June 19, 1997
MEMO
TO: Commissioners
FROM: Gregg Larson
SUBJECT: Agenda Item #7 - Reconsideration of the Need to Proceed With Development of a Regional Disposal Facility

Congress first enacted legislation addressing the disposal of low-level radioactive waste in 1980 (the Low-Level Radioactive Waste Policy Act). In the 17 years that have followed, both discrete events and more systemic change in waste management practices have significantly changed the context for development of new waste disposal capacity. These events, actions, and changes have not unfolded in a readily-evident progression from which conclusions could easily be drawn about the likelihood of success in a particular compact or state. In addition, distinctive siting approaches, environmental characteristics, political circumstances, and financial resources in the various compacts and unaffiliated states complicate generalizations about the future.

More recently, national events since enactment of Ohio's enabling legislation in June of 1995 (e.g., the recent decision to delay the planned operation of an Illinois disposal facility by nine years) (see Figure 1), coupled with the continued trends in waste management practices and the rising costs of new disposal facilities, warrant Commission reconsideration of its commitment to develop new regional capacity at this time. Individually, the items discussed below may not constitute sufficient reason to do so; however, the totality does call for such reconsideration. This is especially appropriate now, with the Commission at the brink of spending large sums of money on site selection activities in Ohio.

The most significant reasons to reconsider development of new, regional disposal capacity in the Midwest Compact include the following:

1) The continued downward trend in national and Midwest Compact waste volumes.

The rapid increase in low-level radioactive waste disposal costs has resulted in the widespread adoption of volume reduction practices (e.g., waste minimization, compaction, incineration,
evaporation decontamination, etc.) that have significantly reduced national and regional waste volumes. This trend is likely to continue, although the rate may diminish as the cost of achieving additional efficiencies rises. The implementation of a new density-driven price structure at the Barnwell disposal facility could remove some incentives for volume reduction, particularly involving waste compaction, but also may increase the use of other technologies that eliminate or reduce weight (e.g., free release, incineration, decontamination, metal smelting, and steam reforming).

a) National.

During the years from 1986 to 1995, national waste disposal volumes have dramatically fallen. Between 1986 and 1989, the national disposal volume averaged 1,670,486 cubic feet. For the years 1992 through 1995, the national volume has averaged 695,173 cubic feet, a 58% reduction.

b) Midwest Compact.

Midwest Compact disposal volumes also have fallen dramatically over the past 11 years. Based on the very limited history and information on low-level radioactive waste management that was available in the early 1980s, the Compact's Regional Management Plan projected that average annual disposal volumes for Midwest Compact waste would reach 215,500 cubic feet by the late 1980s. Actual volumes never rose higher than 114,700 cubic feet and, during the last four years, Midwest Compact disposal volumes have averaged 21,730 cubic feet (see Figure 2).

Although future volumes may increase with the dismantlement of nuclear power plants, much of the dismantlement waste would probably be shipped to the Envirocare disposal site or to other available high-volume, low-activity disposal facilities. The Midwest Compact disposal facility would not be designed to accommodate most of this dismantlement waste, the Compact's current waste acceptance criteria discourage its receipt, and the expected cost of disposal at a Compact facility would compel generators to look elsewhere for disposal capacity for this waste.

It can be argued that the annual amounts of waste, measured in cubic feet, should not be the single determinant of a disposal facility's economic viability. For example, disposal facilities already impose disposal surcharges that are based on the hazard of the waste, and the radioactivity of some of the waste can be expected to increase over time as internal reactor components are replaced at nuclear power plants. Even with an increased fee-setting emphasis on waste characteristics other than cubic feet, however, the continued downward trend in waste volumes makes it increasingly difficult to justify the cost and the need for a regional disposal facility. This is especially true in the Midwest Compact because a disposal facility will operate for only 20 years before a successor facility must commence operations in another Midwest Compact state. Furthermore, fees based on waste radioactivity could encourage storage for decay and additional reductions in waste shipped for disposal.

2) Rising development costs, funding constraints, and potentially high waste disposal fees at a Midwest Compact facility.

The estimated cost of developing a new disposal facility for low-level radioactive waste has steadily risen since enactment of the first federal legislation in 1980. This is reflected in the expenses incurred by the host states that got an early start on siting, although they also have benefited from arid environments and the less costly design features that are associated with improved shallow-land burial (California), or a combination of shallow-land burial and engineered barriers (Texas). The experience in other host states indicates that the cost of new disposal capacity is likely to be much higher, particularly if more than one site is characterized, if the facility design includes multiple engineered barriers, and if a complex licensing process is prescribed with adjudicatory hearings. Generator financing of these costs also has become more problematic as circumstances have changed regarding the perceived ability of states and compacts to develop new disposal capacity, the cost of that capacity, the regulation of electric utilities, the falling waste disposal volumes, and the possible disposal fees that might be charged at a new regional facility.

a) Comparable costs of disposal facility development.

The Commission is in the enviable position of not having spent a large amount of money on siting in Ohio, relative to other host states. It also was repaid its share of the money that was expended by Michigan. Absent the selection and assistance of a developer/operator, the Ohio Low-Level Radioactive Waste Facility Development Authority has not yet been able to provide a qualified cost estimate for a regional disposal facility. Because Ohio law requires characterization of three sites, an engineered barrier facility, and a detailed licensing process with adjudicatory hearings, these development costs are likely to be high.

The experience of other host states provides a range of cost estimates for consideration (see Figure 3). It should be noted that these development costs are dependent on the characteristics of the different siting programs, and are largely independent of the size of the facility or the compact. They also reflect different periods over the last decade or more during which these costs were incurred.

b) Utility deregulation.

As deregulation of the electric utility industry advances, low-level radioactive waste disposal costs are among the many elements that a utility must consider in determining its mix of generating capacity (e.g., nuclear, coal, oil/gas, etc.) and its competitiveness with other utilities. In addition, the amount of money that must be set aside in dedicated decommissioning funds is increasing as projections of waste disposal costs rise.

The Commission has nearly $10 million remaining in the Export Fee Fund. This money was derived from utility ratepayers in the Compact's member states and is dedicated to paying
the development expenses of the host state. At the current rate of spending in Ohio, these funds would probably be exhausted in about three years. To ensure that the Commission has sufficient funds on-hand, the Commission would need to establish a new fee system soon to collect some money before the remaining balance is spent. Given the current availability of disposal access, the utility deregulation cost constraints, cost estimates for new disposal capacity, and a growing generator reluctance elsewhere to fund state and compact facility development activities, resistance to the collection of additional funds can be anticipated.

c) Future assessment of non-utility generators.

It is likely that the Commission would eventually need to assess non-utility, as well as utility generators, to pay for future development expenses. Levying fees on non-utility generators raises a number of complex issues related to their long-term disposal needs, their waste volumes, and their waste characteristics. In addition, non-utility generators, who have not previously funded development expenses, would probably strongly oppose the imposition of any fees, especially if their future need for the facility is uncertain. Such opposition could make fee collection difficult and costly.

d) Disposal fees at a Midwest Compact regional facility.

.The dramatic fall in regional waste volumes, coupled with high development costs for a new disposal facility, could make the price of waste disposal at a Midwest Compact facility prohibitive. In the Midwest Compact region, disposal fees would be further magnified because all of the development, financing, and operating costs would need to be recovered during the relatively short, 20-year period that the facility would accept waste (other compacts provide for longer, or indefinite, operating periods.) In addition, development money for the subsequent disposal facility in the next host state would need to be collected from generators during the early years of operation of the first disposal facility in Ohio.

3) Continued access to existing disposal facilities has lessened the need for new disposal capacity.

Unexpected events involving existing, privately-operated disposal facilities in South Carolina, Utah, and possible other locations, have created disincentives for development of new disposal capacity. If disposal access to all existing facilities is ever lost, generators have on-site waste storage capabilities. Although temporary storage is not a desirable alternative to disposal, it would provide for waste management during the interval of time needed to secure disposal capacity elsewhere.

a) South Carolina withdrawal from the Southeast Compact and renewed access to the Barnwell disposal facility.

South Carolina was one of the three original states with disposal sites that demanded national development of new disposal capacity. During the time leading up to Barnwell's scheduled closure in January, 1993, the impending loss of existing disposal capacity compelled compacts and states to move forward with development of new disposal facilities. Loss of access penalties continued to push national siting efforts up until the time that South Carolina withdrew from the Southeast Compact and reopened its facility in July, 1995, to all states except North Carolina. (This occurred one month after Ohio enacted enabling legislation, but was not legally final until April, 1996, when the South Carolina Supreme Court upheld the legislation that reopened Barnwell.) The reopening of Barnwell, the acceptance of stored waste from Michigan, and the unconditional access to a disposal facility in an unaffiliated state (i.e., without the exclusionary authority of a compact) removed a significant force driving development of new disposal capacity.

While future political change in South Carolina could again lead to Barnwell's closure, there is no physical constraint on continued acceptance of waste at the facility. The current license covers enough remaining land to accommodate approximately eight million cubic fee of waste (sufficient for at least 20 more years of operation at current disposal rates); an equivalent amount of additional vacant land is available at the site, but is not included under the current license.

South Carolina state law imposes a $235/cubic foot surcharge on disposal of low-level radioactive waste. Both South Carolina and Chem-Nuclear, the facility operator, want stable annual waste flows that ensure adequate revenues for the site and for various state education programs. (South Carolina originally expected a total revenue stream of $140 million annually. During the 1996 fiscal year, the state received $93 million; $80 million is projected for 1997.) New South Carolina legislation that was enacted in 1997 will guarantee a minimum annual revenue contribution of $24 million to the state's scholarship fund by the 1999 fiscal year. Recent changes in the fee structure also are intended to promote long-term contracts with major generators.

b) Envirocare expansion of services.

The Northwest Compact originally authorized the Envirocare disposal facility in Clive, Utah, to play a very limited role with regard to disposal of commercial low-level radioactive waste. Initially, Envirocare could only accept mixed waste and "high-volume, low-activity," non-reactor, decommissioning and dismantlement waste.

In April, 1995, the Northwest Compact allowed Envirocare to broaden acceptance of waste beyond the original authorization. A potentially significant amount of Class A waste is now eligible for disposal at Envirocare (Class A waste constitutes approximately 95% of the regional waste shipped for disposal). Envirocare has aggressively sought to expand its services to commercial low-level radioactive waste generators, and is expected to continue to do so in the future. Some generators have actively supported such expansion to encourage competition and counter rising disposal costs at Barnwell. Beyond possible increases in state surcharges on disposed waste, it is unclear what impact the current litigation and investigations will have on Envirocare's long-term future. In the short-term, both Utah regulators and the U.S. Nuclear Regulatory Commission appear satisfied with the overall safety of facility operations. Envirocare has approximately 330 million cubic feet of unused capacity.

c) Other private initiatives.

Private developers in Texas, Utah, Washington, or other locations also might provide future disposal options for some commercial low-level radioactive waste. The likelihood that these proposals will advance is still very uncertain, as is the scope of services to be offered. For example, in Texas, Waste Control Specialists, Inc. (WCS), has proposed a disposal facility on its 16,000 acre tract in Andrews County that would initially accept commercial mixed waste and U.S. Department of Energy (DOE) waste. WCS also has proposed acceptance of commercial low-level radioactive waste at the facility for treatment and storage. In Utah, a new low-level radioactive waste disposal facility has been recently proposed by Laidlaw Environmental Services at its hazardous waste facility near Envirocare's operations in Tooele County. Finally, in Washington, Dawn Mining Company has proposed a high-volume, low-activity disposal facility for DOE waste at its defunct uranium mill in Stevens County. Like Envirocare, other private firms may initially offer disposal services only to DOE, but later expand into the commercial low-level radioactive waste market.

d) Generator storage capacity.

It is uncertain how long existing disposal facilities in South Carolina or Utah may be willing or able to accept low-level radioactive waste, regardless of whether or not the Midwest Compact proceeds with development of a regional disposal facility. Although undesirable from a waste management standpoint, temporary waste storage by generators would be necessary if future access to all existing disposal facilities is lost. Arguably, such storage could increase exposure risk; however, the actual level of risk is unlikely to pose any threat to public health or safety. Generators throughout the nation stored low-level radioactive waste without incident for one year when Barnwell closed to out-of-region waste in June, 1994. Michigan generators also safely stored waste for nearly five years after being denied access to disposal sites, but did report some economic impact.

In the early 1990s, in anticipation of the scheduled closing of Barnwell, the Commission encouraged generators to develop on-site storage capacity that would suffice until a Midwest Compact facility began operating. Most of the utilities and other large waste generators now have sufficient storage capacity for periods of time ranging from 5 to 10 years. Smaller generators also may have similar waste storage capacity, or could rely on vendors for storage needs. Although the U.S. Nuclear Regulatory Commission discourages on-site, temporary storage of waste by licensees, it has not interfered with such storage when disposal was impossible.

In addition to the reasons cited above, the difficulties encountered in bringing new regional disposal facilities into operation in three of the four states that have advanced to, or beyond, licensing (California, Nebraska, and North Carolina), must be acknowledged. Furthermore, a number of other compacts (e.g., the Appalachian and Central Midwest Compacts) and states (e.g., Connecticut, Massachusetts, New York) have either redirected or halted facility development efforts for some of the same reasons that warrant this reconsideration of need in the Midwest Compact.

Recommendation:

Based on the reasons discussed in this memorandum, the Midwest Compact Commission should adopt the attached proposed resolutions that Commissioners intend to introduce for consideration.

As stated in the attached proposed resolution on cessation of development activities for a regional low-level radioactive waste disposal facility, the State of Ohio has acted in good faith as the Commission's host state. Following its designation as host state, and facing the long-term loss of access to existing disposal facilities, both Ohio's Governor and General Assembly acted responsibly in laying the groundwork for development of a regional disposal facility and enacting the necessary enabling legislation. In addition, both the Ohio Low-Level Radioactive Waste Facility Development Authority and the Ohio Department of Health's Agreement State Program proceeded to diligently implement the legislation and establish the necessary siting and regulatory programs that would lead to operation of a regional disposal facility.

In considering this action, the Midwest Compact Commission should recognize the important support and contributions of Ohio Governor George Voinovich and his staff; the Ohio General Assembly and its leadership; Senator Gary Suhadolnik and Representative Bill Schuck and their staff; members of the Senate and House Committees that acted on the 1995 enabling legislation; Roger Suppes, Ohio's Commissioner and Chief of the Bureau of Radiation Protection at the Department of Health; the staff of the Bureau; Jane Harf, Alternate Ohio Commissioner and Executive Director of the Ohio Low-Level Radioactive Waste Facility Development Authority; the staff of the Authority; the Ohio Low-Level Radioactive Waste Facility Development Authority Board and its Chairman, Bob Teater; and many other Ohio citizens who have participated in this process since July of 1991.