The Paper, Allied-Industrial, Chemical and Energy Workers International Union, AFL-CIO ("PACE") has long been the primary representative of the hourly workers at the United States Government’s nuclear weapons complex sites. Its members also work in steel facilities, machining operations, metal working plants and other workplace settings where radioactive metals can be smelted, cast, ground, machined, plated, welded or otherwise processed. PACE therefore has a long and continuing interest in the understanding of the risks posed by exposure to radioactive materials and the protection of the public, including PACE members, their families, and the communities in which they live and work, from these risks.

At the November 1-2, 1999 Rockville, Maryland "public participation" meeting in the above proceeding, it developed that:

1. the NRC is relying on a private contractor called Science Applications International Corporation ("SAIC") to prepare the technical basis ("NUREG - 1640") for the rules to be set here;
2. the NRC has not publicly disclosed, and could not disclose at the meeting, relevant interests possessed by SAIC and its clients in the outcome here;

1. the NRC was therefore not able to comment on the fact that SAIC has been working with or for further entities with substantial interests in this Commission’s determinations here. In particular, in mid-1996 SAIC -- contemporaneous with SAIC’s contractual commitment to the NRC to "submit" to the NRC the "draft" and "final" "issues paper" and "regulatory options paper" -- teamed with British Nuclear Fuels ("BNFL") in successful pursuit of a quarter billion dollar Department of Energy contract predicated on the BNFL/SAIC team’s ability to recycle and release for commerce unprecedented amounts of radioactive metals. SAIC 1996 documentation shows that SAIC expected its share of the BNFL project to be $30 million, as discussed below.
2. the NRC staff was unable to comment on what SAIC disclosed to the NRC, pursuant to its obligation to make continuing disclosures, and what the NRC did to assure compliance with conflict of interest laws and policies.

NRC staff promised that the NRC General Counsel will review the conflict of interest involved in the use of SAIC, and solicited public comments in aid of this review. The information, analysis and related requests that follow is in response to this request.

For further information regarding these comments please contact Dan Guttman at 202-638-6050 or Richard Miller at 202-637-0400.

SUMMARY

The facts now publicly available show that NRC’s reliance on SAIC here is without evident regard for conflict of interest laws and principles, and may well include further fraud, waste, and/or abuse. In summary:

• SAIC is joined at the corporate hip with BNFL, Inc. ("BNFL"), a prominent profitmaking proponent of the free release of radioactively contaminated metals for unrestricted use in commerce;

• A federal judge found that the BNFL/SAIC project poses "great" potential for environmental harm, was forwarded in disregard of the National Environmental Policy Act ("NEPA"), and has proceeded with a "startling and worrisome" absence of "public scrutiny or input on a matter of such grave importance."

Above and beyond ties to BNFL, SAIC has ties to the two sources of radioactive solids:

• SAIC boasts of its longstanding involvement with the electric utility industry;
• SAIC has a further financial dependence on the Department of Energy, the primary source of radioactive metal waste, and a vigorous promoter of the recycling of this waste for unrestricted commercial re-use.

Finally, SAIC’s conflict of interest is compounded where the SAIC contracts show that:

• NRC called on the private contractor to draft and finalize the NRC’s regulatory "issues" and "options" papers;
• The statement of work for the August, 1999, SAIC contract shows ongoing NRC prejudged this proceeding, the NRC’s staff’s November 1 claims of openmindedness notwithstanding.

PACE therefore requests that:

• NRC fully disclose all documents and actions relating to SAIC and NRC compliance with conflict of interest law and policy;
• NRC provide immediate and full disclosure of all relevant interests, affiliations, and/or plans possessed by SAIC that may conflict with work for the NRC here;
• NRC fully disclose all SAIC workproduct, including, as discussed below, NRC "issues" and "regulatory options" papers drafted and finalized by SAIC, and SAIC’s analysis of the "pros and cons of stakeholders";
• NRC provide for on-the-record public discussion of:

1. the circumstances that led to NRC employment of, and continued reliance on, a tainted contractor to perform basic governmental activities;
2. the steps to be taken to preclude reliance on tainted data, to assure that NRC, and not a private contractor, is fully in charge of the proceeding here, and to affirmatively demonstrate that the outcome of this proceeding has not been prejudged; and
3. further actions needed to insure the integrity of the NRC’s processes.

The Atomic Energy Act, at 42 U.S. Code Section 2210(a) provides that the Commission shall not employ a contractor in the absence of: (1) full disclosure by that contractor of all relevant information; (2) a determination by the Commission that:

1. it is unlikely that a conflict of interest would exist; or
2. such conflict has been avoided after appropriate conditions have been included in such contract...except that if the Commission determines that such conflict of interest cannot be avoided by including appropriate conditions therein, the Commission may enter into such contract...if the Commission determines that it is in the best interests of the United States to do so and includes appropriate conditions in such contract...to mitigate such conflict.

This statutory provision is implemented by Commission procurement rules. See, 48 CFR 2009.5 ("Organizational Conflicts of Interest") and Federal Acquisition Regulation 9.5. The NRC rules, the NRC explains at 48 CFR 2009.570-100, are to (emphasis added):

(including those regulated by the NRC) which may give rise to actual or

potential conflicts of interest in the event of contract award.

NRC rules explain, at 48 CFR 2009.570–2(b), that (emphasis added):

As these words reflect, the purpose of Federal conflict of interest prohibitions is preventive. They are designed to guard against the "potential" for that which "may" occur. There is no requirement that there be actual corruption or loss suffered by the government. They are to prevent honorable persons from entering into settings fraught with temptation.

The "preventive" purpose of conflict of interest rules was explained (with regard to the statutory rule governing officials) in United States v. Mississippi Valley Generating Company ("Dixon-Yates"), 364 U.S. 520 (1961). (The case involved the Atomic Energy Commission, this Commission’s predecessor). The Supreme Court elaborated (Id., at 549):

Similarly, the Office of Federal Procurement Policy "conflict of interest policies applicable to consultants" (Office of Federal Procurement Policy Letter No. 89-1) provides (emphasis added):

NRC has now declared that at least two SAIC contracts are at the bedrock of the proposed rulemaking.

The technical analysis underlying this proceeding (NUREG-1640) was produced by SAIC under Contract NRC-04-92-037. The copy of the contract available from the NRC public document room, which was substantially incomplete , did not contain any conflict of interest clause or evidence of review for conflict of interest. However, the public copy of a November, 1996 amendment shows that NRC called on SAIC to, among other things: (1) choose the "independent" source to evaluate SAIC’s work; (2) tell the Commission the "pros and cons of [other] stakeholders"; (3) "submit" draft and final "issues" and "regulatory options" papers.

If the terms of the public portions of the SAIC contract are credited SAIC, and not the Commission, is the source of the proposed rule here. The "delivery schedule" under the November, 1996 amendment (one of over a dozen amendments) included, in part:

If the contract terms are to be credited, SAIC performance of tasks at the heart of the regulatory decisionmaking process is a violation of the longstanding prohibition against the use of private contractors to perform inherently governmental functions. The Comptroller General explained (in the context of a contract awarded by the Department of Energy):

See Comptroller General of the United States; B-237356; December 29, 1989, at 4. (Attachment 2 hereto).

Thus, as just quoted, the propriety of the SAIC role depends on disclosure and analysis of the actual role it plays here. It is not sufficient for the Commission to declare that the Commission signs off on SAIC’s work. PACE therefore requests that the general counsel’s inquiry, and related public disclosure and discussion, consider the "degree of discretion and value judgment exercised in the process of decisionmaking" by SAIC and the NRC. Thus, the Commission must disclose all communications between/within SAIC and NRC relating to the development of regulatory options, issues, and standards, including NRC review of SAIC submittals.

SAIC contract NRC-04--99-046, effective August 4, 1999 is entitled, "Technical Assistance Support for Clearance of Materials and Equipment." The statement of work begins by explaining that, notwithstanding the $2.5 million dollars previously provided to SAIC (an amount double that initially deemed needed) to provide the "technical basis" for the rulemaking, SAIC failed to complete its job:

The statement of work then declares that the predicate for SAIC’s continuing work is the NRC’s June 30, 1998 Staff Requirements Memorandum. The statement of work explains (at 1):

At the November 1 public meeting, PACE and many other stakeholders pointed out that a proceeding based on the June 30, 1998 memorandum constitutes the impermissible prejudgment of the outcome. (In particular, predetermination that there will be standards, and that they will be based "dose" and not "detectability" based). The NRC staff, and facilitators, provided assurances that the Memorandum no longer governed, and that the NRC was openminded. The terms of the August, 1999 SAIC statement of work (which remained unmodified in the copy provided by the NRC public document room on November 8) belie these November 1 proclamations.

Finally, the contract contains, at H.1, an "organizational conflict of interest clause." There is no indication in the public file of any waiver of the conflict of interest rules, or, indeed, of any affirmative conflict of interest review conducted by the NRC.

III. SAIC’S RELEVANT INTERESTS

BNFL, Inc., ("BNFL") the U.S. subsidiary of British Nuclear Fuels PLC is a "full service nuclear waste management, decommissioning, engineering, and nuclear materials handling company which provides integrated global solutions to its customers."

BNFL’s wholly owned subsidiary Manufacturing Sciences Corporation ("MSC") converts radioactive metals into commercial products. MSC’s website (mfgsci.com) explains (See Attachment 13):

BNFL’s business ambitions include a dominant role in the recycling of radioactive waste. MSC’s website further explains that (See Attachment 13):

In October, 1996 the Department of Energy announced its intent to award a contract to a consortium that promised to clean up and "reindustrialize" the contaminated gaseous diffusion facilities at the Department’s Oak Ridge, Tennessee "K-25" site. The Department’s press release stated that consortium was led by BNFL, inc., and BNFL’s wholly-owned subsidiary Manufacturing Sciences Corporation ("MSC"), and included SAIC. On August 25, 1997 DOE awarded the BNFL team a quarter billion dollar contract styled "East Tennessee Technology Park Three-Building Decontamination and Decommissioning (D&D) and Recycle Project."

The BNFL/SAIC Oak Ridge K-25 project involves an estimated 125,000 tons of radioactive metal. The material includes surface contaminated metals to be released directly from the DOE site and further metal, notably including volumetrically contaminated nickel, which is to be processed at MSC’s Oak Ridge facility (outside of the DOE complex) prior to release.

The August, 1997 DOE/BNFL contract does not require the BNFL/SAIC team to recycle and release the contaminated metals. However, DOE and BNFL proclaim that the economics of the contract -- to both DOE and the BNFL/SAIC team -- depend on the recycle and release of the Oak Ridge contaminated metals. The contaminated metals include: (1) an unprecedentedly large volume of surface contaminated metals; and (2) volumetrically contaminated nickel -- the unrestricted release of which has never previously been permitted.

A November 30, 1998 affidavit filed with the Federal Court by the Department of Energy in OCAW v. Pena explains:

BNFL also proclaims that the wholesale recycling and release of contaminated

Oak Ridge metals is essential to the profitability of the BNFL team’s contract. BNFL told the Federal Court:

* * *

Similarly, the BNFL statement of undisputed facts filed with the Court included:

In March, 1999 BNFL/MSC obtained a precedent setting license to release volumetrically contaminated nickel, and evidently other materials, from the MSC Oak Ridge site. While the (approximately 6,000 tons of) contaminated nickel constitutes a small fraction of the Oak Ridge metal waste, it would provide the lion’s share of the revenues from recycling. This license was provided by the State of Tennessee, which purported to act under authority delegated to it by this Commission.

On September 20, 1996 -- just before, as cited above, the November 22, 1996 contractual due date for SAIC to "submit draft issues paper" to the NRC -- SAIC entered into a "Teaming Agreement" with BNFL to negotiate and perform the Oak Ridge recycling project. See Attachment 7 hereto. The Agreement contemplated an SAIC role that included (italics added):

PACE notes that, pursuant to the requirement that conflict of interest be evaluated with reference to "potential", as well as actual, conduct, the NRC analysis of SAIC’s work on the BNFL/Oak Ridge project necessarily should have included all of the potential work under all of the categories above, including the work that might be done under the "other expertise" heading.

A November 12, 1996 "briefing" on the "Metals Recycling Project" presented by Bob Schultz indicated that SAIC would receive in the range of $30 million as part of the team. The briefing summarized the roles of the members of the "Privatization/Re-Use Team." The SAIC role was identified as "regulatory compliance," "health and safety," "information and technology support," "communications/public accountability support," and "other services as needed (project management services.)" See Attachment 7 A hereto, reference to "$30 M" at 6.

In the period prior to the August, 1997 DOE contract award, BNFL contracted with SAIC for at least $529,588 in interim "Regulatory support and Technical" support." See Attachment 7 B. On September 11, 1997 -- coincident, as cited above, with SAIC’s contractual obligation to "submit final regulatory options paper"on September 30, 1997 to the NRC -- BNFL informed SAIC that DOE had awarded BNFL the prime contract. BNFL therefore told SAIC that: "SAIC, as a Teaming partner, is hereby requested to begin working with the BNFL Inc. Oak Ridge Office on the Subcontract effort." See Attachment 7C.

The BNFL/SAIC Oak Ridge recycling teaming is a fraction of the work SAIC conducts in partnership with BNFL.

In September, 1996 BNFL boasted that its team, including SAIC (which would work on "regulatory applications") was awarded "stage one of the world’s biggest clean-up contract" -- for work at the DOE’s Hanford site.

In December, 1996 a BNFL/SAIC/Morrison-Knudsen team was awarded a multimillion, perhaps billion, dollar mixed waste treatment contract by DOE’s Idaho site. A news release explained that SAIC provides the BNFL team "all permitting and regulatory support."

In mid-1998, the DOE awarded the BNFL/SAIC team a 20 year Hanford cleanup contract, reputedly worth up to $6.9 billion.

In March, 1999 SAIC announced that it formed a joint venture with BNFL, Westinghouse and Morrison Knudsen to seek a six billion dollar contract to manage DOE’s Idaho facilities. The SAIC press release touted a statement by the partners, which proclaimed:

Finally, above and beyond its work in tandem with BNFL, PACE understands that as recently as August, 1999 SAIC has independently sought a further contract related to the promotion of the release of contaminated DOE property(ies) for reuse.

The decision to proceed with the BNFL/SAIC Oak Ridge recycling project was taken notwithstanding the warning by labor, citizen and environmental groups that the project was proceeding without regard for minimally requisite health, safety, and environmental protection requirements.

On June 29, 1999 U.S. District Court Judge Gladys Kessler found that citizens are barred by a provision of the Superfund law ("Section 113(h)") from bringing suit to compel the DOE to follow the law. However, the Judge agreed that the Department of Energy’s ongoing recycling of radioactive material from Oak Ridge for "unrestricted" commercial uses poses "great" and unexamined potential for environmental harm. "In the absence of Section 113(h)," the Judge stated, "an Environmental Impact Statement would clearly have been mandated."

Judge Kessler’s decision stated:

The Judge found, "ample evidence that the proposed recycling significantly affects the quality of the human environment." Two years following the August, 1997 contract award, and following millions of taxpayer dollars expended on the project the Judge found that "Plaintiffs allege and [DOE and BNFL] have not disputed, that there is no data regarding the process efficacy or track record with respect to safety."

Finally, the Judge termed "startling and worrisome" the absence of opportunity for "public scrutiny or input on a matter of such grave importance." She explained that "[t]he lack of public scrutiny is only compounded by the fact that the recycling process which BNFL intends to use is entirely experimental at this stage." The Judge also found "quite troubling" that DOE and BNFL "have provided no adequate explanation" for their failure to provide for public notice of the recycling project as required by the governing Federal Facilities Agreement among EPA, DOE, and the State of Tennessee.

In sum, the June 29 decision confirmed that -- as labor, citizen, and environmental groups stated prior to the 1997 contract award -- Oak Ridge recycling is proceeding in callous and knowing disregard of the public procedures required by law and the Administration’s commitment to the environment and reinventing government in a manner that will enhance the public’s trust -- rather than reaffirm its suspicions.

In sum: (1) the immediate profitability of the quarter billion dollar BNFL/SAIC Oak Ridge contract; and (2) the longer term profitability of BNFL/SAIC radioactive metals recycling ventures, stand to be profoundly impacted by the outcome of the NRC’s determinations in this proceeding regarding the terms, if any, on which contaminated metals can be released for unrestricted use in commerce. In light of the above, the NRC’s inquiry must publicly disclose and consider at least the following:

• What did SAIC disclose/represent to the NRC regarding: (1) its affiliations with BNFL; (2) its work on the DOE/Oak Ridge project; (3) its further interests (past, present, and potential) in performing work related to the promotion of metals recycling; and when did SAIC make the disclosure(s)/representation(s);
• When did NRC learn of SAIC’s interest in the Oak Ridge recycling project, and what action did it take upon learning of it;
• What affirmative efforts did NRC staff make, if any, to inquire about SAIC’s relevant interests (as discussed above);
• What affirmative action did NRC staff take in light of any disclosure(s)/representation(s);
• What affirmative action(s) did NRC staff take to assure the adequacy of disclosure/representation;
• What, precisely, is the nature of the "regulatory compliance" work that SAIC has been performing for BNFL in relation to the numerous instances in which, it is now known, the BNFL/SAIC project has been in noncompliance with laws and rules;
• What affirmative action did the NRC take to assure that members of the public and "stakeholders" would be fully apprised of relevant SAIC interests and activities;
• What affirmative action will the NRC take to assure that the environmental and public participation requirements ignored by BNFL/SAIC and DOE in the pursuit of Oak Ridge recycling (and related profits) will be complied with;
• What, if any, communication(s) have there been between SAIC and any actual or potential clients regarding this proceeding and/or its subject matter;
• Above and beyond its work in conjunction with BNFL, what additional work (past, present, or prospective) does SAIC perform in relation to the recycling and/or potential release of radioactive materials?

The electric utility industry is, along with the U.S. Department of Energy, one of the two essential sources of the nuclear waste whose disposition is at issue in the instant rulemaking. SAIC’s website boasts (See Attachment 13):

In light of the above:

• What did SAIC disclose to the NRC about its work for electric utilities;
• What affirmative action did NRC staff take in light of the disclosure(s);
• What affirmative action(s) did NRC staff to assure the adequacy of disclosure;
• What work has SAIC performed, and what work does it plan to perform, for electric utilities that possess radioactive nuclear waste and/or otherwise have an outcome in the interest of this proceeding?

As noted above, the amounts involved in the DOE contracts with SAIC/BNFL teams alone run into the billions of dollars. In addition, SAIC has substantial further contractual relationships with, and dependencies upon, DOE.

As the November 1-2 workshop made plain, DOE is far and away the largest source of radioactive metals. DOE is an active proponent of the release and recycling of the million-plus tons of radioactive metals at DOE facilities. Thus, as noted above, DOE is an active proponent of the recycling and commercial release of the 100,000 (more or less) tons of contaminated metals from the BNFL/SAIC Oak Ridge project. In October, 1997, shortly after the issuance of the BNFL/SAIC contract, DOE created a "National Center of Excellence for Metals Recycle" at Oak Ridge to promote recycling of DOE waste.

PACE notes that NRC staff comments at the November 1-2 meeting indicate the surprising NRC view that DOE’s one million plus tons of metallic waste are somehow irrelevant to this proceeding. PACE respectfully notes that: (1) it defies commonsense to consider standards for the release of metallic radioactive waste without consideration of the primary source of it; (2) in any event, the BNFL/SAIC Oak Ridge project confirms that the free release of DOE metallic waste is now occurring under the putative auspices of this Commission’s statutory authority.

In light of the above:

• What did SAIC disclose to the NRC about its work for DOE (past, present, and prospective), and when did it make the disclosure(s);
• What affirmative action did NRC staff take in light of the disclosure(s);
• What affirmative action(s) did NRC staff to assure the adequacy of the disclosure?

In view of the foregoing, it is respectfully requested that:

1. NRC disclose all documentation relating to SAIC/NRC compliance with conflict of interest law, regulations and policy, including all conflict of interest disclosures and representations;
2. NRC disclose all documentation regarding its conflict review of all other consultants it employs in relation to this proceeding;
3. NRC disclose all relevant interests or affiliations possessed by SAIC (past, present, and prospective) that may potentially conflict with its work here;
4. NRC disclose the workproduct produced by SAIC under NRC contracts that relate to this proceeding, including, as discussed above the drafts and final versions of ‘issues" and "regulatory options" papers;
5. NRC disclose all information bearing on SAIC’s role in the performance of inherently governmental functions, as stated above;

1. NRC provide full public record discussion of: (a) the circumstances that led to the NRC employment and continued reliance on a tainted contractor; and (b) the steps to be taken to preclude reliance on tainted data; (c) further steps to insure the integrity of the NRC’s process;
1. NRC provide full public record discussion of why public participants should not reasonably conclude that the outcome of this proceeding has been prejudged.