublic Service Co. of Indiana (Marble flill Nuclear Generating Station, Units I and 2), CL180-10, 1I NRC 438,440-42 (1980).8 *

'Ihis restriction on the remedies at issue in this proceeding

• climinates the need to consider arguments by the settlements' opponents seeking to expand the remedies against SFC and GA beyond those sought by the NRC Staff. On the other hand, if the Intervenors or Oklahoma conclude at some future date that either GA or SFC is violating the terms of its settlement or if they are dissatisfied with any enforcement action the Staff is taking (or not taking), they are free to file a petition under 10 C.F.R.12.206 sesking additional or stricter enforcement actions '

II. ANALYSIS OF Tile SETTLEMENTS llaving discussed the general stande-ds we apply in reviewing settlements, we now turn to the settlements in this proceeding. .As noted above, we first give 8

Fur this reason, we need not reach latervenors' quesnon whether the Board male the required independent skeernunsion, supported by the record, that the GA settienrnt nwets the "petblic interest" consideranon of protecting the pubhc health and s dety.

8 As we stated in MarNa ihil We behese that pubhc health and safety is best served by concentraun inspecnon and enforcenwns resources on actual belJ inspections and reLited newnnhc and engmeenng v A. as opposed to the conduct of kgal proceedings Tlus conuderanon calls for a pobey the encourages licensees to consent to, rather than cotuest, enforcenwnt acuous. Such a pohey would be thwarted it hcemees which consented to enforcernrnt actions were rouunely subjected to format pmceedings possibly leading to nuwe severe or thfferers enforcement schons Rather than consent and nsk a heanng on whether more drasuc tehef was calkd for, heenaces would, to protect their own mierests. call for a heanng on each enforcement order to emure that the possibihty of kss severe acuon would also be considered. The end result wr*sid be a major diversson of agency resourcea from project inspecouns and engmeenng invesugauons to the conduct of heanngs.

Il NRC at 44142.

• At the outset of this case, one intervenor candidly acknowkdged that it is

• precluded fmm advocanng any nessures beyond the scope of the october 15th order " N ACE's Reply to $FCs Answer in opposition to N ACE's Monon to Intervene, dated Dec. 30.1991, at 9 See also CLIW12,40 NRC at 70 ("NACE recognizes in tius mstance that it may only intervene with respect to matters found to be widun the scope of the staffs enforcenwnt order and may not espand the breadth of the order or proceeding")

S I << #elley v. Saha. 42 F 3d 1501.1515 (6th Cir 1995); 8vitorn 725 l- 2d at 1383. Sequmah FurLr Corp (UF, Produchos IncthryL C1189-19. 24 NRC 508. 513-14 (1989L MarNe lhlt CLIMIO.11 NRC at 442.

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"due weight" to the position of the Staff and then consider the general "public interest."

A. "Due Weight" to Be Accorded the Staff's Position We begin our "due weight" discussion by reiterating our statements earlier in this proceeding that the Staff's position, while entitled to due weight, is not itself dispositive of whether an enforcement settlement should be approved:

Once prnceedings have been initiated. the Staff's discretion is never absolute. Wh;le the agency's enforcement descretion may be at its zeruth as the agency decides whether to initiate enforcenent action, that discietion does not negate the participatory rights in agency proceedings under statute or regulation once a proceedmg has been initiated or a matter set for hearing.

eoee

[Ojoce an enforcenwnt order has been set for hearing , , , , the NRC Staff no longer has untrammeled discretion to offer or accept a compromise or settlement. In any pending proceeding, the piesiding officer's approval of settlement is a matter that must give due consideration to the pubhc interest.s However, the fact that the Board (and the Commission) give less than absolute deference to the Staff's views on a settlement hardly means that such views either can be ignored or constitute only a minor factor in the Board's and Commission's

, evaluation of a settlement - a result that the opponents apparently desire, See note 8. supra The presence of the "due ,+eight" language in 10 C.F.R. 5 2.203 provides dispositive proof of the importance of the Staff's views. Several considerations reinforce the usefulness of the "due weight" approach, both in general and in this particular proceeding.

8 3eyanah fuel Corp. (oore. Oklahoma Sine), C119412,40 NRC 64,70-71 (1994t intervenms assert that the Bard must accord due weight to $taff's views only if Staff espreuly states that the settlenwnt adequately a&lresw n the heahh and safety concerns ratwd in Staff's onJn d enforcement order, but not if Staff addresses nwrely whether the settienwnt is in the pubhc interest. Howe er, Intervenors cite no support for this novel proposition. our regulatory standard for approving settlenwnts is tte "pubhc interest"(10 C F.R. 6 2.203), and the NRC Stafr's adjudicatory subnussions understandably and appropnarcly focus on that broader standard The pubhc interest includes, but is not hnuted to, conuderanon of the pubhc health and safety tour mandate umler the Atorruc Energy Act ("AEA")) our statutory authonty for the Comnussion's "pubhe interest" review of settlements umlet 10 C.F R.12.203 is not the AEA (wNch is silent reganhng settlernents) but rather section 5(b) of the Adnunistrauve Pmcedure Act ("APA"), whii permits a far broader scope of comiderations.

Nor can we accept intenenon' related posioon that the appropnate test for setticcient approvalis whether the settlemens saushes the purpose of the Staff's original enforcement order. Such sausfacuon is only one of the facton which we consider when esanumns the "puhhc health and safety" elernent of the pubbe interest. See Aandall L. Oren C1193-14, 37 NRC at 429 (Comnusucc's approval of an enforcenwnt seulenunt was based only le part on the facts that "the anginal lenforcenwntl order sought terminanon of a hceme . . . land thatl this result is achieved under the agreement without funher hugabon"). An insistence that a settlement reach m full the same goals as the origmal enforcement order would effectnely preclude settlernents in enforcenwnt cases.

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Itaving " lived" with the case as a litigant, the NRC Staff necessarily knows the record as well as, and probably better than, the Board and the Commission.

The Staff has a similarly close familiarity with the strengths and weaknesses of its own factual and legal contentions (e.g., here, its controversial position that SFC's parent corporation, GA, may be viewed as a de facto NRC licensee),

in addition, it is the Staff - not the Board or the Commission - who has negotiated with the enforcement targets (in this case, for many months) and who consequently is in the strongest position at the agency to assess what those agency targets are willing to concede and how much they are willing to pay.'

Finally, the Staff also has the best sense of h'ow it should allocate its limited enforcement resources, as measured against other priorities, to provide the maximum protection of the public health and safety, and whether the investment of further tiine and money in litigating (as compared with see.hng) a particular case is a responsible use of those scarce resources. Such exercise of enforcement discretion is essential to the efficient working of the Commission's administrative process in enforcement proceedings.

This resource allocation factor is particularly relevant to the instant settle-ments if past is prologue to the future, a full hearing of this proceeding would be quite lengthy and expensive in the first 3 years of this case, the parties have submitted nearly 400 filings. 7he time and expense associated with these filings would likely be relatively small compared with the time and cost of the remainder of this litigation. By the date of the GA settlement, the proceeding had not yet even reached the hearine rtage, discovery had barely begun, and the prospect of extensive discr very battles loomed large. The case had also taken a detour through the federal courts. See General Atomics v. NRC, 75 F 3d 536 (9th Cir.1996). TL settlements will permit the NRC to avoid further expenditures of its scarce resources.

Both as a general matter and especially as applied to the instant proceeding, all of the reasons for giving "due weight" to the Staff's views justify giving quite substantial deference to the Staff's support of the SFC and GA settlements. We are willing, in short, to presume that our Staff acted in the agency's best interest in agreeing to the settlements. Only if the settlements' opponents show some

" substantial" public-interest reason to overcome that presumption will we undo the settlements. See Sequoyah Furls, CLI-94-12,40 NRC at 71 n.10.

'The federal courts hke the Comnussion, assign substanual importance to facton such as Ifwse and consequently accord considerable weight to the opimons of expenenced coumel when dechhng whether to approse settlements See. e.g , Torrui v. Tucson Electric fewer Ca. 8 F.3d 1370 (9th Cir.1993). cert. denied. 512 U.S 1220 (1994h Gruaada Invernmener. Inc v. DW Corps. 823 F Supp. 448,453 (N D ohio 1993). The scales tip even more toward judicial approval where, as here. government oflicials prosecuting an enforcement can favor the seulement.

See Uwed Swes v. M4cratoft. 56 F.3d 1448.1462 (D C Cir,1995)(Meruroft

See MarMe Ndt. Il NRC at 44142. quared supra at p. 20h Cf Micruroft,56 F.3d at 1459 ("a settlement.

perucularly of a nujor case, will aHow the Departnwnt of Jusuce to reallocate necessanly hnuted resources").

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B. "Publie4meerest" Factors la Reviewing Settleewats We divide our public-interest inquiry into four parts: (1) whether,in view of the agency's original order and the risks and benefits of further litigation, the:

settlement result appears unreasonable: (2) whether the terms of the settlement appear incapable of effective implementation and enforcement; (3) whether the settlement jeopardires the public health _ and safety; and (4) whether the settle.

ment approval process deprives interested parties of meaningful participation."

L Risks and Benefits ~

In reviewing a settlement, the first "public interest" factor we examine is the risks an i benefits of settling as compared to litigating the proceeding. More specifically, we consider: (1) the likelihood (or uncertainty) of success at trial, (2) the range of possible recovery and the related risk of uncollectibility of a larger trial judgment, and (3) the complexity, length, and expense of continued litigation._ On balance, we believe that these considerations support approval of -

the GA and SFC settlements,

a. GA Settlement To the extent the opponents suggest that the GA settlement can be apy ved only if it grants the Staff (or the opponents) es 'rything they theoretically might have won is c he case been fully litigated - which in this proceeding would f

translate into guaranteed full funding of all decommissioning costs - we reject'--

l their position, Opponents'z argument, if accepted, would deprive the Staff's t

adversaries (here, GA and SFC) of all incentive to settle. See also note 8, Supra.

Such a " settlement" would be indistinguishable from a merits judgment based on a judicial finding of liability, it is simply " inappropriate . . . to measure

- the remedies in the [ settlement] decree as if they were fashioned after trial,"

Micro 3 oft,56 F.3d at 1461.

Here, the Nrt Staff faces a ' substantial possibility of defeat if the case proceeds to toal. The Staff's untested " defacto licensee" theory would likely turn in large part on its ability to overcome the legal maxim that shareowners (here GA) of a corporation (here SFC) are not liable for the corporatian's obligations, absent equitable circumstances warrantin " piercing the corporate U

ta aldstion to Mac usoA where the D C, Circuit considered a statutory "public interest" standard applicable to annuust enforcernent settlements, we have looked to sewral other judicial authoritses that have used standards sirnilar to curs when re*iewing settlernents. See, e s., Massachusarrs School c/Im or A=&rwr v t/nited States, 118 F3d 775,782 (D C Cir.1997x Armstrong v. Sourd e/ School Duecsors,616 F.2d 305,314 (7th Cir 1980)

(Arnutrongk Gink v, lepwt, 521 F.2d 153, t 57 (3d Cir.1975) (Gina), Grtaarti, 495 F.2d at 462.

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't

e veil."'8 On the one hand, there is no governing Commission or court law directly supporting Staff's " defacto licensee" theory. On the other hand, both the Board and the United States Court of Appeals for the Ninth Circuit appear to conclude that there Could be a set of facts that, if proven, would establish Commission jurisdiction over GA as posited in the 1993 enforcement order " Dus, both the Staff and GA understandably concluded that neither side could be certain of a victory on the issue of jurisdiction.

Absent a settlement, the NRC Staff's effort to make GA the ultimate guarantor of the cleanup of SFC's Gore site not only would face difficult legal hurdles but might also run into significant practical problems De financial information in the record suggests that GA is not necessarily a " deep pocket" and that a vietary by the Staff on the liability issue might not lead to a fully collectible judgment, should SFC default on its cleanup obligation and the NRC attempt to force GA to spend tens obe.illions of dollars on the cleanup effort, For example, GA asserts the ' 'nancial condition has worsened substantially

as the result of congressional funding cutbacks in programs for which GA is a l contractor, i.e., the Gas-Wrbine Modular Helium Reactor program (climinated I in 1995) and the nuclear fusion research program (cut by 20% in 1995), in addition, according to GA, its current business operations and future business opportunities have suffered and continue to suffer as a result of the as-yet-unresolved enforcement order at issue in this proceeding, particularly in view of its loss of a significant line of credit from Citicorp These statements raise a significant risk that any judgment against GA might well be collectible only in part.

Furthermore, if the Commission were to reject the settlement and full scale litigation were to resume, the proceeding would undoubtedly prove complex, lengthy, and expensive. The time and expense of involving senior NRC Staff and senior corporate management in a full hearing would be considerable. The complex jurisdictional issue of first impression (whether GA was a de facto licensee) not only would generate much discovery and contentious litigation but also could easily result in any final Commission decision being appealed to a U

Sec. e a, t/nised Stater v. Cordow CArmical Co,113 F3d 572 (6th Cir 1991x /aviva Afanufacturing Co

v. 7L James & Co.,893 F 2d 80,82-84 (5th Cir.1990), rert dense 4 498 U.S 1108 (199tk "The Board denied ( A's nntion for summary judgnwnt on ttus inue and the Court or Appeals did not hnd the Conawaion's juriid :non " plainly lackmg." SequawA furtr Corp. (Gore, oklahoma Sitek LBPMl7,39 NRC 359, redrw darluied CLIMil,40 NRC 55 (1994% General Asomics v. NRC,75 F3d $36, s41 (9th Cir.

19961 Particukrly in environnwntal cases ;he judictary has been withng to hold parent compames hable for their subsidiarws' ~ts when there is strong evidence of parental control See, e s , (laited Stater v. Kayser RotA Corp,,

910 F 2d 2- ist Cir,1990k cert. denied 498 U.s 1084 (1991) 3* That s, according to GA, essential to make buure s acquisioons, to backstop letters of credit and priorma r a required by donwsue and foreign custonwrt to levebze Ructuaung cash requirements, and to provide a sourre of funds in an emergency oA states that the hne of credit which it was later able to ottun provides less credit at less favorable terms and that GA s opporturuues to pursue business opportumues have consequently been brruted.

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United States Court of Appeals. The settlement of the Staff's claim against GA will permit the parties and the Commission to avoid these expenditures of time and money. As we indicated at the outset, we tend to look more favorably upoa settlements that will reduce the amount of money spent on litigation over liability issues and make that money available for cleanup.

De long and short of the GA settlement is that the NRC Staff has obtained from GA a commitment to contribute either $5.4 million or 59 million (depend-ing on the outcome of GA's pending request for an IRS tax ruling) to cleaning up the SIC site at Gore. To be sure, this is a much smaller commitment than the NRC Staff theoretically might have obtained had it pursued the enforcement litigation to the end. On the other hand, further litigation raises the substantial

, possibility of leaving GA free of cleanup responsibility altogether, despite a ma-

! jor investment of NRC Staff time and resources. And, even if the original Staff enforcement order ultimately survived all litigation attacks, the victory might prove chimerical. GA may well lack the financial wherewithal to serve as a full guarantor of the cleanup expenses, as the original enforcement order essentially contemplated. Under these circumstances, v c are not inclined to second-guess the views of our Staff, GA, and the Licerbing Board that the GA settlement achieves a reasonable result.

b. SFC Settlement As for the SFC settlement, the Staff's position contains no apparent vulnera-bilities on the merits similar to the jurisdictional ones affecting its case against GA, and we believe, based on the current nascent record, that the Staff might well prevail against SFC if the proceeding were to go to a full hearing. The level of uncertainty associated with the Staff's case against SFC appears significantly lower than the level of uncertainty associated with its case against GA.

His is not to say, however, that the Staff acted unreasonably in reaching a settlement with SFC. De settlement has the obvious advantages of halting .

diversion of SFC resources from cleanup to litigation and of saving Staff resources as well. In addita ., in approving the SFC settlement, the Board

- concluded (and the Staff and SFC emphasize on appeal) that, under the SFC settlement, the NRC will receive from SFC "all that the NRC would be entitled o receive in the absence of an agreement and a decision issued in NRC's favor." LBP-95-18,42 NRC at 154 (emphasis added). His conclusion, if taken at face value, taitigates quite strongly in favor of accepting the SFC settlement.

However, the settlement's opponents do not take it at face value. Rey question whether the SFC-pledged funds will actually prove collectible. We turn to that question in the next portion of this decision.

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2, . Implemenendon and Edorcement he opponents of the SFC settlement do not agree with the Licensing Board that the agreement effectively commits SFC "to furnish all of its assets and revenues" to the cleanup of its Gore site.'S Le LBP-95-18, 42 NRC at 155.

In their view, the agreement suffers from a number of fatal flaws, including a failure to prevent diversion of SFC funds, an inadequate reporting requirement, a lack of adequate protection against an SFC bankruptcy, and incomplete financial information. In our view, none of these objections is sufficient to upset the SFC settlement agreement, both for the reasona the Licensing Board gives (42 NRC a t 152 55) and for the reasons we give below,

a. Improper Disbursal of Assets According ta the opponents, nothing in the agreement prevents SFC from im-properly disbursing its assets, i.e., taking funds carmarked for decommissioning _

and instead improperly using them to pay unreasonable or unnecessary expenses such as drawing down or retiring GA's debt. De opponents fear that such ac-tion by SFC would render uncollectible the assets and revenue that SFC pledges in its settlement to contribute towards decommissioning the Gore facility, it seems to us that the only two ways to guarantee that funds will not be improperly disbursed would be either to prohibit SFC from paying its debts until after the completion of decommissioning or to give the Staff the authority to preapprove all SFC's expenses. In our opinion, both are unacceptable. The first approach is legally questionable:_ We doubt that the NRC may lawfully nullify credito s' valid claims against SFC..Such an effort also would be counterproductive: If SFC could not pay its debts, it could find no vendors,-

contractors, or emt :s willing :o provide the goods and services needed for decommissioni: The second approach (NRC preapproval of all SFC transactiens) would, c. our view, misallocate resources by placing an enormous administrative burden on both the Staff and SFC, We acknowledge the risk of improper disbursal but agree with the Licensing Board that the "NRC is not left helpless in the event of any deception" on SFC's part. LBP-95-18,42 NRC at 152 "[A]ny transfer of SFC assets and revenues to claimants who had no legal entitlement to them would subject SFC to an -

enforcement action (by the NRC) , , for violating the Settlement Agreement."

Id (internal quotation snarks omitted), in other words, the Staff, by using its own investigative authority and the settlement's reporting requirements (providing for Une opponents raise no sinular concerns about the implementation and enforcement or the GA settlenunt, nor do we see any such peublems with that settlement 212

4 annud financial audits), is in a position under the SFC settlement to discover and counteract ime roper disbursements."

b. Reporting Requirements ne opponents doubt the effectiveness of the SFC settlement's reporting requirements and consider the Staff's authority to require SFC to request the return of misspent funds to be small comfort. ney point out that it is far casier to prevent misspending in the first place than it is to recover misspent funds held by nonlicensees.

Bey go on to suggest four amendments to irr. prove the reporting require-ment: (1) require the annual reports to include specific information regarding decommissioning expenses or to justify the reasonableness of those expenses; (2) provide for public access to the annual reports; (3) require the filing of finan-cial reports by other entities related to SFC (i.e., Sequoyah Holding Corporation

("SHC"), Sequoyah Fuels International Corporation ("SFIC"), and CcnverDyn);

and (4) provide for Staff review of SfC's quarterly financial reports. As we ex-plain below, these " improvements" would be marginal at best and do not justify reopening the settlement agrecuent.

De suggested requirement that the annual reports either include specific information regarding decommissioning expenses or justify the reasonableness of those expenses would merely provide the Staff with information to which it already has access, both under its general investigatory and enforcement authority and also under the terms of the settlement. See SFC Settlement Agreement 15,42 NRC at IfA ("SFC will make its financial records and books available for audit by the NRC Staff at any reasonable time").

He suggested public access to SFC's annual reports poses obvious confi-dentiality problems for a privately held company. Intervenors have not offered any solution to these confidentiality problems. Regarding the suggested fil-ing of financial reports by other entities rela:ed to SFC (i.e., SHC, SFIC, and ConverDyn), none of these entities is even a party to the instant proceeding.

Consequently, the settlement cannot bind them to file reports.

Finally, regarding the suggested provision of quarterly financial reports to the Staff, we note that every 3 months the Staff already receives from the i Environmental Protection Agency (" EPA") copies of SFC's quarterly financial statements as well as its quarterly reports describing activities conducted and the nature and amount of revenues used for those activities.

N rvr instance, were the Starf to ascern a pattern of irnproper &sbursemenu. the agency coukt then require sic to obtain Staff's preapproval of all &sbunernents in excess of a certasa dollar hgure. If the recipient of linproper asburnernents were GA ce sorne other enuty with knowledge of the sfC nettlernent, the staff could icek reimbursement from the recipient. In a&huon. any willful violanons of the Comnussion's orders rnay lead to crinunal sanctions. See generuffy AEA 1223. 42 U.S C. 6 2273 213

c. Bankruptcy The rent alleged defect in the SFC settlement relates to a possible future bankruptcy of that company. Intervenors ask whether the NRC can improve its current position as an unsecured creditor in the event diat SFC files for bankruptcy, and suggest that the public would be best served by the settlement requiring SFC to provide advance notice of its intent to file for bankruptcy We cannot agree with Intervenors' suggestion. It is not at all clear that advance notice would enhance the flRC's position in a potential SIC bankruptcy.

Intervenors speculate that, with advance notice, the NRC might issue some form of immediate order that would give priority to decontamination costs over creditor claims in a bankruptcy proceeding. But no one explains precisely why a prebankruptcy decontamination order by the NRC would have more weight than a postbankruptcy order (or, for that matter, more weight than SFC's existing cleanup obligations). And, as the NRC Staff points out in its brief, an NRC order issued on the eve of bankruptcy, resting on special advance notice given the NRC but no one cise, conceivably could be rendered void by the bankruptcy court under its equitable powerr.

The Commission, of course, claims no particular bankruptcy expertise. But absent a more definitive showing of the utility of advance notice than has been presented in this case, we decline to add an t.nbargained-for notice requirement to what seems on balance a reasonable settlement. We are loath to jeopardize that settlement by adding a new requirement of so little demonstrable worth.

See Clause 1i of the Settlement Agreement, reprinted at 42 NRC 165 (allowing withdrawal from settlement in the event of "any substantive modification").

We see only one other possible means by which the agency could improve its position if SIC goes bankrupt - to require SEC to obtain an additional surety instrument guaranteeing the decommissioning funds in the event that the IJc nee goes bankrupt. Ilowever, according io the Staff, SFC cannot provide mm than the $750,000 lett r of credit that it has already obtained. Nothing in the ecord leads us to believe that the Staff is incorrect.

SI's status as the cwner of a shutdown facility with significant decommis-sioning liabilities ,.ould most likely preclude SFC from qualifying for such an additional letter of credit. C9nsequently, the only realistic situation in which a bank would issue such a lett6: of credit would be if the letter were fully collat-etalized by cash - a situation that would defeat the decommissioning goal by removing that same cash from the pool of money available to decommission the site." We agree with the Staff and SFC that this approach would be impractical U tntervenors respond ht it does snake arase to collaterahre funds. if only to protect them from Kerr41cGee's

$10 6 milhon cl.um. our discussion of the Kerr.McGee loan, infra at pp. 216 et seg. is dnpositive of Intervenorf respome.

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and counterproductive. Consequently, we do not consider the absence of this second approach in the settlement to be a factor mitigating against its approval.

d, insuficient FinancialInformation The settlement opponents argue that the settlernent agreements and the adjudicatory record lack sufficient financial information to assess the settlements' workability. For the reasons set forth below, we cons. der the absence of these pieces of proprietary information to be either irrelevant or insufficiently important to rattle the settlement.

(U "Best Ba.",ain" Intervenors arpe that the financial data in the record are insufficient to permit a fair evalustion of whether the Staff obtained the best bargain in the public in:erest. We reject this argument on two grounds. First, it ignores the established judicial precedent - equally applicable in the administrative context - that the adjudicator's " function is not to determine whether the resulting array of rights and liabilities is the one that will best serve society, but only to confirm that the resulting settlement is within the reaches of the public interest." Microsoft.

56 F.3d at 1160 (internal quotation marks omitted, emphases in oria;inal). See generally 10 C.F.R. 59 2.759,2.1241 (requiring only that a settlement be " fair and reasonable"), Second, we need not reject a settlement merely because one of the parties might have received a more favorable result had the case been ft.lly litigated.'8 )

(ID Decommissioning Cosa and SFC's Contrautwn Intervenors want to know the current best estimate of the costs of decom-missioning the Gore site and the dollar amount for SFC's contribution to those costs. We do not consider these pieces of informar:vn to be essential to an adequate settlement. As the Board correctly pointed out, the SFC settlement will provide this agency with "all that [it) would be entitled to receive in the absence of an agreement and a decision issued in NRC's favor." LBP-95-18, 42 NRC at 154. Additional financial information will not improve our position vis a vis SFC.

la our e-h is sinula to that of the federal courts in thas regard. see e: 11by,75 F3d at 1200; Aftemsoft, 56 F.3d at 1460.1461 a 9. EEoC v. Ilerum waller a s<ms. Inc., 768 F.2d 884, 889 (7th Or.1985) Ulirum Walker); Grmself. 495 F.2d at 455 n.2 C'there is no remon, at least in theory, why a satisfactory settienunt could nut arnount to a hundredth or even a thouundth part of a single percent of the potential recovery").

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De record, in any event, now contains a significant portion of the informa-tion sought by Intervenors ' Under the terms of the settlement, a major element (and, according to the NRC St.-ff, the major element) of SFC's contribution will be ConverDyn's revenue," 3e most recent information available to the Com-mission indicates that SFC's revenues from ConverDyn and other sources are estimated at $88-89 million through the year 2003, and $96 million through the year 2005,2' SFC's most recent decommissioning cost estimate is $82,268,000,H (iii) LTalms on ConnrDyn's Rennue ne opponents want to know the details of the claims on ConverDyn's revenues that woGd have a higher payment priority than payments to STC, Hey are concerned that the settlement's failure to specify the nature of these other claims on ConverDyn's revenues, together with GA's potential control over ConverDyn,22 removes any assurance that r.. ,verDyn's profits will actually be dedicated to decommissioning rather than usu by GA for its own financial

purposes, Although the opponents do not say so explicitly, this argument essentially calls into question the appropriateness of the relationship between ConverDyn and its parent companies. However, the issue of the reasonableness of this relationship is not before the Commission. He instant proceeding is bounded by the terms of the enforcement order which placed this issue outside of the parameters of this proceeding by providmg that the relationship " appears to be a bona fide arrangement among the various parties." 58 Fed. Reg. at 55,089.

Moreover, as opponents' line of argument is based only on speculation, we see no reason to allow them discovery, especially given the current settlement posture of this case, See Section ll.B.4 of this Order, infm, at pp. 222 et seq.

(le) - Kerr-McGee imen De opponents are concerned that SFC might misuse some of its assets or revenue to pay off all or part of the $10.6 million loan from Kerr McGee to GA, SHC, and SFIC. They argue that SFC's status as a shutdown business with no profit-making future deprives it of any incentive to conserve its resources for futur: decommissioning, and that GA has an obvious incentive to have l'Jee STC Settienwn: Agreenwnt 11 b, Anachrnent to LBP-95-18,43 NRC at 161, NRC Staft's Answer in ition to latervenors' retmon for Renew of LBP.9518, dated Dec.1,1993, at 8 a 4 p'Staft's Appeal Bnef, dated10,1997, Much at 14, letter from John H. Elbs, President, sFC to Cal J.

NperielkA NRC, dated reb. 28.1997, anached as Appenda I to General Atonnes' Bnefin Support of Artirmanon of LBP.96 24, deed Math 17,1997.

D 5ee GA's Appeal Bnef, dated Mach 17,1997, Appendix 1.

22 5ce none 1, supra, and the organiauonal chart provided as Appendia A to this Order, 216 l

. 1

SIC pay off as much of GA's debt to Kerr McGee as possible. The opponents propose that the settlement be amended to preclude SFC from paying GA's debt to Kerr McGee unless and until decommissioning is satisfactorily completed.

According to the opponents, this amendment would also preclude GA from unjustly enriching itself by using SIC to pay the debts of GA's subsidiaries.

Si1C and SIIC.

De probiern here, as we noted above, is that the Commission has no authority to nullify private debts. He Kerr McGee issue, in any eveat, lacks practical significance because Kerr-McGee has already indicated in writing that it does not intend to enforce its rights against SFC until tne Gore site decommissioning has been completed. Kerr McGee presumably has every incentive to permit SFC to proceed with decommissioning unimpeded, for if the SIC effort fails, Kerr-McGee may we.. be drawn into the decommissioning process (and expenses) via the "Superfund" law, i.e., the Comprehensive Environmental Response,

] Compe'isation and Liability Act (CERCLA),42 U.S.C.19 96019675.

(v) Letter of Credit and ikconnmissioning Resene Account Opponents' next area of financial inquiry is a variation on their Kerr-McGee query - they want to know whether the settlement will make available to SFC's creditors its $750,000 letter of credit required under 10 C.F.R.

I40.3622 and its roughly $3.8 million decommissioning and reclamation account

(" decommissioning reserve account") required under its NRC license, We see no real problem with either the letter of credit or the reserve account.

He letter of credit requires any funds drawn on it to be placed in a Standby Trust, the contents of which can be used only for decommissioning. Rus, Intervenors' request that the settlement be modified to commit the funds to decommissioning is unnecessary.

The following facts, offered by GA and SIC, shed further light on this matter: '

To enable SFC to obtain the letter of credit, GA deposite i the $750,000 in an escrow (or cash collateral) account held by GA at Citibank of North America; the money in the cash collateral account was not loaned to GA; and the principal has never been the property of SFC, ne letter of credit is (by its own terms) an " irrevocable" commitment by the bank to pay the NRC $750,000, and is automatically renewed each year absent 90 days' notice by the bank. If the bank gives such 90-day notice, and if SFC cannot within 30 days provide alternativt, assurance that it can replace the letter of credit, then the NRC may draw down the full amount. Thus, the bank's requirement that SFC provide financial backing for the letter of credit is irrelevant to the bank's obligation to the NRC under 23 The letier of credit is appended as Attachnent 3 to SFCs Reply to Intervennrs' Renewed opposman, dated Sept. 21, IW5.

217

the same letter of credit. We fina these explanations from GA and SIC both uncontroverted and satisfactory, and we therefore see no need for further inquiry into the $750,000 letter of credit.2d As for the decomn.issioning feserve, latervenors are incorrect to view it as a separate source of decommissioning funding that was set aside and protected from incursions by other business expens:s, and that had to be backed by either cash or other assets. The reserve is instead a balance sheet ' .: counting mecha-nism indicating that retained earnings have been appropriated by a company in accordance with legal or contractual requirements or as a result of authorization by its board of directors "

Indeed, according to the Staff, SFC's balance sheet already provides the remedy sought by Intervenors, i.e., those reserves are separately identified in STC's audited financial statements and are balanced against expenses for "apecific waste di.sposal projects and decommissioning activities" rather than against "other debh and expenses." NRC Staff's Brief Regarding Commission Review of Settlement Agreement Between Sequoyah Riels Corp, and the NRC Staff, dated April 29,1995 at 910, As the SFC balance sheet already provides what the Intervenors seek, we see no advantage to reiterating these matters in the settlement,

3. Public flealth and Safety We must next determine whether the settlements jeopardize public health and safety and therefore are inconsistent with the NRC's governing statutes and rules or with public policy,26 The settlements' opponents raise three arguments regarding this general issue - one focused on statutory authority, one on regulatory compliance, and one on general environmental law. We see no violation of law or jeopard) to public health and safety that would justify the Commission's rejection of the settlements and the consequent further litigation on the 1993 enforcement order.

24 in a related matter, laterwnnrs object to the fact that die SIC nettlement does not requue the interest from the letter of cmht's cash conateral account to be descated, along with the pnncipal, for sw in decomnussiomng the ute. Intervenor*: Imtial Hnef. deed htarch 25,1996, at 1213, relvmg on Reg Guide 3 66.11us objecuan fails. Becauw the funds in the account were placed there by GA rather than SFC, any ic'erest from those funds belongs to G*. .nd is irrelevant to the StC settlement. See $FC's Reply to inservenors' oppomuon to settlement Agreernett daed Sept IS.1995, at 9. Mmeever, nodung in ker Guide 3 66 reqmres that a cash collateral account even be embhshed to support a letter of cretht, mucl. less that the interest from such an account nwst be conmuned to decomrmssiotung funding D $ce GA's Reply Bnef, deed Apnl 29.1996, at 9-10. See uae sFr's Reply to Intervenorf Renewed oppounor,, dated Sept. 29,1995, at 5 (a rewrve is an accounung practice uwd "to in&cate the retained earmngs have been appropnated in accordance with legal or contractual requirements or as a result of authonzation by the Imard of & rectors"), quorms inscrmedwse Accmuitu.g, CompreAcasm Volume at 744 ($th ed.1972) Intervermrs have not controverted GA's and SFC's statements.

2*See, e g. In re Snus4, 926 F.2d 1027.1029 (11th Cir.1991)(wulemera is vad as agaimt# blic pobey if it Wrectly contravenes a federal statute or policy).

218

a. Statutory Authority Opponents argue that the GA settlement is inconsistent with the Commis-sion's statutory duty under the ABA to protect public health and safety, Ac-cording to Intervenors, the Commission lacks statutory authority to compromise l public ticalth and safety. They assert that although the Commission may com-promise the amount of a monetary penalty for noncompliance with a standard or agree on alternate means of compliance, the Commission is barred from negoti-ating away compliance itself or accepting a compromise that jeopardizes public health and safety?

It is of course true that the Commission would not accept a settlement of an enforcement adjudication where the settlement in actuality jeopardized the public health and safety, But, as the Board found and as we agree, that is not the case with the GA and SFC settlements, he record fully supports a finding that the two settlements do not jeopardize public health and safety. SFC currently predicts revenue from Coi;verDyn in excess of $88 million through the year 2003, and in excess of $% million through the year 2005, all of which must be devoted to cleaning up the Gone site. GA's Appeal Brief, dated March 17, 1997, Appendix 1; Staff's s,ppeal Brief, dated March 10,1997, at 14, his amount alone would be moic than sufficient to cover the $82,268,000 in decommissioning s:xpenses (SFC's current estimate). GA's Appeal Brief, dated March 17,1997, at 22. GA's additional sum of either $5.4 or $9 million adds a further cushion. Prior to the SFC and GA settlements, the NRC had no contractual guarantee that these funds would be dedicated to decommissioning. Now it does, he opponents' apparent view that the NRC must adhere without compromise to the remedial plan of the 1993 enforcement order is similar to a line of argument rejected by the Seventh Circuit in Afmstrong v. Beard of School Directors, supra - a decision we find both analogous and persuasive, ".here, the

- court was faced with the contention (made by the Intervenors in that proceeding) that "once liability is established in a school desegregation suit, , . , the plaintiffs may not exchange their right to a particular remedial plan for other remedies or programs or for a speedy resolution of the litigation." Armstrong, 616 F.2d at 316. He court rejected that approach as too rigid and concluded D opponents support their argument by asenbmg legal sigmticance to the staff's failure to agree espressly with the statemens in the GA settlenent that both GA and SFC consider their funding mechanisms to be adequate to pay for the Gore nWs decomnussiomng, intervenm' Petition for Review of LBP.96 24, dated Nov. 26.1996, at 7, oklahoma's Appeal Dnef, dated leb 11.1997, at 6. Intervenors' Appeal Bnef, dated leb. 18.1997, at 7.

We attach no sigmftcance to the staff's decision not to join in GA's statement. Even an esp.tsa statenrnt by the Staff that the mechamsms were dasufficient in ttus respect would not necessanly be fatal to the settienent, As enpluned above, the essence of settlements is compromne Uhram Wuder. 768 F.2d at 889. Arnurmag. 616 F.2d at 315), and we will not judge them on the basis of whether the Staff (or any other party) achieves in a settlement everything it could posubly atten from a fully and successfully hugated proceeding see note 18 and auociated test, sapra.

219

that "such a rule would effectively preclude settlement because, by prohibiting any meaningful compromise as to remedy, it would elitninate the element of exchange which is at the heart of settlement of any litigation." Id.

We therefore reject Intervenors' argument that we lack authority under the AEA to approve settlements that provide a remedy or a level of assurance regarding public health and safety that is less than what the Commission originally sought in a contested enforcement order,

b. Regulatory Compliance The settlements

• opponents suggest that compliance with agency regulations is the sine qua non of protecting the public health and safety, and that the settlements here impermissibly fail to guarantee full compliance with our rule governing financial assurance for decommissioning,10 C.F.R. 640.36. 'The NRC Staff agiees that the settlements do not require SFC and GA to meet the literal terms of section 40.36.

We readily agree, of course, that an NRC-heensed facility's compliance with our safety rules can be an important indicator that the facility does not jeopardize puHic health and safety. But we cannot agree with the opponents' wooden view thr in settling enforcement controversies the NRC cannot agree to alternate l

l devices to protect health and safety. Taken to its logical extreme, insistence o.:

l strict regulatory compliance in all cases, as the settlement opponents demand l here, would rule out agency use of exemptions and enforcement discretion ti relax rules in particular circumstances - a position at odds with maintaining regulatory flexibility and with NRC rules and practice. See, e.g.,10 C.F.R. 640.14 (exemptions); Ponland General Electric Co. (Trojan Nuclear Power Station), CLI-95-13,42 NRC 125,127-29 (1995) (enforcement discretion).

In this case, as we discussed at length earlier in this opinion, the NRC Staff faced a situation where GA might well prevail in its contest with the Staff, leaving the NRC with nothing at all from GA, and where SFC seemed incapable of producing the precise tir ancial guarantees contemplated by section 40.36 but offered to commit all revenues to site cleanup. In circumstances like these, we cannot say it was unreasonable for the NRC Staff to exercise enforcement discretion and to pocket offers of full revenue from SFC and 55.4 to 59 million from G A rather than to continue a quixotic quest for strict regulatory compliance, in our view, the NRC Staff in the end obtained a settlement that substantially meets the financial assurance goals underlying section 40.36. We are not inclined 220 i

. .. . - - __ - - -. -. - . . - ~ ~ .

- to expend further agency resources on an enforcement fight that is unlikely to result in more assurance than what the NRC Staff already has obtained.28

, c. Miscellaneous Environmentalissues Oklahoma asserts that the SFC settlement will adversely affect its own and the EPA's ability "to ensure that remediation will proceed as to pollutants under their jurisdictions since the theories of liability are similar" to those asserted in the instant proceeding. Oklahoma's Amicus Curiac Brief, dated April 11,1996, at 9. We disagree. Neither of these governmental entities will be prejudiced oy the SPC settlement, given th I the SfC settlement itself has no precedential value" and given further that the instant Order does not address the merits of any theory of liability in this proceeding.

Oklahoma also argues, for the first time in its Initial Appeal Brief challenging the GA settlement, that Commission approval of the "A settlement is contrary to the requirements of the National Environmental Policy Act ("NEPA"). According to Oklahoma, it is premature for the Commission to determine finally who is responsible for decommissioning costs and the amount of such costs, and to bar further action by the NRC Staff, when the decision process for determining these costs has only just begun.

4 Decause Oklahoma failed to raise these arguments before the Board, it may not do so on appeal," Even were Oklahoma not so barred, we would reject its argument on the merits. The Staff can best assess the decommissioning alterna-tives if it first knows how much money GA has to spend on decommissioning, De settlement provides that information, Rus, our approval of the GA settle-ment supports rather than preempts the NRC's NEPA review.

28 la a related argument on regulatory (and stautory) comphance, oklahoma as erts that both settlements contravene the An6 cal assurance requsrenwnts of the Comnuasson's regulmions (10 CF R. I 4036) and ,he AEA (42 U S C 6 2201(an. According to oklahonm, the settlements pernut sic to " reduce lits l

• net' revenues arul its net worth, by incurnng tww delas, paying off ok! debts, paying debts to GA releasang GA from custing agreenwnts, land] transferring aswts and income to related enuues . . ", thereby reducing the Comnussion, oklahoma, and the pubhc to the status of unsecured creditors, oklahorna's App al Bnef, dated reb. II.1997, at 10Lil, oklahoma conunues that the Staff, in reaching these settlemetas, has esteeded its authonty by fathng to require comphance with secuon 4016. by fathng to emphun why it is maiving that regulauon, and by therehy fashng to provide adequate notice and opportunity for comment on stus defacto amendment to this regulanon.

We disagree with Oklahoma's arguments. We have drah elsewhere in this order with the substance of oklahoma's hnancial assurance ergunwnt, and we need not do so again here. We would nonetheless aki that the staff is penther waiving section 4036 nor amending it, but is instead merely esercising dnereuon to allow an ahernative means of nwenng tte rule's haancial assurance goals. klareover secuon 220l(s)is irrelevant here because the secuon apphes only to byproduct rnaterials as defined in secuon lle(2) of the AEA - a kind of matenal not handled at 6e Gore facihry.

"See Settlenwnt Agm ment between NRC and GA at 12 ("no inference adveru to either party shall be drawn based on the parues having entered into tius $cttlement Agreenwns"), appended as Attachnwnt I to NRC Staff's and GA's Joint klouon foe Approval of Settlenwnt Agreement, dated July 11, 1996.

"See, e s , PMladelpha Electric Co, (l.imerick Generaung Station, Umts I and 2), A1.AB-843,24 NRC 220, 248 a29 (19146). c7 Harum Walker 768 F 2d at 892 (argunwnt oppoeng a .ettlement was rejected because it was

< raned for the hrst tme on appeal).

221

4, Meaningful Participation Because of the procedural posture of this adjudication, the settlements' opponents have obtained no discovery on the liability and the decommissioning cost issues in this proceeding. As a result, they believe that they lack sufficient information to judge the merits of either settlement, particularly on the issues of (i) GA's fmancial capabilities and respcnsibilities and (ii) the Staff's and the Commission's consideration of GA's San Diego facilities during settlement negotiations. Opponents argue that their lack of access to important information on these issues vitiates their right to meaningful participation in the case.

We cannot agree with the opponents' grievance. Early in this adjudication, we made clear that outside parties "may only intervene with respect to matters found to be within the scope of the Staff's enforceiaent order and may not expand the breadth of the order or proceeding." CL19412,40 NRC at 70.

In other words, Intervenors take enforcement cases as they find them. They may not control how such cases are prosecuted or compromised. Nor may they

" simply object to settlement in order to block it." Id. at 71 n.10. Otherwise,

, of course, the agency would be turning over its prosecutorial powers to private l parties, and "the scope of many proceedings would be ' virtually interminable' and ' free-ranging.'" Id. at 70, citing Bellotti v. NRC, 725 F.2d at 1381.

l It is useful for concerned Intervenors, based on available information, to raise objections to enforcement settlements as outside the public interest, and they have done so here with considerable force. But it would not be sound practice, or even possible, for the Commission to place in Intervenors' hands the same information and considerations that may have influenced the NRC Staff to strike a compromise with SFC and GA." As outlined in general terms earlier in this decision, numerous subjective factors, including agency enforcement priorities and resources, an assessment of adversaries

• determination and skill, shared confidences at settlement meetings, and an evaluation of likelihood of litigation success, go into a decision to settle, These kinds of matters are simply not susceptible of review by adjudicators and third parties. Cf. Heckler v, Chaney, 470 U.S. 821 (1984).

Insofar as the settlement opponents demand discovery access to confidential commercial and corporate information, their requests would surely meet with determined resistance. Cf. Sequoyah fuels Corp. (Gore Oklahoma Site),

CLI 95-16, 42 NRC 221 (1995). We decline to devote further adjudicatory resources te this sort of dispute in a case where, in our,iudgment, the NRC Staff already has reached settlements that we view as reasonable in light of the risks, benetits, and costs of further litigation. See Section II.B.1, supra.

3I obviously. less informauon is available wtwn a case settles than would be if the case were fuHy htigated nut tlus fut of hfe does not undercut the viatuhty of a settlenwnt. See hby 75 F 3d at 1199; Atwmmp. 56 F3d at 146t; Girs4. 321 l' 2d at 160; Gnnatti. 495 F.2d at 462.

222

- __ ._ _ _ . _. ____. _ __.r.__ _ . ._ . . _ . _ . . . _ . _ _ . _ . _ _ - .

1 i

in short, we see no value in the kind of reopened discovery proceedings and 4

i information. sharing - essentially a second major litigation to assess the virtues

' of settlement - that the settlement opponents demand. Such an approach not -

only would produce no fruitful result, in our judgment, but also would serve as a major disincentive to engaging in the arduous, yet desirable, task of settling i . complen enforcement cases. Cf. Massachusetts School of La at Andover v.

i United States,118 F.3d at 784 85.

l _ One specific matter concerning the parties' knowledge bears further discus-j .sion. Intervenors maintain that, in a secret " global settlement" addressing all F decommissioning claims against GA, the Staff evaluated the relative risks of-

-the various GA facilities in San Diego and the SPC site and apparently appor--

tioned some amount of OA resources among them, based on that risk assess-ment. Moreover, Intervenors assert that the global settlement was presented to the Commission in a secret ex pane briefing. According to Intervenors, such ex -

part6 communication undermines the basic fairness of the hearing process and precludes effective judicial review of our final decision. The remedy sought by the Intervenors is full disclosure of all documents relating to the settlement with GA.

In our instant review of the GA settlement, we give no consideration whatever l to the decommissioning of GA's San Diego facilities. We judge the current GA settlement purely on its own merits. Disclosure of the San Diego-related

. documents sought by the opponents is therefore unnecessary.22 In addition, even were the opponents to demonstrate from the requested documents that 4 the money available for decommissioning the Gore site might have been greater had Staff not reached an understanding with GA regarding the decommissioning

'of its San Diego facilities, such a demonstration would in no way affect our decision today.8) The NRC's arrangements for GA's San Diego facilities reflect an exercise of enforcement judgment on how best to prioritize and allocate resources _ an inquiry outside the purview of the adjudicatory process. Cf.

. CL19516,42 NRC at 225 26. In any event, the mere possibility that a party might have received a more favorable result is not a sufficient reason to overturn a settlement."

221la cur understan&ng, la any event. that intervenors haw alreaty sereiwd large poruous of this masena) through a heedun of Informanou Act requrst.1hese docurnents show that,in 1996, the Commission considered the NRC Stalt's then proposed exercise of enforcenwnt &acretion for the GA's San Diego facthues independendy .

1 and without reviewing or pening on 'he potential Gore settlement.

33tn a relased argument. Inserwnors usert that the GA *iecret global settlerne.n" unlawfully grants GA an uncon&uonal and indefimte waiver of decomnuissoning fun &ng requirements as they apply to GA's facihties in San Diego. CA. without pubhc entice and opportumty for comment. Intervenors' imual Bnef, dad Id 18.

1997, at 22 a.18. Because neither the enforcement order, the Board's orde' approving the oA settlement, nor the instant order ad,Irtsses GA's San Diego facihues' decomnuulomng. the matter in beyond the scope of this twoceeding.

M*A seulement will not no c ,xted solely because it does not provide a complete victory" for a parucular 4

party. Ish 75 F.3d at 1200, citing mram Wattsr. 768 F.2d at 889 a

4 223 J

, - u - -. , - - . . , - - .

Conclusion Ibr the foregoing reasons, we affirrn LDP-95-18 and LDP 96-24.

IT IS SO ORDERED.

Ihr the Commission JOllN C. IlOYLE Secretary of the Conunission Dated at Rockville, Maryland, this 8th day of October 1997, 224

APPENDIX A CHART ILLUSTRATING THE RELATIONSHIP OF DIFFERENT COMPANIES ASSOCIATED WITH SEQUOYAH FUELS CORPORATION General Atomics Allied Signal,Inc.

Technology Corporation l (GATC) I Allied-Signal Energy Services General Atomics General Atomics (GA) Energy Services (GAES) l' I Sequoyah Holding GAES Limited Corporation Partnership (SHC) (CAFSLP)

Sequoyah Fuels laternational

- Corporation ConserDyn (SFIC) l Sequoyah Fuels Corporation (SFC)

Based on Intervenors' Initial Appeal Brief, filed March 25,1996, at 2-3 n,1, 4 n 3, 22 n.23, in turn based on GA's Answer to NRC Staff's First Set of Interrogatories, dated June 29,1994, at 2. See also SFC's Response in Opposition to Intervenors' Petition for Review [of LBP-95-18), dated Nov. 27, 1995, at 5 n.5; SFC's Response Brief, dated April 29,1996, at 7; intervenors' Opposition to Joint Motion for Approval of Settlement Agreement Between NRC Staff and GA, dated Aug. 9,1996, at 3 4,8; Staff's Appeal brief, dated March 10,1997, at 2.

225

Atomic Safety and Licensing Boards issuances ATOMIC SAFETY AND UCENSING BOARD PANEL B. Paul Cotter, Jr.,* Chief Administrative Judge Js.nes R Gleason,* Deputy Chief Administrative Judge (Executive)

Frederick J. Shon,* Deputy Chief Administrative Judge (Technical)

Mernbors Dr. George C. Andersm Dr. Richard F. Foster Dr. Kenneth A. McCollorn Charles Bechhoefer* Dr. David L. Hetrick Marshall E. Miller Peter B. Bloch* Ernest E. Hill Thomas S. Moore

• G. Paul Boltwerk lil* Dr. Frank F. Hooper Dr. Peter A. Morris &

Dr. A. Dixon Callihan Dr. Charles N, Kelber* Thomas D. Murphy

• Dr. James H. Carpenter Dr. Jerry R. Kline* Dr. Richard R. Parizek Dr. Richard F. Cole

• Dr. Peter S. Lam

• Dr. Harry Rein Dr. Thomas E. Elleman Dr. James C. Lamb lil Lester S. Rubenstein Dr. George A. Ferguson Dr. Linda W. Uttle Dr. David R. Schink Dr. Harry Foreman Dr. Emmoth A. Luebke Dr. George F. Tidey

• Permanent panel members

Cite as 46 NRC 227 (1997) LBP-9717 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING BOARD Before Adminletrative Judges:

Charles Bochhooter, Chairman Thomas D. Murphy Frederick J. Shon in the Matter of Docket No. 7218-ISFSI (ASL8P No. 97 720-01 ISFSI)

NORTHERN STATES POWER COMPANY (Independent Spent Fuel Storage Installation) October 15,1997 he Licensing Board denies reconsideration of its earlier order (LDP-97-13, 46 NRC i1 (1997)) terminating the proceeding without prejudice. It determines that termination svith prejudice, as sought by one petitioner for intervention, is inappropriate in the circumstances, RULES OF PRACTICE: TERMINATION OF PROCEEDING ne rule authorizing licensing boards to terminate a proceeding (10 C.F.R. 5 2.107(a)) prior to issuance of a notice of hearing is ambiguous on its face as to wt aNr a board may impose conditions on such termination.

RULES OF PRACTICE: TERMINATION OF PROCEEDING Termination of a proceeding with prejudice is not warranted wher: there has been no demonstration that diere has been substantial prejudice to an opposing party or to the public interest. That an opposing party may " linger in uncertainty" 227

___ j

about a futua application does not constitute such a demonstration. In addition, termination with prejudice (i.e., barring future use of a site for a designated purpose) would be inappropriate in the absence of any information that would -

justify precluding the site from such future use.

MEMORANDUM AND ORDER-(Denying Reconsideration and Terminating Proceeding)

• lhis proceeding concerns the application of Northern States Power Company (NSP or Applicant) for a license to possess spent fuel and other radioactive materials associated with storage of spent fuel from the Prairie Island Nuclear Itwer Plant, in an independent dry-cask' spent fuel storage installation (ISFSI) located at an away-from-reactor site in Goodhue County,' Minnesota. Pending before this Atomic Safety and Licensing Board is a petition by Florence Town.

ship for us to reconsider our July 30,1997 order terminating this poceeding without prejudice (LBP-9713,46 NRC 11) and to substitute a termination with prejudice or subject to defined conditions.

For the reasons that follow, we are denying Florence Township'c petition and reaffirming our earlier order to terminate the prodng without prejudice.

I. BACKGROUND Petitions for leave to intervene and requests for a hearing were filed by seven entities: the Minnesota Department of Public Service; the Minnesota Environmental Quality Board; the Prairie Island Indian Community; the Prairie Island Coalition; the City of Red Wing, Minnesota: Florence Township, located in Goodhue County, Minnesota: and the City of Lake City, Minnesota, We have not yet ruled on the admissibility of any of the foregoing petitioners and thus have never issued a Notice of Hearing.

In December 1996, we had scheduled a prehearing conference to consider these petitions but, as a result of pc Jing litigation in the Minnesota courts

' concerning the suitability of the ptc osed Goodhue County site, we cancelled the prehearing conference (scheduled for December 1719,1996) and granted NSP's motion to suspend this proceeding. LBP-96-26,44 NRC 406 (1996).

Thereafter, reflecting the outcome of the state-court litigation tht permitted the dry-cask storage sought by NSP on the Prairie Island site itself and satisfied NSP's current need for offsite storage, NSP withdrew its ISFSI application and, on July 24,' 1997, moved to terminate this proceeding. NSP expressed its view that,-in the absence of a Notice of Hearing, we lacked authority to impose ,

conditions on the termination.

228 i'

d 8

w - -

, , e a,

On July 30, 1997, we granted NSP's termination motion, pointing out that it would be inappropriate for us to impose conditions on the termination.

LBP 9713,46 NRC I1. Simultaneously, Florence Township, a petitioner for '

intervention, filed a response to NSP's termination motion, favoring termination but seeking dismissal of NSP's application "with prejudice" or, alternatively, subject to a condition that NSP's application for an ISFSI on the Florence Township site not be resubmitted. By Memorandum and Order (Petition for Reconsid: ration), dated August 7,1997, we determined to treat Florence Township's response as a petition for reconsideration of LDP 9713, postponed the effective date of LDP 9713, and invited oQer parties or petitioners to respond.

We received responses from NSP, the NRC Staff, the Minnesota Environ-mental Quality Board (MEQB), the Minnesota Department of Public Service, and the Prairie Island Dakota Community.' Florence Township filed a reply, to which no party nesponded (even though it raised several matters not clearly comprehended within FMrence Township's petition),

11. DISCUSSION in its termination motion, the Applicant took the position that we had no authority to impose conditions on the withdrawal of an application prior to issuance by this Board of a Notice of Hearing (which we could not issue until we had found at least one petitioner to have standing and to have sub nitted an acceptable contention). Indeed, prior to the suspension of this procceding, petitioners had not yet been required to submit supplements to their petitions that would include their contentions, even though several had submitted contentions prematurely, and we had not held the prehearing conference designed to assist us in making determi.iations on the adequacy of standing and contentions.

On its face, the termination authority (set forth in 10 C.F.R. 6 2.107(a)) is at best ambiguous:

(a) The Comnussion may permit an applican, to withdraw an appheation prior to the issuance of a notic6 of hearing on such terms and conditions as it may presenbe, or may, on receiving a tequest for withdrawal of an apphcation, deny the application or dismiss it with prejudice. Withdrawal of an applicanon aher the issuance of a nonce of heanng shall be on frch terms as the presiding ofheer may prescribe.

I We gramed the Praine Island Dakota Comnumty's tekphone request for an cuension of unu with n which to 61e a response, and it Aled withsn that period We are treaung the Prune bland Dakota Comnumty (which did not nie an intervenuon petiuon under that name) as a subset of the Praaie Island Indian Commumty, which had Sled a peution. Both groups are represented by the sane counsel. 04, ; .ies and peutioners that had hied imervention pentions wers chgible to comment on the terms of withdrawal, and we accordingly have considered the commems of the Prmrie Island Dakota Comnumty in issuing Gus Memorandum and order.

229 l

l

Because we are exercising the delegated authority of the Commission in this proceeding (see 10 C.F.R. I 2.721(a)), we could perhaps construe the termination authority as permitting us to impose terms and conditions prior to issuance of a Notice of Hearing and requiring us to consider the appropriateness of such terms and condition: after issuan:e of a Notice of llearing, This interpretation would be consistent with Florence Township's position.

Alternatively, the regulation could be construed, as the Applicant asserts, as permitting us to impose terms and conditions only after the issuance of a notice of hearing. For this interpretation, NSP cites Vermont Fankee Nuclear Power Corp. (Vermont Yankee Nuclear Power Station), CLi-93-20,38 NRC 83,84 85 (1993). That case, however, explicitly applies only to a " license amendment" proceeding governing a nuclear power plant and thus may not govern an initial application for an ISFSI such as this anc.

We need not, however, resolve these jurisdictional questions. Ibr we agrer with both NSP and the Staff, as well as the Prairie Island Dakota Community and the Minnesota Department of Public Service, that any conditions here (or, alternatively, dismissal with prejudice or denial of the application) are unwarranted and, hence, as we earlier held, inappropriate.

Such relief might be considered where there is " substantial prejudice to the l

opposing party or to the public interest in general." Pueno &co Electric Power Authority (North Coast Nuclear Plant, Umt 1), ALAB-662,14 NRC 1125, i133 (1981); see also Sequoyah fuels Corp., CL1-93-7, 37 NRC 175,179 (1993),

endorsing the " substantial prejudice" standard. Florence Township has made no such showing here.

A. Florence Township Position in its initial petition, dated July 30,1997, Florence Township indicated that, if NSP retained the option to submit another application for an ISFSI in that ecmmunity, it (Florence Township) would " linger in uncertainty" about a future application. It mentions that it has spent " tens of thousands hours and nearly as :nany dollars" in opposing the ISFSt. It adds that, without a condition that the application shall not be resubmitted, "there is no finality to the withdrawal, there is no closure, and it must remain ever diligent and indefinitely on the alert." It concludes that, without limitations as to resubmittal, NSP's withdrawal is "nothing more than an extended suspension," for which the rules assertedly do not provide, in its August 29, 1997 reply to responses submitted by other parties and petitioners - a filing that we had not authorized and to which no party or petitioner responded - Florence Township discussed jurisdictional and other legal issues but added no significant additional reasons for imposing conditions 230 s a -

on the termination.8 f t clarified that it was seeking only a very narrowly tailored term that would prevent NSP from submitting the same application for the same sites it also charaderized the withdrawal in terms of an " unusual situationl]

whkh involvals) substantial prejudice to the opposing party or to the public iraerost in general," citing Ence,ty fuels Nelear, Inc., Lilp.93 20. 42 NRC 197 (1993).

I'lotence Township also reiterates the anerted damage it would suffer if the site for an ISPSI were approved, as set forth in its intervention petition.

'ihese, however, are allegations of injury if a new facility were applied for that could be asserted if such eventuality occurred ihey have never been proved in an adjudicatory hearing and, in any event, are not a result of the requested termination. 'the only discrete factor that 11orence Township discunes (in terrns of the bvshness of a with prejudice termination)is the availability of other sites for N! / to use a an ISFSI,if necessary. Ilut this factor could also be consideemt in the content of a new application, when and if submitted. It is prematu: to consider it now.

Finally, llorence Township auerts that, if NSP's application is dismissed without prejudice, Florence Township is entitled to compensation, it questmns whether we can order payment of monetary compensation and acemiingly docri not provide figures concerning any amounts it has espended. Ilut it further states that it would accept compensation in the form of a narrow prohibition -

in cuence, a reiteration of its previous claim for relief.

11. Other Participants' Positions splicant and NRC Staff each seek denial of the Florence Township petiti, id distnissal of the .!!Sp application without prejudice. F.ach asserts jurisdh ial bases for this position - our alleged lack of authority to condition the withdrawal. As stated earlier, however, we are not deciding those questions at this time.

On the merits, the Applicant points out that, as a matter of law, the possibility of a second proceeding does not jusNfy dismissal with prejudice or the imposition of conditions on withdrawal, citing North Cet. ALAll-662, supra, at i138, and IMc l'ower Co. (IYrkins Nuclear Station, Units I,2, and 3), LilP.

82-81,16 NRC 1128,1135 (1982) 'Ihe Staff observes that the possibility of future litigation espenses is precisely the consequence of tiny dismissal without prejudice (citing North Coast, ALAll 662, supra), and does not provide a basis for departing from the " usual rule" that disminals should be permitted without 8 u a ha iusseiwa me. nwan or iodo.w. ., . .we miuw or e inuwd enemnei m unaen se ew.ains an engwrnesuble MI

prejudice. Sre oln Philadelphia Electric Co. (Itlton Generating Statior'. Units I and 2), ALAll b57,14 NRC 967,979 (1981).

As for other petitioners, the MEQil (which earlier had disappromi the suitability of the Goodhue County site for an ISFSI) states that it would be futile for NSP to resubmit an application for the Goodhue County site because NSP could rmt obtain the requisite state approval for that site. 'ihe MEQIl thus concludes that, as a rnatter of state law, it is of no consequence v.hether we condition the termination, and it espresses no opinion on whether we shculd do so. It adds that, should State law change, Florence Township would be on an equal footing with other municipalities and townships, he Minnesota Department of Public Service, in a filing dated Augut' JJ, 1997, disagrees with llorence Township and indicates that florence Township should be satisfied with the finality of our July M 1997 Order terminating the proceeding without prejudice. Ibr different reasons, the Prairie Island Dakota Community, which favors finding a site other than the Prairie Island site now being utillied, in its August 29,1997 response states that dismissal with prejudice, as sought by llorence Towt. ship, would be " inappropriate at this time." he Dakota Community notes that NSP's withdrawal is based entirely on the decision of the MEQll and not on the merits of the site, that dismissa with prejudice implies a decision on ,te r erits, and that because we have no evidence before us on the merits of the site, it would clearly be inappropriate for us to dismiss the petition with prejudice.

C. I,1 censing floard Conclusion

~ We have considered all of the foregoing views and conclude, largely for the reasons espressed most forcefully by the Prairic li. land Dakota Community, that dismissal with prejudice or with conditions would be inappropriate. In particular, conditions would suggest that we had reviewed the site on the merits I and found some fault with it. See l'erlins, l. IIP 82 81, supra,16 NRC at i135.

We clearly have not done so. !!eyond that, the espenses of participation outlined by 11orence Township are not of the type that would warrant granting of relief, even assuming we have the authority to grant it. Id. He state of the proceeding as of the suspension date - when contentions had not even been submitted or required - suggests no significant espenses have been incurred. Nothing that florence Township has submitted indicates otherwise.

Ill, ORDER Accordingly, for the reasons set forth, it is, this 15th day of October 1997 ORDERED:

232 1( m_

1. 11orence Townshi/s petition for reconsideration of 1.Bp.97 13 is denied.

2. NSP's motion to t, nninate ti.is proceeding withcut prejudice is granted.

• Ihis proceeding is twreby terminated without prejudice.

3. Pursuant to 10 C.F.R. I 2.760 of the Commission's Rules of Practice, this Memorandum arul Order will constitute the final decision of the Commission forty (40) days fror. die date of its issuance, unless an appeal is filed in accordance with 10 C.F.R.12.714a or the Commission directs otherwise. An appeal to the Commission may be filed by petitioners or parties, as set forth in 10 C.F.R. 6 2.714a, within ten (10) days of service of thir Order, "Ihe appeal shall be asserted by the filing of a notice of appeal and accompanying supporting brief. Any other party or petitioner may file a briefin support of or in opposition to the appeal within ten (10) days after service of the appeal.

TilB ATOMIC SAFETY AND LICENSING BOARD Charles Ilechhoefer, Chairman ADMINISTRATIVII JUDGB

'Ihomas D. Murphy ADMINISTRATIVB JUDGH liederick J Shon ADMINISTRATIVE JUDGE Rockville, Maryland October 15.1997 233

Cite es 46 NRC 234 (1997) L5P 9719 UNnED STATES OF AMERICA NUCLEA9 REGULATORY COMMISSION ATOM 6C SAFETY AND LICENSING BOARD i

Before Administrative Judges:

Charles Bochhoofer, Chairman Dr. Jerry R. Kline Dr. Peter S. Lem in the Matter of Docket No,lA 97 068 (ASLBP No. 97 73101 Et)

(Order Superseding Order ,

Prohibiting involvement in NRC Licensed Activities (Effective immediately)) -

AHARON isEN-HAW, Ph.D.

(Upper Montclair, New Jersey) October 22,1997

'ihe 1.icensing floard grants the Staff's motion to delay the proceeding for 120 days, to accommodate referral of the proceeding to the Department of Justice for possible criminal prosecution, llecause there had been no explanation why a delay of this length was necessary and because of the impact of delay upon Dr. Ilen liaim, who is subject to an immediately effective order barring his participation in NRC licensed activities, the Doard required detailed reasons should any further delay be sought, including possible production at a prehearing conference of a Department of Justice representative for floard questioning.

MEMORANDUM AND ORDER (Staff's Motion for Delay of Proceeding)

On September 30,1997, the NRC Staff filed a motion for an order delaying this proceeding for 120 days, subject to the possibility of a request for an ex'en-234

sion of time. 'this proceeding concerns a currently effective Staff enforcement order that prohibits Dr. Aharon llen llaim from engaging in NRC licensed ac.

tivities for 5 years commencing July 31,1997. (See LilP 9715,46 NRC 60 (1997), for a further description of this proceeding.) In a response dated October 13,1997. Dr. Ilen llaim indicated that he would not oppose the Staff's motion.

According to the Staff, the purpose of the delay is to accommodate its referral of the files in this proceeding to the Department of Justice for possible criminal prosecution. Ilased on an affidavit of !!ruce A. Levy, Assistant U.S. Attorney for the District of New Jersey, which spells out the substantive reasons why a delay should be granted, the delay should be for no less than one hundred and twenty days, subject to the possibility of a request for an extension." The Staff's motion reiterates the need for a delay of that length. Neither the Department of Justice not the NRC Staff provides any explanation as to why a delay of as long as 120 days is warranted.

Given the record before us, with no expressed opposition by Dr. Ilen llaim to the 120-day delay sought by the Staff, we have insufficient basis upon which we could reject the Staff's motion. Some delay is clearly warranted, and a 12(bday delay has been characte'ited in another proceeding involving a federal investigation into possible criminal conduct as of " moderate duration."

Oncology Services Corp., L11P 9310,37 NRC 455,460, ag'd. CLI 93 7,38 NRC 44 (1993).

We would be remiss, however, in not noting our skepticism of the length of t time requested. Although the Department states that it is " presently conducting a criminal investigation"(Levy Affidavit 2), it is our general understanding that the Department is merely considering at this time whether or not to undertake a formal criminal investigation. We have no information before us that would explain why that threst.old decision could not be made in substantially less time than 1/0 days. We are concerned that additional, lengthy delay could have an unwartanted negative effect on Dr. Den llaim's interests by delaying inquiry into the merits of his suspension for insubstantial reasons.

Nonetheless, we are granting the Staff's request for a 120-day delay, mea.

sured from September 30,1997, the vate of the Staff's motion. The delay thus will extend to January 28,1998, or such earlier date as the Staff may be notified that the Department of Justice will not pursue a formal criminal investigation.

To obeein a further extension beyond January 28, 1998, the Staff will be requitgJ to produce detailed reasons, including the status of the Department of Justice investigation and reasons why a continuation of the delay is warranted.

Should such a request be filed, we may *cil convene a prehearing conference at which the Staff would be rec,uired to prmluce for floard questioning a Department of Justice representative for justification of any further delay, 235

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IT IS SO ORDERED.

FOR 1118 ATDMIC SAIIT. Y AND LICENSING llOARD Charles Dechhoefer, Chairman ADMINIS11(ATIVII JUDGil Rockville, Maryland Ockher 22,1997 236

l Cale as 46 NRC 237 (1997) LBP-9719 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION t

ATOMIC SAFETY AND LIC9.NSING 80ARD Before Adminletrative Judgest B. Paul cotter, Jr., Chairman Dr. Richard F. Cole Dr. Thomas S. Ellemen in the Metter of Docket No. 030-30691 CivP (ASLBP No,97 730-02 CNP)

BARNETT INDUSTRIAL X RAY, INC.

(Stillweter, Oklahome) October 24,1997 MEMORANDUM AND ORDER (Approving Settlement Agreement and Dismissing Proceeding)

Ily letter dated June 16,1997, !!arnett Industrial X Ray, Inc. ("Ilarnett"),

appealed from a Nuclear Regulatory Commission (NRC) Order Imposing Civil Monetary I'enalty issued May 23, 1997, by th: Director of the Office of I!nforcement. The Director charged three violations of NRC safety regulations governing radiographers and levied a fine of $4(K'MXL Ilarnett, located in Stillwater, Oklahoma, sought a hearing to have the penalty remitted, ibilowing the establishment of this floard on July 14,1997, the 11 urd ordered the parties to file a Joint Prehearing Report. That Report, filed on August 19, 1997, stipulated the issues as to which there was no dispute, identified the central issues for litigation, as well as those amenable to a dispositive motion, and estimated the time needed for discovery and hearing. At a September 3.

1997 telephone prehtating conference the lloard directed the parties, inter alia.

to enter into settlement negotiations and advise the lloard by October 22,1997, of the result. On September 17, 1997, she lloard issued a notice of hearing 237

based on the schedule agreed to at the prehearing conference as subsequently amended by the parties.

On October 17, 1997, the parties filed a joint Motion for Ar. proval of Settlement Agreement which attached a joint Settlement Agreement. Dat agreement, before us now, provides that llarnett withdraws its request for hearing and sets out the terms and conditions whereby llarnett would pay a reduced civil penalty.

Once a hearing has been noticed, any neEotiated settlement between the Staff and any of the parties subject to an enforcement order must be reviewed and approved by the lloard pursuant to 10 C.F.R. 6 2.203 (1997). Sequoyah fuels Corp. (Gore, Oklahoma Site), CLI 9412,40 NRC 64,71 (1994). At that point tie NRC 5taff no heget las untramnried discreuon to orfer er anept a cornpronuse tv .

settlement. la any pending proceeding. tiw presidine ofhcer's approval of settlenent is a snatter that ntust give due consklerauon to tie public interest Id.

Moreover,just as the Commission, as a matter of policy stresses that the fair and reasonable settlement of contested licensing proceedings is encouraged, so too, such settlements are equally desirable in other kinds of proceedings. Cf.

Philadelphia Electric Co. (Peach Ilottom Atomic Power Station. Unit 3), ALAll.

$32,9 NRC 279,283 (1979). %e principle in Peach Bottom was reiterated in the Commission's Statement of Policy on Conduct of I.icensing Proceedings, Cl.l.8l 8,13 NRC 452,456 (198I); see also Admnced Medical Systems, Inc.

(One fisctory Row, Geneva, Ohio 44041), LIlp.9410,39 NRC 126 (1994).

We have reviewed the Settlement Agreement before us with those precepts in mind and find that the agreement is fair and reasonable. Accordingly, we find the agreement to be in the public interest and will approve it as requested by the parties.

Order i

Upon consideration of the Joint Motion for the Approval of Settlement Agreement received by this lloard on October 1,1997, the Joint Settlement Agreement attached thereto, and the entire tecos.1 in this matter, it is, this 24th day of October 1997 ORDIIRIID

1. He Joint Settlement Agreement submitted by the parties, attached hereto and incorporated herein by reference, is cpproved as in the public interest.

l-238 x I

2.

Pursuant to 10 C.F.R. 6 2.203 and in accordance with the terms of the Settlement Agreernent, this proceeding is terminated and dismissed.

"Illii ATOhilC SAFIITY AND LICENSING !!OARD' l II. Paul Cotter, Jr., Chairman ADh11NISTRATIVE JUDGE Richard F. Cole ADhilNISTRATIVil JUDGE Issued at Rockville, hiaryland October 24,1997

• Adiruaisusuve Judge 11kman was est osastatie to age ttus MeivavanJum and order, but he was aJvised of 44a contents and aggewd of its hauance 239

_ _ =

ATTACHMENT UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOAMO in the Matter of Docket No. 030 30691.CivP BAMNETT INDUST 9tAL X RAY, INC.

(9tillweter, Oklebt we)

JOINT SETTLEMENT AGREEMENT On May 23,1997, the staff of the Nuclear Regulatory Commission (Staff) issued an " Order imposing Civil Penalty" (Order) to !!arnett Industrial X Ray.

Inc. (llarnett). 62 l'ed. Reg, 30, 346. In its Order, the Staff charged three violations of the Corntnission's regulations governing radiography and levied a fine of $4,000. On June 16,1997, !)arnett requested a hearing. On July 14, 1997, an Atomic Safety and I,icensing floard (Iloard) was established to preside ,

in the proceeding.

'Ihe Staff and llarnett agree that it is in their respective interests and in the piblic interest to settle the enforcement action and agree to the following terms nnd conditiono r

1. Ilarnett wi'hdraws its request for a hearing.

2. Ilarnett agrees to pay a civil penalty in the amount of $2,500.00 in four installments, to be paid in accordance with paragraph 4 of this Settlement Agreement.

3. If any installment remains unpaid for a period of thirty (30) days or more, the Staff may, in its discretion, consider this Settlement Agreement as materially breached. In the event of a breach of this Settlement Agreement, the full amount of the civil penalty imposed on llarnett, $4,000 (plus interest and '

administrative charges, less any paymer,ts already made hereunder), will become due, in this event, Ilarnett agrees to waive any right to contest or seek review of the imposition of the civil penalty before the NRC or in any court.

4. Ilarnett agrees to make payments in four installments, with an installment every six months. 'Ihe first payment is to be received thirty days after this Settlement Agreement has become final agency action (unless such day falls on a Saturday, Sunday or federal holiday, in which case payment is to be received 240

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by the next business day), plus interest on the unpaid principal balance accruing at the rate of 5 percent per year, as well as an administrative charge of $10.00 per month. Sutr equent payments shall be received by the first day of the month upon which payment is due as shown in the schdule in this paragraph. Payments shall be made payable to the United States 'Deasury and received at the address below until the principal sum and all interest and other charges assessed under the provisions of this Settlement Agreement have been fully paid.

Payments will be mailed or otherwise delivered to the following address:

U.S. Nuclear Regulatory Commission Office of Enforcement I Attn: James Lieberman i Mail Stop O-7H5 Washington, DC 20555-0001 l

' %e following is a schedule of monthly installments:

NAltNITT X ILAY INVOICE NUMBFJL EA 96 902 Periment Payment Total laterget Admin. Primelpel Remalaing Numiher liste* Payment Amenet Aineunt Amount Delance Heginning a talance . . . 14.M10 00 1 725 00 10 42 60 00 654 Ss 1.s45 42 5 2 725 00 7 69 60 00 657.31 1.lss il 3 725 00 4 95 60 00 6 tic 05 52s06 4 590.26 2 20 . 60 00 52s(e 0 Total , $2.761.26 525 26 5240 00 $2.500 00

'N paynent daies willlie determined when sie Settlenwnt Agreenwnt in approved tiy the 1.icensing flowd At that une, the NRC Office of Enrarcenwns will inform Damett of the dates liy lettet.  !

5. - In the event of a material breach of this Settlement. Barnett agrees to pay all reasocable collection costs, court costs, and aaomey's fees incurred by the i Nuclear Regulatory Commission avl /or the United Itates for any appropriate collection actions taken by the Nuclear Regulatory Commission and/or the i United States. Ilowever, in no event will these costs exceed 5% of the total .

civil penalty imposed. .

6. Ikilure or failures by the Staff to exercise any right in this Settlement Agreement with rupect to a material breach shall not be construed as a waiver of its right to esercise the same or any other right at any time thereafter.

7. The provisions of this Settlement Agreement may not be changed except

- by a prior written agreement which specifies the agreed-upon changes and which

, is signed by the Staff and Barnett.

t 241 r

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8. The parties agree and understand that this Settlement Agreement is only binding on the NRC and Barnett and relates only to NaC's authority to take civil enforcement action. 'this Settlement Agreement shall be binding upon the legal representatives, successors and assigns of Barnett.

9. The Staff and llarnett shalljointly move the Atomic Safety and Licensing l Iloard designated in the above-captioned proceeding for an order approving this Settlement Agreement and terminating the proceeding.

In Witness Whereof, the parties have caused this Settlement Agreement to be executed by their authorized representatives.

10R IIARNiTIT INDUSTRIAL X RAY. INC. 10R Tilli NRC STAIP O. Michael Solomon Richard G. Bachmann Counsel for Barnett Industrial X Ray, Inc. Counsel for NRC Staff Dated this 15th day of October 1997 242 1

o

Directors' Decisions Under 10 CFR 2.206 a

Cite as 46 NRC 243 (1997) DD-97 25 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION OFFICE OF NUCLEAR REACTOR REQULATION Samuel J. Colline, Director in the Matter of Docket No. 50-271 (License No. DPM.20)

VERMONT YANKEE NUCLEAR -

POWER CORPORATION (Vermont Yankee Nuclear Power Station) Octot er 8,1997 fly a petition dated December 6,1996, submitted by the Citizens Awareness Network, Inc. (Petitioner or CAN), Petitioner requested evaluation of two enclosed documents relating to the Vermont Yankee Nuclear Ibwer Station (Vermont Yankee facility) operated by the Vermont Yankee Nuclear Ibwer Corporation (Licensee). De first document was a CAN memorandum raising a concern with cortrective actions taken by the Licensee in opening the minimum flow valves at the Vermont Yankee facility to provide residual heat removal pump protection. Petitioner raised the concern that an unreviewed safety question may have been introduced. He second document was a CAN memorandum m;uesting review of certain licen ce event reports (LERs) submitted by the Licensee.

lYtitioner requested that the memoranda be evaluated by the NRC to see if enforcement action was warranted based on the information contained therein.

De Director of the Office of Nuclear Reactor Regulation issued a Partial Director's Decision on October 8,1997. He Petitioner's request was granted in that the NRC Staff has evaluated those issues raised in the CAN memoranda that have been closed by the Staff and the Staff has found that no further enforcement action is warran!.d. De three LERs that iemain open and are still being evaluated by the NRC Staff will be addressed in a Final Director's

!keision.

2 13

PARTIAL DIRECTOR'S DECISION UNDER 10 C.F.R. I 2.206 L INTRODUCTION On December 6,1996, Mr. Jonathan M. Illock, submitted r. petition to the Office of the Secretary of the U.S. Nuclear Regulatory Cornmission (NRC) pursuant to section 2.206 of Title 10 of the Codt of Federal Regulation.r (10 C.F.R. 6 2.206). 'Ihe petition was submitted on behalf of the Citizen's Awareness Network, Inc. (CAN or Petitioner), and contained two memoranda from CAN. The first memorandum enclosed with the petition is dated December 5,1996. It reviews information presented by the Vertnant Yankee Nuclear Power Corporation (Licensee) at a predecisional enforcement conference held on July 23,19%, involving the minimum flow valves in the tesidual heat removal (RilR) system at the Vermont Yankee Nuclear Power Station (Ve.mont Yankee facility).

CAN raises a concern that the corrective action taken by t'ne Licensee in opening these valves may have introduced an unreviewed adety question with regard to containment isolation, The second memorandum enclosed with the petition is dated December 6, 1996, and contains a review of certain licenwe esent reports (LERs) submitted by the Licensee in the latter part of 1996. Various issues are presented, such as fire protection, tornado protectior, thesmal protection for piping lines, equipment operability, and equipment testing. On the basis of its analysis of the LERs, CAN reaches certain conclusions regarding Licensee performance and actions that should be taken. In the petition, the Petitioner requested that the NRC evaluate these documents, pursuant to section 2.206, to see if enforcement action is warranted based upon the information contained therein.

On f'rbruary 12,1997, the NRC informed the Petitioner in an acknowledge-

< ment letter that the petition had been referred to the Office of Nuclear Reactor Regulation for the preparation of a Director's Decision and that action would be taken within a reasonable time regarding the specific concerns raised in the petition.

11. DISCUSSION The NRC Staff evaluation of these documents follows.

244

L A, ne Renkissal Heat Resnovel Systeen l De first document enck> sed with the petition is a CAN memorandum dated

, December 5,1996, that reviews information presented by the Licensee at a l predecisional enforcement conference held on July 23, 1996, involving the l minimum flow valves in the Vermont Yankee RHR system.8 De Vermont l Yankee RHR systern consists of two loops Eacti loop has two pumps that take suction from the suppression chamber. Each pump has a minimum flow line equipped with a minimum flow valve that returns flow to the suppression chamber. De RHR pumps start automatically to cool the reactor in case of a loss-of-coolant accident (LOCA). De minimum flow valves close to prevent flow from being diverted from the reactor core to the suppression pool when flow is being supplied from the RHR pumps to the reactor core, and open automatically on high pump discharge pressure to protect the RHR pumps if other valves between the RilR pumps dir. charge and the reactor core are not yet-open.

De Licensee discovered a vulnerability to single failure that could prevent the minimum flow valves from opening to protect the RHR pumps during a L.OCA. To resolve this concern, the Licensee changed the normal and failed positions of these valves from CLOSED to OPEN. ne Petitioner is concerned that the corrective action taken by the Licensee in opening these valves may have introduced an unreviewed safety question with regard to containment isolation.8

, A pipe break outside containment would breach primary containment with an l OPEN minimum flow valve.

L Dis issue must be addressed in terms of the Vermont Yankee facility licensing basis. De basic design for early boiling water reactors, including the Vermont Yankee facility which was reviewed and accepted by the NRC, considered the piping of the RIIR and Core Spray (CS) Systems to be a closed

.catension of primary containment. Failure of the passive pressure boundaly (piping) of these systems during either the short term (injection phase) or long-term (recirculation phase) course of a design basis accident (DBA) was not a design basis assumption. As a result, the RHR and CS suction and minimum flow lines were not provided with containment isolation valves, or if valves ute provided in these lines, they were not provided for the purpose of meeting l

$ewent stawnents in the themhet S 19% nemavandum we eithee undrar or inemect A single power supply fasture dava nas peevent RHR memnum Gow valws in both kuts frown op vaung, contrary to the stawarm on page 2 of the memorandum slininum Sow valves la hoth loops will nie femma opta 6r a single power supply railwe 06 curs, contrary to the stawarnt on page 3 of de menswamium Also, on page 4 of the Drcenber 5,19%

mensvandus CAN queshons the remote manual closwo capabihty of the numnum Sow salves. The nummum flow volws haw remoes enanual closwo and 3emag capabihty, bus the pump pruercuaa logic will owmde any nmow enanual closwo or opatng signal 3

The NRC Start assunri Prunones's nfenace to an "unrevw.ed safety quesnon" is in the conwst or de NPC's ngulauas 10 C F R i 50 39. 'nanges Testa, and Ispenments."

-245

containment isolation requirements and thus were not classified as containment isolation valves. In most if not all cases, the penetrations of concern in the older plants were originally provided with at least one valve capable of perforrni.ig the containtnent isolation function, and these valves are periodically tested under inservice testing (IST) program requirements. 'Ihe Vermont Yankee minimum flow valves can be remotely closed and are periodically tested under the IST program.

Ibr more recent facilities, emergency core cooling system (ECCS) clo ed systerns outside containment are required to have at least one recognised isolation valve at each penetration. ~!his is not the case for the Vermont Yankee facility, in view of the licensing criteria applicable to the Verrnont Yankee facility, maintaining the minimum flow valves of the HilR system in the OPEN position is permitted and acceptable. The Vermont Yankee final safety analysis report (FSAR) does not describe the minimum flow valves as being in the CLOSED position, and placing these valves in the OpEN position is not a change to the facility under the meaning of section 50.59 and no unreviewed safety question is presented. Ibr the above reasons, no enforcement action is warranted with regards to this issue.

II, 1,1censee Esent Reports

'the second document enclosed with the petition is a CAN memorandum 1 dated December 6,1996, that contains a review of several 1.ERs submitted by N the Licensee in the latter part of 1996. Various issues are presented, such as fire piotection, tornado protection, thermal protection for piping lines, equipment opuability, and equipment testing. On the basis of its analysis of the LERs, CAN reaches certain conclusions regarding Licensee performance and actions that it believes should be taken. First, CAN requests that the NRC and the Licensee review all safety analyses conducted since initial startup of the Vermont Yankee facility with particular attention to their role in providing a complete and up-to-date PSAR. Second, the Licensee needs to correct serious deficiencies in its design change control process and should undertake a historical review of 3

its design control documentation to verify its accuracy. Third, the Licen ec should perform a global evaluation to determine how many modifications have been inadequately tested since startup. Fourth, the Licensee needs to initiate a thorough retraining program to review and emphasize the underlying safety purposes of Technical Specifications, the FSAR, design bases, and NRC regulations in relation to routine operation of the Vermont Yanker facility, emergency preparedness, and practical implementation of the NRC's " defense-in depth" philosophy. Finally, CAN strongly recommends that the Licensee's 246

-_.m _. ._ _ _ _ . . _ . _ _ _ - _ _ _ _ . - _ . _ _ _ _ _ _ . _ _ _ _ . _ _ _ _ _ . _ _ . . _ _ _

Vermont Yankee staff receive training on the prcper use of the " Single Failure" i=

criterson,

'The LFRs identified in the CAN memorandum are briefly discussed below.

9, 1, IER Wih "Twofire suppression systems do not mort design requirements due so personnel error on the part ofichel wnder who ,

designed and lassailed the systems" }

CAN aaerts that the LER did not address the cause and consequences of the foam suppression systern deficiency, which is one of the two fire suppression systems addressed in this LER. CAN 18 correct in that the Licensee did not -

determine a precise root cause because such a long time had elapsed since the 1

- occurrence (1978). It is not unreasonable for a licensee to be unable to ascertain the exact root cause of a personnel error that took place many years before (18 i years in this case), Key points that are considered in reviewing an LER are  ;

(1) whether the specific problem is being appropriately addressed; (2) whether the potential for a broader problem exists; and (3) if a broader problem exists, whether it la properly addressed. In this case, the Licensee reviewed its current design process and procedures and determined that a similar occunence would mit be espected to occur now, and the Licensee had two teams that were actively reviewing the fire protection design bases and searching for the types of problems reported in the LUR CAN is incorrect in stating that the consequences of the foam system denciency were not discussed in the LER The Licensee stated that any fire in the area would be contained and suppressed, preventing its spread to safety related equipment.

llecause the design deficiencies addressed in this LER were licensee-identified and corrected, they were treated as Noncited Violations in inspection Report 50 27lN6 05 in accordance with section Vll.H.1 of the NRC's Enforcement Policy,8 and the LER was closed in Inspection Report 50 271N6-06. Ibrther enfoicement action is not warranted.

3 the NltC's piky and grocedures lur deerrnumng de enfmenwm acuan dwt awy be manansed tw a violanon are divuned in NURI.o-lfdtl, Teneral samenwnt or hky and Procedures fw NRC rnforcenwm Acnons"(I aftweenwnt hky). liname regulahwy requaenwnts have vwytag degrees or safety, .afeguards, or environnwntal egnihcance, Gw hree swp in Ow enlmenes prtuess 's to evaluase dw ogruficatwo or de violeuan and den assign a severny level to the violathm A violahon is asugerd one of four wvertty levels As descrited la secuaa lY cr de f arorcepwm hay, severity levelI is ass sned to violatues the are os most safety sigmhcant and severity levelIV ta asugned to vioimums that are de trast safety sigm6cana Conshies wuh #w recogmtum that skdauons have differral degrees or safety agm6cance, de I.nforcenwns hdicy recogems ihm twee are oder whdauona or namar safety a environnwrual concren thal are telow the newl or ogshcance or seventy latel IV thdahms llwte punar violatians we hot ektmally GW sul#ct er rormal eetmenwns action and afe not usually urscnbed in inspectue reports To the essent that sah violauona are desenhed, dry are usually dricribed si

• Nimesied Vkdattons?

247

2, LER 96 H: "Tailure la provide tornado protection for diesel generator rooms as specyird in the Final Sqfety Analysis Report due to unknown cause" The FSAR states that large venting areas are provided to vent the diciel generator roorn in the event of a tomado to provide pressure equalitation.

1he LER notes that the facility as constructed did not include venting. CAN asserts that " flaws in the FSAR cause serious, rippling effects throughout VY's

[Verrnont Yankee facility's) safety systems" and that the Licensee "must include assessments of the impact of the deficient conditions upon all affected programs."

1he Licensee took immediate action to ensure emergency diesel generator (EfXI) operability in the absence of the pressure relief panels.1he Licensee took immediate compensatory measures which included blocking open the EDO room doors and posting fire and security watches. The Licensee took additional compensatory actions for the restoration of operability of the diesel and day tank enclosures during cold weather months when the EDC doors had to be shut. An NRC inspector verified that the recommended compensatory measures were properly implemented.

1he discrepancy between the actual plant design and the FSAR is a de facto change to the facility as described in the safety analysis report, and thus required an evaluation to meet the requirements of section 50.59. The failure to perform such a section 50.59 cvaluation was categorized as a Severity Level IV violation, and was dispositioned in inspection Report 96-11 as a Noncited Violation in accordance with section Vll.ll.1 of the Enforcement policy O$er plants have been found to have FSARs that do not properly describe the facilities. Consequently, for this reason and as a result of lessons learned from events at Millstone Nuclear Power Station and Maine Yankee Atomic Power Station, on October 9,1996, the NRC tequested information frorn all power reactor licensees, to verify, among other things, that the plant FSARs properly <

describe the facilities, and that the systems, structures, and components are consistent with the design basis. In conjunction with this request for information, and in order to encourage licensees to identify dixtepancies, the Commission approved a modification to the NRC Enforcement iblicy that allows the NRC Staff to esercise enforcement discretion for a period of 2 years for violations related to FSAR discrepancies identified by licensees. The policy revision was published in the federal Register on October 18, 1996 (61 fed. Reg. 54,461).

In the Licensee's response to this request for information, dated February 14,1997, the Licensee committed to complete its FSAR verification program in 1998. ,

CAN raises a concern about a potential error in the Licensee's statement in this LER of no prior occurrences, based on a James A. Fitipatrick Nuclear Power Plant report of a similar problem. Licensees are only required to report 248

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prior similar occurrences at their facility, and not at any other facility. Derefore.

the Licensee was accurately rtporting that a similar event had not previously occurred at Vermont Yankee Nuclear Ivwer Station.

His LER is closed. Ibrther enforcement action is not warranted. De Licensee has issued a supplement to this LUR to document the long term corrective actions to vent the EDO room in the event of a tornado to provide l pressure equalitatiort Dis LER supplement remains open pending NRC i inspection of the Licensee's modifications to the EDO room to provide the required pressure equalitation,

3. lEM %23: Nkiginal R31.1 ANSI Code section that required twerpressurization relieffor isointed pying sections uns not considered during l thel original design"

~ Certa'in piping sections, which would be isolated after a LOCA, were found tu lack overpressure protection, contrary to code req 9irements. De water in this piping could expand because of the high temperatures accompanying a

. LOCA and exceed the design pressure rating of the piping. CAN asserts that the Licensee failed to take advantage of earlier opportunities to identify this design error when making modifientions to the sin systems discussed in the 3

LER. CAN is ccnect in that the LER represented the first discovery of this problem, although modifications had teen made to the affected systems earlier.

His potential overpressuritation problem has been identified at other plants, as evidenced by the issuance of NRC Information Notice (IN) 96 49 on August 20, 1996, and NRC Generic Letter (OL) 96-06 on September 30,1996. He Licensee did maintain an awareness of events in this area and identified this issue at its site before the generic communications referred to above were issued. %e NRC Staff encourages licensee initiatives to identify and correct safety problems that-

-may be generic to the industry in advance of generic NRC Staff communications to the industry, %e Licensee's corrective actions included a design change that provided the required overptruuie protection for the affected lines. He change was completed in the 1996 ictueling outage.

This LER remains open= Responses from power reactor licensees to GL 96-06 were received by the NRC Staff in February 1997 and are undergoing review to ensure that the overpressure protection issue is being adequately addressed and resolved. Ibilowing this generic review, a determination will be made of whether enforcement action is warranted for specific plants. Information

- regarding the completion of this activity and any enforcement action taken will be publicly available in the plant specific inspection Reports. His LER will be further discussed in a Final Director's Decision when the LER is closedc 249

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4. 11M W18: " inadequate installation and inspection offire protection wrap results in j'lant operwtion outside ofits design basis, a singlefire would impact mult&le trains of safety related equipment" CAN aswrts that this deficiency had significant adverse safety implications.

The reported deficiency consisted of a small gcp in the fire barrier installed on a cable tray support. The cable tray contained wiring to support operation of the ECCS. The NRC Staff does not consider CAN's claim, that a fire could have rendered both divisions of tne ECCS inoperable, credible. The Licensee's evaluation found that esisting fire protection analyses were very conservative, l

and that, with the. combustible loading and fire detection and suppression equipment in the area, no credible fire threat could challenge the functionality of the "as found," wrapped cable. -The Licensee has acted appropriately to correct the fire barrier deficiency and to prevent similar problems in the future. With the

( combustible loading, fire detection, and suppression equipment in the area, the NRC Staff conceptually agrees with the Licensee's conclusion th. I no credible fire threat could challenge the functionality of the "as found" wrapped cable, inspection activities were performed the week of August 18,1997, to verify the i

Licensee's conclusion.

l 'this LER remains open. Results of the inspection ai,d any enforcement action as a result of this inspection activity will be made publicly available through plant specific inspection Reports. This LER will be further discussed in a Final Director's Decision when the LER is closed.

L ILR W19: "lla(( scram and group ill containment isolation caused by loose Reactor Protection System breaker termination" The NRC Staff agrees with CAN that this event presented no significant risk to public health and safety. This LER is closed. No violation was involved; therefore the NRC Staff concludes that enforcement action is not warranted.

6. IER %20: " inadequate vender (sic) design activity and licenser design veryication result in inability to demonstrate Fire Suppression System Operability" This LER involved the inability of the carbon dioside fire supprest. ion system to fully estinguish a deep-sca'ed fire, as required. The Licensee stated in the LER that this event had no safety significance. The NRC Staff considered this LER to have little apparent actual or potential safety significance. This conclusion was based on the Licensee's analysis that although the carbon dioside suppression systems might not fully estinguish a deep sea'ed fire, the suppression and detection systems would function. Fire detection would alert 250

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t the fire brigade, and because the carbon dioxide fire suppression system had reduced the fire, the fire brigade could extinguish the fire more easily. The NRC Staff closed this LER in inspection Report 9611. Pending inspector review of the Licensee's conective actions, the unresolved item initiated for this issue in inspection Report E08 (URI 96-08 01) was left open. As documented in inspection Report 97 05, unresolved item E08 01 was closed and a Noncited Violation was issued, consistent with section VII.II.I of the NRC Enforcement Policy. Ibrther enforcement action is not warranted.

CAN asserts that this LER reveals a serious deficiency in the Licensee's design change control process, and that the Licensee should determine how many other modifications have been inadequately tested since startup. The -

NRC Staff agrees that this event demonstrated a weakness in the Licensee's-modification and testing programs associated with fire protection. As noted under the discussion tegarding LER 96-13, the Licensee has initiated reviews of the fire protection design bases to search for these types of problems, and

- believes that the current design process and procedures are adequate to preven.

similar problems. As discussed earlier, by letter dated October 9,1996, the NRC Staff requested information from all licensees, to verify, among other things, the adequacy of the design change control process and to determine the rationale for concluding that design basis requirements are properly translated into operating, maintenance, and testing procedures. *lhe Licensee resp (mded by letter dated February 14, 1997.

7. IER W21: " inadequate procedural controls of hf0V IJmit Switch Settings result in a potential common causefailure mode with the capacity to Affect multiple sqfety signylcant components" 1his LER involved two limit switches on shutdown cooling suction motor.

operated valve (MOV) to the "D" RHR pamp. *lhe switches measure valve travel towards the open position. One open limit switch permits the pump motor to start after the valve position is sufficiently open, and the other limit switch stops valve travel so that the motar doesn't drive the valve too far and damage the valve. 'the Licensee identified that a modification to the valve's motor operator resuhed in the improper setting of these two limit switches.

- Inspector followup, as documented in Inspection Report 97-05, led to the -

conclusion that this error was of low safety significance. The failed start of the "D" RHR pump because of this limit switch error on the shutdown cooling suction valve affected only the shutdown cooling mode of operation of the RHR system.- 1hc failure did not impact the other modes of RHR system operation and the safety design bases functions of the R51R system. _ Further, prompt Licensee action was taken to check the other recently modified hlOVs. Their limit switches were found to be properly set and therefore their safety functions 251

were unaffected. His licensee identified and corrected violation resulted in the issuance of a Noncited Violation, consistent with section VII.B.I of the NRC Enforcement Policy. Als LER is closed. Further enforcement action is not warranted.

5. IER %22: " Combination ofpoor man machine interface, en inadequate procedure, inadequate Operating Experience Review results in a common causefeiture mrchenism, and an Emergency INesel Generator to e cred Tech Spre (sic) outage time"

- De output breaker for one ernerFency diesel generator (EDO) was found to be incapable of ek> sing because of a missing cotter pin which was necessary for a mechanical linkage. As a result of the absence of thi*, cotter pin, the breaker closing, springs failed to recharge, rendering the breaker incapable of being closed from the control room. he only indication that the closing springs had failed to recharge was a mechanical flag indicator located behind the breaker i

cubicle door. No Licensee pnicedures required verification of the closing-spring status %e closing springs were apparently in an uncharged condition for over 3 weeks without discovery, llecause the periodic surveillance interval for the breaker is greater than the EDO limiting condition for operation (LCO), the Licenwe unknowingly operated in violation of ita Technical Specification (TS) governing diesel generator operability. After reviewing the Licensee's root.

cause analysis of this event, the NRC Staff determined that the missing cotter pin would not reasonably have been expected to be detected by the Licensee's existing quality assurance program or through other related control measures.4 De Licensee identified the EDO inoperability, investigated to determine when the problem arose, and reported that the LCO time was exceeded. De Licensee responded to the inoperable equipment when the inoperability was discovered. He Licensee did not intentionally exceed an LCO Rather, the Licensee discovered an equipment problem caused by a malfunction beyond its control which meant that, in hindsight, an ifO had been exceeded. De Licensee is designing a modification for this and other circuit breakers of similar design to allow monitoring of the charging status of the closing springs without having to open the circuit. breaker cubicle door, llecause the EDO inoperability was not avoidable by reasonable Licensee quality assurance sneasures or management controls, the NRC did not issue a Notice of Violation for this issue. His is consistent with section VI.A of the

• CAN asserti prat de tJanwe nusconstnea de purpines or Ts (Juuung Conauoni tur operaune (troil as part of a"chroeuc pariera of mhundmtanang* of Ts. IsAR drugn baws, and NRC regulauona. Iw the reasons dractiled herein, Lt a 422 does not provWe a baus for dus nuestion 252

Enforcement Policy.1his Lt!R is closed. The NRC Staff concludes that further enforcernent action is not warranted.

9. IER 96 23: %,lequate Surveillance l'rocedure results in failure to meet Technical Specyication requirementsfor Radiation Monitor l'unctional Testing" 1he reactor building and refueling floor radiation monitor test procedure did not verify the high alarm contact actuation as required by TS. The NRC Staff agrees with CAN that this event presented no significant risk to public health and safety. Considering that the monitors were verified to be fully functional, and were in the condition required by Plant Technical Specifications, this specific event appears to have been limited to a inadequate testing methodology.1he Licensee's corrective actions included revising the deficient surveillance test procedure to properly test the high alarm output contacts.

Ikiwever, the LER ren:ains open as the NRC Staff has not cornpleted its inspection activities related to this LER. The NRC Staff will look historically to see if this is an isolated case as part of the enforcement consideration.

On January 10, 1996, the NRC issued Generic Letter (GL) 96-01, ' Testing of Safety.Related Logic Circuits." that requested, among other things, that all power reactor licensees review their surveillance test procedures to ensure that all portions of the logic circuitry are being tested.1he Licensee's response to GL 9401, due to be sent to the NRC in September 1997, will be evaluated with respect to the Licensee's long. term corrective action for logic testing I

procedures, because any associated corrective action could be considered in determining whether 'nforcement action is warranted. Information regarding any enforcement action taken will be available publicly in plant specific inspection Reports.1his LER will be further discussed in a Final Director's Decision when the LER is closed.

10. IER 96 25: " inadequate testing leads to misagustment ofisolation wire mechanical stop andfailure to meet Technleal Specylcation leak rate limits for containment purge isolation mlve" 1his IIR involved a containment isolation valve that leaked in excess of TS requirements. 1he amount of valve leakaFe was influenced by the direction in which the valve was leak tested and the adjustment of a mechanical stop. CAN's concern appears to be that the Licensee failed to apply the single-failure criterion in assessing the significance of the failure in its LER.

Section 50.73(b)(3) requi,es that an LER contain an assessment of the safety consequences and implications of the esent, including the availability of other 253

syttems or components tisat would have performed the safety function of the failed system or component. In this case, the requirement is that the assessment include the availabihty of a redundant component (valve) that would have p ; formed the safety function (torus isolation). petitioner's issue is thus whether the LER should have, in addition, assessed the potential radiological consequences had a design-basis accident (DilA) occurred with failure of the redundant isolation valve. Compliance with section 50.73(b)(3) does not require that the assessment consider an additional single failure beyond the failure that forms the basis for the assessment. On the basis of required reporting, LER 96 25 was not deficient in omitting discussion of the potential consequences of failure of the redundant valve. Inspection Report 50 271/96 11 dispositioned this Severity Level IV TS violation as a Noncited Violation in accordance with the criteria for enforcement Jiscretion in section Vll.II.! of the Enforcement ,

policy Althcegh the event was considered to be of more than minor safety significance, the outboard valves had successfully passed all previous tests, and thus the demonstrated containment integrity was always maintained for the two affected penetntions. 'Ihis LER is closed. No further enforcement action is warranted.

C. Summary In summary, with respect to CA14's concern that an unreviewed safety question with respect to containment isolation may have been introduced by Licensee actions in opening the RilR minimum flow lines, the NRC Staff determined that no unreviewed safety question was intro 6ced and, therefore, no enforcement action is warranted. With respect to CAN's concerns related to th6 LURs, the NRC Staff finds that the Enforcement Iblicy has been applied consistently for the LERs that hase been clo ed and further enforcement action is not warranted.

Ibr those LERs that remain open, the inspection / enforcement process will continue until the Staff has completed its investigation and consideration of the issues involved, LER closure and enforcement action, as appropriate, will be documented publicly as is NRC Staff practice, tnd will be documented in a Irinal Director's Decision.

With regard to CAN's overall conclusions based on e analysis of the above LERs, the NRC Staff has reached the following conclusions:

With respect to CAN's conclusion that the NRC and the Licensee should revicw all safety analyses conducted since startup of the Vermont Yankee facility, with particular attention to their role in providing a complete and up to-date I SAR, the NRC Staff has taken actions as noted in the discussion ab(we related to LER 96-14 with respect to identifying and correcting FSAR inaccuracies.

'this action was taken in a request on October 9,1996, to all licensees, including 254

Vermont Yankee, to provide the requested information, in addition, the NRC Staff has implemented a series of en, accring design inspections, including an inspection to verify portiens of the Licensee's design control process and maintenance of the Licensees's FSAR commitments. He results of the NRC design inspection conducted at Vermont Yankee were reported in inspection Report 97 201 dated August 27,1997. l With respect to CAN's conclusion that the Lkensee needs to correct serious deficiencies in its design change control process and should undertale a historical review of its design control documentation to verify its accuracy, the NRC Staff has taken action as noted in the discussion related to LER 96 20 with respect to identifying and correcting design change control process deficiencies. In the October 9,1996 letter to all licensees, including Vermont Yankee, the NRC Staff requested information to verify, among other things, the f.dequacy of the design change control process and to determine the rationale for concluding that daign-basis requirements are properly translated into operating, maintenance, t and testing procedures. As also noted in the discussion related to LER 96-20, the Licensee has undertaken a review of the fire protection design bases to search for the type of problems involved in LER 96-20, and believes that the current modification programs are adequate to prevent similar problems.

With respect to CAN's conclusion that the Licensee should perform a global evaluation to determine how many modifications have been inadequa;ely tested since startup, as noted in the discussion related to LER 96 20, the Licensee has been require. 'o provide verification of the design change control process, including among mher things the rationale for concluding that design-basis requirements are translated into testing procedures.

With respect to CAN's conclusion that the Licensee needs to initiate a thorough retraining prograrr to review and emphasite the underlying safety purposts of TSs, the FSAR, design bases, and NRC regulations in relation to routine operation of the Vermont Yankee facility, emergency preparedness, and practical implementation of the NRC's " defense in-depth" philosophy, the NRC Staff disagrees. In the discussion related to LER 96-22, the NRC Staff addresses CAN's assertion that the Licensee misconstrues the purposes of TS LCO as part of a " chronic pattern of misunderr.tanding" of TS, FSAR design bases, and NRC regulations. The NRC Staff fmds no basis to require such a retraining program.

Finally. CAN strongly recommend that the Licensee's Vermont Yankee staff receive training on the proper use of the " Single Failure Criterion." In the discussion related to LER 96-25, the NRC Staff addresses what seems to be the basis for CAN's recommendation: 1.e., the perception that the Licensee

- failed to properly apply the Single Failure Criterion in assessing the significance of a leaking isolation valve in LER 96-25. Compliance with section 50.73 does not require that the assessment consider an additional single failure. He enforcement conference related ta the minimum flow valves concerned a problem 255

in implementation of the Single Failure Criterion, not a misunderstanding of  ;

the requirements of the Single Failure Criterion. Becauw the Licensee did not I

err in the instance described in LER 96 25 and the petition provides no other instances in which problems were caused by a misunderstanding of the Single l

Failure Criterion, the NRC Staff finds no basis for requiring additional training.  !

Ill. CONCLUSION 1hc NRC Staff has reviewed the information subrmited by the Petitioner.

1he Petitioner's request is granted in that the NRC Staff has evaluated the majority of issues and LERn taised in the memorandr wided by the Petitioner to see if enforcement action is warranted based on ine information contained therein. "D'c NRC Staff has discussed each memorandum above and described any related enforcement action taken for those issues and LERs that are closed.

The NRC will continue the same process and consideration for the LERs that '

remain open and documentation of any inspection and/or enforcement action will be consistent with agency practices and will also be the subject of e Final Director's Decision.

As provided in 10 C.F.R. I 2.206(c), a copy of this Decision will be filed with the Secretary of the Commission for the Commission's review.1his Decision will become the final action of the Corn.nission 25 days after iuuance, unless the Commission, on its own motion, institutes review of the Decision in that time.

FOR Tile NUCLEAR REGULATORY COMMISSION Samuel L Collins, Director Office of Nuclear Reactor Regulation Dated at Rockville, Maryland, this tith day of October 1997.

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