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City of West Chicago v. United States Nuclear Regulatory Commission


decided: March 1, 1983.


Petition for Review of an Order of the United States Nuclear Regulatory Commission. Appeal from the United States District Court for Northern District of Illinois, Eastern Division. No. 81 C 5743 -- Frank J. McGarr, Judge.

Cummings, Chief Judge, Bauer, Circuit Judge, and Grant, Senior District Judge.*fn*

Author: Cummings

CUMMINGS, Chief Judge.

This appeal by the City of West Chicago (City) consolidates review of two orders. Petitioner first challenges a Nuclear Regulatory Commission (NRC) order of February 11, 1982, granting to Kerr-McGee Corporation (KM) a license amendment (Amendment No. 3) authorizing demolition of certain buildings at KM's West Chicago facility, and acceptance for on site storage of contaminated soil from offsite locations. In the Matter of Kerr-McGee Corp. (West Chicago Rare Earth Facility), 15 NRC 232 (1982). The second challenge is to a district court order of April 5, 1982 dismissing plaintiff's mandamus suit for lack of subject-matter jurisdiction. City of West Chicago v. NRC, 542 F. Supp. 13 (N.D. Ill. 1982). We uphold the NRC order in No. 82-1575 and affirm the district court's dismissal order in No. 82-1684.

I. Facts

KM operated a milling facility in West Chicago for the production of thorium and thorium compounds from 1967 to 1973. Although the plant closed in 1973, there is presently on site approximately 5 million cubic feet of contaminated waste material consisting of building rubble, contaminated soil, and tailings from the milling of thorium ore. The NRC has been studying KM's proposed plan to decommission the site -- ultimately dispose of the tailings and other contaminated materials -- since submission of the plan in August 1979. In December 1979 the NRC staff published a notice of intent to prepare a draft environmental impact statement (EIS) to discuss the KM plan for interment of wastes onsite. 44 Fed. Reg. 72246 (Dec. 13, 1979). The draft was issued for comment in May 1982 (NRC Br. at 4).

The current NRC license for the West Chicago site is a "source material" license issued pursuant to NRC regulations, 10 C.F.R. Part 40, and authorizing KM to possess and store thorium ores.*fn1 In March 1980 and March 1981 KM submitted emergency requests to demolish Buildings Nos. 1 and 3 at the West Chicago site. On April 24, 1981, the NRC staff granted these requests as Amendment No. 1 to KM's existing license. Amendment No. 3, which is the focus of the City's suit challenging the NRC order, was issued in September 1981 and allowed demolition of six additional buildings on site in a non-emergency situation. Amendment No. 3 also authorized receipt and storage on site of contaminated material that was formerly taken from the site for use as landfill.

On October 14, 1981, the City brought suit challenging the issuance of Amendment No. 3 as well as the NRC's delay in adopting a final decommissioning plan for the site and issuing an EIS for the plan. The City requested the district court to set aside Amendment No. 3, claiming, inter alia, that the amendment violated the National Environmental Policy Act (NEPA) because no EIS was issued before approval, and that the City had no notice of KM's request for the amendment and consequently had no opportunity to request a hearing. The City also sought an order compelling NRC to issue an EIS for, and to take final action on KM's proposed plan for decommissioning and stabilization of the site. Judge McGarr temporarily enjoined KM's activities under the amendment and ordered the NRC to give notice to the City and consider any request for hearing that the City might make (Rec. Doc. No. 16). NRC did so, and on February 11, 1982, issued its order denying the City's request for a formal, trial-type hearing, addressing the contentions raised by the City in the written materials it submitted, and issuing Amendment No. 3. 15 NRC 232. Meanwhile, the City filed a preliminary injunction motion raising the same claims in the district court. On April 5 the district court dismissed the City's motion for a preliminary injunction for lack of subject-matter jurisdiction, holding that the court of appeals had exclusive jurisdiction over any challenges to Amendment No. 3 now that NRC had taken final aciton on it; and that the claims that NRC acted improperly in not having issued an EIS or a final amendment adopting a decommissioning plan for the West Chicago facility were not ripe for judicial determination, since they related to an amendment not yet issued. 542 F. Supp. 13. The district court denied the City's motion to stay its April 5 order (Rec. Doc. No. 61) and this Court denied both the City's motion to stay the district court order and its motion to stay Amendment No. 3 pending appeal, City of West Chicago v. NRC, No. 82-1575 and No. 82-1684 (May 13, 1982).

II. Review of the NRC order

The City challenges the NRC order, 15 NRC 232 (1982), on both procedural and substantive grounds, contending first, that the NRC violated its own regulations, the Atomic Energy Act, due process, and the National Environmental Policy Act (NEPA) in issuing Amendment No. 3, and second, that the order must be set aside because it is both unsupported by substantial evidence in the record and arbitrary and capricious. We address the procedural issues first.

A. The NRC order cannot be set aside on procedural grounds.

The Atomic Energy Act of 1954 (AEA), § 189(a), 42 U.S.C. § 2239(a), clearly requires NRC to grant a "hearing" if requested "in any proceeding under this chapter, for the granting, suspending, revoking, or amending of any license or construction permit * * *."*fn2 The parties in this case are arguing about the kind of "hearing" the NRC is required to conduct when issuing an amendment to a source materials license. The City argues that NRC must hold a formal, adversarial, trial-type hearing as provided by NRC regulations, 10 C.F.R. §§ 2.104 and 2.105. We shall refer to the hearing process outlined in those Sections as a "formal hearing." NRC and intervenor KM argue that the NRC may hold an informal hearing in which it requests and considers written materials without providing for traditional trial-type procedures such as oral testimony and cross-examination. We shall refer to this kind of hearing as an "informal hearing."*fn3 In the circumstances of this case, we find that an informal hearing suffices.

1. NRC did not violate its own regulations.

Under Commission regulations, a formal hearing is triggered by either a notice of hearing under 10 C.F.R. § 2.104 or a notice of proposed action under § 2.105. The City argues that both regulations require the Commission to hold a formal hearing in this case.

Section 2.104 provides that a notice of hearing will issue when "a hearing is required by the Act or this chapter [10 C.F.R. ch. 1] or [when] the Commission finds that a hearing is required in the public interest."*fn4 The City argues that NRC must issue a notice of hearing because the first sentence of Section 189(a) of the AEA requires a hearing upon the request of an interested party. See supra note 2. NRC however offers a narrower interpretation of the phrase "required by the Act" in Section 2.104. It contends that a formal hearing is "required by the Act" within the meaning of Section 2.104 when the AEA mandates a hearing even absent a request for one; in other words, even when a proceeding under Section 189(a) will be uncontested. The second sentence of Section 189(a) provides that NRC shall automatically hold a hearing on certain applications for a construction permit even absent a request for a hearing. The first sentence of Section 189(a) on the other hand requires NRC to grant a hearing only upon the request of an interested person. By distinguishing the two sentences in this manner, NRC interprets Section 2.104 to "require" a hearing only in cases falling under the second, rather than the first sentence. Because a materials license amendment clearly falls within the first sentence of Section 189(a), it does not, we hold, trigger the Section 2.104 notice of hearing, or the formal procedures provided therein.

The City argues next that the notice of hearing under Section 2.104 is triggered in this case by Section 2.105 of "this chapter."*fn5 See supra note 4. Yet consistent with its interpretation of the words "required by the Act" in Section 2.104, NRC contends that nothing in chapter 1 requires a hearing in the sense of mandating one even absent a request. 15 NRC at 245. Far from mandating a hearing even absent a request, Section 2.105 provides only that notice of proposed action -- also called notice of opportunity for a hearing -- will issue in certain circumstances. If no hearing is requested, none will be held. 10 C.F.R. § 2.105(e)(1). NRC agrees that a party who requests a hearing pursuant to the notice of opportunity for a hearing issued under Section 2.105 is entitled to a notice of hearing under Section 2.104 and a formal hearing will be convened. 15 NRC at 246; see also NRC Br. at 15 n. 9. However, Section 2.105 by its own terms requires issuance of a notice of proposed action only in limited circumstances, for example, with respect to an application for or an amendment of a facility license, 10 C.F.R. § 2.105(a)(1), (a)(3), a license for "receipt of waste radioactive material from other persons for the purpose of commercial disposal by the waste disposal licensee," id. § 2.105(a)(2), (a)(3), a license to receive high-level radioactive waste at a geologic repository operations area, id. § 2.105(a)(4), or a license "as to which the Commission determines that an opportunity for a public hearing should be afforded," id. § 2.105(a)(6). The City argues that Amendment No. 3 effectively licenses KM to receive offsite thorium for commercial disposal under Section 2.105(a)(2). By its terms Section 2.105(a)(2) requires notice of proposed action as to (1) commercial disposal, which this is not, since KM is only a temporary storage site and is apparently not being reimbursed or otherwise compensated for its actions (Admin. Red., Vol. 6, Doc. No. 7), (2) by a waste disposal licensee, such as those licensed at Hanford, Washington, or Barnwell, South Carolina. KM, to the contrary, operates under a source materials license, rather than under a license for a commercial waste disposal site, and had no intention of changing its status, id.

Finally, the City argues that NRC should have found that the "public interest" required a formal hearing, 10 C.F.R. § 2.104(a); id. § 2.105(a)(6). We note that the determination of whether the public interest requires a hearing is left to NRC's discretion, and find that in this case, NRC had ample cause to reject the City's argument.

First, counsel for the City agreed at oral argument that all the buildings at the West Chicago site did have to come down. The City did not object to the issuance of Amendment No. 1 in April 1981 allowing demolition of Buildings Nos. 1 and 3. In granting Amendment No. 3, the NRC staff indicated that its conclusion was based on its earlier favorable review of KM's demolition plan under Amendment No. 1, covering project management, employee training, and radiological and health and safety effects, as well as several site visits made to view the Amendment No. 1 demolition in progress (Admin. Rec., Vol. 6, Doc. No. 4). The staff specifically determined that the prior demolition work was done in a safe manner. Having concluded that the prior demolition work posed no threat to the public health or safety or to the environment, and that Amendment No. 3 would pose no new technical or safety problems, NRC could reasonably have concluded that the "public interest" did not require a formal hearing on Amendment No. 3.

Second, with respect to the receipt of offsite materials, the NRC staff concluded that the materials would not constitute a danger to the public health and safety and that there was no need to exercise licensing authority over them. See 10 C.F.R. Part 71. The staff also found that receipt of such a relatively small amount of offsite materials would present no unusual technical problems or safety, health, or environmental concerns, and would not increase the problems of decommissioning and storage or disposal of wastes (Admin. Rec., Vol. 6, Doc. No. 4). In addition, Amendment No. 3 only authorized storage of the materials temporarily; a decision regarding disposal could be made at a later date, subject to further review. 15 NRC at 258. Based on these staff reports, NRC could reasonably have concluded that the public interest was served without a formal hearing.*fn6

Thus no formal hearing was required under NRC's interpretation of 10 C.F.R. §§ 2.104 and 2.105. When a court is called upon to construe administrative regulations, "the ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation." Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 89 L. Ed. 1700, 65 S. Ct. 1215, quoted in First Bank v. Avenue Bank and Trust Co., 605 F.2d 372, 376 (7th Cir. 1979). Although NRC's interpretation of its regulations is at times somewhat convoluted, it is not plainly erroneous or inconsistent with the text of the regulations. We therefore hold that NRC acted in conformance with its regulations in denying the City a formal hearing.

2. NRC did not violate the Atomic Energy Act.

Our inquiry cannot end with a finding that the NRC acted in conformance with its own regulations, for we must determine whether those regulations as interpreted violate the governing statute. If the AEA requires a formal hearing in the case of a materials license amendment, then the NRC must provide one, despite its interpretation of the regulations.

The City claims that a materials licensing hearing under Section 189(a) of the AEA must be in accordance with Section 5 of the Administrative Procedure Act (APA), 5 U.S.C. § 554. Section 554 does not by its terms dictate the type of hearing to which a party is entitled; rather it triggers the formal hearing provisions of Section 556 and 557 of the APA if the adjudication in question is required by the agency's governing statute to be "determined on the record after opportunity for an agency hearing * * *."*fn7 United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 757, 32 L. Ed. 2d 453, 92 S. Ct. 1941. The City argues that Section 189(a) of the AEA triggers the formal hearing provisions of the APA because it provides that the "Commission shall grant a hearing upon the request of any person whose interest may be affected by the proceeding, and shall admit any such person as a party to such proceeding." See supra note 2.

Although Section 554 specifies that the governing statute must satisfy the "on the record" requirement, those three magic words need not appear for a court to determine that formal hearings are required. See, e.g., Seacoast Anit-Pollution League v. Costle, 572 F.2d 872, 876 (1st Cir.), certiorari denied sub nom. Public Serv. Co. v. Seacoast Anti-Pollution League, 439 U.S. 824, 58 L. Ed. 2d 117, 99 S. Ct. 94 (1978); Marathon Oil Co. v. EPA, 564 F.2d 1253, 1263 (9th Cir. 1977). However, even the City agrees that in the absence of these magic words (Br. at 24), Congress must clearly indicate its intent to trigger the formal, on-the-record hearing provisions of the APA. United States Lines v. FMC, 584 F.2d 519, 536, 189 U.S. App. D.C. 361 (D.C. Cir 1978); Nofelco Realty Corp. v. United States, 521 F. Supp. 458, 461-462 (S.D.N.Y. 1981); see also United States v. Florida East Coast Ry., 410 U.S. 224, 234-238, 35 L. Ed. 2d 223, 93 S. Ct. 810; United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 756-758, 32 L. Ed. 2d 453, 92 S. Ct. 1941. We find no such clear intention in the legislative history of the AEA, and therefore conclude that formal hearings are not statutorily required for amendments to materials licenses.

The parties agree that the legislative history of the 1954 AEA sheds little light on the hearing requirement of the first sentence of Section 189(a). City Br. at 18; 15 NRC at 247. While Section 181 of the AEA made the provisions of the APA applicable to all agency actions, S.Rep. No. 1699, 83d Cong., 2d Sess., reprinted in 1954 U.S. CODE CONG. & AD. NEWS 3456, 3483, it did not specify the "on the record" requirement necessary to trigger Section 554 of the APA. Thus despite the fact that the statute required the Commission to grant a hearing to any materially interested party, there is no indication that Congress meant the hearing to be a formal one.*fn8 Similarly, the legislative history of the 1957 and 1962 amendments to the AEA shows little concern with the procedures required by the hearing provision in the first sentence of Section 189(a). Rather, Congress was concerned mainly with facilities or reactor licenses as opposed to the source, special nuclear, or byproduct materials licenses covered under the first sentence of Section 189(a). See Staff of Joint Comm. on Atomic Energy, 87th Cong., 1st Sess., Improving the AEC Regulatory Process (Comm. Print 1961); Radiation Safety & Regulation: Hearings before Joint Comm. on Atomic Energy, 87th Cong., 1st Sess. (1961); AEC Regulatory Problems, Hearings before Subcomm. on Legislation of the Joint Comm. on Atomic Energy, 87th Cong., 2d Sess. (1962).

In adopting rules to carry out the AEA, however, the Atomic Energy Commission (AEC) did provide by regulation for formal hearings on request in all licensing cases. 10 C.F.R. §§ 2.102, 2.708, 21 Fed. Reg. 804 (Feb. 4, 1956). The agency did not indicate whether the formal hearings were a matter of discretion or statutory mandate. In 1957, the Act was amended to add the second sentence of Section 189(a), mandating a hearing on certain applications for construction permits even when uncontested. Again, the type of hearing to be held was left undefined. After the 1957 amendment took effect, there was a significant amount of criticism of the AEC for overformalizing the licensing process. The staff of the Joint Committee on Atomic Energy published a report criticizing the AEC for going "further in some respects than the law required, particularly in regard to the number of hearings required and the formality of procedures." 1 Improving The AEC Regulatory Process viii. With respect to materials licenses, the Joint Committee staff suggested registration rather than licensing of materials, though it did recommend hearings before a hearing examiner in contested materials licensing cases. Id. at 73. The Joint Committee then held hearings to explore legislative improvements to the AEC regulatory process. Although witnesses debated whether Section 189(a) of the AEA required formal procedures in licensing cases, the Joint Committee did not resolve the issue. Instead, the Committee concentrated mainly on reactor licensing, and in 1962 proposed amendments that established licensing boards, 42 U.S.C. § 2241, and dispensed with the mandatory hearing requirement in uncontested operating license, but not construction permit, proceedings. See supra note 2.

The AEC continued to hold formal hearings in all contested reactor cases, as well as in materials licensing cases. However, based on the threadbare legislative history concerning materials licenses, we are unable to conclude that the AEC's procedures were mandated by statute. Even if the legislative history indicates that formal procedures are required by statute in reactor licensing cases under the second, third, and fourth sentences of Section 189(a), we do not accept the City's argument that this by necessity indicates that all hearings under the first sentence must be formal as well (City Br. at 20).*fn9 While the first sentence of Section 189(a) speaks in terms of "any license or construction permit," it does so in the context of a statute that distinguishes between the licensing of nuclear materials and reactor facilities. See, e.g., 42 U.S.C. §§ 2071-2078 (licensing of special nuclear material); id. §§ 2091-2099 (licensing of source material); id. §§ 2111-2114 (licensing of byproduct material); id. §§ 2131-2141 (licensing of commercial and test reactor facilities). In this case, we have no difficulty ascribing different meanings to the word "hearing" even though it appears in succeeding sentences of the same statutory section.

The City argues that under the APA, agency action is classified either as rulemaking or adjudication, and since licensing is adjudication, NRC is obliged to provide a formal hearing in this case. The "on the record" requirement of APA Section 554, according to the City has been relevant primarily in cases involving rulemaking, not adjudication, e.g., United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 32 L. Ed. 2d 453, 92 S. Ct. 1941; United States v. Florida East Coast Ry., 410 U.S. 224, 35 L. Ed. 2d 223, 93 S. Ct. 810; in adjudication, the City claims the absence of the "on the record" requirement is not decisive.*fn10 For example, Section 402 of the Federal Water Pollution Control Act (FWPCA), 33 U.S.C. § 1342(a)(1), which provides for a "public hearing," has been held by three courts including this one to require a formal hearing pursuant to Section 554. Seacoast Anti-Pollution League v. Costle, 572 F.2d 872 (1st Cir.), certiorari denied sub nom. Public Serv. Co. v. Seacoast Anti-Pollution League, 439 U.S. 824, 99 S. Ct. 94, 58 L. Ed. 2d 117 (1978); Marathon Oil Co. v. EPA, 564 F.2d 1253 (9th Cir. 1977); United States Steel Corp. v. Train, 556 F.2d 822 (7th Cir. 1977). The First Circuit relied principally on the adjudicative nature of the decision at issue -- issuance of a permit to allow discharge of a pollutant -- finding that primarily the rights of the particular applicant would be affected, and that resolution of the issues required specific factual findings by the EPA Administrator. Seacoast Anti-Pollution League v. Costle, supra at 876. The court also mentioned the judicial review provision of Section 509 of the FWPCA, which provides for review of a determination required under the FWPCA to be made "on the record." Id. at 876 n. 6. The Ninth Circuit in Marathon Oil Co. v. EPA, 564 F.2d 1253, relied principally on the judicial review provision, id. at 1263, though it also found that the "setting of effluent limitations under section 402 of the [Federal Water Pollution] Control Act * * falls squarely within the mainstream of traditional adjudications," id. This Court in United States Steel Corp. v. Train, 556 F.2d 822, relied principally on the judicial review provision of Section 509, but also found that Section 558(c) of the APA meandated a formal hearing independently of Section 554. Section 558(c) provides:

when application is made for a license required by law, the agency, with due regard for the rights and privileges of all the interested parties or adversely affected persons and within a reasonable time, shall set and complete proceedings required to be conducted in accordance with sections 556 and 557 of this title or other proceedings required by law and shall make its decision.

This Court held in Train that the FWPCA Section 402 application was a license application proceeding and that the applicant was entitled to a formal hearing under APA Sections 556 and 557.

The First, Fifth and Ninth Circuits rejected the Section 558(c) analysis of this Circuit, see Seacoast, 572 F.2d at 878 n. 11 and Marathon Oil, 564 F.2d at 1260-1261 n. 25; see also Taylor v. District Engineer, United States Army Corps of Engineers, 567 F.2d 1332, 1337 (5th Cir. 1978). After reconsideration, we have decided herein to abandon our position in Train insofar as we relied on APA Section 558(c) to order a formal hearing. See Gallagher & Ascher Co. v. Simon, 687 F.2d 1067, 1074-1075 (7th Cir. 1982). We now agree with the First, Fifth and Ninth Circuits that Section 558(c) does not independently provide that formal adjudicatory hearings must be held. "It merely requires any adjudicatory hearings mandated under other provision of law to be set and completed in an expeditious and judicious manner." Marathon Oil, 564 F.2d at 1260-1261 n. 25.

All three cases, however, relied at least in part on the presence of the "on the record" requirement in Section 509, indicating that the requirement is indeed relevant to defining the hearing process even in adjudication. Insofar as we relied on the judicial review provision of Section 509, we need not reconsider our holding in Train because it is distinguishable from the case at bar. Judicial review of NRC action is governed by a general jurisdictional grant in Section 189(b) of the AEA, 42 U.S.C. § 2239(b). See supra note 2. Unlike the "on the record" requirement of Section 509 of the FWPCA, there is no indication even in the judicial review Section of the AEA, the governing statute, that Congress intended to require formal hearings under the APA.

Thus even in adjudication, the "on the record" requirement is significant at least as an indication of congressional intent. We agree with the courts and commentators who recognize that adjudication may be either informal or formal. See S. Breyer & R. Stewart, Administrative Law and Regulatory Policy 481, 524-526 (1979); K. Davis, Administrative Law Treatise § 12:10, at 447-454 (2d ed. 1979); Verkuil, A Study of Informal Adjudication Procedures, 43 U. Chi. L. Rev. 739, 739 n. 1 (1976); see also Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 28 L. Ed. 2d 136, 91 S. Ct. 814; Izaak Walton League v. Marsh, 210 U.S. App. D.C. 233, 655 F.2d 346, 361-362 n. 37 (D.C. Cir. 1981), certiorari denied sub nom. Atchison, Topeka & Santa Fe Ry. v. Marsh, 454 U.S. 1092, 70 L. Ed. 2d 630, 102 S. Ct. 657. Formal adjudications are those required by statute to be conducted through on-the-record proceedings. Informal adjudications constitute a residual category including "all agency actions that are not rulemaking and that need not be conducted through 'on the record' hearings." Izaak Walton League v. Marsh, supra at 361-362 n. 37.*fn11 For example, in United States Lines, Inc. v. FMC, 584 F.2d 519, 189 U.S. App. D.C. 361 (D.C. Cir. 1978), the court considered the hearing requirement of Section 15 of the Shipping Act of 1916, 46 U.S.C. § 814. Under Section 15, the Commission may grant exemptions from the antitrust laws for anticompetitive agreements among ocean carriers when it is in the public interest to do so. Id. In analyzing the procedures necessary for a fair hearing, the court found that the case did not involve an adjudication in the consitutional sense, described in Sangamon Valley Television Corp. v. United States, 106 U.S. App. D.C. 30, 269 F.2d 221, 224 (D.C. Cir. 1959), as a "resolution of conflicting private claims to a valuable privilege." Neither did it involve notice and comment rulemaking under APA Section 553. Rather the court characterized the case as involving an issue "quasi-adjudicatory" in nature -- an adjudication of the rights of certain named parties to an exemption from the antitrust laws in light of the public interest. 584 F.2d at 539-540. This kind of agency action, though quasi-adjudicatory, was not intended by Congress to merit a formal hearing under Section 15 of the Shipping Act, id. at 536-537. See also Sea-Land Serv., Inc. v. FMC, 653 F.2d 544, 551, 189 U.S. App. D.C. 361 (D.C. Cir. 1981); Marine Space Enclosures, Inc. v. FMC, 420 F.2d 577, 589-590 (D.C. Cir. 1969); Nofelco Realty Corp. v. United States, 521 F. Supp. 458, 461-462 (S.D.N.Y. 1981); United States v. Independent Bulk Transport, Inc., 480 F. Supp. 474, 478-479 (S.D.N.Y. 1979).

Despite the fact that licensing is adjudication under the APA, there is no evidence that Congress intended to require formal hearings for all Section 189(a) activities. In light of the above analysis, we conclude that NRC did not violate the AEA when it denied the City's request for a formal hearing.*fn12

3. NRC hearing procedures satisfy the requirements of due process.

The City argues that the NRC proceedings deprived it of liberty or property interests without due process of law. Yet generalized health, safety and environmental concerns do not constitute liberty or property subject to due process protection. See, e.g., Izaak Walton League v. Marsh, supra at 361; Gasper v. Louisiana Stadium & Exposition District, 418 F. Supp. 716, 720-721 (E.D. La. 1976), affirmed, 577 F.2d 897 (5th Cir. 1978), certiorari denied, 439 U.S. 1073, 59 L. Ed. 2d 40, 99 S. Ct. 846. Although the City claims that it has presented "specific documented concerns" to the NRC in its petitions (Br. at 28), such "concerns" do not, without more, require due process protection.

Even if we were to find a protected liberty or property interest in this case, we would hold that Commission procedures constituted sufficient process. The City received a meaningful opportunity to submit statements and data explaining why the amendment should not be granted. See See-Land Service, Inc. v. FMC, 209 U.S. App. D.C. 289, 653 F.2d 544, 551 (D.C. Cir. 1981). On October 27, 1981 the City filed four petitions for hearing with the NRC (Admin. Rec., Vol. 1, Docs. Nos. 1-5). NRC responded on November 5 by requesting that the City submit to NRC and serve on KM any information relating to the health, safety or environmental effects of issuing Amendment No. 3 (Admin. Rec., Vol. 1, Doc. No. 6). The City responded on November 13 with a list of six contentions (Admin. Rec., Vol. 1, Doc. No. 7), all of which KM denied (Admin. Rec., Vol. 1, Doc. No. 8). NRC addressed another letter to both parties asking KM to respond to the City's two factual allegations and offering the City a chance to respond to KM (Admin. Rec., Vol. 1, Doc. No. 9). KM submitted a detailed rebuttal of the City's contentions with supporting documentary information (Admin. Rec., Vol 1, Doc. No. 13). The City responded by reiterating its earlier assertions but provided no other factual information (Admin. Rec., Vol. 1, Doc. No. 14).

By pressing its request for a formal evidentiary hearing, the City has indicated its belief that written comments and documentation provide an inadequate opportunity to air its concerns. However, we are given no hint by the City of concerns other than the six listed in its November 13 submission to the Commission. Of those six, only two present factual issues, see Part IIB infra, the resolution of which will in large part be based on technical or scientific data that will not necessarily be made more reliable through an oral presentation. Cf. Mathews v. Eldridge, 424 U.S. 319, 344-345, 47 L. Ed. 2d 18, 96 S. Ct. 893; Basciano v. Herkimer, 605 F.2d 605, 610-611 (2d Cir. 1978). In addition, as in a motion for summary judgment, it appears that both the City and KM essentially agreed on the facts but contested their interpretation, thus alleviating the need for an oral hearing.

We find that NRC correctly applied the Mathews v. Eldridge analysis, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18, in its order. 15 NRC at 256-262. The private interest that would be affected by official action in this case is a generalized one; in fact the health, safety and environmental interests of the City appear to be more "public" than "private." Though such interests are, of course, significant in the larger sense, in this case the City itself valued the particular interest involved only minimally since it did not object to the issuance of Amendment No. 1 involving similar procedures. Taking into account the technical, scientific nature of the issues, the absence of credibility questions, and the apparent lack of controverted issues of material fact, the additional value of an oral hearing in this case in minimal. Finally, convening a formal hearing involves a great deal of expense, both for the agency and the parties. According to NRC, 15 NRC at 261,

A three-member licensing board or administrative law judge must be appointed, and with that come all the accouterments that make the proceeding more costly in terms of the time and materials expended: e.g., participation in a prehearing conference, preparation of transcripts, discovery, submission of prefiled testimony, a trial-type hearing at which witnesses are presented and cross-examined, and the preparation of findings of fact and conclusions of law.

NRC concluded, and we concur, that in this particular case, the Commission procedures afforded the City all the process that was constitutionally necessary.

The City, however, raises another notice problem. The City contends that NRC regulations provide for only one kind of hearing -- a formal one. See 10 C.F.R.§§ 2.104 and 2.105, notes 4 and 5 supra. Despite the provisions in APA Section 552(a) which require that agency procedures be published in the Federal Register, there are no regulations in effect governing any kind of informal hearing. In addition, NRC has admittedly always granted formal hearings on request in materials licensing cases. 15 NRC at 246 n. 12, NRC Br. at 17 n. 11.*fn13 Therefore the City claims that when it filed its written materials in October and November of 1981, it assumed that these were preliminary to a formal hearing, and that it was prejudiced by lack of notice of the informal hearing. See Transco Sec., Inc. v. Freeman, 639 F.2d 318, 323-324 (6th Cir. 1981), certiorari denied, 454 U.S. 820, 70 L. Ed. 2d 90, 102 S. Ct. 101.

NRC seems to admit it has no regulations governing informal hearings, but argues that in this case at least the City had actual notice of the new procedures and an adequate opportunity to conform to them. APA Section 552(a) provides that persons may not be "required to resort to, or be adversely affected by" a matter which is not published "except to the extent that a person has actual and timely notice of the terms thereof." See Human Resources Management, Inc. v. Weaver, 442 F. Supp. 241, 247 (D.D.C. 1977). In addition, though an agency may be bound by its own established customs and practices, it may satisfy due process requisites by prior public notice of its new policy or requirements. See Briscoe v. Kusper, 435 F.2d 1046, 1055 (7th Cir. 1970).

We do not doubt the authority of NRC to change its procedures on a case-by-case basis with timely notice to the parites involved, see NLRB v. Bell Aerospace Co., 416 U.S. 267, 294, 40 L. Ed. 2d 134, 94 S. Ct. 1757, but we question the wisdom of doing so without the benefit of published regulations. A review of the documents in this case indicates that the issue of adequate notice is a close one. The November 5, 1981, letter from NRC to the City requested that the City provide "any additional information and arguments it desires that the Commission consider in connection with the license amendment . . . ." (Admin. Rec., Vol. 1, Doc. No. 6). The final November 25, 1981, letter from NRC urged both KM and the City to "recognize that the Commission is hereby requesting whatever information is now possessed by Ker-McGee and the City which is relevant to resolving the City's assertions" concerning KM's dust-abatement program (Admin. Rec., Vol. 1, Doc. No. 9). Although these letters are not totally unambiguous, we conclude that the City did have adequate notice that the Commission intended to base its decision on written submissions. Other than the mere allegation of prejudice, there is no evidence in the record that the City would have responded differently if it had a more definite idea of the type or scope of the hearing. See Citizens for Allegan Cty. v. FPC, 134 U.S. App. D.C. 229, 414 F.2d 1125, 1134 (D.C. Cir. 1969). The City also argues that it received the technical information on the decommissioning activities in KM's December 4, 1981, letter, and was given only one week to respond (Admin. Rec., Vol. 1, Doc. No. 14). However, the City failed to request an extension form NRC and also failed to challenge substantively KM's decommissioning data at any subsequent time. Accordingly, there is no evidence that the City was prejudiced by the one-week notice period.

4. NRC did not violate the procedural requirements of NEPA.

Section 102(2)(C) of NEPA requires the preparation of an EIS for all "major Federal actions significantly affecting the quality of the human environment * * *." 42 U.S.C. § 4332(2)(C).*fn14 The Act clearly envisions certain actions for which an EIS is unnecessary. Hanly v. Mitchell, 460 F.2d 640, 644 (Hanly I) (2d Cir. 1972), certiorari denied, 409 U.S. 990, 93 S. Ct. 313, 34 L. Ed. 2d 256. The agency must make a threshold determination that a particular activity constitutes a "major" federal action with "significant" effects. That determination is reviewable by the courts, and we evaluate NRC's substantive decision not to issue an EIS, infra Part IIB. However, the City also argues that it was not given notice or the opportunity to comment when NRC made its threshold decision not to issue an EIS (Br. at 36). Assuming without deciding that notice and comment procedures are required under NEPA,*fn15 we find that the City had an adequate opportunity to contribute to NRC's threshold decision not to issue an EIS. The fact that the City argued for an EIS in its petition for hearing before NRC indicates it knew that the issue was under consideration (Admin. Rec., Vol. 1, Doc. No. 1). The City also had ample opportunity to submit data to the Commission during the five-to six-week period in which it filed other written materials.*fn16 The Commission did not violate the procedural requirements of NEPA, because the City had adequate notice and an opportunity to comment on the Commission's action.

B. The Commission did not act arbitrarily or capriciously in issuing Amendment No. 3.

The scope of review of agency action is defined in Section 10(e) of the APA, 5 U.S.C. § 706. In certain limited circumstances, as, for example, when a hearing "on the record" is required by statute, a court must set aside agency action when it is not supported by substantial evidence. 5 U.S.C. § 706(2)(E). Otherwise, an agency decision can be set aside if it was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Because the AEA does not require an "on the record" hearing, see supra Part IIA-2, we must apply the "arbitrary and capricious" test to this informal injudication. See Camp v. Pitts, 411 U.S. 138, 140-142, 36 L. Ed. 2d 106, 93 S. Ct. 1241; Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414-415, 28 L. Ed. 2d 136, 91 S. Ct. 814; United States Lines v. FMC, 584 F.2d 519, 526, 189 U.S. App. D.C. 361 (D.C. Cir. 1978). Judicial review in accordance with this standard is not toothless: while the agency's decision "is entitled to a presumption of regularity, * * * that presumption is not to shield [its] action from a thorough, probing, in-depth review." Citizens to Preserve Overton Park, Inc., supra at 415.

To facilitate review of informal proceedings in the absence of formal findings of fact and conclusions of law, it is crucial that the agency articulate the reasons for its decision. City Fed. Sav. & Loan Ass'n v. Federal Home Loan Bank Bd., 600 F.2d 681, 688-689 (7th Cir. 1979). In the order before this Court, NRC clearly stated its reasons for issuing Amendment No. 3. It relied principally on a staff memorandum evaluating KM's demolition activities under Amendment No. 1 and the potential impacts of Amendment No. 3, and considering the potential consequences of on site storage of the offsite waste materials. (Admin. Rec., Vol. 6, Doc. No. 4). The staff made numerous site visits to view Amendment No. 1 demolition in progress. They concluded that KM's plans under Amendment No. 1 for project management, radiological health and safety and employee training had worked well, and would be adequate for Amendment No. 3 demolition. The buildings were examined during a site visit and it was concluded that there were no factors that would tend to make demolition particularly difficult or hazardous. Offsite impact was monitored during demolition of Building No. 3 under Amendment No. 1 and no significant offsite impact was detected. For Amendment No. 3 activities, KM agreed to install two additional permanent air samplers near the demolition area. The evaluation specifically concluded that KM is performing demolition work in a safe manner.

With respect to the offsite materials, the evaluation found that the amount of offsite soil would be minor both in volume and content of radionuclides when compared to wastes currently on site. Acceptance of the offsite wastes would present no unusual technical or sefety problems and would not significantly increase the problem of decommissioning and storage or disposal of wastes. Neither demolition nor acceptance of the offsite wastes would prejudice any disposal alternatives which might later be selected.

Based on this review of KM's activities and their effect on the public health, safety, and the environment, we cannot say that NRC acted in an arbitrary and capricious manner in issuing Amendment No. 3. In addition, NRC responded thoroughly to each of the six contentions raised by the City in its petitions for hearing. Three of those contentions criticized KM's proposed demolition methods; three were more general criticisms of NRC procedure. It is evident from the NRC order that it took these criticisms into account, and after due consideration, rejected them. We therefore address these contentions only briefly, again concluding that NRC acted within the scope of its authority and in a reasonable manner in granting Amendment No. 3.

1. KM's demolition procedures under Amendment No. 3

The City's basic argument criticizing KM's procedures is that NRC allowed KM to depart from the terms of its proposed stabilization plan in carrying out Amendment No. 3 (Admin. Rec., Vol. 1, Doc. No. 7, #1, #2, #6). The plan, however, was just a proposal at the time Amendment No. 3 was issued. The procedures and schedule incorporated therein did not bind NRC until final approval. When KM sought approval for decommissioning activities, NRC considered

whether allowing such activity is consistent with out rules that provide for protection of the public health and safety and the environment, whether it would preclude or prejudice any disposal option, or whether it would otherwise be inappropriate under the circumstances.

15 NRC at 271. The fact that the decommissioning procedures were at variance with those described in the proposed plan did not necessarily invalidate the amendment, when, as indicated above, NRC gave the amendment adequate consideration.

In particular, the City contends that KM has failed to use the water-fogging system for dust control described in its proposed plan. Inadequate dust control may result in offsite contamination from airborne radioactive debris. KM's factual submissions show that they used a demolition procedure involving both water and foam, and that the air particle sample station records indicate no detectable increase in airborne radioactivity. Various staff inspection tours confirm that the procedures do not endanger the public health or safety or the environment. The City has produced no evidence to challenge this finding.

Similarly, the City alleges that according to the stabilization plan, KM agreed to build a lagoon to contain the water from its demolition activities. Instead, KM uses existing floor trenches to funnel water to available storage tanks. Since the use of water and foam for dust abatement resulted in less runoff than anticipated, this system is adequate. According to the water monitoring figures, there has been no detectable increase in radiation due to the dust abatement program. Again, the City has produced no evidence to challenge this finding.*fn17

Based on the evidence submitted by both the City and KM, we cannot conclude that NRC acted arbitrarily in rejecting the City's challenges to KM's procedures under Amendment No. 3. We turn now to the City's more general criticisms of NRC action.

2. Storage of thorium on site

The City argues that the concentration of thorium at the West Chicago site qualifies it for consideration under proposed Option 5, which states that "long term disposal other than at a licensed disposal site will not normally be a viable option * * *." 46 Fed. Reg. 52063 (Oct. 23, 1981). However, the "Option" was not final at the time; there has been no decision as of yet as to long-term disposal of the wastes at the site; and the following sentence of the proposed Option 5 allows storage "onsite under an NRC license until a suitable method of disposal is found." Id. Option 5 presents no obstacle to NRC's issuance of Amendment No. 3.

3. Failure to obtain city building permits

The City argues that KM must obtain city building demolition permits before implementing Amendment No. 3. However, the City has taken no action to assert its regulatory authority, and NRC need not abstain from acting until it does. See In the Matter of Cleveland Electric Illuminating Co. (Perry Nuclear Power Plant, Units 1 and 2), 6 NRC 741, 748 (1977); In the Matter of Southern California Edison Co. (San Onofre Nuclear Generating Station, Units 2 and 3), 7 AEC 410, 412 (1974). This argument presents no obstacle to the issuance of Amendment No. 3.

4. Failure to file an EIS

The parties agree that NEPA, 42 U.S.C. § 4332(2)(C), requires issuance of an EIS before approval of KM's overall decommissioning and stabilization plan for the West Chicago site; such a plan clearly will have a significant impact on the environment. See supra note 14. The City argues that by issuing Amendment No. 3 without an EIS and before final approval of the overall KM decommissioning plan, NRC illegally segmented the overall plan.

"Piecemealing" or "segmentation" allows an agency to avoid the NEPA requirement that an EIS be prepared for all major federal action with significant environmental impacts by segmenting an overall plan into smaller parts involving action with less significant environmental effects. City of Rochester v. United States Postal Serv., 541 F.2d 967, 972 (2d Cir. 1976). In Kleppe v. Sierra Club, 427 U.S. 390, 49 L. Ed. 2d 576, 96 S. Ct. 2718, the Supreme Court articulated the appropriate standard of review by which to evaluate an agency's decision not to issue an EIS in a context similar to this one. In Kleppe, the Department of the Interior approved several coal-related projects in the Northern Great Plains without preparing a comprehensive EIS on all the proposed projects in the region. The Court held that the agency did not act arbitrarily in refusing to prepare a comprehensive EIS on the entire region; indeed the Court said that even if "a regional impact statement was due at that moment, [the Court of Appeals] would have erred in enjoining approval of the four mining plans unless it had made a finding that the impact statement covering them inadequately analyzed the environmental impacts of, and the alternatives to, their approval." Id. at 407-408 n. 16. As long as the agency does not act arbitrarily in refusing to prepare an EIS, the decision lies in its discretion. Id. at 412.

In Kleppe, the agency had in fact issued an EIS on each individual mining project but had refused to issue a regional EIS. In this case, the agency decided against issuing an EIS for the component part of the plan, and in fact issued a draft EIS for the overall plan. We do not think this difference changes the analysis. The Supreme Court was concerned in Kleppe with the reasonableness of the environmental decision, whatever it might be, with respect to the region, as well as with respect to each component part of the project; it was not mandating an EIS for each component part of a plan. Therefore the Kleppe analysis still applies even though NRC decided against issuing an EIS for Amendment No. 3. If that decision was not arbitrary or capricious, it must be upheld.*fn18

This Circuit has always followed the rule that an agency's decision not to issue an EIS for an activity it claims has an insignificant impact may be reversed by a court if it is arbitrary or capricious. Assure Competitive Transp., Inc. v. United States, 635 F.2d 1301, 1308 (1980); Nucleus of Chicago Homeowners Ass'n v. Lynn, 524 F.2d 225, 229 (1975), certiorari denied, 424 U.S. 967, 47 L. Ed. 2d 734, 96 S. Ct. 1462; First Nat'l Bank v. Richardson, 484 F.2d 1369, 1381 (1973). This threshold decision not to issue an EIS must be supported by a record sufficiently developed to permit judicial review. Assure Competitive Transp., supra at 1308 n. 7. Despite the fact that NRC rules do not require it to publish the results of its environmental investigation in an EIS, a negative declaration or an environmental impact appraisal, see 10 C.F.R. § 51.5(d)(4),*fn19 there is still before us an adequate record to review. NRC explained the reasons for its determination both in the background document to Amendment No. 3 (Admin. Rec., Vol. 6, Doc. No. 4) and in its order of February 11, 1982, 15 NRC 232, 263-265. As discussed above, supra at 26-27, the decision was based on an evaluation of past activities under Amendment No. 1, onsite inspection reports, and the considered judgment, uncontradicted by any evidence offered by the City,*fn20 that Amendment No. 3 activities would not affect radioactivity levels in the surrounding air or water. In addition, the agency's decision to allow demolition of the buildings would not prejudice the selection of a permanent disposal plan for which a draft EIS had already issued. In deciding not to issue an EIS for Amendment No. 3, NRC took the requisite "hard look" at the environmental impact of its action, Kleppe, supra at 410 n. 21. Based on the record before us, we cannot conclude that the Commission acted arbitrarily in deciding not to isse an EIS for Amendment No. 3.

III. Review of the district court order

After NRC issued its February 1982 order, the district court dismissed the City's motion for a preliminary injunction. 542 F. Supp. 13. The court found, first, that Counts V-XII of the City's complaint were in effect challenges to the license amendment, and that under 28 U.S.C. § 2342(4), the court of appeals is the exclusive forum for review of final NRC orders entered in any proceeding for the granting, suspending, revoking, or amending of any license, 42 U.S.C. § 2239. See Rockford League of Women Voters v. NRC, 679 F.2d 1218, 1221 (7th Cir. 1982); Natural Resources Defense Council, Inc. v. NRC, 196 U.S. App. D.C. 354, 606 F.2d 1261, 1264-1266 (D.C. Cir. 1979). The City apparently agrees that the NRC order was a final one reviewable exclusively in this Court (City Br. at 40).*fn21

Second, the district court found that Counts I-IV were not ripe for judicial review. Those Counts asked the court to exercise its mandamus power to compel NRC compliance with NEPA. When there has been no final agency action permitting review in the court of appeals, we may assume that the district court has jurisdiction to order declaratory or injunctive relief if the NRC violates a clear, non-discretionary legal duty contained in NEPA, and there is no other adequate remedy. Gage v. AEC, 479 F.2d 1214, 1222, 156 U.S. App. D.C. 231 (D.C. Cir. 1973); Izaak Walton League v. Schlesinger, 337 F. Supp. 287, 291 (D.D.C. 1971). It is evident from the face of the complaint that NRC is in the process of complying with NEPA; it has in fact issued a draft EIS on KM's proposed decommissioning and stabilization plan. Yet because the City requests the court to order NRC to complete both the EIS and the plan by a "date certain," their real complaint seems to be that NRC is improperly delaying the EIS and the final proposal.*fn22

Although there are no express time limits in NEPA, we may assume that a district court has jurisdiction to compel agency action if NRC unreasonably delays issuing an EIS. Here, however, the City faces different roadblock: exhaustion of administrative remedies. Under 10 C.F.R. § 2.206(a) any person may request that NRC institute a proceeding to "modify, suspend or revoke a license, or for such other action as may be proper." The City could have petitioned NRC to expedite the licensing proceeding and the EIS process. If the petition were denied, 10 C.F.R. § 2.206(b), that final order would be appealable to this Court, rather than the district court. Rockford League of Women Voters v. NRC, 679 F.2d 1218, 1219-1221 (7th Cir. 1982); see also Justice Rehnquist's dissent from the denial of certiorari, General Pub. Utilities Corp. v. Susquehanna Valley Alliance, 449 U.S. 1096, 66 L. Ed. 2d 824, 101 S. Ct. 893. Consequently the district court properly dismissed Counts I-IV.

The orders under review in Nos. 82-1575 and 82-1684 are affirmed.


Orders affirmed.

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