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POLICY ISSUE
NOTATION VOTE

SECY-05-0170

September 20, 2005

• PURPOSE
• BACKGROUND
• DISCUSSION
• MINNESOTA REVIEW TEAM DETERMINATION
• STAFF ANALYSIS
• STAFF RECOMMENDATION
• RESOURCES
• COORDINATION

PURPOSE:

To request Commission approval to continue with Agency actions to complete processing of the State of Minnesota agreement application, based on a determination made by a majority of the Minnesota Review Team, and to inform the Commission of a different determination made by the Team Leader.

BACKGROUND:

The Atomic Energy Act of 1954, as amended, (Act) provided the Commission with the sole authority to regulate radiological hazards associated with byproduct, source, and special nuclear materials. The Act was amended in 1959 to provide a role for the States in the regulation of the radiological hazards of nuclear materials by adding Section 274, Cooperation with States. Section 274b authorizes the Commission to enter into an agreement with the Governor of a State whereby the Commission relinquishes some of its authority for certain materials, and the State assumes that authority.

The Commission, in 1981, adopted the revised policy statement entitled, “Criteria for Guidance of States and NRC in Discontinuance of NRC Regulatory Authority and Assumption Thereof by States Through Agreement” published on January 23, 1981 (46 FR 7540), as amended by statements published on July 16, 1981 (46 FR 36969), and on July 21, 1983 (48 FR 33376), referred to hereafter as the “Criteria Policy Statement.” Office of State and Tribal Programs (STP) Procedure SA-700, “Processing an Agreement,” issued on April 2, 2001, has been adopted pursuant to this Criteria Policy Statement and is consistent with the legal authorities of the Commission and the Agreement States.

DISCUSSION:

By letter dated July 6, 2004, Governor Tim Pawlenty requested that the Commission enter into an Agreement with the State of Minnesota pursuant to § 274b of the Act. The letter requested that NRC authority be discontinued and assumed by the State of Minnesota for: (1) byproduct materials as defined in 11e.(1) of the Act; (2) source materials; and (3) special nuclear materials in quantities not sufficient to form a critical mass. Governor Pawlenty certified that Minnesota has a program for the control of radiation hazards which is adequate to protect public health and safety within the State with respect to the materials covered by the proposed Agreement. The Governor further certified that the State wishes to assume the regulatory responsibility for those materials. In response, Chairman Diaz sent an acknowledgment letter dated July 27, 2004. Copies of Governor Pawlenty's letter, and Chairman Diaz’s response are at: ADAMS: ML041960496 and ML042020640, respectively.

The application for the proposed Agreement does not request authority over production or utilization facilities, or independent spent fuel storage installations (ISFSIs) within Minnesota. These activities involve facilities, or special nuclear materials in critical mass quantities, which may not be relinquished to the State and must be retained by the Commission in accordance with the Act, the Agreement, and 10 CFR 150, "Exemptions and Continued Regulatory Authority in Agreement States and in Offshore Waters Under Section 274."

In accordance with STP Procedure SA-700, an NRC review team was established to review the Minnesota Agreement application, to prepare a Draft Staff Assessment and to provide a recommendation on the Agreement. The Minnesota Review Team consisted of staff from STP, the Office of Nuclear Material Safety and Safeguards (NMSS), Region III, the Office of Nuclear Security and Incident Response, and the Office of the General Counsel (OGC). The Team completed a review of the application including a review of Minnesota statutes and regulations provided in the application. In a letter dated October 19, 2004, comments on the application were provided to the State.

Subsequent to completion of the October 19, 2004 comment letter, the Minnesota Review Team became aware through an inquiry from the Minnesota Department of Health (MDH) staff of the 0.054 millirem per year public radiation dose standard applied by the State at the Prairie Island Nuclear Power Plant (Prairie Island) ISFSI through the State’s Certificate of Need process. (See October 27, 2004 memorandum from Luis Reyes to the Commission entitled: “Communication Plan Regarding the State of Minnesota’s Plan to Set a More Stringent Radiation Dose Standard.”) The dose standard is different than NRC’s dose standard.

At a later date, in a conference call, MDH staff indicated that an application for the Monticello Nuclear Power Plant (Monticello) ISFSI was under review, and noted possible plans to apply the 0.054 millirem per year radiation dose standard to the proposed facility. During the discussion, NRC staff raised concerns to the State regarding the more stringent ISFSI standard, and noted that NRC staff would need to consider the possible effect of the standard on the Minnesota Agreement application. In response to the concerns, the MDH staff worked closely with the Minnesota Environmental Quality Board and the Minnesota Public Utility Commission (MPUC) to insure that the Minnesota Environmental Impact Statement Scoping Document for the Monticello ISFSI acknowledged and accepted areas of exclusive NRC jurisdiction. [ADAMS: ML0522004240]

The Minnesota Review Team conducted a broad-based review of Minnesota’s regulations and statutes to determine the basis for the State’s ISFSI radiation dose standard. In the course of this review, the Team identified over 40 statutes and regulations that could potentially intrude into areas reserved to the Commission along with reports documenting their implementation. A summary of these statutes and regulations is available at: ADAMS: ML051610220 and the reports are available upon request.

By letter dated November 18, 2004, Minnesota staff requested an Agreement effective date of September 6, 2005. In an August 1, 2005 conference call, Minnesota staff provided further guidance to NRC staff on the proposed effective date. Minnesota staff indicated that they do not want Minnesota licensees to have to pay two fee bills during the year the Agreement is effective. Minnesota staff indicated that if the Agreement effective date would fall after March 31, 2006, they would delay the effective date until September 1, 2006, to eliminate billing of Minnesota licensees by both NRC and Minnesota.

MINNESOTA REVIEW TEAM DETERMINATION:

Based on its review, the majority of the Minnesota Review Team members and the Director of STP determined that the Minnesota Program meets requirements of the Act and the Commission’s criteria, and is therefore adequate to protect the public health and safety and is compatible with the NRC’s program for the regulation of agreement materials. This determination is based on the Draft Staff Assessment of the proposed Minnesota Program contained in Attachment 1 .

One member of the Team, the Team Leader, is unable to support this determination. The basis for the Team Leader’s determination, which provides additional information for five of the Commission’s criteria for entering into agreements, and which is different than the staff recommendation below, is presented in Attachment 4 .

STAFF ANALYSIS:

Staff acknowledges the concerns raised by the Team Leader in that it was the intent of the Congressional framers of Section 274 that radioactive materials and facilities covered by the Act should either be regulated by NRC, or the States, but not by both. This has been, and staff believes, will continue to be, an underlying fundamental principle of the Agreement State Program. However, based on the Draft Staff Assessment presented in Attachment 1 , and current understanding of NRC’s position on preemption, the staff concludes that the Minnesota request for an Agreement is consistent with the provisions of the Act and meets Agency criteria for entering into an agreement with the NRC. Thus, the NRC should continue activities to complete processing of the Agreement request. This conclusion is based on staff’s view that a finding of compatibility of a State’s program with NRC’s program is a matter separate from the possible Federal preemption of certain State statutes or actions that are outside the State’s program for the regulation of material under the proposed Agreement. This conclusion is also based on a previous Commission decision in denying a petition for rulemaking (67 FR 66076, October 30, 2002). The decision found that if a State adopts statutes or rules, or takes action in an area reserved to the NRC under the Act, the Agency need not take separate individual actions to preclude or vacate such statutes, rules or actions, but rather could rely on licensee’s challenge in the Federal courts to have such provisions and actions eliminated. Whether or not Minnesota has statutes or has taken actions that potentially intrude into areas of exclusive NRC jurisdiction, the staff finds that these actions, statutes, and regulations are outside the Minnesota Program for the regulation of agreement material and the staff concludes that such statutes, rules, and actions will not affect the regulation of material under the proposed Agreement. Staff recognizes that, historically in the 1960's, the Atomic Energy Commission may have taken a different action on preemption issues, such as with the New York Agreement (i.e., for details, see Section D to Appendix A to Attachment 4 , “The New York Agreement Precedent”).

This conclusion is also based on staff’s review and determination that there are no safety, security, or compatibility issues or concerns presented by the Minnesota statutes and regulations. See memorandum from Paul Lohaus to Karen Cyr, Brian Sheron, Margaret Federline, and Michael Weber dated June 24, 2005, [ADAMS: ML0517901380], and responses to Paul Lohaus from Margaret Federline dated July 11, 2005, [ADAMS: ML0518700876], from Michael Weber dated July 12, 2005, [ADAMS: ML051920134], and Brian Sheron dated July 15, 2005, [ADAMS: ML0518802680]. A security concern identified in the Michael Weber July 12, 2005 response has been communicated to Minnesota regarding potential safeguards information. On September 9, 2005, the MN State Liaison Officer responded to the concern.

STAFF RECOMMENDATION:

That the Commission:

1. Continue with Agency actions to complete processing of the Minnesota Agreement application to include: (a) publication of the proposed Agreement in the Federal Register (FR) Notice (Attachment 2 ) for public review and comment; (b) placing a copy of the Draft Staff Assessment (Attachment 1 ) in the NRC’s Public Electronic Reading Room on the Internet at http://www.nrc.gov/NRC/ADAMS/index.html and into ADAMS; (c) dispatching a letter to the cognizant Congressional Committees by the Office of Congressional Affairs informing them that the Commission is considering entering into an Agreement with Minnesota; and (d) issuing a press release by the Office of Public Affairs.

2.  Approve the proposed letter to the Governor from the Chairman, Attachment 3 , that would be dispatched in parallel with publication of the proposed Agreement in the FR to discuss: (a) the limits of authority that Minnesota would assume under the Agreement; and (b) areas of regulatory authority reserved to NRC.

3.  Provide direction to staff that its decision on the Minnesota Agreement should be incorporated into Agency policies and procedures.

RESOURCES:

1. A savings of 1.2 FTE was originally anticipated for FY 2006 based on the assumption that Minnesota would become an Agreement State within FY 2005. Due to an extension in the schedule for completion of the Minnesota Agreement, Region III anticipates expending this 1.2 unbudgeted FTE to complete its materials licensing, inspection, and allegation casework in FY 2006. Region III currently has the resources to complete these tasks; however, if the FY 2006 workload significantly exceeds earlier projections for completing the Minnesota Agreement, Region III and NMSS will develop a prioritization plan to ensure significant products remain on schedule.

COORDINATION:

This paper has been coordinated with OGC and it has no legal objection to the staff recommendation. OGC does not agree with the analysis, views and recommendations presented by the Team Leader. The Office of the Chief Financial Officer has reviewed this paper for resource implications and has no objections.

Attachments:

1. Draft Staff Assessment of the Minnesota Program
2. Federal Register Notice
3. Proposed Letter to the Governor
4. Information in Support of Team Leader’s View

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