POLICY ISSUE

INFORMATION

January 14, 2002 SECY-02-0008

FOR: The Commissioners

FROM: William D. Travers

Executive Director for Operations

SUBJECT: STATUS REPORT ON DEVELOPING A MEMORANDUM OF

UNDERSTANDING WITH THE U.S. DEPARTMENT OF ENERGY FOR A

DECISION PROCESS REGARDING POTENTIAL SITE TRANSFERS UNDER

SECTION 151(b) OF THE NUCLEAR WASTE POLICY ACT 

PURPOSE:

To provide the Commission with a status report on developing a memorandum of

understanding (MOU) with the U.S. Department of Energy (DOE) for a decision process

regarding potential site transfers to DOE under Section 151(b) of the Nuclear Waste Policy Act

(NWPA). In addition, this paper provides the staffís expanded evaluation of the option of

increasing financial assurance, and a revision to the financial criteria for determining sites that

might need Federal funding for remediation. This Commission paper partially responds to the

December 17, 2000, Staff Requirement Memorandum (SRM)-SECY-00-0180. The staffís

response to the remaining SRM direction will be provided to the Commission in April 2002, as

requested in the SRM.

SUMMARY: 

A status report is provided on the development of an MOU with DOE regarding potential site

transfers to DOE under Section 151(b) of the NWPA. The staff has made progress in the

following areas: (1) providing DOE with background information; (2) preparing an Agreement in

Principle to seek an MOU; (3) preparing a draft MOU; and (4) informing various stakeholder

groups of the MOU initiative. Potential challenges related to the MOU are also discussed,

including DOEís decision to put the MOU development on hold to evaluate the policy question

of voluntarily accepting U.S. Nuclear Regulatory Commission (NRC) sites under Section 151(b).

CONTACT: Robert L. Johnson, NMSS

 (301)415-7282
The Commissioners 2

Other issues identified are: (1) timely completion of the MOU; (2) implementation of the MOU;

and (3) response to a negative DOE decision, should this occur. This paper also evaluates the

option of increasing financial assurance and revises the financial criteria for determining sites

that might need Federal funding for remediation. 

BACKGROUND:

In SECY-00-0180, dated August 23, 2000, the staff provided the Commission with an analysis

of issues to facilitate remediation of decommissioning sites in non-Agreement States. The

analysis considered both formerly licensed sites and currently licensed sites where future

funding of decommissioning might be difficult. The staff also provided options to address these

difficulties. On December 19, 2000, the Commission approved, in SRM-SECY-00-0180, the

following three options: Option A1 for requesting Federal financial assistance for formerly

licensed sites in non-Agreement States; Option B1 for pursuing an MOU with DOE; and Option

B4 for increasing financial assurance as a fallback option in case DOE will not support the

MOU. Regarding Option A1, this paper responds to the Commissionís request to more sharply

focus the screening criteria the staff would use to identify sites that might need Federal financial

assistance. In addition, in April 2002 the staff will respond to the Commissionís request to

better define the number of sites and potential costs of remediation. For Option B1, this paper

provides a status report on the MOU development. For Option B4, this paper provides a

response to the Commissionís request for further evaluation of the option to increase financial

assurance. The Commission also requested, in SRM-SECY-00-0180, additional staff input in

April 2002 to allow for possible future Commission consideration of requesting Federal financial

assistance for currently licensed sites. 

DISCUSSION:

1. Status Report on Developing an MOU with DOE 

a. Status

As stated above, this paper provides an update of the staffís activities for the option of

pursuing an MOU with DOE that would implement Section 151(b) of the NWPA and thereby

provide a mechanism that licensees could use to meet the institutional controls requirements

of 10 CFR 20.1403, that are necessary to terminate a license with restrictions on future site

use (Option B1 in SECY-00-0180). At this time, some licensees are having difficulty finding an

acceptable party willing to assume responsibility for institutional controls. Section 151(b)

authorizes DOE to assume title and custody of low-level radioactive waste and the land on

which such waste is disposed of, on request of the owner and after termination of the license

issued by NRC, if the Commission makes the following determinations required by Section

151(b) of the NWPA: (1) NRC decommissioning requirements have been met; (2) site transfer

is at no cost to the Federal government; and (3) Federal ownership is necessary or desirable

to protect the public health and safety and the environment. However, DOE acceptance of a

site is discretionary. If DOE assumes title and custody, DOE is authorized to maintain the

waste and land in a manner that will protect the public health and safety, and the environment. 

Therefore, the purpose of the MOU is to identify the criteria and coordination process that NRC

and DOE would use to make decisions and take actions, on a site-by-site basis, regarding

potential transfers of NRC-licensed sites to DOE.
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Attachment 1 lists seven potential restricted-use sites, where licensees are planning

decommissioning. However, it is unlikely that one of these sites (Jefferson Proving Ground)

will be a candidate for transfer to DOE under Section 151(b) of the NWPA because its owner,

the U.S. Army, has completed an MOU, with the U.S. Fish and Wildlife Service and U.S. Air

Force, to provide long-term institutional control of the site. For the other six sites, it is difficult

to predict at this time how many would be candidates for transfer to DOE under Section

151(b), using the MOU, because of numerous uncertainties for each site. For example, at the

Sequoyah Fuels Corporation (SFC) site, the licensee is pursuing two options for transfer to

DOE: transfer under Section 151(b) or transfer under Title II of the Uranium Mill Tailings

Radiation Control Act (UMTRCA). In addition, to bound the total number of sites that might be

future candidates for transfer to DOE, the staff also estimated how many currently operating

NRC licensed sites might be decommissioned in the future using the restricted use option. 

The staffís estimate is based on an informal screening of about 5000 NRC licensed sites using

data in NRCís Licensing Tracking System and input from NRC project managers. The staffís

screening identified five sites with large quantities of long-lived radionuclides, which the staff

used as an indicator of the potential for licensees to consider the restricted use option with

DOE ownership under Section 151(b). From this estimate, the staff concludes that the total

number of candidate sites for transfer to DOE under Section 151(b) is small, and is probably

less than fifteen (assuming all decommissioning sites in Attachment 1 and future candidates

from currently operating licensed sites). However, considering the conservative assumptions

made in the estimate, the number of actual candidate sites for transfer to DOE under Section

151(b) may be as low as five over the next 20 years.

NRC and DOE staff have made progress toward developing an MOU since the staff received

the Commissionís direction on December 19, 2000, to pursue this option. The NRC staff

began its work by providing the DOE staff with background information on many topics related

to NRCís Decommissioning Program including: (1) regulations, guidance, and

decommissioning/license termination process for restricted use sites; (2) difficulties in

arranging enforceable institutional controls; (3) justification for seeking an MOU; (4) number of

decommissioning sites considering restricted use; and (5) number of operating NRC licensees

that might consider restricted use in the future. The purpose of this background information

was to establish a foundation of understanding, about NRCís program, to facilitate preparing

the MOU. The staff also evaluated NRCís license termination process and site transfer

process to DOE for uranium mill tailings sites under UMTRCA Title II, and the AMAX site in

Parkersburg, West Virginia, under Section 151(c) of the NWPA. Lessons learned from these

successful site transfer processes contributed to developing a similar process for the Section

151(b) MOU.

NRC and DOE staffs prepared an Agreement in Principle that was signed by NRC and DOE

senior managers on March 16, 2001, to seek an MOU that would define the criteria and process

that each agency would use to make determinations regarding the potential transfer of a site,

consistent with Section 151(b) of the NWPA (see Attachment 2). NRC and DOE management

also established the NRC-DOE Working Group that would develop the MOU and agreed to the

goal of completing the MOU by September 2001. 

The NRC-DOE Working Group prepared a draft MOU and provided it to both NRC and DOE

staff reviewers on April 30, 2001. NRCís review team consisted of: Division of Waste

Management staff with decommissioning and environmental review experience; Division of Fuel

Cycle Safety and Safeguards staff with uranium mill tailings license termination and long-term

surveillance experience; and legal staff from the Office of the General Counsel (OGC). DOEís
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review team consisted of staff with long-term stewardship experience from Environmental

Management, General Counsel, and the Grand Junction Field Office. NRC staff comments 

were received and incorporated into the draft MOU. Although some general DOE comments

were discussed, DOE put completion of written comments on hold in early July.

DOE staff decided to put the MOU development on hold to conduct an evaluation of the pros

and cons of the policy question of DOE voluntarily accepting NRC sites under Section 151(b) of

the NWPA. DOE staff planned on providing this evaluation in a Decision Memorandum to the

Secretary of Energy. Although the Agreement in Principle and the draft MOU clearly stated

that the MOU was limited to the criteria and process for NRC and DOE to use in making future

decisions on a site-specific basis, DOE staff became concerned about potential liabilities and

the appearance that completing an MOU might be viewed as a DOE commitment to the future

transfer of candidate restricted-use sites. DOE staff decided that the policy issue needed to be

fully evaluated at this time, and presented to the recently appointed DOE senior managers and

the Secretary for consideration and policy direction, before proceeding with further MOU

development.

In a parallel effort, the NRC staff believed it would be beneficial to prepare a letter for the

Chairman to send to the Secretary of Energy, expressing the importance of resolving the

institutional control issue and encouraging efforts to develop an MOU. The Chairman sent this

letter to the Secretary of Energy on November 2, 2001. 

Finally, the NRC staff, as part of its enhanced public outreach efforts, has conducted briefings

of stakeholder groups to inform them of the institutional control issue and how NRC and DOE

are working together on an MOU that would help resolve this issue. Briefings were given to: (1)

decommissioning licensees and stakeholders during the November 2000 Decommissioning

Workshop; (2) NRCís Advisory Committee on Nuclear Waste; and (3) the Board of Radioactive

Waste Management of the National Academy of Sciences. In addition, licensees considering

restricted-use (Sequoyah Fuels and Whittaker) were briefed, in public meetings, on the status

of the MOU development. 

b. Potential Challenges and Outcomes

The first and foremost challenge facing NRC is to gain full DOE support for the policy of

potential site transfers under Section 151(b). There are different views among the many DOE

offices that have some role in DOEís long-term stewardship activities. Therefore, positive

direction from the Secretary may be needed if MOU development is to proceed. Such

direction would establish a common path forward for all DOE offices to follow. As mentioned

previously, the Chairmanís letter to the Secretary of Energy expressed the importance of

resolving the institutional control issue and encouraged efforts to develop an MOU. A

management meeting will be held with DOE to discuss their plans for response.

The second challenge is completing the MOU in a timely manner and without delay, assuming

that positive direction from the Secretary would allow the Working Group to resume MOU

development. The next steps would include: (1) DOE and NRC management agreeing to a

new schedule; (2) DOE completing its comments on the draft MOU; (3) the Working Group

resolving DOE comments and completing a draft final MOU that senior DOE and NRC

managers are ready to sign; and (4) providing the draft final MOU to the Secretary and the

Commission. 
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Another challenge is timely implementation of the completed MOU for licensees who might

propose using the Section 151(b) site transfer to DOE after license termination. At this time,

SFC is the only licensee that has expressed a desire to both DOE and NRC, to use the

Section 151(b) approach and has actually submitted a Decommissioning Plan. The staff is

currently reviewing the SFC Decommissioning Plan and preparing the draft Environmental

Impact Statement (EIS). Should the MOU be completed, DOE and NRC staffs would need to

agree on a schedule for implementing the MOU for the SFC site. It is still somewhat early in

the review and draft EIS preparation process, and therefore, now is a useful time for DOE to

become involved. Although no specific schedules can be assumed at this time, the sooner an

MOU can be completed, the sooner DOE coordination and review can begin, and the less

impact there may be on the overall existing schedule for completing the SFC review and EIS

development. 

If significant delays result and impact the staffís existing schedule, SFC might be financially

impacted, which could in turn begin to impact SFCís ability to conduct successful

decommissioning. Because of the current uncertainty regarding site transfer to DOE under

Section 151(b), SFC also proposed that its site be reclassified as a byproduct material facility

for license termination under Title II of the UMTRCA and 10 CFR Part 40, Appendix A. Should

this path be approved, transfer of the site to DOE would be mandatory under UMTRCA if the

State declines the responsibility. The staff is currently evaluating SFCís request and will

provide a paper to the Commission on a proposed course of action in the near future. 

Finally, the most significant challenge would result from DOE deciding not to continue the

MOU development. Should this occur, the staff will inform the Commission immediately and

recommend options for Commission consideration, consistent with the Commissionís direction

in SRM-SECY-00-0180. 

2. Evaluation of the Option of Increasing Financial Assurance 

In addition to directing in SRM-SECY-00-0180 that the staff report on the status of the DOE

MOU, the Commission also directed the staff to further evaluate the option of increasing

financial assurance for the amount necessary for offsite disposal until NRC approves the site

specific decommissioning plan (Option B4 in SECY-00-0180). The staffís evaluation is

summarized here, and the complete evaluation is provided in Attachment 3. The following

summary and the discussion in Attachment 3 are limited to sites where licensees assume

onsite disposal with restrictions on future site use to determine the level of their required

financial assurance. The following discussion does not address new license applicants, nor

existing licensees with onsite burials that could decommission in the future to unrestricted

release criteria, because these types of licensees were beyond the scope of the

Commission-directed evaluation in SRM-SECY-00-0180. However, because the staff

recognizes that similar concerns may exist for such sites, the staff will consider whether

changes to the regulatory structure or other appropriate actions are needed to avoid potential

funding shortfalls in the future for these types of sites. 

NRC regulations in 10 CFR 30.35, 40.36, and 70.25, require that a decommissioning funding

plan (DFP) must contain a cost estimate for decommissioning. These regulations simply

create a reporting requirement for licensees, and the regulations do not specify any criteria on

how the licensee should estimate the decommissioning cost. More significantly, the

regulations do not provide for NRC approval of the estimated amount. In order to determine if
The Commissioners 6

a cost estimate satisfies the reporting requirement, the staff uses regulatory guidance to

review the contents of the DFP. NRC guidance allows a licensee to select onsite waste

disposal under restricted release criteria as the basis for its cost estimate. This

decommissioning approach will be accepted, for cost estimation purposes, if the licensee

identifies and justifies key assumptions. After evaluating cost estimates, the staff will either

accept the licenseeís estimate (perhaps after requesting additional information) or find that the

licensee has not met the reporting requirement. Rejecting an estimate on the basis that it

does not meet the reporting requirement is difficult to justify if the licensee has made a

reasonable effort to calculate the cost of decommissioning. Therefore, the existing regulatory

structure for financial assurance allows the licensee to provide a cost estimate based on the

presumption of eventual NRC approval of onsite disposal under restricted release criteria,

when the decommissioning plan is approved. The assumption of onsite disposal typically

results in a much lower cost estimate for decommissioning as compared to offsite disposal

methods. 

At this time, only a few licensees have taken this onsite disposal approach for their cost

estimates. However, some licensees might not be able to employ onsite disposal if they

cannot find a long-term steward or they cannot fully satisfy all the NRC technical criteria for

onsite disposal with restrictions on future site use. Therefore, for some cases, if onsite

disposal is not approved, the licenseeís financial assurance may fall short of the actual costs of

decommissioning with offsite disposal. Under these circumstances, should the licensee

declare bankruptcy and not be able to conduct remediation, Federal financial assistance might

be needed. The staff evaluated whether this risk could be reduced by requiring an increase in

financial assurance, to address the cost of offsite disposal until a licenseeís decommissioning

plan is approved. The disposal cost increase could be substantial in certain cases, and would

increase the carrying cost of financial assurance for licensees. Thus, increased financial

assurance may not be possible for financially weak licensees that might present the greatest

risk of bankruptcy because they might be unable to obtain increased financial assurance. 

Furthermore, for these financially weak licensees, increasing the cost of financial assurance

could reduce limited funds available for remediation. 

The staff also evaluated three methods to motivate licensees to increase financial assurance:

rulemaking, case-by-case license conditions, and guidance. Based on the staffís evaluation, it

may be necessary, in rare cases, to address specific licensee circumstances and apply caseby-case license conditions, assuming that the staff can develop an analysis, which can be

defended if challenged, that justifies a departure from the NRC regulations. However, the staff

does not favor broad implementation of any approach to increasing financial assurance,

because it may be difficult, if not impossible, for financially weak licensees to implement.
The Commissioners 7

3. Revision to Financial Criteria 

The SRM directed the staff to consult with OGC on whether the financial criteria discussed in

SECY-00-0180 should be more sharply focused, as the proposed criteria may not accurately

reflect the circumstances under which the government can impart a remediation obligation on

a private party (i.e., a former licensee or parent company of a former licensee).

The staff and OGC determined the criteria should recognize that ìlegal reachabilityî is a key

factor in determining financial responsibility of a former licensee. We recognize that the ability

to hold a former licensee or parent company financially responsible depends on the facts of

the case, and that the law is not well defined. Rather than developing specific criteria to

address a variety of factual circumstances that may or may not occur, the staff believes it is

more appropriate to use the following criteria that would require a case-by-case analysis when

specific facts are presented before providing financial assistance:

 Previous licensee and parent company, if any, exist, and

- Previous licensee and parent company, if any, are not legally reachable; or

- Previous licensee and parent company, if any, are legally reachable, and all available 

 assets have been obtained without causing bankruptcy, but these assets are 

 insufficient to complete remediation.

The criteria from SECY-00-0180 have been revised and reformatted to address these

concerns and are provided in Attachment 4.

RESOURCES:

The staff had planned to complete the MOU in fiscal year (FY) 2001. Because the MOU has

been delayed, work will need to continue into FY 2002, if DOE decides to support further

development of the MOU. This does not present a resource issue because the staff budgeted

0.3 full-time equivalents for MOU implementation in FY 2002. If it appears that the MOU

cannot be completed in FY 2002, the need for resources in FY 2003 will be evaluated during

the next budget cycle and resources will be reprogrammed, if needed. Although the option of

increasing financial assurance does have potential resource implications, the staffís planned

course of action negates the need for resources.
The Commissioners 7

COORDINATION:

OGC has reviewed this paper and has no legal objections. The office of the Chief Financial

Officer has reviewed this paper for resource implications and has no objections.

/RA/

William D. Travers

Executive Director

 for Operations

Attachments:

1. ìList of Potential Restricted-Use Sitesî 

2. ìAgreement in Principleî

3. ìEvaluation of Option B4 to Increase Financial Assuranceî 

4. ìRevised Criteria for Determining Site Remediation Funding Needsî
The Commissioners 8

COORDINATION:

OGC has reviewed this paper and has no legal objections. The office of the Chief Financial

Officer has reviewed this paper for resource implications and has no objections.

/RA/

William D. Travers

Executive Director

 for Operations

Attachments:

1. ìList of Potential Restricted-Use Sitesî 

2. ìAgreement in Principleî

3. ìEvaluation of Option B4 to Increase Financial Assuranceî 

4. ìRevised Criteria for Determining Site Remediation Funding Needsî

AN: package: ML012890367 TICKET: 200000564 & 200000565

DISTRIBUTION: Central File LLDP r/f DCB R/f NMSS r/f

Path & File Name: s:\dwm\dcb\RLJ2\Comm-paper-draft-1016.wpd *see previous

concurrence

OFC DCB DCB DCB TECH ED DWM

NAME R.L.Johnson

*

S. Moore* L. Camper* E. Kraus* J. Piccone*

DATE 10/16/01 10/18/01 10/18/01 10/15/01 10/18/01

OFC DWM OGC CFO NMSS DEDMRS EDO

NAME J. Greeves* M. Virgilio C. Paperiello W. Travers

DATE 10/18/01 11/11/01 10/18/01 12/20/01 1/14/02 1/14/02

OFFICIAL RECORD