ML042090249

Brief for the Federal Respondents on Petition for Review of an Order of the Us Nuclear Regulatory Commission

ML042090249
Person / Time
Site:	Diablo Canyon
Issue date:	05/12/2004
From:	Cole S, Cordes J, Kovacs K, Mullins C, Slaggie E NRC/OGC, US Dept of Justice, Environment & Natural Resources Div
To:	US Federal Judiciary, Court of Appeals, 9th Circuit
Mullins C
References
03-74628
Download: ML042090249 (99)

Text

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 03-74628 SAN LUIS OBISPO MOTHERS FOR PEACE, SIERRA CLUB, and PEG PINNARD, Petitioners, V.

UNITED STATES NUCLEAR REGULATORY COMMISSION and the UNITED STATES OF AMERICA, Respondents, and PACIFIC GAS & ELECTRIC COMPANY Intervenor-Respondent On Petiton for Review of an Order of the United States Nuclear Regulatory Commission BRIEF FOR THE FEDERAL RESPONDENTS THOMAS L. SANSONETTI KAREN D. CYR Assistant Attorney General General Counsel JEFFERY BOSSERT CLARK JOHN F. CORDES, JR.

Deputy Assistant Attorney General Solicitor E. LEO SLAGGIE KATHRYN E. KOVACS Deputy Solicitor Attorney Appellate Section CHARLES E. MULLINS Environment and Natural Senior Attorney Resources Department U.S. Department of Justice SHELLY COLE P.O. Box 23795 Attorney Washington, D.C. 20026-3795 Office of the General Counsel (201) 514-4010 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 (301) 415-1606 May 12, 2004

TABLE OF CONTENTS TABLE OF AUTHORITIES ........................................ iv JURISDICTIONAL STATEMENT . ................................... 1 ISSUES PRESENTED .......................................... 1 STATEMENT OF THE CASE ........................................ 2 A. Nature of the Case ....................................... 2 B. Statutory and Regulatory Framework. ........................ 6

1. NRC Authority to License an ISFSI ....... .............. 6

2. The NRC HearingProcess .......... .................. 7

3. Physical Security at NuclearFacilities ...... ............ 9 C. Statement of Facts .. 13

1. General Background . 13

2. Motion to Stay or, in the Alternative, Expand the Proceeding .14

3. Commission Decision on Motion to Stay or Expand the Proceeding .14

4. Licensing Board Rulings .15

5. Commission Ruling on Terrorism Contentions ..... ...... 17

6. FinalAgency Decision ............... ............... 21

-I-

SUMMARY

OF ARGUMENT ..................... 21 ARGUMENT..................................................... 24 I. Standard of Review .24 II. The Commission Correctly Found that the Environmental Impact Statement for an NRC-Licensed Facility Need Not Address Impacts of a Hypothetical Terrorist Attack. 25 A. The NRC License is Not the "Proximate Cause" of a Terrorist Attack. 25 B. The Effects of A Terrorist Attack Are Not "Reasonably Foreseeable.". 34 C. The Commission's Other Reasons For Excluding Petitioners' NEPA-Terrorism Contention Were Reasonable. 39

1. NEPA Does Not Require A "Worst Case" Analysis. 40

2. Granting Petitioners' Request Could Result In The Disclosure of Sensitive Security Information .44 D. Petitioners' Remaining Claims Lack Merit .46 E. The Amici's Claims Lack Merit .49 III. The Commission Did Not Violate Either the APA or the AEA When It Dismissed Petitioners' Contentions. 51 A. The Commission Reasonably Used an Adjudicatory Proceeding to Resolve a Generic Legal Issue .52 B. Petitioners' Arguments Do Not Address the Use of Adjudication. 54 C. The Adoption of the PFS Decision Was Not An Abuse of Discretion.

...................................................... 56 D. Dismissal of Petitioners' Contentions Did Not Violate the AEA. . 58 IV. The Commission Reasonably Rejected Petitioner's Attempt to Expand the Proceedings. .......... .......................... 59 V. Petitioners' Proposed Exhibits Are Not In The Record ..... .......... 62 CONCLUSION ....................... ............................ 64 ADDENDUM Private Fuel Storage, LL. C. (Independent Spent Fuel Storage Installation),

CLI-02-25, 56 N.R.C. 340 (2002) ............................ Add-1 STATUTORY AND REGULATORY APPENDIX CEQ Regulations .................. ........................... App. 1 CERTIFICATE REGARDING WORD COUNT ..........................

CERTIFICATE OF SERVICE .........................................

-iii-

TABLE OF AUTHORITIES FEDERAL CASES Brand X Internet Services v. FCC, 345 F.3d 1120 (9th Cir. 2003) ...... 25 .

Bullcreek v. NRC, 359 F.3d 536 (D.C. Cir. 2004) .................. ....... .6 Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) ............... ...... 25 Cities of Anaheim v. FERC, 723 F.2d at 659 ...................... ...... 57 Citizens Committee To Save Our Canyons v. U.S. ForestService, 297 F.3d 1012 (9h Cir. 2002) ............................. ...... 44 Citizens to Preserve Overton Park, Inc., v. Volpe, 401 U.S. 402 (1971) 63 .

City of New York v. U.S. Dep't of Transp., 715 F.2d 732 (2d Cir. 1982),

appeal dismissed and cert. denied, 465 U.S. 1055 (1984) ....... ..... .

Davis v. EPA, 348 F.3d 772 (9kh Cir. 2003) ....................... ..... .

Dubois v. U.S. Dep't ofAgriculture, 102 F.3d 1273 (1St Cir. 2000) ..... 34 .

Edvardsen v. U.S. Dep't of Interior, 268 F.3d 781 (9th Cir. 2001) ..... .. 40,43 Environmental ProtectionInformation Center v. Simpson Timber Compian y, 255 F.3d 1073 (9t Cir. 2001) ...................................... ..... .

Falcon Carrichev. Ashcroft, 335 F.3d 1009 (9TH Cir. 2003) .......... ....... 49 FordMotor Company v. FTC, 673 F.2d 1008 ( 9 th Cir. 1982) ......... ....... 57 Friends of the Clearnvaterv. Dombeck, 222 F.3d 552 (9 th Cir. 2000) ... 24 .

GeneralAtomics v. NRC, 75 F.3d 536 (9th Cir. 1996) ............... .

-iv-

Glass PackagingInstitute v. Regan, 737 F.2d 1083 (D.C. Cir. 1984),

cert. denied, 469 U.S. 1035 (1984) ............................ 32, 33 Hazardous Waste Treatment Council v. EPA, 861 F.2d 277 (D.C. Cir.

1988 .................................................... ... 32 Kelley v. Selin, 42 F.3d 1501, cert. denied, 515 U.S. 1159 (1995) ........ .... 6 Limerick Ecology Action, 869 F.2d 719 (3d Cir. 1989) ...... ........ 35, 39, 55 Mada-Luna v. Fitzpatrick, 813 F.2d 1006 (9' Cir. 1987) ............... 54,55 MetropolitanEdison Co. v. People Against NuclearEnergy, 460 U.S. 766 (1.983) vassim NLRB v. Bell Aerospace Co, 416 U.S. 363 (1974) ..................... 24, 52 NLRB v. St. FrancisHospital, 601 F.2d 404 (9h Cir. 1979) .............. 52,53 No Given Alliance of Lane County v. Aldridge, 855 F.2d 1380 (9tCir. 1988) ................................... 19, 36, 37, 38,42 Patel v. Immigration and NaturalizationService, 638 F.2d 1199 (9' Cir. 1980) ............................................... 57 PeopleAgainst NuclearEnergy v. NRC, 678 F.2d 222 (D.C. Cir. 1982),

rev'd, 460 U.S. 766 (1983) ................. .................... 29 Pfaff v. HUD, 88 F.3d 739 (9' Cir. 1996) ....... ............... 24, 53, 56,57 PresidioGolf Club v. National ParkService, 155 F.3d 1153 (9th Cir. 1998) .............................................. 34 Riverkeeper v. Collins, 359 F.3d 156 (2d Cir. 2004) ...... .............. 8, 11 Robertson v. Methowv Valley Citizens Council, 490 U.S. 332 (1989) ............................................ 20,40,43,44

Russian River Watershed Committee v. Santa Rosa, 142 F.3d 1136 (9th Cir. 1998) ............... ................................ 49 Securities and Exchange Commission v. Chenery, 332 U.S. 194 (1947) .................................................... 52 Selkirk ConservationAlliance v. Forsgren, 332 F.3d 944 (9th Cir. 2003) . ............................................ 34,43 Sheet Metal Workers InternationalAssociation, Local No. 355 v. NLRB, 716 F.2d 1249 (9h Cir. 1983) ............................. 52, 56, 57 Sierra Club v. Marsh, 769 F.2d 868 (1S' Cir. 1985) ....................... 36 Sierra Club v. Marsh, 976 F.2d 763 (15' Cir. 1992) ....................... 34 Tribune Co. v. FCC, 133 F.3d 61 (D.C. Cir. 1998) ....................... 60 Vincent v. Apfel, 191 F.3d 1143 (9 Cir. 1999) .......................... 25 Warm Springs Dam Task Force v. Gribble, 621 F.2d 1017 (9' Cir. (1980) .................................................. 38 Weinberger v Catholic Action of Hawaii,454 U.S. 139 (1981) ..... ...... 45, 46 Wyoming Outdoor C'ouncil, Inc. v. U.S. ForestService, 165 F.3d 43 (D.C. Cir. 1990) . .............................................. 34 NUCLEAR REGULATORY COMMISSION CASES Pacific Gas & Electric Company (Diablo Canyon Independent Spent Fuel Storage Installation), CLI-03-04, 57 NRC 273 ...... ............... 60 Private Fuel Storage, L.L.C. (Independent Spent Fuel Storage Installation),

CLI-02-25, 56 N.R.C. 340 (2002) ........ .................... passim

-vi-

Metropolitan Edison Company (Three Mile Island Nuclear Station, Unit 1), CLI-80-39, 12 NRC 607 (1980) ............. ........................ 29 Entergy Nuclear Operations,Inc. (Indian Point, Units 1, 2, and 3),

DD-02-6, 56 NRC 296 (2002) .................................. 10 FEDERAL STATUTES AND REGULATIONS Federal Statutes 5 U.S.C. §706(2)(A) ............................................... 24 16U.S.C.§1451,etseq ............................................ 50 28 U.S.C. 2342(4) ......................... .............. .... . .. I 28 U.S.C. §2344 . .. .. .. . ....................... .............. .... . .. 1 42 U.S.C. §2073 ........ ....................... .............. .... . .. 6 42 U.S.C. §2093 ....... ....................... .............. . ... . .. 6 42 U.S.C. §2111 ....... ....................... .............. .... . .. 6 42 U.S.C. §2167 ....... ....................... .............. . . . .. 44 42 U.S.C. §2239 ....... ....................... .............. .... . .. 1 42 U.S.C. §2239(a) ..... ....................... .............. 1,7, 8,51 42 U.S.C. §2239(b) ..... ....................... .............. .... ... 1 42 U.S.C. §4321, et seq ....................... .............. .... . .. 9 42 U.S.C. 4332(1)(C)(i) ....................... .............. .... .. 27 42 U.S.C. §4332(c) . . .

-vii-

42 U.S.C. §10101 et seq., .. ,............. ............ . .. . ...... 6 .......

42 U.S.C. §10152 ....... ,............. ............ .. .. ..... . 6 .......

42 U.S.C. §10153 ....... ,............. ............ .. .. ..... . 6 .......

Federal Regulations 10 C.F.R. Part 2 ......... ,. . .. . .. . .. . .. . .. . ..... . . . . .. . . . . .. . .... 8 10 C.F.R. §2.206 ......... ,. . .. . .. . .. . ..... . . . . .. . . . . .. . . 8,61 10 C.F.R. §2.714 ......... ,. . . . ... .. . . . . .. . .. . ..... .. .. .. . 14, 16 10 C.F.R. §2.714)(a) ...... ,..... .. . .. . ..... .. . ... 58 10 C.F.R. §2.714(b)(1) .... ,... .. .. . ..... .. . .... 9 10 C.F.R. §2.714(b)(2)(iii) ,..... .. . . . . ..... .... 9 10 C.F.R. §2.758 ......... .......... . . .. . . . . ..... .... 8 10 C.F.R. §2.758(b) ...... ,..... .. . .. . ..... .... 8 10 C.F.R. §2.802(a) and (d) ..... .. . .. . ..... .... 8 10 C.F.R. Part 51 ........ ...... .. . .. . ..... .... 9 10 C.F.R. §51.104(b) ..... ...... .. . .. . . . . . .... . . . .... 9 10 C.F.R. §51.30-31 ...... ... . . . .. . .. . .. . ..... .. . .... 9 1O C.F.R. §51.71 (d) ...... .... .. .. . .. . .. . . . . ..... .. . ... 20 10 C.F.R. Part 72 ........ .... .. .. . .. . ..... . . . ... 13 10 C.F.R. §72.210 ....... ...... ............................... 7

-viii-

10 C.F.R. §72.40 ................................................... 7 10 C.F.R. §72.42(a)(13)-(14) ............... .......................... 7 10 C.F.R. Part 73. 9 40 C.F.R. §1502.22(b)(3-4) . ......................................... 41 40 C.F.R. §1502.22(b)(4) . ........................................... 35 40 C.F.R. §1508(a) ................................................ 35 40 C.F.R. §1508(b) ................................................. 35 MISCELLANEOUS Final Rule, ProtectionAgainst Malevolent Use of Vehicles at Nuclear Power Plants, 59 Fed.Reg. 38,899 (Aug. 1, 1994) ..................... 10,46 Final Rule, Requirementsfor the Physical Protection of NuclearPower Reactors, 42 Fed.Reg. 10,836 (Feb. 24, 1977) .............................. 9 All OperatingPower Reactor Licensees; OrderModifying Licenses (Effective Immediately), 67 Fed. Reg. 9,792 (March 4, 2002) .... 11 1.....

All OperatingPower ReactorLicensees; Order Modifying Licenses (Effective Immediately), 68 Fed. Reg. 24,510 ...................... 12 In the Matter ofAll Operating Power Reactor Licenses; OrderModifying Licenses (Effective Immediately), 68 Fed. Reg. 1,643 (Jan. 13, 2003) .... ...... 12 OrderModifying Licenses (Effective Immediately), 67 Fed. Reg. 65,150 (Oct. 23, 2002) (directed to all generally licensed ISFSIs) ..... ....... 11 OrderModifying Licenses (Effective Immediately), 67 Fed.Reg. 65152 (Oct. 23, 2002) (directed to all specifically licensed ISFSIs) .... ...... 11

-xx-

69 Fed. Reg. 15910 (Mar. 26, 2004) ............... ................... .

69 Fed. Reg. 2182 (Jan. 14, 2004) ................. 8 ...........

68 Fed. Reg. 35585 (June 16, 2003) ............... ................... .

67 Fed. Reg. 19,600 (Apr. 22, 2002) ............... ................... .

http:// www.nrc.gov/reading-rm/adams/web-based.html, ADAMS Accession Nos.

ML040610540 and ML032810013 ................ ................... .

JURISDICTIONAL STATEMENT The Court has jurisdiction over this case under the Administrative Orders Review Act, also known as the Hobbs Act, which gives this Court jurisdiction over "final orders" of the Nuclear Regulatory Commission ("NRC") "made reviewable by section 2239 of Title 42." 28 U.S.C. 2342(4). "Section 2239 of Title 42" is Section 189 of the Atomic Energy Act (AEA). It governs "any proceeding ... for the granting .. . of any license," 42 U.S.C. §2239(a), while 42 U.S.C. 2239(b), provides that "[a]ny final order entered in any proceeding of the kind specified in [section 189a] . . . shall be subject to judicial review" under the terms of the Hobbs Act. See generally General Atomics v. NRC, 75 F.3d 536. 538 (9 th Cir. 1996). The NRC issued its final adjudicatory decision on October 15, 2003 (Excerpts of Record ("ER") 38-42), and petitioners filed suit in this Court within sixty days as required by the Hobbs Act. See 28 U.S.C. §2344.

ISSUES PRESENTED

1. Whether, in proceedings on an application to license a facility to store spent nuclear fuel in dry casks, the National Environmental Policy Act ("NEPA")

required the NRC to address the effects of a hypothetical attack by terrorists on that facility in an environmental assessment or impact statement.

2. Whether, faced with proposed contentions that NEPA required an assessment of the risk of terrorism, the Commission deprived petitioners of their

right to an NRC hearing when it summarily rejected the contentions on the basis of the agency's own precedent in similar cases.

3. Whether the Commission was required to grant petitioners an adjudicatory hearing on their own anti-terrorist proposals when NRC regulations already had established agency security requirements and where petitioners refused an opportunity to file a petition for generic rulemaking or a petition for site-specific agency enforcement action.

STATEMENT OF THE CASE A. Nature of the Case In December 2001, Pacific Gas & Electric Company (PG&E) applied to the Nuclear Regulatory Commission (NRC) for a license authorizing construction and operation of an independent spent fuel storage installation (ISFSI) at the Diablo Canyon nuclear power plant in California (ER5). PG&E sought the ISFSI license because the wet pools where Diablo Canyon currently stores its spent nuclear fuel are nearing their capacity (ER5). Diablo Canyon's proposed ISFSI would store spent fuel in dry concrete casks on the reactor site (ER5).

Petitioners sought to intervene in the NRC's ISFSI licensing proceeding and requested a hearing (ER5). An Atomic Safety and Licensing Board admitted one of petitioners' eight proffered contentions for hearing (ER16). The admitted 2

contention challenged PG&E's financial ability to construct and operate the ISFSI safely. Later, both the Board and the Commission found the financial contention insubstantial on the merits, and terminated the ISFSI adjudication (ER41-42).

Petitioners' lawsuit in this Court does not challenge the Commission's decision on the financial contention.

Instead, petitioners' lawsuit arises out of a different group of contentions --

environmental contentions under NEPA that the Board and the Commission found inadmissible. These contentions claimed that NEPA requires the NRC to consider the potential environmental consequences of terrorist-type acts of malice and insanity (ER18-21). Although the NEPA-terrorism issue came up early in the adjudication, when other issues were still pending, the Board certified it to the Commission for immediate (interlocutory) appellate review (ER19-21). The Board did so because of the Commission's "ongoing 'top to bottom' review of the agency's safeguards and physical security programs" in the wake of the September 11, 2001, attacks on the United States (ER19).

On review, the Commission rejected the NEPA-terrorism contention. The Commission stressed that it "is devoting substantial time and agency resources to combating the potential for terrorism" (ER37), but held that NEPA does not provide an "appropriate format" for evaluating the terrorist threat to nuclear 3

facilities (ER36). Pointing (as precedent) to a series of then-recent adjudicatory rulings, in particular PrivateFuel Storage, L.L.C. (Independent Spent Fuel Storage Installation), CLI-02-25, 56 NRC 340 (2002) ("PFS"), the Commission found that terrorist attacks are "too far removed from the natural or expected consequences of agency action to require a study under NEPA, which is confined to 'manageable' inquiries" (ER36). The Commission also expressed concern that litigating NEPA-terrorism contentions in NRC hearings would raise difficult "practical" and "security" problems (ER36).

Petitioners now ask this Court to direct the NRC to include the foreseeability and impacts of terrorism in agency hearings as a part of its NEPA analysis. Petitioners also claim that the Commission wrongly relied on the PFS precedent to reject their NEPA-terrorism claims. According to petitioners, the Commission was required to give them an opportunity to relitigate the issue in the Diablo Canyon ISFSI adjudication. Below, in our argument, we explain that the Commission rightly considered NEPA an inappropriate vehicle to study terrorism and reasonably handled petitioners' hearing request.

Petitioners raise one other matter in this Court. During the pendency of the ISFSI adjudication, they filed a motion directly with the Commission requesting that the proceeding be suspended until the NRC completed its post 9/11 security 4

review or (alternatively) that the proceeding be expanded to include consideration of petitioners' own proposed security measures (ER1 15). The Commission denied petitioners' motion (ER32).

The Commission said that "moving forward with this adjudication will not prevent appropriate implementation of any rule or policy changes arising from [the Commission's] ongoing evaluation of terrorism-related policies" (ER32). The Commission referred petitioners' security proposals to the NRC staff "for appropriate consideration as the Staff continues its review of security measures."

(ER30). The Commission indicated that petitioners could pursue their request for security upgrades through a petition for rulemaking or a petition for enforcement, but that petitioners were "not free to use an adjudication as a means to enhance existing NRC orders or regulations" (ER30).

Before this Court, petitioners reiterate their claim that modifying (or improving on) NRC security regulations was a legitimate subject for litigation at an NRC adjudicatory proceeding. Below, in our argument, we explain why petitioners might have pursued their claim of inadequate NRC security regulations through a petition for rulemaking, but not through an adjudicatory hearing on the Diablo Canyon ISFSI.

5

B. Statutory and Regulatory Framework

1. NRC Authority to License an ISFSI Under the AEA, the NRC has authority to license ISFSIs. See AEA §§ 53, 63, 81,42 U.S.C. §§2073, 2093, 2111. See generally Bullcreek v. NRC, 359 F.3d 536 (D.C. Cir. 2004). In addition, in 1983 Congress passed the Nuclear Waste Policy Act (NWPA), 42 U.S.C. §10101, et seq. Among other things, the NWPA instructed federal agencies, including the NRC, to "take such actions as ...

necessary to encourage and expedite the effective use of available storage and necessary additional storage, at the site of each civilian nuclear power reactor,"

consistent with considerations set forth by Congress. 42 U.S.C. §10152. The NWPA authorized the NRC to approve dry storage technologies, including casks, for use at civilian reactors without site-specific hearings. See Kelley v. Selin, 42 F.3d 1501, 1504 (6' Cir. 1995), cert. denied, 515 U.S. 1159 (1995) (citing 42 U.S.C. §10153). "The impetus behind Congress' action was the belief that existing on-site storage facilities at most reactors, which consist of pools for underwater storage, would be insufficient to meet storage needs prior to the opening of the federal [high level waste] repository." Id. at 1504.

6

The NRC regulations for licensing ISFSIs are in 10 C.F.R. Part 72 (2003),'

which provides two licensing options. The first option is a general license issued under 10 C.F.R. §72.210, which allows a nuclear power plant licensee to store spent nuclear fuel in an ISFSI on the plant site, using an NRC approved cask system, without a separate license application. The second option is a site-specific license under 10 C.F.R. §72.40. A site-specific license requires that a licensee submit a separate application for the ISFSI, which triggers an opportunity for an NRC hearing under Section 189a. of the AEA, 42 U.S.C. §2239(a). Before issuing a specific license, the NRC must determine, in part, that issuance will not be inimical to the common defense and security and that there is reasonable assurance that the licensed activities can be conducted without endangering the public health and safety. See 10 C.F.R. §72.42(a)(13)-(14).

2. The NRC HearingProcess Section 189a. of the AEA requires that in any proceeding under the AEA for the granting of a license "the Commission shall grant a hearing upon request of any person whose interest may be affected by the proceeding, and shall admit such

'All cites to the Code of Federal Regulations are from the 2003 version unless otherwise noted.

7

person to the proceeding." 42 U.S.C. §2239(a). The NRC regulations governing hearings are found in 10 C.F.R. Part 2.2 To intervene in an NRC proceeding, a petitioner must, in addition to meeting requirements relating to standing, submit at least one admissible contention. See 10 C.F.R. §2.714(b)(1). A contention is not admissible if it attacks existing NRC regulations or includes matters that are outside the scope of the proceeding, as defined by the notice of hearing or opportunity for hearing. 10 C.F.R. §2.758. However, under 10 C.F.R. §2.758(b), a party to an NRC hearing may request a waiver of a regulation for a particular case. In addition, under 10 C.F.R. §2.802(a) and (d), an interested person may "petition the Commission to issue, amend, or rescind any regulation," and ask the Commission to suspend "all or part" of related adjudications in the meantime. Finally, under 10 C.F.R. §2.206, any person may request the Commission to "institute a proceeding to modify, suspend, or revoke a license, or for any other action as may be proper." See generally Riverkeeper v. Collins, 359 F.3d 156 (2d Cir. 2004).

2 The Commission revised 10 C.F.R. Part 2 effective February 13, 2004. See 69 Fed. Reg. 2182 (Jan. 14, 2004). The administrative proceedings in this case were conducted under the prior version of Part 2 and references in this brief are to the previous version; while the revision renumbered many provisions referred to in this brief, it did not change those provisions substantively.

8

As part of a licensing hearing, a petitioner may submit contentions on issues arising under NEPA, 42 U.S.C. §4321, et seq. See 10 C.F.R. §2.714(b)(2)(iii).

NEPA requires that federal agencies prepare an environmental impact statement (EIS) for government "actions significantly affecting the quality of the human environment." 42 U.S.C. §4332(c).

In determining whether an action requires an EIS, the NRC staff prepares an environmental assessment (EA), which results in either a decision to prepare an EIS or in a "finding of no significant impact." 10 C.F.R. §51.30-31. The NRC regulations implementing NEPA, 10 C.F.R. Part 51, specifically allow a party to an NRC proceeding to challenge an NRC staff decision that an EIS need not be prepared for the proposed activity. 10 C.F.R. §51.104(b).

3. Physical Security at Nuclear Facilities As part of its duty to protect the public health and safety and common defense and security, the NRC has enacted regulations requiring nuclear facilities to provide certain physical protections against sabotage and external assaults. See 10 C.F.R. Part 73. These regulations were first issued in 1977, see Final Rule, Requirementsfor the Physical Protection of Nuclear Power Reactors, 42 Fed.

Reg. 10,836 (Feb. 24, 1977), but have been amended by the NRC from time to time as it deems necessary to protect the public health and safety and common 9

defense and security. For example, prior to 1994, the NRC did not require licensees to protect against a vehicle bomb. But given world events in the 1990s, including a vehicle bombing of the World Trade Center and an intrusion incident at the Three Mile Island nuclear power plant, the NRC concluded that, while the risk from a vehicle bomb attack was not quantifiable or predictable, requiring protective measures was prudent. See Final Rule, ProtectionAgainst Malevolent Use of Vehicles at Nuclear Power Plants, 59 Fed. Reg. 38,899 (Aug. 1, 1994).

After the tragic attacks on September 11, 2001, the NRC considered what additional security protections might be in order. The NRC immediately issued a number of Safeguards and Threat Advisories to its licensees in order to strengthen the licensees' capabilities and readiness to respond to a potential attack on a nuclear facility. The NRC then undertook a comprehensive re-evaluation of the agency's safeguards and security requirements, including its threat assessment framework and design basis threats, i.e., the threats which the plants are designed to withstand. This review has resulted in many safeguards and security upgrades.

In view of its continuing review and upgrade of security measures, the NRC -- by not suspending operating licenses -- has "implicitly concluded that continued operation of power plants and ISFSIs does not pose an imminent risk to the public health and safety and is not inimical to the common defense and security" (ER30).

10

On February 25, 2002, the NRC issued orders to all operating power reactor licensees requiring them to take interim compensatory measures above and beyond those required by NRC regulations. See All OperatingPower Reactor Licensees; OrderModifying Licenses (Effective Immediately), 67 Fed. Reg. 9,792 (March 4, 2002). While the details of these measures cannot be disclosed for security reasons, they include "increased patrols, augmented security forces and capabilities, additional security posts, installation of additional physical barriers, vehicle checks at greater stand-off distances, enhanced coordination with law enforcement and military authorities and more restrictive site access controls for all personnel." Riverkeeper, 359 F.3d at 161 (quoting Entergy Nuclear Operations, Inc. (Indian Point, Units 1, 2, and 3), DD-02-6, 56 NRC 296 (2002)).

The NRC has since issued similar, security-driven orders imposing interim compensatory measures on other nuclear facilities, including ISFSIs. See Order Modifying Licenses (Effective Immediately), 67 Fed. Reg. 65,150 (Oct. 23, 2002)

(directed to all generally licensed ISFSIs); see also OrderModifying Licenses (Effective Immediately), 67 Fed. Reg. 65152 (Oct. 23, 2002) (directed to all specifically licensed ISFSIs). In issuing these orders, the Commission recognized that many ISFSI licensees had already initiated many of the required measures voluntarily as a result of threat advisories or of their own accord, but concluded 11

that these measures should be embodied in enforceable agency orders. These orders will remain in effect until either the threat environment changes or the NRC determines that additional orders or rules are needed. Recently, the NRC issued additional orders on access authorization, security guards, fatigue, guard training and qualifications, and on the types of threats that licensees must design to protect against (i.e., the "design basis threat"). 3 The Commission issued these orders to operating nuclear power plants. While the specifics are not publicly available because they contain safeguards information, they address essentially the same issues as the interim security measures discussed above, but more comprehensively.

The NRC is still in the process of developing security orders to address additional security issues, such as guard fatigue, at ISFSIs and at decommissioning reactors. As part of its development of security orders, the NRC staff has held a series of meetings with members of the public and with industry representatives.

See http:I/ www.nrc.gov/reading-rn/adams/web-based.html, ADAMS Accession Nos. ML040610540 and ML032810013.

3 See In the Matter ofAll OperatingPowerReactor Licenses; Order Modifying Licenses (Effective Immediately), 68 Fed. Reg. 1,643 (Jan. 13, 2003);

All OperatingPower Reactor Licensees; OrderModifying Licenses (Effective Immediately), 68 Fed. Reg. 24,510; 25,514; 24,517 (May 7, 2003).

12

D. Statement of Facts

1. General Background On December 21, 2001, PG&E filed an application under 10 C.F.R. Part 72 to construct and operate an ISFSI at its Diablo Canyon Power Plant (ER214). The ISFSI is needed to provide additional spent fuel storage capacity so that the two Diablo Canyon reactors can continue to generate electricity beyond 2006, the projected date that the pools where spent fuel is currently stored will reach capacity (ER214-15). The ISFSI will provide sufficient space to store each unit's spent fuel until the current operating licenses expire (September 2021 for Unit I and April 2025 for Unit 2) (ER215).

The ISFSI will store spent fuel and associated non-fuel hardware from the Diablo Canyon nuclear power plant in the HI-STORM 100 dry cask storage system (ER215). This system consists of welded cylindrical stainless steel canisters with welded flat ends, that are designed to withstand specific accidents and natural phenomena, and to provide containment of the radioactive materials (ER215). In their storage configuration, these canisters will be surrounded by a steel and concrete structure called an overpack (or cask) that is designed for use in high seismic areas, creating a "can within a can" effect (ER216). The spent fuel 13

cask assembly will then be placed on a 7.5 foot thick concrete pad and anchored to' steel rings embedded in the pad (ER216).

Responding to a notice of opportunity for hearing, see 67 Fed Reg. 19,600 (Apr. 22, 2002), various parties, including petitioners in this case, filed requests for hearing and petitions to intervene in accordance with 10 C.F.R. §2.714. A Licensing Board was established to rule on the petitions and requests and to preside over the proceeding. Petitioners later supplemented their filings to include eight joint proposed contentions (ER44-84).

2. Motion to Stay or, in the Alternative, Expand the Proceeding On June 25, 2002, petitioners, along with other parties in the proceeding pending before the Board, filed a motion directly with the Commission (ERI 15-153). The motion asked the Commission to stay the ISFSI licensing proceeding pending the implementation of new and more rigorous security measures, or in the alternative, to expand the adjudicatory proceeding to consider petitioners' own proposed interim measures for the entire Diablo Canyon nuclear complex and to provide for public participation in this portion of the proceeding.

3. Commission Decision on Motion to Stay or Expand the Proceeding After determining that the petition should have been filed with the Board in the first instance, the Commission chose to address it as an exercise of its 14

"ultimate supervisory control over" NRC adjudications (ER30). On the question of staying proceedings, the Commnission found no stay justified because "mere continuation of this adjudicatory proceeding" would not endanger public health and safety and because "moving forward with the adjudication will not prevent appropriate implementation of any rule or policy changes arising from [the Commission's] ongoing evaluation of terrorism-related polices" (ER31-32). The Commission also denied petitioners' request to expand the scope of the proceeding, noting that petitioners were not free to use an adjudication as a means to enhance existing NRC orders or regulations (ER30& n. 10). The Commrission noted that the appropriate forum for addressing dissatisfaction with NRC's approach to security would be a petition for rulemaking (on generic matters) or a petition for enforcement (on site-specific matters) (ER30). The Commission noted that petitioners expressly declined to invoke those remedies (ER30), but the Commission nonetheless referred petitioners' security proposals (i.e., their petition) "for appropriate consideration as the Staff continues its review of security measures" (ER30).

4. Licensing BoardRulings The Board conducted an initial prehearing conference on September 10-11, 2002, during which it heard oral arguments on standing and admissibility of 15

contentions. The Board found that several parties, including petitioners, had demonstrated standing (ER4-5). The Board also found that one of petitioners' technical contentions, TC-2, regarding PG&E's financial qualifications to build and operate the ISFSI safely, was admissible (ER15-16). Thus, pursuant to 10 C.F.R. §2.714, the Board granted the hearing requests and allowed petitioners to move forward on the financial qualifications issue. Ultimately, in rulings not at issue before this Court, both the Board and the Commission found petitioners' financial grievances without merit (ER38-43).

The Board also found that seven of the proposed contentions, four technical and three environmental, did not meet the standards for admission to the proceeding (ER13-21). The Board's terrorism ruling rested on its view that petitioners' contentions amounted to an impermissible attack on NRC regulations (ER19-21). But "in light of the Commission's ongoing 'top to bottom' review of the agency's safeguards and physical security programs, including those related to ISFSIs, which was commenced following the events of September 11," the Board certified its ruling on the environmental contentions, to the extent they involved terrorism issues, to the Commission for its consideration (ER19-21).

16

5. Commission Ruling on Terrorism Contentions The Commission accepted the Board referral of its decision to reject terrorism contentions (ER33). The Commission pointed out that it had "recently decided similar issues" in four other cases (ER36). The Commission noted that in those cases, "[w]e held that NEPA does not require a terrorism review, and that an environmental impact statement is not the appropriate format in which to address the challenges of terrorism" (ER36). The Commission relied in particular on its lead decision on the NEPA-terrorism issue, PFS, where the Commission gave several reasons cutting against a NEPA-terrorism review.4 "For the same reasons," the Commnission said, it would not require a NEPA-based terrorism review of Diablo Canyon's proposed ISFSI or admit petitioners' NEPA-terrorism contention (ER36).

In PFS, also an ISFSI case, the Commission stressed its determination, in the wake of the September 11, 2001, terrorist attacks, to strengthen security at nuclear facilities. PFS, 56 NRC at 343. The Commission determined, however, that the potential for a terrorist attack at a nuclear facility does not require a review under NEPA; rather, such threats could be addressed most effectively 4 The Petitioners did not include a copy of the PFS decision in the Excerpts of Record, so for this Court's convenience, we have attached a copy of the Commission's PFS decision as an Addendum to this Brief.

17

under the agency's "AEA-rooted duty" to protect the "public health and safety" and the "common defense and security." Id. In reaching this conclusion, the Commission examined its ongoing security activities and looked to its legal obligations under NEPA.

The Commission considered relevant judicial authority on the NEPA-terrorism question, and noted that the only two federal courts of appeals to address the question in the area of nuclear regulation had upheld agency refusals to consider terrorism under NEPA. Id. at 349-350. Nonetheless, the Commission went on to examine "the broad scope of NEPA law to determine if there is any reason to view terrorism differently today, in the wake of the notorious September 11 attacks." Id. at 350. In reaching its decision, the Commission discussed several factors. "These factors," the Commission said, "stand singly, and cumulatively, as justification against invoking NEPA as the basis for our terrorism review in nuclear licensing cases." Id. at 348.

The Commission first looked at NEPA's "rule of reason," noting that "Courts have excluded impacts with either a low probability of occurrence, or where the link between the agency action and the claimed impact is too attenuated to find the proposed federal action to be the 'proximate cause' of that impact." Id.

at 348-349 (citing Metropolitan Edison Co. v. People Against Nuclear Energy, 18

460 U.S. 766, 772-775 (1983)). The Commission noted that the notion of "proximate cause" reflects ideas of what justice demands, or of what is administratively possible and convenient. Id. at 349, n.33 (citing No GWEN Alliance of Lane Counlt v. Aldridge, 855 F.2d 380,1385-86 (9th Cir. 1988)). The Commission also pointed out that NEPA is confined to "manageable" inquiries and expressed concern that, if a line were not drawn, the NEPA process would become "bottomnless," subject only to the ingenuity of those thinking of potential adverse effects. Id. at 349-50.

The Commission concluded that the appropriate place to draw the "proximate cause" line was between likely impacts of the PFS facility itself and the unforeseeable impacts of a terrorist attack on the facility. The Commission found that "the causal relationship between approving the PFS facility and a third party deliberately flying a plane into it is too attenuated to require a NEPA review, particularly where the terrorist threat is entirely independent of the facility." Id. at 350. "Terrorism is a global issue," the Commission said, "involving stochastic criminal behavior, independent of the planned facility." Id. at 347 ni 8.

Next, the Comrnission turned to the practical difficulties of performing a NEPA review of terrorism. It noted that, notwithstanding the September 11th attacks, it still could not assess with any precision the likelihood of a terrorist 19

attack at a particular nuclear facility. Id. at 350. In addition, while acknowledging that 10 C.F.R. §51.71 (d) provides for qualitative consideration of factors that cannot be quantified, the Commission determined that "even a qualitative assessment [of terrorism] would be highly speculative." Id.

The Commission also pointed out that NEPA does not call for an inquiry into worst-case possibilities. Id. at 352 (citing Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 354-55 (1989)). The Commission concluded that while NEPA mandates "consideration of a broad range of environmental effects that are reasonably likely to ensue as a result of a major agency action," it does not require an agency "to engage in speculation about what might happen as a result of criminal terrorist activity." PFS, 56 NRC at 352.

Finally, the Commission said that, in the sensitive area of security, the "public aspect of NEPA processes conflicts with the need to protect sensitive information." Id. at 354. The Commission indicated that a NEPA review would not add "meaningfully" to the agency's decisionmaking, "in light of our ongoing studies and existing requirements and directives." Id. at 356. And, the Commission reasoned, "widespread NEPA-terrorism reviews, even if we attempted to keep EISs and hearings confidential, [would] increase the risk of dangerous security breaches." Id. at 354-55.

20

As noted above, in the present (Diablo Canyon) case, the Commission adopted the "same reasons" it had set out in PFS (ER36).

6. FinalAgency Decision.

Nine months after the Commission had issued its NEPA-terrorism ruling in this case, the adjudication ended when the Commission issued its final decision rejecting petitioners' financial qualifications contention (a decision not challenged in this lawsuit) (ER38-42). 5 Petitioners then filed their petition for judicial review in this Court.

SUMMARY

OF ARGUMENT

1. Under the AEA's mandate "to provide for the common defense and security and to protect the health and safety of the public," the NRC devotes major resources to assuring that licensed facilities, including Diablo Canyon, are protected against the threat of terrorist attacks. The Commission has correctly determined, however, that the potential impacts of terrorism lie outside the scope of NEPA. The Supreme Court held in MetropolitanEdison Co. v. People Against Nuclear Energy, 460 U.S. 766 (1983), that NEPA extends only to impacts falling 5 0n March 22, 2004, after the Commission terminated the adjudication, and after completion of its environmental, safeguards, and safety reviews of PG&E's application, the NRC issued its Safety Evaluation Report and Materials License No. SNM-2511 for the Diablo Canyon ISFSI. See 69 FR 15910 (Mar. 26,2004).

21

within an environmental "chain of causality," which the Court likened to the familiar concept of "proximate cause." 460 U.S. at 774. The Commission reasonably found that malevolent human action, the essence of terrorism, breaks this chain of causation. Accordingly, the Commission correctly found that the NEPA analysis supporting the licensing of the Diablo Canyon ISFSI need not address the impacts of a possible terrorist attack.

Furthermore, NEPA requires an agency to address only those impacts that are reasonably foreseeable. As the Commission observed, there is no quantitative way to predict the probability of a terrorist attack at an ISFSI site. After 9/11 it is reasonable to speculate that terrorist attacks may recur, but where, when, and how often obviously cannot be foreseen with any kind of demonstrable certainty. In short, a terrorist attack at Diablo Canyon is speculative and not reasonably foreseeable. This degree of uncertainty, plus the NRC's statutory duty to protect sensitive security information from public disclosure, renders the NEPA process an unhelpful mechanism for analyzing the terrorist threat. For these reasons, the Commission justifiably concluded that NEPA does not require analysis of terrorist-created impacts.

2. The Commission adopted the foregoing legal position during an adjudication (the PFS case), not a rulemaking. But the Supreme Court and this 22

Court have consistently upheld an agency's right to use adjudication as a means to adopt legal doctrines. What the Commission did here was simply to apply its then-recent PFS decision in deciding petitioners' nearly identical claims. This is standard practice in adjudicatory systems, both judicial and administrative. The Commission did not violate any right of petitioners when it followed its own PFS decision in a subsequent, similar case.

3. The Commission correctly denied petitioners' request to expand the ISFSI adjudicatory hearing to include their challenge to the adequacy of NRC security regulations. Petitioners' brief in this Court (at 54-55) acknowledges their intent to use the ISFSI hearing as a means to challenge NRC regulations. That is improper. Under standard administrative law practice, hearing petitioners (or others) dissatisfied with agency regulations must file a petition for rulemaking.

Here, when petitioners filed their petition with the Commission demanding stronger security requirements, they specifically disclaimed the petition for rulemaking device. Petitioners deliberately failed to avail themselves of a chance to perfect a challenge to the NRC's security regulations.

23

ARGUMENT I. Standard of Review.

Agency decisions under NEPA are reviewed under the "arbitrary and capricious" standard of the APA, 5 U.S.C. §706(2)(A). Environmental Protection Information Center v. Simpson Tinber Comnpany, 255 F.3d 1073, 1078 (9th Cir.

2001); Friendsof the Clearwvater v. Dombeck, 222 F.3d 552, 556 (9th Cir. 2000).

"Review under this standard is to be searching and careful, but remains narrow, and a court is not to substitute its judgment for that of the agency." Friendsof the Clearnvater,222 F.3d at 556.

To the extent that the petition for review challenges the NRC's decision to proceed by adjudication rather than rulemaking, the standard of review is highly deferential, because "the choice between rulemaking and adjudication lies in the first instance within the [agency]'s discretion." NLRB v. Bell Aerospace Co, 416 U.S. 363 (1974); accord Pfaff v. HUD, 88 F.3d 739, 747 (9h Cir. 1996). This Circuit has employed a "general rule of deference to announcements of law by adjudication." Pfaff, 88 F.3d at 748.

Finally, to the extent that the petition alleges that the NRC violated the requirements of the Atomic Energy Act and of its own regulations, the agency's interpretation should be afforded substantial deference. "When a court reviews an 24

agency's construction of the statute which it administers" and the statute is silent or ambiguous with respect to a particular issue, "the question for the court is whether the agency's answer is based on a permissible construction of the statute,"

and the court may not substitute its own construction for a reasonable construction made by the agency. Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837, 84344 (1984); accordBrand XInternet Services v. FCC, 345 F.3d 1120, 1127 ( 9 th Cir.

2003). Likewise, an agency's interpretation of its own regulation is "controlling" unless it is "plainly erroneous or inconsistent with the regulation." Robertson v.

Methowv Valley Citizen's Council, 490 U.S. at 359 (1989); accord Vincent v. Apfel, 191 F.3d 1143, 1148 (9 th Cir. 1999).

II. The Commission Correctly Found that the Environmental Impact Statement for an NRC-Licensed Facility Need Not Address Impacts of a Hypothetical Terrorist Attack.

A. The NRC License is Not the "Proximate Cause" of a TerroristAttack.

The central issue in this case is not whether the NRC should consider the possibility of terrorist attacks on nuclear facilities. Most certainly the Commission should, and it does. Well aware that these facilities could be attractive targets, the NRC devotes "tremendous attention," as the petitioners acknowledge, Pet. Br. at 25

29, to the risk of terrorist attacks and how to prevent them. 6 As the Commission stressed in its Order here (ER 37) and in PFS, 56 NRC at 343-45, it has taken extensive anti-terrorist measures under its AEA authority to protect the public health and safety and preserve the common defense and security. See also pp 1O-12, supra.

Instead, the terrorism-related question in the present case is a narrow and peripheral issue: whether the potential impacts of terrorism are "environmental impacts" requiring study under NEPA. The Commission determined they are not.

This determination is entirely consistent with the language and purpose of NEPA as interpreted by the Supreme Court in MetropolitanEdison, and it is consistent with good sense: there is simply no reason for the Commission to conduct yet another review of the same problem just to place an environmental "stamp" on the analysis.

The Commission correctly noted in PFSthat terrorist attacks are "not a natural or inevitable byproduct of licensing" nuclear facilities. 56 NRC at 347.

The intervention of malevolent human action "lengthens the causal chain beyond the reach of NEPA." Metropolitan Edison, 460 U.S. at 775. Whatever terrorism's 6We will refer to Petitioners' Brief as "Pet. Br.", the amicus curiae brief of the County of San Luis Obispo as "County Br.", and the amicus curiae brief of the State of California (and three other states) as "Calif. Br."

26

impacts might be, they are obviously unacceptable and must be prevented. This is why, particularly after the 9/11 attacks, the Federal government, including the NRC, has devoted unprecedented attention and resources to defending against the terrorist threat. A NEPA analysis would be superfluous and redundant, and the Commission correctly found no such analysis is required.

Section 102 of NEPA requires federal agencies to prepare "a detailed statement ... on the environmental impact" of any proposed major federal action "significantly affecting the quality of the human environment." 42 U.S.C.

4332(1)(C)(i). "To determine whether Section 102 requires consideration of a particular effect, we must look to the relationship between that effect and the change in the physical environment caused by the major federal action at issue."

Metropolitan Edison, 460 U.S. at 773. Petitioners argue that "[t]he addition of the proposed ISFSI to the Diablo Canyon site would add to the vulnerability and attractiveness of Diablo Canyon as a terrorist target." Pet. Br. at 13. Thus, petitioners argue, to comply with NEPA the Commission must address the environmental impacts of a terrorist attack before it can license the Diablo Canyon ISFSI.7

'Diablo Canyon is not a particularly vulnerable or attractive terrorist target.

The reactor and its spent fuel will be in place regardless of the fate of the proposed ISFSI. Moreover, given that the attacks of September 11, 2001, were in highly 27

This argument might have weight if NEPA duties were triggered by simple "but for" causation. But in Metropolitan Edison the Supreme Court expressly held that "but for" causation is necessary but not sufficient for NEPA: "Some effects that are 'caused by' a change in the physical environment in the sense of 'but for' causation will nonetheless not fall within Section 102 because the causal chain is too attenuated." 460 U.S. at 774. The Supreme Court found that "environmental impact" in NEPA's Section 102 must "include a requirement of a reasonably close causal relationship between a change in the physical environment and the effect at issue. This requirement is like the familiar doctrine of proximate cause from tort law." Id. Here, the Commission reasonably applied the Supreme Court's "proximate cause" analogy from MetropolitanEdison in finding that the impacts of a possible terrorist attack on an NRC-licensed facility are not cognizable under NEPA. See ER 36; PFS, 56 NRC at 349 and n.33.

The facts of Metropolitan Edison, while not entirely analogous to the present case, illustrate how "but for" impacts fall outside NEPA when they occur populated and visible areas while Diablo Canyon is on a remote area of the coast and not readily available to public scrutiny, it could be argued that this particular facility is an unlikely target. See, e.g., PFS, 56 NRC at 351. In fact, the County itself acknowledges that "[g]iven the relatively remote location and the safety measures currently in place, attack via commando-style attack and land vehicle bomb can probably be dismissed .. .." County Br. at App., pg. 3-249 (emphasis added).

28

not as the natural result of a Federal action, but rather because of aberrational human intervention. Metropolitan Edison involved an NRC decision to allow restart of the undamaged Three Mile Island Unit I nuclear reactor. The issue in dispute was whether NEPA required the NRC to analyze potential psychological health effects on persons living near the reactor who were frightened by the possibility of another accident. In the NRC hearing on restarting the reactor, People Against Nuclear Energy ("PANE") contended that restarting Unit 1 would cause severe psychological stress that should be addressed in a NEPA impact statement. The Commission refused to admit the contention. See Metropolitan Edison Company (Three Mile Island Nuclear Station, Unit 1), CLI-80-39, 12 NRC 607 (1980).

In a split decision, a reviewing court of appeals reversed. People Against NuclearEnergy v. NRC, 678 F. 2d 222 (D.C. Cir. 1982). As the court of appeals saw the case, no one disputed that restarting the reactor created some risk of an accident, and there was evidence that fear aroused by this risk could cause clinically observable psychological stress. Thus, there was a clear "but for" causal connection between restart and foreseeable impacts on human health. Given this connection, the court of appeals found PANE's contention "cognizable under NEPA" and admissible for litigation at the NRC hearing. 678 F.2d at 229.

29

A unanimous Supreme Court reversed the court of appeals. 460 U.S. 766 (1980). The Supreme Court recognized that the NRC's licensing decision would impact the environment, including possibly by causing psychological damage.

But the causal link between the agency action and that potential harm was interrupted by the risk of an accident.

In a causal chain from renewed operation of TMI-1 to psychological health damage, the element of risk and its perception by PANE's members are necessary middle links. We believe that the element of risk lengthens the causal chain beyond the reach of NEPA.

Id. at 775 (footnote omitted). In short, even though the NRC's action (allowing restart) could be linked to an impact on the human environment (damage to psychological health), that impact nevertheless was "too far removed ... to be covered by NEPA." Id. at 777. In other words, the agency action was the "cause" but not the "proximate cause" of the adverse impact in question for NEPA purposes.

The Supreme Court's reasoning in MetropolitanEdison strongly supports the Commission's finding here that licensing a nuclear facility is not a "proximate cause" of terrorism-related impacts for NEPA purposes. The "causal chain" linking the licensing of the Diablo Canyon ISFSI to the possible impacts of a terrorist attack on the facility is broken by an intervening "middle link" -- a 30

perception by terrorists of an opportunity for criminal human action and a deliberate decision to act on that opportunity. As in MetropolitanEdison, this non-environmental "middle link" breaks the "causal chain" and removes terrorism from the scope of NEPA. Id. at 775.

Unlike human actions that do come under NEPA, such as foreseeable social and economic behavior that affect the environment, terrorism is not a natural consequence of agency action. It falls outside normal, predictable human behavior. Terrorism obviously needs to be understood and dealt with effectively, but the Commission correctly found that trying to fit terrorism into NEPA is neither helpful nor legally necessary.

The purpose of an EIS is to inform the public (and the agency itself) of the environmental effects that will result, with a fair degree of likelihood, from the licensing of the facility. See PFS, 56 NRC at 347. Here, if PG&E constructs the Diablo Canyon ISFSI, that action will cause certain "effects" on the physical environment. For example, there will be some effects on the environment from the action on the facility by natural forces, such as wind, rain, and earthquakes. There will also be some effects on the environment from construction of the facility, as well as the potential effects of any accidents that might occur at the facility. Those effects are reasonably foreseeable and are the "natural and inevitable results of 31

licensing the facility." PFS, 56 NRC at 347. Put in terms of Metropolitan Edison, the licensing of the facility is the "proximate cause" of those impacts. See 460 U.S. at 774.

That is not the case with any effects of a postulated terrorist attack on the Diablo Canyon ISFSI. As the Supreme Court held in MetropolitanEdison, the mere fact that human events - such as an attack (or fear of an attack) - might not occur "but for" the licensing of the facility does not mean that the effects of such events fall within NEPA. See 460 U.S. at 774. Instead, a postulated terrorist attack (or "act of malice or insanity," to use petitioners' phrase) would be an intervening, deliberate act, "lenghten[ing] the causal chain beyond the reach of NEPA." Id. at 775. Thus, the licensing of the facility cannot be said to be the "proximate cause" of such a criminal act within the meaning of Metropolitan Edison, 460 U.S. at 774.

The D.C. Circuit reached a similar result on facts analogous to ours in Glass PackagingInstitute v. Regan, 737 F.2d 1083 (D.C. Cir. 1984), cert. denied, 469 U.S. 1035 (1984), overruled in part on other grounds, Hazardous Waste Treatnent Council v. EPA, 861 F.2d 277, 283 n.2 (D.C. Cir. 1988). In that case, petitioners argued that before allowing the use of plastic bottles to package liquor, the Bureau of Alcohol, Tobacco, and Firearms ("BATF") should be required to 32

prepare an EIS analyzing the potential environmental impacts of a "deranged criminal" tampering with plastic bottles, dangerously affecting human health.

Petitioners argued that the BATF should have evaluated the impact of those events on the environment, contending "that NEPA requires consideration of environmental effects caused by reasonably foreseeable criminal acts of third parties." 737 F.2d at 1091.

The D.C. Circuit rejected that claim as "specious," because "no cognizable environmentaleffect is implicated by the introduction of a new plastic container into the market place merely because it may be susceptible to tampering." Id.

(emphasis in original) (citing Metropolitan Edison). In essence, Glass Packaging held that the postulated criminal activity that would introduce contaminated material into the plastic bottles was an "intervening action" that was outside the scope of NEPA. "If we were to seize the word 'environmental' out of its context and give it the broadest possible definition, the words 'adverse environmental effects' might embrace virtually any consequence of a governmental action that someone thought 'adverse."' Id. at 1091 (citing Metropolitan Edison). Or, as the Conmmission pointed out in PFS, It is sensible to draw a distinction between the likely impacts of the [] facility and the impacts of a terrorist attack on the facility. Absent such a line, the NEPA 33

process becomes truly bottomless, subject only to the ingenuity of those claiming that the agency must evaluate this or that potential adverse effect, no matter how indirect its connection to agency action.

56 NRC at 350.

In sum, a "highly attenuated chain of causation" does not trigger an agency's NEPA duties. See Presidio Golf Club v. National Park Service, 155 F.3d 1153, 1158 (91h Cir. 1998) (citing MetropolitanEdison). While NRC's licensing the Diablo Canyon ISFSI can be considered the "cause" of the environmental effects of a hypothetical terrorist attack in a "but for" sense, it is not the "proximate cause" of those effects.

B. The Effects of A TerroristAttack Are Not "Reasonably Foreseeable."

NEPA requires only an analysis of "reasonably foreseeable" impacts.

Selkirk ConservationAlliance v. Forsgren, 336 F.3d 944, 958 (9 th Cir. 2003)

(consequences should be "reasonably foreseeable" and "probable."). See, e.g.,

Dubois v. U.S. Dept. ofAgriculture, 102 F.3d 1273, 1286 (15' Cir. 1996); Sierra Club v. Marsh, 976 F.2d 763, 767 (1S' Cir. 1992); Wyonzing Outdoor Council, Inc.

v. U.S. Forest Service, 165 F.3d 43, 49 (D.C. Cir. 1990). Agencies "need not consider potential effects that are highly speculative or indefinite." PresidioGolf Club v. National Park Service, 155 F.3d at 1163.

34

The Council on Environmental Quality ("CEQ") has adopted regulations that provide guidance on NEPA compliance and how agencies define the various terms used in the statute. 8 For example, the regulations require an EIS to discuss both direct effects and indirect effects of the proposed action. Direct effects are "caused by the action and occur at the same time and place [of the action]," 40 C.F.R. § 1508(a), while indirect effects are "caused by the action and are later in time or further removed in distance, but are still reasonablyforeseeable." 40 C.F.R. §1508(b) (emphasis added). Impacts that are "reasonably foreseeable" include "impacts which have catastrophic consequences, even if the probability of occurrence is low, provided that the analysis of the impacts is supported by credible scientific evidence, is not based on pure conjecture, and is within the rule of reason." 40 C.F.R. §1502.22(b)(4) (emphasis added).

As the First Circuit explained in a case involving claimed indirect impacts:

Whether a particular set of impacts is definite enough to take into account, or too speculative to warrant consideration, reflects several factors. With what confidence can one say that the impacts are likely to occur? Can one describe them 'now' with sufficient specificity to make their consideration useful?

If the decisionmaker does not take them into account 'now,'

'The NRC is not bound by CEQ regulations it has not expressly adopted.

See Limerick Ecology Action, 869 F.2d 719, 743 (3d Cir. 1989). However, the NRC gives those regulations "substantial deference." PFS, 56 NRC at 348, n.22 (Citations omitted).

35

will the decisionmaker be able to take account of them before the agency is so firmly committed to the project that further environmental knowledge, as a practical matter, will prove irrelevant to the government's decision?

Sierra Club v. Marsh, 769 F.2d 868, 878 (1S Cir. 1985) (citation omitted).

In this case, the effects of a terrorist attack would be "indirect effects" that would have to be "reasonably foreseeable" to require their evaluation under NEPA. The Sierra Club factors support the NRC's conclusion that the effects of a terrorist attack are not "definite enough" to be considered; instead, those effects are "too speculative" and thus, are not "reasonably foreseeable." For example, no one can say with any confidence whether the claimed impacts are likely to occur, much less describe "how" exactly those impacts might happen or describe them with "sufficient specificity to make their consideration useful." Sierra Club, 769 F.2d at 878. "[T]he possibility of a terrorist attack ... is speculative and simply too far removed from the natural or expected consequences of agency action to require a study under NEPA." PFS, 56 NRC at 349.

That conclusion finds support in this Court's prior case law. In No GWEN Alliance v. Aldridge, this Court reviewed a NEPA challenge to the U.S. Air Force's proposal to build a group of radio towers as part of a system for sending messages to U.S. strategic forces during and after a nuclear war. The No GWEN 36

Alliance, a citizens' group, argued that NEPA required the Air Force to issue an EIS analyzing the environmental impact of a nuclear war. The Alliance contended building the towers would not only make nuclear war more likely, but "that any geographic area in which a GWEN tower is located would become a priority target[]" in any conflict. Id. at 1381-82.

This Court disagreed, holding that the Alliance's claims were speculative.

No GWEN admits that its contention that GWEN would increase the probability of nuclear war is merely speculative. Additionally, we find the contention that GWEN would be a primary target in a nuclear war to be equally speculative. Thus, . . . neither proposition must be discussed in an environmental assessment or environmental impact statement.

Id. at 1386 (footnote omitted) (citation omitted). The No GWEN Court pointed out that the CEQ's definition of "reasonably foreseeable" "consistent with the holding in this case.. .." 855 F.2d at 1386, n.I. In essence, this Court held that No GWEN Alliance's claim that the GWEN towers would become a primary target was pure conjecture, which was not reasonably foreseeable and thus beyond the scope of NEPA.

The same logic applies to petitioners' claims in this case. Petitioners argue that if the Diablo Canyon ISFSI is built, it will become a "priority" target of a terrorist attack, Pet. Br. at 42-43, a claim virtually identical to that raised by the No 37

GWEN Alliance. Such claims are purely conjectural, as the No GWEN Court noted. Petitioners are simply raising hypothetical possibilities similar to the fear of No GWEN Alliance that the radio towers in their case would be attacked by a foreign enemy.

In No GWEN, this Court found its holding consistent with its prior analysis

- in Warm Springs Dam Task Force v. Gribble, 621 F.2d 1017 (99 Cir. 1980). 855 F.2d at 1386 ni. In Warm SpringsDam, this Court held that the Corps of L Engineers need not issue an EIS discussing the catastrophic failure of a dam.

"Everyone recognizes the catastrophic results of the failure of a dam; to detail these results would serve no useful purpose." 621 F.2d at 1026-27. The potential L failure of the Diablo Canyon ISFSI after a hypothetical terrorist attack is equally as speculative, and a NEPA review equally unhelpful, as was the potential failure L of the Warm Springs Dam, or as the potential enemy attack on the GWEN towers.

Taken to its logical conclusion, petitioners' argument would require the Federal government to perform a NEPA analysis of the effects of a potential L terrorist attack on each and every construction project it approves - every single L bridge in the Federal Interstate Highway System, for example. Certainly after L 9/11, bridges, buildings, dams are all potential terrorist targets; and terrorists could L always seek out an unexpected target. But performing NEPA reviews of the 38

effects of hypothetical terrorist attacks at every Federal project would impose a heavy, unproductive burden on the Federal government, requiring the expenditure of significant resources. 9 And, frankly, across-the-board terrorism reviews would fulfill the Supreme Court's fear that "'adverse environmental effects' might embrace virtually any consequence of a government action that someone thought

'adverse."' Metropolitan Edison, 460 U.S. at 772.

C. The Commission's Other Reasons ForExcluding Petitioners'NEPA-Terrorism Contention Were Reasonable.

The Commission's lead decision on the NEPA-terrorism issue, PFS, pointed to several factors that "stand singly, and cumulatively, as justification against invoking NEPA as the basis" for reviewing terrorist risks. 56 NRC at 348.'1 In 9 For example, if the NRC received a phone call with a threat to blow up the Golden Gate Bridge if it proceeded to license the Diablo Canyon ISFSI, the petitioners' logic would require the NRC to perform an analysis of the effects of the destruction of the Golden Gate Bridge. Indeed, this hypothetical example raises an arguably less speculative claim of environmental harm than petitioners' undifferentiated general fear of terrorism. Yet it is doubtful that any court would require an agency to consider blackmailers' threats in its NEPA review.

"OAs the Commission pointed out in PFS, 56 NRC at 349-50, the only two Federal appellate decisions that have addressed the issue of NEPA and terrorism in the area of nuclear regulation have upheld government decisions not to consider the impacts of terrorism under NEPA. See Limerick Ecology Action v. NRC, 869 F.2d 719 (3d Cir. 1989); City of New York v. U.S. Departmentof Transportation, 715 F.2d 732 (2d Cir. 1983), appeal dismissed and cert. denied, 465 U.S. 1055 (1984).

39

L this brief we have stressed two of them -- the Commission's legal arguments that:

(1) under the "proximate cause" doctrine, NEPA does not require an environmental inquiry into "stochastic criminal behavior, independent of the planned facility," 56 NRC at 347, n.18, and (2) the environmental effects of a hypothetical terrorist attack are not "reasonably foreseeable." 56 NRC at 348-49.

But the Commission also pointed to several other factors cutting against a NEPA-based reviews in PFS. We turn now, briefly, to two of those factors.

1. NEPA Does Not Require A "Worst Case" Analysis.

Petitioners' request for an analysis of a successful terrorist attack at the Diablo Canyon ISFSI approximates a request for a "worst case" analysis that has long since been discarded by the CEQ regulations and, as the Commission noted L. in PFS, 56 NRC at 351-54, has been discredited by the Federal courts. See, e.g.,

L Robertson v. Methow Valley Citizens Council, 490 U.S. at 354-55. Accord Edwardsen v. U.S. Dep't of Interior,268 F.3d 781, 785 (9' Cir. 2001). Instead, the CEQ regulations now require agencies to review only "reasonably foreseeable" L impacts; if the information about that impact is unavailable, agencies are to L prepare a "summary of existing credible scientific evidence" relevant to evaluating L that impact, and the "agency's evaluation of such impacts [should be] based upon theoretical approaches or research methods generally accepted in the scientific 40 K

community." 40 C.F.R. §1502.22(b)(3-4). As we noted earlier, the CEQ's definition of "reasonably foreseeable" excludes impacts based on "pure conjecture." Id.

In this case, petitioners' proposed scenario requires that the NRC assume not only that a terrorist attack occurs, but that it succeeds and, in addition, results

- in the release of radioactive materials into the environment. The Commission L noted that this was, indeed, a "theoretical possibility," but not a "reasonably L foreseeable one."

A theoretical possibility, though, is not the same as a L 'reasonably foreseeable impact,' which is the usual trigger-point for NEPA reviews. Substituting theoretical possibility for probability analysis amounts to a worst-L case approach.

L 56 NRC at 352. Making the various assumptions required by petitioners' scenario L requires the NRC to venture into the realm of "pure conjecture," which removes it from the definition of "reasonably foreseeable impact." In sum, as the Commission pointed out in PFS, the extreme uncertainties attendant to evaluating L terrorist risks render evaluating terrorism under NEPA a form of "worst case" L analysis -- which NEPA does not require.

L Petitioners (Pet. Br. at 45-46) and amici (County Br. at 15, Calif Br. at 12-K 14) insist that the NRC's position "is directly contradicted" by its "own pragmatic 41 L

L approach" requiring its licensees to defend against various forms of terrorism. See Pet. Br. at 46; Calif. Br. at 13. But there is nothing inconsistent about the NRC approach. In many areas, including (but not only) terrorism, the Commission L

L requires licensees to take elaborate and often burdensome measures to prevent accidents, thereby making a "worst case" accident so "speculative" that its effects L need not be addressed in NEPA reviews.

L Petitioners' "contradiction" argument conflates the NRC's safety and L environmental responsibilities. It is not surprising that, in the wake of terrorist events in recent times, the NRC, like the entire American government, has focused L intense attention on how best to protect the nation's populace and industrial infrastructure from malicious attack. Hence, invoking its AEA authority to protect the "common defense and security" and "public health and safety," the NRC has issued a series of orders (and, on occasion, regulations) requiring anti-terrorist it measures at nuclear facilities of various types, including ISFSIs. See pp. 10-12, L

supra. The NRC is confident that its aggressive action has enhanced nuclear

- facilities' security.

However, this cautious approach to security planning does not obligate the NRC to examine "every conceivable impact ... in an EIS." No Gwen Alliance, 855 F.2d at 1385. Federal agencies may impose planning requirements that are 42

more stringent than NEPA on themselves, but they do not thereby alter their obligations under NEPA or the CEQ regulations. For example, in Edwardsen v.

Departmentof Interior, supra, the DOI's own regulations required it to analyze the trajectory of spilled oil in spill response plans. 268 F.3d at 785. But this Court held that the obligation to perform that analysis did not require the inclusion of such information in an EIS. Id. NEPA documents "need not include a worst-case scenario." Id. (citing Robertson v. Methow Valley Citizens Council, 490 U.S. at 354). Certainly, the NRC can plan for the unpredictable possibility of a terrorist attack without taking on the obligation of performing an environmental analysis of the impacts of such an attack.

A contrary holding would yield untenable results. NEPA has no relation to the NRC's arsenal of anti-terrorist weapons or to the public's protection. NEPA's purpose is different. Congress enacted NEPA to make sure that federal agencies take account of "probable" environmental costs and benefits, see, e.g., Selkirk ConservationAlliance, 336 F.3d at 958 (citing cases), not costs based upon "pure conjecture." Routine inclusion of terrorist-induced impacts in the NEPA cost-benefit calculus, as petitioners would have it, could very well "distort[] the decisionmaking process by overemphasizing highly speculative harms." See Robertson v. Methow Valley, 490 U.S. at 356.

43

2. Granting Petitioners' Request Could Result In The Disclosure of Sensitive Security Information.

A major purpose of NEPA (and NRC hearings) is to inform the public and obtain its views. See Robertson v. Methow Valley, 490 U.S. at 356. See also Citizens Comm. To Save Our Canyons v. U.S. Forest Service, 297 F.3d 1012, 1021 (9' Cir. 2002). But in the terrorism arena too much public information can become counterproductive. And if the Commission were to allow terrorism-driven NEPA hearings in this case, there would seem no obvious or principled basis for denying them in other nuclear licensing cases. NEPA-terrorism inquiries likely would become commonplace at NRC adjudicatory hearings.

Congress has expressly instructed the Commission to protect sensitive information from public disclosure. See AEA, § 147,42 U.S.C. §2167. And it is simple common sense that the more people with access to information about security vulnerabilities and anti-terrorist measures -- information seemingly indispensable to participating in agency hearings about terrorism issues -- the greater the chance that such information could, however inadvertently, fall into the wrong hands. Thus, the Commission has to maintain a delicate balance: on one hand allowing maximum public participation in its hearing and NEPA processes, 44

L while on the other hand protecting sensitive security information, the release of L which could actually facilitate the exact type of attack petitioners fear.

L Petitioners (Pet. Br. at 47-48) and their supporting amici (County Br. at 16-22; Calif Br. at 14-16) argue that a NEPA-terrorism review would not compromise security information because of the Commission's power to protect such information through devices like security clearances and closed-door adjudicatory hearings. But the Commission acknowledged the possibility that it could "attempt[] to keep EISs and hearings confidential." PFS, 56 NRC at 356. Instead, L

its expressed concern was that "widespread NEPA-terrorism reviews" would "increase the risk of dangerous security breaches." Id. This concern is reasonable.

L If the Commission embarks on a process of allowing each and every license or license amendment to be subject to the possibility of a terrorism review in a public forum, there is every chance that, sooner or later, some vital information will be inadvertently released. Certainly, keeping the NEPA process out of the public eye is permitted in these circumstances. See Weinberger v CatholicAction of Hawaii, 454 U.S. 139 (1981). Given that the license is not the "proximate cause" of the hypothetical impact, and that the impact itself is not "reasonably foreseeable," the 45

security factor adds more weight to the Commission's decision not to undertake such reviews."

D. Petitioners'Remaining Claims Lack Merit.

In their brief, petitioners raise various claims in addition to those we have already answered. All lack merit. First, petitioners argue that the NRC's issuance

-y of a "Vehicle Bomb Rule," 59 Fed. Reg. 38,899 (Aug. 1, 1994), demonstrates that the agency can - and should - conduct a NEPA analysis of terrorism in general.

Pet. Br. at 40. But in the Vehicle Bomb Rule, the Commission merely exercised its authority under the AEA to protect licensed facilities against one specific type of threat, which - while unpredictable - was relatively easy to ascertain: vehicles L operate in a certain manner and by a certain method and the Commission issued L guidance to protect against certain threat scenarios.

By contrast, petitioners in this case ask the NRC to analyze under NEPA an open-ended threat by any and all possible scenarios - and results. That is quite different from the Commission's issuance of the Vehicle Bomb Rule. There is no L

"As the Commission recognized in PFS, the Supreme Court in Weinberger L v CatholicAction pointed out that the Navy could perform an "in house" NEPA review of a proposed defense facility, "and factor it into its decisionmaking, even if the NEPA results could not be publicized or adjudicated." 56 NRC at 356. "But here," the Commission said, "a formal NEPA review, secret or otherwise, would not add meaningfully to our understanding of the terrorism issue, in light of our ongoing studies and existing requirements and directives." Id.

L 46 L

way that anyone can anticipate any specific attack at any specific facility and what would be the results of a "successful" attack. Instead, the NRC and its licensees have taken reasonable preparations to protect all licensed facilities against plausible attack scenarios. The NRC has done this under its AEA authority with the cooperation of other government agencies. Those plans are subject to revision on a daily basis as the government obtains additional threat information or as it L conceives of additional steps it could take to make the plants more secure. But L taking these steps to protect against a hypothetical attack does not increase the NRC's duties under NEPA.

Second, petitioners allege that the Commnission's decision is "inconsistent L with the agency's own long-established policy and practice of addressing the L environmental impacts of external events ... under NEPA." Pet. Br. at 43. But L petitioners conceded in their contention that the NRC has a "long-established L policy ... of refusing to examine the environmental effects of destructive acts of malice or insanity." (ER67). Moreover, the impacts of all of the events cited by petitioners in their "long established policy" argument, see Pet. Br. at 43-44, are L impacts that are reasonably foreseeable results of licensing a facility.

L For example, when the NRC licenses any facility, there is a measurable L possibility that the facility will experience an accident from the operation of any L47

I equipment or machinery associated with the facility, and that this accident may have some impact on the environment. Likewise, there is a reasonably foreseeable L possibility that the facility will be impacted by weather events, such as rain or tornadoes, or by earthquakes, or even by events at an adjacent facility, and that these impacts on the facility may have an impact on the environment. The licensing of the facility is the "proximate cause" of the environmental impacts of L those events, see page 32, supra, and the NRC has always addressed them.

L Contrary to petitioners' claim, Pet. Br. at 44, these external events amount to the L"natural" consequences of operation of the ISFSI. But the NRC has never had a L

"long-established policy and practice of addressing" deliberate and intervening L external events under NEPA.

L Finally, petitioners allege that "[t]errorist attacks on nuclear facilities are L also 'closely linked' to those facilities, in the sense that they are desirable targets."

L Pet. Br. at 44. Yet petitioners' claims about the "desirability" of nuclear plants as targets, id., or that nuclear plants are "highly attractive targets," Pet. Br. at 42, are L speculative. In theory, many industrial facilities - including nuclear ones - may L attract terrorist attention. But the NRC's recent actions, as outlined in PFS, may L have effectively deterred terrorists from attacking NRC-licensed facilities by L making those facilities too difficult to attack. In any event, a terrorist attack on the 48

Diablo Canyon ISFSI is certainly not so likely or inevitable as to make its occurrence "foreseeable."

E. The Amici's Claims Lack Merit.

Essentially, the amici track the petitioners' arguments in responding to the Commission's decision, but do not address our "proximate cause" argument. We have responded to those arguments above and will not do so again here.

The County raises an additional argument to the extent that it claims that it was not allowed to present information to the NRC.' 2 This information includes an Environmental Impact Report ("EIR") that was prepared for the County (since the conclusion of the hearing), County Br. at 7-8, 17 and n9, as well as information about the County's ability to provide "medical, police and other services that would be called on in the event of a successful terrorist attack on the ISFSI." County Br. at 7. But the County later admits that it "already has responsibilities as an off-site responder in PG&E's Security Plan." County Br. at

20. Thus, the County has a pre-existing duty to advise both PG&E and the NRC 1

2This Court has held that amici cannot raise arguments that are not raised by the petitioner. See, e.g., Falcon Carrichev. Ashcroft, 335 F.3d 1009, 1014 n.5 (9 ' Cir. 2003); Russian River Watershed Committee v. Santa Rosa, 142 F.3d 1136, 1141 n.1 (9t h Cir. 1998).

49

of the services it can provide if "called upon in the event of a successful terrorist attack." Id.

Moreover, the County had the EIR prepared as part of its analysis for the granting of a permit under the Coastal Zone Management Act, 16 U.S.C. § 1451, et seq., so it is not clear whether it addresses issues that would be relevant to the AEA or NEPA. Furthermore, the report is dated January, 2004, long after the NRC had completed its hearing process, so it was not a part of the "record of decision" before the NRC. Thus, its relevance to the NRC's issuance of the Diablo Canyon ISFSI license is questionable.

Nevertheless, nothing stops the County from asking the NRC to consider the material contained in its EIR, to review it, and to discuss it with the County, either in a closed or open forum. The NRC receives many requests of this nature and always responds, especially when the submission comes from a government agency with responsibilities associated with a nuclear power plant. If the County wants the NRC to review and respond to the comments in this document, it can easily achieve that goal.

Essentially, both amici (as well as petitioners) imply that there can be no meaningful analysis of terrorism except under NEPA. But issues related to terrorism are safety issues, and unlike environmental issues, the NRC does not 50

L need NEPA for the obligation and authority to deal with terrorism-related issues.

L Instead it addresses those issues under the authority of the AEA. If NEPA were L repealed tomorrow the NRC would still address terrorism under the AEA.

L While compliance with the AEA does not excuse any obligation the NRC may have under NEPA, the Supreme Court's proximate cause analysis in L Metropolitan Edison does excuse any NEPA obligation to evaluate terrorism and its effects. Excluding the effects of terrorism in accord with a Metropolitan Edison analysis still leaves the NRC with all the authority and obligations it needs to combat terrorism and its effects.

III. The Commission Did Not Violate Either the APA or the AEA When It L Dismissed Petitioners' Contentions.

L In addition to challenging the merits of the Commission's decision, the petitioners also allege that (1) the Commission's reliance on its decision in PFS L violated the Administrative Procedure Act ("APA"), Pet. Br. at 37-38, and (2) the L Commission improperly denied their hearing rights under Section 189a of the AEA, 42 U.S.C. §2239(a). Pet. Br. at 33-36. Both arguments are fatally flawed.

L As we show below, the Commission used the adjudicatory process to establish an internal legal precedent to guide future Commission adjudications - an entirely L

L51

L unexceptional, legal, and appropriate process. It then applied that decision to this case and correctly dismissed petitioners' contentions.

A. The Commission Reasonably Used an Adjudicatory Proceedingto Resolve L a Generic Legal Issue.

L It is axiomatic that an administrative agency can use either rulemaking or L adjudication to resolve issues that come before it. NLRB v. Bell Aerospace K Company, 416 U.S. at 290-95; Securities and Exchange Commission v. Chenery, 332 U.S. 194, 199-204 (1947); Davis v. EPA, 348 F.3d 772, 785 (9' Cir. 2003);

L Sheet Metal Workers InternationalAssociation, Local No. 355 v. NLRB, 716 F.2d 1249 (91 Cir 1983). As the Supreme Court pointed out in Chenery:

L Not every principle essential to the effective administration of a statute can or should be cast immediately into the mold of a general I rule. Some principles must await their own development, while L others must be adjusted to meet particular, unforeseeable situations.

In performing its important functions in these respects, therefore, an administrative agency must be equipped to act either by general rule L or by individual order. To insist upon one form of action to the L exclusion of the other is to exalt form over necessity.

L 332 U.S. at 202. Chenery concluded that "the choice made between proceeding by L general rule or by individual, ad hoc litigation, is one that lies primarily in the L informed discretion of the administrative agency." Id. at 203 (citation omitted).

This Court not only has recognized that "the mere fact that the [agency] created a binding policy by adjudication does not [a]ffect the policy's validity .. .," NLRB 52

v. St. FrancisHospital, 601 F.2d 404,414 (9th Cir. 1979), but it has also followed a "general rule of deference to announcements of law by adjudication .... " Pfaff

v. HUD, 88 F.3d at 747.

In 2002, the Commission faced a series of adjudicatory proceedings that raised the same generic legal issue: whether the NRC was required to review L potential terrorist acts under the rubric of NEPA in addition to its normal AEA L safety reviews. The Commission determined that its regulations did not address L this situation; therefore, the Commission undertook a comprehensive review of the L parameters of NEPA to determine whether that statute required such an undertaking. But instead of proceeding through the notice-and-comment L procedures of a general rulemaking, a process that could have taken several years, L the Commission chose instead to proceed through adjudication, requesting briefs L from the parties in each of four then-pending cases, reviewing them, and reaching L an informed decision.

After review, the Commission issued its lead PFS decision, which L determined that NEPA did not require the preparation of an EIS analyzing the L environmental impacts of a hypothetical terrorist attack. The Commission then L relied on the reasoning in PFSin four other cases, including this one (ER36). The Commission then was free to use its PFS decision as precedent when faced with 53

similar issues. When petitioners in this case presented a proposed contention seeking an EIS that analyzed the impacts of possible terrorist acts at the proposed Diablo Canyon ISFSI, the Commission reasonably concluded that this request was sufficiently similar to the request in PFS to justify its application here. Thus, the Commission rejected petitioners' NEPA claims "for the reasons stated in PFS."

L (ER 36 ). There was nothing unlawful about this use of the Commission's own LP adjudicatory precedent in resolving issues in NRC proceedings.

B. Petitioners'Arguments Do Not Address thre Use ofAdjudication.

L Petitioners argue that the Commission violated the APA in issuing PFS in that it established a "binding substantive norm" without "providing notice or the opportunity for public comment." Pet. Br. at 37. But petitioners cite absolutely no L authority for the proposition that the NRC could not use adjudication to determine its obligations under NEPA in this situation.

Instead, petitioners cite Mada-Luna v. Fitzpatrick, 813 F.2d 1006, 1014 (9 th Cir. 1987), in support of their argument that the NRC violated the APA. However, that case turned on the distinction between a general policy statement and a formal L rule. See 813 F.2d at 1013-14. The Mada-Luna Court stated the unexceptional L proposition that adoption of a general rule required a formal rulemaking and concluded that the agency action under review was a policy statement, not a 54

binding rule. Id. at 1014. Mada-Luna did not involve using an adjudication to make law, and hence is inapplicable to this case.

Petitioners also argue that the Commission was required to conduct an "evidentiary proceeding that would support the factual determinations on which its policy rests." Pet. Br. at 38, citing Limerick Ecology Action, 869 F.2d at 733. But that case, again, deals with the distinction between a "policy statement" and a "general rule." In that case, the Third Circuit concluded that an internal NRC authority relied on in a licensing decision was a policy statement, not a rule, and not entitled to any deference. See id. at 733-35. The Limerick Court faulted the NRC for not supporting its decision in that case with a binding internal precedent.

Here, the Commission has supported its decision with exactly that type of precedent (namely, the PFSdecision).

Moreover, petitioners fail to recognize that the issue before the Commission was one of legal policy, not dependent on adjudicatory facts. The question was whether NEPA required a terrorism analysis. Notably, in connection with PFS and its companion cases, the Commission took review of several decisions by its Atomic Safety and Licensing Board - decisions reaching different conclusions -

and asked for briefs from all the parties involved analyzing all aspects of the issues raised, including whether NEPA required the NRC to conduct an analysis of 55

L the environmental impacts of potential terrorist attacks. Thus, the Commission did L not decide the NEPA-terrorism question without input from the affected parties, L both the nuclear industry and the members of the public who were participating in the cases.

In this case, the Licensing Board issued a preliminary ruling dismissing the L NEPA-terrorism contention but certified the issue to the Commission. (ER 19-21).

The parties briefed the issue before the Board and the Commission had the full record before it, including not only the parties' briefs before the Board but also the proposed contention and petitioners' supporting material. Based on that review, the Commission concluded that the issues raised in this proceeding were L sufficiently similar to those raised in the previous proceeding to apply the legal conclusion adopted in that case. This result was entirely in accord with the APA's requirements.

C. The Adoption of the PFSDecision Was Not An Abuse of Discretion.

There are several cases where this Court has held that an administrative

- agency's action in proceeding by adjudication rather than rulemaking constituted "an abuse of discretion." See, e.g., Pfaff v. HUD, 88 F.3d at 748, and cases cited therein. But those cases are easily distinguishable from this case.

56

L First, this Court found an abuse of discretion where there is "an alteration of L pre-existing lawful relationships (rendering unlawful that which had previously K been lawful)." Sheet Metal Workers' InternationalAssoc. v. NLRB, 716 F.2d at 1257. In those cases, this Court found that the agency's decision "depart[ed]

abruptly from [the agency's] preexisting ... standard." Pfaff v. HUD, 88 F.3d at L 748-49. See also FordMotor Company v. FTC, 673 F.2d 1008, 1009 (9h Cir.

L 1982) (rulemaking necessary "where the parties have relied on the precedents");

L Patel v. Immigration and NaturalizationService, 638 F.2d 1199 (9 th Cir. 1980)

(same). But in this case, the Commission has not "departed ... from [its]

preexisting standard." Instead, it established a new standard where none had L existed before.

Second, this Court has held that "agencies may not use adjudication to circumvent the Administrative Procedure Act's rulemaking procedures." Cities of Anaheim v. FERC, 723 F.2d 656, 659 (9' Cir. 1984).'3 But this exception is inapplicable where the agency does not use the adjudication to amend a recently adopted rule or to supplant a pending rulemaking proceeding. Id. In the present L case the NRC did not amend any rule, much less a recently adopted one.

'3See also FordMotor Co. v. FTC, 673 F.2d at 1010 (order would "enact the precise rule the [agency] has proposed, but not yet promulgated.")

57

L Moreover, in this case there was also no pending rulemaking proceeding that L would have determined the requirements under NEPA with respect to terrorism.' 4 K D. Dismissal of Petitioners'ContentionsDid Not Violate the AEA.

Petitioners also claim that the Commission improperly denied their contentions under the AEA by (1) failing to address whether their contentions L meet the admissibility standards in the Commission's regulations, Pet. Br. at 33, K and (2) improperly judging the merits of the contentions. Pet. Br. at 35. But the L Commission neither ruled on the substantive merits of the contentions nor improperly failed to address whether the contentions meet the technical requirements of the applicable regulations. Instead, the Commission simply ruled L that the subject matter of the contentions was barred because, as a matter of law, L NEPA does not require the NRC to conduct the requested analysis. A contention can be properly supported under NRC contention-pleading standards (10 C.F.R.

§2.714(a)) (as the petitioners claim their contentions were) but may not be admissible because it is legally outside the scope of the Commission's proceeding.

It matters little whether there is a "genuine factual dispute regarding the NRC's

' 4 The Federal government respectfully reserves the right to argue that these exceptions to Chenery are not valid.

58

ability to evaluate the risk of a terrorist attack," Pet. Br. at 35, if NEPA does not require the NRC to make that evaluation in the first place.

IV. The Commission Reasonably Rejected Petitioner's Attempt to Expand the Proceedings.

Petitioners also challenge a Commission decision in this case (ER27-32) denying their attempt to litigate "common defense and security issues" in the Diablo Canyon hearing. Pet. Br. at 52, et seq. This issue arises out of a petition (ER115) asking the Commission to: (1) conduct a comprehensive review of the adequacy of NRC safety requirements; (2) suspend the proceeding pending the completion of that review; (3) expand the proceeding (to consider petitioners' security proposals) if it was not suspended; and (4) provide for public participation in considering new requirements. The Commission responded that while it had conducted - and was still conducting - safety reviews of NRC programs and processes, there was no reason to suspend the proceeding pending completion of the review. (ER30-32) The petitioners do not challenge that decision.

Instead, petitioners complain that the NRC should have expanded the proceeding to allow them to litigate issues they claim are related to "the common defense and security." In their brief, petitioners now openly assert that the NRC's regulations are "grossly inadequate[,]" Pet. Br. at 54, indicating that their real goal 59

was to challenge the Comrnission's security regulations in the Diablo Canyon proceeding. But as the D.C. Circuit has pointed out, "it is hornbook administrative law that an agency need not -- indeed, should not -- entertain a challenge to a regulation ... in an adjudication or licensing proceeding." Tribune Co. v. FCC, 133 F.3d 61, 68 (D.C. Cir. 1998). Thus, it would have been improper to allow the petitioners to challenge the NRC's regulations in an adjudicatory forum.

Moreover, petitioners ignore both the Commission's response to their request and the inconsistency of their own actions. As the Commission noted (ER30), petitioners insisted that their petition was not a petition for rulemaking, even though a rulemaking petition is a more appropriate way to review generic technical requirements. Having insisted they did not want their pleading considered as a petition for rulemaking, petitioners can hardly now complain that L the "Commission has not instituted a single rulemaking to establish changes in the design basis threat.. ...." Pet. Br. at 54. Quite simply, petitioners have never asked L

for a rulemaking on this subject.' 5 L 15 Petitioners know how to file a rulemaking petition because they submitted such a petition with another request they filed to stay the Diablo Canyon ISFSI proceedings. Although the Commission denied the stay request, see CLI-03-04, l 57 NRC 273 (2003), the Commission referred the rulemaking petition to the NRC L Staff for action. 57 NRC at 275. The NRC Staff published the petition for comment in the Federal Register, 68 Fed. Reg. 35585 (June 16, 2003), and is now reviewing public comments.

60 L

L-

In the alternative, had petitioners believed that there were site-specific issues relating to the "common defense and security" - which were not controlled by rule or regulation - at the Diablo Canyon facility, they could have submitted those issues to the Licensing Board as proposed contentions. That is why the Commission offers the opportunity for interested parties to participate in licensing proceeding and why the Commission pointed out that the petition should have been addressed to the Licensing Board in the first instance if it was not a petition for rulemaking (ER30). It is true that petitioners did submit proposed contentions with their original petition to intervene, but none of those contentions addressed matters relating to "common defense and security" except for the proposed contention relating to a NEPA-based review of the environmental impacts of "destructive acts of malice or insanity"(ER3 1). Had petitioners identified site-specific omissions in the Diablo Canyon security processes, they could have litigated those issues. As the Commission pointed out (ER30), site-specific claims might also be appropriate subjects for a citizens' petition under 10 C.F.R. §2.206.

As with the rulemaking option, petitioners expressly disclaimed the citizens' petition option (ER30).

In sum, petitioners failed to identify any site-specific common defense and security issues that were not associated with rulemaking issues. Had they done so, 61

they could have presented those issues to the Licensing Board as proposed contentions. No such contentions were filed. Similarly, petitioners avoided submitting a petition for rulemaking to cover what they concluded were deficiencies in the Commission's regulatory framework. As we noted, they could have presented those proposals to the Commission as a petition for rulemaking - a

- course of action that petitioners subsequently took on another issue. In any event L the Commission did not ignore petitioners' proposals. It referred them to the NRC Staff for "appropriate consideration" in the agency's ongoing security reviews IL (ER30). Petitioners can hardly blame the Commission for their own failure to follow proper and available Commission procedures.

Finally, the facts also refute petitioners' complaint that "the only forum in which the Commission has addressed the matters raised in their petition" is a L forum in which they cannot participate. Pet. Br. at 55. As we have demonstrated L

L above, petitioners could have petitioned for a rulemaking proceeding, as in fact they did later. See n.12, supra. They simply chose not to do so.

L V. Petitioners' Proposed Exhibits Are Not In The Record Of This Case.

L The Motions Panel forwarded the petitioners' Motion for Leave to File L Exhibits and the NRC's Opposition to this Panel for a decision. The NRC renews its opposition to the Motion to the extent petitioners (or amici) seek to place 62 L

before the Court documents not part of the record below, such as other agencies' environmental impact statements. To be meaningful, this Court's review "must be based on the full administrative record that was before" the agency at the time of its decision. Citizens to Preserve Overton Park, Inc., v. Volpe, 401 U.S. 402, 420 (1971). We do not object to including documents subject to judicial notice (e.g.,

prior Commission decisions or orders).

63

CONCLUSION For the foregoing reasons, this Court should deny the petition for review.

Respectfully submitted, THOMAS L. SANSONETh KAREN D. CYR Assistant Attorney General General Counsel JEFFERY BOSSERT CLARK COHN F. CORDES, JR.

Deputy Assistant Attorney General A~olicitor KATHRIN E. KOVAC9 E. LEO SLAGGIE Attorney Deputy/9ofcitorAl Appellate Section Environment and Natural Resources Department CHARLES . ULNS U.S. Department of Justice Senior Attorne P.O. Box 23795 Washington, D.C. 20026-3795 (202) 514-4010 §RELLY D. O)LE Attorney Office of the General Counsel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 (301) 415-1606 Dated: May 12, 2004 64

ADDENDUM Private Fuel Storage, LL C. (Independent Spent Fuel Storage Installation),

CLI-02-25, 56 N.R.C. 340 (2002)

Cite as 56 NRC 340 (2002) CLI-02-25 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION COMMISSIONERS:

Richard A. Meserve, Chairman Greta Joy Dicus Nils J. Diaz Edward McGaffigan, Jr.

Jeffrey S. Merrifield In the Matter of Docket No. 72-22-ISFSI PRIVATE FUEL STORAGE, L.L.C.

(independent Spent Fuel Storage Installation) December 18, 2002 NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: REMOTE AND SPECULATIVE EVENTS (TERRORISM)

An EIS is not an appropriate format to address the challenges of terrorism.

The purpose of an EIS is to inform the decisionmaking agency and the public of a broad range of environmental impacts that will result, with a fair degree of likelihood, from a proposed project, rather than to speculate about "worst-case" scenarios and how to prevent them.

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: REMOTE AND SPECULATIVE EVENTS (TERRORISM)

The possibility of a terrorist attack on the PFS facility is speculative and simply too far removed from the natural or expected consequences of agency action to require a study under NEPA.

340

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: REMOTE AND SPECULATIVE EVENTS (TERRORISM)

Agencies have discretion to exclude high-consequence, low-probability events from a NEPA analysis. City of New York v. U.S. Department of Transportation, 715 F.2d 732, 750 (2d Cir. 1982), appeal dismissed and cert. denied, 465 U.S.

1055 (1984).

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: REMOTE AND SPECULATIVE EVENTS (TERRORISM)

The NEPA process is governed by a "rule of reason," which does not extend to all conceivable consequences of agency decisions, no matter how far down the causal chain from a nuclear licensing decision and no matter how unpredictable.

See Duke Energy Corp. (McGuire Nuclear Station, Units I and 2; Catawba Nuclear Station, Units 1 and 2), CLI-02-14, 55 NRC 278, 295 n.41 (2002).

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: PUBLIC PARTICIPATION Using the NEPA process to consider terrorism would be incompatible with NEPA's (and the NRC's) public participation process. In the wake of the terrorist attacks on the Pentagon and World Trade Center that took place September 11, 2001, an overriding government priority is to avoid disclosing to terrorists themselves precisely where and how nuclear facilities might be most vulnerable and what steps are being taken to lessen terrorists' chance of success.

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: "WORST-CASE SCENARIOS" NEPA does not call for a "worst-case" inquiry, which, it is now recognized, simply creates a distorted picture of a project's impacts and wastes agency resources. Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 354-55 (1989). A theoretical possibility that a terrorist attack will occur is not the same as a "reasonably foreseeable" impact, the usual trigger point for NEPA reviews. Substituting theoretical possibility for probability analysis amounts to a worst-case approach, exaggerating a project's risks and unduly alarming the public.

341

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: SAFEGUARDS INFORMATION Because NRC is required by law to protect key security-related information

("safeguards information") from unauthorized disclosures, it cannot make publicly available the kind of information necessary for a more than superficial NEPA review. See Atomic Energy Act, § 147, 42 U.S.C. § 2167. This limitation on information availability supports our decision not to use NEPA, in part a public information statute, as our vehicle to analyze terrorism. Cf Public Citizen v.

FederalAviationAdministration, 988 F.2d 186 (D.C. Cir. 1993) (FAA's statutory mandate to protect airport security overrides Administrative Procedure Act's notice-and-comment and publication requirements for rulemakings).

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

SCOPE OF EIS: SECURITY REQUIREMENTS We have in place substantial security requirements for our facilities and are studying whether additional action is necessary. Thus, even if terrorism were a matter cognizable under NEPA - and for the reasons given above we believe it is not - it would elevate form over substance to insist that we supplement our ongoing comprehensive review with a duplicative or formalistic NEPA study.

See Friendsof the River v. FederalEnergy Regulatory Comission, 720 F.2d 93, 106-08 (D.C. Cir. 1983).

MEMORANDUM AND ORDER On December 13, 2001, the Atomic Safety and Licensing Board referred to the Commission its decision denying admission of a late-filed contention of the State of Utah. Utah's contention related to the threat of a terrorist attack on Private Fuel Storage, L.L.C.'s (PFS) proposed independent spent fuel storage installa-tion (ISFSI).' We subsequently accepted review, 2 and also agreed to review three ILBP-01-37.54 NRC 476 (2001).

2CL1-02-3. 55 NRC 155 (2002). The Commission accepted review of the question whether either the Atomic Energy Act (AEA) or the National Environmental Policy Act (NEPA) requires the NRC to consider the risk of terrorism in a licensing proceeding. The Commission declined to review the Board's ruling that Utah's proffered contention met our late-filing criteria Utah subsequently dropped its AEA claim, leaving only its NEPA claim for our review.

342

other cases raising terrorism-related issues.3 The primary question in these cases is whether NEPA requires the NRC, in rendering licensing decisions, to consider the impacts of terrorism. We hold today that NEPA does not require a terrorism review. 4 I. BACKGROUND A. Overview Below we consider in some detail the legal question whether NEPA requires an inquiry into the threat of terrorism at nuclear facilities. At the outset, however, we stress our determination, in the wake of the horrific September 11th terrorist attacks, to strengthen security at facilities we regulate. We currently are engaged in a comprehensive review of our security regulations and programs, acting-under our AEA-rooted duty to protect "public health and safety" and the "common defense and security." 5 We are reexamining, and in many cases have already improved, security and safeguards matters such as guard force size, physical barriers, access control, detection systems, alarm stations, response strategies, security exercises, clearance requirements and background investigations for key employees, and fitness-for-duty requirements. More broadly, we are rethinking the NRC's threat assessment framework and design basis threat. We also are reviewing our own infrastructure, resources, and communications.

Our comprehensive review may also yield permanent rule or policy changes that will apply to the proposed PFS facility and to other NRC-regulated facilities.

The review process is ongoing and cumulative. It already has resulted in a number of security-related actions to address terrorism threats at both active and defunct nuclear facilities.

For instance, just after the September 11th terrorist attacks, we issued Threat Advisories to all licensees of nuclear power plants, nonpower reactors, nuclear fuel facilities, gaseous diffusion plants, and decommissioning reactors. The 3

Duke Cogema Stone & Webster (Savannah River Mixed Oxide Fuel Fabrication Facility), CLI-02-4, 55 NRC 158 (2002) (granting petition for review); Duke Energy Corp. (McGuire Nuclear Station, Units I and 2; Catawba Nuclear Station, Units I and 2), CLI-02-6, 55 NRC 164 (2002) (accepting certified question); Dominion Nuclear Connecticut, Inc. (Millstone Nuclear Power Station, Unit 3), CLI-02-5, 55 NRC 161 (2002) (accepting referred ruling).

4 We reach the same conclusion in the other three companion cases. See Duke Energy Corp. (McGuire Nuclear Station, Units I and 2; Catawba Nuclear Station, Units I and 2), CLI-02-26. 56 NRC 358 (2002); Dominion Nuclear Connecticut, Inc. (Millstone Nuclear Power Station, Unit 3), CLI.02-27, 56 NRC 367 (2002); and Duke Cogema Stone & Webster (Savannah River Mixed Oxide Fuel Fabrication Facility). CLI-02-24, 56 NRC 335 (2002).

5 See. e.g., AEA §1103(b) & (d), 104(d), 161(b), 182a, 189a(1)(B)(ii) & (iii), 42 U.S.C. §12133(b) & (d),

2134(d), 2201(b), 2232(a), 2239(aXl)(B)(ii) & (iii). See also Florida Power & Light Co. (Turkey Point Nuclear Generating Plant, Units 3 and 4), 4 AEC 9. 12 (Commission 1967) (these two statutory phrases "are fundamental to a delineation of the Commission's licensing authority and responsibility for [nuclear power plant] facilities"), affid sub nom. Siegel v. AEC. 400 F.2d 778 (D.C. Cir. 1968).

343

Advisories indicated that these facilities should go to the highest level of security.

As a result of our initial Advisories, nuclear power plant licensees increased patrols, augmented security forces and capabilities, added security posts, installed additional physical barriers, increased the standoff distance for vehicle checks, 6 enhanced coordination with law enforcement and military authorities, and imposed more restrictive site access controls for all personnel. We continue to provide updates to the licensees regarding our original Threat Advisories, having so far issued more than thirty such updates. NRC security specialists have performed numerous onsite physical security vulnerability assessments at licensed facilities to evaluate the effectiveness of our licensees' enhanced security measures.

On February 25,2002, after further security reviews, we took the additional step of issuing orders to all 104 power reactor licensees requiring them to take interim compensatory security measures over and above those required by our regulations.

The orders formalized steps that those licensees had voluntarily taken in response to our Threat Advisories, and also included additional measures to further protect nuclear power plants. The newly required safeguards measures (whose details are not available to the public) include more patrols, more security personnel, and physical and vehicle barrier modifications. The orders also require additional security measures pertaining to waterways and owner-controlled land outside the plants' protected areas. The NRC Staff has confirmed that, as of August 31 st, all nuclear power plant licensees are in compliance with the requirements set forth in these orders. In addition, the Staff is conducting independent inspections at licensee sites.

We have subsequently issued similar security-driven orders to Honeywell International, Inc., for its uranium conversion facility in Metropolis, Illinois, on March 25th; to General Electric Company for its wet storage facility in Morris, Illinois, on May 23d; to twelve nuclear plants that are being decommissioned also May 23d; to two enriched uranium fuel fabricators (BWVX Technologies, Inc.

and Nuclear Fuel Services) on August 22d; and to independent spent fuel storage facilities using dry cask storage on October 23d.

This set of orders will remain in effect until either the threat environment changes or we determine that additional orders or rules are needed.

• In a related action, in January we increased the full-time staffing at the NRC Headquarters Operations Center, which takes in fast-breaking security and safety information. In April, we established a new Office of Nuclear Security and Incident Response. The new office is responsible for immediate operational security and safeguards issues as well as for long-term policy development.

It works closely with law enforcement agencies and the Office of Homeland Security. It also coordinates the NRC's ongoing comprehensive security review, 6

The standoff distance between a barrier and the nuclear plant is the distance between vital plant equipment and the closest exterior point of the vehicle barrier system.

344

including (for example) a major research effort to evaluate the vulnerabilities and potential effects of a large commercial aircraft crashing into a nuclear facility or into storage and transportation casks - issues raised in this proceeding.

B. Facts and Procedural Posture of This Case PFS seeks a license to operate an ISFSI on the Skull Valley Goshute Indian Reservation in Utah. During the course of this litigation and prior to September 11, 2001, the Licensing Board admitted numerous issues for hearing, many of which await final merits resolution. But the Board rejected various contentions relating to the risks of terrorism or sabotage at the proposed facility, finding each to be inadmissible.7 In response to the terrorist attacks of September 11, 2001, Intervenor Utah asked the Board to admit its late-filed contention Utah RR, Suicide Mission Terrorism and Sabotage, which claimed violations of both the AEA and NEPA.

Utah contended that the events of September 11 had materially changed the circumstances under which the Board had rejected previously proffered terrorism-related contentions by showing that a terrorist attack is both more likely and potentially more dangerous than previously thought.

Utah's new AEA "terrorism" claim argued that PFS's Safety Analysis Report and the Staffs Safety Evaluation Report failed to identify and adequately evaluate external man-induced events such as suicide mission terrorism and sabotage, "based on the current state of knowledge about such events," as required by an NRC rule.8 The Board found this argument an impermissible attack on NRC rules because, in promulgating security rules applicable to ISFSIs, the Commission had specifically considered and rejected requiring protection against the malevolent use of an airborne vehicle. 9 Utah's new NEPA "terrorism" claim argued that PFS's Environmental Report and the NRC Staffs draft Environmental Impact Statement (EIS)'0 were deficient in failing to consider the environmental consequences of terrorists flying a fully loaded commercial jumbo jet into the PFS facility. Relying on a 1973 Appeal Board decision in the Shoreham proceeding," the Board found that the rationale for excluding acts of war in our safety analysis - that this is the responsibility of the national defense establishment - applies equally to a NEPA analysis.

7 See LBP-98-13, 47 NRC 360, 372 (1998); LBP-98-10, 47 NRC 288, 296 (1998); LBP-98-7, 47 NRC 142, 186, 199,216,226,233-34, afd on othergrounds, CLI-98-13, 48 NRC 26 (1998).

8See 10 C.F.R. §72.94.

9 LBP-01-37, 54 NRC at 485-86. See Final Rule, "Physical Protection for Spent Nuclear Fuel and High-Level Radioactive Waste," 63 Fed. Reg. 26,955-56 (May 15, 1998).

10 The Final Environmental Impact Statement, dated December 2001, was not yet available at the time Utah submitted its contention and the Board made its ruling.

" Long Island Ughting Co. (Shoreham Nuclear Power Station), ALAB-156, 6 AEC 831, 851 (1973).

345

Therefore, the Board held that the NRC's NEPA responsibilities did not include considering the effects of terrorism.12 The Board also cited a 1989 Third Circuit decision, Limerick Ecology Action v. NRC,13 which found that NRC had no duty to perform a "probabilistic risk assessment" of the risk of sabotage in an EIS because the petitioners had failed to show that such an assessment was possible.' 4 Noting, however, that the extraordinary events of September 11 may have changed what can be said to be "reasonably foreseeable," the Board referred its terrorism ruling for immediate Commission review.'I We accepted review, asking parties to address all issues "the parties determine are relevant," and in addition the question: "What is an agency's responsibility under NEPA to consider intentional malevolent acts, such as those directed at the United States on September 11, 2001?"'6 On review, Utah has abandoned its AEA-terrorism claim and focused on its NEPA-terrorism claim. 7 Its NEPA claim does not ask that the NRC Staff inquire into or predict the likelihood of a September 11-style terrorist attack on the proposed ISFSI, but argues that the mere fact that these attacks occurred at other U.S. targets makes such an attack a reasonably foreseeable environmental impact of erecting this facility, requiring a NEPA review. Utah asks the Commission simply to assume an attack and go straight to analyzing its consequences. Both PFS and the NRC Staff, citing the Shoreham and Limerick Ecology Action decisions, maintain that terrorism and other intervening malevolent acts lie outside NEPA and need not be considered under that statute.

II. ANALYSIS A. Introduction The issue here is whether an unquantifiable threat of terrorism, in this case a suicidal air crash of a jumbo jetliner into an ISFSI, raises the kinds of environmental concerns that call for a NEPA review in an EIS. That is, does it serve the purposes of NEPA to include in an EIS a discussion of the impact of a catastrophic event that is not directly linked to an NRC licensing decision and the likelihood of which is impossible to quantify?

12LBP-0f.37, 54 NRC at 487. See 10 C.FR. § 50.13, "Attacks and destructive acts by enemies of the United States; and defense activities." This provision relieves reactor license applicants from providing for design features that protect against "enemies of the United States." By its terms, section 50.13 applies to production and utilization facilities only. It therefore does not apply directly to ISFSks such as the one at issue in this proceeding.

3869 F.2d 719, 743-44 (3d Cir. 1989).

14 LBP-01-37, 54 NRC at 487.

' See a. at 487-88.

16

-C02-3, 55 NRC at 162.

17 See State of Utah's Brief in Response to CLI-02-03 and in Support of Utah's Request for Admission of Late-Filed Contention Utah RR (Suicide Mission Terrorism and Sabotage), dated Feb. 27, 2002, at 3 n.2.

346

Terrorism differs from matters ordinarily considered in an EIS. The proposed PFS facility's EIS, for example, considers such matters as likely effects on local water, air quality, vegetation, wildlife, culture, and lifestyle. These effects are reasonably certain; an EIS can quantify them to a fair degree of precision.

Terrorism, by contrast, comes in innumerable forms and at unexpected times and places. It is decidedly not predictable. And it is not a natural or inevitable byproduct of licensing the PFS facility.' 8 In our view, an EIS is not an appropriate format to address the challenges of terrorism. The purpose of an EIS is to inform the decisionmaking agency and the public of a broad range of environmental impacts that will result, with a fair degree of likelihood, from a proposed project, rather than to speculate about "worst-case" scenarios and how to prevent them.

By its own terms, NEPA is not absolute. It directs federal agencies "to use all practicable means, consistent with other considerations of national policy," in environmental reviews.19 The NEPA process is governed by a "rule of reason." 20 It does not extend to all conceivable consequences of agency decisions, no matter how far down the causal chain from a nuclear licensing decision and no matter how unpredictable. Using the NEPA process to consider terrorism also would be incompatible with NEPA's (and the NRC's) public participation process. In the wake of September 11, an overriding government priority is to avoid disclosing to terrorists themselves precisely where and how nuclear facilities might be most vulnerable and what steps are being taken to lessen terrorists' chance of success.

Yet it would not be possible to embark upon a meaningful NEPA review of any type without engaging such subjects. NEPA does not override our concern for making sure that sensitive security-related information ends up in as few hands as practicable.

We hasten to add that our decision against including terrorism within our NEPA reviews does not mean that we plan to rule out the possibility of a terrorist attack against NRC-regulated facilities. On the contrary, as we outlined above, the Commission and its Staff have taken steps to strengthen security and are in the midst of an intense study of the effects of postulated terrorist attacks and of our relevant security and safeguards rules and policies. These activities are rooted in the NRC's ongoing responsibilities under the AEA to protect public health and safety and the common defense and security. But we see ho practical benefit in conducting that review, case-by-case, under the rubric of NEPA, nor

'8 The Commission evaluates the impacts of accidents precipitated by natural events such as earthquakes, hurricanes, and other severe storms. Unlike acts of terrorism such events are closely linked to the natural environment of the area within which a facility will be located; and are reasonably predictable by examining weather patterns and geological data for that region. We do not know of similar principles that would permit reasonable prediction of an act of terrorism against a particular facility. Terrorism is a global issue, involving stochastic criminal behavior, independent of the planned facility.

' 9 See 42 U.S.C. §4331(b).

20 See Duke Energy Corp. (McGuire Nuclear Station, Units I and 2; Catawba Nuclear Station, Units I and 2),

CLI-02-14, 55 NRC 278. 295 n.41 (2002).

347

any legal duty to do so. Below we set out a series of factors cutting against using the NEPA framework to conduct a terrorism review and against admitting Utah's NEPA-terrorism contention for hearing. These factors stand singly, and cumulatively, as justification against invoking NEPA as the basis for our terrorism review in nuclear licensing cases.

B. NEPA's Goals and the Rule of Reason We begin with general NEPA requirements. NEPA demands that federal agencies prepare a "detailed statement ... on the environmental impact" of any proposed major federal action "significantly affecting the quality of the human environment."21 Council on Environmental Quality (CEQ) regulations, which offer agencies guidance on NEPA compliance, provide that the EIS must discuss direct and indirect effects of the action. 2 Direct effects are "caused by the action and occur at the same time and place." 2 3 Indirect effects are "caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable," such as growth-inducing effects. 2 4 CEQ regulations also caution that the EIS should not be overbroad.25 NEPA's "dual purpose" is to ensure that federal officials fully take into account the environmental consequences of a federal action before reaching major decisions, and to inform the public, Congress, and other agencies of those consequences. 2 6 These purposes inform our determination whether the potential impact of a terrorist attack is the type of information Congress intended for agencies to include in an EIS.

It is well established that NEPA requires only -a discussion of "reasonably foreseeable" impacts. 27 Grappling with this concept, various courts have described it as a "rule of reason,'"2 8 or "rule of reasonableness," 2 9 which excludes "remote 21 See 42 U.S.C. § 4332(2)(C)(i).

2240 C.F.R §1502.16. Although the Commission is not bound by CEQ regulations that it has not expressly adopted (see Limerick Ecology Action, 869 F.2d at 743), the Commission gives those regulations "substantial deference." See Long IslandLightingCo. (Shoreham Nuclear Power Station. Unit 1), CLI-91-2, 33 NRC 61, 72 n.2 (1991).

23 40 C.FR. § 1508.8(a).

2440 C.F.R. §1508.8(b) (emphasis added).

25 Environmental impact statements should be "analytic rather than encyclopedic," and "shall be kept concise and shall be no longer than absolutely necessary to comply with NEPA and these regulations." 40 C.F.R.

§ 1502.2(a), (b).

26 See Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349 (1989); Baltimore Gas and Electric Co.

v. NaturalResources Defense Council, Inc., 462 U.S. 87,97 (1983); Duboisv. U.S. DepartmentofAgriculture, 102 F.3d 1273, 1291 (Ist Cit. 1996).

27 See, e.g., Wyoming Outdoor Council, Inc. v. U.S. ForestService, 165 F.3d 43, 49 (D.C. Cis. 1999); Dubois v.

U.S. Dept. ofAgric., 102 F.3d at 1286; Sierra Club v. Marsh, 976 F.2d 763, 767 (1st Cit. 1992).

2 SSee Davis v. Latschar, 202 F.3d 359, 368 (D.C. Cit. 2000); San Luis Obispo Mothersfor Peace v. NRC, 751 F.2d 1287, 1300.01 (D.C. Cir. 1984). vacated on other grounds, 760 F.2d 1320 (D.C. Cir. 1985).

29 See Limerick Ecology Action, 869 F.2d at 745; NaturalResources Defense Council, Inc. v. Morton, 458 F.2d 827, 837 (D.C. Cir. 1972).

348

and speculative"30 impacts or "worst-case" scenarios. 3 ' Courts have excluded impacts with either a low probability of occurrence, 32 or where the link between the agency action and the claimed impact is too attenuated to find the proposed federal action to be the "proximate cause" of that impact.33 NEPA does not call for "examination of every conceivable aspect of federally licensed projects."34 Here, the possibility of a terrorist attack on the PFS facility is speculative and simply too far removed from the natural or expected consequences of agency action to require a study under NEPA.

Two federal court of appeals decisions have addressed the issue of terrorism and NEPA in the area of nuclear regulation. Both decisions upheld, as reasonable, an agency refusal to consider terrorism under NEPA. In Limerick Ecology Action

v. NRC, the Third Circuit determined that in licensing a nuclear power reactor the NRC could decline to consider the effects of terrorism in an EIS because the intervenors had not shown any way to predict or analyze the risk meaningfully. 35 Similarly, in City of New York v. U.S. Departmentof Transportation,the Second Circuit held that, in permitting the transport of nuclear materials, the Department of Transportation need not perform a NEPA analysis of the effects of sabotage

- because agencies had discretion to exclude such high-consequence, low-probability events:

DOT simply concluded that the risks of sabotage were too far afield for consideration. To a large degree this judgment was justified by the record. Substantial evidence indicated that sabotage added nothing to the risk of high-consequence accidents. Even the least sanguine commentators could say only that sabotage added an unascertainable risk. In light of these conflicting points of view, it was within DOT's discretion not to discuss the matter further beyond adopting the NRC security requirements. 3 6 30 See Limerick EcologyAction. 869 F.2d at 739; Trout Unlimited v. Morton, 509 F.2d 1276, 1283 (9th Cir. 1974).

31See Robertson v. Methow Valley Citizens Council. 490 US. at 354; Edwardsen v. U.S. Department of the Interior. 268 F.3d 781, 785 (9th Cir. 2001).

32 San Luis Obispo Mothersfor Peace v.NRC, 751 F.2d at 1300-01 (NRC's exclusion from EIS of consequences of Class 9 accidents upheld in light of agency's finding that there was an extremely low probability of occurrence).

33 See Metropolitan Edison Co. v. PeopleAgainstNuclearEnergy, 460 U.S. 760,772-75 (1983). See also Presidio Golf Club v. National Park Service, 155 F.3d 1153, 1163 (9th Cir. 1998); No GWEN Alliance of Lane County v.

Aldridge, 855 F.2d 380 1385-86 (9th Cir. 1988). "At bottom the notion of proximate cause reflects ideas of what justice demands, or of what is administratively possible and convenient." Holmes v.SIPC, 503 U.S. 258,268 (1992)

(internal quotations omitted). The concept confines NEPA to "manageable" inquiries. Metropolitan Edison, 460 U.S. at 776.

34Louisiana Energy Services. LP. (Clhiborne Enrichment Center). CLI-98-3. 47 NRC 77, 102-03 (1998). See also PrivateFuel Storage, LLC. (Independent Spent Fuel Storage Installation),CLI-02-20, 56 NRC 147. 155-56 (2002).

35 869 F.2d at 744.

36715 F.2d 732, 750 (2d Cir. 1982), appealdismissed and cert. dented, 465 U.S. 1055 (1984).

349

In short, the only two directly pertinent court of appeals decisions, Limerick Ecology Action and City of New York, give us no reason to include terrorism within our NEPA review. 37 It is sensible to draw a distinction between the likely impacts of the PFS facility and the impacts of a terrorist attack on the facility. Absent such a line, the NEPA process becomes truly bottomless, subject only to the ingenuity of those claiming that the agency must evaluate this or that potential adverse effect, no matter how indirect its connection to agency action. In our view, the causal relationship between approving the PFS facility and a third party deliberately flying a plane into it is too attenuated to require a NEPA review, particularly where the terrorist threat is entirely independent of the facility. Nonetheless, we examine below the broad scope of NEPA law to determine if there is any reason to view terrorism differently today, in the wake of the notorious September 11 attacks on the World Trade Center and the Pentagon.

C. The Risk of a Terrorist Attack Cannot Be Adequately Determined The horrors of September 11 notwithstanding, it remains true that the likelihood of a terrorist attack being directed at a particular nuclear facility is not quantifiable.

Any attempt at quantification or even qualitative assessment would be highly speculative. In fact, the likelihood of attack cannot be ascertained with confidence by any state-of-the-art methodology. That being the case, we have no means to assess, usefully, the risks of terrorism at the PFS facility. Risk, of course, is generally thought of as "the product of the probability of occurrence [and]

the consequences." 38 Here, though, we have no way to calculate the probability portion of the equation, except in such general terms as to be nearly meaningless.

Utah has presented no evidence of a system or technique for assessing accurately the probability of a terrorist attack in general or a September 1l-type attack specifically. It argues, however, that qualitative factors could show that a terrorist threat is "reasonably foreseeable." It gives as an example a situation where a terrorist group, with the apparent wherewithal to mount such an attack, makes a specific threat against a facility or class of facilities. Although the probability of such attacks would still not be measurable, the threats would make attacks reasonably foreseeable and thus subject to NEPA, according to Utah.

We note that there has been no such threat, however, against the proposed PFS facility.

37Se also No GWENAlliance ofLane County v.Aldridge, 855 F.2d at 1385-86 (speculation that a foreign nation might target military radio towers in a nuclear war does not trigger a NEPA duty to study the effects of such an attack).

38 Private Fuel Storage, LLC. (Independent Spent Fuel Storage Installation), CLI-01-22, 54 NRC 255. 262 (2001).

350

If we were to speculate on the probability of the scenario in Utah's contention

-a hijacked jumbo jet hitting the PFS facility and causing catastrophic effects - our guess is that the probability is actually minuscule. For one thing, Congress and the Federal Aviation Administration (FAA) have put in place enhanced anti-hijacking measures at airports and on commercial airplanes (e.g.,

enhanced passenger and baggage screening, strengthening of cockpit doors, the Air Marshall program). Moreover, the United States intelligence community and various law enforcement agencies have increased their efforts to identify potential terrorists and prevent potential attacks before they occur. For instance, the FAA and Department of Defense have acted more than once to protect the airspace above nuclear power plants from what were thought at the time to be credible threats.39 In addition, terrorists seeking to cause havoc and destruction would find many targets far more inviting than the proposed PFS facility. That facility would be located in a remote, desert location far from population centers. And it would use NRC-approved strong storage casks, which are designed to minimize the effects of off-normal events and accidents.40 Given this setting, a terrorist attack seemingly would be quite unlikely to result in a high-consequence release of radioactivity.

Because we have seen no evidence to the contrary, in this proceeding or elsewhere, we conclude that the risk of a terrorist attack on the proposed PFS facility (and other nuclear facilities) is beyond this agency's ability to determine meaningfully. Utah has not proposed other means to evaluate terrorism, besides suggesting that the NRC simply assume, on the basis of the September 1I terrorist attacks, that the PFS facility is at risk. This we decline to do, as it would transform NEPA analysis into a form of guesswork and distort NEPA's cost-benefit calculus.

As in Limerick Ecology Action, Inc. v. NRC, therefore, the contention here fails to provide "some method or theory by which the NRC could ... enter[] into a meaningful analysis of the risk of sabotage despite its asserted inability to quantify the risks.'"41 D. NEPA Does Not Require a "Worst-Case" Analysis Utah's proposed approach - that the NRC assume the likelihood of a suicidal air crash into the PFS facility and calculate the consequences - amounts to a form of "worst-case" analysis. While that approach at one time found favor in 39 See PSEG Nuclear LLC (Salem Nuclear Generating Station, Units I and 2; Hope Creek Generating Station),

DD-02-3, 56 NRC 243.255-57 (2002).

40See generally NUREG-1714, "Final Environmental Impact Statement for the PFS Facility," Vol. 1, at 4-49 through 4-53 (December 2001).

41869 F.2d at 744.

351

NEPA case law, today it stands discredited. Both the Supreme Court and CEQ have concluded that NEPA does not call for a "worst-case" inquiry, which, it is now recognized, simply creates a distorted picture of a project's impacts and wastes agency resources. 42 In theory, as the NRC Staff brief acknowledges, the NRC could attempt to perform a "worst-case" analysis on the basis of much conjecture and numerous assumptions. But is it useful or legally necessary to do so? For instance, with no meaningful way to determine the probability that terrorists will attack the PFS facility, the most that can be said is that a repeat of the September 11 scenario, this time directed at PFS rather than an office building, is a theoretical possibility. A theoretical possibility, though, is not the same as a "reasonably foreseeable" impact, the usual trigger-point for NEPA reviews. Substituting theoretical possibility for probability analysis amounts to a worst-case approach.

It exaggerates a project's risks and might unduly alarm the public.

In Robertson v. Methow Valley Citizens Council, the Supreme Court held that NEPA's "twin functions - requiring agencies to take a 'hard look' at the consequences of the proposed action and providing important information to other groups and individuals" - do not call for an inquiry into worst-case possibilities. 43 The Court pointed with approval to CEQ's 1986 abandonment of a regulation that had required EISs to include worst-case analyses.44 The Court stated that CEQ's original rule had led agencies to devote substantial effort to "limitless" analyses - "that is, one can always conjure up a worse 'worst case' by adding an additional variable to a hypothetical scenario." 45 CEQ's new focus on "reasonably foreseeable impacts," the Court said, "will generate information of greatest concern to the public and of greatest relevance to the agency's decision, rather than distorting the decisionmaking process by overemphasizing highly speculative harms."4 Under Robertson, an analysis of a hypothetical terrorist attack has no place in the EIS for the PFS facility. NEPA's mandate to federal agencies, as we see it, is to consider a broad range of environmental effects that are reasonably likely to ensue as a result of a major agency action, not to engage in speculation about what might happen as a result of criminal terrorist activities. The PFS EIS discusses a range of likely impacts, including radiological impacts on workers and the public, air quality impacts, impacts on plant life, visual impacts, impacts on wildlife, and socioeconomic and cultural impacts on the local community. While not all these effects can be "measured" or "determined" in a concrete fashion - for 42 Robertson v. Medhow Valley Citizens Council, 490 U.S. at 354-55.

43 1d at 356.

441d at 354-56; see 40 C.FR. § 1502.22 (1985) (requiring worst-case analysis).

45490 U.S. at 356 n.17, quoting CEQ Proposed Rule, "National Environmental Policy Act Regulations," 5O Fed Reg. 32,234, 32,236 (Aug. 9. 1985).

S6ee 490 U.S. at 356.

352

example, the facility's impact on scenic values - the Staff can say with some degree of certainty that the impacts studied will take place.

This is in striking contrast to the impacts of an airborne terrorist attack at the PFS site using a commercial aircraft, an event that could possibly happen but is hardly a natural or expected consequence of licensing the facility. Utah says that we should take guidance from Sierra Club v. Marsh, a First Circuit decision concluding that "reasonable foreseeability" under NEPA means that "the impact is sufficiently likely to occur that a person of ordinary prudence would take it into account in reaching a decision." 47 Distinguishing "reasonably foreseeable" effects from those that are "highly speculative," the court asked:

"With what confidence can one say that the impacts are likely to occur?"48 Utah, in turn, asks its own question under the SierraClub v. Marsh formulation, "What person of ordinary prudence would not want to know, before deciding to license a facility that might some day house the nation's entire current inventory of spent nuclear fuel, what the reasonably foreseeable environmental impacts would be of an airborne assault on the facility?" 49 Utah asks the wrong question. The "reasonably foreseeable" effects of a successful attack with a jumbo jet against the PFS facility are not the same as the "reasonably foreseeable" impacts of simply licensing the facility. Utah's attempt to conflate the probability of the initiating event (terrorism) with its consequences simply skips over the question whether the impacts are "likely to occur," a key element of Sierra Club v. Marsh's "ordinary prudence" test.

With Utah having provided no reason to believe that an airborne terrorist attack on the PFS facility is "likely to occur" - indeed, Utah asks us simply to assume that it will - we cannot conclude that such an attack is a "reasonably foreseeable" impact of building the proposed ISFSI. To hold otherwise would mean that we would have to consider such attacks foreseeable at any facility under our jurisdiction. And Utah's view of foreseeability does not seem confined to airborne terrorist attacks. On Utah's approach, presumably all other kinds of terrorism, if conceivable, would require NEPA review as well, both in EISs and at NRC hearings. Such an open-ended approach to NEPA is unworkable because 47 976 F.2d at 767. See also Duboisv. U.S. Dept ofAgric., 102 F3d at 1286.

48976 F.2d at 768, quoting Sierra Club v. Marsh, 769 F.2d 868, 878 (st Cir. 1985).

49 See Utah's Brief at 8.

353

it has no stopping point.5 0 As the Supreme Court noted in Robertson, it is always possible to "conjure up" progressively more disastrous scenarios. 51 The Court's rejection of worst-case NEPA reviews in Robertson relieves agencies of the arduous and unproductive task of analyzing conceivable, but very speculative, catastrophes. It also enables agencies to use their limited resources more effectively. 52 E. NEPA's Public Process Is Not a Forum for Sensitive Security Issues Although we conclude in the previous discussion that there is no basis on which to provide a reasonable measure of the risk of terrorism and that the risk of terrorism is far afield from issues involving the natural environment of the facility, the Commission is presently engaged in analyzing how to keep such risk at a minimum. Part of this effort is to protect sensitive information from falling into the hands of those with malevolent intentions. The public aspect of NEPA processes conflicts with the need to protect certain sensitive information.

NEPA requires agencies to include the public in NEPA reviews. 53 Indeed, public information and public participation form a large part of NEPA's raison d'etre.54 At the NRC, public input includes not just an opportunity to comment on draft EISs, but also an opportunity to contest environmental findings at agency hearings on the licensing action in question.

In our view, the public interest would not be served by inquiries at NRC hearings and public meetings into where and how nuclear facilities are vulnera-ble, how they are protected and secured, and what consequences would ensue if 50To put the burden of considering threats of terrorism into perspective, it is useful to consider the cumulative burden on the federal government as a whole that would result from such free-ranging inquiries. Because there are no limits or natural boundaries to the possibility of a terrorist strike, if one were to conclude that NEPA requires an agency to consider such threats, then the environmental reviews for thousands of federal actions throughout the nation would be required to consider terrorism, including those for individual highways, dams, bridges, etc.

This is not to suggest that an environmental review should never consider the threat of terrorism. We address today only whether NEPA requiressuch a study. In fact, the NRC has briefly considered, as a matter of discretion, the issue of terrorism in generic environmental reviews for certain broad categories of activities. See, e.g., NUREG-1437, "Generic Environmental Impact Statement for License Renewal of Nuclear Plants," Vol. 1, § 5.3.3.1, at p. 5.18 (May 1996); NUREG-1437, "Generic Environmental Impact Statement for License Renewal of Nuclear Plants,"

Vol. 1, Addendum 1. Appendix I at p. Al17 (August 1999).

51 See 490 U.S. at 356 n.17.

52 See Kansas Gas and Elecric Co. (Wolf Creek Generating Station, Unit 1), C1.-99-19, 49 NRC 441, 463 (1999); General Public Utilities Nuclear Corp. (Three Mile Island Nuclear Station, Units I and 2; Oyster Creek Nuclear Generating Station). CLI-85-4. 21 NRC 561, 563-64 (1985). quoting Rockford League of Women Voters v.

NRC, 679 F.2d 1218, 1222 (7th Cir. 1982); Westinghouse Electric Corp. (Exports to the Philippines), CLI-80-14, 11 NRC 631. 649 (1980). See generally NaturalResources Defense Council, Inc. v. Morton, 458 F.2d 827, 837 (D.C. Cir. 1972) (NEPA "must be construed in the light of reason if it is not to demand what is, fairly speaking, not meaningfully possible, given. .. that the resources of energy and research - and time - available to meet the Nation's needs are not infinite").

53 See 42 U.S.C. § 4332.

54See Robertson v. Methow Valley Citizens Council, 490 U.S. at 356.

354

security measures failed at a particular facility. Such NEPA reviews may well have the perverse effect of assisting terrorists seeking effective means to cause a release of radioactivity with potential health and safety consequences.

Years ago, before NEPA's enactment, the Atomic Energy Commission (AEC) considered the question whether it should use its hearing process to assess the risk of "enemy attack or sabotage" against a particular facility (the Turkey Point reactor in Florida). 55 The AEC rejected the idea, holding that "examination into the above matters, apart from their extremely speculative nature, would involve information singularly sensitive from the standpoint of ... our national defense."5 6 Such matters, according to the AEC, are "clearly not amenable to board consideration and determination." 57 The AEC commented that it "would not propose to make them cognizable issues in the absence of a clear Congressional direction to that end." 58 Congress has enacted no such directive.

NEPA does not override the AEC's (and our) concern for making sure that sensitive security-related information ends up in as few hands as practicable.

NEPA itself includes limiting provisions. Section 101(b) of NEPA requires agencies to implement the statute's policies using "all practicable means, consistent with other essential considerations of national policy."5 9 Another passage in the same section provides that the federal government's efforts to "attain the widest range of beneficial uses of the environment" are subject to restraints based on "risk to health and safety, or other undesirable and unintended consequences."60 These provisions caution against using the NEPA process for a terrorism review. A full-scale NEPA process inevitably would require examination not only of how terrorists could cause maximum damage but also of how they might best be thwarted. But keeping those kinds of information secret is vital. To use NEPA's own terms, confidentiality in this area is an "essential consideration of national policy," protects against "risks to health and safety,"

and avoids "undesirable and unintended consequences."

For the NRC, protecting safeguards information is not simply a policy choice. It is requiredby law. Section 147 of the AEA provides that the NRC "shall" prohibit unauthorized disclosures of key security-related information. Consequently, the NRC cannot make publicly available the kind of information necessary for a 55 TureyPoini, 4 AEC at 13-14. affd sub nonL Siegel v. AEC, 400 F.2d 778 (D.C. Cir. 1968).

S6J1f at 14.

57 m Si1d.

5942 U.S.C. §4331(b) (emphases added). See also NEPA § 101(a). 42 US.C §4331(a) ("it is the continuing policy of the Federal Government ... to use all practicablemeans and measures.... [t]o create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other reqirements of present and future generations of Americans" (emphasis added)).

42 US.C. §433 1(b)(3).

355

more than superficial NEPA review. 61This limitation on information availability supports our decision not to use NEPA, in part a public information statute, as our vehicle to analyze terrorism. 62 We recognize that in Weinberger v. CatholicAction of Hawaii, 454 U.S. 139 (1981) (which did not involve issues of terrorism), the Court indicated that the Navy should perform a NEPA review in the given circumstances, and factor it into its decisionmaking, even if the NEPA results could not be publicized or adjudicated. 63 Such a review would be useful to an agency that otherwise might not consider an issue relevant to licensing. But here, a formal NEPA review, secret or otherwise, would not add meaningfully to our understanding of the terrorism issue, in light of our ongoing studies and existing requirements and directives.

And widespread NEPA-terrorism reviews, even if we attempted to keep EISs and hearings confidential, increase the risk of dangerous security breaches.

As we explained above in detail,64 our refusal to assess terrorism's risks under the ritualized NEPA process - EISs, public comment, adjudicatory hearings -

hardly means that the NRC is ignoring those risks, either at individual facilities or in general. Working closely with the Office of Homeland Security and with other agencies, the NRC after September 11 has shifted substantial resources and personnel to a study of the terrorism threat. We already have upgraded security requirements, with more improvements in the pipeline. Our agency is engaged in intensive research on facility vulnerabilities; it is considering additional or alternate means of protection; and it is looking in particular-at the effects of suicidal crashes of large commercial airplanes,65 the focus of Utah's contention here.

Given our existing efforts, it is not obvious what additional information or insights a formal NEPA review might bring into play.66 We already are reviewing 61 See Warm Springs Dam Task Force v. Gribble, 621 F.2d 1017. 1027 (9th Cir. 1988) ("[e]veryone recognizes the catastrophic results of the failure of the dam; to detail these results would serve no useful purpose").

62Cf Public Citizen v. Federal Aviation Administration. 988 F.2d 186 (D.C. Cir. 1993) (FAA's statutory mandate to protect airport security overrides Administrative Procedure Act's notice-and-comment and publication rirements for rulemakings).

O)454 US. 139, 143 (1981).

64See Section LA, supra, entitled "Overview."

65See PSEGNuclear LLC (Salem Nuclear Generating Station, Units 1 and 2; Hope Creek Generating Station),

DD-02-3, 56 NRC 243, 262 (2002), review declineit unpublished letter of NRC Secretary (Dec. 6, 2002):

Mhe NRC, in conjunction with DOE laboratories, is continuing a major research and engineering effort to evaluate the vulnerabilities and potential effects of a large commercial aircraft impacting a nuclear power plant. This effort also includes consideration of possible additional preventive or mitigative measures to furtherprotectpublic health and safety in the event of a deliberate aircraft crash into a nuclearpowerplant or spent fuel storage facility. The final results from that analysis are not yet available. If the ongoing research and security review recommends any other security enhancements, the NRC will take the appropriate action.

66Although the Commission concludes that NEPA does not call for a formalistic NEPA study on the impacts of terrorism, the FEIS for the PFS project will include the Commission's comprehensive discussion here of the terrorism issue. See Claiborne, CLI-98-3, 47 NRC at 89 ('The adjudicatory record and the Board decision (and, of course, any Commission appellate decisions) become, in effect, part of the FEIS. See, e.g., PhiladelphiaElectric Co. (Limerick Generating Station, Units I and 2), AL.AB-819,22 NRC 681, 705-07 [1985].").

356

terrorism from nearly every conceivable angle. We have in place substantial security requirements for our facilities and are studying whether additional action is necessary. Thus, even if terrorism were a matter cognizable under NEPA -

and for the reasons given above we believe it is not - it would elevate form over substance to insist that we supplement our ongoing comprehensive review with a duplicative or formalistic NEPA study. 67

m. CONCLUSION For the foregoing reasons, we decline to require a NEPA review of the impact of terrorism at the proposed PFS facility. We therefore affirm the Licensing Board decision rejecting Utah's late-filed terrorism contention (Late-Filed Contention Utah RR).

IT IS SO ORDERED.

For the Commission 68 ANNElTE L. VIETII-COOK Secretary of the Commission Dated at Rockville, Maryland, this 18th day of December 2002.

7See Friendsof the River v. FederalEnergy Regulatory Comission, 720 F.2d 93,106-08 (D.C. Cir. 1983).

68 Commissioner Dicus was not present for the affirmation of this Order. If she had been present, she would have approved it.

357

Statutory and Regulatory Appendix

\Vstaw.

40 CFR § 1508.8 Page 1 40 C.F.R. § 1508.8 C

CODE OF FEDERAL REGULATIONS TITLE 40-PROTECTION OF ENVIRONMENT CHAPTER V--COUNCIL ON ENVIRONMENTAL QUALITY PART 1508--TERMINOLOGY AND INDEX Current through May 5,2004; 69 FR 25280

§ 1508.8 Effects.

"Effects" include:

(a) Direct effects, which are caused by the action and occur at the same time and place.

(b) Indirect effects, which are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable. Indirect effects may include growth inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems.

Effects and impacts as used in these regulations are synonymous. Effects includes ecological (such as the effects on natural resources and on the components, structures, and functioning of affected ecosystems),

aesthetic, historic, cultural, economic, social, or health, whether direct, indirect, or cumulative.

Effects may also include those resulting from actions which may have both beneficial and detrimental effects, even if on balance the agency believes that the effect will be beneficial.

<General Materials (GM) - References, Annotations, or Tables>

40C.F.R. § 1508.8 40 CFR § 1508.8 END OF DOCUMENT Copr. © West 2004 No Claim to Orig. U.S. Govt. Works App. 1

40s LId 1.W.

40 CFR § 1502.22 Page I 40 C.F.R. § 1502.22 C

CODE OF FEDERAL REGULATIONS (c) The amended regulation will be applicable to all TITLE 40--PROTECTION OF ENVIRONMENT environmental impact statements for which a Notice CHAPTER V--COUNCIL ON of Intent (40 CFR 1508.22) is published in the ENVIRONMENTAL QUALITY Federal Register on or after May 27, 1986. For PART 1502--ENVIRONMENTAL IMPACT environmental impact statements in progress, STATEMENT agencies may choose to comply with the Current through May 5, 2004; 69 FR 25280 requirements of either the original or amended regulation.

§ 1502.22 Incomplete or unavailable information.

[51 FR 15625, April 25, 19861 When an agency is evaluating reasonably <General Materials (GM) - References, Annotations, foreseeable significant adverse effects on the human or Tables>

environment in an environmental impact statement and there is incomplete or unavailable information, the agency shall always make clear that such information is lacking. 40 C. F. R. § 1502.22 (a) If the incomplete information relevant to 40 CFR § 1502.22 reasonably foreseeable significant adverse impacts is essential to a reasoned choice among alternatives and END OF DOCUMENT the overall costs of obtaining it are not exorbitant, the agency shall include the information in the environmental impact statement.

(b) If the information relevant to reasonably foreseeable significant adverse impacts cannot be obtained because the overall costs of obtaining it are exorbitant or the means to obtain it are not known, the agency shall include within the environmental impact statement:

(I) A statement that such information is incomplete or unavailable; (2) a statement of the relevance of the incomplete or unavailable information to evaluating reasonably foreseeable significant adverse impacts on the human environment; (3) a summary of existing credible scientific evidence which is relevant to evaluating the reasonably foreseeable significant adverse impacts on the human environment, and (4) the agency's evaluation of such impacts based upon theoretical approaches or research methods generally accepted in the scientific community. For the purposes of this section, "reasonably foreseeable" includes impacts which have catastrophic consequences, even if their probability of occurrence is low, provided that the analysis of the impacts is supported by credible scientific evidence, is not based on pure conjecture, and is within the rule of reason.

Copr. © West 2004 No Claim to Orig. U.S. Govt. Works App. 2

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT SAN LUIS OBISPO MOTHERS FOR PEACE, et al., )

Petitioners, )

v. ) No. 03-74628

)

U.S. NUCLEAR REGULATORY COMMISSION )

and the UNITED STATES OF AMERICA, )

Respondents, )

).

PACIFIC GAS AND ELECTRIC COMPANY, )

Intervenor. )

CERTIFICATE REGARDING WORD COUNT Pursuant to Federal Rule of Appellate Procedure 32(a)(7)(C), undersigned counsel for the U.S. Nuclear Regulatory Commission certifies that the number of words in Federal Respondents' Brief of May 12, 2004, excluding Table of Contents, Table of Authorities, Addendum, Statutory and Regulatory Appendix, and signat es, as counted by the Corel WordPerfect program is 13,796.

Respe y sub) tted, arles E. M lins Senior Attorney Office of the General Counsel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 (301) 415-1606 May 12, 2004.

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT SAN LUIS OBISPO MOTHERS FOR PEACE, et al., )

Petitioners, )

V. ) No.03-74628 U.S. NUCLEAR REGULATORY COMMISSION )

and the UNITED STATES OF AMERICA, )

Respondents, and )

PACIFIC GAS AND ELECTRIC COMPANY, )

- Intervenor. )

CERTIFICATE OF SERVICE I hereby declare under penalty of perjury that I have mailed two copies of the Federal Respondents' Brief, via first class mail, to:

David A. Repka, Esq. Sheldon L. Trubatch, Esq.

Winston & Strawn, LLP Offices of Robert K. Temple, Esq.

1400 L Street, N.W. 2524 N. Maplewood Avenue Washington, D.C. 20005-3502 Chicago, Illinois 60647-1929 Diane Curran, Esq. Bill Lockyer, Esq.

Harmon, Curran, Spielberg California Department of Justice

& EispbergLLP 1515 Clay Street, 20' Floor 1726 M Seet4 .W., Suite 600 P.O. Box 70550 Washington, C. 20036 Oakland, California 94612-0550 Charles E Mfillins Senior AttonrAy Office of the General Counsel U.S. Nuclear Regulatory Commission 301-415-1606 (Voice); 301-415-3200 (Fax)

Dated: May 12, 2004