[Federal Register Volume 62, Number 82 (Tuesday, April 29, 1997)]
[Notices]
[Pages 23284-23287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10975]


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NUCLEAR REGULATORY COMMISSION

[Docket No. 040-07102]


Shieldalloy Metallurgical Corp. (Newfield, New Jersey); 
Director's Decision Under 10 CFR Sec. 2.206

I. Introduction

    In an undated letter addressed to U.S. Nuclear Regulatory 
Commission (``NRC'') Chairman Shirley Jackson and received on October 
11, 1996, Sherwood Bauman, Chairperson of Save Wills Creek 
(``Petitioner''), requested that the NRC take action with respect to 
NRC licensee Shieldalloy Metallurgical Corporation (``SMC''), of 
Newfield, New Jersey. The Petitioner requested, pursuant to 10 CFR 
Sec. 2.206, that the NRC modify SMC's license to allow only possession 
of radioactive material for the express purpose of decommissioning and 
decontaminating its Newfield facility, and that current operations 
resulting in additional radioactive material being stored at the site 
be immediately halted. The Petitioner cites the lack of adequate 
financial assurance, as required by 10 CFR Sec. 40.36, as the basis for 
his request.

[[Page 23285]]

    The Petitioner submitted a follow-up letter, addressed to the NRC 
Executive Director for Operations and dated February 7, 1997, 
reiterating the above request. In this letter, the Petitioner stated 
that SMC is attempting to reclassify wastes as potential resources for 
which the Petitioner believes there is no viable market. Furthermore, 
the Petitioner concludes that without a viable market and the resultant 
inadequate financial assurance for the company, SMC is jeopardizing the 
health and safety of the local Newfield community.
    By letter dated November 14, 1996, I formally acknowledged receipt 
of the Petitioner's original correspondence and informed the Petitioner 
that his request was being treated pursuant to 10 CFR Sec. 2.206 of the 
Commission's regulations. A notice of receipt of the petition was 
published in the Federal Register on Thursday, November 21, 1996 (61 FR 
59251). By letter dated March 7, 1997, I formally acknowledged receipt 
of the Petitioner's supplementary letter.
    I have evaluated the Petitioner's request and have determined that, 
for the reasons stated below, the Petition is granted in part and 
denied in part.

II. Background

    At its Newfield, New Jersey facility, SMC processes pyrochlore, a 
concentrated ore containing columbium (niobium), to produce ferro-
columbium, an additive/ conditioner used in the production of specialty 
steel and superalloys. The pyrochlore contains, by weight, more than 
0.05 percent natural uranium and thorium, which are source materials 
and therefore require a NRC license pursuant to 10 CFR Part 40. SMC 
operates this process under the authority of NRC Source Material 
License No. SMB-743.
    During the manufacturing process, the radioactive materials are 
concentrated in both high-temperature slag and baghouse 1 
dust, which are then stored in the source material storage yard at the 
site. The slag contains most of the licensed material. In a letter to 
the NRC, dated June 24, 1996, the licensee indicated that the 
concentration of source material in the baghouse dust is, on average, 
less than the ``unimportant quantity'' source material threshold of 
0.05 percent by weight, as described in 10 CFR Sec. 40.13(a), 
2 and need not be treated as licensed material after it is 
removed from the site. The licensee has stored source material in this 
manner at the Newfield site since the 1950s and has accumulated 
approximately 295,000 kilograms (kg) of thorium and 40,000 kg of 
uranium at the site. SMC's current license limits SMC to 303,050 kg of 
thorium and 45,000 kg of uranium. That license expired on July 31, 
1985, and SMC has continued operations in accordance with its existing 
license under the timely renewal provisions of 10 CFR Sec. 40.42(a). 
The SMC site has been included in the NRC's Site Decommissioning 
Management Plan because it contains a large volume of contaminated 
material for which disposal may prove difficult.
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    \1\ The baghouses contain filters comprised of cloth (or similar 
material) arranged in a tubular fashion in an enclosed housing. The 
effluent stream from the production area is blown through the filter 
bags, which trap the particulates on the collected material that 
builds up on the bags. As the buildup of material on the bags 
increases, so too does resistance to flow. For that reason, the 
baghouse filters are equipped with shaking/vibrating devices to 
remove the collected dust and re-condition the bags. The rated 
efficiency of the filters used in the D-111 baghouses is over 99 
percent.
    \2\ Under Sec. 40.13(a), any person is exempt from the 
requirements of 10 CFR Part 40 and from the requirements for a 
license under Section 62 of the Atomic Energy Act to the extent that 
such person receives, possesses, uses, transfers or delivers source 
material in any chemical mixture, compound, solution, or alloy in 
which the source material is by weight less than 0.05 percent of the 
mixture, compound, solution, or alloy.
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    The primary issue significantly delaying SMC's license renewal is 
SMC's ability to meet the financial assurance requirements of 10 CFR 
Sec. 40.36 3. To meet its obligation under Sec. 40.36, SMC 
originally provided the NRC with a Letter of Credit, dated July 23, 
1990, in the amount of $750,000 to serve as financial assurance pending 
completion of the NRC's review of SMC's decommissioning funding plan.
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    \3\ The NRC's financial assurance requirements in 10 CFR 
Sec. 40.36, as pertain to SMC's Newfield license, state that:
    (a) Each applicant for a specific license authorizing the 
possession and use of more than 100 mCi of source material in a 
readily dispersible form shall submit a decommissioning funding plan 
(DFP) as described in paragraph (d) of this section.
    *        *        *        *        *
    (d) Each DFP must contain a cost estimate for decommissioning 
and a description of the method (such as a prepayment, a surety, or 
an external sinking fund as described in Sec. 40.36(e)) of assuring 
funds for decommissioning.
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    In September 1993, SMC notified the NRC that it had filed for 
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. At that time, 
SMC also informed the NRC that it could not provide an acceptable 
decommissioning funding plan for reaching unrestricted release limits 
4 by disposing of all stored material in a licensed disposal 
facility. Despite SMC's filing for bankruptcy and continued efforts to 
satisfy the NRC's financial assurance requirements, SMC has and 
continues to maintain public health and safety at its Newfield facility 
during continued operations under its existing license. Therefore, the 
status of current public health and safety protection is not at issue 
in this case.
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    \4\ The NRC's guidance for unrestricted release limits can be 
found in ``Disposal or Onsite Storage of Thorium or Uranium Wastes 
from Past Operations'' (October 23, 1981; 46 FR 52061).
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    By letter dated December 12, 1995, SMC submitted a new 
decommissioning funding plan to the NRC, proposing that the licensed 
slag be exported for use in steel production. The decommissioning 
funding plan also proposes that SMC sell the baghouse dust domestically 
(for cement manufacturing) without restriction because it is, on 
average, less than the 10 CFR Sec. 40.13(a) ``unimportant quantity'' 
threshold described above. Finally, under the new decommissioning 
funding plan, SMC would decontaminate and decommission the remainder of 
the Newfield site, after off-site shipment of the aforementioned 
products and in accordance with the NRC's unrestricted release 
criteria, by disposing of remaining contaminated structures and soils 
in a licensed disposal facility.
    In December 1994, SMC submitted an application to the NRC for a 
license to export a test shipment of slag to a steel mill in Trinidad. 
The NRC's review of the export license application became moot in early 
1996 when public concern in Trinidad led SMC's potential customer to 
reconsider purchasing the material. SMC has unofficially indicated to 
the NRC that it is currently negotiating with other steel mills and 
will likely revise its export application for export to steel mills in 
one or more countries during 1997.
    By letter dated June 24, 1996, SMC requested permission for the 
proposed domestic sale and transfer of the baghouse dust to unlicensed 
persons; the staff is currently reviewing the request.

III. Discussion

    The Petitioner cites the lack of adequate financial assurance, as 
required by 10 CFR Sec. 40.36, as the basis for his request. The 
Petitioner states that SMC is attempting to reclassify wastes as 
potential resources for which the Petitioner believes there is no 
viable market. Furthermore, the Petitioner concludes that lacking both 
a viable market and adequate decommissioning funding, SMC is 
jeopardizing the health and safety of the local Newfield community. To 
support his request, the Petitioner presents three factors he believes 
are relevant to his petition:
    1. The Petitioner stated that the NRC's draft environmental impact 
statement, dated July 1996, for SMC's Cambridge facility (docket 040-
8948), discussed an identical proposal to sell slag from the

[[Page 23286]]

Cambridge site. As part of that discussion, the Petitioner noted that 
the NRC staff stated that SMC could not actually demonstrate that SMC's 
proposal for sale of ferro-columbium slag at the Cambridge site is a 
workable and viable option.
    2. The Petitioner also stated that to prove the lack of 
marketability for sale of ferro-columbium, the NRC could determine 
whether or not potential customers in the United States would require a 
license to possess the material in question. The Petitioner believes 
that few, if any, domestic companies will be willing to obtain any NRC 
licenses that may be required for the use of this material.
    3. Finally, the Petitioner stated that the only customer SMC has 
been able to locate, to date, was not in the United States, but in an 
under-developed third world country with little protection. After 
adverse publicity in the affected country, the facility purchasing the 
material canceled its order, and SMC has been unable to develop a new 
market during the succeeding 3 years.

A. Regulatory Framework.

1. Summary of 10 CFR Sec. 40.36
    Under 10 CFR Sec. 40.36, a licensee is required to submit a 
detailed decommissioning funding plan, describing both the plan for 
decommissioning the site upon termination of operations and the method 
of assuring funds to complete the actions described in the 
decommissioning plan. The purpose of this requirement is to assure that 
a licensee possesses sufficient funds to eventually decontaminate and 
decommission the site to a level at which public health and safety is 
assured. This rule was originally implemented in 1990. The NRC 
generally requires its licensees to provide financial assurance 
sufficient to decommission a site for unrestricted release consistent 
with the definition of decommissioning in 10 CFR Sec. 40.4. To meet 
these unrestricted release criteria, licensees generally transfer any 
radioactive waste generated during decommissioning to a licensed 
disposal facility. However, in some cases the staff has used its 
discretion to accept lesser amounts of financial assurance, based on a 
finding of the acceptability of alternative approaches (e.g., in-situ 
disposal) or a binding commitment (such as a license condition or NRC 
order) from the licensee to pursue alternative approaches. In cases 
that involve a major federal action and where the potential 
environmental impacts of the alternative approaches may be significant, 
the NRC prepares an Environmental Impact Statement (EIS) and Record of 
Decision in accordance with the requirements of 10 CFR Part 51.
2. Application of 10 CFR Sec. 40.36 to License No. SMB-743
    Prior to 1990, the NRC did not require financial assurance for 
decommissioning from its licensees. During the period prior to the 
rule's implementation, SMC amassed large quantities of slag at the site 
contaminated with source material. Because SMC was in timely renewal at 
the time, SMC was only required to provide certification of financial 
assurance for $750,000 to meet the financial assurance requirements 
pursuant to 10 CFR Sec. 40.36(c)(2).
    In 1993, after SMC notified the NRC that it could not provide 
adequate financial assurance to meet unrestricted release limits, the 
NRC began to develop an EIS for the decommissioning of the SMC Newfield 
site in response to the licensee's request to dispose of the 
contaminated slag and baghouse dust in situ. The NRC suspended EIS 
development in 1995 when the licensee informed the NRC of its intent to 
transfer the slag for use in steel smelting and the baghouse dust for 
other, non-licensed purposes.
    In December 1995, SMC submitted a modified decommissioning funding 
plan. That plan proposes that the licensed slag be exported for use in 
steel production as a fluxing agent that also removes impurities from 
the steel mixture, the result being a derived slag containing the 
impurities including the source material. This derived slag would be 
sold as an aggregate with no restrictions, because the concentrations 
of uranium and thorium would be, on average, well below the NRC's 10 
CFR Sec. 40.13(a) ``unimportant quantity'' limit. The concentration of 
source material in the derived slag is less than in SMC's slag because 
it is diluted with other inert materials (such as lime and alumina) 
during the smelting process. The latest decommissioning funding plan 
also proposes that SMC sell the baghouse dust domestically for other 
purposes (e.g., cement manufacturing) without restriction because the 
contaminated baghouse dust would also be, on average, less than 0.05 
percent of source material by weight. By letter dated June 24, 1996, 
SMC requested permission for the proposed domestic sale of the baghouse 
dust; the staff is currently reviewing the request. Finally, under the 
new decommissioning funding plan, SMC would decontaminate and 
decommission the remainder of the Newfield site to conform to the NRC's 
unrestricted release limits; contaminated structures, soils, and 
radioactive wastes generated during decontamination and decommissioning 
would be sent to a licensed disposal facility. SMC calculated the cost 
for executing the decommissioning activities described in the 1995 
modified decommissioning plan to be slightly less than $750,000.
    The NRC has held a Letter of Credit for $750,000 from SMC, pursuant 
to 10 CFR Sec. 40.36(c)(2), since 1990. On February 26, 1997, at SMC's 
request, the NRC drew upon the Letter of Credit and is currently 
holding the funds in trust. 5 Because SMC has in place the 
required decommissioning funding plan and a financial assurance 
mechanism which encompasses the cost estimates to perform the actions 
proposed in the decommissioning funding plan, SMC is considered to be 
in compliance with 10 CFR Sec. 40.36 until such time as the NRC 
determines whether the submitted decommissioning funding plan is 
acceptable (as discussed below). Therefore, the issue being decided 
herein is whether the licensee's current decommissioning funding plan 
is acceptable.
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    \5\ To facilitate its planned exit from bankruptcy proceedings 
and with the Bankruptcy Court's approval, SMC requested by letter 
dated October 25, 1996, that the NRC draw upon the existing Letter 
of Credit.
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B. Acceptability of Decommissioning Funding Plan

    In SECY-96-210, dated October 1, 1996, the NRC staff informed the 
Commission of its concerns regarding the acceptability of SMC's 
decommissioning funding plan and described its plan to resolve the 
associated issues. As part of its plan, the staff informed the 
Commission of its intent to permit interim acceptance of the 
decommissioning funding plan to allow renewal of the license; however, 
the staff's plan also requires that SMC present adequate evidence 
(e.g., obtaining NRC approval of an export license application) 
regarding the marketability of the slag within one year after renewal 
of License SMB-743. If SMC cannot provide such evidence, the NRC will 
reconsider the acceptability of the licensee's decommissioning funding 
plan. This could include requiring the plan's revision to include a 
different approach for decommissioning and disposal of the radioactive 
slag (e.g., in-situ disposal). The NRC transmitted a copy of SECY-96-
210 to the Petitioner as an enclosure to the November 14, 1996 
acknowledgement letter.

[[Page 23287]]

    In the Petitioner's February 7, 1997 supplementary letter, the 
Petitioner elaborates upon his belief that the current decommissioning 
funding plan should be considered unacceptable and the licensee is not 
in compliance with the regulations in 10 CFR Sec. 40.36 by stating that 
SMC's proposed plans to disposition the slags are neither 
technologically nor financially viable.
    The Petitioner argues that the NRC has already stated that the sale 
of ferro-columbium slag is not viable, as referenced in the Draft 
Environmental Impact Statement on Decommissioning of the Shieldalloy 
Metallurgical Corporation, Cambridge, Ohio (NUREG-1543, July 1996) 
(Draft EIS). This is not correct.
    The respective viabilities of the Newfield and Cambridge ferro-
columbium slags for use in steel production are considered by the NRC 
to be different in each case. As stated below, the Newfield ferro-
columbium slag was produced using the same process that produced a 
previously marketed Newfield ferro-vanadium slag, demonstrating that 
the process using the Newfield ferro-columbium slag appears to be 
viable. In contrast, the Cambridge ferro-columbium slag was produced 
using a different process and different feedstock materials. 
Consequently, the metallurgical properties of the Cambridge slags have 
not yet been demonstrated to be technologically viable. For this 
reason, the export sale alternative was not included for consideration 
in the Draft EIS for decommissioning of the Cambridge site.
    With regard to the previously marketed ferro-vanadium slag, SMC 
delivered, on average, 7000 tons of ferro-vanadium slag per year to the 
domestic steel industry from 1991 to 1995, with the highest annual 
amount reaching 9000 tons. By comparison, SMC currently stores 
approximately 70,000 tons of ferro-columbium slag at its Newfield site. 
The licensed ferro-columbium slag at the Newfield site was produced in 
a manner similar to the ferro-vanadium slag. SMC's extensive 
metallurgical evaluations indicate that the ferro-columbium slag has 
metallurgical properties relating to the proposed steel process that 
are similar, if not superior, to relevant properties of the ferro-
vanadium slag.
    The NRC staff acknowledges the Petitioner's statement that the 
domestic use of ferro-columbium slag would likely require an NRC or 
Agreement State license for possession and use, thus possibly 
constraining domestic commercial interest in the product and thereby 
impacting the financial viability of the slag product. However, SMC is 
marketing the material to international locations where regulatory 
conditions may be less of a factor in determining the product's 
financial viability. As part of any international export application 
and prior to issuance of an export license, the NRC will inform the 
importing government of the proposed importation and use of the product 
containing the source material, in accordance with the International 
Atomic Energy Agency's Code of Practice on the International 
Transboundary Movement of Radioactive Waste.
    Finally, the Petitioner argues that the only potential customer SMC 
has been able to locate, to date, has been in Trinidad. Because of 
internal country concerns, the customer purchasing the material 
canceled its order, and SMC has been unable to develop a new market 
during the succeeding years, thus significantly decreasing viability of 
the product. The NRC agrees with the Petitioner that this raises a 
concern as to the viability of the proposed decommissioning funding 
plan and therefore grants the Petitioner's request in part. The NRC 
intends to require, in the form of a license condition as part of any 
future license renewal, that SMC provide additional proof (in the form 
of an NRC-approved export application) of the viability of the proposed 
disposition method within one year of the license's renewal. If such 
proof is not forthcoming within the time limit, the NRC staff plans to 
issue an order requiring the submission of a new decommissioning 
funding plan along with appropriate mechanisms for financial assurance. 
Furthermore, the NRC will include a condition in any renewed SMC 
license requiring SMC to provide financial assurance commensurate in 
value for the costs of offsite disposal for future source material 
possession increases. These two conditions are intended to prevent SMC 
from continuing to accumulate licensed material at the site in 
perpetuity without adequate financial assurance.

IV. Conclusion

    The staff has carefully considered the request of the Petitioner. 
For the reasons discussed above, I conclude that no substantial public 
health and safety concerns warrant NRC action concerning the request. 
However, because the staff is proposing to impose certain restrictions 
on the licensee for reasons similar to those presented by the 
Petitioner, I grant the Petitioner's request to that extent and deny it 
in other respects.
    A copy of this Decision will be placed in the Commission's Public 
Document Room, Gelman Building, 2120 L Street, NW, Washington, DC, and 
at the Local Public Document Room for the named facility. A copy of 
this Decision will also be filed with the Secretary for the 
Commission's review as provided in 10 CFR Sec. 2.206(c) of the 
Commission's regulations.
    As provided by this regulation, the Decision will constitute the 
final action of the Commission 25 days after issuance, unless the 
Commission, on its own motion, institutes a review of the Decision 
within that time.

    Dated at Rockville, Maryland, this 15 day of April 1997.

    For the Nuclear Regulatory Commission.
Carl J. Paperiello,
Director, Office of Nuclear Material Safety and Safeguards.
[FR Doc. 97-10975 Filed 4-28-97; 8:45 am]
BILLING CODE 7590-01-P