[Federal Register Volume 63, Number 182 (Monday, September 21, 1998)]
[Notices]
[Pages 50258-50262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25177]


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NUCLEAR REGULATORY COMMISSION

[Docket No. 40-8989; License No. SUA-1559]


Envirocare of Utah, Inc.; Issuance of Director's Decision Under 
10 CFR 2.206

    Notice is hearby given that the Director, Office of Nuclear 
Material Safety and Safeguards, has taken action with regard to a 
Petition for action under 10 CFR 2.206 received from Dr. Thomas B. 
Cochran, Director of Nuclear Programs, on behalf of the Petitioner, 
Natural Resources Defense Council (NRDC), dated December 12, 1997, as 
supplemented May 6, 1998, with regard to Envirocare of Utah, Inc. 
(Envirocare). Specifically, by letter dated December 12, 1997, the 
Petitioner requested that NRC (1) conduct an immediate investigation of 
issues raised in the Petition and immediately suspend Envirocare's NRC 
license; (2) conduct an investigation of possible criminal violations 
of section 223 of the Atomic Energy Act of 1954, as amended (the Act); 
(3) immediately suspend Envirocare's license with the State of Utah, 
under section 274j(2) of the Act; (4) investigate the adequacy of the 
State of Utah agreement state program to protect whistleblowers; (5) 
contact each current and former Envirocare employee personally, on a 
confidential basis, to advise them of their rights to inform the NRC of 
unsafe practices and violations, to inform them of the protections 
available to them, and to ask them if they have any information which 
they wish to disclose, on a confidential basis or otherwise; and (6) 
order a special independent review of Envirocare's relationships with 
its employees, along the lines of the review ordered by the NRC for the 
Millstone site.
    Petitioner asserts, as a basis for the December 12, 1997, request, 
that Envirocare's employee-related practices and contractual provisions 
constitute a violation of 42 U.S.C. Sec. 5851 (Section 211 (``Employee 
Protection'') of the Energy Reorganization Act of 1974(ERA)) and the 
NRC's whistleblower protection regulations under Parts 19 and 40 of 
Title 10 of the Code of Federal Regulations (i.e., 10 CFR 19.16, 19.20, 
and 40.7). Specifically, Petitioner states that current and former 
Envirocare employees who have provided to governmental authorities 
information adverse to Envirocare's interests fear for their lives and 
the lives of their families should their identities become known to 
Envirocare. Petitioner also states that certain provisions in 
Envirocare's standard employment contract prevent its employees from 
disclosing to the NRC information concerning unsafe practices and 
violations under the NRC license and threaten them with severe 
financial penalties in the event of a disclosure. By letter dated 
January 16, 1998, NRC acknowledged receipt of NRDC's December 12, 1997, 
Petition.
    With respect to the May 6, 1998, Supplement, NRDC requested that 
(1) NRC suspend all licenses Envirocare has with the NRC; (2) NRC 
request the State of Utah to suspend all licenses that Envirocare holds 
with the State of Utah under the purview of the Utah Division of 
Radiation Control; (3) the license suspensions indicated in (1) and (2) 
above are to be enforced until such time as NRC and the State of Utah 
have completed the actions under (4) and (5) below; (4) NRC undertake a 
program, in cooperation with the State of Utah and the Environmental 
Protection Agency (EPA), to contact each and every current and past 
employee on an individual basis and obtain a sworn statement from each, 
indicating: (i) whether they were intimidated by the unlawful 
Envirocare Employee Agreement; (ii) whether they withheld or altered 
any health, safety, or environmental information in any Envirocare 
report, or in any written or oral communication with any official of 
the State of Utah, EPA or NRC; and, (iii) whether they failed to report 
any health, safety, or environmental information to appropriate 
authorities; and in cases where there was information withheld, 
altered, or not reported, identify fully what the information was; (5) 
NRC investigate the extent to which such information, revealed under 
(4) above, has affected existing and past licenses held by Envirocare 
issued by the NRC or the State of Utah, under the purview of the Utah 
Division of Radiation Control.
    In support of Petitioner's May 6, 1998, request, NRDC asserted that 
NRC now has before it new information that it did not have at the time 
that NRDC's earlier Petition (dated January 8, 1997) requesting 
enforcement action against Envirocare was denied by NRC on

[[Page 50259]]

February 5, 1997. NRDC's Petition dated January 8, 1997, was addressed 
in Director's Decision (DD-97-02) which was issued on February 5, 1997. 
Petitioner further stated that this new information consists of NRC's 
letter of December 8, 1997, to Charles A. Judd, indicating that 
Envirocare's employee protection policies were in violation of NRC's 
Whistleblower Protection Regulations.
    By letter dated June 9, 1998, NRC acknowledged receipt of the May 
6, 1998, Petition and indicated that, because of the similarity of 
requested actions with those of the December 12, 1997, Petition that 
the May 6, 1998, Petition is being considered as a Supplement to the 
December 12, 1997, Petition.
    The Director, Office of Nuclear Material Safety and Safeguards, has 
determined that the requests should be denied for the reasons stated in 
the ``Director's Decision Under 10 CFR 2.206'' (DD-98-09), the complete 
text of which follows this notice and which is available for public 
inspection in the Commission's Public Document Room, the Gelman 
Building, located at 2120 L Street, N.W., Washington D.C. 20555 and is 
also available on the NRC Electronic Bulletin Board at (800) 952-9676.
    A copy of this Decision has been filed with the Secretary of the 
Commission for the Commission's review in accordance with 10 CFR 
2.206(c) of the Commission's regulations. As provided by this 
regulation, this Decision will constitute the final action of the 
Commission 25 days after the date of issuance unless the Commission, on 
its own motion, institutes review of the Decision within that time.

    Dated at Rockville, Maryland, this 14th day of September 1998.

    For the Nuclear Regulatory Commission.
Carl J. Paperiello,
Director, Office of Nuclear Material Safety and Safeguards.

I. Introduction

    On December 12, 1997, and May 6, 1998, Dr. Thomas B. Cochran, 
Director of Nuclear Programs, Natural Resources Defense Council (NRDC), 
filed Petitions with the U.S. Nuclear Regulatory Commission (NRC) 
pursuant to Title 10 of the Code of Federal Regulations, Section 2.206 
(10 CFR 2.206). In these Petitions, NRDC requested that NRC take action 
to immediately suspend all licenses held by Envirocare of Utah, Inc. 
(Envirocare). Specifically, NRDC requested that NRC take the following 
actions.

Petition of December 12, 1997

    (1) Conduct an immediate investigation of issues raised in the 
Petition and immediately suspend Envirocare's NRC license.
    (2) Conduct an investigation of possible criminal violations of 
section 223 of the Atomic Energy Act of 1954, as amended (the Act).
    (3) Immediately suspend Envirocare's license with the State of 
Utah, under section 274j(2) of the Act.
    (4) Investigate the adequacy of the State of Utah agreement state 
program to protect whistleblowers.
    (5) Contact each current and former Envirocare employee personally, 
on a confidential basis, to advise them of their rights to inform the 
NRC of unsafe practices and violations, to inform them of the 
protections available to them, and to ask them if they have any 
information which they wish to disclose, on a confidential basis or 
otherwise.
    (6) Order a special independent review of Envirocare's 
relationships with its employees, along the lines of the review ordered 
by the NRC for the Millstone site.
    NRDC asserts, as basis for the December 12, 1997, request, that 
Envirocare's employee-related practices and contractual provisions 
constitute a violation of 42 U.S.C. Sec. 5851 (Section 211 (``Employee 
Protection'') of the Energy Reorganization Act of 1974 (ERA)) and the 
NRC's whistleblower protection regulations under Parts 19 and 40 of 
Title 10 of the Code of Federal Regulations (i.e., 10 CFR 19.16, 19.20, 
and 40.7). Specifically, NRDC asserts that current and former 
Envirocare employees, who have provided to governmental authorities 
information adverse to Envirocare's interests, fear for their lives and 
the lives of their families should their identities become known to 
Envirocare. NRDC also states that certain provisions in Envirocare's 
standard employment contract prevent its employees from disclosing to 
the NRC information concerning unsafe practices and violations under 
the NRC license and threaten them with severe financial penalties in 
the event of a disclosure. By letter dated January 16, 1998, I 
acknowledged receipt of NRDC's December 12, 1997, Petition.

Petition of May 6, 1998

    (1) Suspend all licenses Envirocare has with the NRC.
    (2) Request the State of Utah to suspend all licenses that 
Envirocare holds with the State of Utah under the purview of the Utah 
Division of Radiation Control.
    (3) The license suspensions indicated in (1) and (2) above are to 
be enforced until such time as NRC and the State of Utah have completed 
the actions under (4) and (5) below.
    (4) Undertake a program, in cooperation with the State of Utah and 
the Environmental Protection Agency (EPA), to contact each and every 
current and past employee on an individual basis and obtain a sworn 
statement from each, indicating: (i) whether they were intimidated by 
the unlawful Envirocare Employee Agreement; (ii) whether they withheld 
or altered any health, safety, or environmental information in any 
Envirocare report, or in any written or oral communication with any 
official of the State of Utah, EPA or NRC; and, (iii) whether they 
failed to report any health, safety, or environmental information to 
appropriate authorities; and in cases where there was information 
withheld, altered, or not reported, identify fully what the information 
was.
    (5) Investigate the extent to which such information, revealed 
under (4) above, has affected existing and past licenses held by 
Envirocare issued by NRC or the State of Utah, under the purview of the 
Utah Division of Radiation Control.
    In support of NRDC's request in this Petition, NRDC asserted that 
NRC now has before it new information that it did not have at the time 
that NRDC's earlier Petition, dated January 8, 1997, requesting 
enforcement action against Envirocare that was denied by NRC on 
February 5, 1997. NRDC's Petition dated January 8, 1997, was addressed 
in DD-97-02, issued February 5, 1997. NRDC stated that this new 
information consists of NRC's letter of December 8, 1997, to Charles A. 
Judd, indicating that Envirocare's employee protection policies were in 
violation of NRC's whistleblower protection regulations.
    NRC's letter dated June 9, 1998, acknowledged receipt of the May 6, 
1998, Petition and indicated that, because of the similarity of 
requested actions with those of the December 12, 1997, Petition, the 
May 6, 1998, Petition would be considered as a supplement to the 
December 12, 1997, Petition.
    As was indicated in the NRC's acknowledgment letters dated January 
16, 1998, and June 9, 1998, NRDC's requests for action concerning 
Envirocare's license with the State of Utah and the Utah Agreement 
State Programs concern matters that do not fall within the scope of 
matters ordinarily considered under 10 CFR 2.206. As indicated in the 
June 9, 1998, acknowledgment letter, these matters were addressed by 
Richard L. Bangart, Director of the Office of State Programs, in his 
February 18, 1998, letter to NRDC. Accordingly, this Director's 
Decision

[[Page 50260]]

will only address the NRDC requests for action that relate to the 
license to receive, store, and dispose of certain byproduct material 
issued to Envirocare by NRC, pursuant to Section 11e.(2) of the 
Act.1 Allegations of possible criminal violations of section 
223 of the Act have been referred to the Federal Bureau of 
Investigation (FBI). Although matters of federal criminal violation 
clearly fall under the jurisdiction of the FBI, the NRC staff has, in 
the course of its investigations into NRC-related matters, reviewed and 
examined documents bearing on these matters. NRC's evaluation of this 
information, which has been acquired either directly, or examined under 
condition of confidentiality, will be discussed briefly, to the extent 
possible, in Section III of this Decision.
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    \1\ In its Petition of May 6, 1998, NRDC requests the NRC to 
suspend all licenses Envirocare has with NRC. The only license that 
has been issued to Envirocare by the NRC is the NRC license to 
receive, store, and dispose of uranium and thorium byproduct 
material, issued November 19, 1993, pursuant to Section 11e.(2) of 
the Act.
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II. Background

    Envirocare operates a radioactive waste disposal facility in Clive, 
Utah, 128 kilometers (80 miles) west of Salt Lake City in western 
Tooele County. Radioactive wastes are disposed of by modified shallow 
land burial techniques. Envirocare submitted its license application to 
the NRC in November 1989 for commercial disposal of byproduct material, 
as defined in Section 11e.(2) of the Act (11e.(2) byproduct material). 
On November 19, 1993, NRC completed its licensing review and issued 
Envirocare an NRC license to receive, store, and dispose of uranium and 
thorium byproduct material. Envirocare began receiving 11e.(2) 
byproduct material in September 1994 and has been in continuous 
operation since.
    To ensure that the facility is operated safely and in compliance 
with NRC requirements, the staff conducts routine, announced 
inspections of the site. Areas examined during the inspections include 
management organization and controls, operations review, radiation 
protection, radioactive waste management, transportation, construction 
work, groundwater activities, and environmental monitoring. The NRC has 
conducted ten inspections of the Envirocare facilities between April 
14, 1994, and June 25, 1998, in conjunction with the 11e.(2) byproduct 
material license and has cited the licensee for ten violations. None of 
the violations are related to concerns raised in the NRDC Petitions. 
All violations were categorized in accordance with the guidance in 
NUREG-1600, ``General Statement of Policy and Procedures for NRC 
Enforcement Actions'' (Enforcement Policy) at a Severity Level 
IV.2 The most recent inspection, conducted June 22-25, 1998, 
resulted in the issuance of two citations. The first violation relates 
to failure to follow procedures; the second violation results from 
failure to perform confirmatory ground-water sampling. The results of 
the June 1998 inspection are documented in Inspection Report 40-8989/
98-01 which was issued on July 24, 1998.
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    \2\ As explained in Section IV. of the Enforcement Policy, 
violations are normally categorized in terms of four levels of 
severity (Severity Level I being the most significant). A Severity 
Level IV violation is defined as a violation of more than minor 
concern which, if left uncorrected, could lead to a more serious 
concern.
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    In addition to the routine, announced site inspections described 
above, the staff has, since January 1997, conducted many 
investigations, interviews, and telephone conversations with numerous 
individuals into aspects of Envirocare's operations, including matters 
relating to concerns raised in NRDC's 10 CFR 2.206 Petitions. The 
staff's investigations included interviews with former Envirocare 
employees.

III. Discussion

    NRDC asserts two bases in support of its requested actions: (1) 
Envirocare's employment contract non-disclosure covenant threatens the 
financial well being of employees who want to provide information 
regarding Envirocare operations, and (2) current and former Envirocare 
employees fear for their lives and lives of their families. NRDC states 
that it is apparent from sworn affidavits, compiled in the State of 
Utah Legislative Auditor General Investigation of Envirocare, that 
current and former employees of Envirocare fear for their lives and for 
the lives of their families. NRDC further states that Envirocare has 
required employees to enter into an employment agreement with onerous 
provisions that impose significant monetary penalties for disclosing 
safety-related information. NRDC, furthermore, asserts that such 
threatening practices constitute a violation of Section 211 of the ERA, 
10 CFR Secs. 19.16, 19.20, and 40.7. The NRC has evaluated these 
matters and found no basis to take the requested actions.
    As an initial matter, NRDC requests that the NRC immediately 
suspend Envirocare's NRC licenses. The NRC's Enforcement Policy 
describes the various enforcement sanctions available to the Commission 
once it determines that a violation of its requirements has occurred. 
In accordance with the guidance of Section VI.C.2 of the Enforcement 
Policy, Suspension Orders may be used: (a) to remove a threat to the 
public health and safety, common defense and security, or the 
environment; (b) to stop facility construction when (i) further work 
could preclude or significantly hinder the identification or correction 
of an improperly constructed safety-related system or component or (ii) 
the licensee's quality assurance program implementation is not adequate 
to provide confidence that construction activities are being properly 
carried out; (c) when the licensee has not responded adequately to 
other enforcement action; (d) when the licensee interferes with the 
conduct of an inspection or investigation; or (e) for any reason not 
mentioned above for which license revocation is legally authorized. 
Furthermore, in accordance with the guidance in Section VI.C.3. of the 
Enforcement Policy, Revocation Orders may be used: (a) when a licensee 
is unable or unwilling to comply with NRC requirements; (b) when a 
licensee refuses to correct a violation; (c) when a licensee does not 
respond to a Notice of Violation where a response was required; (d) 
when a licensee refuses to pay an application fee under the 
Commission's regulations; or (e) for any other reason for which 
revocation is authorized under Section 186 of the Act (e.g., any 
condition that would warrant refusal of a license on an original 
application). Pursuant to 10 CFR 2.202(a)(5), the Commission may issue 
an immediately effective order to modify, suspend, or revoke a license 
if the Commission finds that the public health, safety, or interest so 
requires or that the violation or conduct causing the violation was 
willful.
    In this case the NRDC has not provided the NRC with substantiated 
information supporting the existence of circumstances that would 
provide a basis for immediate suspension of the Envirocare license. 
Furthermore, neither the investigations conducted by the NRC nor by the 
FBI have revealed evidence providing a basis for suspension of the 
license.

Assertion 1

Envirocare's Employment Contract Non-disclosure Covenant Threatens 
Financial Well Being of Employees Who Want to Provide Information 
Regarding Envirocare Operations
    Prior to the filing of NRDC's Petition dated December 12, 1997, the 
NRC reviewed Envirocare's Whistleblower

[[Page 50261]]

Protection Policy; its Environmental Compliance Program; and its 
Employment Agreement. By letter dated December 8, 1997 (the letter 
referenced by NRDC in support of its May 6, 1998, Petition), the NRC 
notified Envirocare that its written company policies were inconsistent 
with Section 211 of the ERA, 42 U.S.C. 5851, and 10 CFR 40.7. More 
specifically, the NRC staff found that while Envirocare's Whistleblower 
Protection Policy and Environmental Compliance Program encouraged 
employees to report suspected legal violations of state or federal 
environmental laws and violations of the ERA and the Act, they did not 
incorporate all of the protections afforded in Section 211 of the ERA 
and 10 CFR 40.7. Further, the policies established an incorrect 
standard with respect to the nature of safety hazards that would 
trigger employees' reports to appropriate governmental authorities. In 
addition, the NRC notified Envirocare that its Employment Agreement 
could be interpreted to preclude the disclosure to the NRC or another 
government agency of data in support of a nuclear safety concern.
    As a result of its review, the NRC requested Envirocare to modify 
its Whistleblower Protection Policy, Environmental Compliance Program, 
and Employment Agreement to ensure compliance with NRC requirements. By 
correspondence dated January 21, 1998, Envirocare responded to the 
NRC's December 8, 1997, letter. Among other things, Envirocare amended 
its Whistleblower Protection Policy, Environmental Compliance Program, 
and Employment Agreement in an effort to bring those documents into 
compliance with NRC requirements. NRC reviewed Envirocare's 
modifications to its corporate policies and employment agreement and 
concluded that they satisfied NRC requirements. By letter dated 
February 9, 1998, the NRC staff informed Envirocare that it found the 
modifications acceptable.
    Moreover, by letter dated December 31, 1997, the NRC required 
Envirocare to respond to the allegations raised in the December 12, 
1997, Petition. That letter requested Envirocare to indicate whether it 
intended to enforce its Employment Agreement against current and former 
employees who have engaged, or do engage, in protected activities 
cognizable under Section 211 of the ERA and 10 CFR 40.7. It also 
requested that Envirocare indicate what actions it would take to notify 
current and former employees that the Employment Agreement will not be 
applied to protected activities. In its January 21, 1998, response, 
Envirocare asserted that it has not in the past, nor does it intend to 
claim or assert in the future, that any current or former employee who 
has engaged in protected activities is in violation of Envirocare's 
Employment Agreement. Additionally, Envirocare has made reasonable 
efforts to notify by letter all current and former employees that the 
Employment Agreement in effect at the time of their employment does not 
prevent them from raising nuclear safety concerns or otherwise 
discourage them from engaging in protected activities.
    With respect to asserted violations by Envirocare of Section 211 of 
the ERA and 10 CFR 40.7 against its employees, the NRC has investigated 
these and other Envirocare-related matters extensively over a period of 
approximately 19 months (January 1997 through August 1998). These 
investigations included: (1) conversations and interviews (both in 
person and telephonically), (2) acquisition of and evaluation of many 
documents acquired from several sources during the course of the 
investigation, and (3) frequent contact with the FBI. The conversations 
and interviews were conducted with many individuals, including many 
present and former employees of Envirocare as well as present employees 
of the State of Utah.
    Additionally, NRC's investigations included interviews and meetings 
with individuals including representatives of the organizations (law 
firms and the State of Utah, Office of Legislative Research and General 
Counsel) identified in NRDC's letter of January 21, 1998.3 
It was suggested by NRDC that the individuals identified in its January 
21, 1998, letter may possess information relating to the asserted 
violations of NRC's whistleblower regulations by Envirocare. The FBI, 
although focusing on alleged criminal activities (bribery and 
extortion) associated with Envirocare's then-President Khosrow Semnani, 
did, in the course of these investigations, also acquire information 
bearing on the above NRC-related matters. This information was 
investigated by the NRC and revealed no evidence that any current or 
former Envirocare employee has received threats of financial harm or 
has felt threatened by Envirocare's employment non-disclosure covenant.
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    \3\ In its acknowledgment letter dated January 16, 1998, the NRC 
requested the NRDC to provide the NRC the names of ``unidentified 
individuals (and attendant background information) referenced in the 
Petition,'' indicating that confidentiality consistent with the NRC 
allegation program would be provided. The NRDC's letter of January 
21, 1998, responded to that request.
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Assertion 2

Current and Former Envirocare Employees Fear For Their Lives and Lives 
of Their Families
    Allegations of possible criminal violations of the Act had been 
referred to the FBI as indicated in my letter of January 16, 1998. 
Nonetheless, in the course of its various investigations, the NRC staff 
acquired information bearing on the matter of death threats. The scope 
of NRC's investigations conducted for Assertion 2 was identical to that 
conducted for Assertion 1 and is described above.
    In addition, the Utah Attorney General's Office had initiated a 
criminal investigation in early 1997 into the matter of the 
relationship (alleged bribery/extortion) between Mr. Larry F. Anderson, 
former Director of the Utah Division of Radiation Control and Mr. 
Khosrow B. Semnami, former President of Envirocare. This alleged 
bribery/extortion investigation was later assumed by the FBI. The FBI's 
investigation into this matter has resulted in a July 22, 1998, filing 
of a Cooperation Agreement between Mr. Semnani and the U.S. Attorney's 
Office. No information surfaced during the FBI investigation indicating 
that death threats had been made against either present or former 
employees by Mr. Semnani or other officers of Envirocare.
    Based on the investigations of Envirocare that have been conducted 
by the NRC and the FBI, there has been no evidence uncovered indicating 
that any current or former Envirocare employee: (1) has received 
threats of financial harm or has felt threatened by Envirocare's 
employment contract non-disclosure covenant, or (2) fears for his/her 
life or the lives of his/her family as a result of threats received, 
either directly or indirectly, from any officer of Envirocare.

IV. Conclusion

    On the basis of the above assessment, I have concluded that no 
substantial health and safety issues have been raised regarding 
Envirocare that would require initiation of the action requested by the 
NRDC. As explained above, the NRDC has not provided any specific 
information that would provide a basis, for suspension of the 
Envirocare license. Furthermore, neither the investigations conducted 
independently by the NRC nor by the FBI have revealed the existence of 
circumstances that would warrant immediate suspension of the

[[Page 50262]]

Envirocare license. Accordingly, the Petitioner's request for action is 
denied.

    Dated at Rockville, Maryland this 14th day of September 1998.

    For the Nuclear Regulatory Commission.
Carl J. Paperiello,
Director, Office of Nuclear Material Safety and Safeguards.
[FR Doc. 98-25177 Filed 9-18-98; 8:45 am]
BILLING CODE 7590-01-P