Agreement Near on UC Operation of Nuclear Labs : Energy: The new contract could come before the end of the year. The precedent-setting arrangement would raise the university’s oversight of the facilities.

The U.S. Department of Energy and the University of California are near agreement on a precedent-setting arrangement for the university to continue operating the Los Alamos and Livermore nuclear weapons laboratories, Energy Secretary James D. Watkins said Wednesday.

Under the arrangement, UC would step up its environmental, safety and health oversight at the labs. But in negotiations yet to come, it is expected to insist that the government retain liability for environmental or safety problems. The contracts have been a source of controversy and there had been speculation that the Energy Department would turn to someone else to operate the labs.

Although the government has not yet announced its intention to retain the university, Watkins said that he and UC President David P. Gardner are close to agreement on a “conceptual framework” that could lead to a new contract before the end of the year.

The relationship involving the university in secret government research and development on nuclear weapons has been a source of intense debate among members of the faculty and the UC student body for years. Although the Board of Regents voted 13 to 3 last September to enter negotiations on a new five-year pact, there has been continued speculation that the Energy Department might invite other potential operators to compete for the contract.

The speculation intensified more than a year ago, when faculty referendums and votes in student senates across the university system called for ending ties to the facilities. A university-wide faculty committee voted 6 to 2 to end the association with the Energy Department on grounds that secret government research is contrary to the role and nature of the university.

In an interview with The Times, Watkins said that the new contract with UC “will have several precedent-setting features,” intensifying the UC administration’s management oversight, environmental protection and safety precautions.

“This is no extension of the old contract,” Watkins said. “This is a reworked, rejuvenated and revitalized arrangement with the University of California and the Department of Energy, and it is first-rate stuff.”

In addition to the Los Alamos and Livermore contracts, UC will negotiate an agreement for another five years as operator of the Energy Department’s Lawrence Berkeley Laboratory at Berkeley. The current contracts expire next year.

Together, the three facilities employ nearly 20,000 people and have operating budgets of about $2 billion.

The university receives about $12.5 million per year for the three contracts.

Once the property of UC, Lawrence Berkeley is the Energy Department’s oldest laboratory. Los Alamos was created by the U.S. Army Corps of Engineers as part of the World War II Manhattan Project, which developed the atomic bomb. Livermore was opened by the Atomic Energy Commission in 1952.

Although Watkins said that he and Gardner “are just about to agree” on the framework for a new agreement, a UC spokesman said that the negotiation of details will begin only after the government’s formal announcement that the university will continue as operator of the labs.

At a meeting in Chicago two weeks ago, UC officials and representatives of the Energy Department tabled the chief issues that they want to resolve during the upcoming talks.

The university has already made it clear that it will insist on retaining its freedom from liability for environmental accidents and health and safety problems.

A university spokesman agreed that the new arrangement will see a stronger emphasis on environmental health and safety with an increased university presence in the labs.

Like the rest of the Energy Department’s weapons complex, Los Alamos and Livermore face an enormous environmental cleanup from years of operations when safety precautions took second place to weapons production requirements set by the Department of Defense.