IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-11353
_____________________
WASTE CONTROL SPECIALISTS, LLC,
Plaintiff-Appellee,
versus
UNITED STATES DEPARTMENT OF ENERGY; JAMES M. OWENDOFF,
Acting Assistant Secretary for Enviornmental Management;
MARY ANN SULLIVAN, Deputy General Counsel for Environment
and Civilian Nuclear Defense Programs,
Defendants-Appellants.
_______________________________________________________
Appeal from the United States District Court for
the Northern District of Texas
_______________________________________________________
_____________________
No. 98-10331
_____________________
In Re: UNITED SATE DEPARTMENT OF ENERGY; JAMES M. OWENDOFF,
Acting Assistant Secretary for Environmental Management;
MARY ANNE SULLIVAN, Deputy General Counsel for Environment
and Civilian and Defense Nuclear Programs,
Petitioners.
_______________________________________________________
On Petition for Writ of Mandamus to the United States
District for the Northern District of Texas
_______________________________________________________
May 14, 1998
Before REAVLEY, DeMOSS and PARKER, Circuit Judges.
REAVLEY, Circuit Judge:
Waste Control Specialists, L.L.C. (WCS) sued the Department
of Energy (DOE) for rejecting its proposal for a new facility for
disposing of DOE’s low-level radioactive waste. After a one day
hearing, the district judge granted a preliminary injunction,
enjoining DOE from refusing WCS’s bid on specific grounds. We
reverse and order dismissal of the case.
I. Background
The Atomic Energy Act of 1954 (AEA)1 empowers the federal
government to regulate all activities involving radiological
health and safety of atomic energy and its byproducts. The Low-
Level Radioactive Waste Policy Amendments Act of 1985 (LLWPAA)
amended the AEA to provide that the federal government is
“responsible for the disposal of . . . low-level radioactive
waste owned or generated by the Department of Energy.”2 Low-
level radioactive waste (LLRW) is defined in the LLWPAA by what
it is not: it is “not high-level radioactive waste, spent nuclear
fuel, or byproduct material (as defined in section 2014(e)(2) of
this title).”3 LLRW generally consists of “section 2014(e)(1)
byproduct material”: “any radioactive material (except special
nuclear material [i.e. plutonium or specified uranium isotopes])
yielded in or made radioactive by exposure to the radiation
1
42 U.S.C. §§ 2011-2297g-4 (1994).
2
42 U.S.C. § 2021c(b)(1)(A).
3
42 U.S.C. § 2021b(9)(A).
2
incident to the process of producing or utilizing special nuclear
material.”4
DOE disposes of its LLRW under its “Radioactive Waste
Management Policy.” In accordance with that policy, the agency’s
LLRW “shall be disposed of on the site at which it is generated,
if practical, or if on-site disposal capability is not available,
at another DOE disposal facility.”5 Disposal at a non-DOE
facility requires an exemption from this policy. Under the
agency’s current exemption policy, DOE may use a non-DOE disposal
facility if, among other things, the facility “compl[ies] with
applicable Federal, State, and Local requirements, and ha[s] the
necessary permits, licenses, and approvals for the specific
wastes involved.”6
The AEA authorizes the Nuclear Regulatory Commission (NRC)
to issue licenses for LLRW disposal sites and to exempt certain
activities from licensing.7 An NRC regulation provides that “any
prime contractor of the Department [of Energy] is exempt from the
requirements for a license set forth in [42 U.S.C. § 2111] . . .
to the extent that such contractor . . . transfers, receives,
acquires, owns, possess, or uses byproduct material for: (a)
4
42 U.S.C. § 2014(e)(1). LLRW may also contain small
amounts of “special nuclear material” (see 42 U.S.C. § 2014(aa))
and “source material” (see 42 U.S.C. § 2014(z)).
5
DOE Order 5820.2A, Radioactive Waste Management (Sept. 26,
1988).
6
DOE Memorandum (Oct. 24, 1996) at 2.
7
42 U.S.C. § 2111.
3
[t]he performance of work for [DOE] at a United States
Government-owned or controlled site.”8
The NRC may relinquish to states, by agreement, its
authority to license and regulate certain activities, including
LLRW disposal facilities.9 Among other things, the “agreement
state” must certify to the NRC that it “has a program for the
control of radiation hazards adequate to protect the public
health and safety,” and that its public health, safety and
environment standards “are equivalent, to the extent practicable,
or more stringent that,” the NRC’s corresponding standards.10
Texas is an agreement state.11 Under Texas law, “[a]
radioactive waste disposal license may be issued only to a public
entity specifically authorized by law for radioactive waste
disposal.”12 Thus, a private commercial waste disposal facility
company is barred by state law from obtaining a license in Texas
for the disposal of LLRW.
On August 29, 1996, DOE issued a Request for Proposals (RFP)
in connection with the cleanup of its Fernald nuclear site in
Ohio. In the Fernald RFP, DOE required that the bidders
demonstrate that they possess, or have the ability to obtain
8
10 C.F.R. § 30.12(a) (1997).
9
42 U.S.C. § 2021(b).
10
42 U.S.C. §§ 2021(d)(1), 2021(o)(2).
11
Notice of Discontinuance of Certain Regulatory Authority
and Responsibility within the State of Texas, 47 Fed. Reg. 15,186
(Apr. 8, 1982).
12
TEX. HEALTH & SAEFTY CODE ANN. § 401.203(West 1992).
4
within 27 months of a contract award, “the proper Federal, State
and Local permits and licenses for the permanent disposal” of
LLRW.
WCS’s facility in West Texas is licensed to dispose of
hazardous and toxic wastes, but not LLRW. On September 20, 1996,
WCS submitted a proposed bid to the DOE for the Fernald RFP. WCS
included a provision in the application for oversight of the site
by the Texas Natural Resource Conservation Commission (TNRCC).
In December, after the TNRCC withdrew from consideration as the
proposed oversight body, WCS submitted an alternative regulatory
oversight mechanism. Under either plan, WCS argues that it would
be exempt from Texas state licensing requirements because it
would effectively become a DOE-controlled facility.
On May 5, 1997, DOE sent WCS a letter informing it that,
while “DOE is not prepared to accept the WCS proposal as
submitted,” the agency “is considering” the development of an RFP
for future waste disposal contracts that “could . . . allow for
alternative regulatory structures.” WCS sued DOE, arguing that
DOE’s refusal to consider its proposal was arbitrary and
capricious.
After a one day hearing, the district court issued an
injunction enjoining DOE from denying any WCS bid “on the
ground(s) that: (i) WCS is not or cannot be licensed by Texas for
the disposal of low-level radioactive or mixed wastes; (ii) WCS
is not licensed by the NRC for the disposal of low-level
radioactive or mixed wastes; or (iii) WCS has imposed or sought
5
to alter the provisions of the Fernald RFP relative to title to
the wastes subject thereto.”13
II. Discussion
Both sides agree that WCS’ proposal for DOE regulation of
the site could lawfully be implemented. They disagree on whether
DOE has the discretion to require a state license as a
requirement for bidding. DOE’s policy requiring such a license
is set forth only in its memorandum, which is not the product of
a formal rulemaking. Moreover, even that memorandum does not
address the issue of utilizing self-regulation of the site in
place of a state license.14 We will not give deference to DOE’s
interpretation under Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984), because it had not
enunciated its interpretation prior to the litigation.15
In granting the injunction, the district court focused on
section 110a of the AEA, which provides that
13
The Fernald RFP included a provision that the bidder must
take title to all the wastes. WCS’ proposal contained a
provision that DOE would be requested to take back title after
site closure. The district court found that this future
possibility did not “seek or purport to alter or vary the terms
relative to title of the RFP.” Because we hold that DOE has
discretion to require a state license, which WCS cannot obtain,
we do not reach the issue of title.
14
Since this litigation began, DOE has issued a “Notice of
Intent to Conduct Policy Analysis; Request for Public Comment,”
outlining the WCS proposal and a proposal from another private
entity and requesting comments on the issue. 63 Fed. Reg. 13,396
(Mar. 19, 1998).
15
See United States v. Food, 2,998 Cases, 64 F.3d 984, 987
n.5 (5th Cir. 1995); Irving Indep. Sch. Dist. v. Packard
Properties, 970 F.2d 58, 64 (5th Cir. 1992).
6
“Nothing in this subchapter shall be deemed .
. . to require a license for (1) the
processing, fabricating, or refining of
special nuclear material, or the separation
of special nuclear material, or the
separation of special nuclear material from
other substances, under contract with and for
the account of the Commission; or (2) the
construction or operation of facilities under
contract with and for the account of the
Commission.”16
The district court interpreted this section to mean that the NRC,
and thus the agreement states, could not require that a private
entity contracting with DOE for LLRW disposal have a license, and
that DOE could therefore not require an NRC or state license as a
precondition for bidding. The district court, in issuing the
preliminary injunction, stated that “[t]he existence of a state
or NRC license is neither a necessary prerequisite nor a
sufficient basis for the receipt by a DOE contractor of DOE low-
level or mixed radioactive wastes for disposal at a private
site.” Although correct, that does not answer the question of
whether DOE may require a state or NRC license as part of the
grounds for the contract.
Section 110 is found in Subchapter IX, Atomic Energy
Licenses, which begins by stating that it is unlawful for anyone
“to transfer or receive in interstate commerce, manufacture,
produce, transfer, acquire, possess, use, import, or export any
utilization or production facility except under and in accordance
16
42 U.S.C. § 2140(a). “Commission” refers to the Atomic
Energy Commission. 42 U.S.C. § 2014(f). The district court
found that Commission also applied to the DOE, and DOE does not
disagree with that.
7
with a license issued by the Commission.”17 As DOE argues, it
appears clear that the introductory phrase, “nothing in this
subchapter,” limits § 110 to production and utilization
facilities. WCS argues that such a reading renders the two
subsections superfluous. However, the second subsection
addresses the “construction or operation of facilities under
contact with and for the account of the Commission.” The first
subsection addresses the issue the handling of “special nuclear
material,”18 focusing on activities rather than facilities.
This interpretation is supported by NRC’s regulations. The
regulations provide that a contractor of the DOE is exempt from
the licensing requirements “to the extent that such contractor .
. . receives . . . byproduct material for: (a) The performance of
work for the Department at a United States Government-owned or
controlled site.”19 Logically, if DOE does not “control” the
site, then the contractor is subject to the ordinary NRC
licensing requirements.20
17
42 U.S.C. § 2131.
18
"Special nuclear material” is defined as enriched
plutonium or uranium. 42 U.S.C. § 2014(aa).
19
10 C.F.R § 30.12 (1997) (emphasis added).
20
To the extent that the statute is ambiguous on the
licensing requirements, these regulations are entitled to
deference under Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984). Granted, the NRC’s
interpretation does not necessarily bind the DOE. However, the
same statute governs both the NRC and the DOE, and DOE has not
issued any regulations on the issue prior to this litigation.
8
If DOE chooses to regulate, or “control”, the private waste
disposal sites, then the sites are exempt from NRC and state
licensing requirements. Where, however, DOE does not exercise
such control, the NRC and the agreement states retain their power
to regulate commercial sites providing a service to DOE. Nothing
in the statute indicates that DOE must exercise regulatory
authority over such sites.
WCS directs our attention to other statutes, arguing that
they indicate that DOE must facilitate competition. DOE’s
enabling statute, the Department of Energy Organization Act,
specifies that one of the founding purposes of DOE is “[t]o
assure, to the maximum extent practicable, that the productive
capacity of private enterprise shall be utilized in the
development and achievement of the policies and purposes of this
chapter.”21 The overall federal procurement policy provides
that, with limited exceptions, “an executive agency in conducting
a procurement for property or services . . . shall obtain full
and open competition through the use of competitive procedures in
accordance with the requirements of this subchapter” and the
Federal Acquisition Regulation.22 Neither of these statutes,
however, direct the DOE to promote competition to the exclusion
of other concerns, such as safety and state involvement.
WCS is effectively asking the courts to intrude into the
agency’s policy making process without a statutory basis. We
21
42 U.S.C. § 7112(14).
22
41 U.S.C. § 253(a).
9
reverse the grant of the preliminary injunction and order
dismissal of the suit against DOE. The mandamus action against
the trial judge based on his order that high-ranking DOE
officials attend the settlement discussions is also dismissed as
moot.
REVERSED. The district court is ordered to dismiss the
case.
10