October 11, 2002

Wanda C. Taunton, Director

Solid and Hazardous Waste Program

U.S. Environmental Protection Agency

Denver, CO 80202-2466

Dear Ms. Taunton:

This responds to your letter dated September 13, 2002. Your letter pertained to whether, under criteria

pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

Off-Site Rule (OSR), specified management units at Cotter Corporation’s Canon City Milling Facility

will be designated by the U.S. Environmental Protection Agency (USEPA) as "acceptable" for wastes

from off-site response actions authorized or funded under CERCLA. Your letter followed Cotter

Corporation’s June 27, 2002 request that USEPA approve Cotter’s rail spur, storage pads and processing

circuit, in addition to the Primary and Secondary Impoundments approved August 31, 2000.

The Division recognizes that USEPA’s criteria for a determination under the Off-Site Rule use

approaches which are different from the applicable U.S. Atomic Energy Act regulatory framework.

As in the past, the Division is willing to assist in providing information, as needed, in particular

regarding Department oversight and enforcement actions at Cotter’s facility. As a matter of principle,

however, for some aspects of your determination, it would seem far preferable for USEPA to obtain the

information you require firsthand directly from the primary sources, Cotter Corporation, the U.S. Mine

Safety and Health Administration (USMSHA), the U.S. Department of Energy (USDOE), and the U.S.

Nuclear Regulatory Commission (USNRC). The following responds to the three major sections of your

September 13, 2002 letter.

First, the Department is not aware of any material previously received by Cotter Corporation at its

Canon City Milling Facility which would in any way impair transfer of the uranium mill tailings

impoundments to the U.S. Department of Energy. All materials known to have been received at the site

are U.S. Atomic Energy Act materials, type 2 byproduct material [in federal law, 11e.(2) material], or

ores, uranium-mine-related or source material received for uranium processing (the tailings would thus

be type 2 byproduct material).

Wanda C. Taunton, USEPA

October 11, 2002

Page 2

which is not type 2 byproduct material must not inhibit reclamation of the tailings impoundment or the

ability of the U.S. Government to take title to the impoundment as long-term custodian." Cotter

Corporation has emphasized its desire to avoid any jeopardy to eventual transfer of the site from its

Colorado specific radioactive material license to U.S. Government general license in perpetuity.

Existing Colorado regulations, license conditions, binding procedures, Division enforcement and Cotter

practices assure that transfer to the U.S. Government will occur. License Condition 16 of Colorado

Specific Radioactive Materials License 369-01 requires prior notice, an company environmental review

if the Department so orders, and license amendment application if the Department so orders, for any

material with a potential health, safety or environmental impact different from or greater than those

previously evaluated.

In addition, Cotter’s Radiological Health and Safety Procedure 1-7 regarding material acceptance

specifies the way that the USNRC licensing policy guidance, cited in your letter, is to be implemented.

If the USEPA requires different provisions in Procedure 1-7 to satisfy OSR criteria, direct

correspondence with Cotter is advised. Necessary modifications can readily be incorporated during

forthcoming revision of Procedure 1-7 to accommodate Colorado House Bill 1408 changes in

Both the caldesite ore (U/Zr ore) and the Metropolis CaF bed filter materials (classified by the USNRC

as source material, as an ore, and as an alternate feedstock) are relatively rich in uranium. Over the past

three years Cotter has rebuilt the mill to use an acid process for the U/Zr ore, but that process is

evidently now at a standstill pending further investment. The CaF uranium extraction process will

evidently be an alkaline leach process. Such materials have been processed previously at other uranium

mills. The Department has received Cotter’s plan for sampling the CaF material in order to complete

process design. For worker safety, fluorine gas emanation must be prevented or controlled during

processing, as well as during disposal. For environmental protection, fluorine geochemistry must be

evaluated related to disposal. If USEPA has questions about Cotter’s metallurgical processes or

business plans, please address them directly to Cotter Corporation.

Second, Cotter’s financial assurance arrangements are legally adequate. Colorado’s radiation

regulations (RH 3.9.5) provide routinely for appropriate adjustments. The license financial assurance

amount (approximately $14,000,000) includes both engineering contingency and a surcharge

contingency for independently hiring work to be done. This is complemented by the approximately

$6,000,000 fund under the CERCLA Consent Decree. Full cleanup and closure, in particular for ground

water protection, are enforceable through U.S. District Court under the CERCLA Consent Decree.

New buildings have been considered to be sufficiently covered by not having reduced the license

financial warranty following demolition of the old alkaline mill. In addition to routine annual review,

the decommissioning plan and associated costs are now in a thorough, comprehensive five-year review

Wanda C. Taunton, USEPA

October 11, 2002

Page 3

Finally, USEPA expresses concern about "environmentally significant releases of hazardous

substances". This is a term of art and law under CERCLA and other environmental statutes. In the past,

and again recently, Division staff have reviewed Cotter’s operating practices, including spill control and

cleanup, at the site. In July 2000, Cotter experienced one spill which required reporting to the National

Response Center. Another spill was reported to the National Response Center, but later found to be less

than reportable. The U.S. Mine Safety and Health Administration (MSHA) has on occasion been called

to investigate a spill complaint. From conversation with MSHA, three spills in question were inside

buildings with adequate containment, or in one case had evidently not occurred. From follow-up

involving a complaint about three 2001 instances, the MSHA inspector found Cotter’s response actions

to be appropriate.

The Division will provide under separate cover a copy of Cotter’s March 2, 2002 compilation of

incident reports, which detail the company’s response actions. Also included will be a recent spill

reporting summary memo. The Division suggests that USEPA contact the company directly for any

further accounting to applicable OSR criteria directly, and then perhaps verify the information with the

National Response Center and U.S. Mine Safety and Health Administration.

Also for your information, Cotter completed repairs July 22, 2002 in the countercurrent decantation tank

area and conducted sampling nearby. If your staff had completed the field review scheduled for July,

the work could have been observed directly. At cessation of operations, at least three feet of

contaminated soils will be removed beneath the mill operations area. The criteria will be to attain

cleanup as low as is reasonably achievable below the national standards. Ground water impacts are

routinely monitored and reasonably well characterized for the mill area at this time. Prior to closure,

ground water corrective actions will be enforced to CERCLA standards through both the License and

federal-court-ordered CERCLA Consent Decree and Remedial Action Plan.

The Division is unclear why USEPA is inquiring in such a hit or miss manner into routine operations at

a U.S. Atomic Energy Act site when USEPA and USNRC have agreed that RCRA ground water

protection standards will be met at closure. If the Off-Site Rule authority requires additional assurances,

perhaps direct interaction with Cotter would be more appropriate.

Cotter has provided updated procedures acceptable to this Division and appears to be taking assertive

actions to clear up all the violations cited in the Department’s recent enforcement actions involving

worker safety issues at the Cotter facility. The Division is inspecting weekly to ensure compliance with

the recent Order. Using the principle that exposures and releases are to be as low as is reasonably

achievable, Cotter’s procedures and performance will continue to receive close scrutiny from Division

staff. Some of the questions in your letter seem afield from basic OSR considerations. How is

hypothetical future performance a basis for USEPA to judge present capability? If one or another of

these matters of past and present compliance and enforcement are of particular concern for your OSR

designation determination, the Division is willing to provide details.

If we can be of further assistance, please contact me directly. We each have our separate roles to

perform, with staff trained in depth to perform them. The Division is certainly willing to be one of the

multiple sources from which you obtain information necessary to make your Off-Site Rule designation

determination.

Wanda C. Taunton, USEPA

October 11, 2002

Page 4

My staff is available to meet with you about this letter at your convenience. If you have any questions,

please contact Ken Weaver at 303-692-3058 or Kenneth.Weaver@state.co.u   . I request that policy

Sincerely,

David A. Butcher, Director

Laboratory and Radiation Services Division