ML13081A764

Entergy'S Proposed Findings of Fact and Conclusions of Law for Contention NYS-17B (Prosperity Values)

ML13081A764
Person / Time
Site:	Indian Point
Issue date:	03/22/2013
From:	Bessette P, Dennis W, Glew W, Rund J, Sutton K Entergy Nuclear Operations, Entergy Services, Morgan, Morgan, Lewis & Bockius, LLP
To:	Atomic Safety and Licensing Board Panel
SECY RAS
References
RAS 24277, 50-247-LR, 50-286-LR, ASLBP 07-858-03-LR-BD01
Download: ML13081A764 (133)

Text

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of ) Docket Nos. 50-247-LR and

) 50-286-LR ENTERGY NUCLEAR OPERATIONS, INC. )

)

(Indian Point Nuclear Generating Units 2 and 3) )

) March 22, 2013 ENTERGYS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW FOR CONTENTION NYS-17B (PROPERTY VALUES)

William B. Glew, Jr., Esq. Kathryn M. Sutton, Esq.

William C. Dennis, Esq. Paul M. Bessette, Esq.

ENTERGY SERVICES, INC. Jonathan M. Rund, Esq.

440 Hamilton Avenue MORGAN, LEWIS & BOCKIUS LLP White Plains, NY 10601 1111 Pennsylvania Avenue, NW Phone: (914) 272-3202 Washington, DC 20004 Fax: (914) 272-3205 Phone: (202) 739-3000 E-mail: wglew@entergy.com Fax: (202) 739-3001 E-mail: wdennis@entergy.com E-mail: ksutton@morganlewis.com E-mail: pbessette@morganlewis.com E-mail: jrund@morganlewis.com COUNSEL FOR ENTERGY NUCLEAR OPERATIONS, INC.

TABLE OF CONTENTS Page I. INTRODUCTION ............................................................................................................. 1 II. PROCEDURAL HISTORY OF CONTENTION NYS-17B ............................................. 6 A. Application Submittal and Original Contention NYS-17 ...................................... 6 B. NRC Staffs Initial Environmental Review, the DSEIS, and Amended Contention NYS-17A........................................................................................... 11 C. Entergys Summary Disposition Motion ............................................................. 17 D. The FSEIS and Amended Contention NYS-17B ................................................. 20 E. New Yorks December 2011 Prefiled Testimony and Related Filings................ 26 F. Entergys and the NRC Staffs March 2012 Prefiled Testimony and New Yorks Motion to Strike ....................................................................................... 28 G. The Boards Site Visit and New Yorks Motion to Supplement the Record ....... 32 H. New Yorks June 2012 Prefiled Rebuttal Testimony .......................................... 32 I. Other Prehearing Procedural Matters................................................................... 33 J. The October 2012 Evidentiary Hearing on NYS-17B ......................................... 38 III. APPLICABLE LEGAL AND REGULATORY STANDARDS .................................... 40 A. NRCs NEPA Requirements ................................................................................ 40 B. Controlling NEPA Principles............................................................................... 42 C. Standard of Review and Evidentiary Burden of Proof ........................................ 46 D. The Boards Decision Supplements and Amends the FSEIS .............................. 47 IV. FACTUAL FINDINGS AND LEGAL CONCLUSIONS ............................................... 54 A. Witnesses and Evidence Presented ...................................................................... 54

1. Entergys Expert Witnesses ..................................................................... 54

2. NRC Staffs Expert Witnesses ................................................................. 56

3. New Yorks Expert Witness .................................................................... 57 B. New Yorks Postulated Changes in Property Values Are Not Directly Related to Significant Physical Environmental Impacts ...................................... 58 C. The FSEIS Evaluates Offsite Land-Use Impacts In Accordance with NRC Guidance .............................................................................................................. 64 D. Property Value Impacts Would Be SMALL Under the Proposed Action (License Renewal) and MODERATE Adverse Under the No-Action Alternative............................................................................................................ 70

1. Dr. Sheppards Property Value Impact Evaluation Relied on Questionable Assumptions and Departed from Standard Economic Methods.................................................................................................... 72

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TABLE OF CONTENTS (continued)

Page

a. Background on Dr. Sheppards December 2011 Analysis .......... 72

b. Dr. Sheppards December 2011 Analysis Improperly Assumed the Property Value Recovery Will Equal the Alleged 1974-1976 Historic Operational Impact ......................... 75

c. Dr. Sheppards 1974-1976 Historic Operational Impact Calculation Departed From Well-Accepted Economic Methods........................................................................................ 77 (i) Dr. Sheppard Incorrectly Defined 1974 to 1976 As the Event of Interest ..................................................... 77 (ii) Dr. Sheppards Sample Extended Too Far Beyond the Event of Interest ......................................................... 80 (iii) Dr. Sheppard Used an Invalid Control Group .............. 82 (iv) Dr. Sheppards Sample Incorrectly Included Numerous Non-Residential and Non-Market Transactions ..................................................................... 86 (v) Dr. Sheppard Could Have Applied the Well-Established Hedonic Approach to His Data..................... 89 (vi) Conclusion Regarding Dr. Sheppards 1974-1976 Historic Operational Impact Calculation ......................... 91

2. Dr. Tolleys Property Impact Assessments Are Reasonable ................... 91

a. Background on Dr. Tolleys March 2012 Analyses .................... 91

b. Dr. Sheppards Criticisms of Dr. Tolleys March 2012 Analyses Are Without Merit or Irrelevant ................................... 95 (i) Dr. Tolleys MLS Hedonic Analysis Does Not Suggest That Indian Point Adversely Impacts Property Values ................................................................ 96 (ii) Dr. Tolleys Sample Size Was Appropriate ................... 105 (iii) Dr. Tolleys Use of Asking Price Rather Than Sales Price Was Valid ............................................................. 106 (iv) Dr. Tolleys Treatment of the Rail Station Variable Was Reasonable ............................................................. 107 (v) Conclusion Regarding Dr. Tolleys Hedonic Assessments ................................................................... 108

3. The No-Action Alternative Would Result in a Net Negative Property Value Impact Compared to License Renewal Even Assuming Dr. Sheppards Billion-Dollar Increase ................................ 109

a. Discount Rate ............................................................................. 111

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TABLE OF CONTENTS (continued)

Page

b. Property Value Increase Timeframe .......................................... 112

c. PILOT and Property Tax Payments ........................................... 115

d. Comparing the No-Action Alternative to License Renewal ...... 118 E. Dr. Sheppards Future Positive Offsite Land-Use Impacts Are Remote and Speculative ......................................................................................................... 119 V.

SUMMARY

OF FINDINGS OF FACT AND CONCLUSIONS OF LAW ................. 124 VI. ORDER .......................................................................................................................... 127

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of ) Docket Nos. 50-247-LR and

) 50-286-LR ENTERGY NUCLEAR OPERATIONS, INC. )

)

(Indian Point Nuclear Generating Units 2 and 3) )

) March 22, 2013 ENTERGYS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW FOR CONTENTION NYS-17B (PROPERTY VALUES)

Pursuant to 10 C.F.R. § 2.1209, and the Atomic Safety and Licensing Boards (Board)

February 28, 2013 Order,1 Entergy Nuclear Operations, Inc. (Entergy) submits its Proposed Findings of Fact and Conclusions of Law (Proposed Findings and Conclusions) on New York State (New York) Contention 17B (NYS-17B).

The Proposed Findings and Conclusions are based on the evidentiary record in this proceeding, and are submitted in the form of a proposed Partial Initial Decision by the Board.

The Proposed Findings and Conclusions are set out in numbered paragraphs, with corresponding citations to the record of this proceeding.

I. INTRODUCTION

1. This Partial Initial Decision presents the Boards Findings of Fact and Conclusions of Law on Contention NYS-17B. NYS-17B raises a National Environmental Policy Act (NEPA)2 challenge to whether the U.S. Nuclear Regulatory Commission (NRC or 1

Licensing Board Order (Granting Parties Joint Motion for Alteration of Filing Schedule) at 1 (Feb. 28, 2013)

(unpublished).

2 42 U.S.C. § 4321 et seq. (2006).

Commission) Staffs Final Supplemental Environmental Impact Statement (FSEIS)3 adequately examines and discloses the potential for substantial, positive offsite land-use and property value impacts that New York claims would result under the no-action alternative. In this case, the no-action alternative is the denial of Entergys application to renew the operating licenses for Indian Point Nuclear Generating Units 2 and 3 (respectively, IP2 and IP3, and collectively, Indian Point or IPEC) for another twenty years.4 New York alleges that IP2 and IP3 operations have substantially depressed local property values, and that this impact will persist if the NRC renews the IP2 and IP3 licenses. It further claims that the no-action alternative would reverse these alleged adverse effects and cause property values in the area surrounding Indian Point to increase. Therefore, New York claims that when compared to license renewal, the no-action alternative would have LARGE5 positive property value impacts, which would in turn cause LARGE positive offsite land-use impacts.

2. Having considered all of the record evidence, the Board finds that New York has not met its evidentiary burden to establish that the property value increases it alleges will accrue under the no-action alternative are associated with any significant physical impact to the 3

NUREG-1437, Supp. 38, Generic Environmental Impact Statement for License Renewal of Nuclear Plants, Regarding Indian Point Nuclear Generating Units Nos. 2 and 3, Final Report (Dec. 2010) (FSEIS)

(NYS00133A-J).

4 Consistent with Commission precedent, the Board focuses its Decision on the FSEIS even though New Yorks predecessor contentions, NYS-17 and NYS-17A, challenged Entergys Environmental Report (ER) and the NRC Staffs Draft Supplemental Environmental Impact Statement (DSEIS), respectively. See La. Energy Servs., L.P. (Claiborne Enrichment Ctr.), CLI-98-3, 47 NRC 77, 84 (1998) (indicating that the Board appropriately treated a NEPA contention as a challenge to the FEIS even though most of the environmental contentions were filed as challenges to the applicants ER).

5 In assessing the significance of environmental issues, the NRC assigns a SMALL, MODERATE, or LARGE level for each issue addressed. As discussed in Section III.A below, 10 C.F.R. Part 51, Appendix B defines those terms and indicates that unless the significance level is identified as positive, the impact is adverse, or in the case of SMALL, negligible.

environment caused by Indian Point.6 Rather, at most, those property value impacts, if they exist at all, are the product of a generalized fear of nuclear power or other psychological concerns.

NEPAwhich requires an analysis only of those effects caused by and through impacts on the physical environmentdoes not require the evaluation of psychology based effects.7 Therefore, as a matter of law, NEPA does not require any further consideration of property value impacts or any resulting offsite land-use impacts in this proceeding.

3. Assuming, however, that it were necessary to address property value impacts associated with license renewal, the Commissions Generic Environmental Impact Statement (GEIS) already does so. Specifically, the GEIS evaluates the potential for Indian Point to adversely impact property values and concludes that such impacts, if any, would be SMALL.8 Consistent with that conclusion, the NRC Staffs environmental standard review plan, NUREG-1555, Supplement 1, directs the Staff to focus its offsite land-use review on other issues that the GEIS does not resolve genericallynamely, identifying impacts resulting from any plant workforce-related changes during the license renewal term or land development caused by changes in the plants tax payments or payment-in-lieu-of-taxes (PILOT).9 New York has not specifically and substantially supported its challenge to the FSEIS by explaining why or how the FSEIS evaluation is materially inconsistent with this Staffs well-established guidance, which is 6

See Metro. Edison Co. v. People Against Nuclear Energy, 460 U.S. 766, 772-74 (1983) (holding that NEPA does not require an agency to assess every impact on a project, but only those that have a reasonably close causal relationship with a change in the physical environment).

7 See id.

8 NUREG-1437, Generic Environmental Impact Statement for License Renewal of Nuclear Plants at 4-103 (May 1996) (GEIS) (NYS00131B); id. at C-84 to -85 (NYS00131G) (summarizing the GEIS Indian Point-specific case study). SMALL is defined in NRC regulations as environmental impacts that are not detectable or are so minor that they will neither destabilize nor noticeably alter any important attribute of the resource.

10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1 § 3.

9 NUREG-1555, Supp. 1, Standard Review Plans for Environmental Reviews for Nuclear Power Plants:

Operating License Renewal at 4.4.3-4 (Oct. 1999) (NUREG-1555, Supp. 1) (ENT00019B).

accorded special weight.10

4. Even if New York were not held to this exacting standard, based on this proceedings entire record, the Board finds insufficient evidence to conclude that the no-action alternative would cause a substantial increase in property values. The Board rules in favor of Entergy and the NRC Staff for three primary reasons. First, New Yorks claim that a $1.07 billion property value gain would result from removing the so-called Indian Point disamenity11 relies on flawed assumptions and an analysis that contravenes generally-accepted economic methodologies. Second, Entergys expert, Dr. George S. Tolley, has prepared Indian Point-specific property value assessments using a widely-accepted hedonic12 economic modeling approach. Those assessments demonstrate that proximity to Indian Point has had no discernible adverse impact on residential property values, such that the no-action alternative would not engender increased property values. Third, even assuming New Yorks asserted property value gain would occur, it would be offset by countervailing factors. In particular, the no-action alternative also would entail negative impacts to property values due to lost PILOT payments felt soon after cessation of operations. These near-immediate negative PILOT effects outweigh any alleged disamenity-related property value increase in the distant future after decommissioning.

5. Finally, even assuming the no-action alternative would lead to increases in surrounding property values, the Board finds no evidence that such increases would drive any 10 See, e.g., NextEra Energy Seabrook, LLC (Seabrook Station, Unit 1), CLI-12-05, 75 NRC __, slip op. at 16 n.78 (Mar. 8, 2012).

11 A disamenity is an undesirable land use, activity, or neighborhood feature (e.g., freeway noise or polluting facilities) that may lower nearby property values. See George Tolley, Property Value Effects of Indian Point License Renewal at 9 (Mar. 2012) (Tolley Report) (ENT000144).

12 Hedonic modeling allows researchers to use statistical regression analysis to algebraically estimate the price effect that a single attribute (e.g., proximity to a power plant) has on property values by controlling for other housing characteristics that also impact property values (e.g., number of rooms, lot size, and proximity to amenities such as parks). See Testimony of Entergy Witnesses Donald P. Cleary, C. William Reamer, and George S. Tolley Regarding Contention NYS-17B (Property Values) at 62-63 (A92) (Mar. 28, 2012) (Entergy Testimony) (ENT000132).

reasonably foreseeable offsite land-use impacts requiring consideration under NEPA. The Indian Point-specific study included in the GEIS, in conjunction with more recent information contained in local land-use plans, invalidates New Yorks claim that there are unexamined non-speculative and significant offsite land-use impacts under the no-action alternative. For significant offsite land-use changes to occur, numerous uncertain future steps by unknown third parties would need to occur, including zoning changes, closure of other nearby industrial facilities along the Hudson River, and subsequent development of the surrounding properties.

Given that long-term, significant future land-use changes are contrary to historic development patterns and current local land-use plans for the Indian Point area, the Board finds that such possible changes are remote and speculative and thus need not be considered under NEPA.13

6. For the reasons fully set forth below, the Board finds that, based on the entire record of this proceeding, the NRC Staff and Entergy have carried their respective burdens of proof on this contention, and that the NRC Staff has satisfied its obligations under NEPA and 10 C.F.R. Part 51. The Board thus resolves NYS-17B on the merits in favor of the NRC Staff and Entergy. In accordance with well-established NRC adjudicatory practice, the NRC Staffs FSEIS is deemed supplemented by this Decision.14 13 See Socy Hill Towers Assn v. Rendell, 210 F.3d 168, 182 (3d Cir. 2000); USEC Inc. (Am. Centrifuge Plant),

CLI-06-10, 63 NRC 451, 466-69 (2006).

14 Entergy Nuclear Generation Co. (Pilgrim Nuclear Power Station), CLI-12-01, 75 NRC __, slip op. at 30 (Feb.

9, 2012) (citation omitted) (In an NRC adjudicatory proceeding, the adjudicatory record, Board decision, and any Commission decision become effectively part of the environmental review document (here, a final supplemental EIS.). Therefore, the SEIS is deemed supplemented by the Boards decision, and by this decision.). This issue is discussed further in Section III.D below.

II. PROCEDURAL HISTORY OF CONTENTION NYS-17B A. Application Submittal and Original Contention NYS-17

7. On April 23, 2007, Entergy applied to the NRC to renew the IP2 and IP3 operating licenses for twenty years beyond their current expiration dates of September 28, 2013, and December 12, 2015, respectively.15

8. Section 4.18 of Entergys ER evaluated the potential for offsite land-use impacts from continued operation during the license renewal term.16 Specifically, the ER concluded that license renewal would result in only SMALL offsite land-use impacts for two reasons.17 First, the ER showed that license renewal would not cause population-driven land-use impacts (i.e.,

land-use changes caused by an increase in the number of Indian Point workers living in the area around Indian Point) because Indian Points workforce is not expected to change significantly during the period of extended operation.18 Second, the ER showed that license renewal would not cause tax-driven land-use impacts (i.e., land-use changes caused by expanded public services made possible through increased PILOT or tax payments) because Indian Points PILOT and other tax payments are expected to remain at approximately current levels during the period of extended operation.19

9. In addition, the ER evaluated the environmental impacts from alternatives to the proposed action, including the no-action alternative (i.e., denying the IP2 and IP3 renewal 15 Entergy Nuclear Operations, Inc., Indian Point Nuclear Generating Unit Nos. 2 and 3; Notice of Acceptance for Docketing of the Application and Notice of Opportunity for Hearing Regarding Renewal of Facility Operating License Nos. DPR-26 and DPR-64 for an Additional 20-Year Period, 72 Fed. Reg. 42,134 (Aug. 1, 2007) (Hearing Notice).

16 See Indian Point Energy Center License Renewal Application, App. E, Applicants Environmental Report, Operating License Renewal Stage, Indian Point Energy Center at 4-40 to -43 (Apr. 2007) (ER)

(ENT00015B).

17 Id. at 4-42 to -43.

18 Id. at 4-42.

19 Id.

application).20 The ER indicated that decommissioning activities and related impacts would not differ significantly under the proposed license renewal action and the no-action alternative because, under both scenarios, Entergy will eventually need to decommission IP2 and IP3.21 The ER also noted the significant negative economic impact that would result under the no-action alternative. Specifically, the local community would no longer benefit from Entergys substantial PILOT and tax payments to local governments, which would cease or be greatly reduced after operations end.22 Based on this evaluation, the ER concluded that the adverse environmental impacts of the no-action alternative exceed those resulting from license renewal.23

10. On August 1, 2007, the NRC published in the Federal Register a Notice of Acceptance for Docketing of the Application and Notice of Opportunity for Hearing.24 The Hearing Notice stated that any person wishing to participate as a party must file a petition for leave to intervene within sixty days of the Notice (i.e., October 1, 2007),25 a deadline later extended until November 30, 2007.26

11. New York submitted Contention NYS-17 in its November 30, 2007 Petition to Intervene.27 As originally proffered, NYS-17 alleged that:

20 Id. at §§ 7.3, 8.4.

21 Id. at 7-2. In other words, similar decommissioning impacts would still take place under both scenarios license renewal would only defer those impacts for a maximum of twenty years. Id.

22 See id. at 8-63, 8-67.

23 See id. at 8-66 to 8-67.

24 Hearing Notice, 72 Fed. Reg. at 42,134.

25 Id.

26 Entergy Nuclear Operations, Inc., Indian Point Nuclear Generating Unit Nos. 2 and 3; Notice of Opportunity for Hearing Regarding Renewal of Facility Operating License Nos. DPR-26 and DPR-64 for an Additional 20-Year Period: Extension of Time for Filing of Requests for Hearing or Petitions for Leave To Intervene in the License Renewal Proceeding, 72 Fed. Reg. 55,834 (Oct. 1, 2007).

27 New York State Notice of Intention to Participate and Petition to Intervene (Nov. 30, 2007) (New York Petition), available at ADAMS Accession No. ML073400187.

The [ER] fails to include an analysis of adverse impacts on off-site land use of license renewal and thus erroneously concludes that relicensing of IP2 and IP3 will have a significant positive economic impact on the communities surrounding the station (ER Section 8.5) and understates the adverse impact on off-site land use (ER Sections 4.18.4 and 4.18.5) in violation of 10 C.F.R.

Part 51, Subpart A, Appendix B.28

12. NYS-17 assumed that, absent license renewal, decommissioning and removal of all spent fuel would occur by 2025, at which time the Indian Point site would be available for unrestricted use, and adjacent properties would be available for beneficial uses and would increase in value.29 To support this theory, New York relied on a 2007 report by its expert, Dr. Stephen C. Sheppard, which asserted that the sites highest and best alternative use would involve a combination of attractive riverfront development that would be likely to include employment and other attractive locations.30 Dr. Sheppards report also contained calculations that relied on a 1974 hedonic study involving a then-over seventy year-old Illinois coal plant.31 In particular, relying on a statistical coefficient32 from that coal plant study, Dr. Sheppard calculated thatbut for the presence of the Indian Point facility and its spent fuelproperty values within two miles of the site would increase approximately $576 million (or about 13 percent).33 Thus, according to New York, the no-action alternative (i.e., denying the IP2 and 28 Id. at 167.

29 Id. at 168.

30 Stephen Sheppard, Potential Impacts of Indian Point Relicensing on Property Values at 3 (Nov. 2007) (2007 Sheppard Report) (NYS000226).

31 Id. at 2.

32 A coefficient is the numerical constant placed before and multiplied by an explanatory variable in an algebraic formula. Entergy Testimony at 71-72 (A99) (ENT000132).

33 2007 Sheppard Report at 6 (NYS000226).

IP3 renewal application) would cause a $576 million increase in property values within two miles of Indian Point.34

13. New York and Dr. Sheppard, however, did not identify any direct physical impacts from IP2 and IP3 as causing the alleged property value impacts.35 Dr. Sheppard instead cited several studies suggesting that any alleged property value impact would stem from perceived risk or fear associated with nuclear power.36

14. Entergy and the NRC Staff opposed NYS-17s admission.37 Both parties argued that NYS-17 lacked a legal basis because the ER analysis of potential offsite land-use impacts from continued operation adhered to NRC guidance in the GEIS,38 and Regulatory Guide 4.2, Supplement 1 (ER guidance for license renewal applicants).39 These guidance documents direct 34 See New York Petition at 168, 173.

35 See generally id. at 168-174; 2007 Sheppard Report at 2-6 (NYS000226).

36 2007 Sheppard Report at 3-4 (citing D. Clark & L. Nieves, An Interregional Hedonic Analysis of Noxious Facility Impacts on Local Wages and Property Values, 27 Journal of Environmental Economics and Management 235, 236 n.4, 250 (1994) (Interregional Hedonic Analysis) (NYS000235) (attributing potential property value impacts near nuclear power plants to the risk of an accident and public aversion to nuclear plants); S. Folland & R. Hough, Externalities of Nuclear Power Plants: Further Evidence, 40 Journal of Regional Science 735, 749 (2000) (NYS000233) (concluding that the authors data support the proposition that a public perception of nuclear risk causes a change in land prices); Clark et al., Nuclear Power Plants and Residential Housing Prices, 28 Growth and Change 496, 509 (1997) (Nuclear Power Plants and Residential Housing Prices) (NYS000236) (assessing the potential for property value impacts due to perceptions of risks toward nuclear technology)).

37 Answer of Entergy Nuclear Operations, Inc. Opposing New York State Notice of Intention to Participate and Petition to Intervene at 114-15 (Jan. 22, 2008) (Entergy Answer), available at ADAMS Accession No. ML080300149; NRC Staffs Response to Petitions for Leave to Intervene Filed by (1) Connecticut Attorney General Richard Blumenthal, (2) Connecticut Residents Opposed to Relicensing of Indian Point, and Nancy Burton, (3) Hudson River Sloop Clearwater, Inc., (4) the State of New York, (5) Riverkeeper, Inc., (6) the Town of Cortlandt, and (7) Westchester County at 59 (Jan. 22, 2008) (NRC Staff Answer), available at ADAMS Accession No. ML080230543. Entergy also opposed NYS-17s admission because the proposed contention and accompanying Sheppard Declaration failed to identify specific inadequacies in the ER and impermissibly raised issues beyond the scope of license renewal. Entergy Answer at 115.

38 See GEIS § 4.7.4 (NYS00131B).

39 Regulatory Guide 4.2, Supp. 1, Preparation of Supplemental Environmental Reports for Applications to Renew Nuclear Power Plant Operating Licenses § 4.17 (Sept. 2000) (Regulatory Guide 4.2, Supp. 1) (ENT000136).

Regulatory Guide 4.2, Supp. 1 is the companion to NUREG-1555, Supp. 1, which provides equivalent guidance to the NRC Staff in the preparation of a license renewal SEIS. See id. at 4.2-S-2. Because this Decision focuses on the FSEIS, we likewise focus on NUREG-1555, Supp. 1.

that the offsite land-use impact analysis need consider only impacts from plant-related population growth (i.e., impacts caused by any increase in the number of plant workers) and local tax-related development (i.e., impacts caused by growth related to expanded public services made possible through increased tax-revenues).40 Entergy also challenged New Yorks core claim that under the no-action alternative the site would be available for unrestricted use by 2025.41

15. The Board heard oral argument on whether NYS-17 met the Commissions contention admissibility requirements.42 At the oral argument, New York reiterated its claim that a significant property value increase would ensue if the decision is made not to renew the license and the site is decontaminated and decommissioned.43 Entergy and the NRC Staff also reiterated their position that Entergys ER complied with directly-applicable NRC guidance in the GEIS and Regulatory Guide 4.2, Supp. 1.44

16. The Board admitted NYS-17, ruling that NRC regulations do not limit consideration of offsite land use to population-driven and tax-driven land-use changes.45 Thus, we admitted NYS-17 as a contention of omission, limiting the contentions scope to the issue of whether Entergys ER should have considered property value-driven offsite land-use impacts.46 40 Entergy Answer at 114-15; NRC Staff Answer at 58-59 (both citing GEIS, Vol. 1, § 4.7.4 and 10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1).

41 Entergy Answer at 117. Entergy also opposed NYS-17 to the extent that New York claimed that Entergy must consider spent fuel storage-related impacts, an issue that was resolved generically by NRC regulations, and therefore beyond the scope of license renewal. See id. at 117-18.

42 Official Transcript of Proceedings, Indian Point Nuclear Generating Units 2 & 3, at 347-366 (Mar. 11, 2008).

43 Id. at 351:13-18 (Sipos).

44 Id. at 348:20-349:7 (Chandler); id. at 360:15-361:5 (Sutton).

45 See Entergy Nuclear Operations, Inc. (Indian Point Nuclear Generating Units 2 & 3), LBP-08-13, 68 NRC 43, 115 (2008).

46 Id. at 116.

B. NRC Staffs Initial Environmental Review, the DSEIS, and Amended Contention NYS-17A

17. As required by NEPA and 10 C.F.R. Part 51, the NRC Staff comprehensively reviewed Entergys license renewal application. The NRC Staff initiated that process by publishing a notice of intent to prepare a plant-specific supplement to the GEIS (i.e., a supplemental environmental impact statement or SEIS) and to conduct related environmental scoping activities.47

18. As part of that process, the NRC Staff conducted environmental site audits at Indian Point from September 10-14, 2007, and from September 24-27, 2007, which allowed the NRC Staff to tour the site, examine the data Entergy used in preparing the ER, and meet with Entergy personnel and representatives from federal, state, and local government agencies to obtain relevant information.48

19. The NRC also invited the applicant, federal, state, local, and tribal government agencies, local organizations, and individuals to participate in the scoping process by providing oral comments at scheduled public meetings and/or submitting written suggestions and comments.49 The scoping process included two public meetings held on September 19, 2007, in Cortlandt Manor, New York.50 Following the NRC Staffs prepared statements, the meetings 47 Entergy Nuclear Operations, Inc., Indian Point Nuclear Generating Unit Nos 2 and 3; Notice of Intent to Prepare an Environmental Impact Statement and Conduct Scoping Process, 72 Fed. Reg. 45,075 (Aug. 10, 2007). 10 C.F.R. § 51.20(b)(2) requires the NRC to prepare an EIS or SEIS for renewal of a reactor operating license. In addition, Section 51.95(c) states that the EIS prepared at the operating license renewal stage will be a supplement to the GEIS (NYS00131A-I).

48 See FSEIS at xv (NYS00133A).

49 See Environmental Impact Statement Scoping Process Summary Report Indian Point Nuclear Generating Station Unit Nos. 2 and 3 Village of Buchanan, New York at 1 (Dec. 2008) (NRCR00139).

50 See id.

were open for public comments.51 The Staff received hundreds of written and oral comments during the scoping process.52

20. On October 31, 2007, New York submitted comments to the NRC Staff concerning the scope of the SEIS.53 In one comment, New York recommended that the SEIS address whether onsite spent fuel storage will have significant impacts on present and future land use in the area around the Indian Point plant.54 New York later submitted supplemental scoping comments in November 2007, asserting that additional high level waste at the site could exacerbate the adverse impact on the adjacent land values and underscores the substantial benefit that would accrue to the adjacent land ownersat least out to two miles where approximately $4 billion worth of property is locatedif renewal were denied and those properties recovered as much as $500 million in value.55 Notably, the only mechanism New York identified as causing the potential property value impacts was related to spent fuel storage.56

21. In preparing the IP2 and IP3 DSEIS, the Staff reviewed the Indian Point ER and compared it to the GEIS; consulted with numerous federal, state, regional, and local agencies, and Native American Tribes (as listed in Appendix D to the DSEIS); conducted an independent review of issues in accordance with NUREG-1555, Supp. 1 (the Staffs Environmental Standard 51 See id.

52 See id. at 3-15.

53 See New York State Executive Agencies and the Department of Law Scoping Comments on the License Renewal of Indian Point Units 2 and 3, Buchanan, New York (Oct. 31, 2007) (NRC000135).

54 Id. at 17.

55 New York State Supplemental Submission Concerning NEPA Scoping on the License Renewal of Indian Point Units 2 and 3, Buchanan, New York at 1 (Nov. 30, 2007) (NRC000145).

56 See id.

Review Plan for license renewal applications); and considered the public comments received during the scoping process.57

22. In December 2008, the NRC Staff issued the DSEIS for public comment.58 Consistent with the GEIS and NRC guidance in NUREG-1555, Supp. 1, DSEIS Section 4.4.3 evaluated the potential for new land-use impacts from license renewal that might result from plant-related population growth and local tax-related development.59 In doing so, the Staff confirmed Entergys conclusions and found that license renewal produced: (1) no population-driven land-use impacts because Indian Points workforce would remain approximately the same size during license renewal;60 and (2) no tax-driven land-use impacts because Indian Points PILOT and other tax payments would remain at approximately the same level during the license renewal term.61 Based on that evaluation, the DSEIS found that license renewal would have SMALL offsite land-use impacts.62

23. In addition, DSEIS Section 8.2 discussed potential impacts from the no-action alternative and found only SMALL offsite land-use impacts.63 It based this impact assessment on the dual determination that: (1) plant shutdown would result in few changes to offsite and onsite land uses; and (2) the transition to alternate uses, few as they would be, would only occur 57 See NUREG-1437, Supp. 38, Generic Environmental Impact Statement for License Renewal of Nuclear Plants, Regarding Indian Point Nuclear Generating Unit Nos. 2 and 3, Draft Report for Comment at xiii (Dec. 2008)

(DSEIS) (NYS00132A).

58 Indian Point Nuclear Generating Unit Nos. 2 and 3; Notice of Availability of the Draft Supplement 38 to the Generic Environmental Impact Statement for License Renewal of Nuclear Plants and Public Meeting for the License Renewal of Indian Point Nuclear Generating Unit Nos. 2 and 3, 73 Fed. Reg. 80,440 (Dec. 31, 2008).

59 See DSEIS at 4-41(NYS00132B).

60 Id.

61 Id.

62 Id. at 4-37 to 4-49; id. at 9-9 (NYS00132C). As noted above, SMALL is defined in NRC regulations as environmental impacts that are not detectable or are so minor that they will neither destabilize nor noticeably alter any important attribute of the resource. 10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1 § 3.

63 DSEIS at 8-27 (NYS00132B).

over an extended timeframe.64 In addressing the no-action alternatives socioeconomic impacts, the DSEIS noted that shutdown of IP2 and IP3 might result in increased property values in communities surrounding the site, which might increase tax revenues.65 However, the DSEIS also recognized that Entergys PILOT and other tax payments would be greatly reduced after operations cease.66 Ultimately, the DSEIS found that, on balance, the no-action alternative, which included the significant reduction in Entergys PILOT and other taxes payments, and even with the potential property value increase (and any associated tax revenue increase), would result in SMALL to MODERATE adverse impacts.67

24. To assist the public, the NRC Staff held public meetings in Cortlandt Manor, New York.68 During those meetings, the Staff described the preliminary results of the NRC environmental review (as documented in the DSEIS), answered questions, and provided members of the public with information to assist them in formulating comments.69 The Staff ultimately received comments from 183 individuals or groups, including New York, and 88 commenters spoke during the public meetings.70 New Yorks comments on the DSEIS largely 64 Id.

65 Id. at 8-29. The DSEIS cited a study conducted by Levitan and Associates, a consultant for Westchester County, that evaluated various economic issues associated with retiring IP2 and IP3. Levitan & Assocs., Inc.,

Indian Point Retirement Options, Replacement Generation, Decommissioning/Spent Fuel Issues, and Local Economic/Rate Impacts (June 9, 2005) (NYS000056).

66 DSEIS at 8-29 to -30 (NYS00132B).

67 Id. at 8-30. MODERATE is defined in NRC regulations as environmental impacts that are sufficient to alter noticeably, but not to destabilize, important attributes of the resource. 10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1 § 3.

68 FSEIS at xvi (NYS00133A).

69 See id.

70 FSEIS, App. A at A-2 (NYS00133C). Many of the comments supported license renewal. See id. at A-58 (NYS00133D).

mirrored the claims made in NYS-17.71 It asserted that the Staff failed to analyze the alleged positive impact on property values of the no-action alternative.72 Again referencing Dr. Sheppards 2007 report, New York claimed that, under the no-action alternative, the Indian Point site could be decommissioned within six years after license expiration, that the site would be cleared of all nuclear materials and facilities by 2025,73 and the resulting removal of the facility and its spent fuel would increase property values within two miles of Indian Point by

$576 million.74 And as with its earlier comments, New York premised its claim of future property value increases on the complete removal of the Indian Point facility and its spent fuel.75

25. In response to the DSEIS, New York filed NYS-17A, contending that the DSEISlike the ERignored alleged positive property value impacts of the no-action alternative.76 To support NYS-17A, New York referenced Dr. Sheppards previously-filed 2007 report as well as a second report he prepared in February 2009.77 Using the alleged $576 million impact from his earlier report as a starting point, Dr. Sheppards 2009 report compared the discounted present value of several post-shutdown scenarios, applying a 3.25 percent discount rate to the $576 million impact, and varying the timeframe under which the property value increase would occur in relation to his several assumed scenarios for Indian Point 71 New York State Attorney General, Comments on the Draft Supplemental Environmental Impact Statement, Indian Point Units 2 and 3, Buchanan, New York 13 (Mar. 19, 2009) (New York DSEIS Comments)

(NYS000134).

72 Id. at 13.

73 Id. at 15.

74 Id. at 14. As discussed below, the NRC Staff considered and addressed comments received on the DSEIS in its FSEIS, later issued in December 2010. FSEIS at xvi (NYS00133A).

75 New York DSEIS Comments at 14 (NYS000134).

76 State of New York Contentions Concerning NRC Staffs Draft Supplemental Environmental Impact Statement (Feb. 27, 2009), available at ADAMS Accession No. ML090690303.

77 Stephen Sheppard, Potential Impacts of Indian Point Relicensing with Delayed Site Reclamation (Feb. 26, 2009) (2009 Sheppard Report) (NYS000227).

decommissioning.78 These scenarios included a no-action option that assumed decommissioning and removal of all spent fuel by 2025 (i.e., ten years beyond 2015), and other license renewal scenarios that assumed decommissioning and spent fuel removal sometime between 2095 and 2155 (i.e., 60 to 140 years beyond 2035).79 Dr. Sheppard claimed that, compared to the no-action alternative scenario, the license renewal scenarios would impose an alleged $300 million to $340 million present value burden on nearby properties, depending on the assumed decommissioning date.80 This new estimate was over $200 million less than his originally-asserted $576 million adverse impact.81

26. Both Entergy and the NRC Staff opposed admission of the amended contention.82 Entergy argued that the DSEIS no-action alternative evaluation recognized that IP2s and IP3s shutdown may result in increased property values, and that this mooted New Yorks alleged contention of omission that the Board admitted in connection with the ER.83 Relying on the Supreme Courts Metro. Edison decision, Entergy further argued that New York had not established that the alleged property-value impacts are caused by any significant impact to the 78 Id. at 2-4. As discussed below in more detail, because most people would rather receive a benefit today than far off in the future, a future benefit must be discounted to be put in current dollar terms. In other words, economists and policymakers use discount rates to adjust for the time value of money. See Tolley Report at 5 (ENT000144). Discount rates are commonly used to compare and put on a common scale benefits and costs that occur in different time periods. See id.

79 2009 Sheppard Report at 2-4 (NYS000227).

80 See id. at 2-5.

81 See 2007 Sheppard Report at 6 (NYS000226).

82 Answer of Entergy Nuclear Operations, Inc. Opposing New and Amended Environmental Contentions of New York State (Mar. 24, 2009) (Entergy NYS-17A Answer), available at ADAMS Accession No. ML090930204; NRC Staffs Answer to Amended and New Contentions Filed by the State of New York and Riverkeeper, Inc., Concerning the Draft Supplemental Environmental Impact Statement (Mar. 24, 2009)

(NRC Staff NYS-17A Answer), available at ADAMS Accession No. ML090840116.

83 Entergy NYS-17A Answer at 17-19.

physical environment and, thus, need not be considered under NEPA.84 In addition, Entergy maintained that New Yorks amended contention impermissibly challenged the NRCs generic findings on spent fuel storage,85 and that New York made unsupported assumptions about when the site would be decommissioned and become available for unrestricted use under the no-action alternative.86

27. The NRC Staff also opposed NYS-17As admission on the grounds that Dr. Sheppards new 2009 report contained analyses that could have been performed earlier in the proceeding and raised new assertions that likewise could have been raised sooner.87 Thus, the Staff contended that NYS-17A was impermissibly late in contravention of 10 C.F.R.

§§ 2.309(c)(1) and (f)(2).88

28. The Board admitted NYS-17A and consolidated it with NYS-17.89 The Board determined that NYS-17A updated the original contention to reflect that New York contends that the NRC Staff erred in a similar manner to Entergy and that the original contention is now relevant to the [DSEIS], as well as to the ER.90 C. Entergys Summary Disposition Motion

29. In February 2010, Entergy moved for summary disposition of NYS-17/17A on the grounds that no genuine issue of fact remained in dispute and that it was entitled to a decision as 84 Id. at 22-24 (citing Hammond v. Norton, 370 F. Supp. 2d 226, 243 (D.D.C. 2005); LES, CLI-98-3, 47 NRC at 88 (quoting Metro. Edison, 460 U.S. at 772)). According to Entergy, a showing of direct physical impacts is required by NEPA and this controlling Supreme Court precedent. Id.

85 Id. at 24-26.

86 Id. at 27-28.

87 NRC Staff NYS-17A Answer at 14-16.

88 Id. at 15.

89 Licensing Board Order (Ruling on New York States New and Amended Contentions) at 8 (June 16, 2009)

(unpublished).

90 Id. In so ruling, the Board found that Entergy had not yet properly placed the mootness issue before the Board by filing a summary disposition motion. Licensing Board Order (Denying New York States Motion to Strike) at 2-3 (June 16, 2009) (unpublished).

a matter of law.91 It based the Motion on four assertions.92 First, Entergy argued that NEPA does not require consideration of New Yorks alleged property value impacts because, if these property value impacts exist at all, they result from the publics perception of risk and aversion to nuclear power facilities and spent fuel storage, rather than from actual adverse physical impacts to the environment.93 Second, Entergy argued that NEPA does not require consideration of New Yorks alleged offsite land-use impacts because, if such impacts would occur at all, they would result from unspecified actions by unknown third parties to develop the Indian Point site and the surrounding land into an attractive riverfront development by 2025 and thus, are too speculative to require consideration under NEPA.94 Third, Entergy argued that the 2025 timeframe New York projected for such development was unsupported and speculative because NRC regulations allow up to sixty years to complete the decommissioning process, and Entergy adopted this 60-year decommissioning timeframe in its decommissioning filings with the NRC.95 Fourth, Entergy argued that the omission alleged in the contention was cured by the DSEIS.96

30. The NRC Staff supported Entergys Motion.97 It argued that New York had not demonstrated the required connection between alleged property value impacts and any physical 91 Entergy Nuclear Operation, Inc. Motion for Summary Disposition of New York State Contention 17/17-A (Property Values) (Feb. 26, 2010), available at ADAMS Accession No. ML101100474.

92 Id. at 2.

93 Id. at 11-14 (arguing that risk of an accident and the public aversion to nuclear plants . . . is not cognizable under NEPA (citing Metro. Edison, 460 U.S. at 775; Olmstead Citizens for a Better Cmty. v. United States, 606 F. Supp. 964, 974 (D. Minn. 1985), affd, 793 F.2d 201 (8th Cir. 1986) (holding that the U.S. Bureau of Prisons was not required to consider the impact on nearby property values resulting from a decision to convert a hospital facility to a medical center for federal prisoners because the threshold requirement of a primary impact on the physical environment is missing)) (emphasis in original).

94 Id. at 14-17 (citing 2007 Sheppard Report at 3 (NYS000226)).

95 Id. at 16.

96 Id. at 17-19.

97 NRC Staffs Answer to Applicants Motion for Summary Disposition of New York State Contention 17/17-A (Property Values) (Mar. 18, 2010), available at ADAMS Accession No. ML100770570.

impacts from Indian Point.98 In addition, the Staff also noted that New York had not adequately supported its decommissioning and redevelopment scenario assumptions,99 and concurred that the contention of omission should be dismissed as moot because the DSEIS considered the potential for property value impacts.100

31. New York opposed Entergys Motion and responded that NYS-17A does not concern the publics perception of risk, but rather involves the impacts of continued presence of spent fuel storage casks and an operating nuclear facility.101 In support, New York included another new report (its third), the March 2010 Sheppard Report, which generally referenced the concepts of nuisance and amenities.102 But Dr. Sheppard again did not specify what direct physical impacts from IP2 and IP3 produced the alleged property value impacts.103 New Yorks legal submission, but not Dr. Sheppards actual report, pointed to certain issues addressed in the DSEIS (e.g., noise, aesthetics, groundwater) and argued, for the first time, that these physical environmental impacts caused property values to decline.104 In doing so, however, New York did not challenge the GEIS or DSEIS findings that those physical impacts are SMALL.105 In 98 Id. at 12-16.

99 Id. at 16-17.

100 Id. at 9-11.

101 State of New Yorks Response to Entergys Motion for Summary Disposition on New York Contentions 17 and 17A at 5 (Mar. 18, 2010) (New York Summary Disposition Response), available at ADAMS Accession No. ML100880169.

102 See generally Stephen Sheppard, Determinants of Property Values (Mar. 15, 2010) (2010 Sheppard Report)

(NYS000228). An amenity is a desirable land use, activity, or neighborhood feature (e.g., parks or high-quality schools) that may increase nearby property values. Tolley Report at 9 (ENT000144). In contrast, a disamenity is an undesirable land use, activity, or neighborhood feature (e.g., freeway noise or polluting facilities) that may lower nearby property values. See Official Transcript of Proceedings, Indian Point Nuclear Generating Units 2 & 3 at 2556:18-2557:6 (Oct. 22, 2012) (Sheppard) (Oct. 22, 2012 Tr.); Tolley Report at 9 (ENT000144).

103 See generally 2010 Sheppard Report (NYS000228).

104 See New York Summary Disposition Response at 7-8. The DSEIS (and later the FSEIS) characterize all such impacts as SMALL. See DSEIS at 4-6, 4-37, 4-62 (NYS00132B); FSEIS at 4-6, 4-43, 4-69 (NYS00133B).

105 See DSEIS at 4-62 to -63 (NYS00132B); GEIS at 4-50 (NYS00131B).

addition, New York argued that NRC Staffs no-action alternative analysis must consider environmental impacts during the decommissioning period and claimed, contrary to Entergys argument, that this period would not necessarily last sixty years.106 Finally, New York claimed that the DSEIS did not moot the contention because the DSEIS made only passing reference to property value impacts and did not contain the requisite level of analysis called for by NEPA.107

32. We denied Entergys Motion for Summary Disposition due to the existence of a genuine dispute over three material facts.108 The first was whether there was a reasonably close causal relationship between any changes to the physical environment resulting from the no-action alternative and the adverse property value impact alleged by New York.109 The second material issue of fact concerned the likelihood of offsite land-use changes near the Indian Point site under the no-action alternative.110 Finally, we ruled that the DSEIS did not moot NYS-17A because a material issue remained concerning whether the DSEIS discussion of property values satisfied NEPA.111 D. The FSEIS and Amended Contention NYS-17B

33. In December 2010, the NRC Staff issued the FSEIS.112 Relevant here, the FSEIS finds that license renewal would cause no population-driven or tax revenue-related land-use 106 New York Summary Disposition Response at 11-13 (arguing that decommissioning may take up to sixty years under 10 C.F.R. § 50.82(a)(3), but that the decision on permitted decommissioning time period is to be subjected to public comment and an NRC decision) (emphasis in original).

107 Id. at 13-15.

108 See Licensing Board Memorandum and Order (Denying Entergys Motion for the Summary Disposition of NYS Contention 17/17A) at 11 (Apr. 22, 2010) (unpublished) (Apr. 22, 2010 Order).

109 Id. at 12.

110 Id. at 13.

111 Id.

112 FSEIS at ii (NYS00133A).

impacts beyond those currently experienced.113 Thus, the FSEIS concludes that license renewal would result in only SMALL offsite land-use impacts.114

34. Turing to the no-action alternative, the FSEIS concludes that the impacts of the no-action alternative on offsite land use would also be SMALL.115 In addressing the no-action alternative, the FSEIS notes that shutdown of IP2 and IP3 might result in increased property values in communities surrounding the site, which might increase tax revenues.116 As in the DSEIS, however, the FSEIS recognizes that Entergys PILOT and other tax payments would be greatly reduced soon after operations cease.117 As such, the FSEIS finds that, under the no-action alternative, the significant reduction in Entergys PILOT and other taxes payments, even when balanced against a potential property value increase (and any associated tax revenue increase), would overall result in SMALL to MODERATE adverse impacts.118

35. The FSEIS also considers and addresses comments received on the DSEIS.119 Responding to New Yorks comment that the DSEIS did not analyze whether property value changes impacted offsite land use, the Staff referenced the GEIS and noted that [t]he impact of nuclear plant operations on real estate values was not identified as an issue to be addressed by license renewal.120 The Staff also acknowledged that the no-action alterative might result in 113 See id. at 4-46 to -47 (NYS00133B).

114 Id.

115 Id. at 8-22 (NYS00133C).

116 Id. at 8-25.

117 Id.

118 The FSEIS finds that MODERATE adverse effects due to loss of Indian Point PILOT and tax revenue would occur for the Hendrick Hudson Central School District, the Village of Buchanan, the Town of Cortlandt, and the Verplanck Fire District. Id.

119 Id. at xvi (NYS00133A).

120 Id. at A-122 (NYS00133D). In its response to a related New York comment, the Staff also explained that the FSEIS is not required to address the economic costs and economic benefits of the proposed action or of alternatives to the proposed action. Id. The Staff further noted that the NRC need not address any aspect of the storage of spent fuel for the facility within the scope of the generic determination in the Waste Confidence increased property values, but again noted any such benefit would likely be offset by reduced tax revenues for local jurisdictions.121 The Staff also disagreed with New Yorks claim that this alleged beneficial property value impact would occur in 2025 after the Indian Point site was decommissioned because NRC decommissioning regulations allow up to sixty years to complete the decommissioning process and there was insufficient evidence to assume decommissioning would be completed any sooner.122

36. After the NRC issued a final updated Waste Confidence Rule,123 New York submitted NYS-17B.124 In submitting this second amendment of the original contention, New York proffered several new bases for the contention related to the Waste Confidence Rule, asserting that there was no longer a date certain by which spent fuel would be removed from the Indian Point site.125 Accordingly, New York argued that granting Entergys license renewal would perpetuate alleged depressed land values and reduced tax revenues.126 Finally, it sought to apply the previously-admitted contention to the FSEIS.127 To support NYS-17B, New York Rule (10 C.F.R. § 51.23). Id. Finally, the Staff explained that the independent spent fuel storage installation, and any associated offsite land use impacts, was not within the scope of the proposed license renewal action.

Id.

121 Id. at A-157.

122 Id. at A-157 to -158.

123 Final Rule, Consideration of Environmental Impacts of Temporary Storage of Spent Fuel After Cessation of Reactor Operation, 75 Fed. Reg. 81,032 (Dec. 23, 2010).

124 State of New York Contention 17B (Jan. 24, 2011) (State of New York Contention 17B), available at ADAMS Accession No. ML110390250. In addition to submitting NYS-17B, New York also proposed alternative remedies, including waiver of, or exemption from, the Waste Confidence Rule pursuant to 10 C.F.R. § 2.335. State of New Yorks Request for a Determination that the Proposed Amended Bases for Contention 17A are not Barred by 10 C.F.R. § 51.23(b), or that Exemption from the Requirements of 10 C.F.R.

§ 51.23(b) Should be Granted, or that the State has Made a Prima Facie Case that § 51.23(b) Should be Waived as Applied to Contention 17B (Jan. 24, 2011), available at ADAMS Accession No. ML110390250.

125 State of New York Motion for Leave to File Timely Amended Bases to Contention 17A (Now to be Designated Contention 17B) at 1-2 (Jan. 24, 2011), available at ADAMS Accession No. ML110390250.

126 Id. at 6. New York also argued that the FSEIS does sufficiently address this issue because it does not analyze impacts to property values and tax revenues from long-term spent fuel storage. Id. at 4-5.

127 State of New York Contention 17B at 1 n.1.

referenced Dr. Sheppards three previously-filed reports, as well as a fourth, new, January 2011 report.128

37. In that fourth report, Dr. Sheppard referenced the $576 million property value impact estimate from his 2007 Report.129 Dr. Sheppard, however, again altered his methodology from his prior work. He calculated, using a 4 percent discount rate, the present value for three different license renewal scenarios, and compared those to a no-action alternative scenario.130 He assumed a thirty-two year decommissioning period in his no-action case, and 42, 72, and 102-year decommissioning periods in the license renewal scenarios.131 Dr. Sheppard did not explain the rationale for these latest changes to his assumptions or methodologies, but claimed that they were made in response to the Commissions 2010 Waste Confidence Rule update.132

38. In his January 2011 Report, Dr. Sheppard portrayed his fourth analysis as a more complete analysis of the potential economic impacts on property values near Indian Point than his earlier reports.133 In addition to calculating the discounted present value of the alleged property value increase after decommissioning, Dr. Sheppard factored property-tax revenues and lost PILOT payments into his calculations.134 Specifically, he calculated the discounted present value of increased property-tax revenues that he projected would result from anticipated higher property values after decommissioning.135 In addition, Dr. Sheppard calculated the discounted 128 See Stephen Sheppard, Potential Economic Impacts Related to Property Value Diminution in Communities Surrounding the IPEC (Jan. 24, 2011) (January 2011 Sheppard Report) (NYS000230).

129 Id. at 1.

130 Id. at 1-6.

131 Id.

132 Id. at 1.

133 Id.

134 Id. at 2, 4.

135 Id. at 5.

present value of Entergys future PILOT payments, assuming those payments continued through 2035 in all scenarios, even though he acknowledged that PILOT payments would cease (or be greatly reduced) upon cessation of operations, which, in the no-action alternative scenario, would take place twenty years earlier.136

39. Thus, the calculations in Dr. Sheppards January 2011 Report were based on summing the net present value of the property value impact, the tax revenue-related impact, and the PILOT payment impact.137 Dr. Sheppard concluded that, relative to the baseline no-action alternative, the license renewal scenarios would impose on the local communities a net present value cost of between $169 million and $238 million.138 Significantly, the new estimate contained in Dr. Sheppards fourth (January 2011) report, and which he described as a more complete analysis, was substantially less than the cost estimates in his first (2007) and second (2009) report ($576 million and $300 million to $340 million, respectively).139

40. Entergy opposed admission of NYS-17B.140 Entergy maintained that NYS-17B and its associated waiver petition were untimely because the possibility of long-term storage of spent fuel at the Indian Point site was publicly known and acknowledged by New York for at least one year before New York submitted its pleadings.141 Aside from the timeliness issue, Entergy further asserted that NYS-17B was not admissible because environmental issues 136 Id. at 4.

137 See generally id.

138 Id. at 6.

139 See 2007 Sheppard Report at 6 (NYS000226); 2009 Sheppard Report at 5 (NYS000227).

140 Applicants Answer to Proposed Amended Contention New York State 17B and the Associated Request for Exemption and/or Waiver of 10 C.F.R. § 51.23(b) (Feb. 18, 2011), available at ADAMS Accession No. ML110560589. Entergy also opposed New Yorks proposed request for an exemption or waiver from the Waste Confidence Rule.

141 Id. at 15-19. In making this argument, Entergy pointed to New Yorks longstanding knowledge that spent fuel would possibly be stored at Indian Point for many years after the extended operating period. Id. at 15. Entergy also contended that the Waste Confidence Rule has never established a timetable for spent fuel removal at Indian Point, or any other site. Id. at 15-16.

concerning long-term spent fuel storage, and IP2 and IP3 decommissioning, were outside the scope of the NRCs license renewal review.142

41. The NRC Staff did not oppose admission of NYS-17B to the extent it updated the previously-admitted contention to refer to the FSEIS, but objected to New Yorks spent fuel-related arguments, exemption request, and waiver petition.143 The Staff believed that NYS-17B and its associated waiver petition were untimely because the new information cited by New York (i.e., the Waste Confidence Rule and Entergys decommissioning plan) was not materially different than previously-available information.144 Like Entergy, the Staff also claimed that NYS-17B was not admissible because issues concerning long-term spent fuel storage environmental impacts were outside the scope of this proceeding.145

42. The Board determined that NYS-17B differed from previously-admitted NYS-17/17A primarily in the substitution of the FSEIS for the DSEIS, and thus admitted NYS-17B and consolidated it with NYS-17/17A.146 We denied NYS-17B, however, to the extent that it proposed new bases that challenged the Waste Confidence Rule.147 In addition, we found irrelevant New Yorks argument about the timeframe for spent fuel removal from the site and the Waste Confidence Rule because the Waste Confidence Rule has never specified a timetable for

[removing] spent fuel and NRC regulations have long envisioned the possibility of spent fuel 142 Id. at 19-30.

143 NRC Staffs Answer to the State of New Yorks Motion for Leave to File Amended Bases to Contention 17A (To be Designated 17B) and Request for an Exemption or Waiver (Feb. 18, 2011), available at ADAMS Accession No. ML110530343.

144 Id. at 27-30.

145 Id. at 21-26.

146 Licensing Board Order (Ruling on Pending Motions for Leave to File New and Amended Contentions) at 16 (July 6, 2011) (unpublished).

147 See id. at 16-18.

remaining on reactor sites until the end of site decommissioning.148 Therefore, we declined to consider New Yorks request for exemption and waiver.149 Later, in clarifying our July 6, 2011 Memorandum and Order, we further stated that any incremental impact of spent fuel alone need not be given any role in assessment of property values and that whatever hypothesized impact IPEC has on property values during the period of extended operations is not affected to a measurable degree by any one component (including the presence or absence of spent fuel).150 E. New Yorks December 2011 Prefiled Testimony and Related Filings

43. On December 17, 2011, New York submitted its Statement of Position,151 written direct testimony,152 and supporting exhibits on NYS-17B. Dr. Sheppard was New Yorks sole testifying witness.153 In its Position Statement, New York argued that the FSEIS is inadequate because it does not analyze adverse impacts to property values caused by Indian Point during license renewal or potential benefits to property values from the no-action alternative (i.e.,

property value-driven land-use changes).154 According to New York, the FSEIS conclusion that the no-action alternative would have SMALL impacts on land use and SMALL to MODERATE 148 Id. at 16.

149 Id. at 18.

150 Licensing Board Order (Granting Entergys Request for Clarification) at 4 (Aug 10, 2011) (unpublished). In response to a challenge by New York and several groups, the D.C. Circuit vacated and remanded the 2010 Waste Confidence Rule. New York v. NRC, 681 F.3d 471 (D.C. Cir. 2012). Pursuant to the Commissions direction, contentions subsequently filed by New York and the other intervenors are being held in abeyance as the NRC Staff prepares a generic waste confidence EIS. Calvert Cliffs Nuclear Power Project, LLC (Calvert Cliffs Nuclear Power Plant, Unit 3), CLI-12-16, 75 NRC ___, slip op. (Aug. 7, 2012); Licensing Board Order (Holding Contentions NYS-39/RK-EC-9/CW-EC-10 and CW-SC-4 in Abeyance) (Aug. 8, 2012)

(unpublished).

151 State of New York Initial Statement of Position Contention NYS-17B (Dec. 17, 2011) (New York Position Statement) (NYS000223).

152 Pre-filed Direct Testimony of Stephen C. Sheppard, Ph.D. Regarding Contention 17B (Dec. 16, 2011) (revised Jan. 30, 2012) (New York Direct Testimony) (NYSR00224). As discussed below, Dr. Sheppards testimony included yet another new analysis.

153 See id.

154 See New York Position Statement at 29-34 (NYS000223).

adverse impacts on socioeconomics is flawed because it omits any serious consideration of impacts to local property values.155 Based on Dr. Sheppards testimony and new report, New York claimed that offsite land-use and socioeconomic impacts of the no-action alternative would be LARGE and beneficial.156

44. In his December 2011 testimony andnow fifthDecember 2011 report, Dr. Sheppard described a new analysis, which unlike his earlier reports, applied an approach he described as similar in spirit to event studies that are applied to the values of stocks and other financial assets.157 Dr. Sheppard likened IP2 and IP3 commencing full power operations in the period from 1974 to 1976 to an event,158 and hypothesized that anyone holding properties near Indian Point during that period would have suffered a property value decline, resulting in a lower return on the property than for those who held property entirely before 1974 or entirely after 1976.159 To test this hypothesis, Dr. Sheppard compiled a sample of historical repeat property sales160 and compared returns on properties which were held from before 1974 to after 1976, called the treatment group, to returns on properties held entirely before 1974 or entirely after 1976, called the control group.161 Dr. Sheppard reported that the treatment group annual nominal rate of returns were approximately 3 percent lower than the control group 155 See id. Pursuant to 10 C.F.R. Part 51, Appendix B, SMALL impacts are not detectable or are so minor that they will neither destabilize nor noticeably alter any important attribute of the resource. Because such impacts are considered negligible, they are neither positive nor adverse.

156 See New York Position Statement at 29-34 (NYS000223).

157 Stephen Sheppard, Impacts of the Indian Point Energy Center on Property Values at 3-4 (Dec. 2011) (revised Jan. 30, 2012) (December 2011 Sheppard Report) (NYSR00231).

158 See id. at 8.

159 See id. at 12.

160 Id. at 8-9.

161 See New York Direct Testimony at 29:6-30:19 (NYSR00224).

returns.162 According to Dr. Sheppard, this difference means that IP2 and IP3 operations have lowered property values by $1.07 billion (in January 2011 dollar values).163 Dr. Sheppard acknowledged that this was an impact estimate of the commencement of IP2 and IP3 operations, but he assumed that when IPEC is gone and the site is restored these changes will be undone.164

45. Dr. Sheppards December 2011 Report was a substantial departure from his prior four reports. Unlike his earlier studies, Dr. Sheppard did not specifically predict the timing of the $1.07 billion recovery.165 Also, unlike his second and fourth reports, Dr. Sheppard did not apply a discount rate to estimate the difference between license renewal and the no-action alternative.166 Nor did Dr. Sheppard account for PILOT or property tax payments, as was the case in his prior January 2011 Report.167 F. Entergys and the NRC Staffs March 2012 Prefiled Testimony and New Yorks Motion to Strike

46. On March 28, 2012, Entergy filed its Statement of Position;168 written testimony prepared by three expert witnesses, Mr. Donald P. Cleary, Mr. C. William Reamer, and Dr. Tolley;169 and supporting exhibits. In its Position Statement, Entergy argued that: (1) the FSEIS reasonably and appropriately evaluates offsite land-use and other socioeconomic impacts 162 See December 2011 Sheppard Report at 9 (NYSR00231).

163 See id at 11-12.

164 See New York Direct Testimony at 39:13-16 (NYSR00224).

165 See December 2011 Sheppard Report at 11-12 (NYSR00231) (stating that the increase would occur after decommissioning, but not when decommissioning would likely be completed).

166 See generally id.

167 Compare January 2011 Sheppard Report at 4-6 (NYS0000230), with December 2011 Sheppard Report (NYSR00231).

168 Entergys Statement of Position on Contention NYS-17B (Property Values) (Mar. 28, 2012) (Entergy Position Statement) (ENT000131).

169 Entergy Testimony (ENT000132).

in accordance with the GEIS and NUREG-1555, Supp. 1; (2) New Yorks alleged changes in property values are not directly related to physical environmental impacts from Indian Point and, thus, need not be evaluated under NEPA; (3) New Yorks predicted positive offsite land-use impacts under the no-action alternative are remote and speculative and, thus, need not be examined under NEPA; (4) the GEIS case study of property values near Indian Point demonstrated that IP2 and IP3 have not, and will not, cause adverse property value impacts; (5) Dr. Tolleys economic modeling demonstrates that IP2 and IP3 have not and will not cause adverse property value impacts; and (6) Dr. Tolleys criticisms of Dr. Sheppards event-study like approach showed that Dr. Sheppard made unreasonable assumptions and did not adhere to well-established economic methodologies.170

47. Entergys supporting exhibits included Dr. Tolleys expert report that included his independent property value assessment and his critique of Dr. Sheppards arguments.171 Specifically, Dr. Tolleys report contained two hedonic regression analysesone which used the Multiple Listing Service (MLS) data set he assembled, and a second which used the same data set that Dr. Sheppard assembled and used for his final December 2011 analysis.172 Based on those assessments, and an extensive review of established economic literature, Dr. Tolley concluded that there was no reliable scientific basis to conclude that Indian Point depressed property values.173 In addition, Dr. Tolley testified that when the present value of lost PILOT payments is considered, the no-action alternative would result in a net $182 million negative impact.174 170 Entergy Position Statement at 1-6 (ENT000131).

171 Tolley Report (ENT000144).

172 Id. at 15-22, 48-50.

173 See id. at 22, 50.

174 Entergy Testimony at 106 (A133) (ENT000132).

48. Dr. Tolley also offered detailed criticisms of Dr. Sheppards various reports.175 Ultimately, Dr. Tolley disagreed with Dr. Sheppards claim that Indian Point adversely impacts property values and instead concluded that Indian Points property value effect is unequivocally positive.176

49. On March 30, 2012, the NRC Staff filed its Statement of Position;177 written testimony prepared by three witnesses, Mr. Jeffrey J. Rikhoff, Mr. Andrew L. Stuyvenberg, and Mr. John P. Boska;178 and supporting exhibits. In its Position Statement, the Staff argued that:

(1) the FSEIS adequately addresses tax-revenue and population-related offsite land-use impacts for both the license renewal and the no-action alternative;179 (2) Dr. Sheppard made incorrect assumptions regarding NRCs decommissioning regulations; and (3) Dr. Sheppards new event study made faulty assumptions about decommissioning, used flawed data, and never evaluated the extent of the alleged offsite land-use impacts.180

50. New York filed a Motion to Strike portions of Entergys and the Staffs testimony.181 New York sought to exclude select testimony which it argued: (1) impermissibly offered legal and regulatory interpretations and conclusions; (2) repetitiously and cumulatively 175 Id. at 79-84 (A109-11).

176 Tolley Report at 8 (ENT000144).

177 NRC Staffs Initial Statement of Position on Contention NYS-17, 17A, 17B (Land Use) (Mar. 30, 2012)

(revised Oct. 9, 2012) (NRC Staff Position Statement) (NRCR00080).

178 NRC Staff Testimony of Jeffrey J. Rikhoff, Andrew L. Stuyvenberg, and John P. Boska Concerning Contentions NYS-17, 17A and 17B (Land Use) (Mar. 30, 2012) (revised Oct. 9, 2012) (NRC Staff Testimony) (NRCR00081).

179 NRC Staff Position Statement at 11-14 (NRCR00080).

180 Id. at 14-18.

181 State of New York Motion to Strike Portions of Entergy and NRC Staff Witness Testimony as Impermissible Under NRC Regulations (Apr. 30, 2012), available at ADAMS Accession No. ML12121A702.

summarized documents already in evidence; and (3) attacked the Boards original decision to admit NYS-17B.182

51. Entergy and the NRC Staff opposed New Yorks Motion to Strike.183 First, Entergy and the Staff countered that, rather than offering impermissible legal argument or conclusions, their witnesses properly rebutted New Yorks testimony.184 Second, Entergy and the Staff argued that their testimony was not repetitious or cumulative, but rather helped further illuminate Entergys and the Staffs detailed environmental evaluations.185 Third, Entergy and the Staff claimed that New York sought to exclude testimony that was entirely consistent with the Boards prior NYS-17B rulings.186

52. The Board denied New Yorks Motion to Strike.187 In so doing, we explained that we are comfortable exercising our responsibility to interpret independently what the law is, and further indicated that the testimony at issue may actually be helpful for understanding the 182 See id. at 1, 6-21.

183 Entergys Answer Opposing New York States Motion to Strike Portions of Entergy Pre-Filed Testimony on Contention NYS-17B (Property Values) and NYS-37 (Energy Alternatives) (May 14, 2012) (Entergy Answer Opposing New Yorks Motion to Strike), available at ADAMS Accession No. ML12135A715; NRC Staffs Answer in Opposition to State of New York Motion to Strike Portions of Entergy and Staff Witness Testimony as Impermissible under NRC Regulations (May 14, 2012) (NRC Staffs Answer Opposing New Yorks Motion to Strike), available at ADAMS Accession No. ML12135A693.

184 Entergy Answer Opposing New Yorks Motion to Strike at 1-2; NRC Staffs Answer Opposing New Yorks Motion to Strike at 5-7.

185 Entergy Answer Opposing New Yorks Motion to Strike at 1-2; NRC Staffs Answer Opposing New Yorks Motion to Strike at 5-7.

186 Entergy Answer Opposing New Yorks Motion to Strike at 14-16; NRC Staffs Answer Opposing New Yorks Motion to Strike at 5-7. The Staff also argued that New Yorks motion should be denied because New York failed to satisfy the Boards consultation requirements. NRC Staffs Answer Opposing New Yorks Motion to Strike at 4-5.

187 Licensing Board Order (Denying New Yorks Motion in Limine and Holding Riverkeepers Motion in Limine in Abeyance) (June 1, 2012) (unpublished). The Board noted that New Yorks motion was untimely, but sua sponte granted New York an extension. Id. at 5.

context of relevant documents.188 We also concluded that Entergys and the Staffs testimony was consistent with our admission of NYS-17B.189 G. The Boards Site Visit and New Yorks Motion to Supplement the Record

53. On May 8, 2012, the Board toured the Indian Point site and the surrounding area, along with representatives of each of the parties and interested governmental entities.190 New York subsequently filed a Motion to Supplement the evidentiary record with certain statements that Entergy officials allegedly made during the site visit relating to long-term spent fuel storage plans.191 Entergy opposed New Yorks Motion to Supplement.192 We denied New Yorks Motion to Supplement because New York disregarded its obligation to consult with the other parties, contrary to the requirements of 10 C.F.R. § 2.323(b).193 We also reiterated that the only purpose of the off-the-record site visit was to ensure our thorough familiarity with the physical features of the Indian Point site.194 H. New Yorks June 2012 Prefiled Rebuttal Testimony

54. New York subsequently filed its Revised Statement of Position195 and Dr. Sheppards rebuttal testimony.196 Dr. Sheppard acknowledged that he made no attempt in his 188 Id. at 6.

189 Id.

190 Representatives from Entergy New York, the NRC Staff, Riverkeeper, Inc., Hudson River Sloop Clearwater, Westchester County, and the Town of Cortlandt attended the site visit. Licensing Board Order (Denying New York States Motion to Supplement) at 1 (June 7, 2012) (June 7, 2012 Order) (unpublished).

191 State of New York Motion to Supplement the Record Based on the May 8, 2012 Site Visit at 1 (May 18, 2012),

available at ADAMS Accession No. ML12139A422.

192 Entergys Answer in Opposition to State of New York Motion to Supplement the Record Based on May 8, 2012 Site Visit at 1-2 (May 29, 2012), available at ADAMS Accession No. ML12150A396.

193 June 7, 2012 Order at 3-5.

194 Id. at 4.

195 State of New Yorks Revised Statement of Position Regarding Contention NYS-17B (June 29, 2012) (New York Revised Position Statement) (NYS000433).

196 Pre-filed Rebuttal Testimony of Stephen C. Sheppard Regarding Contention NYS-17B (Jun. 28, 2012) (New York Rebuttal Testimony) (NYS000434).

study to distinguish between physical impacts and other kinds of impacts that might cause property value changes, but claimed that Indian Point indisputably has physical impacts on nearby properties, including impacts from radionuclide leaks, noise, traffic, and aesthetics.197 His rebuttal testimony also included a number of technical critiques of Dr. Tolleys report, including the claim that Dr. Tolleys results actually supported Dr. Sheppards conclusion that local property values would increase under the no-action alternative.198 Dr. Sheppards rebuttal, however, did not address Entergys and the NRC Staffs criticisms of his event study-like approach.

I. Other Prehearing Procedural Matters

55. On August 8, 2012, New York filed a Motion with respect to its seven Track 1 contentions,199 seeking to invoke its purported statutorily-granted cross-examination rights under Section 274(l) of the Atomic Energy Act (AEA), 42 U.S.C. § 2021(l).200 Specifically, New York claimed that as the host state to Indian Point, Section 274(l) confers upon it expansive cross-examination rights that take precedence over the restrictive cross-examination rights allowed pursuant to 10 C.F.R. §§ 2.315(c) and 2.1204(b)(3).201 It argued that the 2004 modifications to the NRCs Administrative Procedure Act-compliant regulations, which it contended generally restrict the use of cross-examination by most parties, do not purport to 197 Id. at 13:3-11.

198 Id. at 21:5-45:20.

199 Track 1 contentions consist of Riverkeeper TC-2 (Flow-Accelerated Corrosion), NYS-12C (SAMA Analysis -

Decontamination Costs), NYS-16B (SAMA Analysis - Population Estimate), NYS-17B (Land Values), NYS-37 (Energy Alternatives), Clearwater EC-3A (Environmental Justice), NYS-5 (Buried Piping), NYS-6/7 (Non-EQ Cables), and NYS-8 (Transformers). Prior to the October 2012 hearings, the parties settled another Track 1 contention, Riverkeeper EC-3/Clearwater EC-1 (Spent Fuel Pool Leaks to Groundwater). The Board approved that settlement agreement on October 17, 2012. Licensing Board Consent Order (Approving Settlement of Consolidated Contention Riverkeeper EC-3 and Clearwater EC-1) (Oct. 17, 2012) (unpublished).

200 State of New York Motion to Implement Statutorily-Granted Cross-Examination Rights Under Atomic Energy Act § 274(l) at 1 (Aug. 8, 2012), available at ADAMS Accession No. ML1221A483.

201 Id. at 14-15, 19.

address the rights preserved to the States in [Section 2021(l)].202 Thus, New York asserted, 10 C.F.R. §§ 2.315(c) and 2.1204(b)(3) do not apply to it as a host state and do not restrict its right to interrogate witnesses.203

56. Both Entergy and the NRC Staff opposed New Yorks Motion, stating that it lacked a legal basis,204 arguing that New York mischaracterized as an absolute right what is actually a reasonable opportunity to cross-examine witnesses.205

57. On August 29, 2012, in accordance with 10 C.F.R. § 2.1207(a)(3) and the Boards Scheduling Order, Entergy (and the other parties) submitted in camera proposed questions for the Board to consider asking to the other parties witnesses on Contention NYS-17B.206

58. In an Order issued on September 21, 2012, the Board granted, in part, New Yorks August 8, 2012 Motion for cross-examination of witnesses during the evidentiary hearings.207 The Board found that New Yorks opportunity to cross-examine witnesses is bound by the same 10 C.F.R. Part 2 regulations that govern all parties to this proceeding.208 As a result, the Board found it unnecessary to address whether and if so to what extent, in some theoretical sense, the right to cross-examination granted to host states by the AEA may be different from those provided to parties under 10 C.F.R. Part 2.209 Citing 10 C.F.R. § 2.1204(b)(1), the Board 202 Id. at 14.

203 Id. at 15.

204 Entergys Answer Opposing New York States Motion to Cross-Examine (Aug. 20, 2012) (Entergy Answer Opposing NYS Motion), available at ADAMS Accession No. ML12233A371; NRC Staffs Answer to State of New Yorks Motion to Implement Statutorily-Granted Cross-Examination Rights under Atomic Entergy Act § 274(l) (Aug. 20, 2012) (NRC Staff Answer Opposing NYS Motion), available at ADAMS Accession No. ML12233A742.

205 Entergy Answer Opposing NYS Motion at 3-4, NRC Staff Answer Opposing NYS Motion at 9-10.

206 10 C.F.R. § 2.1207(a)(3)(iii).

207 Licensing Board Order (Order Granting, in part, New Yorks Motion for Cross Examination) (Sept. 21, 2012)

(unpublished).

208 Id. at 5.

209 Id. at 5-6.

noted that in any oral hearing under Subpart L, a party may file a motion (accompanied by a cross-examination plan) seeking cross-examination by the parties on particular admitted contentions or issues.210 Pursuant to 10 C.F.R. § 2.1204(b)(3), the presiding officer may allow cross-examination by the parties only if the presiding officer determines that cross-examination by the parties is necessary to ensure the development of an adequate record for decision.211

59. The Board concluded that New York had complied with 10 C.F.R. § 2.1204(b) by filing a Motion for cross-examination and proposed examination questions by the August 29, 2012, deadline for those submittals.212 Citing the voluminous and technical nature of the parties evidentiary submissions, the Board determined that granting New Yorks request for cross-examination was necessary to ensure development of an adequate record for this proceeding.213 It thus ruled that during the hearing, New York could examine witnesses following the Boards examination, as long as New Yorks questions were relevant, reasonable, and non-repetitive.214

60. On September 24, 2012, the Board discussed its Order in a pre-hearing conference call in response to questions from the NRC Staff and Entergy.215 During that conference, Chairman McDade confirmed that New York would have the opportunity to examine witnesses on areas that the Board missed in its own witness examinations.216 He also stated that other parties would have a reasonable opportunity to interrogate witnesses on discrete issues through 210 Id. at 6.

211 Id. (quoting 10 C.F.R. § 2.1204(b)(3)).

212 Id.

213 Id.

214 Id. at 7.

215 Official Transcript of Proceedings, Indian Point Nuclear Generating Units 1 & 2 [sic2 & 3] at 1238:1-1241:8 (Sept. 24, 2012) (Judge McDade) (Sept. 24, 2012 Tr.).

216 Id. at 1238:2 (Judge McDade).

oral motions at the hearing if they made a sufficiently compelling request and avoided repetitive questions.217

61. Later, on September 28, 2012, Entergy filed an emergency petition for interlocutory review of the Boards Order with the Commission.218 Entergy requested, and was granted, expedited briefing on its petition.219 New York opposed Entergys petition220 and the Staff supported it.221

62. On October 12, 2012, the Commission issued an Order denying Entergys request for interlocutory review, noting that the Board has the responsibility in the first instance to oversee the development of an adequate case record.222 In so ruling, the Commission cited Chairman McDades assurances, made during the September 24, 2012 prehearing conference call, that the Board would prohibit open-ended, lengthy, repetitive, and immaterial cross-examination, and allow all parties a full and fair opportunity to request cross-examination.223 The Commission further stated its expectation that the Board would act on cross-examination requests fairly and evenhandedly, rigorously oversee any cross-examination it allows, and limit 217 Id. at 1239:21-23 (Judge McDade).

218 Entergys Emergency Petition for Interlocutory Review of Board Order Granting Cross-Examination to New York State and Request for Expedited Briefing (Sept. 28, 2012), available at ADAMS Accession No. ML12272A363.

219 See Commission Order (Oct. 2, 2012) (unpublished).

220 State of New York Combined Opposition to Entergys Requests for Emergency Stay and Interlocutory Review of the Board Order Granting Limited Cross Examination (Oct. 1, 2012), available at ADAMS Accession No. ML12275A327. Entergy replied in opposition to New Yorks answer. See Entergys Reply to New York States Opposition to Entergys Emergency Petition for Interlocutory Review (Oct. 8, 2012), available at ADAMS Accession No. ML1228A002.

221 NRC Staffs Answer to Entergys Emergency Petition for Interlocutory Review, and Application for Stay, of the Boards Order of September 21, 2012 (Oct. 5, 2012), available at ADAMS Accession No. ML12279A309.

222 Entergy Nuclear Generation Co. (Indian Point Nuclear Generating Units 2 & 3) CLI-12-18, 76 NRC __, slip op. at 6 (Oct. 12, 2012).

223 Id. at 3-4.

the cross-examination to supplemental and genuinely material inquiries, necessary to develop an adequate and fair record.224

63. During the hearing on the first contention (Riverkeeper TC-2), the Board indicated that it would allow questioning of the witnesses by the petitioner (there, Riverkeeper, Inc., (Riverkeeper)), Entergy, and the NRC Staff.225 Entergy objected to examination of witnesses by any party, and requested that the Board close the record.226 In support of its position, Entergy: (1) noted that Riverkeeper had not made, nor been required to make, the sort of showing contemplated by the Subpart L regulations, which was a circumstance that the Commission had found troubling; (2) argued that no sufficient constraints had been placed on examination by parties; (3) noted that the procedure, rather than constituting the rare occurrence contemplated by the Commission, was apparently being undertaken as the norm for these proceedings; and (4) argued that, with two full days of Board questioning, additional questioning by the parties was not truly necessary, as mandated by the Commission.227 In the alternative, Entergy requested reciprocal treatment; i.e., that it be afforded the same direct and cross-examination rights as the other parties.228

64. The Board denied Entergys motion to preclude party examination of witnesses, stating any additional showing need not be articulated, and that the Board envisioned allowing Riverkeeper, then Entergy, and then the Staff brief opportunities to conduct limited interrogation 224 Id. at 7.

225 Official Transcript of Proceedings, Indian Point Nuclear Generating Units 2 & 3 at 1797:16-24 (Oct. 17, 2012)

(Judge McDade).

226 Id. at 1794:11-1797:15 (Fagg).

227 Id. (Fagg).

228 Id. at 1797:8-14 (Fagg).

of the witnesses.229 During hearing on the second contention (NYS-12C), Entergy reiterated its objection, which was again denied by the Board, and Entergy asked that the Board recognize Entergys standing objection on such grounds with respect to all remaining contentions.230 Upon that basis, Entergy rested upon its standing objection, and did not repeat its procedural arguments in connection with NYS-17B or subsequent contentions.

J. The October 2012 Evidentiary Hearing on NYS-17B

65. On October 15, 2012, the Board commenced the evidentiary hearing on the Track 1 contentions at the DoubleTree Hotel located at 455 South Broadway, Tarrytown, New York 10591, and admitted into evidence the exhibits proffered by the parties.231 We held the NYS-17B oral evidentiary hearing on October 22, 2012.232

66. The Board conducted the hearing in accordance with the provisions of 10 C.F.R.

Part 2, Subpart L. Per our September 21, 2012 Order, and the Commissions related guidance in CLI-12-18, the Board permitted limited cross-examination and redirect examination by all parties. Specifically, after the Board completed its questioning of the parties witnesses, it afforded counsel for all parties to the contention the opportunity to ask relevant, non-repetitive redirect and cross-examination questions to the witnesses.233 New York questioned the witnesses on NYS-17B first, followed by Entergy and then the NRC Staff.234 229 Id. at 1797:16-1800:10 (Judge McDade).

230 Official Transcript of Proceedings, Indian Point Nuclear Generating Units 2 & 3 at 2315:17-2316:2 (Oct. 18, 2012) (Bessette).

231 Official Transcript of Proceedings, Indian Point Nuclear Generating Units 2 & 3 at 1268:21-1272:6 (Oct. 15, 2012) (Judge McDade).

232 See Oct. 22, 2012 Tr.

233 See supra Section II.I.

234 See generally Oct. 22, 2012 Tr.

67. The NYS-17B hearing concluded on the evening of October 22, 2012. The parties jointly submitted proposed corrections to the hearing transcripts.235 The Board issued an Order adopting the parties proposed transcript corrections with some minor revisions.236

68. During the hearing, New York and Entergy each moved to admit new exhibits.237 We granted those motions to ensure a complete record,238 and allowed New York and Entergy until November 21, 2012, to file any responsive evidence on these new exhibits.239 New York timely submitted a supplemental declaration from Dr. Sheppard,240 and Entergy timely submitted supplemental testimony from Dr. Tolley and two supporting exhibits,241 all of which the Board admitted.242 Subsequently, New York submitted another round of written testimony from Dr. Sheppard on December 3, 2012,243 which the Board also admitted.244 235 Letter from Counsel for Entergy Nuclear Operations, Inc., Counsel for Riverkeeper, Inc., Counsel for the State of New York, Counsel for the NRC Staff, and Counsel for Hudson [River] Sloop Clearwater, Inc., to Lawrence G. McDade, Chairman, Dr. Michael F. Kennedy, and Dr. Richard Wardwell, Atomic Safety and Licensing Board (Dec. 5, 2012), available at ADAMS Accession No. ML12340A546.

236 Licensing Board Order (Adopting Proposed Transcript Corrections with Minor Edits) (Dec. 27, 2012)

(unpublished).

237 See Oct. 22, 2012 Tr. at 2671:21-23 (Taylor) (New York offered Exhibit NYS000446); id. at 2711:1-3 (Tenpas) (Entergy offered Exhibit ENT000590).

238 See Oct. 22, 2012 Tr. at 2674:2-4 (Judge McDade) (admitting NYS000446); id. at 2711:8-9 (Judge McDade)

(admitting Exhibit ENT000590).

239 Oct. 22, 2012 Tr. at 2692:11-19 (Judge McDade) (setting deadline for responsive evidence to NYS000446); id.

at 2712:4-8 (Judge McDade) (setting deadline for responsive evidence to ENT000590).

240 Declaration of Stephen C. Sheppard (Nov. 21, 2012) (Sheppard Supplemental Declaration) (designated exhibit number NYS000465 during hearing, see Official Transcript of Proceedings, Indian Point Nuclear Generating Units 2 & 3 at 3182:5-6 (Nov. 28, 2012) (Judge McDade) (Nov. 28, 2012 Tr.)).

241 Supplemental Testimony of Entergy Witness George S. Tolley Regarding Contentions NYS-17B (Property Values) (Nov. 21, 2012) (Entergy Supplemental Testimony) (ENT000592); R. Palmquist, Measuring Environmental Effects on Property Values without Hedonic Regressions, 11 Journal of Urban Economics 333 (1982) (Palmquist Article) (ENT000593); G. Tolley, RCF, Examples of Errors Remaining in Dr. Sheppards Assessor Data Set (Nov. 21, 2012) (Assessor Data Set Errors) (ENT000594). Entergy also filed the Declaration of Cory Gruntz (Nov. 21, 2012) (ENT000591), which provided information that we requested regarding the assessed value of Indian Point and the tax rates in the relevant local jurisdictions. See Oct. 22, 2012 Tr. at 2623:21-2624:10 (Judge McDade); id. at 2663:18-2664:5 (Judge McDade).

242 Nov. 28, 2012 Tr. at 3182:5-19 (Judge McDade).

243 Written Supplemental Rebuttal Testimony of Stephen C. Sheppard Regarding Contention NYS-17B (Dec. 3, 2012) (New York Supplemental Rebuttal Testimony) (NYS000467).

69. On March 22, 2013, the parties submitted proposed findings of fact and conclusions of law in the form of a proposed Initial Decision by the Board.

III. APPLICABLE LEGAL AND REGULATORY STANDARDS A. NRCs NEPA Requirements

70. Two sets of regulatory requirements govern the NRCs review of license renewal applications. Under 10 C.F.R. Part 54, the NRC conducts a health and safety review focused on the detrimental effects of aging on the plant.245 Under 10 C.F.R. Part 51, the NRC completes a NEPA-based environmental review, focusing on the potential impacts from operating for twenty additional years. As explained above, the contention at issue hereNYS-17Barises under NEPA and the NRCs 10 C.F.R. Part 51 NEPA-implementing regulations.246

71. NEPA requires that federal agencies, such as the NRC, prepare an EIS for major Federal actions significantly affecting the quality of the human environment.247 NEPA is a procedural statute that does not mandate particular substantive results.248 Rather, it is designed to insure a fully informed and well-considered decision, including examining the proposed actions and its reasonable alternatives environmental impacts.249 NEPA merely prohibits uninformedrather than unwiseagency action.250

72. In 1996, the NRC published the license renewal GEIS. For each license renewal application, Part 51 requires that the Staff prepare a supplement to the GEIS adopting applicable 244 Official Transcript of Proceedings, Indian Point Nuclear Generating Units 2 & 3 at 3284:8-9 (Dec. 10, 2012)

(Judge McDade) (Dec. 10, 2012 Tr.).

245 See Final Rule, Nuclear Power Plant License Renewal: Revisions, 60 Fed. Reg. 22,461, 22,464 (May 8, 1995).

246 Indian Point, LBP-08-13, 68 NRC at 113-116.

247 42 U.S.C. § 4332(2)(C) (2006).

248 Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350-51 (1989).

249 Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 519, 558 (1978).

250 Robertson, 490 U.S. at 351.

GEIS generic findings, evaluating any new and significant information, and addressing plant-specific impacts.251 Based on the GEIS, specifically, Table B-1, Appendix B to Subpart A of 10 C.F.R. Part 51 (Table B-1) divides license renewal into generic (Category 1) and plant-specific (Category 2) components.252

73. Table B-1 assigns significance levels for environmental issues based on the following definitions:

SMALL: Environmental effects are not detectable or are so minor that they will neither destabilize nor noticeably alter any important attribute of the resource. For the purposes of assessing radiological impacts, the Commission has concluded that those impacts that do not exceed permissible levels in the Commissions regulations are considered small.

MODERATE: Environmental effects are sufficient to alter noticeably, but not to destabilize, any important attributes of the resource.

LARGE: Environmental effects are clearly noticeable and are sufficient to destabilize important attributes of the resource.253

74. Table B-1 lists offsite land use impacts (license renewal term) as a Category 2 (i.e., site-specific) issue because such impacts may be SMALL, MODERATE, OR LARGE, and because [s]ignificant changes in land use may be associated with population and tax revenue changes resulting from license renewal.254 251 10 C.F.R. § 51.95(c).

252 See Final Rule, Environmental Review for Renewal of Nuclear Power Plant Operating Licenses, 61 Fed. Reg.

28,467, 28,490 (June 5, 1996) (NYS000127), amended by 61 Fed. Reg. 66,537 (Dec. 18, 1996) (NYS000128).

253 10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1.

254 Id.

75. Separate from offsite land use, but relevant to the NYS-17B claim, Table B-1 also lists housing impacts as a Category 2 issue.255 The potential housing impacts NRC Staff considered in the GEIS included housing marketability impacts.256 While putting housing in Category 2, Table B-1 also indicates that housing impacts are expected to be of small significance at plants located in a medium or high population area and not in an area where growth control measures that limit housing development are in effect.257

76. Table B-1 also lists the following issues as generically-resolved Category 1 issues with SMALL license renewal impacts: noise, aesthetic, public radiation exposure, and spent fuel storage.258 These findings apply in all license renewal proceedings and cannot be challenged absent a waiver.259 B. Controlling NEPA Principles

77. Three tenets of NEPA are relevant to whether the NRC Staff satisfied its NEPA obligations with respect to NYS-17B.260 First and fundamental to the Boards analysis, NEPA is concerned with actual physical impacts to the environment.261 As the Supreme Court in Metro.

Edison explained, the theme of [NEPA] is sounded by the adjective environmental, which means that NEPA does not require an agency to assess every impact on a project, but only those 255 Id.

256 See GEIS at C-84 to -85 (NYS00131G).

257 10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1.

258 Id. In addition, Table B-1 indicates that public radiation exposure impacts during decommissioning and socioeconomics impacts during decommissioning are SMALL. Id.

259 See Entergy Nuclear Vt. Yankee, LLC (Vt. Yankee Nuclear Power Station), CLI-07-3, 65 NRC 13, 19-21 (2007); Fla. Power & Light Co. (Turkey Point Nuclear Generating Plant, Units 3 & 4), CLI-01-17, 54 NRC 3, 22-23 (2001).

260 As noted above, consistent with Commission precedent, the Board focuses its Decision on the FSEIS even though New Yorks predecessor contentions, NYS-17 and NYS-17A, challenged Entergys ER and the NRC Staffs DSEIS, respectively. See LES, CLI-98-3, 47 NRC at 84 (indicating that the Board appropriately treated a NEPA contention as a challenge to the FEIS even though most of the environmental contentions were filed as challenges to the applicants ER).

261 Metro. Edison, 460 U.S. at 772-74.

that have a reasonably close causal relationship with a change in the physical environment.262 Consistent with this controlling Supreme Court precedent, both Council on Environmental Quality (CEQ) regulations and subsequent federal court rulings make clear that an EIS need only discuss socioeconomic impacts if they are interrelated with actual physical environmental effects.263 In particular, courts have held that NEPA does not require that agencies evaluate potential property value changes when the threshold requirement of a primary impact on the physical environment is missing.264

78. Moreover, the Commission has applied this specific principle in the reactor license renewal context, finding that the GEIS did not have to consider property value impacts from spent fuel shipments because those impacts would arise from the publics perception of risk rather than from an impact to the physical environment.265 Accordingly, in considering socioeconomic impacts under NEPA, the Commission, like the courts, distinguishes between socioeconomic impacts arising directly from a physical impact to the environment and those that do not.266 262 Id. at 772, 773.

263 See 40 C.F.R. § 1508.14; see also 10 C.F.R. § 51.14(b) (adopting the CEQ definition in 40 C.F.R. § 1508.14);

Tongass Conservation Socy v. Cheney, 924 F.2d 1137, 1144 (D.C. Cir. 1991) (citing 40 C.F.R. § 1508.14);

Hammond, 370 F. Supp. 2d at 243 (Only when socioeconomic effects somehow result from a projects environmental impact must they be considered.).

264 Olmstead Citizens for a Better Cmty., 606 F. Supp. at 974 (emphasis added) (holding that the Bureau of Prisons was not required to consider the impact on nearby property values resulting from a decision to convert a hospital facility to a medical center for federal prisoners).

265 Final Rule, Changes to Requirements for Environmental Review for Renewal of Nuclear Power Plant Operating Licenses, 64 Fed. Reg. 48,496, 48,502 (Sept. 3, 1999). The GEIS evaluation of socioeconomic impacts is also consistent with the NEPA principle that socioeconomic impacts are only be discussed if they are directly related to physical environmental effects. See GEIS at 4-99 (NYS00131B) (explaining that only those [socioeconomic impacts] directly affecting the natural and built environment are carried forward to the decision to renew an operating license).

266 See Final Rule, Changes to Requirements for Environmental Review for Renewal of Nuclear Power Plant Operating Licenses, 64 Fed. Reg. at 48,502.

79. In ruling on Entergys summary disposition motion, the Board recognized this key NEPA principle, finding that a question of fact existed regarding whether there was a reasonably close causal relationship between any changes to the physical environment resulting from the no-action alternative and New Yorks alleged property value impact.267 In other words, to meet its burden, New York must first establish that its alleged property value impacts are caused by physical environmental impacts from Indian Point.268

80. Turning to the second tenet of NEPA, the Board must apply a rule of reason in determining whether the NRC took the requisite hard look at the proposed actions environmental impacts and alternatives.269 Under the rule of reason, an EIS need not be so all-encompassing in scope that the task of preparing it would become either fruitless or well nigh impossible.270 An EIS must only furnish such information as appears to be reasonably necessary under the circumstances to evaluate the project.271 As the Commission explained:

There is no NEPA requirement to use the best scientific methodology, and NEPA should be construed in the light of reason if it is not to demand virtually infinite study and resources.

Nor is an environmental impact statement intended to be a research document, reflecting the frontiers of scientific methodology, studies and data. NEPA does not require agencies to use technologies and methodologies that are still emerging and under development, or to study phenomena for which there are not yet standard methods of measurement or analysis. And while there will always be more data that could be gathered, agencies must have some discretion to draw the line and move forward with decisionmaking. In short, NEPA allows agencies to select 267 Apr. 22, 2010 Order at 12.

268 The Board addresses this issue in Section IV.B of this Decision.

269 New York v. Kleppe, 429 U.S. 1307, 1311 (1976); see also U.S. Dept of Transp. v. Pub. Citizen, 541 U.S. 752, 767-69 (2004) (rule of reason is inherent in NEPA and its implementing regulations).

270 Kleppe, 429 U.S. at 1311 (citing Natural Res. Def. Council v. Callaway, 524 F.2d 79, 88 (2d Cir. 1975)).

271 Lee v. U.S. Air Force, 354 F.3d 1229, 1245 (10th Cir. 2004).

their own methodology as long as that methodology is reasonable.272

[N]or does NEPA require [resolution of] disagreements among various scientists as to methodology.273 When specialists express conflicting views, an agency must have discretion to rely on the reasonable opinions of its own qualified experts.274 Accordingly, in evaluating the parties economic models and countervailing criticisms, the Board is mindful that NEPA does not require adopting novel, untested methodologies or resolving disagreements at the frontiers of economic theory.275

81. Furthermore, the rule of reason does not call for certainty or precision, but an estimate of anticipated (not unduly speculative) impacts.276 As such, NEPA does not require consideration of future land-use development that is unlikely or difficult to anticipate.277 Therefore, even if New York establishes its alleged property value increase under the no-action alternative, the Board must determine whether that increase would result in any non-speculative land-use impacts.278

82. Third, in a license renewal proceeding, past plant construction and current operating experience establish the environmental baseline for purposes of a NEPA analysis.279 License renewal impacts, if any, are determined by assessing changes that may result from 272 Entergy Nuclear Generation Co. (Pilgrim Nuclear Power Station), CLI-10-11, 71 NRC 287, 315-16 (2010)

(citations omitted).

273 Pac. Gas & Elec. Co. (Diablo Canyon Power Plant Indep. Spent Fuel Storage Installation), CLI-08-26, 68 NRC 509, 518 n.51 (2008) (quoting Friends of Endangered Species, Inc. v. Jantzen, 760 F.2d 976, 986 (1985)).

274 Id. at 518 n.50 (quoting Marsh v. Or. Natural Res. Council, 490 U.S. 360, 378 (1989)).

275 The Board addresses this issue in Sections IV.C and D of this Decision.

276 La. Energy Servs., L.P. (Natl Enrichment Facility), CLI-05-20, 62 NRC 523, 536 (2005).

277 Socy Hill Towers Assn, 210 F.3d at 182.

278 The Board addresses this issue in Section IV.E of this Decision.

279 See Proposed Rule, Environmental Review for Renewal of Operating Licenses, 56 Fed. Reg. 47,016, 47,020 (Sept. 17, 1991) (NYS000125).

license renewal and comparing them to this baseline.280 Thus, the NRC uses existing conditions as the baseline from which to measure any different impacts from license renewal or alternatives to license renewal.281 In other words, the Board must take into account conditions as they exist today, both in terms of plant operations and the surrounding environment, and need not analyze or speculate about the effects of historical construction and operation that are already part of the current environmental baseline.282 C. Standard of Review and Evidentiary Burden of Proof

83. The Board reviews contested issues de novo.283 According to the Commission:

[W]hen resolving contentions litigated through the adversary process, [boards must] bring their own de novo judgment to bear. In such cases, boards must decide, based on governing regulatory standards and the evidence submitted, whether the applicant has met its burden of proof (except where the NRC Staff has the burden).284

84. With respect to NYS-17B, New York has the initial burden of going forward; i.e., it must provide sufficient evidence to support the claims made in the admitted contention.285 280 See id.

281 See CEQ Guidance on Consideration of Past Action in Cumulative Effects Analysis at 1-2 (June 24, 2005)

(CEQ Guidance) (ENT000146).

282 The Board addresses this issue in Section IV.D.1.b of this Decision.

283 Exelon Generation Co., LLC (Early Site Permit for Clinton ESP Site), CLI-05-17, 62 NRC 5, 39 (2005); La.

Energy Serv., L.P. (Claiborne Enrichment Ctr.), CLI-98-3, 47 NRC 77, 84 (1998).

284 Clinton, CLI-05-17, 62 NRC at 39.

285 AmerGen Energy Co., LLC (Oyster Creek Nuclear Generating Station), CLI-09-7, 69 NRC 235, 269 (2009)

(quoting Consumers Power Co. (Midland Plant, Units 1 & 2), ALAB-123, 6 AEC 331, 345 (1973)) (The ultimate burden of proof on the question of whether the permit or license should be issued is . . . upon the applicant. But where . . . one of the other parties contends that, for a specific reason . . . the permit or license should be denied, that party has the burden of going forward with evidence to buttress that contention. Once he has introduced sufficient evidence to establish a prima facie case, the burden then shifts to the applicant who, as part of his overall burden of proof, must provide a sufficient rebuttal to satisfy the Board that it should reject the contention as a basis for denial of the permit or license.) (emphasis in original), affd sub nom. N.J.

Envtl. Fedn v. NRC, 645 F.3d 220 (2011); see also Vt. Yankee, 435 U.S. at 554 (upholding this threshold test for intervenor participation in licensing proceedings); Phila. Elec. Co. (Limerick Generating Station, Units 1 &

2), ALAB-262, 1 NRC 163, 191 (1975) (holding that the intervenors had the burden of introducing evidence to demonstrate that the basis for their contention was more than theoretical).

As a general matter, an intervenor cannot meet its burden by relying on unsupported allegations and speculation.286 It must introduce sufficient evidence during the hearing phase to establish a prima facie case.287 If it does so, then the burden shifts to the applicant and the NRC Staff to provide sufficient evidence to rebut the intervenors contention.288

85. While the NRC Staff, not the applicant, has the burden of complying with NEPA,289 the applicant also has the burden of proof in this licensing proceeding if it becomes a proponent of the challenged portion of the Staffs FSEIS.290 From an evidentiary standpoint, the applicants and the NRC Staffs positions must be supported by a preponderance of the evidence.291 D. The Boards Decision Supplements and Amends the FSEIS

86. In accordance with these NEPA and administrative law principles, NRC hearings must focus on whether the NRC Staff has taken the required hard look at relevant, non-286 See Oyster Creek, CLI-09-7, 69 NRC at 268-70; see also Phila. Elec. Co. (Limerick Generating station, Units 1 & 2), ALAB-857, 25 NRC 7, 13 (1987) (stating that an intervenor may not merely assert a need for more current information without having raised any questions concerning the accuracy of the applicants submitted facts).

287 See Oyster Creek, CLI-9-07, 69 NRC at 268-70.

288 See, e.g., 10 C.F.R. § 2.325; La. Power & Light Co. (Waterford Steam Electric Station, Unit 3), ALAB-732, 17 NRC 1076, 1093 (1983) (citing Midland, ALAB-123, 6 AEC at 345).

289 See, e.g., Duke Power Co. (Catawba Nuclear Station, Units 1 & 2), CLI-83-19, 17 NRC 1041, 1049 (1983).

290 La. Energy Servs., L.P. (Claiborne Enrichment Ctr.), LBP-96-25, 44 NRC 331, 338-39 (1996) (citing Pub.

Serv. Co. of N.H. (Seabrook Station, Units 1 & 2), ALAB-471, 7 NRC 477, 489 n.8 (1978), revd on other grounds, CLI-97-15, 46 NRC 294 (1997)). As a practical matter, we note that Entergy and the NRC Staff are generally aligned in their positions; i.e., they both view the FSEIS offsite land use analysis as reasonable under NEPA and New Yorks criticisms of that analysis as legally and factually unjustified.

291 See Diablo Canyon, CLI-08-26, 68 NRC at 521 (ruling in favor of the NRC Staff and applicant because the record (which included written submissions and oral argument) by a preponderance of the evidence, indicated that the intervenors contention lacked merit); Pac. Gas & Elec. Co. (Diablo Canyon Nuclear Power Plant, Units 1 & 2), ALAB-763, 19 NRC 571, 577 (1984) (In order to prevail . . . , the applicants position must be supported by a preponderance of the evidence.). A preponderance of the evidence requires the trier of fact to believe that the existence of a fact is more probable than its nonexistence. Concrete Pipe &

Products of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602 (1993) (internal quotation marks omitted).

speculative environmental impacts.292 Thus, NRC hearings must focus on whether the NRC Staff has unduly ignored or minimized pertinent environmental effects.293 But it is not a game of gotcha, in which the Staffs work can be rejected based on trivial, speculative, regulatorily-foreclosed, or irrelevant considerations.294

87. In determining whether the environmental record in this proceeding is sufficient under NEPA and 10 C.F.R. Part 51, the Board considers the record as a whole, including the FSEIS and the evidentiary record for the hearing, as developed by the Board and the parties.295 As the Commission has explained:

Boards frequently hold hearings on contentions challenging the staffs final environmental review documents. In such cases,

[t]he adjudicatory record and Board decision (and . . . any Commission appellate decisions) become, in effect, part of the FEIS. Put another way, under our longstanding practice, the Staffs review (the FEIS itself) and the adjudicatory record will become part of the environmental record of the decision.296

88. Thus, after the Board considers the entire record of this proceeding, the FSEIS will be deemed supplemented by the Boards decisions on NEPA contentions and by any subsequent Commission decision.297 Likewise, the NRCs record of decision ultimately will 292 See LES, CLI-98-3, 47 NRC at 87-88; see also Balt. Gas & Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87, 97-98 (1983) (NEPA requires agency to take a hard look at environmental consequences prior to taking major action).

293 Duke Energy Corp. (McGuire Nuclear Station, Units 1 & 2; Catawba Nuclear Station, Units 1 & 2), CLI 17, 58 NRC 419, 431 (2003); see also Exelon Generating Co., LLC (Early Site Permit for Clinton ESP Site),

CLI-05-29, 62 NRC 801, 811 (2005) (There may, of course, be mistakes in the [EIS], but in an NRC adjudication, it is Intervenors burden to show their significance and materiality. Our boards do not sit to flyspeck environmental documents or to add details or nuances.) (internal quotes omitted).

294 See, e.g., Clinton, CLI-05-29, 62 NRC at 811.

295 See, e.g., Nuclear Innovation North America LLC (South Texas Project, Units 3 & 4), CLI-11-6, 74 NRC __,

slip op. at 7-8 (2011).

296 Id. (quoting LES, CLI-98-3, 47 NRC at 89).

297 Pilgrim, CLI-12-01, slip op. at 30 (citing La. Energy Servs., L.P. (Natl Enrichment Facility), CLI-05-28, 62 NRC 721, 731 (2005)).

include the Board and Commission decisions, which are based on the adjudicatory record.298 This process is codified at 10 C.F.R. § 51.102(c), which specifies:

When a hearing is held on the proposed action under the regulations in part 2 of this chapter or when the action can only be taken by the Commissioners acting as a collegial body, the initial decision of the presiding officer or the final decision of the Commissioners acting as a collegial body will constitute the record of decision. An initial or final decision constituting the record of decision will be distributed as provided in § 51.93.299

89. The Commission and its Boards have followed this process routinely and without exception, not only in the relatively-recent decisions cited above, but also in many more cases dating back decades.300 Under this well-established process, the Board may modify EIS conclusions and, if warranted, remedy an otherwise deficient EIS through its adjudicatory decision.301 The Commission may also do so on appeal.302 298 See, e.g., La. Energy Servs. L.P. (Natl Enrichment Facility), CLI-06-15, 63 NRC 687, 707 n.91 (Adjudicatory findings on NEPA issues, including our own in this decision, become part of the environmental record of decision and in effect supplement the FEIS.); LES, CLI-98-3, 47 NRC at 89.

299 Final Rule, Amendments to Adjudicatory Process Rules and Related Requirements, 77 Fed. Reg. 46,562, 46,600 (Aug. 3, 2012).

300 See, e.g., Diablo Canyon, CLI-08-26, 68 NRC at 526; Hydro Res., Inc. (P.O. Box 15910, Rio Rancho, NM 87174), CLI-01-04, 53 NRC 31, 53 (2001) ([T]he Presiding Officers incorporation into LBP-99-30 of a staff affidavit on costs and benefits also does not require FEIS supplementation . . . in an adjudicatory hearing, to the extent that any environmental findings by the Presiding Officer (or the Commission) differ from those in the FEIS, the FEIS is deemed modified by the decision.); Phila. Elec. Co. (Limerick Generating Station, Units 1 & 2), ALAB-819, 22 NRC 681, 705-07 (1985), affd in part and review otherwise declined, CLI-86-5, 23 NRC 125 (1986), remanded in part on other grounds sub nom. Limerick Ecology Action, Inc. v. NRC, 869 F.2d 719 (3d Cir. 1989); Niagara Mohawk Power Corp. (Nine Mile Point Nuclear Station, Unit 2), ALAB-264, 1 NRC 347 (1975).

301 S. Nuclear Operating Co. (Early Site Permit for Vogtle ESP Site), LBP-09-7, 69 NRC 613 (2009) ([T]he record now contains sufficient evidence on dry cooling to support a conclusion that dry cooling would not be preferable to the proposed wet cooling system at the Vogtle site. We thus conclude that the agencys NEPA obligations relative to the discussion of design alternatives have been satisfied with regard to dry cooling, and contention EC 1.3 is resolved on the merits in favor of the staff and SNC.) (emphasis added).

302 See Dominion Nuclear N. Anna, LLC (Early Site Permit for North Anna ESP Site), CLI-07-27, 66 NRC 215, 230 (2007) (But our own examination of the entire administrative record leads us to conclude that the Staffs underlying review was sufficiently detailed to qualify as reasonable and a hard look under NEPA - even if the Staffs description of that review in the FEIS was not. Our explanation below provides an additional detailed discussion as part of the record on the alternative site review. We direct the Staff to include a similar level of detail in future FEIS analyses of alternative sites.) (emphasis in original).

90. The Commission has repeatedly authorized supplementation through the hearing record, most recently last year, when it revised and clarified Section 51.102(c).303 The well-established process in Section 51.102(c), which governs the resolution of environmental issues following an adjudicatory hearing, requires the Board to consider the adjudicatory record as a whole when evaluating the environmental impacts of the proposed action, to supplement the FSEIS as necessary, and to modify the NEPA analysis and conclusions, if warranted.

91. The U.S. Courts of Appeals, across multiple circuits, have consistently upheld the NRCs practice as consistent with the AEA304 and NEPA.305 Supplementation through public hearings, moreover, is not confined to the NRC.306 The rationale for allowing supplementation through the hearing process is straightforwardthe NRCs hearing process allows for greater public participation than NEPA otherwise requires.307 In this respect, the Commission and the courts have uniformly rejected New Yorks argument that supplementing an EIS with the 303 See Final Rule, Amendments to Adjudicatory Process Rules and Related Requirements, 77 Fed. Reg. at 46,586, 46,600 (amending 10 C.F.R. § 52.102(c) to cover all hearings under 10 C.F.R. Part 2, without altering the meaning or intent of the regulation).

304 Nuclear Info. & Res. Serv. v. NRC, 509 F.3d 562 (D.C. Cir. 2007) (holding that supplementing an EIS through the hearing record does not violate the AEA).

305 Citizens for Safe Power, Inc. v. NRC, 524 F.2d 1291 1294 n.5 (D.C. Cir. 1975) (holding that the deemed modified principled did not depart from either the letter or the spirit of NEPA); Ecology Action v. AEC, 492 F.2d 998, 1001-02 (2nd Cir. 1974) (omissions from an FEIS can be cured by subsequent consideration of the issue in an agency hearing); New England Coalition on Nuclear Pollution v. NRC, 582 F.2d 87, 94 (1st Cir.

1978) (having no trouble finding that the NRCs supplementation process satisfies NEPA); see also Pub.

Serv. Co. of N.H. (Seabrook Station, Units 1 & 2), CLI-78-1, 7 NRC 1 (1978).

306 See, e.g., Pacific Alaska LNG Company, et al., 9 FERC ¶ 61,334, 61,709 (1979) ([T]he CEQ General Counsel suggests that the matter should also be considered in the FEIS because the Commission proceeding does not provide the broad public review and comment required by NEPA. We disagree. Our final decision will address this issue in detail, based on the record in the proceeding. All interested parties have had an opportunity to contribute to that record, and our decision will therefore be based on full information. This procedure fully comports with the letter and spirit of NEPA.) (citing Aberdeen & Rockfish R.R. v. SCRAP, 422 U.S. 289, 320-21 (1975); Citizens For Safe Power, Inc. v. NRC, 582 F.2d 87 (1st Cir. 1978)).

307 Hydro Res., CLI-01-04, 53 NRC at 53 ([T]he hearing process itself allows for additional and more rigorous public scrutiny of the FES than does the usual circulation for comment.) (quoting Limerick, 22 NRC at 707)

(emphasis added).

adjudicatory record in a contested proceeding would frustrate public participation in the NEPA process.308

92. Despite this definitive governing precedent, New York argues that the process of supplementing a final EIS with the hearing record is inconsistent with 10 C.F.R. § 51.92, which requires that the Staff prepare a supplemental EIS when there are substantial changes to the proposed action or new and significant information.309 According to New York, this regulation requires that an FSEIS supplement address any new and significant information brought to light during the hearing.310

93. New Yorks argument is incorrect for two reasons. First, despite Section 51.92s longstanding existence, the Commission has repeatedly authorized supplementation through the hearing record, most recently, in reaffirming and clarifying Section 51.102(c) last year.311 Second, [a] basic tenet of statutory construction, equally applicable to regulatory construction,

[is] that a statute should be construed so that effect is given to all its provisions.312 New Yorks claim that Section 51.92a more general regulation governing all EISs prepared by the NRC Staffforbids the supplementation of an EIS through the hearing record would render meaningless the more specific provisions in Section 51.102(c), governing resolution of environmental issues following an adjudicatory hearing. Because New Yorks argument would give no effect to Section 51.102(c), it must be rejected as a matter of law.313 308 See, e.g., New York Revised Position Statement at 6-9 (NYS000433).

309 See, e.g., id.

310 See id.

311 See Final Rule, Amendments to Adjudicatory Process Rules and Related Requirements, 77 Fed. Reg. at 46,586, 46,600.

312 Hydro Res., Inc. (P.O. Box 777, Crownpoint, New Mexico 87313), CLI-06-11, 63 NRC 483, 491 (2006).

313 Nor does the supplementation of an EIS through the hearing process necessarily mean that there is new and significant information. On the contrary, supplementation of the record through the Section 51.102 process is

94. None of the cases on which New York relies is relevant to interpreting the NRCs regulations in Part 51, nor do these cases establish that those regulations somehow undermine the NEPA public participation process. The only two arguably-pertinent cases were considered and distinguished by the NRC Appeal Boards decades ago. Appeal Boards determined that neither case applies to the NRC hearing process and those Appeal Board decisions remain binding in this proceeding and thus mandate that we reject New Yorks theory.314

95. First, New York cites the Second Circuits 1975 I-291 Why? decision, which invalidated an agency decision because subsequent studieswhich were not circulated for review and comment and were available only to agency officials and not the publicshowed that the EIS was inadequate.315 Later in 1975, in ALAB-262, the Limerick Appeal Board readily distinguished that case from circumstances identical to those here, where the NRCs hearing record supplemented the Staffs EIS.316 The Appeal Board found significant distinctions between the unpublished supplemental studies that the court invalidated in I-291 Why? and any supplemental NEPA analysis that may result from the NRCs contested, public adjudicatory proceeding.317 This proceeding is no different than that in Limerick, in that the environmental issues have been tested through a public, adversarial adjudicatory proceeding.

appropriate when the record of hearing shows no significant new picture of the environmental impacts of the proposed action. See Hydro Res., CLI-01-04, 53 NRC at 53.

314 New Yorks remaining authorities stand for the general principles that NEPA requires public participation in agency decisionmaking and the publication of relevant environmental information. See Minn. Pub. Interest Research Grp. v. Butz, 541 F.2d 1292 (8th Cir. 1976); Ohio Valley Envtl Coalition v. Hurst, 604 F. Supp. 2d 860 (S.D.W.Va. 2009); Custer Cnty. Action Assn v. Garvey, 256 F.3d 1024 (10th Cir. 2001); 40 C.F.R. § 1500.1(b); Natural Res. Def. Council v. Callaway, 527 F.2d 79 (2d Cir. 1975). These principles are not violated by Section 51.102(c) or the application of that regulation in this proceeding.

315 See I-291 Why? Assn v. Burns, 517 F.2d 1077, 1081 (2d Cir. 1975).

316 Limerick, ALAB-262, 1 NRC at 163.

317 See id. at 197 n.54.

96. Second, New York cites the First Circuits 1980 Grazing Fields Farms v.

Goldschmidt decision. In Grazing Fields, the First Circuit held that the Federal Highway Administrations reliance on certain studies and memoranda that were in the administrative record, but not incorporated into the EIS, was inappropriate.318 In 1985, however, the Appeal Board, in ALAB-819, a separate Limerick decision, easily distinguished Grazing Fields from supplementation through the NRC hearing process.319 Noting that the Grazing Fields decision did not even cite to the First Circuits earlier New England Coalition opinion upholding the NRCs hearing supplementation rule, the Appeal Board approved the licensing board applying Section 51.102 to explicitly amend the Limerick final environmental statement through its decision.320 Once again, the circumstances before this Board are no different. As in Limerick, the relevant environmental issues have been fully and rigorously ventilated through a public adjudicatory hearing, in which New York participated to protect its interests.321 ALAB-262 and ALAB-819 therefore control, and mandate the rejection of New Yorks argument.

97. In summary, Section 51.102(c), which governs the resolution of environmental issues following an adjudicatory hearing, requires that we consider the adjudicatory record as a whole when evaluating the NEPA issues presented in NYS-17B, to supplement the FSEIS as necessary, and to modify the NEPA analysis and conclusions, if warranted.322 318 Grazing Fields Farm v. Goldschmidt, 626 F.2d 1068 (1st Cir. 1980).

319 Limerick, ALAB-819, 22 NRC at 706 n.33.

320 See Limerick, ALAB-819, 22 NRC at 705-07 & n.33 (citing New England Coalition on Nuclear Pollution, 582 F.2d at 94). The Appeal Board also rejected the argument that certain changes made to Part 51 in 1984 required the recirculation of NEPA documents following a hearing, holding that section 51.102 serves the same purpose as its differently worded predecessor, incorporating the adjudicatory decision into the environmental record of decision. See id. As detailed above, the Commission and its Boards have uniformly followed this interpretation of Section 51.102 ever since.

321 See id. at 707.

322 See Final Rule, Amendments to Adjudicatory Process Rules and Related Requirements, 77 Fed. Reg. at 46,586, 46,600.

IV. FACTUAL FINDINGS AND LEGAL CONCLUSIONS A. Witnesses and Evidence Presented

1. Entergys Expert Witnesses

98. Entergy presented a three-person witness panel consisting of Mr. Cleary, Mr. Reamer, and Dr. Tolley. Entergys witnesses submitted written direct testimony and gave oral testimony at the evidentiary hearing.323

99. Mr. Cleary is an Environmental Safety Consultant with Talisman International, LLC.324 He holds a Bachelor of Arts degree in Economics from the University of Massachusetts, Amherst and a Master of Arts degree in Economics from the University of Florida. He has more than thirty-eight years of professional experience in the nuclear industry, including more than twenty-five years with the NRC Staff. As an NRC Staff manager, Mr. Cleary oversaw the development of socioeconomic impact assessment methodologies for nuclear power plant construction and operation, including those for land-use and property value impact assessments.

Mr. Cleary has extensive experience developing and applying NRCs NEPA regulations and guidance and in evaluating offsite land-use and other socioeconomic impacts. In addition, from his time as a member of the NRC Staff, Mr. Cleary is familiar with the Indian Point site and surrounding areas.

100. Mr. Reamer is a Senior Regulatory and Nuclear Safety Consultant with Talisman International, LLC.325 He holds a Bachelor of Arts degree in Political Science from Ohio University, a J.D. degree from Duke University, and an L.L.M degree from the University of 323 Entergy Testimony at 1(ENT000132).

324 Mr. Clearys professional qualifications are provided in his statement of qualifications (ENT000133) and summarized in his testimony. See Entergy Testimony (ENT000132) at 1-5 (A3-4).

325 Mr. Reamers professional qualifications are provided in his statement of qualifications (ENT000140) and summarized in his testimony. See Entergy Testimony (ENT000132) at 5-6 (A7).

California at Berkeley. He has more than thirty years professional experience in the nuclear industry, including extensive experience with NRCs environmental protection, decommissioning, and waste management regulations and guidance. Prior to joining Talisman, Mr. Reamer was the Director of NRCs High-Level Waste Repository Safety Division, where he led the establishment of NRCs regulatory framework for a possible Yucca Mountain repository.

Mr. Reamer also was Deputy Director of NRCs Division of Waste Management, where he oversaw programs on environmental protection, nuclear facility and site decommissioning, and low-level waste management.

101. Dr. Tolley is the President of RCF Economic & Financial Consulting, Inc., and a Professor Emeritus of Economics at the University of Chicago.326 He holds Master and Doctorate degrees in Economics from the University of Chicago, where he has been a Professor or Professor Emeritus of Economics since 1966. He also hold an Honorary Doctoral degree from North Carolina State University, where he was a member of the faculty in the Department of Economics and Business from 1955 to 1966. Dr. Tolley has more than fifty years experience in the field of economics, and is an expert in assessing the economic benefits and costs of activities that may affect the environment and in developing and applying economic methodologies, such as hedonic models, to estimate potential direct and indirect impacts on property values and associated land-use changes. Dr. Tolley independently assessed the potential for property value impacts to areas surrounding Indian Point, which is documented in his report entitled, Property Value Effects of Indian Point License Renewal.327 As part of that assessment, Dr. Tolley 326 Dr. Tolleys professional qualifications are provided in his statement of qualifications (ENT000143) and summarized in his testimony. See Entergy Testimony (ENT000132) at 7-8 (A11).

327 Tolley Report (ENT000144).

visited the area around Indian Point to obtain a better understanding of current offsite land use and the potential for property value impacts.

102. Based on the foregoing, and the respective background and experience of Mr. Cleary, Mr. Reamer, and Dr. Tolley, the Board finds that all three Entergy witnesses are qualified to testify as experts relative to the issues raised in Contention NYS-17B.

2. NRC Staffs Expert Witnesses 103. The NRC Staff presented a three-person witness panel consisting of Mr. Rikhoff, Mr. Stuyvenberg, and Mr. Boska. The Staffs witnesses submitted written direct testimony and gave oral testimony at the evidentiary hearing.328 104. Mr. Rikhoff is a Senior Environmental Scientist and Socioeconomist in the NRC Division of License Renewal in the Office of Nuclear Reactor Regulation (NRR).329 He holds a Master of Science in International Economic Development and a Master of Regional Planning in Regional Environmental Planning from the University of Pennsylvania. He has twenty-three years experience with NEPA reviews and specializes in preparing EISs, environmental assessments, and comprehensive land-use and facility development planning studies.

Mr. Rikhoff was the principal Indian Point ER socioeconomics reviewer and prepared the FSEIS and DSEIS sections addressing license renewal socioeconomic impacts.

105. Mr. Stuyvenberg is a Project Manager in the NRRs Division of License Renewal.330 He holds a Master Degree in Environmental Management / Environmental Economics and Policy. He is NRRs NEPA alternatives subject-matter expert and has worked 328 NRC Staff Testimony (NRCR00081).

329 Mr. Rikhoffs professional qualifications are provided in his statement of qualifications (NRC000082) and summarized in his testimony. See NRC Staff Testimony (NRCR00081) at 1-4 (A.1, A.2(a), A.3(a)).

330 Mr. Stuyvenbergs professional qualifications are provided in his statement of qualifications (NRC000083) and summarized in his testimony. See NRC Staff Testimony (NRCR00081) at 1-4 (A.1, A.2(b), A.3(b)).

on the alternative analyses for nineteen EISs. Mr. Stuyvenberg managed the Indian Point license renewal environmental review and prepared the FSEIS no-action alternative evaluation.

106. Mr. Boska is a Senior Project Manager in the NRRs Division of Operating Reactor Licensing.331 In that role, Mr. Boska manages technical and regulatory reviews for licensing actions associated with his assigned nuclear power reactors. He was the NRCs Indian Point licensing project manager for almost seven years and, in that capacity, reviewed the Indian Point preliminary decommissioning cost estimates.332 He holds Bachelor of Science degrees in Physics from the University of North Carolina and in Nuclear Science from the University of Maryland-University College. He also holds a Master of Science degree in Electrical Engineering from the University of Pittsburgh. Mr. Boska attended the U.S. Navy Officer Nuclear Power School and held an NRC Senior Reactor Operator License at the H.B. Robinson Nuclear Plant.

107. Based on the foregoing, and the respective background and experience of Mr. Rikhoff, Mr. Stuyvenberg, and Mr. Boska, the Board finds that all three Staff witnesses are qualified to testify as experts relative to the issues raised in Contention NYS-17B.

3. New Yorks Expert Witness 108. New York presented testimony from one witness, Dr. Sheppard.333 Dr. Sheppard is an Economics Professor at Williams College, Williamstown, Massachusetts, where he was Chair of the Economics Department from 2007 to 2010.334 Before joining the Williams faculty, Dr. Sheppard was an Economics Professor at Oberlin College. Since 1979, Dr. Sheppard has 331 Mr. Boskas professional qualifications are provided in his statement of qualifications (NRC000084) and summarized in his testimony. See NRC Staff Testimony (NRCR00081) at 1-4 (A.1, A.2(c), A.3(c)).

332 In April 2012, Mr. Boska became the licensing project manager for Oconee Nuclear Station Units 1, 2 and 3.

333 New York Direct Testimony (NYSR00224).

334 Dr. Sheppards professional qualifications are provided in his statement of qualifications (NYS000208) and summarized in his testimony. See New York Direct Testimony (NYSR00224) at 1:21-3:17.

conducted research, written, lectured and taught on economic and regulatory policies as they impact housing, land use, house prices, and land values. He teaches or has taught and published articles on advanced microeconomic theory; economics of land, location, and the environment; environmental economics; public economics; urban economics; cities, regions and the economy; and housing market economics.

109. Based on the foregoing, and Dr. Sheppards background and experience, the Board finds that Dr. Sheppard is qualified to testify as an expert on housing markets and related economic modeling. The Board, however, has concerns about whether Dr. Sheppard has the necessary expertise to testify on the NRC decommissioning process and the physical environmental impacts allegedly caused by Indian Point and the no-action alternative. To ensure a full and complete record, however, we allowed Dr. Sheppard to fully testify on those and other issues at the hearing. It now appears that Dr. Sheppards testimony on NRCs decommissioning process and alleged physical environmental impacts from Indian Point might be excluded as going beyond his technical expertise. Nonetheless, given that the testimony is already in the record, as discussed in this Decision, the Board instead has simply chosen to admit that testimony, but to then give all evidence its appropriate weight (which may be no weight at all if the testimony is not properly supported or purely conclusory) in resolving this contentions merits.

B. New Yorks Postulated Changes in Property Values Are Not Directly Related to Significant Physical Environmental Impacts 110. Before addressing whether the record evidence substantiates some substantial unexamined property value impact as New York claims, we first examine whether NEPA requires the NRC to consider this issue. As discussed above, NEPA does not require the NRC to consider property value impacts that lack a reasonably close causal relationship to physical environmental impacts.335 In ruling on Entergys Summary Disposition Motion, the Board found that a question of fact exists on whether there is a reasonably close causal relationship between any changes to the physical environment resulting from the no-action alternative and New Yorks alleged property value impact.336 We address that issue next.

111. As a threshold matter, the Board observes that New York offered no evidence in its direct testimony connecting any physical impacts to Dr. Sheppards alleged property value impacts.337 For example, Dr. Sheppards direct testimony and expert report never discussed alleged noise, aesthetic, or radiological impacts from leaks to groundwaterthe issues that New York earlier argued in its legal pleadings were the causes of the alleged adverse property value impacts.338 New York did, however, offer as exhibits the GEIS and FSEIS, which conclude that noise, aesthetic, and groundwater impacts are SMALL (i.e., environmentally insignificant).339 112. Entergys witnesses, Dr. Tolley and Mr. Cleary, testified that New Yorks alleged property value impacts, if they exist at all, are not directly related to any physical environmental impact.340 Specifically, Mr. Cleary testified that noise, aesthetic, and radiological impacts are Category 1 issues that the GEIS resolves generically as having SMALL impacts.341 As Mr. Cleary noted, absent new and significant information, which New York has not alleged here, 335 Apr. 22, 2010 Order at 12-13.

336 Id. at 12.

337 See generally New York Direct Testimony (NYSR00224); Dec. 2011 Sheppard Report (NYSR00231).

338 See New York Summary Disposition Response at 7-8.

339 See GEIS at 4-3 to 4-6 (NYS00132B); FSEIS at 4-6, 4-43, 4-69 (NYS00133B). Notably, the FSEIS quotes New Yorks independent groundwater impact assessment, which confirmed that leaks to groundwater have SMALL environmental impacts. See FSEIS at 2-111 to 2-112 (NYS00133A).

340 See Entergy Testimony at 25 (A35), 83-84 (A111) (ENT000132).

341 See id. at 25 (A36).

the Commission has already determined these issues all have SMALL impacts.342 Further, as Entergy noted in its Position Statement, the FSEIS adopts these generic SMALL conclusions.343 113. In addition, Dr. Tolley testified that in published, peer-reviewed journal articles, economic researchers frequently cite public perception of risk and fear of nuclear power as the potential cause for nuclear power plant property value impacts, if such impacts do exist.344 Dr. Tolley also pointed out that throughout this proceeding, Dr. Sheppard referenced a number of these studies to support Dr. Sheppards claim that Indian Point has adverse property value impacts.345 114. In rebuttal, Dr. Sheppard conceded that his property value impact study does not distinguish between Entergys physical impacts and any other kind of impacts it might have on property values.346 Nonetheless, Dr. Sheppard testified that Indian Point indisputably has physical impacts on the environment including pollutant leaks, sirens, traffic impacts, and aesthetic impacts.347 Dr. Sheppard, however, never claimed that noise, aesthetics, traffic, and leaks directly caused significant physical impacts or directly caused the property value impacts allegedly found in his study.348 Instead, he only indicated that [t]hese are classic indicia of nuisances and are all physical impacts.349 Dr. Sheppard also did not refute Dr. Tolleys 342 See Entergy Testimony at 25 (A36) (ENT000132).

343 Entergy Position Statement at 30-31 (ENT000131) (citing FSEIS at 4-6, 4-43, 4-69 (NYS00133B)).

344 Entergy Testimony at 64 (A94) (ENT000132).

345 See id. at 83-84 (A111) (documenting Dr. Sheppards reliance on studies that have attributed potential relationships between the presence of nuclear power plants and property values to public perceptions and preferences).

346 New York Rebuttal Testimony at 13:3-5 (NYS000434); see also Oct. 22, 2012 Tr. at 2706:15-21 (Sheppard).

347 New York Rebuttal Testimony at 13:8-10 (NYS000434).

348 See id.

349 Id. at 13:10-11.

testimony suggesting that any adverse property value impacts more likely resulted from perception, risk, or fear.350 115. At the hearing, in response to Board questions, Dr. Sheppard for the first time asserted that the property value impacts his study allegedly identified were not caused by public perceptions.351 According to Dr. Sheppard, his study identified impacts caused by IP2 and IP3 commencing full power operations between 1974 and 1976, but that undue additional alarm regarding IP2 and IP3 operations was unlikely to have suddenly emerged during this period.352 We are not persuaded. Dr. Sheppards explanation is highly speculative because, as he admitted, in performing his study, he made no attempt to disaggregate the degree to which property value impacts were associated with public perception, fear, or alarm.353 Given Dr. Sheppards earlier reliance on economic studies citing fear of nuclear power as the cause for any property value impacts, any such impacts, if they exist, are likely the result of public perceptions of nuclear power.354 116. Furthermore, whatever the merits of Dr. Sheppards claim about perceptions during the 1974 to 1976 period,355 he certainly presented no affirmative evidence establishing particular physical impacts resulting from IP2 and IP3 commencing operations in this period.

For example, Dr. Sheppard presented no data indicating that the physical impacts from Indian Point would have increased after 1976, compared to before 1974. Based on common sense and 350 See Entergy Testimony at 64 (A94) (ENT000132).

351 Oct. 22, 2012 Tr. at 2650:14-2651:14 (Sheppard).

352 Id.

353 New York Rebuttal Testimony at 13:3-5 (NYS000434); see also Oct. 22, 2012 Tr. at 2706:15-21 (Sheppard).

354 See Entergy Testimony at 83-84 (A111) (ENT000132) (documenting Dr. Sheppards reliance on studies that have attributed potential relationships between the presence of nuclear power plants and property values to public perceptions and preferences).

355 Oct. 22, 2012 Tr. at 2651:1-9, 2706.:5-14 (Sheppard).

undisputed evidence provided in this proceeding, the Board believes it is likely that noise, aesthetic, and traffic impacts actually would have decreased after construction was completed and operations began.356 That leaves only alleged physical impacts from radiological leaks, which could not have impacted property values between 1974 and 1976, because those leaks were identified decades later.357 117. Dr. Sheppard essentially asserted that the alleged current LARGE physical impacts from leaks, noise, traffic, and aesthetics will dissipate over time under the no-action alternative.358 This claim, however, is inconsistent with expert testimony from Mr. Reamer, a decommissioning expert, indicating that there would be no significant physical changes associated with the no-action alternative for several decades.359 In particular, Mr. Reamer testified that once plant operations cease, the plants physical structures would remain relatively 356 IP1 construction began in 1956 and IP1 operations began before plans for IP2 and IP3 were even announced.

GEIS at C-89 (NYS00131G); Gene Smith, Con Edison Atomic Power Plant in Westchester Goes Critical, N.Y. Times, Aug. 3, 1962 (ENT000151). With regard to aesthetics, IP1 structures and operations, and IP2 and IP3 construction would have affected the local landscape for years before the 1974 to 1976 period. See, e.g.,

FSEIS at 2-2 (NYS00133A) (indicating that the IP1 superheater stack was the tallest structure on the Indian Point site). Likewise, there would have been traffic and noise associated with IP1 operation, and IP2 and IP3 construction through the 1960s and early 1970s. See GEIS at C-80 (NYS00131G) (indicating that there would have been as many as 2400 workers onsite during the early 1970s when both IP2 and IP3 were under construction); ConEd Pouring Half Block-Long Base for Atom Plant, N.Y. Times, Dec. 16, 1966 (ENT000173)

(Every three minutes today a big truck with a rotating drum filled with concrete from nearby Verplanck arrived at the waterfront to empty its load onto endless belts that feed the concrete into a hopper . . . .).

357 Further, New Yorks own independent assessment concluded that those leaks have only minimal impacts. See FSEIS at 2-110, 2-112 (NYS00133A) (indicating that New York concluded that there are no known impacts to any drinking water source and that [n]o contaminated groundwater is moving toward surrounding properties).

358 See Oct. 22, 2012 Tr. at 2619:4-8 (Sheppard) (Im not arguing that 100 percent of the disamenity will be removed, just that there will be some change in the pattern of disamenity that will result in changes in property value, and hence, changes in land use.); id. at 2637:6-17 (Sheppard) (stating that while some nuisances would remain the same after cessation of operations, others would or could be decreased. . . .There may be fewer alarms going off and less traffic of workers going in and out.).

359 See id. at 2617:7-11 (Reamer) (After cessation of operations, [t]he plant will remain, the spent fuel will remain, the impacts like view of the plant, noise, traffic remain unchanged, small, so in those terms theres not a significant change that happens the day the plant shuts down.) (emphasis added); see also id. at 2708:20-2709:16 (Reamer).

unchanged for decades, as would aesthetic, noise, and traffic impacts.360 New York, on the other hand, has not provided evidence to the contrary.

118. Moreover, Dr. Sheppard provided no analysis and cited no facts supporting his generalized assertion of current significant physical impacts resulting from Indian Point operations. He did not, for example, refute the FSEIS and GEIS findings that noise, aesthetics, traffic, and leaks would have only SMALL impacts.361 Specifically, the FSEIS finds that impacts from traffic and leaks to groundwater during the period of extended operation would be SMALL and Dr. Sheppard offered no evidence to undermine those conclusions.362 Further, pursuant to Table B-1, noise and aesthetic impacts are resolved generically as Category 1 issues with SMALL impacts for all plants, including Indian Point.363 To the extent that Dr. Sheppard attempts to challenge these findings as they relate to Indian Point, that challenge is not permitted in this proceeding.364 Because any environmental impacts from noise, aesthetics, traffic, and leaks are not detectable or are so minor that they will neither destabilize nor noticeably alter any important attribute of the resource,365 those impacts cannot significantly impact property values in a manner that requires consideration under NEPA.366 Logically, physical impacts that are already SMALL (i.e., undetectable or negligible) cannot be reduced under the no-action 360 Id. at 2617:7-11, 2708:20-2709:13 (Reamer).

361 See GEIS at 4-50, 4-83, 4-119 (NYS00131B); FSEIS at 4-6, 4-43, 4-69 (NYS00133B). The Board notes that there is no indication that Dr. Sheppard has any expertise or direct knowledge concerning the assessment of noise, aesthetic, or groundwater impacts to the environment.

362 See FSEIS at 2-104 to 2-114 (NYS00133A); id. at 3-12, 4-41 to 4-42, 4-47, 4-56, 4-61, 4-67 to 4-69 (NYS00133B).

363 10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1.

364 See Vt. Yankee, CLI-07-3, 65 NRC at 19-21; Turkey Point, CLI-01-17, 54 NRC at 22-23.

365 10 C.F.R. Pt. 51, Subpt. A, App. B, Tbl. B-1.

366 Even if New York had presented sufficient evidence about significant physical impacts that would somehow dissipate over time under the no-action alternative, Dr. Sheppard failed to point to any data connecting these physical impacts to his alleged property value recovery following the cessation of Indian Point operations.

alternative in a manner that would significantly increase property values, and certainly Dr. Sheppard provided no basis on which we could conclude that these SMALL impacts could generate LARGE property value impacts.

119. Based on the foregoing evidence, the Board finds that New York has not met its burden to establish that the alleged property value impacts are the direct result of significant physical impacts to the environment actually caused by license renewal or the no-action alternative.367 In fact, New York has not presented any credible or compelling evidence establishing any significant physical impacts, much less physical impacts that directly cause property value changes. In addition, we agree with Entergy that any such property value impacts, if they exist, are more likely the result of perceived risk and public aversion to nuclear power.368 Therefore, no further analysis of potential property value impacts is required by NEPA. Nevertheless, for completeness of the record, we next address the parties claims regarding the type and magnitude of any alleged property value impact.

C. The FSEIS Evaluates Offsite Land-Use Impacts In Accordance with NRC Guidance 120. Based on the preceding section, the Board finds that NEPA does not require that the FSEIS contain any further property value impact evaluation. Assuming, however, that it were necessary to address property value impacts, we must do so recognizing the full context in which the FSEIS was prepared, including, notably, the analysis in the earlier adopted GEIS.

Entergy and the NRC Staff noted throughout their written and oral testimony that the GEIS forms the basis for the Staffs environmental review guidance in NUREG-1555, Supplement 1, 367 See Apr. 22, 2010 Order at 12; see also Olmstead Citizens for a Better Cmty., 793 F.2d at 204-06 (finding the impact on nearby property values need not be considered absent any significant impacts on the physical environment) (emphasis added).

368 Entergy Testimony at 80 (A108), 83-84 (A111) (ENT000132).

Standard Review Plans for Environmental Reviews for Nuclear Power Plants: Environmental Standard Review Plan for Operating License Renewal.369 121. As Mr. Rikhoff and Mr. Cleary testified, GEIS Section 4.7.1 evaluates the potential for impacts to property values from nuclear power plants (using the title housing marketability impacts).370 Mr. Cleary also pointed out that this GEIS evaluation is based on the NRC Staffs extensive literature review, search of newspaper citations, survey of all nuclear utilities, and detailed case studies of seven nuclear power reactor sites, including Indian Point.371 Mr. Rikhoff and Mr. Cleary explained that the GEIS finds that at all case study sitesincluding Indian Pointlicense renewal would result in only small impacts, if any, on housing values and marketability.372 In reaching this conclusion, the GEIS notes that the prevailing belief of realtors and planners in communities surrounding the sites, including Indian Point, is that the nuclear plants have had little, if any, effect on the marketability or value of homes in the vicinity.373 GEIS Section C.4.4.2 summarizes the Indian Point-specific housing findings in more detail and, as Mr. Rikhoff and Mr. Cleary testified,374 similarly indicates that local realtors generally agree that housing values in neighboring communities have not been depressed because of Indian Points presence.375 369 Id. at 3-4 (A3), 29 (A41), 31-32 (A44); NRC Staff Testimony at 9-12 (A.12-A.13) (NRCR00081); see generally NUREG-1555, Supp. 1 (ENT00019B).

370 NRC Staff Testimony at 28 (A32) (NRCR00081); Entergy Testimony at 30 (A43) (ENT000132); see also GEIS at 4-101 to 4-103 (NYS00131B).

371 Entergy Testimony at 25 (A37) (ENT000132).

372 Id. at 30-31 (A43); NRC Staff Testimony at 14-15 (A.17) (NRCR00081).

373 GEIS at 4-103 (NYS00131B).

374 Entergy Testimony at 56-57 (A81) (ENT000132); NRC Staff Testimony at 14-15 (A.17) (NRCR00081).

375 GEIS § C.4.4.2 (NYS00131G).

122. As Dr. Sheppard testified in rebuttal, the GEIS acknowledges that there was some contrary evidence.376 For example, the GEIS reports that one local realtor claimed that more development in nearby communities would have occurred but for Indian Point.377 The GEIS, however, makes clear that these were isolated instances and that the overall balance of the evidence demonstrates, at most, small property value impacts.378 Thus, Dr. Sheppard focused on a few isolated observations, which were not indicative of most realtors and local planners experience, thereby ignoring the more broadly-founded overall conclusion.

123. In rebuttal, Dr. Sheppard also testified that the GEIS evaluation appears to be entirely anecdotal.379 Contrary to Dr. Sheppards suggestion that we should dismiss the GEIS analysis as subjective or unreliable,380 Mr. Cleary detailed the methodology followed in the GEIS, which included a review of construction and operational impacts and of data from U.S.

Census and local agencies.381 In preparing the GEIS, the NRC Staff supplemented that information with interviews with local government officials, planners, and realtors.382 The GEIS case study was thus far more comprehensive than Dr. Sheppard acknowledged. Although the GEIS methodology differed from Dr. Sheppards repeat-sales analysis (see Section IV.D.1 below), Dr. Sheppard offered no testimony indicating that the GEIS departs from well-accepted methodologies in the social sciences.383 We certainly see no reason why insights gleaned from 376 New York Rebuttal Testimony at 16:14-19:9 (NYS000434).

377 GEIS at C-83 (NYS00131G).

378 See id. at C-83 to C-84 (NYS00131G) (noting that [l]ocal realtors agree that housing values in communities neighboring the plant have not been deflated because of the presence of Indian Point and that IP2 and IP3 construction and operations did not significantly impact housing in the communities neighboring the plants).

379 New York Rebuttal Testimony at 17:1-3 (NYS000434).

380 Id.

381 Entergy Testimony at 29-30 (A42) (ENT000132).

382 Id.

383 See generally New York Rebuttal Testimony (NYS000434); Dec. 2011 Sheppard Report (NYSR00231).

those knowledgeable in a local market, such a realtors, ought to be discounted as anecdotal.

Accordingly, we find nothing unreasonable with the GEIS case study methodology.384 124. NUREG-1555, Supp. 1, the Staffs environmental review plan for license renewal, incorporates and builds on the lessons learned from the GEIS property value evaluation.385 Specifically, NUREG-1555, Supp. 1 states that [a]t all case study sites, only small impacts on housing value and marketability are projected to continue.386 Given this, NUREG-1555, Supp. 1 unsurprisingly directs the Staff to focus on issues it could not generically resolve in the GEISnamely identifying any impacts resulting from possible changes during the license renewal term (i.e., any plant workforce-related changes or development caused by potential changes in the plants PILOT and tax payments).387 125. Consistent with the GEIS and NUREG-1555, Supp. 1, FSEIS Section 4.4.3 evaluates the potential for license renewal offsite land-use impacts that might result from plant-related population growth and local tax-related development.388 The FSEIS concludes that there would be no population-related or tax-revenue-related impacts during the license renewal term beyond what is currently experienced.389 Based on those evaluations, the FSEIS finds that offsite land-use impacts from license renewal would be SMALL.390 384 Pilgrim, CLI-10-11, 71 NRC at 315-16 (citations omitted) (NEPA allows agencies to select their own methodology as long as that methodology is reasonable.). See also Final Rule, Environmental Review for Renewal of Nuclear Power Plant Operating Licenses, 61 Fed. Reg. at 28,474 (explaining that [t]he review of a Category 2 issue may focus on the particular aspect of the issue that causes the Category 1 criteria not to be met in the GEIS) (NYS000127).

385 NUREG-1555, Supp. 1 at 4.4.1-3 (ENT00019B).

386 Id. at 4.4.1-3.

387 Id. at 4.4.3-4.

388 See FSEIS § 4.4.3 (NYS00133B); see also NRC Staff Testimony at 10-12 (A.12-A.13) (NRCR00081);

Entergy Testimony at 40-41 (A59-61), 48-49 (A72) (ENT000132).

389 FSEIS at 4-46 to -47 (NYS00133B) (Since Entergy has indicated that it has no plans to add nonoutage employees during the license renewal period, there would be no noticeable population change to drive changes in land use conditions in the vicinity of IP2 and IP3 that is attributable to the plant. Therefore, there would be no population-related land use impacts during the license renewal term beyond those already being 126. New York has not challenged that the FSEIS properly evaluates population-related and tax-related impacts.391 The Board thus finds that, consistent with the GEIS and NUREG-1555, Supp. 1, the FSEIS offsite land-use license renewal impact evaluation focuses on the issues identified in GEIS and NRC guidancepopulation-related and tax-related impacts.392 127. Furthermore, New York presented little evidence suggesting that the FSEIS is otherwise inconsistent with NRC Staff guidance in NUREG-1555, Supp. 1 or the GEIS. The notable exception was New Yorks assertion that NUREG-1555, Supp. 1 Section 2.2.8 (Socioeconomic Factors) provides for an inclusive approach that does not endorse excluding property values as a driver for offsite land-use impacts.393 New York argued that because this guidance lists detailed socioeconomic information that should be included in an FSEIS, it supports the need for a property-value-driven offsite land-use evaluation. Notably, New Yorks argument was not supported by any expert testimony.

128. The Board finds that NUREG-1555, Supp. 1 does not support New Yorks broad argument that the NRC Staff must consider potential property value changes as part of its FSEIS offsite land-use evaluation. As New York pointed out, NUREG-1555, Supp. 1 Section 2.2.8 lists specific information that should be included in the FSEIS, including regional housing data and experienced. . . . The NRC staff expects that there would be no increase in the assessed value of IP2 and IP3 and that the annual payment-in-lieu-of-taxes and property taxes paid . . . would remain relatively unchanged throughout the license renewal period. Based on this information, there would be no tax-revenue-related land use impacts during the license renewal term beyond those currently being experienced.).

390 See id. at 4-70.

391 See generally New York Petition at 168-74; New York Direct Testimony (NYSR00224); New York Rebuttal Testimony (NYS000434).

392 See Final Rule, Environmental Review for Renewal of Nuclear Power Plant Operating Licenses, 61 Fed. Reg.

at 28,474 (explaining that [t]he review of a Category 2 issue may focus on the particular aspect of the issue that causes the Category 1 criteria not to be met in the GEIS) (NYS000127).

393 New York Revised Position Statement at 17-18 (NYS000433).

land-use planning information.394 The FSEIS, however, includes such information.395 Furthermore, as Mr. Rikhoff and Mr. Cleary testified,396 rather than suggest that a property values analysis is necessary, NUREG-1555, Supp. 1 states that [a]t all case study sites, only small impacts on housing value and marketability are projected to continue.397 The Board thus finds that New York has not identified any material way in which the FSEIS evaluation of license renewal offsite land-use impacts is inconsistent with NRC Staff guidance in NUREG-1555, Supp. 1.

129. New Yorks remaining claim is that the FSEIS should have reached a conclusion contrary to the GEIS and NUREG-1555, Supp. 1, and given credence to New Yorks assertion that the no-action alternative would precipitate increased property values, resulting in positive impacts to land use.398 That issue, however, concerns the adequacy of the FSEIS, not whether it is consistent with the GEIS or NUREG-1555, Supp. 1. We next address that claim, but note that any challenges to a review that is consistent with Staff guidance must be specifically and substantially supported in order to overcome the special weight accorded to such documents.399 As discussed in the remainder of this Decision, New York failed to establish that such a property 394 Id.

395 See FSEIS at 2-114 to -116, 2-121 to 2-123 (NYS00133A-B) (providing background information on housing in the areas around Indian Point, including the closest four counties where approximately 84 percent of the permanent Indian Point workforce resides (i.e., Dutchess, Orange, Putnam, and Westchester Counties)).

396 NRC Staff Testimony at 14-15 (A.16-A.18) (NRCR00081); Entergy Testimony at 31-32 (A44) (ENT000132).

397 NUREG-1555, Supp. 1 at 4.4.1-3 (ENT00019B) (emphasis added).

398 See New York Direct Testimony at 8:1-12 (NYSR00224).

399 See NextEra Energy Seabrook, LLC (Seabrook Station, Unit 1), CLI-12-05, 75 NRC __, slip op. at 16 n.78 (Mar. 8, 2012); Yankee Atomic Elec. Co. (Yankee Nuclear Power Station), CLI-05-15, 61 NRC 365, 375 n.26 (2005) (We recognize, of course, that guidance documents do not have the force and effect of law.

Nonetheless, guidance is at least implicitly endorsed by the Commission and therefore is entitled to correspondingly special weight.) (citations and internal quotation marks omitted); Private Fuel Storage, L.L.C. (Indep. Spent Fuel Storage Installation), CLI-01-22, 54 NRC 255, 264 (2001) (Where the NRC develops a guidance document to assist in compliance with applicable regulations, it is entitled to special weight.), petition for review held in abeyance, Devia v. NRC, 492 F.3d 421 (D.C. Cir. 2007).

value increase would occur under the no-action alternative, or that it would occur with the certainty necessary to meet this heightened burden.

D. Property Value Impacts Would Be SMALL Under the Proposed Action (License Renewal) and MODERATE Adverse Under the No-Action Alternative 130. Assuming that it was necessary to address property value impacts beyond the GEIS discussion of that issue, the following discussion, based on this proceedings entire record, addresses New Yorks claim of significant unexamined property value impacts. On this issue, the parties offered differing expert opinions about the validity and conclusions of competing methodologies for estimating property value impacts. According to Dr. Sheppard, his repeat-sales analysis demonstrated that the no-action alternative would increase property values in the communities surrounding Indian Point by more than $1.07 billion over some period of time.400 131. On the other hand, Dr. Tolley testified that Dr. Sheppards $1.07 billion estimate is unreliable because Dr. Sheppard made incorrect assumptions and did not adhere to well-established economic methodologies.401 Dr. Tolley testified that his independent hedonic modeling demonstrates that there is no scientific basis that Indian Point depresses property values.402 According to Dr. Tolley, if no disamenity-related property value increase takes place after operations end (contrary to Dr. Sheppards claim that it would), and the present value of lost PILOT payments is considered, then the loss of PILOT payments would result in a net $182 million negative impact under the no-action alternative.403 132. In addition, Dr. Tolley argued that Dr. Sheppard never properly compared the no-action alternative to license renewal. Dr. Tolley testified that, even if one assumed that non-400 New York Direct Testimony at 7:10-19 (NYSR00224).

401 Entergy Testimony at 111-13 (A141) (ENT000132).

402 Id. at 130-131 (A162).

403 Id. at 106 (A133); Oct. 22, 2012 Tr. at 2631:7-19 (Tolley).

renewal would produce a $1.07 billion property value impact if one focused only on the long-term removal of Indian Points physical structures after decommissioning, such a focus told only part of the story. He explained that the no-action alternative would result in a net overall decrease in property values of $164 million when one properly discounted the $1.07 billion to present value to take account of the 60-year decommissioning period, and the present value of lost PILOT payments were also properly recognized.404 133. The Board has considered these widely-differing expert opinions. Given the overall weight of the evidence, however, we find that New Yorks criticisms are insufficient for us to conclude that current Indian Point operations cause a substantial negative impact on nearby property values, or that the no-action alternative would cause a substantial increase in those values. As discussed in more detail below, we find on behalf Entergy and the NRC Staff for three primary reasons. First, Dr. Sheppards $1.07 billion property value estimate, which is based on an event study or repeat-sales approach, relied on questionable assumptions and was developed contrary to generally-accepted economic methodologies.405 Second, Dr. Tolleys Indian Point-specific property value assessments, which use widely-accepted hedonic price modeling, suggest a different result. They indicate that proximity to Indian Point does not adversely impact residential property values within Indian Points vicinity, such that there is no property value rebound to be had under the no-action alternative.406 Third, even assuming Dr. Sheppards asserted disamenity-related $1.07 billion gain, that future, long-term gain (which must be discounted to current dollars) would be offset by the near-term loss of PILOT payments, resulting in a net $164 million negative impact under the no-action alternative. Thus, given the 404 Entergy Testimony at 111-13 (A141) (ENT000132).

405 Id.

406 See id. at 130-31 (A162).

absence of any significant property value impacts, we find that there are no unexamined property value-driven land-use impacts under the no-action alternative.

1. Dr. Sheppards Property Value Impact Evaluation Relied on Questionable Assumptions and Departed from Standard Economic Methods 134. As an initial matter, we address Dr. Sheppards December 2011 analysis, which presented his $1.07 billion property value impact calculation.407 As discussed below, the Board cannot accept Dr. Sheppards $1.07 billion calculation as a reasonable estimate for the amount property values might increase under the no-action alternative.

a. Background on Dr. Sheppards December 2011 Analysis 135. Based on his December 2011 analysis, Dr. Sheppard testified that the no-action alternative would increase residential property values in the communities surrounding Indian Point by more $1.07 billion (i.e., by more than 27 percent of their value in January 2011).408 Dr. Sheppards direct testimony stated that his assessment was similar in spirit to event studies that are used to study stock values and other financial assets.409 Dr. Sheppard later suggested that his new study was actually similar to repeat-sales studies that are occasionally used in the housing context.410 Whether treated as an event study or as a repeat-sales study, this new approach significantly departed from the approach taken in his earlier reports, which were based on a 1974 coal plant hedonic study.411 This new approach also predicted a positive no-action alternative impact that was more than four times greater than Dr. Sheppards last 407 December 2011 Sheppard Report at 12 (NYSR00231).

408 New York Direct Testimony at 7:12-19 (NYSR00224).

409 December 2011 Sheppard Report at 3-4 (NYSR00231).

410 New York Rebuttal Testimony at 7:12-16 (NYS000434); Oct. 22, 2012 Tr. at 2602:13-17 (Sheppard).

411 See 2007 Sheppard Report at 2-3 (NYS000226); Glenn Blomquist, The Effect of Electric Utility Power Plant Location on Area Property Value, 50 Land Econ. 97 (Feb. 1974) (Blomquist Coal Study) (NYS000234).

estimate.412 Because Dr. Sheppards testimony did not rely on his earlier evaluations and he regards the last report as his best, preferred estimate, this Decision focuses on his most recent December 2011 evaluation.413 136. Dr. Sheppards December 2011 analysis defined IP2 and IP3 commencing full power operations from 1974 to 1976 as an event.414 Dr. Sheppard hypothesized that anyone who held properties within 3.1 miles of Indian Point during that event would have suffered a property value decline, resulting in a lower return on that property than if they held property entirely before 1974 or entirely after 1976.415 Under his thinking, those who held property only before 1974 would not have had their returns affected because the event had not yet occurred.

Those who owned property solely after 1976 would be similarly unaffected because the event had already occurred.

137. To test his hypothesis, Dr. Sheppard first selected a sample of properties sold between 1999 and 2009.416 Focusing on these properties, he then obtained historical information for pre-1999 sales of these properties.417 Dr. Sheppard counted these previous sales as additions to his data set.418 Dr. Sheppard then compared returns on properties which were held from before 1974 to after 1976, called the treatment group, to returns on properties held entirely 412 See 2011 Sheppard Report at 5-6 (NYS0000230) (claiming that license renewal imposes a cost on local communities whose present value is between $169 and $238 million).

413 See Oct. 22, 2012 Tr. at 2571:17-21 (Sheppard) (agreeing with Judge Wardwells statement that the Board should focus only on the fifth analysis that [Dr. Sheppard] ran). Nevertheless, we consider the changing nature of Dr. Sheppards various estimates and methodologies in evaluating his most recent opinion.

414 New York Direct Testimony at 29:6-13 (NYSR00224); Dec. 2011 Sheppard Report at 8 (NYSR00231).

415 See New York Direct Testimony at 30:14-32:16 (NYSR00224); Dec. 2011 Sheppard Report 4-9 (NYSR00231).

416 December 2011 Sheppard Report at 5-6 (NYSR00231).

417 Id.

418 Id.

before 1974 or entirely after 1976, called the control group.419 He expected to find lower returns for the treatment group than for the control group, and attributed the expected difference to IP2 and IP3 commencing operations.420 138. Dr. Sheppard performed a statistical regression analysis on these data and reported that the treatment group annual nominal rates of return were approximately 3 percent lower than the control group rates of return.421 He concluded that the difference between the control group return and the treatment group return estimated IP2s and IP3s operational impacts.

139. Dr. Sheppard then used 2000 census data to estimate the total value of all residential properties within 3.1 miles of Indian Point and used a house price index to calculate that value at the end of 1976.422 Using these values, he calculated the total reduction in property values as of December 1976, factoring in the lower average annual nominal rate of return for the control group (i.e., about 3 percent) and the average time that residential property is held (i.e.,

about 8 years).423 He then used the house price index to translate these values to residential property values as of January 2011.424 According to Dr. Sheppard, this lost value is $1.07 billion in January 2011 dollars.425 Dr. Sheppard acknowledged that his $1.07 billion calculation is, ultimately, only an impact estimate for IP2 and IP3 commencing operations, and that he is 419 See New York Direct Testimony at 29:16-32:16 (NYSR00224).

420 See id.

421 See December 2011 Sheppard Report at 9 (NYSR00231).

422 New York Direct Testimony at 34:6-15 (NYSR00224).

423 Id. at 34:6-36:13.

424 Id. at 38:11-23.

425 See id.

assuming that when IPEC is gone and the site is restored these changes will be undone.426 140. Departing from his earlier methods, Dr. Sheppards new analysis did not specifically predict when the $1.07 billion recovery would happen and thus gave no explicit consideration to the decommissioning period and how that could affect the timing by which his property value increase would occur.427 Also, unlike his January 2011 Report, Dr. Sheppard did not apply a discount rate to estimate the difference between license renewal and the no-action alternative.428 Nor did his evaluation account for PILOT or property tax payments as was done in his January 2011 Report.429

b. Dr. Sheppards December 2011 Analysis Improperly Assumed the Property Value Recovery Will Equal the Alleged 1974-1976 Historic Operational Impact 141. As noted above, Dr. Sheppards prefiled testimony indicated that his $1.07 billion calculation is actually an impact estimate that was associated with IP2 and IP3 commencing operations.430 We note, however, that these historic operational impacts are only material under NEPA to the extent that they provide us with information about any present day or future changes that may result from the no-action alternative.431 Because Dr. Sheppard assumed that when IPEC is gone and the site is restored these changes will be undone,432 we explored the validity of this assumption at the hearing.

426 Id. at 39:3-16; see also Oct. 22, 2012 Tr. 2585:8-20 (indicating that Dr. Sheppard was assuming property values would rebound the same amount so that the effect will undo itself).

427 See December 2011 Sheppard Report at 1, 12 (NYSR00231).

428 Compare January 2011 Sheppard Report at 5 (NYS0000230), with December 2011 Sheppard Report (NYSR00231).

429 Compare January 2011 Sheppard Report at 4-6 (NYS0000230), with December 2011 Sheppard Report (NYSR00231).

430 New York Direct Testimony at 39:3-16 (NYSR00224).

431 See CEQ Guidance at 1-2 (ENT000146). For more detailed discussion of the legal basis for this conclusion, see Section III.B, above.

432 New York Direct Testimony at 39:3-16 (NYSR00224).

142. When asked about this assumption, Dr. Sheppard reiterated that he simply assumed the initial operational property value effect will undo itself under the no-action alternative.433 Dr. Sheppard, however, could offer no evidence to support the assumption that the alleged initial operational impact would simply equally reverse itself once operations cease.434 He did not, for example, attempt to validate that assumption by examining what has actually happened at decommissioned nuclear plants.435 143. On the other hand, Dr. Tolley testified about extensive research that well-respected economists performed at two nuclear power plantsthe operating Diablo Canyon plant and the decommissioned Rancho Seco plant.436 As Dr. Tolleys testimony made clear, the Rancho Seco and Diablo Canyon studies suggest that neither operating nor decommissioned plants depress property values.437 These studies therefore undermine Dr. Sheppards assumption about any historic property value impact reversing itself because they suggest that an operating plant and a decommissioned plant impact property values in the same manner. Reliance on these studies is reasonable given their publication in recognized journals and Dr. Tolleys discussion of them.438 Moreover, NEPA does not require that the NRC conduct original research reflecting the frontiers of scientific methodology to verify Dr. Sheppards assumption.439 144. Because Dr. Sheppard did not offer a persuasive justification for his assumption that any initial operational impact would equally reverse itself once operations cease, the Board 433 Oct. 22, 2012 Tr. at 2585:8-20 (Sheppard).

434 Id.

435 Id. at 2620:16-23 (Sheppard).

436 Entergy Testimony at 65 (A95) (ENT000132).

437 Id. at 65-66 (finding in both cases that proximity to these plants resulted in increased property values, though in neither case was the finding statistically significant).

438 See id.

439 Pilgrim, CLI-10-11, 71 NRC at 315-16 (2010) (citations omitted).

finds that Dr. Sheppards $1.07 billion calculation is an unreasonable estimate of the amount that property values might increase under the no-action alternative. As such, the Board finds that Dr. Sheppards $1.07 billion estimate is highly speculative and, if anything, represents an estimate of historical impacts that are already part of the current environmental baseline.440

c. Dr. Sheppards 1974-1976 Historic Operational Impact Calculation Departed From Well-Accepted Economic Methods 145. As the preceding section demonstrates, at best, Dr. Sheppard estimated historical impacts that are already part of the current environmental baseline.441 Dr. Tolley and Mr. Stuyvenberg both offered substantial and probative testimony challenging the reasonableness of Dr. Sheppards billion dollar estimate, even as a historical plant operational impact estimate.442 Dr. Sheppards rebuttal testimony contained essentially no response to these criticisms.443 Dr. Sheppards responses to these arguments were offered, for the first time, at and after the hearing, as discussed below.444 (i) Dr. Sheppard Incorrectly Defined 1974 to 1976 As the Event of Interest 146. Dr. Tolley and Mr. Stuyvenberg both testified that Dr. Sheppard defined his event for estimating IP2 and IP3 operational impacts in an inherently unreliable manner that did not account for anticipatory effects or other socioeconomic factors unrelated to Indian 440 See Proposed Rule, Environmental Review for Renewal of Operating Licenses, 56 Fed. Reg. at 47,020 (NYS000125); CEQ Guidance at 1-2 (ENT000146).

441 As a general matter, NEPA does not require that NRC separately analyze the effects of past actions. See CEQ Guidance at 2 (ENT000146).

442 Entergy Testimony at 107-132 (A134-63) (ENT000132); NRC Staff Testimony at 23-28 (A.32)

(NRCR00081).

443 See generally New York Rebuttal Testimony (NYS000434).

444 Oct. 22, 2012 Tr. at 2686:19-2687:24, 2691:6-2692:4; Sheppard Supplemental Declaration (NYS000465);

New York Supplemental Rebuttal Testimony (NYS000467).

Points operations.445 As Dr. Tolley pointed out, Dr. Sheppards direct testimony recognized that his study is only valid to the extent his event (i.e., IP2 and IP3 commencing operations) can be described as a single significant change in the community whose location and timing can be determined unambiguously.446 According to Dr. Tolley, Dr. Sheppards study did not meet this requirement because it did not consider that any IP2 and IP3 impact could not be unambiguously determined because of possible other cofounding events, such as the oil embargo and the associated 1973 to 1975 recession.447 147. Dr. Tolley also testified that Dr. Sheppards study did not consider that news events affect real estate prices and news about IP2 and IP3 substantially pre-dated the 1974 to 1976 period.448 As Dr. Tolley explained in his written testimony and at hearing, plans for IP2 and IP3 were publicized well before the facilities commenced operations.449 As Dr. Tolley noted, Dr. Sheppard himself acknowledged that property value changes occur at the moment that buyers and sellers in the marketplace become aware of new information.450 According to Dr. Tolley, this means that if IP2 and IP3 operations were expected to have a disamenity effect,451 then buyers would have accounted for such an effect once Indian Points expansion 445 Entergy Testimony at 124-125 (A151-53) (ENT000132); NRC Staff Testimony at 23-24 (A.32)

(NRCR00081).

446 December 2011 Sheppard Report at 3 (NYSR00231).

447 Entergy Testimony at 128 (A158) (ENT000132).

448 Id. at 124-125 (A152-53).

449 Id. at 125 (A153); Oct. 22, 2012 Tr. at 2588:1-11 (Tolley); see also Indian Point Park Bought By Edison, N.Y.

Times, Oct. 9, 1954, at 18 (ENT000170); Edison Will Build Atom Power Plant, N.Y. Times, Feb. 11, 1955, at 1 (ENT000171); M. Folsom, 2nd Atom Generator Planned by Con Ed, N.Y. Times, Oct. 30, 1965, at. 1 (ENT000172); P. Millones, Con Ed Approves 3d Nuclear Unit at Indian Point, N.Y. Times, Apr. 26, 1967, at 50 (ENT000153); ConEd Pouring Half Block-Long Base for Atom Plant, N.Y. Times, Dec. 16, 1966 (ENT000173); Con Edison Leases Nuclear Fuel Cores, N.Y. Times, May 27, 1971 (ENT000174).

450 December 2011 Sheppard Report at 3 (NYSR00231).

451 As noted above in footnote 102, a disamenity is an undesirable land use, activity, or neighborhood feature (e.g., freeway noise or polluting facilities) that may lower nearby property values. Oct. 22, 2012 Tr. at 2556:18-2557:6 (Sheppard); Tolley Report at 9 (ENT000144).

plans were first reported in the 1960smany years before Dr. Sheppards 1974 to 1976 event period.452 In other words, Dr. Tolley argued that anticipatory effects would have occurred before operations began because the public was aware that IP2 and IP3 were likely to operate (i.e., any operations-based property value impact would have occurred well before 1974 to 1976).453 148. When asked about pre-1974 anticipatory effects at the hearing, Dr. Sheppard acknowledged their presence, but claimed such effects would only make it more difficult for his study to find a statistically-significant difference between the treatment and control groups, which in turn would make it more difficult for him to detect any operations-based property value impacts.454 Dr. Sheppard thus implied that because his study found statistically-significant differences between the treatment and control groups, his study must have detected property value impacts caused by IP2 and IP3 commencing operations.455 149. We are not persuaded. As Dr. Tolley testified, any difference between the treatment and control group could reasonably be associated with other confounding events (e.g.,

the oil embargo and the associated 1973 to 1975 recession) or other socioeconomic factors unrelated to Indian Points operations.456 Although Dr. Sheppard speculated that such other factors (e.g., high interest and unemployment rates) might equally impact the treatment and control group,457 the Board agrees with Dr. Tolley that the unusual characteristics of Dr. Sheppards data set make this unlikely.458 Notably, Dr. Tolley testified that Dr. Sheppards 452 Entergy Testimony at 124-125 (A152-53) (ENT000132).

453 Id.

454 Oct. 22, 2012 Tr. at 2562:10-23, 2567:11-23, 2569:2-14 (Sheppard).

455 See id.

456 See Entergy Testimony at 128 (158) (ENT000132).

457 Oct. 22, 2012 Tr. at 2563:11-2564:1 (Sheppard).

458 See Tolley Report at 39 (ENT000144) (indicating that Dr. Sheppards control group was much more heavily weighted toward the post-1999 period than the treatment group observations). Moreover, as Dr. Tolley control group was much more heavily weighted toward the post-1999 period than the treatment group observations, meaning that broader societal factors which inevitably would have impacted property returns during these different time periods make a fair comparison between the control group and treatment group essentially impossible.459 In the Boards view, these other socioeconomic factors, which Dr. Sheppard did not control, made it difficult, if not impossible, for Dr. Sheppard to unambiguously identify any impacts solely attributable to IP2 and IP3 commencing operations.

150. In summary, based on the foregoing evidence, the Board finds that Dr. Sheppards December 2011 report failed to properly account for anticipatory effects on property values resulting from news about IP2 and IP3 that would have occurred long before the 1974 to 1976 event. He also failed to properly account for other socioeconomic factors that can just as plausibly explain his results. Given these defects, the Board has serious concerns about the reliability and reasonableness of Dr. Sheppards $1.07 billion impact estimate. Having noted this, we next evaluate the merits of Dr. Tolleys remaining criticisms of Dr. Sheppards analysis.

(ii) Dr. Sheppards Sample Extended Too Far Beyond the Event of Interest 151. Dr. Tolley testified that Dr. Sheppard departed from generally-accepted economic methods that require a short event study window.460 Narrowing the window studied to one of short duration ensures that other factors unrelated to Indian Point do not affect return rates.461 In response, Dr. Sheppard changed his position and suggested that his new study was actually testified, Dr. Sheppards approach also introduced undefined measurement error. Oct. 22, 2012 Tr. at 2588:15-25 (Tolley).

459 Entergy Testimony at 108-09 (A136), 116-17 (A146) (ENT000132).

460 Id. at 126-27 (A155-56).

461 Id.

similar to repeat-sales studies that are occasionally used in the housing context.462 152. Dr. Tolley maintained that, whether treated as an event study or repeat-sales study, Dr. Sheppards approach departed significantly from the important methodological requirements for such studies.463 As Dr. Tolley testified, an event study cannot be valid unless its sampling interval occupies a very small time window (i.e., days or months, not years).464 Dr. Tolley also testified that a proper repeat-sales study requires that [t]he characteristics of houses other than age and environmental quality must not have changed significantly between sales.465 As Dr. Tolley emphasized at the hearing, these are very stringent methodological requirements out of the economic literature that need to be followed to make this approach valid.466 Based on our review of the economic literature cited by Dr. Tolley, we agree.467 153. Contrary to these requirements, Dr. Sheppards sample contained property sales between 1999 and 2009, as well as historical sales for those properties dating before 1960.468 As such, Dr. Sheppards sample covered more than fifty years and necessarily introduced confounding information that could distort or camouflage any actual 1974 to 1976 impact.469 Put simply, during this lengthy period, vast changes might have occurred to affect property values new highways, better or worse schools, stronger or weaker job markets. Given this, it is simply 462 New York Rebuttal Testimony at 7:7-16 (NYS000434); Oct. 22, 2012 Tr. at 2602:13-17 (Sheppard).

463 Entergy Testimony at 126 (A154) (ENT000132).

464 Id. at 126-128 (A154-58).

465 Entergy Supplemental Testimony at 27 (A33) (ENT000592) (quoting R. Palmquist, Measuring Environmental Effects on Property Values without Hedonic Regressions, 11 Journal of Urban Economics 333, 335 (1982)

(Palmquist Article) (ENT000593)).

466 Oct. 22, 2012 Tr. at 2578:18-23 (Tolley).

467 See Palmquist Article (ENT000593); A. McWilliams and D. Siegel, Event Studies in Management Research:

Theoretical and Empirical Issues, 40 Acad. of Mgmt. J. 3 (1997) (ENT000176); J. Campbell, A. Lo, and A.

MacKinlay, The Econometrics of Financial Markets at 175 (1997) (ENT000177).

468 December 2011 Sheppard Report at 5-6 (NYSR00231).

469 See Entergy Testimony at 126-27 (A155) (ENT000132).

asking too much to believe that a rate of return difference was due only to IP2 and IP3 operations. This means that Dr. Sheppard failed to account for other changes affecting the annual nominal return that, almost necessarily, were present given the long study period.

Therefore, the Board finds that Dr. Sheppards analysis departed from the established economic methodologies, in turn raising further serious questions about the validity of Dr. Sheppards results.

(iii) Dr. Sheppard Used an Invalid Control Group 154. Dr. Tolley testified that Dr. Sheppards control group was invalid and unjustifiably biased his results.470 Dr. Tolley pointed out that Dr. Sheppards control group sales were much more likely to occur during the housing bubbles in 1984-1987 and 1999-2009 than his treatment group observations.471 According to Dr. Tolley, these sales during housing bubbles explain the higher returns in the control groupin short, property values skyrocketed to unprecedented levels during these periods giving a higher return rate than to the treatment group.472 To create a control group that would not be affected by these housing bubbles, Dr. Tolley modified Dr. Sheppards sample by removing all sales that occurred during the housing bubbles in 1984-1987 and 1999-2009.473 Dr. Tolley testified that when he eliminated these sales and reanalyzed Dr. Sheppards data, the results indicated that holding a property over the period 1974 to 1976 actually raised the rate of return (i.e., the average yearly rate of return for the control group was substantially lower than the treatment group returns, suggesting, under 470 Id. at 116-17 (A145-46).

471 Id. at 116-17 (A146), 121 (A149).

472 Id.

473 Id. at 120-22 (A149).

Dr. Sheppards theory, that Indian Point commencing operations actually raised property values).474 155. Although Dr. Sheppards June 2012 rebuttal testimony failed to address this criticism, a few days before hearing, Dr. Sheppard prepared Exhibit NYS000446, which contained a new analysis responding to Dr. Tolleys criticism.475 We admitted that exhibit over Entergys objection and allowed Dr. Sheppard to testify about his new analysis.476 Given that Dr. Sheppards analysis was disclosed just prior to hearing, we allowed Dr. Tolley to prepare supplemental testimony addressing Exhibit NYS000446,477 which we also admitted.478 156. At hearing, Dr. Sheppard explained that he reanalyzed his repeat-sales data and added indicator or dummy variables as an attempt to account for the housing bubbles.479 According to Dr. Sheppard, accounting for the housing bubbles with a dummy variable was econometrically much more sound than removing those observations.480 According to Dr. Sheppard, adding this dummy variable confirmed his original conclusion that the treatment group experienced an approximately 3 percent lower annual nominal rate of return.481 474 Id. at 123 (A150).

475 Oct. 22, 2012 Tr. at 2670:8-2671:20 (Sheppard).

476 Id. at 2674:2-4 (Judge McDade).

477 See id. at 2692:11-19 (Judge McDade); see generally Entergy Supplemental Testimony (ENT000592).

478 See Nov. 28, 2012 Tr. at 3181:14-3182:6 (Judge McDade) (admitting Entergy Supplemental Testimony (ENT000592)).

479 Oct. 22, 2012 Tr. 2688:11-15, 2691:6-2692:4 (Sheppard); New York Supplemental Rebuttal Testimony at 5:9-7:3 (NYS000467). A dummy or variable is a variable that takes a zero or one value to indicate which of two mutually-exclusive groups a given observation falls within (e.g., zero for non-housing bubble sales and one for housing bubble sales).

480 Oct. 22, 2012 Tr. 2691:18-2692:4 (Sheppard).

481 Id.

157. In his supplemental testimony, Dr. Tolley argued that Dr. Sheppards dummy variables did not properly control for the bias in Dr. Sheppards analysis.482 As Dr. Tolley explained, by definition, the treatment group contained purchases before 1974.483 Some of these observations may have benefited from the housing bubble, but Dr. Tolley noted that those observations necessarily would have had very long holding periods that would have diluted average annual returns.484 Because a greater number of treatment group observations involved long holding periods, they suffered from depressed average annual returns even for sales that took place during the housing bubbles.485 Again, there is common sense in thisa person who holds an asset that earns 5 percent for fifteen years and then earns 10 percent for the last five years earns a lower average annual return than a person who holds a similar asset but for only the last five years.

158. Dr. Tolley also indicated that the control group contained relatively few purchases unaffected by housing bubbles.486 Because many of these observations had relatively short holding periods and took place during a housing bubble, the control groups shorter holding periods inflated the average annual returns notwithstanding Dr. Sheppards dummy variables.487 Dr. Tolleys supplemental testimony demonstrated this point through a revised analysis that added a holding period variable along with Dr. Sheppards dummy variables.488 482 Entergy Supplemental Testimony at 25 (A32) (ENT000592).

483 Id.

484 Id. at 25-26 (A32).

485 Id.

486 Id. at 8 (A10), 22 (A29).

487 Id. at 25 (A32).

488 Id. at 27-29 (A33).

Dr. Tolleys results again showed that treatment group returns were actually higher than control group returns when one controlled for both housing bubbles and holding periods.489 159. New York did not object to Dr. Tolleys supplemental testimony, but instead filed another round of responsive testimony from Dr. Sheppard.490 Dr. Sheppards supplemental testimony claimed that the additional holding period variable was unnecessary because his analysis account[ed] for length of ownership [i.e., the holding period] by using the annual rate of return as the dependent variable.491 According to Dr. Sheppard, including this duplicative variable conflated impacts from the annual rate of return dependent variable.492 160. We find that Dr. Sheppards argument against using the holding period variable is unpersuasive. The Board fails to see how the annual rate of return variablewhich averages returns over the holding period yearsalready accounts for the holding period effect. Moreover, the correlation between the holding period and the annual rate of return variables was the very reason that Dr. Tolley included the holding period variable.493 Doing so appears reasonable because, as Dr. Tolley testified, a short holding period is correlated with high control group returns for reasons unrelated to Indian Point.494 Thus, we agree that the holding period variable properly controls for differences in returns to control and treatment groups that are unrelated to the so-called Indian Point event.495 489 Id.

490 New York Supplemental Rebuttal Testimony (NYS000467); see also Dec. 10, 2012 Tr. at 3283:18-21 (Judge McDade).

491 New York Supplemental Rebuttal Testimony at 5:20-7:3 (NYS000467).

492 Id.

493 See Entergy Supplemental Testimony at 25 (A32) (ENT000592) (The shorter holding periods inflate the average annual returns for the control group . . . .).

494 Id.

495 See id. at 27-29 (A33).

161. Based on the foregoing evidence, the Board finds that Dr. Tolley raised legitimate criticisms about possible bias in Dr. Sheppards analysis. These criticisms further cause us to question the validity of Dr. Sheppards conclusion that Indian Point adversely impacts property values. We next evaluate the validity of Dr. Tolleys remaining criticisms of Dr. Sheppards December 2011 analysis.

(iv) Dr. Sheppards Sample Incorrectly Included Numerous Non-Residential and Non-Market Transactions 162. The goal of Dr. Sheppards analysis was to isolate the effects of Indian Point, but only those of Indian Point, on property values by evaluating the returns, over time, on a specific group of properties.496 These returns are evidenced through sales prices.497 Given this approach, it is immediately apparent that each sale must be of a similar property in like condition to when it was bought. For example, if the property at 123 Main Street was bought for $30,000 in 1980 as an empty lot, but sold three years later for $90,000 after a three-bedroom home had been constructed, then it would be incorrect to compare that return to returns on other properties where the home was present in both sales.498 Adding the newly-constructed home would obviously explain the first propertys higher rate of return, not any Indian Point effect.

Similarly, an exchange that was not typically arms lengthsuch as between family members or in foreclosurecould readily produce a false reading on the propertys value, and, hence on the rate of return that property experienced.

163. With that background, we note that Dr. Tolley testified that Dr. Sheppards December 2011 analysis relied on a data set with numerous incorrectly-included observations 496 Oct. 22, 2012 Tr. 2562:3-9, 2567:11-2568:6 (Sheppard).

497 See id.

498 See Entergy Testimony at 114-116 (A145) (ENT000132); Tolley Report at 56 (ENT000144).

that did not represent arms-length market transactions of residential properties.499 In this respect, it is worth noting that Dr. Sheppard would draw his data from local property records and Assessor cards, which would reflect information such as sales date, sales price, and any unusual circumstances, such as a foreclosure or sale between family members.500 Dr. Tolleys March 2012 testimony indicated that his review of the same Assessor cards relied upon by Dr. Sheppard demonstrated that Dr. Sheppard had erroneously incorporated into his analysis 425 observations that could not be justified as arms-length or for other reasons, such as their involving an improved property.501 164. Dr. Sheppards June 2012 rebuttal testimony failed to address this criticism, but a few days before hearing, Dr. Sheppard prepared Exhibit NYS000446, which contained a new analysis responding to Dr. Tolleys critique.502 We admitted that exhibit over Entergys objection and allowed Dr. Sheppard to testify about his new analysis.503 165. Dr. Sheppard testified that he reanalyzed his repeat-sales data, but this time removed 289 invalid observations from the analysis because he conceded those observations involved sales of a vacant lot in one transaction and sales of a completed residence in the other transaction in the rate of return calculation.504 He thereby effectively conceded that Dr. Tolleys critique was well-founded.505 According to Dr. Sheppard, his revised results were nearly 499 See Entergy Testimony at 114-116 (A145) (ENT000132); Tolley Report at 56 (ENT000144).

500 December 2011 Sheppard Report at 6 (NYSR00231); Tolley Report at 37-38 (ENT000144); Assessor Data Set Errors at 1-8 (ENT000594).

501 See Entergy Testimony at 115 (A144) (ENT000132) (citing Tolley Report at 56 (ENT000144)).

502 Oct. 22, 2012 Tr. at 2670:8-2671:20 (Sheppard).

503 Id. at 2674:2-4 (Judge McDade).

504 Id. at 2686:19-2687:5 (Sheppard).

505 Id. at 2573:17-24, 2686:19-2687:5 (Sheppard).

identical to his earlier repeat-sales results, in that they still suggested that Indian Point has a significant adverse impact on property values.506 166. Dr. Tolley testified that this reanalysis did not fully respond to his earlier criticisms that Dr. Sheppard should have excluded numerous other observations from his sample beyond simply the 289.507 At the hearing, Dr. Sheppard acknowledged that approximately 135 observations that Dr. Tolley objected to remained in the new analysis.508 Dr. Sheppard claimed, however, that these 135 observations were not actually errors because many of them relied on other data sources beyond the basic Assessors card to correct information such as property address or sales price.509 167. The Board finds that Dr. Sheppards claim that supplemental information was used to correct these other errors is unsupported. As Dr. Tolley testified, the vast majority of the approximately 135 remaining observations to which he objected did not represent arms-length market transactions of residential properties.510 Dr. Tolley correctly noted that those observations could not be corrected through finding supplemental information that better documented the sales details such as the address, sale price, or sale date.511 The Board thus finds that Dr. Sheppards revised analysis still contained a significant number of observations that should not have been included in his data set.512 As Dr. Sheppard acknowledged, these 135 506 Sheppard Supplemental Declaration at 5 (NYS000465).

507 Entergy Supplemental Testimony at 23 (A30) (ENT000592).

508 Oct. 22, 2012 Tr. at 2697:15-19, 2701:11-23 (Sheppard).

509 See id. at 2699:20-2700:1 (Sheppard).

510 Entergy Supplemental Testimony at 24 (A31) (ENT000592).

511 Id.; Assessor Data Set Errors at 1-8 (ENT000594).

512 Dr. Sheppard referred to these errors as unidentified sales and unexplained discrepancies. Sheppard Supplemental Declaration at 3-4 (NYS000465). Dr. Tolley, however, explained that Dr. Sheppard received information during the discovery process that clearly identifies these other improperly-included observations and explains why each of these observations should be excluded. Entergy Supplemental Testimony at 23 (A30) (ENT000592). It is unclear whether Dr. Sheppard reviewed this available explanatory information.

observations constitute roughly 10 percent of the observations used in his final revised analysis.513 This high error rate in his data set provides us with an additional reason to conclude that Dr. Sheppards analysis is unreliable.

(v) Dr. Sheppard Could Have Applied the Well-Established Hedonic Approach to His Data 168. Dr. Tolley testified Dr. Sheppard could and should have performed a standard hedonic regression analysis on his Assessor record data set instead of using his repeat-sales methodology.514 Dr. Tolley noted that the hedonic approach has been used authoritatively in other studies on nuclear plant property value impacts.515 As discussed in Section IV.D.2.a, Dr. Tolley was able to perform such an analysis using Dr. Sheppards own data and found no adverse property value impacts from Indian Point.516 169. Dr. Sheppards June 2012 rebuttal testimony did not address this criticism. At the hearing, Dr. Sheppard agreed that hedonic analysis offers a relevant perspective.517 Dr. Sheppard, however, claimed that his repeat-sales method offered a cleaner experimental design because it contained control group sales taking place prior to and after Indian Points completion.518 Dr. Sheppard asserted that his method was zeroing in on the most relevant aspect of the alleged Indian Point disamenityits operational impacts.519 513 See Oct. 22, 2012 Tr. at 2702:4-8 (Sheppard).

514 Entergy Testimony at 129 (A159) (ENT000132); Oct. 22, 2012 Tr. at 2649:12-2650:7 (Tolley) (stating that

[h]edonic analysis again is overwhelmingly used and that the repeat sales analysis is not applicable at all to this Indian Point situation).

515 Entergy Testimony at 65-67 (A95) (ENT000132).

516 Id. at 130-31 (A162); see also infra Section IV.D.2.a.

517 Oct. 22, 2012 Tr. at 2585:25-2586:4 (Sheppard) (agreeing that hedonic analysis does have something to teach).

518 Id. at 2559:20-23 (Sheppard).

519 Id. at 2562:10-15 (Sheppard).

170. The Board finds that Dr. Sheppard has not offered a persuasive explanation for his failure to perform hedonic regression analysis on his own data. As the flaws discussed in the preceding sections demonstrate, Dr. Sheppards method did not offer a clean experimental design, but rather departed from generally-accepted economic practices and made numerous unreasonable assumptions.520 As discussed next in Section IV.D.2, the record shows that hedonic regression analysis is the most prevalent method used to assess property value impacts and, contrary to Dr. Sheppards assertion, does not require a control group or identifying an event.521 Numerous hedonic studies in the recordincluding studies on which Dr. Sheppard reliedillustrate these points.522 Dr. Sheppard himself attempted to reanalyze Dr. Tolleys hedonic analysis that used Dr. Tolleys separate MLS data set.523 In other words, when it came to his own data, Dr. Sheppard did not apply the standard, well-accepted approach for studying property value impacts. The Board finds that this generally unexplained departure from standard economic methodologies further detracts from the reasonableness of Dr. Sheppards analysis.

520 Further, as previously discussed in Section IV.D.1.b, Dr. Sheppard did not zero in on the relevant issue (i.e.,

property value impacts under the no-action alternative), but instead attempted to estimate whether initial operations caused an impact in the 1970s. As we discussed, there is not a valid basis to conclude simply that any such effects will fully reverse themselves forty years later. As a simple example, assume Dr. Sheppard is correct that in 1976-1976 there was an increase in traffic and to which people had a strong negative reaction, hurting property values. It is entirely possible that today, with growth and economic changes in the area or just greater tolerance for traffic, closing the plant would go unnoticed from a traffic perspective. If so, there would be no reason to expect a mirror image rebound. Dr. Sheppard simply failed to provide sufficient grounds to link events forty years ago to his projected outcome in the future.

521 Oct. 22, 2012 Tr. at 2598:18-23 (Tolley).

522 See, e.g., B. Prest, Measuring the Externalities of Nuclear Power: A Hedonic Study, unpublished thesis, Williams College (2009) (Prest Study) (NYS000232); D. Clark and L. Nieves, An Interregional Hedonic Analysis of Noxious Facility Impacts on Local Wages and Property Values, 27 Journal of Environmental Economics and Management 235 (1994) (NYS000235). See also New York Direct Testimony at 5:4-17 (NYSR00224).

523 Sheppard Supplement Declaration at 4-5 (NYS000465); see also Oct. 22, 2012 Tr. at 2585:25-2586:4 (Sheppard) (agreeing that hedonic analysis does have something to teach).

(vi) Conclusion Regarding Dr. Sheppards 1974-1976 Historic Operational Impact Calculation 171. In light of the foregoing, the Board finds that Entergy and the NRC Staff offered numerous reasonable criticisms of Dr. Sheppards $1.07 billion dollar estimate, which taken together, seriously undermine the validity of Dr. Sheppards analysis. Based on the record as a whole, we cannot credit Dr. Sheppards $1.07 billion dollar estimate as a reliable or reasonable estimate of Indian Points impact on nearby property values. Likewise, we find that it would be unreasonable to evaluate the potential for property value-driven land-use impacts where such an evaluation would depend on first crediting his $1.07 billion property value estimate and using it to develop further analyses on land-use impacts that would result.

2. Dr. Tolleys Property Impact Assessments Are Reasonable 172. We next address Dr. Sheppards criticisms of Dr. Tolleys Indian Point-specific property value evaluation, which concluded that Indian Point currently has no adverse property value impacts.524 As discussed below, the Board finds that Dr. Sheppards criticisms lack merit and that Dr. Tolleys assessments counterbalance New Yorks claim of additional, allegedly unexamined property value impacts.

a. Background on Dr. Tolleys March 2012 Analyses 173. Before discussing his Indian Point-specific property value studies, Dr. Tolley noted that there have been a number of published, peer-reviewed site-specific hedonic property value studies of nuclear power generation facilities.525 He indicated that studies focused on the local area around specific nuclear power plants are the most relevant and applicable for assessing the likelihood for property value impacts from Indian Point, and that the weight of the evidence 524 Tolley Report at 22, 50 (ENT000144) 525 See Entergy Testimony at 63-67 (A93-95) (ENT000132).

from these studies show there is no reliable basis for concluding that proximity to nuclear power plants causes lower property values.526 Based on this literature, Dr. Tolley suggested that it was unlikely that Indian Point currently has any significant adverse impact on property values.527 We agree and consider the reasonableness of Dr. Tolleys analyses against the confirmatory backdrop provided by these earlier studies.

174. For purposes of this proceeding, Dr. Tolley conducted two Indian Point-specific property value assessments using different data setsone using MLS data and the other using the same local Assessor records Dr. Sheppard used for his repeat-sales analysis.528 Dr. Tolley testified that hedonic price modeling is the generally-accepted methodology in economics and real estate fields for identifying property value impacts.529 As Dr. Tolley explained, hedonic modeling allows researchers to use statistical regression to estimate the price effect that a single attribute (e.g., proximity to a nuclear power plant) has on property values by controlling for other housing characteristics that also impact property values (e.g., number of rooms, lot size, and proximity to amenities such as parks).530 Thus, as noted above, this technique does not require a control group.

175. For his MLS study, Dr. Tolley collected data for 296 residential properties actively listed for sale on July 13, 2011 in zip codes within a five mile radius of Indian Point.531 Dr. Tolley obtained or created individual property characteristic variables for these listings, including spatial variables (e.g., distance to Indian Point and distance to commuter rail stations) 526 See id. at 65-67 (A95).

527 Id. at 70 (A98).

528 Tolley Report at 15, 48 (ENT000144).

529 Entergy Testimony at 62 (A91) (ENT000132).

530 Id. at 62-63 (A92).

531 Id. at 74 (A101).

and a variable measuring estimated per-household PILOT payments using data drawn from anticipated payments in 2011.532 In total, Dr. Tolley considered seven explanatory variables:

distance to Indian Point, distance to Indian Point squared, median income, the homes age, whether it was a condominium or townhome, the distance to nearest commuter rail station, and the estimated per-household 2011 PILOT payment.533 Dr. Tolley estimated the statistical relationship between the asking price and these seven variables.534 Based on that analysis, Dr. Tolley testified that the results were clearproximity to the Indian Point site is not a disamenity and thus, Indian Point does not adversely impact property values.535 Dr. Tolley also indicated that the correlations between asking price and almost all of the other variables were highly statistically significant and reflected the expected statistical relationships (e.g., asking prices were higher for newer homes than older homes, were higher for single family homes than condominiums or townhouses, and were higher for homes closer to rail stations than those farther away from rail stationsthe latter because closeness to rail eases a commuters burden).536 176. Dr. Tolley also performed a separate analysis using information from Dr. Sheppards repeat-sales Assessors data set.537 Of the Assessor properties, Dr. Tolley only included each relevant propertys final sale for purposes of establishing that propertys total 532 Id. at 74 (A102).

533 Id. at 74-75 (A102).

534 Id.

535 Id. at 75 (A103).

536 Id. at 78 (A106).

537 Id. at 129 (A161).

value.538 That left Dr. Tolley with a sample of 283 single-family residential property sales within 3.1 miles of the Indian Point site.539 As with his MLS regression, Dr. Tolley obtained or created individual property characteristic variables for these listings.540 Dr. Tolley analyzed the same explanatory variables he considered in the MLS study, plus an additional variable to control for differences in each propertys sale year and month.541 Dr. Tolley estimated the relationship between the sales price and these eight variables.542 Dr. Tolley indicated that the Assessor data set provided no statistically-significant evidence that Indian Point adversely impacted property values.543 As such, he noted that the MLS and Assessor regression results, taken together, are highly reasonable and consistent and both show that there is no scientific basis that Indian Point depresses property values.544 177. To estimate the potential relationship between proximity to the Indian Point site and property values, Dr. Tolleys MLS and Assessor hedonic analyses both used one of the most commonly-used functional forms545 for this type of analysis, the quadratic functional form, which considers together both the linear distance to Indian Point and the linear distance 538 Id. at 130 (A161). Dr. Tolley also excluded sales that occurred prior to the first quarter of 1999, eliminating the few properties that only had transactions before that time, as well as multiple occupancy properties, commercial properties, and other anomalies. Id. at 129-130 (A161).

539 Id. at 129 (A161).

540 Id. at 130 (A161).

541 Id.; Tolley Report at 49-50 (ENT000144). Unlike the MLS study which used asking prices on a single day in July 2011, the Assessor study used sales prices that extended over several years. As such, Dr. Tolley reasonably added a variable to account for when the sale took place.

542 Entergy Testimony at 130-131 (A162) (ENT000132).

543 Id.

544 Id.

545 Functional form refers to the algebraic relationship between an explanatory variable (e.g., distance to Indian Point) and the dependent variable (e.g., home value). See Entergy Supplemental Testimony at 3 (A6)

(ENT000592); Oct. 22, 2012 Tr. at 2601:6-18 (Sheppard).

squared.546 Dr. Tolley testified that the MLS and Assessor quadratic form assessments both suggest that proximity to Indian Point does not adversely impact residential property values, a conclusion consistent with other nuclear power plant studies that were referenced by Dr. Tolley.547 178. Dr. Tolley testified that, along with the quadratic functional form, he originally considered a reasonable set of other functional forms consistent with established economic literature to determine whether adverse property value impacts are associated with Indian Point.548 As indicated in Dr. Tolleys original report, he performed sensitivity analyses using alternative functional forms on both the MLS and Assessor data sets, and those sensitivity analyses did not alter his conclusions.549

b. Dr. Sheppards Criticisms of Dr. Tolleys March 2012 Analyses Are Without Merit or Irrelevant 179. In rebuttal and at hearing, Dr. Sheppard offered several criticisms of Dr. Tolleys hedonic assessments.550 The most expansive was the claim that Dr. Tolleys MLS data set provided hedonic results that are actually consistent with Dr. Sheppards $1.07 billion disamenity estimate that Dr. Sheppard developed using his repeat-sales analysis.551 In addition, Dr. Sheppard argued that Dr. Tolleys MLS analysis used too small a sample, 546 Entergy Supplemental Testimony at 7 (A10), 14 (A18) (ENT000592); Tolley Report at 17, 49 (ENT000144).

The quadratic equation can be represented algebraically as follows: y = ax - bx2, where y equals the home value and x equals the distance from the home to Indian Point. The a term represents the regression coefficient for the linear distance term, and b represents the regression coefficient for the distance squared (i.e., x2) term. As Dr. Tolley explained, this equation is somewhat simplified because he also included terms for a constant and other variables (e.g., house age, condo/townhome). See Oct. 22, 2012 Tr. at 2593:20-2595:9 (Tolley).

547 Entergy Supplemental Testimony at 3 (A6) (ENT000592); Tolley Report at 9-12, 14 (ENT000144).

548 Entergy Supplemental Testimony at 3 (A6) (ENT000592).

549 Tolley Report at 22, 49 (ENT000144).

550 Oct. 22, 2012 Tr. at 2557:18- 2558:8, 2559:17-23 (Sheppard).

551 Id. at 2668:14-21 (Sheppard).

improperly used asking price instead of sales price, and disparately calculated distance of amenities and disamenities.552 As discussed below, notwithstanding these criticisms, the Board finds that overall, Dr. Tolleys MLS study conclusions are reasonable. Dr. Tolleys Assessor analysis further supports that finding and also counters Dr. Sheppards claim that Indian Point adversely impacts property values.553 (i) Dr. Tolleys MLS Hedonic Analysis Does Not Suggest That Indian Point Adversely Impacts Property Values 180. In his rebuttal testimony, Dr. Sheppard focused on Dr. Tolleys MLS data set results and claimed that Dr. Tolley misinterpreted the MLS quadratic functional form results.554 According to Dr. Sheppard, those results suggested that Indian Point is an amenity within a 1.99-mile radius, but that beyond that distance Indian Point is a disamenity.555 He theorized that this positive amenity effect could be explained by Indian Point workers who want to live close to the plant bidding up closer-in housing prices.556 Dr. Sheppard also claimed that Dr. Tolleys MLS data set hedonic analysis should have considered other alternatives to the quadratic functional form.557 In particular, Dr. Sheppard claimed that applying the square root of distance functional form to Dr. Tolleys MLS data set produced statistically-significant results and an adverse property value impact estimate that was similar to Dr. Sheppards repeat-sales property value impact estimate.558 552 New York Rebuttal Testimony at 25:8-33:11 (NYS000434).

553 For the most part, Dr. Sheppard ignored Dr. Tolleys Assessor data set hedonic study.

554 New York Rebuttal Testimony at 35:13-36:7 (NYS000434).

555 Id. at 21:15-23:20.

556 Id.

557 Id. at 32:1-19, 36:9-38:13.

558 See id. at 36:9-38:13.

181. Dr. Sheppard expanded upon his functional form argument during and after the hearing. Specifically, at the hearing, New York moved to admit Exhibit NYS000446, which contained Dr. Sheppards newly-performed MLS hedonic regression analyses.559 The four tables in Exhibit NYS000446 presented results for four different functional forms used to estimate the relationship between proximity to Indian Point and property values: (1) quadratic (the form Dr. Tolley used in his original report); (2) linear;560 (3) square root of distance (the form Dr. Sheppard focused on in his rebuttal);561 and (4) distance squared.562 Dr. Sheppard testified that the results from all four functional form regressions are consistent with each other and showed that Indian Point is a statistically-significant disamenity because property values increase as one moves farther away from Indian Point.563 Dr. Sheppard also claimed that applying these various functional forms to the MLS data set resulted in approximately the same property value impact he found using his repeat-sales methodology (i.e., about $1.07 billion).564 182. Because New York disclosed Dr. Sheppards new analysis just prior to the hearing, we allowed Dr. Tolley to file supplemental testimony addressing Exhibit NYS000446.565 As discussed below, Dr. Tolleys oral testimony, along with his supplemental 559 Oct. 22, 2012 Tr. 2671:21-23 (Taylor). As noted above, the Board admitted that exhibit over Entergys objection and allowed Dr. Sheppard to testify about his new analysis. Id. at 2674:2-4 (Judge McDade).

560 The linear equation can be represented algebraically as follows: y = ax, where y equals the home value and x equals the distance from the home to Indian Point. The a term represents the regression coefficient for the linear distance term. See Sheppard Supplemental Declaration at 4-5 (¶10) (NYS000465); Oct. 22, 2012 Tr. at 2682:11-2683:1 (Sheppard).

561 The square root of distance equation can be represented algebraically as follows: y = ax, where y equals the home value and x equals the distance from the home to Indian Point. The a term represents the regression coefficient for the square root of distance term. Oct. 22, 2012 Tr. 2605:15-24 (Sheppard).

562 The distance squared equation can be represented algebraically as follows: y = ax2, where y equals the home value and x equals the distance from the home to Indian Point. The a term represents the regression coefficient for the distance squared (i.e., x2) term. See Sheppard Supplemental Declaration at 4-5 (¶10)

(NYS000465); Oct. 22, 2012 Tr. at 2684:17-2685:3 (Sheppard).

563 Oct. 22, 2012 Tr. at 2669:6-21, 2684:9-22 (Sheppard).

564 Id. at 2668:14-21, 2678:5-12 (Sheppard).

565 Id. at 2692:5-19 (Judge McDade).

written testimony, refuted Dr. Sheppards claim that alternative hedonic functional forms are consistent with his repeat-sales analysis and support a $1.07 billion property value impact.566 183. Quadratic Functional Form. Dr. Tolley testified that his decision to select the quadratic functional form was sound and based on common sense and well-accepted economic theory.567 As Dr. Tolley explained, if Indian Point were a disamenity or nuisance with an adverse property value impact, as New York alleges, then one would expect that: (1) property values would increase moving away from the plant; and (2) this negative impact would lessen farther away from the plant and eventually, at some maximum distance, there would no longer be a negative impact.568 This is common sense because the alleged disamenity would gradually diminish as the plant becomes a lesser concern at greater distances.569 Perhaps the easiest way to see this is that Indian Point will have zero impact on property values in Chicago or Los Angeles.

As Dr. Tolley noted, the quadratic functional form is one of the most commonly-used functional forms in the economic literature because it captures such a relationship when one in fact exists.570 184. As Dr. Tolley explained in his March 2012 testimony, the MLS results did not conform to this expected result. Rather, the MLS results based on the quadratic functional form were anomalous for two reasons. First, the results suggested that proximity to Indian Point is an amenity within 1.99 miles of the plant (i.e., property values increase as one moves closer to the plant within this range).571 Second, taken uncritically, the results suggested that proximity to 566 Entergy Supplemental Testimony at 19 (A23) (ENT000592).

567 Id. at 11-13 (A16).

568 Id.; Tolley Report at 20-21 (ENT000144).

569 See Entergy Supplemental Testimony at 11-12 (A16) (ENT000592); Tolley Report at 20-21 (ENT000144).

570 See Entergy Supplemental Testimony at 11-12 (A16) (ENT000592); Tolley Report at 20-21 (ENT000144).

571 See Entergy Supplemental Testimony at 11-12 (A16) (ENT000592).

Indian Point is a disamenity beyond 1.99 miles from the plant, and that the disamenity impact increases in strength the farther one moves away from the Indian Point site.572 Dr. Tolley made clear that the impacts increasing strength as distance increases is contrary to the well-understood principle in economics that any disamenity becomes a lesser concernnot a greater concernat greater distances.573 As Dr. Tolley put it, the statistical result doesnt make economic sense because that is not the way people behave.574 185. Dr. Tolley testified that these anomalous results suggested not that the statistical result was correct and economic theory all wrong, but rather that there was an unobserved variable present (i.e., some other amenity or disamenity unrelated to Indian Point) that is influencing property values.575 The Board finds that explanation reasonable and finds that Dr. Sheppards interpretation of the quadratic results contravenes common sense and everyday economic behavior. It would therefore be unreasonable to interpret these results as supporting Dr. Sheppards claim that Indian Point has a significant adverse property value impact.

186. Moreover, Dr. Sheppards theory that the anomalous MLS results can be explained by Indian Point workers who want to live close to the plant bidding up closer-in housing prices576 does not explain why Indian Point would become an increasingly-strong disamenity the farther one moves away from the facility. As Dr. Tolley testified, such a result is 572 See id. With regard to this latter point, Dr. Tolley provided a helpful illustration. Dr. Tolley testified that, taken uncritically, these results suggest that if you move a house situated two miles away from the Indian Point site to three miles away from the Indian Point site, the value would increase $20,000; if you move that same house another mile away from the Indian Point site, from three miles to four miles away, the value would increase another $60,000 (a $80,000 total increase); and if you move that same house another mile away from the Indian Point site, from four miles to five miles away, the value would increase another $100,000 (an

$180,000 total increase). Id.

573 Id.

574 Oct. 22, 2012 Tr. at 2595:20-21 (Tolley).

575 Id. at 2595:20-2596:16 (Tolley).

576 New York Rebuttal Testimony at 23:7-13 (NYS000434).

illogical because the purported Indian Point physical impacts Dr. Sheppard identified (e.g., noise and traffic) decreasenot increaseas you move away from the plant.577 187. The Board also disagrees with Dr. Sheppards claim that the aspect of the MLS quadratic results suggesting it is an amenity to close-in housing can be explained by Indian Point workers desire to live near the facility.578 Dr. Tolley and Mr. Reamer pointed out that there simply are not enough Indian Point workers to cause any observable property value impact through worker demand.579 In sum, it would be unreasonable to conclude that the result found when the quadratic functional form is applied to the MLS data supports Dr. Sheppards claim that Indian Point has a significant adverse property value impact. Our decision to not rely on the results from this quadratic form analysis to reach such a conclusion is also supported by Dr. Tolleys testimony indicating that the quadratic functional form is not statistically significant when applied to Dr. Sheppards Assessor data and thus, likewise does not support Dr. Sheppards claim that Indian Point adversely impacts property values.580 188. Square Root of Distance Functional Form. Dr. Sheppard testified that the square root of distance functional form is an alternative functional form that Dr. Tolley should have considered and shows that property values increase as you move farther away from Indian Point.581 According to Dr. Tolley, however, it is unreasonable to conclude that Indian Point has 577 Entergy Supplemental Testimony at 13 (A17) (ENT000592).

578 New York Rebuttal Testimony at 23:7-20 (NYS000434).

579 See Oct. 22, 2012 Tr. at 2597:3-11 (Tolley); see also ER at 3-24, 3-30 (ENT00015B) (indicating 20 of 1255 Indian Points workers reside in Buchanan, and only about 200 reside in all of Westchester County); 2007 Sheppard Report at 4 (NYS000226) (indicating about 13,000 housing units are located within two miles of Indian Point).

580 Entergy Supplemental Testimony at 13-14 (A17) (ENT000592); Entergy Testimony at 130-131 (A162)

(ENT000132); Tolley Report at 49-50 (ENT000144).

581 Oct. 22, 2012 Tr. at 2601:24-2602:25 (Sheppard).

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an adverse impact on property values based on this square root of distance functional form analysis.582 We agree with Dr. Tolley for two reasons.

189. First, Dr. Tolley indicated that well-established, state-of-the-practice economic analysis does not involve using the square root of distance functional form in hedonic regression analysis.583 As Dr. Tolley noted during the hearing, economists widely use hedonic regression analysis, but based on his extensive literature review, Dr. Tolley located only a handful of studies, out of hundreds of previous hedonic studies, that used the square root of distance functional form.584 Based on Dr. Tolleys research, Dr. Sheppard himself never previously used the square root of distance form in his own published hedonic work.585 Nor did the undergraduate student that Dr. Sheppard advised, who conducted the nuclear power plant hedonic study referenced in Dr. Sheppards testimony, use the square root of distance form.586 190. Second, when Dr. Tolley applied the square root of distance functional form to Dr. Sheppards Assessor data set, Dr. Tolley found that the square root of distance coefficient was not statistically significant and thus does not support Dr. Sheppards claim that Indian Point adversely impacts property values.587 191. In summary, the square root of distance is a highly-unusual functional form not typically used by economists.588 Furthermore, the MLS square root of distance results are inconsistent with the Assessor square root of distance results, which suggest that Indian Point has 582 Entergy Supplemental Testimony at 15 (A19) (ENT000592).

583 Id. at 5 (A7), 14-15 (A19).

584 Oct. 22, 2012 Tr. at 2609:5-20 (Tolley).

585 Entergy Supplemental Testimony at 18 (A22) (ENT000592).

586 See generally Prest Study (NYS000232).

587 Entergy Supplemental Testimony at 5-6 (A8), 15 (A19) (ENT000592); Oct. 22, 2012 Tr. at 2608:23-2610:12 (Tolley).

588 Entergy Supplemental Testimony at 5 (A7) (ENT000592).

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no significant negative impacts on residential property values.589 The Board thus finds that it would be unreasonable to conclude that the MLS square root of distance analysis supports Dr. Sheppards claim that Indian Point has a significant adverse property value impact.

192. Square of Distance Functional Form. Dr. Sheppard claimed that the square of distance functional form is another alternative functional form that Dr. Tolley should have considered and also shows that property values increase as you move farther away from Indian Point.590 Dr. Tolley disagreed and explained that it would be illogical and contrary to common sense and economic theory to select the square of distance functional form.591 Again, we concur with Dr. Tolley.

193. As Dr. Tolley pointed out, applying this functional form means Indian Point would become an increasingly-strong disamenity the farther one moves away from Indian Point.592 As previously noted above in discussing the MLS quadratic functional form, such a result cannot reasonably be accepted.593 As such, the MLS square of distance functional form results do not support the hypothesis that Indian Point adversely impacts property values because logically, the disamenity effects strength should not increase the farther a property is from the plant.594 The Board thus finds that it would be contrary to common sense and economic theory to use the square of distance functional form to measure the effect of proximity to Indian Point.

589 Id. at 5-6 (A8).

590 Oct. 22, 2012 Tr. at 2684:9-2685:10 (Sheppard).

591 Entergy Supplemental Testimony at 17 (A21) (ENT000592).

592 Id.

593 See id.; see also supra ¶¶ 183-186.

594 As noted above, we agree with Dr. Tolley that this result is best explained by an unobserved variable (i.e.,

some other amenity or disamenity unrelated to Indian Point) that is influencing property values. Oct. 22, 2012 Tr. at 2595:20-2596:16 (Tolley).

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194. Linear Functional Form. Dr. Sheppard claimed that the linear functional form is the most commonly-used hedonic functional form and in this case that form shows that proximity to Indian Point causes a decline in property values.595 Dr. Tolley disagreed and explained that while linear distance form is commonly used in general hedonic literature, most studies that use this functional form do so to measure distance from a property to an urban areas central business district.596 As Dr. Tolley explained, in those studies, linear distance makes sense because it captures travel costs associated with work and shopping amenities (i.e., costs that can be expected to move in a linear rate as distance increases).597 In contrast, as Dr. Tolley observed, when a power generation facility is involved, any impact decays at greater distances598 and thus, the linear functional form is inappropriate.599 We agree with Dr. Tolley. Although the linear form may be appropriate in cases where the impact is due to travel costs, it is inappropriate here, where the distance impact would decrease at greater distances.600 195. Dr. Tolley also disagreed with Dr. Sheppards claim that the results from the linear distance functional form demonstrate that proximity to Indian Point causes a decline in property values.601 As discussed in Dr. Tolleys March 2012 report, the linear distance term is not statistically significant when included in the quadratic form, rather than treated as a stand-alone form as suggested by Dr. Sheppard.602 Although the linear term becomes statistically 595 Id. at 2628:2-7, 2682:11-16 (Sheppard).

596 Entergy Supplemental Testimony at 15 (A20) (ENT000592).

597 Id.

598 Id.

599 See id; see also Nuclear Power Plants and Residential Housing Prices at 503 (NYS000236) (Nonlinear forms are preferred on theoretical grounds.).

600 See Entergy Supplemental Testimony at 15-16 (A20) (ENT000592).

601 Id.

602 See Tolley Report at 17, 20-22 (ENT000144).

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significant when it is analyzed alone, without a squared term, Dr. Tolley testified that the linear term only becomes statistically significant because it is then also picking up the omitted squared terms effect.603 In other words, when the squared term is eliminated, the squared terms effect is hidden and erroneously attributed to the linear term.604 The Board thus finds that Dr. Sheppard misinterpreted the linear distance results.605 Accordingly, it would be unreasonable to interpret those results as supporting Dr. Sheppards claim that Indian Point has a significant adverse property value impact.606 196. Based on the foregoing, the Board finds that Dr. Tolleys two hedonic regressions establish that there is no reasonable basis to conclude that Indian Point depresses property values. As noted above, those results are in agreement with other nuclear studies in the economics literature. Thus, for both these reasons, in the Boards view, Dr. Sheppard has not demonstrated that Dr. Tolleys hedonic analyses suggest that Indian Point adversely impacts property values.607 603 Entergy Supplemental Testimony at 16 (A20) (ENT000592).

604 Id.

605 Id. As noted above, Dr. Sheppards error is made all the more indefensible because even positing a significant square term relationship is illogical.

606 Dr. Tolley also testified that Dr. Sheppards linear distance functional form using the MLS data set should also be rejected because it leads to unreasonably large and illogical disamenity effects. See id. at 16-17 (A20-21)

(ENT000592). Taken uncritically, these results suggest that if you move a house from two miles away from the Indian Point site to three miles away from the Indian Point site, the value would increase by $47,000; if you move that same house from two miles to five miles away from the Indian Point site, the value would increase by $141,000; and if you move that same house from two miles to ten miles away from the Indian Point site, the value would increase by $376,000. Id. The Board notes that these are unreasonably large impacts to project when the mean asking price in the MLS sample was approximately $364,000, and where the functional form does not show that this negative impact is lessened farther away from the plant. See id. Thus, the Board agrees that these results defy common sense and accepted economic theory, and thus do not support Dr. Sheppards claim that Indian Point is having a significant adverse property value impact.

607 The Board, however, notes that whether the billion-dollar asserted property value impact is derived from Dr. Sheppards interpretation of the hedonic regression analyses or from his flawed repeat-sales analyses, the Boards conclusion in Section IV.D.3 below remains unchangedthe no-action alternative results in a net

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(ii) Dr. Tolleys Sample Size Was Appropriate 197. Dr. Sheppard also testified that Dr. Tolleys MLS hedonic regression produced imprecise results because the 296-observation sample was too small.608 Based on the number and type of variables in the MLS hedonic model, Dr. Sheppard calculated that Dr. Tolleys analysis required 1458 observations to provide reliable results.609 198. As an initial matter, the Board observes that any statistical analysis contains some uncertainty. For that reason, an analysiss reliability is determined by statistical measures such as standard error coefficients.610 Table 1 in Dr. Tolleys expert report provided these measures for his MLS regression.611 Although Dr. Sheppard suggested that Dr. Tolleys results lack precision because of the small sample size, the sample size was sufficient to provide statistically-significant results for a number of other explanatory variables, including the median income, house age, condominium/townhome, and distance to rail station variables.612 The Board thus finds that Dr. Tolleys sample size was sufficiently large for this Board to consider and rely upon his work.

negative property value impact compared to license renewal because the near-term loss of PILOT payments outweighs Dr. Sheppards alleged property value impacts that would occur decades in the future.

608 New York Rebuttal Testimony at 25:8-27:9 (NYS000434).

609 Id. at 26:19-27:9. Although Dr. Sheppards sample size argument was directed to the MLS hedonic regression, his argument would also appear relevant to the Assessor hedonic regression, which contained 283 observations. Tolley Report at 49 (ENT000144). Based on Dr. Sheppards logic, however, it would appear that he believes the Assessor hedonic analysis should have included 4,500 observations because it included an additional continuous variable for each sales month and year. Compare Tolley Report at 49 (ENT000144)

(indicating the Assessor data set hedonic model contains eight variables), with New York Rebuttal Testimony at 26:19-27:9 (NYS000434). Such a nonsensical result demonstrates the flaw in Dr. Sheppards logic because one would expect that a studys reliability increased, not decreased, when it controls for an additional variable.

For this reason and the other reasons outlined in this section, the Board likewise finds that the sample size for the Assessor analysis was sufficiently large for the analysis undertaken.

610 Oct. 22, 2012 Tr. at 2592:15-25 (Tolley).

611 Tolley Report at 17 (ENT000144). Likewise, Dr. Tolley provided those measures for his Assessor hedonic regression. See id. at 49.

612 See id. at 17.

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199. The Board also notes that Dr. Sheppards repeat-sales analysis involved approximately the same number of individual properties as Dr. Tolleys hedonic analysis.

Although Dr. Sheppard initially claimed that his repeat-sales analysis involved more than 1500 properties,613 he later conceded that it actually involved only about 500 properties.614 When Dr. Tolley removed the incorrectly-included non-residential and non-arms-length transaction properties from Dr. Sheppards analysis, less than 300 individual properties remained.615 Thus, to the extent that Dr. Sheppard claims that Dr. Tolleys 296 properties were insufficient for a valid analysis, it appears that argument equally applies to Dr. Sheppards analysis.

200. Moreover, the Board observes that earlier in this proceeding, and without noting any sample size issues, Dr. Sheppard heavily relied on a 1974 study involving an Illinois coal plant that used only 154 observations.616 Dr. Sheppards earlier reliance on that 154-observation study further undermines his position on this issue.

(iii) Dr. Tolleys Use of Asking Price Rather Than Sales Price Was Valid 201. According to Dr. Sheppard, only hedonic studies using data representing completed residential real estate transactions are valid and thus, Dr. Sheppard faulted Dr. Tolleys property value assessments that used MLS data reporting the propertys asking price rather than the final sales price.617 613 New York Rebuttal Testimony at 7:12-16 (NYS000434).

614 Oct. 22, 2012 Tr. at 2574:14 (Sheppard).

615 Tolley Report at 48 (ENT000144).

616 Blomquist Coal Study at 98 (NYS000234).

617 New York Rebuttal Testimony at 28:6-29:2 (NYS000434).

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202. Dr. Sheppards asking-price argument is based on his assertion that sellers list their homes higher than the actual sales price.618 However, even if true, Dr. Tolleys results are still valid so long as the difference between asking and sales prices is not correlated with another variable in Dr. Tolleys analysis. Dr. Sheppard failed to offer any reason to believe that there is a systematic relationship between the difference in asking prices and sale prices that might bias Dr. Tolleys results suggesting that Indian Point has no disamenity effect.619 The Board thus finds that there is no reason to believe that asking prices are biased in any manner that invalidates Dr. Tolleys MLS regression results.

203. The Board also notes that this criticism is inapplicable to Dr. Tolleys Assessor data set hedonic analysis, which used sales prices, not asking prices.620 The Assessor hedonic regression, like the MLS regression, found that Indian Point did not lower property values.621 As such, Dr. Tolleys ultimate conclusion (and the overall conclusion of greatest fundamental importance to us)that Indian Point does not have a disamenity impact on property values would still remain valid and well supported even if the MLS study should have used asking price data.

(iv) Dr. Tolleys Treatment of the Rail Station Variable Was Reasonable 204. In what appears to be a minor critique, Dr. Sheppard claimed that Dr. Tolley disparately calculated distance to Indian Point, an alleged disamenity, and distance to rail stations, an amenity.622 In particular, Dr. Sheppard testified that Dr. Tolley should have included 618 Id.

619 See generally id.

620 See Tolley Report at 48 (ENT000144).

621 Id. at 49-50 (ENT000144).

622 See New York Rebuttal Testimony at 31:5-9 (NYS000434).

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both distance from the rail station and the square of the distance from the rail station in his MLS regression.623 We find that this criticism is unfounded and immaterial.

205. Dr. Tolley testified that the linear distance functional form is widely used in cases where travel costs are important and explained why (see ¶ 194, above).624 Not only did Dr. Sheppard not suggest otherwise, he later emphasized that the linear distance functional form is widely used.625 Thus, Dr. Tolleys linear distance variable for rail stations is well founded and based on sound economic theory.

206. Furthermore, Dr. Sheppard did not perform a regression that added a quadratic distance rail station variable, even though he performed alternative hedonic modeling to address other similar issues.626 This strongly suggests to the Board that this is an inconsequential issue.

If an alternative approach would have significantly impacted Dr. Tolleys results, then we would have expected Dr. Sheppard to present such information. Having not done so, the Board finds that Dr. Sheppards criticism about the rail station functional form is unsubstantiated and immaterial.

(v) Conclusion Regarding Dr. Tolleys Hedonic Assessments 207. In light of the foregoing, the Board finds that Dr. Sheppards various criticisms fail to undermine the overall validity of Dr. Tolleys two Indian Point-specific hedonic assessments, which were thorough, consistent with sound economic practice, and produced results consistent with prior similar studies. The Board finds that, both standing alone and taken together, Dr. Tolleys two assessments, along with peer-reviewed studies involving other nuclear 623 See id. at 32:19-33:11.

624 Entergy Supplemental Testimony at 15 (A20) (ENT000592).

625 Oct. 22, 2012 Tr. at 2669:6-12, 2682:11-16 (Sheppard).

626 See id. at 2682:11- 2685:10 (Sheppard).

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power plants, suggest that Indian Point operations do not adversely impact property values (i.e.,

there is no disamenity effect) and, therefore, the no-action alternative would not cause property values to increase. Accordingly, the absence of any property value increase means that there are no significant unexamined property value-driven land-use impacts under the no-action alternative.627

3. The No-Action Alternative Would Result in a Net Negative Property Value Impact Compared to License Renewal Even Assuming Dr. Sheppards Billion-Dollar Increase 208. The Board next addresses the claim by Entergy and the NRC Staff that Dr. Sheppard presented a $1.07 billion post-operations property value rebound estimate, but never compared the impacts of the no-action alternative with license renewal impacts, leaving Dr. Sheppards analysis fundamentally incomplete.628 As Dr. Tolley and Mr. Stuyvenberg explained, to conduct such a comparison requires that we consider the difference in the discounted net present value of property values changes under the no-action alternative and the license renewal alternative.629 This is necessary because any disamenity-related property value change occurs in both scenarios, just at different times.630 Put another way, if one assumes that an Indian Point shutdown will create property value impacts, then the main difference between the no-action alternative and license renewal is simply when those impacts will occur.

209. Dr. Tolley further testified that any reasonable comparison between the no-action alternative and license renewal must: (1) apply a horizon cut-off or discount rate to sensibly compare benefits and costs that occur in different time periods; (2) account for when the alleged 627 We note again our addition separate conclusion that, even if such a disamenity effect is present, the potential positive property value impacts that would occur in the future are outweighed by other factors such as the PILOT payment loss. See Section IV.3 below.

628 New York Direct Testimony at 38:23 (NYSR00224).

629 Entergy Testimony at 97 (A123) (ENT000132); Oct. 22, 2012 Tr. at 2630:6-2631:24 (Tolley).

630 See Entergy Testimony at 97 (A123) (ENT000132); Oct. 22, 2012 Tr. at 2630:6-2631:24 (Tolley).

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property value change would happen under each scenario; and (3) account for differences in PILOT payments and property taxes under each scenario.631 Dr. Sheppards January 2011 report explicitly considered these factors, demonstrating that they are relevant to accurately comparing the no-action alternative to license renewal.632 Dr. Tolley testified that the no-action alternative would have a net $164 million negative impact on property values compared to license renewal using a conservative 7 percent discount rate, and when properly accounting for the 60-year decommissioning period allowed by NRC regulations and for lower PILOT payments after operations end.633 210. At the hearing, Dr. Sheppard conceded that his December 2011 report did not address the three factors discussed in the previous paragraph.634 Instead, he stated that the asserted $1.07 billion gain merely provided an input that the Board can consider when comparing the no-action alternative and license renewal.635 In other words, it appears that Dr. Sheppard left it up to the other parties (or the Board) to calculate the net present value difference between the no-action alternative and license renewal. As discussed below, we agree that Dr. Tolleys framework offers a reasonable means for comparing no-action alternative impacts to license renewal impacts, and that Dr. Tolley presented a reasonable analysis finding that the no-action alternative has an overall net negative impact on property values compared to license renewal.

631 Entergy Testimony at 110-111 (A138-41) (ENT000132).

632 January 2011 Sheppard Report at 2-5 (NYS000230).

633 Entergy Testimony at 111-113 (A141) (ENT000132). In other words, Dr. Tolley added the net present value of the $1.07 billion property value impact, the tax revenue-related impact from higher property values, and the impact from lower PILOT payments after operations end. See id.

634 Oct. 22, 2012 Tr. at 2565:9-16 (Sheppard).

635 Id.

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a. Discount Rate 211. Dr. Sheppards December 2011 Report did not apply a discount rate to estimate the difference between license renewal and the no-action alternative.636 Dr. Tolley, however, argued that Dr. Sheppard should have applied a discount rate to properly compare these alternatives.637 Dr. Tolleys testimony discussed the importance of discount rates.638 As he explained, because people generally favor benefits now to benefits later, and because the future is inherently uncertain, a $1 payment today is preferred to a $1 payment sixty years from now.639 Dr. Tolley further testified that using a discount rate in the evaluation of future scenarios allows researchers and policy makers to properly weigh the costs and benefits of a proposed action when these costs and benefits accrue in the future or at different points in time.640 In other words, Dr. Tolley explained that discounting recognizes the lower net value of costs and benefits that arise further in the future relative to costs and benefits that occur sooner.641 Dr. Sheppard did not dispute the importance of discounting to estimate the difference between license renewal and the no-action alternative in current dollars.642 212. According to Dr. Tolley, a 7 percent discount rate is a reasonable discount rate.643 As Dr. Tolley noted, NRCs Regulatory Analysis Guidelines in NUREG/BR-0058, Rev. 4, 636 See December 2011 Sheppard Report (NYSR00231).

637 Entergy Testimony at 111 (A140) (ENT000132); Oct. 22, 2012 Tr. at 2630:6-2631:24 (Tolley).

638 Tolley Report at 26 (ENT000144); Entergy Testimony at 97 (A123) (ENT000132); Oct. 22, 2012 Tr. at 2630:6-2631:24 (Tolley).

639 Entergy Testimony at 97 (A123) (ENT000132).

640 Id.

641 Id.

642 See Oct. 22, 2012 Tr. at 2565:9-16 (Sheppard).

643 Entergy Testimony at 99 (A128).

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suggest a 7 percent discount rate.644 Although Dr. Tolley noted that econometric studies suggest a higher discount rate may be more realistic, for this analysis he pointed out the 7 percent rate is conservative because, if anything, it results in any future disamenity impacts being overstated.645 Dr. Sheppard did not dispute that a 7 percent discount rate was reasonable.646 213. Based on the foregoing, the Board finds both that it is important to properly discount future property value effects and that a 7 percent discount rate is reasonable to use in comparing the no-action alternative and license renewal.

b. Property Value Increase Timeframe 214. Dr. Sheppard initially stated that his alleged $1.07 billion property value disamenity effect would dissipate after removal of IPEC and the decommissioning and reclamation of the site for alternative uses.647 Similarly, Dr. Sheppards January 2011 Report likewise acknowledged that property values would recover only after the site was decommissioned and reclaimed, stating:

[T]he sequence of important events is expected to be:

1st - end of reactor operations 2nd - reclamation of IPEC site including removal of all spent fuel, hazardous materials, buildings and equipment 3rd - recovery of surrounding property values because of site reclamation 644 Id. (citing U.S. Nuclear Regulatory Commission, NUREG/BR-0058, Rev. 4, Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission at 32 (Sept. 2004) (ENT000013)).

645 Id.; Oct. 22, 2012 Tr. at 2660:8-24 (Tolley). As Dr. Tolley testified, economic research suggests that beyond about 25 years in the future it is more realistic to apply a time-horizon cutoff and a zero dollar value to future property value impacts. Thus, a 7 percent discount rate may actually overstate any future rebounds impact.

Entergy Testimony at 97-98 (A123-24) (ENT000132).

646 To the contrary, Dr. Sheppards rebuttal testimony indicated that his 2009 report examined property value impacts using a 7 percent discount rate indicating his endorsement. See New York Rebuttal Testimony at 42:16-43:8 (NYS000434).

647 Dec. 2011 Sheppard Report at 12 (NYSR00231) (emphasis added).

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4th - recovery of property tax payments on surrounding properties648 Dr. Sheppards 2009 Report also focused on site reclamation and restoration, and indicated that any property value increase would not take place for at least a period of 60 years (until 2095) and potentially much longer.649 215. Mr. Boska and Mr. Reamer testified that NRC regulations and Entergys decommissioning plans both allow for a 60-year decommissioning period.650 Mr. Boska further testified that a 60-year period would make decommissioning easier by allowing greater time for radionuclides to decay.651 Mr. Boska and Mr. Reamer also noted that the majority of plant structures and other facilities, including radioactive systems, materials, and components, would likely remain in place until completion of decommissioning.652 Mr. Boskas and Mr. Reamers testimony thus establishes that the 60-year decommissioning timeframe constitutes a reasonable assumption for how long it would take for site reclamation and restoration to occur.

216. Based on the 60-year decommissioning timeframe, Dr. Tolley testified that any disamenity impact must be discounted over that period because no beneficial use of the site could occur and any purported disamenity impact from Indian Point would remain, at least in part, for decades.653 As Dr. Tolley explained, assuming Dr. Sheppards asserted disamenity impact would occur, property values would initially increase very gradually after operations end, 648 Jan. 2011 Sheppard Report at 2 (NYS000230).

649 2009 Sheppard Report at 2 (NYS000227).

650 NRC Staff Testimony at 19-22 (A.24-A.25) (NRCR00081); Entergy Testimony at 94-96 (A122)

(ENT000132).

651 Oct. 22, 2012 Tr. at 2718:5-13 (Boska).

652 NRC Staff Testimony at 20 (A.24) (NRCR00081); Entergy Testimony at 94 (A122) (ENT000132); see also FSEIS at 8-22 (NYS00133C).

653 Entergy Testimony at 97-99 (A123-A128) (ENT000132); Oct. 22, 2012 Tr. at 2630:2-10, 2658:15-2659:17 (Tolley).

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and then, sixty years later, would fully rise to $1.07 billion.654 As Dr. Tolley noted, most of that rise would take place in the last eight years of the 60-year period.655 Dr. Sheppards rebuttal testimony was not inconsistent with these points, stating only that [i]t is likely that property values would begin to recover at the cessation of operations at the plant and continue through the end of the decommissioning window and that when IPEC is fully decommissioned - whatever time and in whatever sequence - the disamenity will be removed and land values will rebound.656 217. At hearing, however, Dr. Sheppard departed from his earlier positions and speculated that the full $1.07 billion gain would be realized within about ten years after operations end.657 Dr. Sheppard, however, pointed to no data connecting any physical changes at Indian Point to this 10-year timeframe, but rather justified it by pointing to the average homeownership period in his data set.658 As Dr. Tolley reasonably pointed out in response, there is no logical reason to believe there is any relationship between that data point and the property value recovery period.659 The Board agrees. Dr. Sheppards theory is that property values are affected by the changing tempo of activity and physical features presented at Indian Point. Yet this 10-year estimate had nothing to with removing structures or reducing activities at Indian Point. We therefore find that Dr. Sheppard failed to substantiate his 10-year timeframe as the period for any potential property value recovery. We also note that Dr. Sheppards departure 654 Oct. 22, 2012 Tr. at 2632:5-2633:9 (Tolley). Dr. Tolley explained that discounting (see supra Section IV.D.3.a) represents this gradual and continuous increase. See id.

655 Id.

656 New York Rebuttal Testimony at 44:16-45:20 (NYS000434).

657 Oct. 22, 2012 Tr. at 2640:11-14 (Sheppard).

658 Id. at 2639:14-23 (Sheppard); see also December 2011 Sheppard Report at 8, Table 1 (NYSR00231)

(indicating that the mean ownership period in Dr. Sheppards sample is 8.19 years).

659 Entergy Supplemental Testimony at 21 (A25) (ENT000592).

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from positions he took on three separate occasions in written reports filed with the Board earlier in this proceeding undermines his oral hearing testimony on this issue.660 218. In summary, based on the record evidence, the Board finds that Dr. Sheppard failed to justify his 10-year recovery period, whereas the 60-year decommissioning period constitutes a more reasonable assumption for purposes of this analysis. Accordingly, the Board concludes that the 60-year decommissioning period is reasonable for considering the timeframe for any full potential property value recovery.661

c. PILOT and Property Tax Payments 219. The parties do not dispute that Entergys PILOT and property tax payments currently represent a significant portion of local government revenues.662 Dr. Sheppards December 2011 Report, however, did not discuss PILOT payments, e.g., whether they would decrease under the no-action alternative, and, if so, whether that decrease would impact local property values.663 220. Mr. Cleary and Mr. Reamer testified that PILOT and tax payments would decrease significantly once operations cease, but would remain relatively unchanged under license renewal.664 As Mr. Cleary and Mr. Reamer explained, after current operations cease and electricity is therefore no longer being generated, PILOT payments and other tax payments 660 See Dec. 2011 Sheppard Report at 12 (NYSR00231); Jan. 2011 Sheppard Report at 2 (NYS000230); 2009 Sheppard Report at 2 (NYS000227).

661 Although spent fuel may remain onsite even after decommissioning, New York has not presented any specific facts in this proceeding suggesting that spent fuel storage results in physical impacts that leads to property value-driven land use impacts. Thus, the Board finds that the Waste Confidence Rule, New Yorks successful court challenge to that regulation, and the Commissions subsequent generic environmental evaluations are not material to this contentions resolution.

662 FSEIS at 4-46 (NYS00133B); Decl. of Cory Gruntz at 2-4 (Nov. 21, 2012) (ENT000591).

663 See December 2011 Sheppard Report (NYSR00231).

664 Entergy Testimony at 102-03 (A131) (ENT000132); Oct. 22, 2012 Tr. at 2624:11-2625:11 (Reamer).

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would most likely decrease to approximately 18 percent of what they are now.665 Dr. Tolley testified that this decrease must be considered when comparing property values under the no-action alternative and license renewal.666 221. In rebuttal, Dr. Sheppard testified that his analysis need not explicitly consider PILOT distributions because: (1) his repeat-sales analysis implicitly accounted for PILOT distribution impacts on property values; and (2) Dr. Tolleys hedonic analysis showed that PILOT payments have a statistically insignificant impact on property values.667 We address each of these issues below.

222. First, Dr. Sheppards claim that his December 2011 report implicitly accounts for PILOT payments ignores Dr. Tolleys rationale for explicitly including PILOT payments.

Namely, Dr. Sheppards $1.07 billion impact estimate presumably accounted for net property value impacts (i.e., positive PILOT impacts minus disamenity impacts). However, any comparison between license renewal and the no-action alternative must account for the fact that PILOT distributions will significantly decrease earlier than when property owners would realize any alleged property value increase associated with Indian Points decommissioning.668 Mr. Cleary and Mr. Reamers unrebutted testimony showed that while PILOT and tax payments would remain relatively unchanged under license renewal, those payments would decrease significantly once operations cease.669 Recognizing this difference is therefore appropriate as one compares the two. Explicitly including PILOT payments calculations in the no-action 665 Entergy Testimony at 102-03 (A131) (ENT000132); Oct. 22, 2012 Tr. at 2624:11-2625:11 (Reamer).

666 Entergy Testimony at 103-06 (A132).

667 New York Rebuttal Testimony at 40:11-41:21 (NYS000434).

668 See Entergy Testimony at 103-06 (A132) (ENT000132).

669 Id. at 102-03 (A131). As Mr. Gruntz, the Entergy Services, Inc. Director of State and Local Taxes, confirmed, after IP2 and IP3 permanently shutdown, their value would be significantly diminished. Decl. of Cory Gruntz at 4 (ENT000591).

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alternative and license renewal comparison, as Dr. Tolley suggests, appears to be a reasonable manner to do so.670 223. Second, we also find unconvincing Dr. Sheppards claim that Dr. Tolleys analysis shows that PILOT distributions have a statistically insignificant impact on property values.671 Dr. Tolley testified that well-established economic literature demonstrates that changes in local tax revenues get passed through to homeowners in the form of increased or reduced property valuesi.e., all things being equal, higher tax revenues result in higher property values because they enable higher services.672 Further, Dr. Tolleys hedonic analysis using Dr. Sheppards own Assessor data demonstrated that Entergys PILOT distributions have a statistically-significant positive impact on property values.673 Dr. Sheppard did not dispute that analyzing his own Assessor data set showed such an impact.674 And while Dr. Tolleys hedonic analysis using the separate MLS data set did not provide statistically-significant results for the PILOT variable, Dr. Tolley explained that his finding that the PILOT payment coefficient was positive (i.e., higher PILOT payments are correlated to higher property values) was reasonable and consistent with the statistically-significant PILOT results from Dr. Sheppards data set and with generally-accepted economic theory.675 In other words, Dr. Tolley testified that PILOT payments should be considered to have an effect on property values, as shown by:

(1) established economic theory; (2) the statistically-significant results Dr. Tolley developed using Dr. Sheppards own data; and (3) Dr. Tolleys further interpretation of his own results 670 In fact, as noted above, Dr. Sheppards own January 2011 report included PILOT distributions in a similar manner. See 2011 Sheppard Report at 4 (NYS000230).

671 Oct. 22, 2012 Tr. at 2643:18-25 (Sheppard).

672 Oct. 22, 2012 Tr. at 2641:12-2642:17 (Tolley).

673 Tolley Report at 49 (ENT000144); Entergy Supplemental Testimony at 5-6 (A8) (ENT000592).

674 See generally Oct. 22, 2012 Tr.

675 Oct. 22, 2012 Tr. at 2716:2-12 (Tolley).

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reached using his own separate data set. For these reasons, we find Dr. Tolleys testimony to be reasonable. Accordingly, the Board finds that the no-action alternative and license renewal comparison should recognize, and take account of, differences in PILOT and property tax payments.

d. Comparing the No-Action Alternative to License Renewal 224. Aside from the three issues discussed above, Dr. Sheppard did not disagree with Dr. Tolleys calculations or conclusion that the no-action alternative would have a net negative impact on property values compared to license renewal if one accounts for a 60-year decommissioning period, differences in PILOT distributions, and discount rates. Thus, even if one assumed that Dr. Sheppards billion-dollar property value impact claim was correct, the no-action alternative would result in a net negative property value impact compared to license renewal because the near-term loss of PILOT payments outweighs Dr. Sheppards alleged property value impacts that would occur many decades later.676 Specifically, Dr. Tolley estimated that, even with Dr. Sheppards claimed billion-dollar property value impact, the no-action alternative results in a $164 million negative impact.677 We find Dr. Tolleys estimate to be reasonable.

225. The Board also finds that Dr. Tolleys estimate is fully consistent with the FSEIS conclusion that license renewals socioeconomic impacts would be SMALL and that the no-action alternatives socioeconomic impacts would be SMALL to MODERATE, with the MODERATE adverse impacts felt in the local communities where Entergys PILOT and other taxes account for a significant portion of revenues.678 In other words, even if Dr. Sheppards 676 Entergy Testimony at 111-113 (A141) (ENT000132).

677 Id.

678 See FSEIS at 8-25, 9-9 (NYS00133C).

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December 2011 methodology was not flawed, then the FSEIS proposed action and no-action alternative impact conclusions would remain unchanged. And to the extent that New York claims that the FSEIS is deficient for not considering Dr. Sheppards property value claims, the preceding discussion gives the public a fair sense of Dr. Sheppards opinions and the countervailing perspectives.

E. Dr. Sheppards Future Positive Offsite Land-Use Impacts Are Remote and Speculative 226. At its core, NYS-17B is about property value-driven offsite land-use impacts, not simply property value changes (a purely economic phenomenon, standing alone).679 Moreover, even assuming that a property value impact occurs and is sufficiently linked to physical effects, NEPA still only requires that the NRC consider reasonably foreseeable impacts.680 As such, NEPA does not require that the NRC consider future land-use development that is unlikely or difficult to anticipate.681 The Board therefore next examines, assuming that the no-action alternative would increase property values, whether any subsequent land-use changes require consideration under NEPA.

227. New York presented little evidence of specific future land-use development changes it asserts would occur.682 Instead, New York relied on Dr. Sheppards testimony that essentially equated land-use impacts with his alleged property value impacts.683 The oversimplification of New Yorks claim was revealed in Dr. Sheppard testifying generally that increased values of residential property will cause owners to make more careful use of land and 679 See Indian Point, LBP-08-13, 68 NRC at 114-16.

680 Private Fuel Storage L.L.C. (Indep. Spent Fuel Storage Installation), CLI-02-25, 56 NRC 340, 348-49 (2002).

681 Socy Hill Towers Assn, 210 F.3d at 182.

682 See generally New York Direct Testimony (NYSR00224); New York Rebuttal Testimony (NYS000434).

683 New York Direct Testimony at 40:1-10 (NYSR00224).

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allocate the land to different types of uses.684 But Dr. Sheppard provided no analysis of what future land-use development or changes he expected.

228. Testifying for Entergy, Mr. Cleary indicated that it is inappropriate to equate property value impacts directly with offsite land-use impacts.685 Mr. Cleary explained that a more appropriate method to evaluate potential offsite land-use impacts would consider historic land-use patterns, current land-use regulations and zoning ordinances, tax rates and incentives, population growth trends, and pending and proposed development plans, all of which also affect actual land use.686 According to Mr. Cleary, the GEIS Indian Point-specific case study considered these factors and thus reflects a comprehensive approach to assessing offsite land-use impacts.687 After looking at these factors, the GEIS Indian Point case study concluded that license renewal would have SMALL land-use impacts.688 229. In rebuttal, Dr. Sheppard responded with a general assertion that [p]roperty values and land use are intimately connected, and the role of property values in determining land use patterns has been understood and written about for a long time, going back to the middle of the 19th century.689 Dr. Sheppard, however, acknowledged that property values are not the only thing that affects land use.690 He did not dispute, for example, that regulatory controls, such as zoning and similar regulations, also influence and limit land use.691 The Board thus finds that the Indian Point-specific case study included in the GEIS, in conjunction with more recent 684 Id.

685 Entergy Testimony at 49 (A74), 80 (A109) (ENT000132).

686 Id.

687 Entergy Testimony at 50 (A75) (ENT000132); see also GEIS at C-89 to -91 (NYS00131G).

688 GEIS at C-91 (NYS00131G); see also Entergy Testimony at 54-56 (A80) (ENT000132).

689 New York Rebuttal Testimony at 8 (NYS000434).

690 See id. at 9.

691 See id.

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information in local land-use plans, is relevant to evaluating the reasonableness of New Yorks claim that significant offsite land-use impacts would occur under the no-action alternative.

230. The GEIS and Mr. Clearys undisputed testimony reveal that the area surrounding Indian Point is already zoned and used for heavy industrial use.692 As Mr. Cleary testified, the LaFarge wallboard factory is located south of Indian Point, along the Hudson River, and the Charles Point Industrial Park, the site of the Charles Point Resource Recovery Plant, the countys waste disposal facility, is located north, also along the Hudson River.693 Further, as Mr. Cleary pointed out, local land-use plans forecast only minor long-term riverfront zoning changes and provide that most of the riverfront will continue to be zoned industrial and light industrial.694 Those plans further indicate that even after Indian Point is decommissioned (regardless of when that occurs), the Village of Buchanan intends to keep most of the Indian Point site zoned industrial.695 231. Based on the foregoing evidence, the Board finds that, even if property values changed as a result of the no-action alternative, a number of intervening steps would be necessary for those changes to cause significant offsite land-use changes. Mr. Cleary observed that those intervening steps would, at a minimum, include significant alterations to the current industrial land-use pattern that has dominated development along the Hudson River in Buchanan for decades.696 Because the industrial land-use pattern is well-established, and local regulatory controls guide land-use development, the Board finds that there is no reason to believe that 692 See GEIS at C-89 to -90 (NYS00131G); Entergy Testimony at 51-53 (A77-78), 55 (A80) (ENT000132); Oct.

22, 2012 Tr. at 2575:24-2576:3 (Sheppard), 2615:16-19 (Tolley).

693 See GEIS at C-90 (NYS00131G); Entergy Testimony at 53 (A78), 60 (A87) (ENT000132).

694 See Village of Buchanan, Comprehensive Master Plan at IIB-11 to IIB-12 (Mar. 2005) (ENTR00137); Entergy Testimony at 61 (A88) (ENT000132); Oct. 22, 2012 Tr. at 2615:16-19 (Tolley).

695 See Village of Buchanan, Comprehensive Master Plan at IIB-11 to IIB-12 (Mar. 2005) (ENTR00137).

696 See Entergy Testimony at 60 (A86) (ENT000132).

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denying the IP2 and IP3 license renewal application could cause significant changes. As such, the FSEIS reasonably concludes that the no-action alternatives land-use impacts would not be significant because shutting down the plant is expected to cause few changes to local land use, and any transition to alternate uses is expected over an extended timeframe.697 232. Moreover, at hearing, Dr. Sheppard conceded that he has not undertaken a study of whats likely to happen in the area around Indian Point after operations end.698 Thus, even were we to credit Dr. Sheppards speculation that land owners who own property thats not currently in residential use will have a strong economic incentive to alter the use and alter that land use (i.e., they will begin petitioning to have it zoned for residential use),699 such a phenomenon is so speculative, and so dependent on multiple intervening actions (e.g., local planners actually responding to Dr. Sheppards hypothesized petitioning) that NEPA does not require that NRC consider such speculative changes.700 233. Assessing any potential land-use changes under such a scenario is all the more impractical given that such changes would not occur, if at all, until an unspecified remote future time after Indian Point is decommissioned.701 Given the speculative and unreliable nature of making assumptions about future land-use changes many decades from now, the Board finds that the FSEIS appropriately concludes that offsite land-use changes would not be significant. We decline to hypothesize about possible unlikely future land-use changes resulting from yet-697 See FSEIS at 8-21to -22 (NYS00133C).

698 Oct. 22, 2012 Tr. at 2611:20-21 (Sheppard).

699 Id. at 2612:7-14 (Sheppard).

700 See Socy Hill Towers Assn, 210 F.3d at 182 (NEPA does not require consideration of merely contemplated future actions or development that is unlikely or difficult to anticipate.); see also Natural Res. Def. Council, 524 F.2d at 93 (holding that NEPA does not require consideration of significant changes in governmental policy or legislation); Shasta Res. Council v. U.S. Dept of Interior, 629 F. Supp. 2d 1045, 1059-60 (E.D. Cal.

2009) (holding that agency did not err by failing to consider alternative that would have required legislative appropriation of additional funds because chances of additional appropriations were remote and speculative).

701 Entergy Testimony at 61-62 (A89) (ENT000132).

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uncertain steps by unknown third parties and likewise decline to find the FSEIS deficient for not doing so.

234. In this connection, the Board also finds that the Commissions USEC decision highly instructive.702 In that case, the petitioner argued that the no-action alternative should have considered the beneficial job-creation impacts (i.e., positive socioeconomic impacts) that allegedly would result if the proposed uranium enrichment facility site was used for some other alternative industrial development. The Commissions rationale rejecting that contention applies equally to NYS-17Bs merits:

[Petitioners] contention puts forth the idea of an industrial heaven employing thousands at the . . . site if the [facility] license is denied and if the site were cleaned up. Yet not only did the contention lack support for this claim, as the Board found, but the no-action alternative is most simply viewed as maintaining the status quo. For the industrial heaven idea to become reality would involve numerous future, yet-uncertain steps by unknown third parties.703 235. New York has provided no evidence that the current status quo industrial land-use pattern along the Hudson River in Buchanan is likely to be converted to a riverfront heavento an attractive riverfront development or some other beneficial use simply as a result of the no-action alternative. Similarly, Dr. Sheppards suggestion that local residents may begin pressing for zoning changes is no less speculative than the USEC petitioners claim.704 236. New Yorks attempt to distinguish USEC fails. New York argues that it does not propose an alternate use for the Indian Point site as did the petitioner in USEC, rather, that it is Entergy who proposes an alternate use of continuing to operate Indian Point.705 This is just a 702 See USEC, CLI-06-10, 63 NRC at 466-69.

703 Id. at 468 (citations omitted).

704 See Oct. 22, 2012 Tr. at 2612:12-14 (Sheppard).

705 New York Revised Position Statement at 18-19 (NYS000433).

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play on words. By arguing that property value increases will cause significant land-use changes, New York clearly is arguing that if Indian Point ceases to operate, then land-use patterns will change from the current baseline and in some manner that significantly differs from historic patterns and current local land use-plans.706 Because such long-term, significant future land-use changes are contrary to historic patterns and current local land-use plans, and would involve numerous uncertain steps by unknown third parties, the Board finds that such changes are remote and speculative and need not be considered under NEPA.

V.

SUMMARY

OF FINDINGS OF FACT AND CONCLUSIONS OF LAW 237. Based upon a review of the entire record of this proceeding and the proposed findings of fact and conclusions of law submitted by the parties, and based upon the findings set forth above, which are supported by reliable, probative, and substantive evidence in the record, the Board has decided all matters in controversy on NYS-17B and the reaches the following conclusions.

238. The Board finds that New York has not met its burden to establish that its alleged property value changes result from any physical impact to the environment actually caused by Indian Point. More likely, any such property value impacts, if they exist, result from perceived risk (whether accurate or not) and fear of nuclear power. Accordingly, the Board finds that NEPA does not require any further consideration of property value impacts or any resulting offsite land-use impacts.

239. Assuming, however, that it were necessary to address what, if any, property value changes would occur, the GEIS already did so. Specifically, the GEIS evaluates the potential for 706 For example, Dr. Sheppard referenced an example in Wisconsin where an industrial facility that was closed, taken over by the city and completely rehabbed into residential use and a museum. Oct. 22, 2012 Tr. at 2611:5-17 (Sheppard). Again, however, Dr. Sheppard made clear that he did not undertake a study of whats likely to happen with regard to the Indian Point sites or surrounding areas land use after operations ends. Id.

at 2611:20-21 (Sheppard).

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Indian Point to adversely impact property values and concludes that such impacts, if any, would be SMALL. In accordance with that conclusion, NUREG-1555, Supp. 1 directs the NRC Staff to focus its offsite land-use review on other more relevant issuesnamely identifying impacts resulting from any plant workforce-related changes during the period of extended operation or land development caused by changes in the plants PILOT or tax payments. Because New York has not identified why or how the FSEIS evaluation is materially inconsistent with this Staff guidance, New York must specifically and substantially support its challenge that the FSEIS must do more, in order to overcome the special weight accorded to such Staff guidance.

240. Even if New York were not held to this heightened standard, however, the Board finds insufficient evidence to conclude that the no-action alternative would cause a substantial increase in property values. On this issue, New York, Entergy, and the NRC Staff offered differing expert opinions about the validity and conclusions of competing economic modeling approaches. The Board finds on behalf of Entergy and the Staff for three primary reasons. First, New Yorks claim that a $1.07 billion property value gain would result from the no-action alternative removing a disamenity relies on several questionable assumptions and on analysis that is contrary to generally-accepted economic methodologies. Second, Entergys Indian Point-specific property value assessments, using a widely-accepted hedonic economic modeling approach, demonstrate that proximity to Indian Point has had no discernible disamenity impact on property values and therefore, there is no increase to be had under the no-action alternative.

Third, even assuming New Yorks asserted property value gain is correct, this tells only part of the story. The no-action alternative results in net overall negative impacts to property values because lost PILOT payments soon after cessation of operations outweigh any alleged property

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value increase in the distant future after decommissioning. Thus, because no significant property value impacts are expected, there can be no property value-driven land-use impacts.

241. Finally, even further assuming the no-action alternative would eventually cause surrounding property values to increase, the Board finds that New York has not shown that such an increase would drive any reasonably foreseeable offsite land-use impacts requiring NEPA consideration. New Yorks expert generally equated vaguely described land-use impacts with his alleged property value impacts, but provided no supporting analysis of particular future land-use development or changes, and failed to acknowledge potential limits imposed by current development patterns, zoning regulations, and existing local development plans. In contrast, the Indian Point-specific study included in the GEIS, in conjunction with more recent information in local land-use plans, undermine New Yorks claim that there are unexamined non-speculative and significant offsite land-use impacts under the no-action alternative. For significant offsite land-use changes to occur, numerous uncertain future steps by unknown third parties would have to take place, including zoning changes, shutting down other nearby industrial facilities along the Hudson River, and then developing the surrounding properties. Because such long-term, significant future land-use changes are both contrary to historic development patterns and current local land-use plans, the Board finds that such possible changes are remote and speculative and thus need not be considered under NEPA.

242. In summary, the preponderance of the evidence shows that New Yorks alleged property value changes are not the result of any physical impact to the environment actually caused by Indian Point and, even if they were, the no-action alternative would not cause a substantial increase in property values. The preponderance of the evidence also shows that even assuming the no-action alternative would eventually cause surrounding property values to

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increase, such an increase would not drive any reasonably foreseeable offsite land-use impacts.

Accordingly, the Board finds that the NRC Staff and Entergy carried their respective burdens of proof, and that, based on the entire record of this proceeding, the NRC Staff has satisfied its NEPA obligations under 10 C.F.R. Part 51. Issues, motions, and arguments presented by the parties but not addressed herein have been found to be without merit, unnecessary, or not relevant to the Boards findings on NYS-17B.

VI. ORDER WHEREFORE, IT IS ORDERED, pursuant to 10 C.F.R. §§ 2.1210 and 51.104(a)(3), that the New Yorks Contention NYS-17B is resolved on the merits in favor of the NRC Staff and Entergy.

IT IS FURTHER ORDERED, this Partial Initial Decision will constitute a final decision of the Commission forty (40) days from the date of issuance (or the first agency business day following that date if it is a Saturday, Sunday, or federal holiday, see 10 C.F.R. § 2.306(a)),

unless a petition for review is filed in accordance with 10 C.F.R. § 2.1212, or the Commission directs otherwise.

IT IS FURTHER ORDERED that any party wishing to file a petition for review on the grounds specified in 10 C.F.R. § 2.341(b)(1) must do so within twenty-five (25) days after service of this Partial Initial Decision. The filing of a petition for review is mandatory for a party to have exhausted its administrative remedies before seeking judicial review. Within twenty-five (25) days after service of a petition for review, parties to the proceeding may file an answer supporting or opposing Commission review. Any petition for review and any answer shall conform to the requirements of 10 C.F.R. § 2.341(b)(2)-(3).

Although this ruling resolves all matters before the Board in connection with Contention NYS-17B, NRC Staff issuance of the renewed operating licenses under 10 C.F.R. Part 54 must

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abide, among other things, the resolution of the remaining admitted contentions, including those contentions designated for future hearings.

Respectfully submitted, Executed in Accord with 10 C.F.R. § 2.304(d)

William B. Glew, Jr., Esq. Kathryn M. Sutton, Esq.

William C. Dennis, Esq. Paul M. Bessette, Esq.

ENTERGY SERVICES, INC. Jonathan M. Rund, Esq.

440 Hamilton Avenue MORGAN, LEWIS & BOCKIUS LLP White Plains, NY 10601 1111 Pennsylvania Avenue, NW Phone: (914) 272-3202 Washington, DC 20004 Fax: (914) 272-3205 Phone: (202) 739-3000 E-mail: wglew@entergy.com Fax: (202) 739-3001 E-mail: wdennis@entergy.com E-mail: ksutton@morganlewis.com E-mail: pbessette@morganlewis.com E-mail: jrund@morganlewis.com COUNSEL FOR ENTERGY NUCLEAR OPERATIONS, INC.

Dated in Washington, D.C.

this 22nd day of March 2013

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of ) Docket Nos. 50-247-LR and

) 50-286-LR ENTERGY NUCLEAR OPERATIONS, INC. )

)

(Indian Point Nuclear Generating Units 2 and 3) )

) March 22, 2013 CERTIFICATE OF SERVICE Pursuant to 10 C.F.R. § 2.305 (as revised), I certify that, on this date, copies of Entergys Proposed Findings of Fact and Conclusions of Law For Contention NYS-17B (Property Values) were served upon the Electronic Information Exchange (the NRCs E-Filing System), in the above-captioned proceeding.

Signed (electronically) by Lance A. Escher Lance A. Escher, Esq.

MORGAN, LEWIS & BOCKIUS LLP 1111 Pennsylvania Ave. NW Washington, DC 20004 Phone: (202) 739-5080 Fax: (202) 739-3001 E-mail: lescher@morganlewis.com COUNSEL FOR ENTERGY NUCLEAR OPERATIONS, INC.

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