ML20235U895

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Forwards Info on Kentucky Waste Site,Including Articles on 770309 Hearing & Nuclear Engineering Co Re Perpetual Care Fund Negotiations
ML20235U895
Person / Time
Issue date: 03/21/1977
From: Kerr G
NRC OFFICE OF STATE PROGRAMS (OSP)
To: Bishop W
NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS)
Shared Package
ML20235U845 List:
References
FOIA-87-235 NUDOCS 8707220629
Download: ML20235U895 (20)
v • d • e


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MEMORANDLN FOR: William P. Bishop, Chief /'*Iaee-! I Waste Management Branch j!, '[g Office of Nuclear Material Safety and Safeguards FROM: G. Wayne Kerr, Assistant Director for State Agreements Program

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Office of State Programs

SUBJECT:

INFO ON KENTUCKY WASTE SITE Attached for your information are the following items regarding the subject site:

1. Two articles regarding the legislative committee hearing which John Adam and I attended on March 9, 1977. ,

l 2. The statement which NECO presented at the hearing.

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3. Letter from NECO to the State dated October 7, 1976 regarding perpetual care fund negotiations.

I appreciate John Adams' participation at the hearing. His presence was most helpful.

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] Y Y l G. Wayn Assistant Director i

for State Agreements Prcgram Office of State Programs

Enclosure:

As stated l

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u 4 1 j Dy UCIPIERTCPMf ROW the current supervision of nuclear T I United Pres: s:ntional dvs!ql . sites by the six states, in- 4 i enwtlig luntlicky, Waeft 51% mes a The quc6.M bl who should own and arc located.  ;

control nuclear wate dirposai sites The task force' report said "The' d came up Tuesday.at a meeting of a states, in dischargig their regulatory special advisory committee locking 4 dutks4 have operated tmder difficult Il into the problem in Kentucky - one of ci cum'.,tanees L:t have pdegntpely six staws where radioactive waste is pre. ;cted the public health and satety.'

buried.

Tne Task Force can find no compelling y An official of the federal Nuclear health or safety reason for reassertion f l

Regulatory Commission (NRC) tc!d of federalcontrel at this time."

! the group an NRC Task I'orce has The NRC Task Force also recom-i recommended federal ownership of all mended that development of a -

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nuclear disposal sites, including the regulatory program for low level stafr. owned ti!e at Maxey Flats in waste disposal be accelerated to in- t 9 Flcming County.

clude standards and criteria for [

, 3 And the head of the private firm disposal sites and Inst no new shallow r, W . _ wMeh operates the Maxey Flats site )

land burial slies ne licensed until '

d n agreed with hlm.

G. Wayne Kerr, resistant director alternative methods of disposal have /,- l!

been studied. j for state Agreement:. Pro;; rams with The Task Force was composed of the NRC, said the federal Task Force members of the NRC's Offica of {

p feels there thould be increased federal Nuclcar Material Safety and

.2 control over the disposal of low-level Safeguards and the Office of State or nuclear waste. . Programs and met with senior g Kerr said the current system of management representatives of the y managing low-level radioactive waste six states (Kentucky, Illiaci.r, New k lacks national organization and ,

York, Nevada, Washington and South A direction and "the states do not have.

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.the resources to provide the needed Kerr said the states were givsn the }

M overall icadership or organization." opportunity to comment on a draft of ~ ~ '

) The task force rceommended that j

the report and they supported the -

g greater federal ' control could be concept of a national policy and pisu p -

og developed through joint federal-state for site selection, althaugh they felt the 3 d.

a . approval of new disposal sites, NitC l j3 licensing, with state participation, of staics must'inbetheassured ofofactive- [

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current and new disposal sites and participation sites, regulation the j f

n federal ownership of ali dispesal sites.

He also said the groap recommends Kerr indicated Kentucky's com-ments had been in favor of fedcral yi 4 . establishing a fcdcrally administered ownershipof thesite.

s perpetual care program.  !

5 The state and NECo have been 4 James Neel, president of the unable to reach agreement on a >

$ Nuclear Engineering Co. (NECo) of renegotiated fee for material buried i j5 Louisville, which operates the Maxey since last June 19, when the state tax d Flats site under a leare arrangement with the state, said "I feel the final went fr.to effect. The state had been q charging four per cent of the Ices, but h q solution is the. task force recom- has been seeking mere. i mendation that De ftdcral govern- They did reach agreement last fall i i

ment take over ti.e ownership. This .!

cier a long standing dispute over the I would relieve tb state of the fee from December,1975 throvgh

.. responsibility."  !

June,197G, with NECo agreeing to pay 4 l Ncelsaid he also fe!t the NRC should seven cents per cubic foot and sending i belp develop a nativaal po!!cy for the state a check for G C,175 last determining perpetu,d care fecs. November. * .i Ncci and the state have been in a Jerry %thington. n financial officer ,

long-st:mding dispute over the fees he for the company, said its latest .

, must pay and Neel has been par- proposel would provide a schedule of P ticularly critical of a special tax fees based on the rek:tive hazard at the placed on all nuc! car material buried materid Wing buried and average 12 y%

at the site by the ITiG. General cents per foot.

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, Ile said the company would also  ;

Neel told the group Tuesday that if agree to pay 10 cents per foot to a he does not get relief f rom the le cents perpitual erre fund, thus totalimt 22

  • per cubic feat tax "I wdl hnic to turn it 4 cents per foot. Wethington said that M I back to tho. tate." wouhl total some pa,000 per year, herr said the tas!, force's rernm- 3 i "which shnnld provik sufficient funds  !.

mendations were not an indictment of for pergutral maintainer." d ___J

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i I 4 ,j inP,r !,0 feet ahmg the shoreline. Jea cue's, a par.tment. .,- *~ * " Jy for an hour on a wide rance of ccm-wr Tbg Laditions for, a r.ews reporter,s plaints. Among the common themes:

' IN ' . La Floating i doc):s would have to be pre.cnce: nc namec, no identification,

    • I"U' ~ sioor d wid steel cab!cs attachd to 1. no hints that would trace anyone .

7 They said there is continulny con. ,

$U 'se,ucture, and not b vegetation, and t$rrd6 or druras could rwt be used as ine. All are members of the new Ken.The fear of retabation st em N' ** - I!ctagon devices if they had contained tucky State Police Professional Assoca-

g oil or any haerdous substance. atton, which will hold its organhatsonal y They s.ald state police, who once . .

meeting tomorrow at Lexingica, had an enviable retiremtnt syste n, are

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""Ua'~ W There' could be rio exe'avstion Sr- ' PoMee hamsssioner Dn Branden' near feld.

the bottom of the list t.ow in that , 1 US* fill work in connection with the pro. burr,h has refutert to deal with the orga-l gsert dock an J thar* gM!!j he no

~~ f 18d E0+ sto sa :e.%0let :cmocrar'y or permared, miled impt transfert hedgny4un; They said tthation morale has officiAly drop and h4 cause

$!'M, of gasoline petruinam produts or "any do with the, ne w organization. .- Mp cthe rank and file are ginist nuress !)onen er. pe; nvinced 4..., hazardou Eatcaals" on the dock. . Gov. Juhan Carroll backed him up in' (

$U diretny when remarking during a tele- criticism in the interest bs srJ7 opin t '.im, emc 'The Corps 'said it 'could retoke any vised nesvs conference Monday night ,

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m. i nsuch pernut to "detrimscial at the atyenvironment, time if the rtructurp .ferred'helonged to the association, this both as purishmsa t G3 is . "da:naging to the general public hardly showed punitive action. """" ~

- Agaj interest' or# has created or may create However, the' nine efficers-Indicated gr.g a..hirsdracce to : E,igation" on the river. at least seven of the . troopers involved

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'* g, The Cerps has invited public comments 19 the statewide shifts l* longed to the_

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Avu on the proposed perrrJt system ann has tablishment as tnembers.

set April 8 as a deadline for sending association and were known by the es- j 3

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  • aD;entually they will have to deal

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Q 3j g na iri' written statements to the Louisville with us ;(the association)," one said.

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. But, like the others, he disc 1r.imed any

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lM ' FRANKFORT, Ky. - The federal wastes, the task force said.

'.standar'ds'fd the disposal 'of radioActM [g - +- - '

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swo government should assume responsibility National planning is essential "to en- ! % **u r' t*f, . - for radioactive.perpetual care waste disposal of existieg sites, a U.S. low-level sure adequate disposal capaelty beyond'...,i;,., #, .

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. 1990, and to control the indiserinunate' '

U*5 , A*uclear Regulatory Commission task construction of new s;tes,", the task g U3 . force has recommended.

force said. . . eE * " -w a-"=**m a ., L Na G gl, . ..The task force also recommended that Kerr said. legislation,would be -re- g l4 ,,I N * " " '

yea e ra at ' no new disposal sites be licensed until quired for the government to assumesh .I ;

U*" ' alternative disposal methods are studied. =n=" '

G. Wayne Kerr assistant. director for ownership, to reassert regulatory author- l f, {,.

8 prg the state agreeme,nt pro ity over the . dumping grounds and to g ", ..

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office of state programs, gram in NRC's *W '"' 75, D Inter. administer a perpetual.cr.re program. ***

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told the Kerr said developmer*, of criteria for l s.,, ,4 a irn Special Adviscry Committee on Ra.

g7.d .dioactive

-mendarkus . Waste Disp were c r a '.that the aboutrecom.

two years.site select:an should LO W 3 be comp;eted.in

Ml, existing 2,ealth or sa%y proble'm.'

.n response to an He said dc'. ions culd be implemented within five years.

all recomrt.en-t

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UT ..The task force said the presett sys. . . . q,  !

2 tem for disposing lowlevel radioactive The panel was composed of members '"

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? }yl . g I w'aste lacks natiocal organi atian and di. of NRC's Office of Nuclear Material -,:1 pil, eg i c,.si . rection. But it noted that the six states' State Programs. The group met withSafetyt-and Safegu $j W Illinois, with commercial burial sites (Kentucky, Nevada. Washington..New York government officials in the six statts in. low-cost way to keep 4 .ET y,J.iaM.s c:. l

volved and visited the sites, Kerr said. your home spring fresh .. W 064 M. quate safety steps.and South Carotics.) have taken ade.

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elways. ideal fer kitchens,  : amsm, 4 car i.

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Eut the panel also sa t:sthreoms, closets *-

c j don't have the resources or id the.the ob!I.staternglueer anywhere end . . <

Uses Sculp ~turing; everywhere.

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c,,, na tonal problem.

ga on . to fired solutions to what is n ' to preserve indbn heritage cm . .

. It's a solid air freshener '

{d federal The task force recommended-that the SCOTTSDALE, Ariz (AP) - Al Col.. that works contmucusly M

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rare of tr,e government sites throuch provid? federal perpetual owner. ton. an engineer with a master's degree* " aH the time' week '

ship. The states should participate in from cia the 'Jniversity of Southern Califor. 'after wen. lt,s better g the t,ite-selection process and daily mon., scu. is melding a second cereer as a co. Itoricg, the panel said. lptor, it is his way of preserving his e

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(* Gov. Julian Carroll has long been an Hopi Indian heritage.

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advocate of federal takeover of the cC"e state's wasta site at 3!axey Flats.

As a potter, he uses his fridian name, C @ ,P^'! ##

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Kuwanwisiwma Qoyawryma. He recently g The N!!C should develop enteria and son two blue ribtons at the Heard Mu.

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. ;g-rw 92co SHELOYVILLE ROAD. SUITC 526 . P. o. Box 7246 was LoutSVILLC. KENTUCKY 4oRo7 PHONE f 5o2) 426-116o March 9, 1977 Mr. Brian Kernan ,

Legislative Research carsi ssion State Capitol Building .

Frankfort, Kentucky 40601 C

Dear Mr. Kiernan:

The following in my statement as presented to the Legislative Research. Commission, Interim Special Con.mittee on Radioactive Waste Disposal, on March 8, 1977. The state-ment has been retyped for clarity:

"Thank you Chairman Denham and Members of the Committee.

- The purpose of this statement is to afford this Committee 'the opportunity to receive NECO's position regarding perpetual care and maintenance fees required under our present Agreement with the Commonwealth of Kentucky and to reaffirm the Company's most recent proposal to the Commonwealth of Kentucky.

NECO has demonstrated a wi).lingness to negotiate with the Commonwealth for a new perpetual care and maintenance CPC & M)

C~ fee for the Company's low-lavel waste disposal site at Maxey Flats. It should be emphasized that the Company has never i stated or indicated to Commonwealth officials its unwillingness to negotiate a new fee agreement based upon properly established criteria for perpetual care and maintenance.

As the Company's records indicate, beginning in December, l i

1972 the Company offered to negctiate a new perpetual care and maintenance rate under the then existing lease guidelines. .In April, 1973, the Company submitted a proposed PC & M plan to the Kentucky Science and Technology Commission (KSTC) for )

review and comment. This plan, among other things, requested that the Atomic Energy Commission LAEC) establish criteria for all low-level radioactive waste sites in the United States based on a need for uniformity. A copy of the Company's pro-posal has previously been submitted on March 12, 1976, to this . ,

a e _ _ . _ _ _ _ _ _ _ _ _ _ _ .

o Mr. Brian Kiernan P. age 2 March 9, 1977 a

Committee for review.

Following NECO's submission of a new proposed PC & M plan to the KSTC, e,xtensive communication was held between the NRC, KSTC and Company officials in an atterapt to provide an adequate format for the' establishment of proper criteria and fees for the Maxey Flats operations. -

The Company, in March, 1975, suggested to the KSTC Chair -

man a methcd to resolve the problem. The proposed plan which was verbally agreed to by the KSTC Chairman and Company officials.

provided that:

(a) a letter be sent by the KSTC Chairman to the

( U.S. Nuclear Regulatcry Commission requiring that the NRC act as an arbitrator between the Commonwealth and the Company in negotiating and establishing criteria and fees for the Maxey Flats PC & M fund; (b) receipt of communication on the Company's present submitted PC & M plan by KSTC and NRC*

(c) establish meetings to be held subsequent to review j of these comments by the Company, KSTC and NRC in  !

an attempt to resolve the issue.  !

I II May, 1975, the NRC replied and suggested that the Commonwealth and the Company develop proper criteria for the assessment of adeqc3te fees. The NRC offered technical assis-e tance in the review and evaluation of any proposed funding

\-' plan. Subsequently, the i3TC Chairman indicated that the NRC overview provided insufficient assistance in such a complex matter and indicated that the NRd was failing to fulfill its responsibilities.

Since May, 1975, discussions have been held between the Commonwealth and Company officials indicating the Company's j willingness to renegotiate an adequate fee. From s review i of the Company's records, it is appare.nt that the Commonwealth and the Company were indeed attempting to resolve the 1C & M issue anu that neither party was attempting to avoid its obligations in providing an adequate solution to tne problem. ]

During the month of November, 1975, Nuclear Engineering Company, Inc. concluded its initial negotiations with the Department of Finc.nce relating to the perpetual care and main- ,

'- i tenance fee due and owing at that time. Nuclear Engineering Company, Inc. entered into an agreemen't which is now being a

1 . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ - _ _ _ _ _ _ -_- _ _ _ - - - _ - - _- _ - - -

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Mr. Brian Kiernan Page 3 March 9, 1977 j l

l tendered to the Committee, agreeing to pay the amount of seven l cents (70) per cubic foot of low-level radioactive waste buried during the period of time, commencing on the 29th day of December, 1972 and terminating on the 19th day of June, 1976. Payment of this sum was pursuant to the original 1963 lease as amended. jl Muclear Engineering Company, Inc. then tendered a check dated  !

November 16, 1976 to the Commonwealth in the amount of $118,175.22, )

a copy of which has been attached to the Agreement for your information.

As the Commonwealth is further aware,, since the imposition I of KRS 138.810 et. seq., the Company has been involved in ev.- I tensive negotiations with various Agencien and Departments of the Commonwealth of Kentucky. It is our understanding that the )

() Commonwealth is currently reviewing the Company's proposal to implement regulations which would apply the excise tax at ten cents 1 (100) per pound based on the rdlative hazard of the materials '

intended for disposal. The Company's proposal is set forth in l Exhibit 1, which is a communication from James N. Neel, Presi- i dent and Chief Executive Officer of Nuclear Engineering Company,  !

Inc., to Secretary Russell McClure, Executive Department of i Finance and Administration. H l

The relative hazard application, as proposed by the Company,  ;

is based on health physics considerations and would be utilized

in construing and implementing KRS 138.810 et. seg. H In additica to the valid underlying health physics principles expressed within the proposal, ,it is equally important te under-stand the financial aspects of such a statutory interpretation C' -'. and how the implementation of such a proposal would stimulate ,

the PC & M funds which will be'availz.ble to the Commonwealth I upon site closure.

The estimated tax revenue generated under the Company's proposed RIAF formula would be analogous to twelve cents (12C) '

per cubic foot of waste disposed at the Maxey Flats facility.

In addition and as a supplement to the proposed RIAF formula, the Company has proposed to increase its present PC & M fee to ,

ten cents (10C) per cubic foot. In summary, the total con-tribution from a combination of the RIAF formula and the pro-posed PC & M increase would yield approximately twenty-two cents (22C) per cubic foot compared to the Chem Nuclear's South Carolina facility's yield of sixteen cents (16C) per cubic foot for per-petual care and maintenance.

The total dollar yield which the Commonwealth would receive - i as a result of a combination of these two proposals would approxi-mate $200,000 per annum. Such an amount when invested conser-a

' Mr. Brian Kiernan Page 4 March 9, 1977 vately should provide sufficient funds to fulfill the Common-wealth's requirements for perpetual care and maintenance.

Nuclear Engineering Company, Inc. would respectfully request the opportunity to present at the next meeting of this  !

Committe2 an extrapolation of the RIAF formula setting forth {

the funds which will be paid to the Commonwealth under both j perpetual care and maintenance fees and the RIAF formula. It  ;

is believed at that time that this Committee will concur with our opinion that such funds generated from these two methods ,

will produce a more than adequate sum to caver the perpetual i care and maintenance of the site upon closure." l 1

I personally appreciated the opportunity to appear before the Com-  !

('~ . mittee on March 8th and the Company, as previously noted,  !

l will provide an overview of its most recent proposal to the l Committee at the Committee's next meeting scheduled for l April 4, 1977.

Sincerely yogrs, 3

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3-Je#ry D. Wethington h/ rector,FinancialPlanning '

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Enclosures l cc: Represen6ative Mitchel Denham i

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.4% Nuclear ]!nsincering Company. Inc.

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m 9200 sHELOYVILLE ROAD. SUITE S26 . P. o. Box 724G LOUlGVILLE. KENTUCKY 4o2o7 PHONE 15o2) 426-716o

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JAMES N. NEEL President and i Chief Executive officer .

October 7, 1976 Mr. Russell McClure, Secretary

h. Executive Department for Finance and Administration '

7toom 301, Capitol' Annex Euildin'g Frankfort, Kentucky.40601

Dear Mr. Secretary:

In line with our telephone conversation of October 6, 1976, Nuclear Engineering would like.to make a proposal to the Commonwealth of Kentucky to resolve the major matters which we have been discussing for several months. We believe that our proposal is fair and equitable to all interested parties. -

Initially, I believe it worthwhile to discuss the conditions f-L which have existed concerning our burial. site at Maxey Flats, Ken.:ucky since the effective date of KRS 138.810 through 138.860 1 on June 19, 1976. As far a.s Nuclear Engineering is concerned, our bt. rial volume at the Kentucky site has decreas-ed by over 95%.

A relatively small amount of radioactive material which would have been buried at Maxey Flats but for the imposition of the tax has been buried at our Illinois site, while the balance, j which could not be economically buried at any of our sites,.has i been buried by our competitor, Chem Nuclear, at its burial site {

I at Barnwell, South Carolina. This has, of course, resulted in l

I a severe financial impact on Nuclear Engineering Company.

As far as the people of Kentucky are concerned a sizeable q payroll to the Marchead, Kentucky area hcs been reduced by more thnn half, and the money flowing into the area has been further reduced since Nuclear Engineering Company has been forced to substantially reduce its expenditures. As far as the Common-

! wealth of Kentucky is concerned, little tax revenue has been generated under KRS 138.810 et seq., and because of the severc reduction in our volume for burial at the Maxey Flats site, very

\

. Mr. Russell McClure

. - Qctober 7,-1976

. .. ,Page 2 little revenue has been generated for the perpetual care and maintenance fund. In addition, the only materials being received at the site are those with high relative activity, since these materials generally have a low weight. For example, in the month of April, before the imposition of the tax, approximately 17,000 curies of by-product material at an estimated weight of 1,000,000 pounds was buried, but 12,000 curies of that total 17,000 was made up of material weighing only approximately 3,000 pounds. On the other hand, since the imposition of the tax, material buried has weighed on an average monthly basis, between 3,000 and 4,000 pounds but with a corresponding range between 12,000 and 18,000 curies.

L Simply stated, presently only high activity material can be eco-I nomically buried at Maxey Flats.

(}' Our proposal, we believe will fairly and to the benefit of both the Commonwealth and Nuclear Engineering Company eliminate these adverse effects which have resulted since the imposition of the tax. It uill generate substantially more funds for the Commonwealth through a combination of the perpetual care and maintenance fee and the tax (as reflected in Attachment A), as well as reduce the future volume of high activity material buried at Maxey Flats. In light of these considerations, Nuclear Engineer 9 ing Company proposes that: -

1. The perpetual care and maintenance fee for the period

, from December 29, 1972 through June 19, 1976 be estab-lished at 7c per cubic foot. A suggested lease amend-

' ment to reflect this perpetual care and maintenance fee is attached as Attachment B.

k 2. The perpetual care and maintenance fee for the period from June 19, 1976 through June 19, 1979 be established at 10C per cubic foot. A proposed lease amendment re-flecting this perpetual care and maintenance fee is attached as Attachment C.

3. Implementing olicies followed by regulations bc. adopted

, to apply Cie. excise tax at 10C per pound on the basis of the material's relative hazard. Our specific proposal is set forth in Attachment D.

4. The Commonwealth, with whatever assistance can be l offered by Nuclear Engineering Company, continue its efforts to have ERDA assume title to the Maxey Flats

, facility.

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5. The Commonwealth and Nuclear Engineering Company co-operate in the studies of Naxey Flats which the Common-Wealth has contracted with Dames & Moore to conduct.

We have suggested that we should commence this matter by holding a meeting on October 14, 1976 at the Maxey vi Flats site with Dames & Moore, the U.S.G.S., EPA, KDl!R , )

The Department of Finance and Nuclear Engineering, for I et - - _ - - - . _ - - - _ _ - - _ _ _ *

, , Mr. Russell McClure October 7, 1976

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P6ge 3 the purpone of developing'a study program in light of on going programs in order to avoid any duplication of effort.

We will appreciate your early response to our proposal.

Very truly yours,,

NUCLEAR ENGINEERING COMPANY, INC.

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\ . h . . .._ s j es N. Necl President f.'

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ADDENDUM ACREEMENT NO. 3 I

This Addendum Agreement, made and entered into this the day of October, 1976, by and between the Commonwealth of i Kentucky, the EXECUTIVE DEPARTMENT FOR FINANCE AND ADMINISTRATION, hereinafter called " LESSOR", and NUCLEAR ENGINEERING COMPANY, INC., a Cali'fornia Corporation duly authorized to do business l

in Kentucky, hereinafter called " LESSEE",

E I.T g g g g E T_ 3:

WHEREhS, the parties hereto did enter into a Lease Agree-

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ment on the 21st dr;r of January, 1963, whereby LESSOR leased to LESSEE cef tain real property situated in Fleming County, Ken-tucky, for an initial period of twenty-five (25) years with LESSEE retaining an option to renew for an additional twenty-five (25) years for the purpose of, among other things, estab--

lishing and operating a low Icvel radioactive waste materials burial site,

{ WHEREAS, pursuant to the Lease Agreement Paragraph VI on l

Page Five (5) thereof, the parties have renegotiated the pay-ments due LESSOR by LESSEE and have amended the Lease by Agree-ments dated on or about May 31, 1968, and March 23, 1971, WHEREAS, the parties by means of the last aforesaid Amend-ment agreed to renegotiate the payment provisions as to.LE3SEE'S payment to LESSOR for subsequent cubic footage buried in axcess of the three million (3,000,000) cubic foot total within the j guidelines as setforth in Paragraph VI of the 1963 Lease Agree-ment, s'

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WHEREAS, .the aforesaid three millicn (3,000,000) cubic foot burial total was reached by the LESSEE on the 29th day of December, 1972, end the parties to the Lease Agreement have subsequently renegotiated in good faith the amounts due and payable to LESSOR and have determined that additional funds are needed to assure the proper safeguards as specified in Paragraphs VI and VII of said Lease, NOW, THEREFORE, it is acknowledged and agreed by the par-ties with concurrence by the Kentucky Department of Human Re-cources as follows:

1 1.

i That LESSEE chall pay the LESSOR the firm and total amount of Seven Cents' (7C) per cubic foot buried for the period

. commencing on the 29th day of December, 1972, and terminating on the 19th day of June, 1976. .

2.

That it is further acknowledged and agreed by the parties that the payment to the LESSOR by the LESSEE of the

(}- aforesaid Seven Cents (7C) per cubic foot shall be deemad to l

l satisfy all obligations legal or otherwise, for the payment  !

of money during the period from December 29, 1972, to June 19, 1 1976, owed by the LESSEE to the LESSOR under the terms of the 1963 Lease Agreement, as amended. ,

' 1 3.

That it is recognized by the parties that the Seven Cents (7C) per cubic foot payment may be in excess of the four i j

percent (4%) per average burial fee limitation as set forth in . -

l Paragraph VI of the Lease Agreement.

Further, it is stipulated {

and agreed by the parties through the execution of this Addendum

  • Agreement that the four percent (4%) limitation for the purposes "

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. . of . Paragraph VI'shall be waived solely fo 29,'1972 to June 19, 1976, r the period of December covered by thi reinstated in full force and effect -

une 19,as of Js Addend 1976,;with either party retaining the legal right to reassert thi subsequent renegotiations. s limitation during

4. .

That at the expiration of the period covered by this Addendum, the parties agree that they ~

conditions and renegotiate the necessityre-evaluate the e::i payment provisions. , if any, for additional

{, 5. .

That in the event of any unresolved conflict between the terms of this Addendum and Lease the 1963 Agreement, as amended,

- the terms as set forth in this Add 6.

That in all other respects,endum shall govern and January ~ 21, 1963, the Lease Agreement of as amended shall and do remain in full force and, and all of its terms a effect.

COMMONWEALTH OP KENTUCKY la EXECUTIVE DEPARTMENT FOR p

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FINANCE AND ADMINISTRATION p

BY: h

- RUSSELL MCCLURE, SECRETARY M 1

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. ;1 NUCLEAR ENGINE 2 RING , INC. COMPANY '

BY: :i JAMES N. NEEL, JR., PRESIDENT i

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(CORPORATE SEAL) ~

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ATTEST: LESSEE ~

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SECRETARY '

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ADDENDUM AGREEMENT'NO. 4 This Addendum Agreement, made and entered into this the day of October, 1976, by and between the Commonwealth of Kentucky, the EXECUTIVE DEPARTMENT FOR FINANCE AND ADMINISTRATION, hereinafter called " LESSOR", and NUCLEAR ENGINEERING COMPANY, INC.,

a California Corporation, duly authorized to do business in Ken-l tucky, hereinafter called " LESSEE",

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WHEREAS, the parties hereto did enter into a Lease Agree-ment on the 21st day of January, 1963, whereby LESSOR leased to LESSEE certain real property situated in Fleming County, Kentucky, for an initial period of twenty-five (25) years with LESSEE retaining an option to renew for an additional twenty-five '(25) yeara for the purpose of, among other things, establishing and operating a low level radioactive waste materials burial site, and

(} WHEREAS, pursuant to the Lease Agreement Paragraph VI on Page Five (5) thereof, the parties have renegotiated the pay-ments due LESSOR by LESSEE and have amended the Lease by an Addendum Agreement No.,3, dated October , 1976, covering the period of December 29, 1972 through June 19, 1976, and WHEREAS, the aforesaid period expired on the 19th day of June, 1976, and the parties to the Lease Agreement have subsequently renegotiated in good fnith the amounts due and payable to LESSOR and have determined that additional funds are needed to assure the b _M.h.1 _ k e e. .e ma_ a.. _ha m _m__ha_..__- _ . _ - _ _ _ . _ . _ - __. _. _ m . . . - - ._ _ m-. ._____m _ _ _ _ - - _ _m___---.-._.- - _ - . - _ . _ . . -

' proper safeguards as specified in Paragraphs VI and VII of said

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Lease, NOW, T!!EREFORE , it is acknowledged and agreed by.the parties with concurrence of the Department of 11uman Resources as follows:

1. That LESSEE shall pay LESSOR ten cents (10C) per cubic foot for every cubic foot of low level radioactive waste buried on the premises, from. June 19, 1976 to June 19, 1979. Upon expiration of the aforestated three year term, the parties hereby agree to re-evaluate the then existing conditions and to rene-([ gotiate the payment provisions for the next three year term accord-ing to Paragraphs VI and VII of the Lease Agreement dated January 21, 1963; provided, however, in no event shall LESSEE be obligated to pay LESSOR for such next three year term at a rate per cubic foot exceeding thirty percent (30%) of the ten cents (10C) per cubic foot amount' set forth in this Addendum. The parties agree that Provision I as set forth herein shall supercede in force and effect, now and hereafter, Paragraph VI of the 1963 Lease Agreement, (J as amended.

l 2.

That it is further acknowledged and agreed by the parties that the payment to the LESSOR by the LESSEE of the aforesaid ten cents (10C) per cubic foot shall be deemed to satisfy all obli-

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gations legal or otherwise, for the payment of money,during the period from June 19', 1976 to June 19, 1979, owed by the LESSEE to the LESSOR under the terms of the 1963 Lease Agreement, as amended.

3. That in the event of any unresolved conflict between -

the terms of this Addendum and the 1963 Lease Agreement, as amended, s.:

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the terms as set forth in this Addendum shall. govern and prevail.

4. In all other respects, the' Lease. Agreement of January 21, j 1963, as amended, and all of its terms and conditions shall and do remain in full force and effect. .

COMMONWEALTH OF KENTUCKY EXECUTIVE DEPARTMENT FOR FINANCE AND ADMINISTRATION j j

BY: RUSSELL MCCLURE, SECRETARY l 4 1  %.

LESSOR

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NUCLEAR ENGINEERING COMPANY, INC.

BY: JAMES N. NEEL, J R .' , PRESIDENT LESSEE C' (CORPORATE SEAL)

ATTEST: -

i SECRETARY I e

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ATTACHMENT D IMPLEMENTING TAX POLICIES The available solutions to the detrim' ental effects of the tax on the Commonwealth of Kentucky, the people of Kentucky and

'on Nuclear Engineering are to repeal the tax, amend the tax, the issuance of regulations interpreting and setting forth a proper j application of the tax, and lastly a court proceeding to deter-mine the constitutionality of the tax. j NECO recommends that the proper solution is to immediately i adopt policies followed by the adoption of regulations which would apply the tax on a relative hazard basis as related to pounds. Implementing the tax by this method will result in

(' NECO being able to compete in the market place, thus resulting in the generation of tax revenue under HB 838 as well as the j

generation of additional pc&m funds. In addition it should result in a reduction in the amount of high activity material buried in Kentucky. Specifically, NECO recommends that the tax i be applied by the.use of the following formula: 100 x number of pounds buried x a radiology index applicability factor (RIAF) =

tax.

The RIAF takes into consideration the inhetent hazardous characteristics of the material such as its half life, specific il l ionization and biological half life and assigns a' hazard index.

It then considers the material's specific activity, that is the concentration of the radioactive material, in terms of curies  ;

per pound. The RIAF has been designed from classifications made j

, by the Federal Government, which have'been adopted by the Common- ,

(_ wealth of Kentucky, as follows:  !

A. The inherent hazardous characteristics of radionuclides has been classified by the Department of Transportation and has been adopted by the Commonwealth of Kentucky in Regulation 902 KAR 100:035, which classifies radio-  !

nuclides into seven groups with Group I being the most

, toxic and relatively hazardous radionuclides such as plutonium 239, radium 226 and the transuranic radio-nuclides, while Group VII represents the material in specific form presenting the least hazard to personnel and the environment, for exampic tritium when added as a paint on luminous dials.

B. Each of these transportation groups then needs to be assigned a hazard index number. The hazard index .

numbers have been designed from the exempt quantity classifications developed by the Federal Covernment ,

and adopted by the Commonwealth of Kentucky in Reg-ulation 902 KAR'100:030, ponting and Disposal Require-ments. This regulation classifies radionuclides by exempt quantitics for licensing purposes, It establishes'

AT.TACitMENT D  !

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- . j the relative hazard of each radionuclides to each other one by the use of an order of magnitude scale expressed in multiple powers of 10. In essence radioactive materials have been listed and assigned some factor of "10" in attempting to establish con-centrations which require licensing or special handling requirements. The relative hazards ratio then between any particular transport group is a factor of ten or in other words, Group I material is. ten times more hazardous than Group II, which is in turn, ten times more hazardous than Group III, etc. The following table lists some representative radionuclides from each trans-port group and their corresponding exempt quantities:

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\- Representative Radionuclides Exempt Quantities Transport Group I Ra 226, Pu 239 .01 II Sr 90, Ba 133 .1 III Co 50, I 131 1.0 IV Co 58, I 134, Mn 54 10 V Kr 85, Pd 103 100 VI & VII Special Cases-e To be even more conservative, we have reduced'the exempt quantities by five fold, as reflected below. l since the exempted quantities are inversely propor- i tional to the relative hazards, the Hazard Index

- numbers are then determined by taking the reciprocal

(} of the exempt quantities as follows:

Exempt Quantities Trdnsport Group Divided by 5 Hazard Index

/I .002 500 II .02 50 III .2 5 IV 2 .5 V 20 .05 VI & VII 20 .05 The Radiology Index Applicability Factor is thus stated as follows: RIAF = Transportation Group Hazard Index x total number of curies per the total poundage buried. .

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,M,r . Russell McClurc .

. . October 7, 1976 o .. . -

.? age 3 the purpose of developing 'a study program in light of on-going programs in order.to avoid any duplication of effort.

We will appreciate your early response to our proposal. 3 Very truly yours, NUCLEAR ENGINEERING COMPANY, INC.

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,. \ -A . .r .. m,/

ames N. Neel President f

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j JUN:ea Attachments cc: Governor Julian Carroll-

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Secretary Jackson White Dr. William McElwain Mr. Guyles Sutton Mr. Charles Wickliffe  ;

l Dr. Mitchel Denham i

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