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Mr. CUNNINGHAM. Well, we feel we have the authority to place requirements on NFS and New York State to do certain types of work. There is no question about that. The question of timing is another matter. We have to specify times for them to establish their contractual arrangements, to put out bids, whatever they have to do.

Mr. WARD. Thank you, Mr. Chairman.

Mr. OTTINGER. I was concerned about one thing you said. NRC has no authority with respect to any DOE nuclear operation? They can't go on their facility?

Mr. DIRCKS. We have had a number of studies done on whether we can regulate DOE activities. The basic conclusion from the studies is that we can certainly regulate in the area of repositories. I think there is something in our Energy Reauthorization Act concerning breeder plants, but we don't have any authority to regulate the department activities.

Mr. OTTINGER. I think we ought to change that. You don't have any involvement in protecting the health and safety of the people at the Hanford facility, for example?

Mr. DIRCKS. No, sir, we don't.

Mr. OTTINGER. Is the same true with respect to the Department of Defense nuclear activities?

Mr. DIRCKS. We don't regulate them, either.

Mr. WARD. Is your legal counsel here, somebody from your legal counsel's office here?

Mr. DIRCKS. Yes.

Mr. WARD. Are you asserting your authority under subparagraph 4 of section 202 of the Energy Reorganization Act as your lack of authority over DOE facilities?

Mr. TREBY. I am Stewart Treby, of the Office of Executive Legal Director. My recollection is that 202-3 provides that radioactive materials that DOE is dealing with that were not regulated under the act before, such as defense materials, are not under the NRC jurisdiction.

Mr. WARD. It says you shall have licensing and regulatory authority pursuant to facilities used primarily for the receipt and storage of high-level radioactive waste resulting from activities licensed under this act.

Mr. TREBY. Right. But defense wastes were not materials licensed under the Atomic Energy Act.

Mr. WARD. But the facility, itself, was licensed under the Atomic Energy "activities licensed under the Atomic Energy Act." The waste didn't have to be licensed; the activities had to be licensed. Mr. TREBY. Well, I think it is

Mr. WARD. Second, you are given authority under subparagraph 4 of section 202 over all retrievable surface storage facilities and other facilities authorized for the expressive purpose of subsequent long-term storage of high-level radioactive wastes generated by the administration which were not used for or part of research and development activities. A solidification activity is something for the express purpose of subsequent long-term storage. A research and development activity is distinguishable from a demonstration project. So the point I am trying to make is I am saying it is not at all clear that your licensing authority is not there.

Mr. DIRCKS. When we get into this area, as you can see, we get all into this bog of what we can license and what we can't. There has been a lot of legal studies within the Commission done on this subject, and maybe the best way to do it is supply it to you. Mr. OTTINGER. Why don't you do that? We would like to have it. Also, we would like to have NRC's views with respect to what the situation should be, if you think there ought to be changes in the law as affects your power.

Minority counsel?

Mr. BIENSTOCK. Thank you, Mr. Chairman.

Mr. Dircks, despite your desire to use the latest technology to test adequacy of the high-level storage tanks, you stated, “All presently available information on high-level tanks at West Valley indicates the waste is being stored safely and don't pose danger to public health and safety." Then you speak of a pan leakage problem.

I am confused at this point. Are the tanks safe, or are they not? Mr. DIRCKS. There has been no leakage from those tanks. We believe the tanks are safe. When you look at the design of the facility, and the vaults, and the pans, and we have submitted a diagram with our testimony, you can see that the pan is basically a smaller scale device underneath the main tank. It is not designed to contain the waste from those tanks; it is designed mainly to provide an initial warning that perhaps a leak has occurred, so the pan is not an essential primary-defense mechanism up there.

Second, the next line of defense is the concrete vault. Primarily what we look to is that once a leak is detected in any way, is that the material would be transferred to a standby tank that is there. We have evaluated the pumping mechanisms to move the waste if a leak does occur into a standby tank, and that is being constantly evaluated. The feeling is that we have enough assurances that the conditions are safe to warrant our general conclusion that the tanks are safe and we have no immediate hazard.

What I talked about in the advanced techniques and technology is that there is no way for us to get near the surface of those tanks to look for corrosion, wall thickness, and so on. What we would like to do is get some remote cameras down on the sides of those tanks to actually see what is going on. We have not done that.

Mr. BIENSTOCK. If the high-level wastes were vitrified and put back in the tanks, would that not result in a better circumstance than keeping it in liquid form in the tanks?

Mr. DIRCKS. I think anything that you do to move from a liquid waste form to a solid waste form is a good thing. I don't think what is being contemplated is putting the waste back in those tanks. But, again, I don't know. But the main thing is to move it from liquid to solid.

Mr. OTTINGER. I have seen the vitrification process, and you end up with something like marble columns. I don't imagine it is physically possible to get those columns back to the tank.

Mr. BIENSTOCK. Would that not be possible, Mr. Dircks?

Mr. DIRCKS. Technically speaking, I don't see why it would be impossible. I see a lot of reasons for not putting the pellets back in the tanks.

Mr. BIENSTOCK. Thank you, Mr. Chairman.

Mr. OTTINGER. All right. We thank you and look forward to the submission of your information for the record.

The meeting is recessed until 1:30 this afternoon.

[Whereupon, the subcommittee recessed, to reconvene at 1:30 p.m., the same day.]

AFTER RECESS

[The subcommittee reconvened at 1:30 p.m., Hon. John D. Dingell, chairman, presiding.]

Mr. DINGELL. The subcommittee will come to order.

The Chair announces this is a continuation of the hearing of the subcommittee on H.R. 6865, the West Valley Demonstration Project Act. Our next witness is Mr. Ralph Deuster. Mr. Deuster, if you would identify yourself, please, sir, fully for the record, and also those who appear at the table with you, we will be happy to receive your statement.

STATEMENT OF RALPH W. DEUSTER, PRESIDENT, NUCLEAR FUEL SERVICES, INC., ACCOMPANIED BY HENRY W. BROOK AND CLARENCE T. KIPPS, COUNSEL

Mr. DEUSTER. Mr. Chairman and members of the subcommittee, my name is Ralph W. Deuster. I am President of Nuclear Fuel Services, Inc. (NFS) and have been since 1973. I am pleased to appear before this subcommittee to provide information regarding the nuclear facilities at West Valley, N.Y. With me at my left is Mr. Henry W. Brook, and to my far left, Mr. Clarence T. Kipps, counsel to NFS.

After the Atomic Energy Act of 1954, the Atomic Energy Commission (AEC) sought to have the utility industry construct and operate nuclear power reactors. Among other things, the AEC committed to reprocess the spend fuel produced in those reactors. The AEC then made strong efforts to bring private industry into the nuclear fuel reprocessing business but without early success because of the lack of an adequate supply of spend fuel to make a reprocessing plant commercially viable. The AEC recognized that absent participation by private industry, it would have to construct and operate a new Government-funded reprocessing plant to meet its commitments to reprocess commercial power reactor fuels because they could not be processed in any Government facility. In 1956, to further encourage private industry participation in reprocessing the Government announced that the AEC would make available to industry the Government's technology on reprocessing and would also provide financial assistance in the form of a baseload contract. This assistance proved to be the factor which enabled the West Valley reprocessing project to go forward.

The origin of Nuclear Fuel Services, Inc., dates back to 1956 and a small nuclear fuel facility in Erwin, Tenn., owned by the Davison Chemical Co. Davison was later bought by W. R. Grace, which in 1962, together with American Machine & Foundry Co., formed and incorporated NFS.

NFS participated in a joint proposal to the AEC, in conjunction with the State of New York, Bechtel Corp. and a group of five utility companies known collectively as the Industrial Reprocessing Group the IRG. The State acted through a predecessor of the present New York State Energy Research and Development Au

thority, to which I will refer as the authority. The authority, pursuant to enabling legislation adopted by the State, had acquired a site consisting of approximately 3,345 acres located in Cattaraugus County, south of Buffalo. The site had been acquired by the authority after a 2-year search and was considered ideal for the location of a reprocessing plant and attendant facilities for radioactive waste. Some of the desirable features of the site were: Proximity to the projected early commercial fuel reprocessing load in the northeast; the presence of a silty till soil with great resistance to the migration of water; a low population density in the vicinty; and favorable meterologic and hydrologic characterics.

The final arrangements included appropriate financing by NFS; a lease and a waste storage agreement between NFS and the authority; a baseload contract between NFS and the AEC; reprocessing contracts with each utility of the IRG utility group; and a construction contract with Bechtel.

The project was financed in such a way as to meet the AEC's requirements for financial qualifications in obtaining a license to operate the facility. A total project funding of $32 million was created. The NFS portion of the funding consisted of $8 million in capital contributions to NFS from Grace and AMF; $13,500,000 in bank loans; and a grant of $2 million from a group of New York State utilities known as Empire State Development Associates, Inc. The authority's portion of the funding consisted of $8,500,000 for construction of the waste storage tanks and certain other facilities which were to be owned by the authority.

The efforts of the Federal Government resulted in the negotiation and execution of a complex set of agreements between NFS and New York State, NFS and the U.S. Atomic Energy Commission and NFS and a group of utilities.

The agreements with the authority consisted of a lease, which granted NFS the right to construct and operate the reprocessing plant on the site, and a waste storage agreement which delineated the responsibilities of the authority and NFS for the care and maintenance of the radioactive wastes that would emanate from the reprocessing plant.

The latter included a specified fund of the authority to be paid into by NFS for perpetual care of the wastes by the authority. Because of long-term health and safety considerations, perpetual care of radioactive waste has always been recognized as a function which can be discharged only by a government entity. Pursuant to the AEC policy, New York State agreed to accept this function, which otherwise would have been performed by the Federal Government. The initial term of the lease was set to expire on December 31, 1980, approximately 15 years after the projected commencement of plant operations. Upon expiration of the lease, unless renewed by NFS, responsibility for the entire site, the waste, and all facilities constructed or located on it was to revert to the authority.

The agreement with AEC was called the baseload contract which provided an initial load of spent fuel to be reprocessed at the plant. The baseload contract also formed the basis for the utility contracts.

Construction and operation of the West Valley facilities required AEC approval, which was granted after the AEC's thorough evaluation of the health and safety factors and financial qualifications required for the project. The plant and attendant facilities were constructed, licensed to operate, and brought into initial operation in April 1966.

The nuclear power industry was developing in the 1960's and rapid growth was projected to continue into the 1970's and beyond. Additionally, from a review of early operations, it was apparent that the contemplated levels of radioactive releases from the plan could not be achieved for future operations without making some modifications. Accordingly, plans for modernization and expansion of the West Valley plant were started in 1968. The objective was to increase the plant's capacity from 300 to 600 MTU/year and to correct for some operating deficiencies. Blaw-Knox Chemical Plants, Inc., was selected to perform the engineering and projected the cost to be $15.8 million.

By early 1972, NFS had reprocessed all the spent fuel then available for processing, and the plant was shut down to complete the revamp and expansion program. In May 1972, however, NFS was informed by the AEC that a new construction permit and operating license was required.

After NFS filed its new application for a construction permit, numerous regulatory changes took place, which NFS would have needed to meet before it could resume operation of the plant. The most significant of the regulatory changes dealt with seismic protection criteria, tornado protection criteria, radioactive waste management, safeguards, and radiation protection.

Additionally, there were general regulatory problems that NFS had to consider, which potentially impacted on the cost and timing of the plant, such as the NRC's GESMO proceeding-general environmental statement on mixed oxide fuel).

Although many of these requirements were identified by late 1975, the critical point was reached in March 1976, when the NRC imposed more stringent seismic criteria for the West Valley site. NFS employed a panel of seismic experts to review this determination and was advised that, as a practical matter, there was very little likelihood that the revised criteria could be demonstarated to be unduly conservative. This development added to NFS' growing concerns about all the other actions that would be needed to obtain the required licensing approvals. In June of 1976, NFS made a comprehensive evaluation of the project which demonstrated that it had become commercially impracticable in light of regulatory requirements that had arisen since its initiation.

The earliest date projected for resuming reprocessing was then 1988, compared to a 1973 date when the expansion project had been conceived. The additional capital needs were in excess of $600 million, compared with $15 million in 1970. It was projected that approximately $100 million would have been required to be invested between June 1976 and the time a construction permit might have been obtained from the NRC. Finally, there was great uncertainty as to whether it was possible, even without regard to cost, to modify the facility to meet the new standards required by the changes in regulatory requirements for nuclear fuel reprocessing.

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