ML21041A157

2-8-21 NEI Reply Brief (DC Cir.)(Case No. 19-1240)

ML21041A157
Person / Time
Site:	Nuclear Energy Institute
Issue date:	02/08/2021
From:	Bonanno J, Croley S, Ginsberg E, O'Neill M, Rund J Latham & Watkins, Nuclear Energy Institute
To:	NRC/OGC, US Federal Judiciary, Court of Appeals, for the District of Columbia Circuit
References
1884290, 19-1240
Download: ML21041A157 (37)

Text

ORAL ARGUMENT NOT YET SCHEDULED No. 19-1240 United States Court of Appeals for the District of Columbia Circuit NUCLEAR ENERGY INSTITUTE, Petitioner,

v.

U.S. NUCLEAR REGULATORY COMMISSION and the UNITED STATES OF AMERICA, Respondents.

On Petition for Review of an Action of the United States Nuclear Regulatory Commission PETITIONER NUCLEAR ENERGY INSTITUTES REPLY BRIEF Ellen C. Ginsberg Jonathan M. Rund Jerry Bonanno Martin J. ONeill Nuclear Energy Institute 1201 F Street, NW Suite 1100 Washington, DC 20004-1218 (202) 739-8000 February 8, 2021 Steven P. Croley LATHAM & WATKINS LLP 555 Eleventh Street, NW Suite 1000 Washington, DC 20004 (202) 637-2200 steven.croley@lw.com Counsel for Petitioner USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 1 of 37

TABLE OF CONTENTS Page TABLE OF AUTHORITIES................................................................................... iii GLOSSARY OF ACRONYMS AND ABBREVIATIONS................................... vi INTRODUCTION AND

SUMMARY

OF ARGUMENT........................................ 1 ARGUMENT............................................................................................................. 5 I.

NRCS 2019 LETTER CONSTITUTES REVIEWABLE FINAL AGENCY ACTION............................................................................ 5 A.

The 2019 Letter Creates New Regulatory Burdens and Enforcement Risks for Licensees.......................................................... 5 B.

The 2019 Letter Does Not Simply Restate a Prior NRC Position.................................................................................................. 8

1.

The 2012 Agreement State Letter Did Not Alter the 1986 Information Notice............................................................. 8

2.

The 2016 Issue Summary Did Not Create Legal Consequences............................................................................ 11

3.

Independent Equipment Dealers Is Inapposite......................... 14 II.

NRCS NEW REGULATORY INTERPRETATION IS UNLAWFUL................................................................................................. 16 A.

Section 20.2002 Addresses Waste Disposal, Not Reactor Operations.............................................................................. 17 B.

NRCs Reading of Section 20.2002 Is Inconsistent with Other NRC Regulations...................................................................... 21 III.

NRC FAILED TO OFFER A SUFFICIENT EXPLANATION FOR ITS NEW INTERPRETATION OF SECTION 20.2002..................... 23 IV.

NRC FAILED TO COMPLY WITH NOTICE-AND-COMMENT PROCEDURES BEFORE DE FACTO AMENDING SECTION 20.2002.................................................................. 25 USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 2 of 37

ii Page V.

NRCS 2019 LETTER IMPOSED A NEW INTERPRETATION AS A BACKFIT WITHOUT INVOKING ANY EXCEPTION EXCUSING THE REQUIRED ANALYSIS................................................ 26 CONCLUSION........................................................................................................ 28 USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 3 of 37

iii TABLE OF AUTHORITIES Page(s)

CASES American Lung Association v. EPA, No. 19-1140, 2021 WL 162579 (D.C. Cir. Jan. 19, 2021)........................... 18, 20 Appalachian Power Co. v. EPA, 208 F.3d 1015 (D.C. Cir. 2000)................................................................ 5, 15, 25 Barrick Goldstrike Mines, Inc. v. Browner, 215 F.3d 45 (D.C. Cir. 2000).......................................................................... 7, 15 Bennett v. Spear, 520 U.S. 154 (1997).............................................................................................. 5 Christensen v. Harris County, 529 U.S. 576 (2000)............................................................................................ 25 Ciba-Geigy Corp. v. United States EPA, 801 F.2d 430 (D.C. Cir. 1986)................................................................ 6, 7, 8, 15 CropLife America v. EPA, 329 F.3d 876 (D.C. Cir. 2003)............................................................................ 29 Department of Homeland Security v. Regents of the University of California, 140 S. Ct. 1891 (2020).................................................................................. 24, 28 Dominion Resources, Inc. v. FERC, 286 F.3d 586 (D.C. Cir. 2002)........................................................................ 8, 13 Encino Motorcars., LLC v. Navarro, 136 S. Ct. 2117 (2016)........................................................................................ 24 Independent Equipment Dealers Association v. EPA, 372 F.3d 420 (D.C. Cir. 2004)............................................................................ 14 Kisor v. Wilkie, 139 S. Ct. 2400 (2019)........................................................................................ 20 USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 4 of 37

iv Page(s)

Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007)............................................................................................ 24 Public Citizen v. NRC, 901 F.2d 147 (D.C. Cir. 1990)............................................................................ 10 STATUTES AND REGULATIONS 42 U.S.C. § 2021(b)................................................................................................... 1 42 U.S.C. § 2021(c)(1)............................................................................................. 17 42 U.S.C. § 2021(c)(4)............................................................................................... 1 42 U.S.C. § 2021(d)(2)............................................................................................. 21 42 U.S.C. § 2021(j).................................................................................................... 1 42 U.S.C. § 2273(a)................................................................................................... 8 42 U.S.C. § 2273(c)................................................................................................... 8 10 C.F.R. § 2.201(b).................................................................................................. 8 10 C.F.R. § 2.202(a)(3)(i).......................................................................................... 8 10 C.F.R. § 2.205(d).................................................................................................. 8 10 C.F.R. § 20.1904................................................................................................. 19 10 C.F.R. § 20.2001(a)(1)........................................................................................ 21 10 C.F.R. § 20.2001(a)(4)........................................................................................ 22 10 C.F.R. § 20.2002................................................................................. 3, 16, 19, 21 10 C.F.R. § 20.2006................................................................................................. 19 10 C.F.R. § 20.2108................................................................................................. 19 10 C.F.R. § 50.109..................................................................................................... 4 10 C.F.R. § 50.109(a)(1).......................................................................................... 12 USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 5 of 37

v Page(s) 10 C.F.R. § 50.109(a)(2).......................................................................................... 27 10 C.F.R. § 50.109(a)(3).......................................................................................... 27 10 C.F.R. § 50.109(a)(4).......................................................................................... 27 10 C.F.R. § 71.5....................................................................................................... 19 10 C.F.R. § 150.10................................................................................................... 17 10 C.F.R. § 150.15(a)(1).................................................................................... 17, 19 OTHER AUTHORITIES 50 Fed. Reg. 38,097 (Sept. 20, 1985)...................................................................... 28 61 Fed. Reg. 26,852 (May 29, 1996)............................................................. 2, 16, 20 70 Fed. Reg. 24,124 (May 6, 2005)......................................................................... 10 NRC Enforcement Policy (Jan. 15, 2020),

https://www.nrc.gov/docs/ML1935/ML19352E921.pdf...................................... 8 USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 6 of 37

vi GLOSSARY OF ACRONYMS AND ABBREVIATIONS 1986 Information Notice NRC, Information Notice No. 86-90, Requests to Dispose of Very Low-Level Radioactive Waste Pursuant to 10 CFR 20.302 (Nov. 3, 1986) 2012 Letter March 13, 2012 letter from NRC to Agreement States 2016 Issue Summary Regulatory Issue Summary 2016-11 2019 Letter September 16, 2019 letter from NRC to petitioner Nuclear Energy Institute AEA Atomic Energy Act APA Administrative Procedure Act EPA Environmental Protection Agency Legal Opinion NRC, Jurisdiction Over Low Level Waste Management at Reactor Sites in Agreement States (Sept. 13, 1985)

NEI Nuclear Energy Institute NRC Nuclear Regulatory Commission USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 7 of 37

1 INTRODUCTION AND

SUMMARY

OF ARGUMENT Section 274 of the Atomic Energy Act (AEA) allows the Nuclear Regulatory Commission (NRC) to transfer authority to regulate certain nuclear materials, including the disposal of those materials, to Agreement States. See 42 U.S.C. § 2021(b). NRC may not enter into agreements for the disposal of nuclear materials if it has determined by regulation or order that public health and safety require it to retain authority over such disposal. Id. § 2021(c)(4). Likewise, where it has entered into such agreements and transferred its regulatory authority to an Agreement State, NRC may reassert that authority only upon finding that Agreement State authority is inconsistent with public health and safety, or that the Agreement State failed to comply with the AEA. See id. § 2021(j). There is no dispute that NRC has not issued a regulation, order, or otherwise made such a finding with respect to disposal of the materials at issue in this case.

NRC has long permitted Agreement States to approve a reactor licensees alternative disposal procedures for very low-level waste, instead of requiring licensees to obtain approval from NRC. See Office of Inspection Enforcement, NRC, Information Notice No. 86-90, Requests to Dispose of Very Low-Level Radioactive Waste Pursuant to 10 CFR 20.302 (Nov. 3, 1986) (1986 Information Notice) (JA__). Indeed, NRC had consistently taken the position that it was not at liberty to vary the clear meaning of its regulations in the absence of a regulation USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 8 of 37

2 or order reasserting the authority it transferred to Agreement States. NRC, Jurisdiction Over Low Level Waste Management at Reactor Sites in Agreement States 2 (Sept. 13, 1985) (JA__). Because NRC decided against issuing such a regulation or order, 61 Fed. Reg. 26,852 (May 29, 1996), NRC licensees continued to seek, and routinely obtained, Agreement State approvals, not NRC approvals.

Notwithstanding the AEAs clarity, NRCs prior position, and longstanding industry practice, in a September 16, 2019 letter to the Nuclear Energy Institute (NEI) (2019 Letter) (JA__), NRC declared that reactor licensees must obtain its approval for alternative waste disposal procedures, effectively nullifying valid Agreement State approvals. In doing so, NRC disregarded the AEA requirement for a regulation or order, upended the regulated communitys longstanding reliance on NRCs prior determinations, and imposed new obligations on reactor licensees.

Yet NRC now claims that the 2019 Letter does not create new regulatory burdens and enforcement risks because this expansion of its regulatory authority was telegraphed in a 2012 letter addressed to Agreement States (2012 Letter) (JA__),

and in the 2016 Regulatory Issue Summary (2016 Issue Summary) (JA__). Not so. The 2012 Letter dealt with a completely different issue, and was not published in the Federal Register or provided to NRC licensees. Likewise, the 2016 Issue Summary could not reasonably have been understood by licensees to unwind previous Agreement State approvals. Neither document provided reasonable notice USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 9 of 37

3 to licensees that NRC had reversed a decades-old legal position and that licensees with valid Agreement State disposal approvals would be subject to future NRC enforcement action.

Only in the 2019 Letter did NRC claimfor the first timethat it must retain authority over reactor licensee disposal procedures for very low-level waste, even when the licensee has an Agreement State approval. Again, however, NRC concedes it has not issued any regulation or order, as required by AEA Section 274(c)(4), to reassert authority to regulate very low-level waste disposal in Agreement States.

Recognizing this failure, NRC attempts to justify its action after the fact, based on a reinterpretation of 10 C.F.R. § 20.2002, which allows NRC to approve alternative waste disposal procedures. 1 Despite Section 20.2002s explicit reference to procedures to dispose of licensed material, (and its title, Method for obtaining approval of proposed disposal procedures), NRC now asserts that this regulation governs nuclear power plant operation and thus, it is prohibited from delegating to Agreement States the authority to issue reactor licensees these approvals.

1 Section 20.2002 governs the approval process for disposal procedures that are not otherwise authorized in the regulations in this chapter, such as disposal in hazardous or municipal solid-waste landfills that, while strictly regulated, are not licensed under the AEA. See NEI Br. 6; NRC Br. 7-8. These disposal methods are thus referred to as alternative disposal procedures.

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4 But there is a fundamental distinction between nuclear waste disposal and reactor operation that is central to the resolution of this case. NRCs new understanding of Section 20.2002 ignores that provisions plain language, structure, and historyall of which show that it applies only to waste disposal, not reactor operation. The Court should thus reject NRCs attempt to bypass the issuance of an AEA-mandated regulation or order to reassert its authority over very low-level waste disposal in Agreement States.

By reinterpreting Section 20.2002 contrary to its unambiguous terms, NRC also created a de facto new regulation in violation of Administrative Procedure Act (APA) notice-and-comment requirements. In further violation of the APA, NRC failed to give a reasoned explanation for this new position in the 2019 Letter, and now attempts to offer impermissible post-hoc rationalizations for its action. And by arbitrarily imposing that new interpretation on licensees without the necessary analysis or evaluation, NRC violated its Backfitting Rule, 10 C.F.R. § 50.109, which applies both to new regulations and new interpretations of existing requirements.

Accordingly, this Court should vacate NRCs action as articulated in the 2019 Letter, reinstate NRCs previous practice, and remand to the agency for further consideration.

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5 ARGUMENT I.

NRCS 2019 LETTER CONSTITUTES REVIEWABLE FINAL AGENCY ACTION The 2019 Letter constitutes reviewable final agency action. An agency decision is final if it marks the consummation of the agencys decisionmaking process and has direct and appreciable legal consequences. Bennett v. Spear, 520 U.S. 154, 177-78 (1997). NRC concedes (at 22) that its 2019 Letter satisfies the first requirement. Instead, it argues that the 2019 Letter does not have legal consequences because it merely repeats a position purportedly made clear previously in NRCs 2012 Letter and 2016 Issue Summary. As explained below, that is incorrect. The 2019 Letter articulates a new, final agency position with legal and practical consequences, creating new regulatory burdens and enforcement risks for licensees with valid state approvals.

A.

The 2019 Letter Creates New Regulatory Burdens and Enforcement Risks for Licensees As explained in NEIs opening brief (at 34-37), the new position taken in the 2019 Letterthat NRC alone has jurisdiction over reactor licensees very low-level waste disposal procedureshas significant legal and practical consequences for NRC licensees in Agreement States. NRCs 2019 Letter imposes new requirements for disposal procedure approvals that licensees must follow, or risk enforcement action. See Appalachian Power Co. v. EPA, 208 F.3d 1015, 1023 (D.C. Cir. 2000)

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6 (guidance document constituted final agency action because [i]t commands, it requires, it orders, it dictates). Under NRCs prior position, licensees in Agreement States needed to seek very low-level waste disposal approval only from their respective Agreement States. Now, post-2019 Letter, they must obtain NRC approval, even if they have an Agreement State approval. 2019 Letter 1 (JA__).

That the 2019 Letter was issued in response to NEIs letter requesting rescission of the 2016 Issue Summary did not preclude the agency from expressing a final position in that document. Ciba-Geigy Corp. v. U.S. EPA, 801 F.2d 430, 436 n.8 (D.C. Cir. 1986). In response to NEIs letter, NRC could have reaffirmed that the Issue Summary was informational and called only for strictly voluntary action by licensees. Instead, NRC did something different. It said licensees must follow the Issue Summary and submit a Section 20.2002 application to NRC for approval of waste disposal procedures or risk enforcement action. See 2019 Letter 1 (JA__).

Importantly, the 2019 Letter also offered a new legal basis for NRCs approval requirement, stating that this requirement is based on the NRCs jurisdiction over the operation of nuclear power plants, which cannot be delegated to an Agreement State. 2019 Letter 1 (JA__) (emphasis added). NRC concedes (at 26) that before the 2019 Letter it did not expressly refer to the non-delegability of jurisdiction over nuclear power plants as a rationale for its new interpretation.

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7 The legal effect of this new requirement is evident from NRCs initial statement that it will consider exercising enforcement discretion for licensees that have relied on existing Agreement State approvals, but only on a case-by-case basis. 2019 Letter 1 (JA__). Enforcement discretion is necessary only where the agency finds a legal violation in the first place. Significantly, this statement also implies there are cases in which enforcement discretion will not be exerciseda risk which has now become reality for some licensees. See Hedges Decl. ¶¶ 19-21 (ADD10-12).

Despite the new legal consequences that flow from its 2019 Letter, NRC attempts (at 21) to avoid judicial review by arguing that its new interpretation would be susceptible to challenge, if need be, in the event that enforcement action is taken against a licensee. But where, as here, an agency publicly articulates an unequivocal position... and expects regulated entities to alter their primary conduct to conform to that position, the agency has voluntarily relinquished the benefit of postponed judicial review. Ciba-Geigy, 801 F.2d at 436. A licensees only alternative to obtaining judicial review now is to violate [NRCs] directives, refuse to seek the newly-required NRC approval, and then defend an enforcement proceeding on the grounds [NEI] raises here. Barrick Goldstrike Mines, Inc. v.

Browner, 215 F.3d 45, 49 (D.C. Cir. 2000). This choice between costly compliance, and the risk of serious civil and criminal penalties underscores the USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 14 of 37

8 2019 Letters legal consequences and provides no basis to delay judicial review.

Ciba-Geigy, 810 F.2d at 438-39.2 In short, the 2019 Letter put forth a new regulatory regime with new legal consequences for NRC licensees, and NRCs arguments to the contrary lack merit.

B.

The 2019 Letter Does Not Simply Restate a Prior NRC Position Before the 2019 Letter, no reasonable observer would have perceived a very substantial risk that NRC would interpret its 2012 Letter and 2016 Issue Summary in the manner it now advances. See Dominion Res., Inc. v. FERC, 286 F.3d 586, 589 (D.C. Cir. 2002). Neither document reflected the position that NRC articulated in the 2019 Letter.

1.

The 2012 Agreement State Letter Did Not Alter the 1986 Information Notice NRC claims (at 27) that its conclusion that NRC licensees must apply to the NRC under Section 20.2002 to use an alternative method of disposal can be traced back to the 2012 Letter. But as discussed below and in NEIs brief opposing the 2 Obtaining review of an enforcement action is not as easy as NRC suggests.

NRC regulations do not provide for an opportunity for hearing to challenge a notice of violation. Compare 10 C.F.R. § 2.201(b), with id. §§ 2.202(a)(3)(i), 2.205(d). In fact, for minor violations (like those at issue here), NRC typically does not issue a formal notice of violation or document its findings. NRC Enforcement Policy 12, 82 (Jan.

15, 2020),

https://www.nrc.gov/docs/ML1935/ML19352E921.pdf.

Nonetheless, under its enforcement policy, NRC views a failure to correct a minor violation within a reasonable time as a potential willful violation, which could then raise the potential for civil and criminal penalties. Id. at 11; see also 42 U.S.C.

§ 2273(a), (c) (AEA civil and criminal penalties).

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9 Governments motion to dismiss (Opp. to Mot. to Dismiss 14-15 (Mar. 11, 2020)),

the 2012 Letter did not effect the regulatory change that NRC claims.

The 2012 Letter does not purport to reverse the agency policy articulated in the 1986 Information Notice. Indeed, it does not reference the Information Notice at all. The 2012 Letter, which NRC styled as a clarification, is simply not germane to the issues before the Court.

Directed to Agreement States, not NRC licensees, the 2012 Letters stated purpose is to clarify how Section 20.2002 and similar Agreement State processes work when the waste disposal facility is located in another State than the waste generator. 2012 Letter 1 (JA__). The 2012 Letters summary paragraph reinforces its focus on these interstate situations, noting that the operator of an unlicensed

[disposal] facility receiving NRC and Agreement State regulated waste for disposal must receive either an exemption or a license from the appropriate regulatory authority (either the NRC or an Agreement State depending on the location of the disposal site) prior to receiving or disposal of the material. Id. at 3 (JA__)

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10 (emphasis added). The letter also did not reference AEA Section 274(c)(1), or distinguish between reactor operation and disposal.3 Finally, NRC does not explain how NRC licensees could have been on notice of the 2012 Letters supposed policy change given that it was neither directed to licensees nor published in the Federal Register. The 2012 Letter acknowledges as much, stating that [i]n order to inform NRC licensees and interested stakeholders, specific guidance regarding the review process for the evaluation of requests under 20.2002 is under development and will be shared with the Agreement States once it has been finalized. 2012 Letter 3 (JA__) (emphasis added). This guidance, as NRC points out (at 53), was not issued until 2020. This Court has long held that

[p]otential petitioners cannot be expected to squirrel through the Commissions public document room in search of papers that might reflect final agency action.

Public Citizen v. NRC, 901 F.2d 147, 153 (D.C. Cir. 1990). NRCs failure to direct the 2012 Letter to NRC licensees further belies its claim that this document effected 3 NRC disputes (at 10-11 & n.4) that it consistently maintained the agency policy announced in the 1986 Information Notice. But the examples cited by NRC hardly constitute a reversal of agency policy. One example suggests there was confusion over whether federal approval was needed given it does not authorize

[the disposal facility] to accept any material it is not otherwise licensed to receive under Texas licensing authority. 70 Fed. Reg. 24,124, 24,126 (May 6, 2005). In any event, that NEIs members received Agreement State approvals after the 2012 Letter underscores that Agreement States and industry did not understand the 2012 Letter to alter agency policy or requirements. See Weber Decl. ¶ 17 (ADD43).

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11 a policy change of which licensees should have been aware, let alone the change NRC now attributes to it.

In support of its overbroad reading of the 2012 Letter, NRC points (at 13, 42) to Scenario 4 of that letter, in which an NRC licensee applies for authorization to dispose of material at an unlicensed facility in an Agreement State. See 2012 Letter 2 (JA__). NRC claims that this scenario makes clear NRC licensees in Agreement States must seek approval from NRC to dispose of the waste. But it is unclear from the referenced scenario whether the hypothetical NRC licensee is even located in an Agreement Statewhich would have been a crucial fact to include if NRC actually intended to reverse its prior position. Id. Moreover, if NRC intended to use this scenario to reassert jurisdiction over the disposal procedures of NRC licensees in Agreement States, it could have said so. It did not. NRC thus inaccurately characterizes the 2012 Letter when it claims that that document communicated the regulatory change articulated in the 2019 Letter.

2.

The 2016 Issue Summary Did Not Create Legal Consequences NRCs claim that the 2019 Letter merely restates a position articulated in the 2016 Issue Summary is similarly unavailing. As discussed in NEIs opening brief (at 32-34), the Issue Summary suggested that NRCs position with respect to very low-level waste disposal was changing insofar as the Issue Summary supersedes the agency position articulated in the 1986 Information Notice. Nevertheless, the Issue USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 18 of 37

12 Summary plainly stated that no action or written response was required from NRC licensees, and that it did not represent a departure from current regulatory requirements and practice. 2016 Issue Summary 3 (JA__). Notably, when NRC issued the Issue Summary, it knew that multiple NRC licensees had valid Agreement State approvals. See Hedges Decl. ¶ 18 (ADD9-10). The Backfitting Rule would have been triggered if the 2016 Issue Summary had required licensees to change their procedures. 10 C.F.R. § 50.109(a)(1). But the Issue Summary did not say state approvals were no longer validit said there was not a backfit and any action taken by licensees was strictly voluntary. 2016 Issue Summary 3 (JA__).

NRC attempts (at 28-30) to reframe the Issue Summarys backfit discussion by essentially arguing that the 2012 Letter to Agreement States already imposed a backfit on NRC licensees. NRC thus contends that the 2016 Issue Summarys statement (at 3 (JA__)) that it does not represent a departure from current regulatory requirements and practice was a reference to requirements and practice imposed on licensees in 2012. This argument falls flat. As discussed above, the 2012 Letter did not alter the position articulated in the Information Notice, did not require changes from licensees, and did not include a backfitting analysis. Moreover, no licensee reasonably would have perceived a very substantial risk that NRC might, several years later, construe the 2016 Issue Summary, or its reference to current requirements and practice, to mean what NRC eventually posited in 2019. See USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 19 of 37

13 Dominion Res., 286 F.3d at 589. Rather, licensees reasonably would have read the 2016 Issue Summary to mean what it says: NRC was not imposing a backfit on licensees and required no action or written response. 2016 Issue Summary 3 (JA__).

NRC also claims (at 25-26) that its newfound understanding that waste disposal procedures are part of nuclear power plant operation and that their approval cannot be delegated to Agreement States, 2019 Letter 1 (JA__), has a basis in the 2016 Issue Summary. But as NRC concedes (at 26), the Issue Summary contains no discussion of reactor operations or this non-delegation theory. The Issue Summarys reference to the regulatory authority that issued the license is not equivalent to NRCs exclusive, non-delegable jurisdiction over reactor operations.

On its face, the Issue Summary applies to [a]ll NRC licenseesnot just reactor licensees covered by AEA Section 274(c)(1). It applies, for example, to other NRC licensees in Agreement States, like Veteran Affairs hospitals, nuclear fuel-fabrication facilities, and federal agenciesnone of which is subject to AEA Section 274(c)(1). NRCs 2019 Letter thus adopted a rationale for its action that is nowhere to be found in the 2016 Issue Summary.

In short, between issuance of the 2016 Issue Summary and the 2019 Letter, NRC revised the legal effect and basis of that Issue Summary, disclaiming its 2016 USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 20 of 37

14 representation to industry that it was not departing from current regulatory requirements and practice.

3.

Independent Equipment Dealers Is Inapposite This case stands in sharp contrast to Independent Equipment Dealers Association v. EPA, 372 F.3d 420 (D.C. Cir. 2004), on which NRC relies. In that case, a trade association wrote to the Environmental Protection Agency (EPA) requesting it confirm the associations interpretation of certain EPA regulations. Id.

at 424-25. EPA disagreed with the associations interpretation, citing longstanding policy, and the trade association petitioned for review of that decision. This Court found that EPAs letter was the type of workaday advice letter that agencies prepare countless times per year in dealing with the regulated community, and which did not effect regulatory change. Id. at 427 (citation omitted). Because the EPA letter neither announced a new interpretation of the regulations nor effected a change in the regulations themselves, it did not constitute final agency action. Id.

The fact that the agency might later enforce the legal interpretation repeated in the letter was insufficient to make the letter itself final agency action.

Here, rather than restating information already included in the Issue Summary (or the irrelevant 2012 Letter), the 2019 Letter conveyed a new agency position that directly conflicts with the Issue Summary. See supra at 11. The 2016 Issue Summary said it imposed no backfit, required no action, and merely provided USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 21 of 37

15 informationit thus had no legal consequences for NRC licensees. The 2019 Letter rescinded that prophylactic language and created new legal consequences for NRC licensees, including the potential for enforcement action.

The 2019 Letter also followed months of agency flip-flopping about the legal implications of the Issue Summary and NRCs statement that it is evaluating the issue generically to provide further clarity. Oct. 31, 2018 NRC Letter to STP Nuclear Operating Company 2 (JA__). Unlike the letter at issue in Independent Equipment Dealers, NRCs 2019 Letter wrought regulatory change by imposing new legal obligations on licensees that were not articulated in the Issue Summary.

This case is therefore more like Appalachian Power Co. and Barrick Goldstrike Mines, in which the courts found informal communications or guidance documents that imposed legal obligations or altered the agencys policy position could constitute final agency action. See Barrick Goldstrike, 215 F.3d at 50; Appalachian Power, 208 F.3d at 1023; see also Ciba-Geigy, 801 F.2d at 436-38 &

nn.8-9 (challenge to EPA position taken in letter to petitioner was ripe, because it represented EPAs final position on the matter and had legal consequences).

Because the 2019 Letter altered the regulatory regime and imposed new requirements on NRC licensees, it satisfies the legal consequences prong of the Bennett test.

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16 II.

NRCS NEW REGULATORY INTERPRETATION IS UNLAWFUL NRCs 2019 Letter states that reactor licensees must seek approval to dispose of very low-level waste from NRCnot Agreement Statesbased on the NRCs jurisdiction over the operation of nuclear power plants, which cannot be delegated to an Agreement State. 2019 Letter 1 (JA__). NRC previously acknowledged, however, that it would need to amend 10 C.F.R. Part 150 in order to take this authority back, and it concedes (at 42) that it has not done so. See Office of Executive Legal Director, NRC, Jurisdiction Over Low Level Waste Management at Reactor Sites in Agreement States 2 (Sept. 13, 1985) (Legal Opinion) (JA__);

61 Fed. Reg. 26,852, 26,852-53 (May 29, 1996). NRC now says it has reinterpreted a different regulation10 C.F.R. § 20.2002to do functionally the same thing.

NRC thus seeks to circumvent the AEA-required regulation or order by contending that Section 20.2002 authorizes it to regulate alternative disposal procedures for very low-level radioactive waste in Agreement States. It does so notwithstanding that NRC previously transferred such authority to Agreement States and decided against issuing a regulation or order taking that authority back.

At most, Section 20.2002 can be read as establishing a method for NRC licensees to obtain approval of proposed disposal procedures in situations not relevant here. There is no dispute that licensees located in non-Agreement States may use Section 20.2002 to obtain NRC approval of alternative disposal procedures USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 23 of 37

17 for very low-level radioactive waste. But Section 20.2002 is not triggered with respect to such activities in Agreement States precisely because NRC long ago ceded disposal authority to Agreement States. And NRCs new interpretation of Section 20.2002 does not satisfy the AEAs requirement of a regulation to reclaim jurisdiction from Agreement States.

A.

Section 20.2002 Addresses Waste Disposal, Not Reactor Operations To avoid dual regulation, when an Agreement State assumes NRCs delegated authority for low-level waste disposal, anyone in the state subject to NRC jurisdiction is exempt... from regulations of the Commission applicable to licensees. 10 C.F.R. § 150.10. NRC, however, must retain exclusive authority over the operation of reactor facilities, among other things. 42 U.S.C. § 2021(c)(1);

10 C.F.R. § 150.15(a)(1). NRC long interpreted these provisions to allow Agreement States to approve an NRC licensees alternative disposal procedures for very low-level waste because such disposal is not part of reactor operations. In other words, Section 150.10 exempted NRC licensees from the requirement in Section 20.2002 to seek NRCs approvals of alternative disposal procedures; licensees would instead need to secure Agreement State approvals.

Whether Section 150.10 makes Section 20.2002 inapplicable to NRC licensees in Agreement States turns on whether the latter regulates reactor operations or disposal. NRC argues (at 45) that it is compelled to conclude USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 24 of 37

18 that Section 20.2002 regulates operations, such that Section 150.15(a)(1) and AEA Section 274(c)(1) prohibit Agreement States from assuming the regulatory authority to approve an NRC licensees alternative disposal procedures.

NRC is wrong. Nothing in the AEA or NRC regulations hints, much less compels, NRC to construe Section 20.2002 as applying to reactor operations rather than waste disposal. [B]ecause deference to an agencys interpretation of a statute is not appropriate when the agency wrongly believes that interpretation is compelled by Congress, [the Court] may not defer to the [NRCs] reading if it is but one of several permissible interpretations of the statutory language. Am. Lung Assn v.

EPA, No. 19-1140, 2021 WL 162579, at *15 (D.C. Cir. Jan. 19, 2021) (citations omitted). For NRC to prevail, its reading must be required by the statutory text.

Id. at *16. NRCs attempted reinterpretation fails for at least three reasons.

First, the term reactor operation in AEA Section 274(c)(1) cannot reasonably be read to include nuclear waste disposal. NRC concedes (at 51) that these are discrete activities. Disposal is clearly, and separately, addressed in AEA Section 274(c)(3)-(4), not (c)(1). See NEI Br. 48-49. Thus, Section 274(c)(1), on which NRC relies, cannot be read to compel NRCs conclusion that the AEA precludes Agreement State approval of a reactor licensees waste disposal procedures.

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19 Second, by its plain terms and indeed its very title, Section 20.2002 deals with disposal. See NEI Br. 50-51. NRC has broad discretion to regulate reactor operation, and defined that term to include the storage and handling of radioactive waste before its ultimate disposalbut, critically, not disposal itself. See 10 C.F.R. § 150.15(a)(1). The requirements in Section 20.2002 are directed at the risks and conditions at the waste disposal facilitynot the risks and conditions at the reactor site prior to waste disposal. See id. § 20.2002.

NRC nonetheless attempts (at 52-54) to draw an artificial distinction between waste disposal procedures and the act of disposal itselfeven though disposal procedures deal with the act of disposal, not the pre-disposal storage and handling of waste referenced by NRC. Despite NRCs suggestion that a Section 20.2002 review allows it to regulate operational activities related to waste handling and transportation, such activities are clearly addressed in other regulations, not Section 20.2002. See, e.g., 10 C.F.R. § 20.1904 (labeling requirements for safe handling of waste containers); id. § 20.2006 (requirements for transfer and manifesting waste shipments); id. § 20.2108 (recordkeeping requirements for waste disposal); id. § 71.5 (transportation requirements). These other regulations are consistent with NRCs ability to maintain exclusive regulatory authority over a reactor licensees handling of waste pre-disposal and underscore the unreasonably expansive nature of NRCs new reading of Section 20.2002.

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20 Third, consistent with its plain language, NRC historically classified Section 20.2002 as a disposal regulation rather than one addressing reactor operations. In a 1985 Legal Opinion, NRC determined that it could not reassert authority over low-level waste disposal without a rulemaking proceeding, or by issuance of appropriate orders. Legal Opinion 2 (JA__). Based on this understanding, NRC proposed, and later withdrew, a 1988 rule that would have reasserted NRC jurisdiction over reactor licensee waste disposal procedures. See 61 Fed. Reg. at 26,852-53. Under its current flawed logic, NRC would have the Court believe that all these prior interpretations were wrong, and that NRC violated Section 20.2002 and AEA Section 274(c)(1) for decades.

In summary, nothing in the AEA or NRC regulations supports NRCs conclusion that Section 20.2002 concerns nuclear reactor operations, and AEA Section 274(c) belies NRCs conclusion. NRCs conclusion that the AEA mandates its new position is erroneous and entitled to no deference. See Am. Lung Assn, 2021 WL 162579, at *15. And because Section 20.2002 unambiguously applies to waste disposal (not reactor operations), the Court need not afford Auer deference to NRCs reinterpretation of that provision. See Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019).

The Court should thus reject NRCs claim that Section 20.2002 applies to reactor operations.

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21 B.

NRCs Reading of Section 20.2002 Is Inconsistent with Other NRC Regulations To bolster its new regulatory interpretation, NRC points (at 49) to the language in Section 20.2002 stating that NRC licensees may apply to the Commission for approval of alternative disposal procedures. 10 C.F.R. § 20.2002.

But NRC, in doing so, ignores Section 150.10. As explained above, Section 150.10 exempts licensees that would otherwise be subject to Section 20.2002 from its applicability. See supra at 17.

Applying NRCs flawed logic also leads to absurd results. If Part 20 were read in isolation, ignoring Section 150.10 as NRC suggests, no transfer to an Agreement State-licensed disposal facility could, as a practical matter, occur. As NRC observes (at 5, 12), 10 C.F.R. § 20.2001(a)(1) authorizes transfers to an authorized recipient, such as low-level waste disposal facilities licensed under 10 C.F.R. Part 61. Significantly, none of the nations low-level waste disposal facilities is licensed by NRC under Part 61they are all licensed by Agreement States via their own NRC-compatible and adequate regulations. See 42 U.S.C. § 2021(d)(2).

To avoid the preposterous conclusion that Section 20.2001(a)(1) does not permit an NRC licensee to transfer waste to an Agreement State-licensed facility, NRC adds (at 5, 8) the phrase or Agreement State-equivalent regulations into Section 20.2001(a)(1). Again, it does so even though that regulation references only NRC-licensed disposal facilities (of which there are none). See 10 C.F.R.

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22

§ 20.2001(a)(1). But NRC refuses to read or Agreement State-equivalent regulations into Section 20.2001(a)(4), which also authorizes NRC licensees to dispose of waste under Section 20.2002. See id. § 20.2001(a)(4).

There is no way to reconcile NRCs inconsistent reading of Section 20.2001(a)which inserts or Agreement State-equivalent regulations into some provisions but refuses to read it into the one that references Section 20.2002. The Court need not adopt this inconsistent interpretation and should instead read Sections 20.2001, 20.2002, and 150.10 together, as NRC did for decades.

There are other logical inconsistencies with NRCs position. Despite NRCs nebulous reference (at 8) to a potential safety concern, NRC has no concern with an Agreement State regulating the recipient of the waste (i.e., the entity ultimately responsible for disposal). Yet NRC suggests it must approve the generators disposal procedures even though the technical considerations are no different than those considered by the Agreement State. NRC likewise has no concern with Agreement States regulating disposal of low-level waste generally, but believes states cannot approve disposal procedures for very low-level waste, the material with the lowest safety risk. This makes no sense. And critically, nothing in the record suggests that Agreement State regulation of very low-level waste disposal poses a USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 29 of 37

23 safety issue or that NRC lacks tools to oversee Agreement State programs. See NEI Br. 43-44.

III.

NRC FAILED TO OFFER A SUFFICIENT EXPLANATION FOR ITS NEW INTERPRETATION OF SECTION 20.2002 In its 2019 Letter, NRC violated the APA requirement for reasoned decisionmaking because it provided no legal or factual analysis to support its contention that low-level waste disposal procedures are part of nuclear reactor operation. According to NRC (at 44), NEI ignores the events of the last eight years because the 2019 Letter merely restates the position communicated in the 2012 Letter and 2016 Issue Summary. Not so. As discussed above, the 2019 Letter changed NRCs position concerning both the legal effect of the Issue Summary and the legal basis for the agencys new approval requirement. See supra at 5. In doing so, NRC abandoned its prior position without citing the relevant statutory and regulatory provisions, addressing the original rationales for NRCs longstanding contrary interpretation, providing any factual support for the new interpretation, or considering industrys reliance on NRCs prior position.

Even considering its 2012 and 2016 statements, NRC has not satisfied its obligation to explain its changed position. NRC offers (at 45) post-hoc rationales found nowhere in 2019 Letter (or prior documents), claiming that its new position is compelled by the AEA and NRC regulations, and necessary for it to retain jurisdiction over waste prior to disposal. But NRCs justification for its new position USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 30 of 37

24 is limited to reasons stated in its decision document and may not be upheld based on these impermissible post hoc rationalizations. Dept of Homeland Sec. v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1909 (2020).

Moreover, while an agency may justify its policy choice by explaining why that policy is more consistent with statutory language than alternative policies, it violates the APAs requirement for reasoned decisionmaking when it does not analyze or explain why the statute should be interpreted as the agency suggests.

Encino Motorcars., LLC v. Navarro, 136 S. Ct. 2117, 2127 (2016) (quoting Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 175 (2007)). That is precisely what has happened here.

Notably, the 2012 Letter makes no reference to the 1986 Information Notice, AEA Section 274(c)(1), or the distinction between reactor operation and disposal. Indeed, the 2012 Letter did not purport to change anythingit was labelled as a mere clarification and not even sent to licensees. 2012 Letter 1 (JA__). The 2016 Issue Summary stated that it supersedes the 1986 Information Notice because the position in that document was incorrect. 2016 Issue Summary 1 (JA__). But the Issue Summary provided no explanation or supporting rationale for that conclusion (much less one based on the notion that Section 20.2002 governs reactor operations). Id. NRC simply failed to offer any meaningful explanation of USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 31 of 37

25 its new position. The agencys new interpretation was thus arbitrary and capricious, and at odds with the APA requirement for reasoned decisionmaking.

IV.

NRC FAILED TO COMPLY WITH NOTICE-AND-COMMENT PROCEDURES BEFORE DE FACTO AMENDING SECTION 20.2002 In response to NEIs argument that the 2019 Letter gave the 2016 Issue Summary the force and effect of law in enforcement actions, NRC again claims (at

41) that the 2019 Letter simply restated its 2012 and 2016 position. But the 2019 Letter did far more than reiterate a prior NRC position; it changed the legal effect of the Issue Summary and the legal basis for NRCs new approval requirement, altering the regulatory landscape for reactor licensees. See supra at 5.

Nothing in Section 20.2002s plain language, structure, or history suggests that provision concerns reactor operations. NRCs attempt to reinterpret Section 20.2002 in a manner inconsistent with its plain language thus constitutes a de facto amendment to that rule. This NRC cannot legally do without complying with [notice-and-comment] rulemaking procedures. Appalachian Power, 208 F.3d at 1028; see also Christensen v. Harris Cnty., 529 U.S. 576, 588 (2000) (To defer to the agencys position would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation.). Because its 2019 Letter substantively altered agency policy and requirements without following notice-and-comment procedures, NRC violated the APA.

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26 V.

NRCS 2019 LETTER IMPOSED A NEW INTERPRETATION AS A BACKFIT WITHOUT INVOKING ANY EXCEPTION EXCUSING THE REQUIRED ANALYSIS NRC failed to comply with its Backfitting Rule before imposing new disposal requirements on reactor licensees. As explained above, the 2019 Letter imposed a backfit because it did far more than restate a prior NRC position. See supra at 8-14.

NRCs claim (at 48) that its prior position has been known to the regulated community since at least 2012 is baseless. The 2012 Letter was not sent to licensees or published in the Federal Register. It also did not purport to reverse agency policy.

As explained above, NRC characterized the 2012 Letter as a clarification rather than a new NRC policy position or interpretation of agency regulations. In fact, the 2012 Letters plainly stated purpose was to clarify how Section 20.2002 and similar Agreement State processes work in multistate situations. 2012 Letter 1 (JA__); see also supra at 9.

Significantly, the 2016 Issue Summary states that there is not a backfit and it contains no backfitting analysis or evaluation (which would have been required if NRC had sought to impose new or different interpretations of its regulations).

2016 Issue Summary 3 (JA__). Thus, when the 2019 Letter reversed course and said licensees must follow the Issue Summary and submit a Section 20.2002 application for approval of very low-level waste disposal procedures (or risk USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 33 of 37

27 enforcement action), NRC violated its Backfitting Rule by failing to perform the required analysis.

NRC belatedly attempts (at 48-49) to invoke an exception to the Backfitting Rules requirement that it prepare a systematic and documented analysis to determine whether imposing the prospective new rule or interpretation is justified considering its benefits and costs. 10 C.F.R. § 50.109(a)(2). The Backfitting Rule allows NRC to prepare a documented evaluation that explains why the agency is invoking a listed exception to the otherwise required systematic analysis. Id.

§ 50.109(a)(2)-(4). But NRCs reference to the so-called compliance exception in Section 50.109(a)(4)(i) is misplaced in two major respects.

First, the Issue Summary said there is not a backfit for which an exception might be necessary and did not otherwise purport to invoke the compliance (or any other) exception. Issue Summary 3 (JA__). The Issue Summarys passing reference to compliancein the middle of a sentence saying there is no backfithardly meets NRCs own requirement for a documented evaluation justifying an agency exception to performing a more detailed systematic analysis. See 10 C.F.R. § 50.109(a)(4)

(allowing exception when NRC finds and declares, with appropriated documented evaluation for its finding that the relevant standard is satisfied). Having failed to make the necessary finding or declaration of the compliance exceptions USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 34 of 37

28 applicability in the Issue Summary, and then failing again to do so in the 2019 Letter, NRC may not do so now. See Regents, 140 S. Ct. at 1909.

Second, even had it invoked the compliance exception as the basis for its decision, that exception is inapplicable here. The Commission has made clear that new or modified interpretations of what constitutes compliance would not fall within the exception. 50 Fed. Reg. 38,097, 38,103 (Sept. 20, 1985). In this case, the requirements in Section 20.2002 have not changed; only NRCs interpretation of what constitutes compliance has changed, rendering the exception inapplicable. A contrary finding would allow the compliance exception to swallow the Backfitting Rule, which applies to both changes to regulations and new or different regulatory interpretations.

CONCLUSION NRCs 2019 Letter constitutes final agency action that created new regulatory burdens and enforcement risks for licensees with existing state approvals. This new NRC position could not reasonably have been anticipated by licensees reviewing the 2012 Letter or 2016 Issue Summary. NRCs new post-hoc interpretation is inconsistent with the AEA and NRC regulations, and amounts to a de facto amendment undertaken without reasoned explanation, public comment, or compliance with the Backfitting Rule. NEI respectfully requests that this Court vacate NRCs determination that compliance with the agencys new very low-level USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 35 of 37

29 waste disposal requirement is mandatory for NRC licensees, reinstate NRCs prior position, see CropLife America v. EPA, 329 F.3d 876, 884 (D.C. Cir. 2003), and remand to NRC for further consideration.

Dated: February 8, 2021 Respectfully submitted,

/s/ Steven P. Croley Steven P. Croley LATHAM & WATKINS LLP 555 Eleventh Street, NW Suite 1000 Washington, DC 20004-1304 (202) 637-2200 steven.croley@lw.com Counsel for Petitioner USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 36 of 37

CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMIT, TYPEFACE REQUIREMENTS, AND TYPE-STYLE REQUIREMENTS

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This document complies with the type-volume limit of Federal Rule of Appellate Procedure 32(a)(7)(B) because, excluding the parts of the document exempted by Federal Rule of Appellate Procedure 32(f) and Circuit Rule 32(e)(1),

this document contains 6,448 words, as determined by the word-count function of Microsoft Word 2016.

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This document complies with the typeface requirements of Federal Rule of Appellate Procedure 32(a)(5) and the type-style requirements of Federal Rule of Appellate Procedure 32(a)(6) because this document has been prepared in a proportionally spaced typeface using Microsoft Word 2016 in 14-point Times New Roman Font.

/s/ Steven P. Croley Steven P. Croley USCA Case #19-1240 Document #1884290 Filed: 02/08/2021 Page 37 of 37