ML19322C047
| ML19322C047 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 11/09/1979 |
| From: | Graham J, Levy A, Loomis P GENERAL PUBLIC UTILITIES CORP., SECURITIES & EXCHANGE COMMISSION |
| To: | |
| References | |
| NUDOCS 7912280479 | |
| Download: ML19322C047 (71) | |
Text
__
, e.,_,
j 00CKE1 NECER ' ' -
2R00. & UTil, FE
'M sit Ste gIsp c rs p
N f
8 T
g HEARINGS s
1 i
!/
Before The I
~
" h SUSCOIGiITTEE ON NUCLEAR REGULATION OF THE COmiITTEE ON EIPIIRONIE T AND PUBLIC WORKS i
1 i
UNITED STATES SENATE t
i t
i THREE MILE ISIAND CILWP I
i l
WASHINGTON, D.C.
NOVEMBER 9,1979
~
MILTON REPORTING,INC.
Cfficial0%rposleu (Notary Public: D.C. Virginia Maryland) 1801 CONNECTICUT AVENUE N.W SUITE #301 WASHINGTON. D.C. 20009 7912280y7
A 1
C 0 NTE NTS 2
TESTIMONY OF:
PAGE 3
PHILIP A.
- LOOMIS, JR.,
Commissioner, 9
4 United States Securities.and Exchange Commission 5
AARON LEVY, Director, 6
Division of Corporate Regulation, Securities and 7
Exchange Commission 8
JOHN GRAHAM, Treasurer, t
9 General Public Utilities Company Ow Q
10 m
0 11 JOSEPH HENDRIE, Chairman, 38 m
O 12 United States Nuclear Regulatory Commission EE
.E 13 JOHN AHEARNE, Commissioner, O-z8 p5 14 Nuclear Regulatory Commission ac 02 aE 15 VICTOR GILINSKY, Commissioner, WL 2
16 Nuclear Regulatory Commission z
O h
17 LEONARD BICKWIT, General Counsel, I
18 Nuclear Dtgulatory Commission 19 NICHOLAS YOST, General Counsel, 20 Council on Environmental Quality i
l 21 l
\\
j l
22 23 j
24 I
25 i
l
1 1
HEARINGS ON THREE MILE ISLAND CLEANUP 2
3 4
FRIDAY, NOVEMBER 9, 1979 5
United States Senate, 6
Subcommittee on Nuclear 7
Regulation of the Committee e 8
Environment and Public Works,,
9 OW Washington, D.
C.
Q 10 m
The subcommittee met at 9:37 a.m.,
in room 4200, Dirksen 2
11 mOj Senate Office Building, Hon. Gary Hart (chairman of the 12 EE subcommittee) presiding.
,2 13 O R Zo Present:
Senators Randolph, Hart and Simpson.
pe 34 Ea Oz Senator Hart.
The hearing wilL come to order.
1 15 wa m
16 Yesterday, this subcommittee ventured into largely 0
uncha rted te rri tory.
We explored the many unknowns of 17 E
18 recovering from a major commercial. nuclear accident.
The trip into ths new regulatory terrain was not exactly a reassuring j9 0"'*
20 For example, we learned that nearly eight months after 21 the Three Mile Island accident there are stilL no guidelines, 22 regulations or technical specifications from the Nuclear 23 Regulatory Commission to guide the cleanup and recavery 24 per ti ns at Three Mile Island.
We also learned that without 25
2 I
such regulatory guidance the ultimate costs and duration of tl 2
operation remain very much in doubt.
Further, the utility's 3
ability and willingness to bear these costs, and to assure thi 4
continuity of this operati.on also are in doubt.
We became 5
familiar with the intricacies and the hazards of each step of 6
the cleanup operation from the initial step of 7
decontaminating the auxiliary building water to the final 8
crucial step of dismantling and removing the highly radioactis 9
cors.
Ow y
10 The major lesson of yesterday's hearing, for me at least, m
0 11 was the understandable nervousness of the nearby neighbors of 2 a 0$
12 the Three Mile Island plant.
To quote the Chairman of the 3
.E 13 Board of Supervisors of Newberry Township:
" Met Ed's present Us Zo p5 14 piecemeal appraoch," referring to the cleanup process, " is ac 0Z aE 15 driving Newberry Township residents batty."
Chairman Bruce wa m
Z 16 Smith further stated:
"A long-range, step-by-step plan could O
h 17 better prepare the community as weLL as the community leaders 2
18 with the problems and dangers to be confronted with the 19 cleanup process."
20 However, testimony yesterday from utility and NRC 21 officials indicated that each side is, at least to some degreG 22 waiting for the other to make the first move.
It seems that 23 Metropolitan Edison, and its parent utility, General Public 24 Utilities, are waiting for the NRC to provide the i
25 specifications for each technical step to be taken, while the
3 a
1 NRC wants to have the utility's plan in hand before deciding 2
on the step-by-step speicifcations.
This kind of hesitancy aa 3
uncertainty, in my view, is not in the public interest; surelp 4
it is not reassuring from the perspective of those who live i
I 5
in the shadow of the cooling towers of Three Mile Island.
~ f f
6 The impact on the costs and the potential health effects!
i 7
of the recovery operation are enormous.
For example, the 8
subcommittee investigation staff advises us that the cost of t
9 removing the radioactive krypton gas from the containment O
W Q
10 building can range from zero to $100 million, depending upon j
z i
0 11 whether the gas is released to the atmosphere a little bit at l 2
0 12 a ti'me or whether it has to be compressed and carted away in ZS
.E 13 tanks.
Thus, there seems to be a basic conflict between the Oa t
Zo p2 14 need to proceed with recovery operations swiftly and the need l ru t
Oz t
15 to proceed cautiously, and therefore more slowly, to satisfy 2
Z 16 public concerns about the safety of each step of the operation O
1-7 Today we will hear from membersoftheNuclearRegulatoryf I
i 18 Commission, and we will want to explore in particular how f
i 19 they plan to resolve this basic conflict.
l 20 For example, is the Commission planning to prepare a full 21 envrionmental impact statement before the cleanup operations 22 can proceed beyond the present stage of decontaminating the 23 auxiliary building water?
If so, how long a delay will this 24 involve?
And what if there are emergency steps that have to 25 be taken on a timely basis?
4 1
We also wiLL hear today from the Treasurer of General 2
Public Utilities and from members of the Securities and 3
Exchange Commission on matters pertaining to the financial 4
ability of the utility to sustain.the costs of the cleanup 5
operations.
It turns out that these financial questions are 6
an integral part of the nuclear regulatory process and of our 7
oversight responsibilities with respect to the Nuclear 8
Requlatory Commission.
Our investigative staff advises us 9
that, to date, a utility's ability to pay the costs of recover:
Ow y
10 from a nuclear accident has not been considered part of the m
2 11 financial review by the NRC in granting a utility a license to E m O$
12 operate a nuclear power plant.
In fact, a member of the NRC ES
.E 13 testified recently before this committee that the financial Oa Zo p5 ja review portion of the licensing process was " excess baggage" ec 0z af 15 that the Commission could well be relieved of.
It now seems wa e
16 that these financial considerations should be a high priority 2
0 17 in the nuclear licensing process.
E 18 What if we looked into a utility's ability to finance a 19 nuclear power plant and operate it and it turns out that is 20 sound, but if the plant has a major accident and requires considerable rehabilitation and that utility doesn't have the 21 financial ability to finance that, then what does the public 22 do?
Under existing law, if a utility goes bankrupt before it 23 can complete the cleanup after a nuclear accident, the 24 responsibility for maintaining the plant falls squarely on the 25
5 1
NRC.
Is the NRC now prepared and qualified to take on such a 2
responsibility?
We will want to explore this issue very closel 3
today.
I think in light of the fact the Congress is being 4
confronted with the proposition, if not the necessity, of 5
substantial financial assistance to one of the major 6
corporations in America, the role of the Federal government 7
in private financing, particularly under dire circumstances, 8
is becoming an increasingly important one, We are talking 9
here about an industry that runs in the tens of billions of Ow y
10 dollars, and the question of who pays when it comes to cleanin!
m 11 up is obviously becoming a much more visible and important one U
"a 0$
12 Senator Simpson.
2
.E 13 Senator Simpson.
Thank you very much, Mr. Chairman.
O A Zo p5 ja Yesterday, we heard expressed the sincere concerns of 2a OZ ai 15 t.h e residents of the local population around Three Mile Island W4 m
16 regarding cleanup and recovery operations at the site.
As z
O 17 Senator Ha rt has quoted, we had a most refreshing witness who l
E 18 siad that up there, the piecemeal approach was driving them 19 batty, and everyone understood what he was saying when he said that.
It was certainly precise.
20 The testimony, on balance, underscored my belief that 21 a new and more candid planning approach is needed by the utili 22 and especially by the NRC to manage the recovery situation.
T 23 utility witnesses stated that a general plan for recovery and 24 cleanup was under development, but that much of the detail wou 25
6 1
have to be developed as the recove ry effort proceeded and as 2
new and possibly changing regulatory requirements were impose $
The NRC witnesses testified that flexibility was'needed to 3
4 develop regulatory requirements as the recovery process' moved 5
forward.
To be sure, I think some flexibility on the part of the utility and NRC may be needed to tailor the cleanup 6
7 program to the situation at the site, particularly as that situation becomes more fully known.
8 9
Nevertheless, I feel that a greater sensitivity to the w
i needs of the local community is essential here.
We are not y
10 a
l o
dealing, as the Commission normally does, with a new jj t
m, application to built a facility.
Rather, we are faced with O $
7 Z%
~, 2 a severely damaged plant that is now in stable condition but 13 U R Zo which poses continuing risks to the local population and to pe 34 ra Oz the workers at the site.
And we are c e rt a i n ly faced with a 1
15 wa m
community which is already anxious as a result of the 16 O
accident and highly skeptical of the two organizations directB 37 I
involved in the cleanup; that is, the NRC and the utility.
18 Given this situation, it seems to me prudent, if not essentiaS l
39 i
f r the NRC to lay out in detail for full public review the 20 standards it expects the utility to meet and the means it 21 will use to ensure the compliance.
22 Mr. Chairman, we will have the Commission with us today, 23 and I would be very interested in hearing reasons why the 24 agency cannot say definitively what it is and is not willing 25
7 1
to allow in terms of releases into the atmosphere and river 2
du ri ng the cleanup operation, what the impact of those release" 3
is likely to be and what limit should be imposed for the 4
workers and what insurances we should use to ensure the 5
applicable standards are met.
I understand that the NRC 6
staff prepared a package of new regulatory requirements 7
somewhat along those lines several months ago and forwarded 8
them to the Commission.
I hope that we might know the status 9
of those propose requirements and what the Commission plans to:
W Q
10 do concerning them.
As I see it, such a set of regulatory 2
2 11 requirements properly validated through public review and E m O$
12 comment, followed by the preparation of detailed recovery ZS E
13 plans to meet those requirements, again subject to public e a r
Zo PU 1-4 scrutiny, would do much to ease the legitimate local concerns.;
za
~
0[2 g
15 Mr. Chairman, the second issue of our hearing today, and z
16 one we will review carefully, is how the Commission intends 2
O 17 to discharge its responsibilities under the National Z
18 Envi ronmental Poli cy Act of 1969. -Again, the question seems 19 to be whether the Commission plans a piecemeal approach to 20 recovery or whether a more comprehensive approach to consideri' 21 environmental impacts is warranted.
I think the Council on t
i 22 Environmental Quality will be helpful in that regard.
l 23 Finally, and presently, we have this opportunity to 24 explore further with the utility representatives and with 25 witnesses from the Securities and Exchange Commission the l
8 1
financial situation concerning the utility and how that 2
af f ects of will af fect its ability to pursue the necessary 3
cleanup operations at the site.
I look forward to hearing the 4
witnesses.
5 Thank you, Mr. Chairman.
6 Senator Hart.
Thank you, Senator Simpson.
7 Our first panel of witnesses this morning includes 8
Commissioner Philip Loomis of the Securities and Exchange 9
Commission, accompanied by Mr. Aaron Levy, Director of the Ow y
10 Division of Corporate Regulation of the SEC; and also Mr. Joha 2
0 11 Graham, who is Treasurer of General Public Utilities Company.
E o O$
12 Gentlemen, we are pleased to have you with us.
Mr. Loomi EE
.E 13 you have a prepared statement, as I understand.
O A Zo Mr. Loomis.
Yes, sir, p5 14 ec 0@2 Senator Hart.
We would be pleased to have you summarize a
15 ya
=
m 16 that.
These are investigative hearings, and therefore it z
O
}
77 has been the custom and rules of the committee to swear the I
18 witnesses before this committee.
So if you gentlemen wiLL 39 stand and be sworn.
In the statements and answers you are to give before this 20 subcommittee, does each of you swear to tell the truth, the 21 whole truth and nothing but the truth so help you God?
22 Mr. Loomis.
I do.
23 i
24 Mr.. Levy.
I do.
i Mr. Graham.
I do.
i 25
9 1
Senator Hart..Thank you.-
Bo seated.
2 Mr. Loomis, please p.oceed.
3 TESTIMONY OF PHILIP A.
LOOMIS, JR. COMMISSIONER, 4
UNITED STATES SECURITIES AND EXCHANGE COMMISSION; 5
AARON LEVY, DIRECTOR, DIVISION OF CORPORATE i
6 REGULATION, UNITED STATES SECURITIES AND EXCHANGE 7
COMMISSION; JOHN GRAHAM, TREASURER, GENERAL 8
PUBLIC UTILITIES COMPANY 9
Mr. Loomis.
Before proceeding with my prepared statement O
W Q
10 I would like to make an explanatory remark.
The subcommittee; e
0 11 yesterday asked us two questions:
first, what the SEC could 2 m O$
12 do to protect the utility from bankrupty; and second, their EE
.E 13 authority in case bankruptcy occurs.
Our statement provides U R Zo p5 14 short answers to these two questions because we did not have ma Oz aE 15 t,ime to explore all the implications and possibilities that W4 m
16 are implied from your questions, some of which are unsettled, 2
O h
17 because aside from a new small cases in the 1930s, there have I
18 been no bankruaty reorganizations of electric utilities, and 19 obviously the issues would have been different tnan the 20 bankruptcy of an ordinary industrial corporation, which is 21 simply the closing duwn and turning off the lights and 22 Liquidating it's assets and dividing among the creditors.
That-l 23 tning, as a practical matter, could not be done with an 24 electric. utility.
25 So s umma ri z i ng my prepared statement, GPU, General Publis i
10 1
Utilities, is a registered holding company under the Holding
)
l 2
Company Act, which is a statete administered by the Commission 3
GPU and its predecessors have been regulated as such by the 4
Commission since the Act became effective.
GPS is.a pure 5
holding company which owns all the common stock of its three 6
operating subsidiaries, Metropolitan Edison Compnay, 7
P~
vlvania Electric Compnay and Jersey Central Power & Light 8
GPU has no outstanding securities except common stock, and, 9
in essence, its stock represents the common stock interest w
y 10 in the subsidiaries.
2 0
11 We are submitting as an exhibit financial and operating e
0 12 data prepared by our staff shortly after the accident from ZE E
13 the December 31, 1978 filings of GPU and its subsidiaries, to Da Zo PU 14 summarize the capital structure and 1978 income of each a0 OZ 15 gompany, the classification of the utility plant and the source z
16 of the electric energy sold.
Z O
17 GPU has $4.6 billion of consolidated assets, of which
)
I 18 Metropolitan Edison accounts for $1.2 bil'. ion, Pennsylvania 19 Eclctric $1.4 billion and Jersey Central $1.9 billion.
20 Consolidated common equity was just under $1.4 billion, the 21 funded debt just over $2 billion.
22 Without going further into these financial matters at the 23 moment, one of the purposes of the r e g ul a t o'r y provisions of 24 the Act was to require that the' members of holding company 25 systems be soundly financed with too high a level of debt.
11 1
The GPU system has only about 50 percent of its capitalizatios 2
in the form of long-term debt.
Its bank loans, at the time 3
of the accident, were only $100 million, about two percent 4
of its capitalization.
Following the accident, it negotiated 5
a recolving credit agreement, for a two-year term, which maket 6
about $450 million available over that two-yea r pe ri od.
The 7
interest rates on that financing were quite comparable to tha9 8
charged other utilities.
9 By requiring proper financing, the Act and regulations OW y
10 seek to keep each utility company highly solvent and most m
O 11 unlikely candidates for bankruptcy, except under extraordinarg
%e O$
12 conditions, which may be here.
Neverthe less, utility Z
.E 13 companies depend on reveneus to pay their expenses.
If U G Zo p5 14 revenues were to become insufficient, the utility company wou0 ma OZ aE 15 b,ecome unable to pay its bills and, consequently, unable to W4 m
16 operate.
Available revenues depend on rates.
Neither the Z
O j
17 Securi' ties and Exchange Commission nor the bankrupty court I
18 could protect the utility from such cash deficiency whether i 19 went into bankrupty or not.
But as a practi. cal matter, 20 arrangements would have to be made to continue to supply the 21 community with electricity, and unless some external power 22 sources was found -- we don't know of one here -- this would 23 require measure to enable the utility to operate.
24 You asked if the Securities and Exchange Comission has 25 power to control or approve any reorganization plan necessitaq l
l l
12 I
1 by the. current or prospective insolvency of the utility.
2 Section 11 of the 1935 Act -- a copy of the pertinent f
deals in some detai subsections is attached to my statement 3
t with that subject.
4 Section 11(e) of the Act permits a registered holding 5
company or any subsidiary to submit a reorganization plan 6
under the 1935 Act to the Commission.
If the Commission finds 7
that the plan is necessary under the Act and is fair and 8
[
equitable to the persons affected thereby, it approves the pla 9
w which is then presented to a Federal District Court for an k
10 E
O enforcement order.
If a reorganization takes place in j
j; E
i a
bankruptcy, Section 11(f) of the 1935 Act requires that any O S 12 ZS
.2 13 plan proposed be first approved by the SEC.
4 Oa Zo Major reorganizations have been effected under each of p5 g
EU O@Z these procedures.
a 15 WL E
You asked the SEC's authority in such cases to appoint a 16 z
O trustee for a utility in financial difficulty.
Only a Federal
)
17 I
18 court can appoint a trustee under either Section 11(e) or Section 11(f), but the Act gives the Comission the right to bG j9 heard on such appointment.
(
20 l
That concludes my prepared statement.
21 Senat r Hart.
Thank.you very much, Mr. Loomis.
22 Mr. Graham, did you have any prepared statement?
23 Mr. Graham.
I do not.
I would be happy to resoond to 24 l
y ur inqui ri es.
l 25 1
I
13 1
Senator Hart.
Thank you very much.
2 I want to make note also that effort was made to secure 3
the appearance of the Pennsylvania Public Utilities Commissios before this subcommittee this morning.
The setting of utility 4
5 rates is, of course, a highly complex and technical area in which each state's procedures present unique intricacies.
6 Since the ability of the operators of Three Mile Island to 7
finance and conduct cleanup operations on site are directly 8
related to rate making by the Pennsylvania PUC, we did invite 9
QW members of that body to testify nere this morning to help us F
jo
<m O
understand the difficult issues presented to them.
We deeply ij 2
O!
regret Pennsylvania Public Utilities has refused to allow any 12 EE of its staff to appear before the subcommittee at this time l
.E 13 Cg Ze
- 5 j4 pending determinations before that commission.
ma az Mr. Loomis, let me ask a few questions to try to understo ay j3 wa i
z r
better the financial situation.
Could you tell the subcommitt 16 z
O t
what degree of freedom the GPU has, the holding company, in h
17 I
18 obtaining financial resources to assist its three operating utilities?
Specifically, would the SEC authorize or be j9 required to authorize an electric utility holding company to 20 issue long-term debt?
i 21 1
Mr. L miss.
Yes.
And, generally speaking, it has been 22 ur p Licy that the holding company should avoid a debt 23 capitalization because its assets are essentially common 24 stock, and to have debt secured by common stock we don't 25
14 1
approve of.
That is why GPU is typical in that it has no 2
significant debt; it just has stock outstanding.
3 Mr. Levy.
Some years ago when GPU was facing stringent 4
cash problems, we did authorize the issuance of long-term debt, 5
all of which has since been retired.
And the outstanding bank 6
Loans today actually were incurred in order to retire the 7
balance of certain long-term debentures then outstanding.
So.
8 this Commission does have discretion to permit them to issue 9
debt, but usually under extraordinary and unusual conditions. i Ow y
10 Senator Hart.
Does the data you just presented indicate z
O 11 to you GPU is in sound financial condition overall?
E m O$
12 Mr. Loomis.
I will leave that to Aaron, but I will make 3
an introductory answer.
Its capitalization is appropriate
.2 13 U R Zo for its operations, we believe, and it seems to me -- and g5 34 ma z
a?
Aaron might not agree, but he will explain -- the particular a
15 WL z
16 problem of GPU and Metropolitan Edison is the fact with both Z
O 17 of these nuclear plants down and not operating, they have to Z
18 buy electricity from other sources, and that electricity is j9 very expensive, and the problem is whether or not their revenues will carry the cost of obtaining purchased power.
We 20 don't kriow exactly, I don't think anybody does, what it is 21 l
g ing to cost to clean up.this plant and what its ultimate 22 l
phase is going to be.
To a considerable degree, there is 1
23 insurance that covers part of it.
24 I will ask Aaron to go forward.
25 l
.r 15 1
Mr. Levy.
The last financial statement we have for GPU'E 2
audited balance is December 31, 1978.
That balance sheet, 3
the financial data for that year, reflects the fact that the TMI 1 was stiLL then in operation but was withdrawn ' rom 4
S service fore refueling in early 1978, and TMI 2 was not in peration by the end of 1978.
So that we have a feast of 6
financial results for 1978 with TMI 1 but not with TMI 1.
7 What is going to develop during the year, we are going to 8
9 get these financial statements and we will have some Ow F
10 opp rtunity to examine as particular proposals and applicatis E
come before us.
E 11 EOj So far as the cleanup costs are concerned, we have no 2
2S hard data at the present time what the estimated rangeoof 13 U R Za costs may be.
Whether or not GPU is able to bear in terms pc j4 EG Oz 0f cash resources is also partly a question of time.
The E
15 ya l
E estimate we have is about $100 mitLion for cleanup costs.
16 O
Over what period of time.
Is it six months, or a year?
And
}
j7 i
I 18 partly the cash generated by GPU would also depend on the billing it is going to get and its ability to obtain outside 19 1
sources of loans, all of which must ultimately be adequately 20 g
, l appraised.
Th1s is something upon which we cannot make a judgment.
We don't know.
1 g
Senator Hart.
Senator Randolph.
g Senat r Randolph.
Thank you very much, Mr. Chairman.
24 I will ask permission to have my statement included in ty 25 i
16 i
1 record.
2 (The statement referred to follows:)
3 4
5 i
6 7
8 9
O s
W 10 O
11 n.aOE 12 a
c%
Z~n=
13 Og s
Zo EU 14 l
EU Of O. I 15 Wa 1
E 16
- z 0
J 17 I
18 19 20 21
.22 4
23 24 i
25
17 1
Senator Randolph.
I would like to make a comment.
FirsG 2
no overall recovery plant has been presented by Metropolitan 3
Edison, yet the Commission has already approved the processing 4
of contaminated water.
Far from representing the kind of 5
deliberate decision making called for by the circumstances, this decision was taken against the backdrop of a diminishing 6
7 storage capacity.
I understand that the Commission determined that no 8
9 environmental impact statement was necessary before approving Qw the start of this processing, despite a suit by citizens Q
10 2
0 11 seeking the preparation of such a statement.
It would be my 2
0 12 feeling -- and I want us to be very careful, of course, in Z
.E 13 making just statements -- it would seem that this dispute C A Zo p5 j4 emphasizes the need for overall impact analysis, Mr. Chairman, ec 0@z nce a comprehensive plan is submitted, as weLL as incremental a
15 WL m
g assessment of the steps as they are contemplated.
O 17 Now.the step-by-step approach by environmental analysis I
18 is plainly inadequate without an overall conception.
I want the record to show that, because we do have to have commitment 19 l
20 and the impacts have to be presented in a recovery plan, or the Commission, in my feeling, c'annot adequately determine 21 l
acceptability of particular steps in the process.
l 22 I w uld like to have on the record that the decision 23 making on cleanup at Three Mile Island is environmental by its 24 25 very nature.
To enable the Nuclear Regulatory Commission to
realistically consider environmental consequences, I would urg I
the Metropolitan Edison officials to expedite the submission 2
of an overall recovery plan.
3 Do you feel as I feel', Mr. Chairman, that that is somethi 4
5 that perhaps has merit?
What is your feeling about that?
Senator Hart.
Senator Randolph, I certainly think that 6
is one of the issues that came out of our hearings yesterday.'
7 We will want to explore that with the NRC commissioners when 8
they appear before us and get their judgment on that.
But it; 9
OW is certainly a legitimate concern.
k 10 E
O Senator Randolph.
Thank you.
jj 2
Sneator Hart.
Thank you for your statement.
0$*
12 EE Mr. Loomis, assuming the replacement power costs will be
.9 13 C &
covered by the rate base for the utility, in your judgment, Zo p5 ja za Oz
.should GPU be able te sustain the estimated $300 to $300 mill!
aj 15 wa E
cost of 'the TMI cleanup?
Mr. Levy.
16 z
O Mr. Levy.
On the basis of the data we have, and b
g7 adequate rate relief is granted, I can't see any reason why I
18 the system should not be able to absorb shatever the cleanup j9 cost may be.
Af te r all, if they are estii.ated at $100 milli.
20
$50 million would be from Metropolitan Edison and $25 milliod 21 l
by Jersey Central dn $25-million by Pennsylvania Electric.
22 system itself, you see, is approximate $4.5 million in asset 23 It certainly has ample earning and revenues, on the basis of 24 the assumption you presented, taht that should not present a 25 l
19 I
kind of problem to the financial health.
2 Senator Hart.
Mr. Dieckamp yesterday indicated that the 3
assets of the corporation were not that liquid and the ability; 4
to liquidate those assets was very restricted and very limited 5
Your answer, in a couple of occasions, referred to the assets of the corporation and the size of those assets.
I take 1t 6
the liquidity of those assets does not affect your answer in 7
8 any regard.
Mr. Levy.
Of course, generally the assets of electric 9
0 utilities are substantially just its net plant.
That is what l WF 10
<m k
11 you have got.
The others are items you have, some cash and i
E a other noncash items.
You have to look at the operating O$
12 l
3S revenues and net income and cash flow that is produced.
Of
.2 g;
a; Zo p"
3,4 course, it may be necessary, to some extent, to engage in "i
short-term borrowings, but you are going to be paid out of
's?
15 W4 x
other cash resources and earnings, the operating revenue df g
O j
37 1978, which goes toshow that that would not be any financially I
18 significant impact, that it can be taken on the assumption you have made in the question; ycu have presented, namely j9 that adequate revenues will be applied to cover the additional 20 purchased power costs.
21 Senat r Hart.
Mr. Gr.aham, along the same line, I am sure 22 Mr. Dieckamp made reference of allusi'on in his testimony to 23 the possibility of Federal involvement financially here.
Firt 24 f all, he declined to commit the company to paying for cleanu 25
20 1
costs of Unit 2 if Met Ed went bankrupt.
On October 18th, 2
during an interview with our investigative staff, you took, i
3 I think, almost exactly the opposite position.
Our staff 4
memorandum from that meeting states as follows, and I would 5
make the entire memorandum an exhibit in this proceeding, and unde rstand that this is a staff summary of what you said.
6 (The memorandum referred to follows:)
7 COMMITTEE INSERT 8
9 0
w Q
10 m
O 11 i
a l
2 e Oe l
ua 12 Z%na 13 D R EO F-14 xa U o 1:
15 WL E
I6 Z
0 17 I
18 19 20 I
~
21 22 23 1
l 24 25 I
21 i
1 Senator Hart.
Quoting from the memorandum, "Mr.
Graham 2
committed GPU to clean up TMI 2 no matter what circumstances 3
transpired."
4 First of all, is that a fair assessment of your position, 5
and if so, how do you square that with what Mr. Dieckamp failel to commit?
6 7
Mr. Graham.
I think it is very important to understand 8
the context in which the question was put to Mr. Dieckamp with 9
the way in which it was put to me,-Senator.
The question was' Ow y
10 put to Mr. Kieckamp if the Metropolitan Edison Company went i
l 2
O into receivership, would GPU put the money in to cleanup the i
it E=
0:
12 plant?
As Commissioner Loomis and Mr. Levy pointed out, GPU.
Z$
i
.E 13 is really an accumulation of the three operating companies.
l 0 R Zo p5 14 It does not have a source of reveneus separate and apart fromi mc 0@Z t, hose three companies.
a 15 W4 E
16 As I recall the context in which we,were discussing the z
i t
0 17 issue with your staff, we were talking about the three i
)
I i
18 operating companies' working together outside of a bankruptcy' i
l l
19 or an insolvency of one of those three companies, and I was j
20 saying, and I continue to say, we would take all steps that wG can and within our power to do the cleanup job and to protect 21 the health and safety of the people in that area.
I don't thj 22 Mr. Dieckamp would disagree with that.
I think he was asked 23 24 a very specific question at a time when he was also being ask@
some fairly complicated questions of what happens in the even9 25
l 1
of an insolvency, and I think he was saying we aren't sure o f '
2 all the ramifications.
I would continue to agree with him tha' 3
that is a very complicated question, that we are not sure of 4
the ramifications.
5 Senator Hart.
WelL, I think at some point, ani fairly 6
soon, this subcommittee and the Congress wiLL want an answer j
7 squarely and flatly on that question, particularly when the 8
president of the company begins to atLude to Federal assistanc.
9 Again, I witL just quote a paragraph from our staff OW y
10 memorandum, which I have just put in the record, about what yo E
O 11 statements were.
If they are incorrect, we want to correct E
O 12 them and we wi L L also want, as I have indicated, to get a Z n
.E 13 flat answer and commitment from the corporation at some point ;
Oa Zo p5 14 in the future.
$S aE 15
" Graham committed GPU to cleaning up TMI 2 no. matter what:.
yz E
16 circumstances.
He said insurance coverage was being continued z
0 h
17 to pay for $300 million in cleanup.
He said GPU could absorb I
18 the cleanup of TMI even if it went to $500 milLion, twice the, 19 amount now forecast, with significant backing by the 8echtel 20 Corporation."
3 21 So I think^the public has a right to know, whether throug i
22 this subcommittee or some other means, what the position of t h[
i i
23 holding company is and what the implications are if_the i
24 holding company is not willing or able to back up Met Ed in an 25 insolvency position with regard to the costs of cleanup.
I
23 1
Mr. Graham.
Obviously, given the fact that Mr. Dieckamp 2
did not feel yesterday that he was prepared to respond to your-3 inquiry, I don't think that I could today.
I would just like 4
to say that I do think that, as I recall, the discussion with 5
the staff, perhaps the paragraph you read was too much a I
summarization of a fairly involved discussion involving a lot 6
.7 of assumptions and ques'tions as to variables.
8 Senator Hart.
One of the staff members at the meeting 9
with you has handed me his notes from what you said, Ow Q
10 Mr. Jonathan Cotton of our invest gative staff.
His notes on E
O 11 the staff discussion with you on October 18th of this year 2
a 0$
12 quote you as saying, "We do not distinguish between Met Eo's ZS
.E 13 or all other obligations to get rid of the water, get the core a a Zo p5 14 out and maintain the safe condition of the reactor.
No one rs 0%
is going to walk away from that obligation."
a?
15 W&
2 16 I think what we are trying to find out is hwether anyone z
a b
t7 is going to walk away from that obligation, and if so, what id I
18 going to have to meet it.
And if you or Mr. Dieckamp at this 19 time areunable to make that commitment, then we will want to i
20 pursue that as vigorously as we can and get the official GPU 21 position on that matter on the record.
I think the people of 1
this country and certainly the people of Pennsylvania have a 22 23 right to know that.
I think what our concern is i f GPU will not stand behind that obligation and Met Ed does go into 24 25
\\' insolvency or receivership, what entity is legally obligated
24 1
to maintain that plant and keep the core cool.
As you know, that core is still hot, there is damage to the fuel in there, 2
there is a serious public health and saf ety risk involved, 3
and we are trying to figure out here whether it is Met Ed's 4
responsibility, GPU's responsibility, the NRC's responsibility, 5
the State of Pennsylvania's responsibility, the Congress' 6
responsibility, or whose responsibility it is.
And on the 7
answer to that question, in my judgment, could well rest a 8
Large part of the future of that industry, because I just don's 9
0 think we can have companies operating nuclear generating plantt 10 m
O for profit, and then when they have an accident walk away, jj m!
O without having some pretty strict ground rules as to what the 12 Z%
~, g implications of that are.
13 O &
f$
Mr. Graham.
If I could respond.
Taken by the statement 34 ga I made to the staff -- and I believe that is an accurate W4 m
statement of wh'at I said, and we do intend, to the best and 16 z
O fullest of our ability, to deal with the problems at the islan<
}
37 I
I wout j ust like to state again the question you asked 18 Mr. Dieckamp yesterday was in a very specific context, where
(
39 y u had one of the three operating companies, the one that ownt 20 half a plant, in receivership, and I don't think he was able g
to respond to that because. I think it is a very complicated g
question.
I think also that there would be a responibility g
of the receiver in bankruptcy, the trustee, as to the cleanup g
activities.
So I think it is a very complicated question and
25 I
not one that ono con just cnswer.
But I am sure Mr. Diockamp 2
would st.and by the statement that we intend, GPU and the 3
three operating companies, to the fultest of our financial 4
resources to deal with the problems at the island.
5 Senator Hart.
Well, it is eight months, 'I guess, almost 6
af ter the accident.
Do you know when GPU will be able to answ 7
that question about its obligations under an insolvency 8
situation, or Met Ed's?
9 Mr. Graham.
We have been looking at that kind of questis Ow y
10 We have no reason to believe that Met Ed wilL become insolvent m
O 11 We wilL continue to look at it, and I wiLL try to report to a!
l O
12 the committee or its staff as we are able to get a better ZE
.E 13 view of what it means.
I think one of the things that is Gn Zo P5 14 very relevant is what Commissioner Loomis said, there has nevG zu Oz aE 15 heen an insolvency of a major electric utility in the United W4 m
16 States', and it is not a situation where a company can go Z
O h
17 insolvent and close up shop and go home.
As you pointed out, I
18 someone has to provide the electricity.
1 19 Senator Hart.
Someone also has to take care of that core 20 which is perhaps even more important.
21 Mr. Graham.
Yes, si r.
22 Senator Hart.
How many days of working capital does Met 23 Ed have?
24 Mr. Graham.
In the electric industry one doesn't 25 calculate days of working capital.
Metropolitan Edison Compan
~
26 1
is a porticipent in the revolving credit' agreement.
The 2
revolving credit agreement is for approximately $412 million, 3
which is available to the GPU system.
Metroplitan Edison's 4
Limit under that is $120 million.
In my point of view, with 5
that bank credit and with adequate rate relief as regards the 6
recovery of the replacement power costs, Metropolitan Edison 7
Company does not have a limit on the number of days of working 8
capital it has.
9 Senator Hart.
Mr. Dieckamp yesterday, I believe, QW y
10 suggested that Met Ed was suf f e ring from a cash flow problem.
m O
11 Can you tell us why he said that?
E m 0$
12 Mr. Graham.
Yes, sir.
In the electric power industry,-
EE
.E 13 one does have to rely upon rate making to know what your U R Zo pS 14 reveneus wiLL be.
Our cash problem is that the rep'Lacement ma yZ
=
aE 15 power costs which we buy on the interchange is costing wa m
16 Metropolitan Edison Company about $10 million a month every Z
0
}
17 month.
Part of that has already been reflected in our I
18 customers' bills as a result of the June rate order.
We will 19 have to receive from the Pennsylvania Commission and additiona 20 allowance for that fuel expense for that replacement power cos 21 The cash problem arises out of the fact that we are now paying for that power, but we are not yet recovering all of it from 22 our customers.
That is why I in my earl er response said that
,'23 24 it was necessary to know that we would have rate making that 25 would allow for the replacement power.
That is what produces
27 1
the cash crunch.
And we have asked the Pennsylvania 2
Commission to deal with that problem by a filing we made a wee 3
or so ago.
4 Senator Hart.
What if they reject your request, what 5
wiLL that do to the Liquidity of Met Ed?
Mr. Graham.
There would be a difficult cash position.
6 7
But we have no reason to believe that that could occur.
What is happening is that we are paying for the fuel that is being 8
9 burned either by us or by someone else to supply the QW y
10 electricity that is needed for our customers.
We don't have 2
ij a reason to believe that the Pennsylvania Commission would not 0
E
@el 37 agree, as they have already, that that fuel should be paid fop 3S
.9 j3 by the people who use that electricity.
O R Zo Senator Hart.
Therefore, you see no reason, that being p5 au OZ a!
j3 t,he principal question about the future stability of Met Ed's W&
2 f
16 financing, no reason to believe that that stability wilL be id 0
b j7 question or that Met Ed wilL survive?
18 Mr. Graham.
I can't say there is no question.
I have confidence that the Pennsylvania Commission wilL see that it 19 should deal with that problem in such a way as to maintain thG 20 financial viability of Met Ed and Pennsylvania Electric 21 i
Company.
You wilL recall.that in the spring when faced with 22 l
that very problem, they did respond in a way that made it 23 1
possible for the banks to feel that they could give us the 24 rev Lving credit agreement and made it possible for a group of i
25 l
28 1
institutional investors to respond and invest in long-term 2
securities of the Pennsylvania Electric Company.
I have no 3
reason to believe that the Pennsylvania Commission will not-4 continue to pursue that kind of policy..
I obviously have to 5
be concerned because, as is always true with an electric 6
utility, you must receive those revenues through c5te making 7
in order to have the cash resources to continue the business.
8 Senator Hart.
Let me see if I can try to summarize what 9
I ahve heard you say and perhaps Mr. Dieckamp, and if you wilQ QW H
10 at the conclusion tell me whether I am right or wrong and in
<z O
11 what degree.
"s O
The officials of General Public Utilities believe they 12 EE
.E 13 will get the rate increase they have requested from the U &
Zo p5 ja Pennsylvania Public Utility Commission, and that given that rd 20 OZ aE 15 increase to cover the costs of replacement power they see no W4 E
16 reason to believe that Met Ed will not remain solvent and z
O l
)
17 financially stable and be able to cover the costs of cleanup l
I 18 of the plant and remain as a viabl'e legal entity, responsible l
costs and ultimate disposition of the 19 for both the cleanup I
l l
20 damaged reactor core.
Mr. Graham.
My only concern is we will receive the 21 rate relief we requested from the Pennsylvania Commission.
I 22 would say if we receive adequate and timely rate relief, I 23 believe hat Metropolitan Edison Ccmpany and the other two 24 operating companies of GPU will remair financial viable.
25
29 3
Senator Hart.
And the rest of tne stetomont that I made, 2
responsible for the cleanup?
3 Mr. Graham.
Yes, sir.
I might point out that, as t
4 Mr. Dieckamp pointed out yesterday, we have already spent, I 5
think he used the figure $100 mitLion, and I think I would have used the figure about 580 mitLion at the island.
We, 6
have received $20 million from our insurers.
So we have 7
already financed $60 million, of which $30 million has been 8
9 financed by the Metropolitan Edison Company.
And I think oW that demonstrates both the commitment of the three operating Q
10 m
O companies and GPU to the cleanup effort and our financial j;
ml O
ability at this point to do that.
12 I:
Senator Hart.
Mr. Loomis, again in round numbers, what
,9 j3 u n f0 are GPU's total assets?
34 ms O*
Mr. Graham.
I think I can help.
It is about $4.6 to E!
15 wa m
$4.7 bitLion.
16 O.
Mr. Loomis.
That is right.
37 I
18 Senator Hart.
Over $4.5 billion.
Why is GPU negotiating Federal research funds from the Department of Energy to help 39 cleanup this reactor?
With a $4.5 billion corporation, why is 20 the Federal government getting into this?
We have a $30 21 billion deficit this year..
22 Mr. Graham.
Senator, I think perhaps the participation 23 f the Federal government in that cleanup activity has become 24 a little bit overblown.
There are substantial ongoing researc 25
30 1
programs by various agencies of the Federal government.
Over 2
the years, it is my understanding that the Federal government 3
has spent something like half a billion dollars to study 4
nuclear fuel cores and to hypothesize damage to nuclea r f uel 5
cores.
I don't think that Federal participation in research 6
in the nuclear part of the electric power industry is unusual, 7
and we saw an opportunity for those research activities of 8
the Federal gove rnment to continue, dollars that would already 9
have been budgeted, as I understand it, for those activities.
Ow y
10 To the extent that the Federal government spends money for a
E 11 those research activities, it relieves us in part of money 2 m O$
12 that we would otherwise have to spend, and therefore, we EE
.E 13 believe, that perhaps a small part of the total cleanup Ca Zo p"
14 dollars t.h a t we are looking at, perhaps $400 million, would no mu Oz aE 15 have to be spend by us because the Federal government would ha W4 E
16 spent some research money along the way as part of its ongoing Z
O l'7 activities.
I think that is different from characterising I
18 our approach and what Mr. Dieckamp said as our searching out 19 for Federal assistance.
20 Senator Hart.
He is quoted as using the term with regar@
21 to the Federal participation as "significant participation.".
22 I don't know what that means in dollar terms, but it sounds i
23 awfulLy like the camel's nose in the tent to me.
To treat a 24 damaged and dangerous reactor as an important opportunity to l
l 25 add to the Nation's nuclear experience in a rather bizarre I
31 1
characterization of the situation as we find it, and also I 2
thin,k putting a burden on the Federal taxpayers that is totalt 3
unfounded.
4 Staff points out GPU's quarterly financial statement 5
dated June 30, 1979, and cites the following language:
6 "Moreover, the subsidiary," presumably Met Ed in this case, 7
" expects to seek financial assistance from the Federal 8
government and/or the utility industry in areas where the 9
technical information should be of wide value and significance Qw y
10 Under these circumstance, the amount of loss, if any, suffered 2[
11 by the corporation resulting from the TMI accident is not E e O$
12 presently determinable and no provision, therefore, has been EE
.E 13 made in their accounts."
Da Zo p5 14 What,this says to me as a non-SEC lawyer is that the m"
O#
aE i*c holding company is unable to state to its stockholders or the wa m
16 public the amount of loss suffered by this accident becaus'e it Z
O
)
17 is unable at this time, namely the end of June of this year, I
18 to state how mucc money the Federal' go**ernment of industry 19 generally may be willing to put up to get " technical informati.
of wide value and significance."
I guess I wiLL just restate 20 my question:
When do you think GPU will be able to vouch for 21 the long-term stability and survivability of the operating 22 utility here and flatly be able to commit to the American 23 24 people that it is able to undertake these cleanup costs?
Mr. Graham.
Let me say first of all the statement that 25
32 1
you read froa tho footnotes to our financial statomont is 2
part of a very long discussion of how one accounts for a 3
nuclear accident when one cannot yet size the loss, and I am 4
not an accountant and I can't really speak to the entire 5
question of why one does not put a loss on the balance sheet 6
at this time.
But that is what that paragraph is intended to 7
deal with.
A rather minor part of that is the fact that becaut 8
we did not know how much of the cleanup activities would be 9
uninsured, wculd not be allowed for rate making, and might be QW y
10 available to us from other sources is p a r t' of the reason why z
E 11 it does not appear in our financial statements.
E o O$
12 In response to when we wilL know for sure that we can EN
.o 13 deal with all of the financial ef f ects of the accident, I woulc D &
Zo p5 14 just like to state I, too, am disappointed there is no ea OZ tE 15 representative of the Pennsylvania Commission here today W4 m
16 because, as Mr. Levy pointed out, and as I tried to emphasize, Z
O
}
17 the recovery of the replacement fuel expense is a very importa(
I 18 part of that question, and the question of how the State 19 regulators wiLL deal with that problem is a very important 20 part of the entire equation.
21 Senator Hart.
I would have to check the recard again, and I can't remember right off the top of my head, but I belie 22 l
l 23 my question to Mr. Dieckamp -- and I apologize for pursuing 24 this, but I can't get a straight answer -- assumed that the 25 action before the' Pennsylvania PUC was going to be favorably
33 1
acted upon, your request, and then I asked the question about 2
the commitment of GPU.
We have two problems:
(1) who is 3
going to be legally responsible for cleaning up the mess; and 4
(2) who is going to pay for it.
And I want to know when we 5
are going to get an answer from GPU on both those questions.
6 Mr. Graham. With that hypothetical, favorable action by 7
the Pennsylvania Commission, I believe that the banks wilL 8
stay with us; Metropolitan Edison wilL have access to bank 9
credit; GPU can contribute in the form of leaving retained W
Q 10 earnings in Metropolitan Edison Company or by GPU using 2
0 11 part of the revolving credit agreement to make borrowings at E
O!
12 the GPU Level and to prt that money into Metropolitan Edison a:
.E 13 Company as that might be necessary.
With adequate, responsivo Og Zo p5 14 timely rate relief from the Pennsylvania Commission to maintai-ec OZ a kind of cash generation that will be acceptable to short-ted a?
15 W4 E
16 investors, I believe that I can state for Mr. Dieckamp that Z
0 17 GPU can do the financing that is necessary to do the cleanup 5
18 work in the order of magnitude that we have looked at.
19 Senator Hart.
Therefore, Met Ed will stay financially l
l 20 stable and legally responsibility?
i t
Mr. Graham.
Yes, sir, with adequate rate making by the_'
21 State authorities in t h a t.-
22 i
Senator Hart.
But conversely, if your request is rejectq 23 24 by the PUC, then it is a whole different ball game.
Mr. Graham.
If there was an outright r e j e c t.i o n, which I:
25 I
34 I
have no reason to anticipate, and which would be, in my vi e w,.
2 quite inconsistent with what the Pennsylvania Commission has 3
done, it would be difficult to know all of the ramifications of where Metropolitan Edison Company would go at tha*t point.
4 Senator Hart.
Mr. Loomis, do you have anything further 9 5
add?
6 Mr. Loomis.
I would venture one observation.
However 7
this works out, I think that putting Metropolitan Edison into g
9 a bankruptcy reorganization would not help.
That is not the QW answer.
And it would raise some very difficult, unsettled y
10 a
2 11 questions under the new Bankruptcy Act as to who would get E
Oh whatever revenue comes in; whether it would go to cleanup or 12
$E whether it goes to paying off bonds is unsettled under the
.2 33 Da Zo pu ja present law.
Though this is a brand new law, I think the ec O@Z courts would decide it right, but there would be a lot of a
15 wa 2
Litigation.
So one hopes for everybody's sake Metropolitan 16 O
Edison doesn't have to go into bankruptcy.
p j7 I
Senator Hart.
But the Federal government doesn't control 18 that, that is a corporate decision, is it not?
19 Mr. Loomis.
Yes, I think that is true, if they want to 20 g
into bankruptcy, which I am sure they don't, they can.
8ut 21 l
any rer,cganization plan would have to be approved by the 22 Securities and Exchange Commission.
23 Senator Hart.
What are the assets, again in round 24 numbers, of Met Ed?
25
35
.r 1
Mr. Loomis.
The figures we had were 1978 figures.
2 Mr. Levey.
$1.2 bilLien.
3 Senator Hart.
Broadly defined, or inclusively defined, 4
I believe our investigative staff has determined that the 5
total cleanup costs, including the cost of replacement power, 6
can go to $1.8 billion.
I am just wondering whether the 7
board of directors might decide under some set of circumstancc 8
that it is better to go into receivership; the cost of 9
replacement might exceed the assets.
OW Q
10 Mr. Graham.
Perhaps I can address that, Senator.
m 0
11 I think that it is important that one be very careful in "c
0$
12 taking that $1.8 bittion figure that comes from the Kemeny 3S
.E 13 Commission report and relating that to the asrets of Met Ed.
3n Zo p5 14 I would like to say in the Kemeny Commission report there ma Oz aE n;
were three figures, a low, a median and a high, and the W1 m
16
$1.8 billion figure is the high one of those.
It assumes that z
O 17 TMI 1 would stay out until I think 1983 -- we have no reason I
and TMI 2 until 1985.
18 to see thct 19 Senator Hart.
But high can also be in business terms 20 conservative.
Mr. Graham.
I recognize that.
Of the $1.8 billion, hal' 21 of that belongs to Met Ed, or approximately half because it is 22 a 50 percent owner of the plant.
So in the first place, if yc 23 24 want at use the $1.8 billion number, it ought to be 5900 milLion related to capitalization.
25
36 1
Second of all, most of that figure would come from two 2
sources:
one is the billing to our customers for fuel for 3
the energy expense, and the Pennsylvania Commission has already 4
allowed us to re-der a substantial part of that.
We are.ar-kin 5
for essentially the rest of it now.
So that over the years 6
that are c'
,ented by that estimate, that fuel cost would 7
be recovered and would be paid for by the customers.
Second 8
of all, the cleanup expense, if it is $400 million, 5300 millie 9
would come from our insurers.
OW Q
10 So when you look at that 5900 million figure, I think z
11 you have to distinguish between the fuel part of it that O
2 e 12 could be incurred over a lung period of time and recovered O
5
.E 13 from customers through billings and the cleanup part of it, D &
Zo come from our insurers.
p5 14 most of wh.ich'will mu OZ Senator Hart.
Den final question, Mr. Graham, and I aE 33 wa z
16 think it is a repetition of the question I have asked you 2o 17 over and over again.
Pennsylvania Electric and Jersey Power &
2 18 Light each own 25 percent of the TMI 2.
If Met Ed were to go-19 into bankruptcy, would the other owners, the two I have stated, 20 still remain liable for the cleanup cost connected with TMI 2?
Mr. Graham.
I don't know the answer to that question.
21 We have asked our counsel to begin looking at it.
It is a 22 complex question relating to license, our bond indentures, our 23 24 debenture indentures.
I might also say, though, if Metropolit.
Edison Company went into receivership, I see no reason why 25 I
37 I
the receiver would not, as part of the revenues that he 2
receives, contribute a substential portion of the cleanup 3
cost.
So I don't think you can just say would it come from 4
Penn Electric and Jersey Central.-
5 Senator Hart.
Mr. Loomis, any further thoughts?
6 Mr. Loomis.
No, sir.
7 Senator Hart.
- hank you, Commissioner Loomis, Mr. Levy.
8 Thank you, Mr. Graham.
I think we will want to get back to 9
this subject in due time.
w Q
10 Our second panel of witnesses this morning includes m
11 Chairman Joseph Hendrie of the NRC; Commissioner Ahearne, O
m O
12 Commissioner Gilinsky; Leonard Bickwit, General Counsel of Z
E 13 the NRC; and Nicholas Yost, General Counsel of the Council on U A Zo P"
14 Envrionmental Quality.
mG OZ 15 Mr. Chairman, gentlemen, welcome once again.
We are a
16 pleased to have you here.
I think, Mr. Chairman, you were z
O h
1:7 here for at least part of our heerings yesterday and this I
18 morning.
So we will look forward to he a ri ng your comments.
19 Once again, these are investigative hearings.
The rules l
20 of the committee provide for swearing witnesses.
So I will 21 ask you to stand and raise your right hand.
Does each of you swear that the testimony you are about :
22 23 give before this committee will be the truth, the whole truth 24 and nothing but the. truth, so help you God.
25 Mr. Hendrie.
I do.
38 1
Mr. Gilinsky.
I do.
2 Mr. Ahearne.
I do.
3 Mr. Bickwit.
I do.
4 Mr. Yost.
I do.
5 Senator Hart.
Thank you.
Please be seated.
Mr. Chairman, I don't know that you have a prepared 6
7 statement.
Do you have any preliminary remarks that you wish g
to provide us?
TESTIMONY OF JOSEPH HENDRIE, CHAIRMAN, UNITED 9
0W STATES NUCLEAR REGULATORY COMMISSION; JOHN y
jo 2
0 AHEARNE, COMMISSIONER, NUCLEAR REGULATORY 11 e!
COMMISSION; VICTOR GILINSKY, COMMISSIONER, O
12 Z2 NUCLEAR REGULATORY COMMISSION; LEONARD BICKWIT,
.E 13 O A Zo
. GENERAL COUNSEL, NUCLEAR REGULATORY COMMISSION; p5 ja ea OZ NICHOLAS YOST, GENERAL COUNSEL, COUNCIL ON ai 15 w1 m
ENVIRONMENTAL QUALITY 16 z
O Mr. Hendrie.
The general counsel has suggested that I b
F7 E
18 make briefly one of those helpful remarks with regard to oggoin proceedings under the Commission rules, and so on.
Just a note 19 that there are formal adjudicatory proceedings which have been 20 requested and are under way for Unit 2 on the EPIC 0K-II s y s t e_n,
l 21 This was a request just this week, so that has just started.
l 22 Then for Unit 1 at Three Mile Island there has been a Commissi<
23 order for a proceeding now for some time.
So we have noted 24 before on these occasions that ex parte rules and the governmet 25
39
'o 1
Sunshine Act impose some constraints on members of the 2
Commission in making comments on these matters.
I understand 3
your staff has been informed of these constraints.
We would 4 :
like to avoid getting into the situation that Chairman 1
5 Pertschuk got into recently, since we all feel an obligation to vote on these things and wouldn't want to be disqualified.
6 I don't want to belabor the point.
I will stop there.
7 Senator Hart.
We will take those matters into 8
consideration and do our best to operate within your legal 9
OW constraints, Q
10 m
O Mr. Chairman, what has been the level of Commission jj 2
involvement in establishing the regulatory framework for the m
O$
12 a:
.E 13 recovery operations?
O &
Za Mr. Hendrie.
The Commission has met a number of times p5 34 20 with the staff at various stages in connection with actions GZ a9 15 wa 16 by the staff.
I would say there is a tolerable level of z
O acquaintance among the commissioners with the situation.
j 17 2
Senator Hart.
Can you be a little more specific than 18 j9 just meeting a number of times?
Into what detail have you gon(
in establishing the framework and the time tables and so on?
20 Mr. Hendrie.
In terms of-the meetings of the Commission, 21 we have been briefed at various stages and discussed with staf
~
22 the actions which have been proposed.
There'were a number f
23 of meetings in connection with the Commission's action to 24 authorize operation of the EPICOR-II system.
I have talked 25 i
l 1
40 I
to members of the staff about the r e c o ve r y operations at 2
Three Mile.
Several months ago I was at Three Mile 3
specifically to review the progress, look at the equipment and 4
see how everything was going with regard to cleanup operations 5
down there.
I have talked to members of the staff at various times in some moderate detail about the various steps that 6
7 are involved, and particularly about how we managed to move in a manner which is consistent with the Envrionmental Policy 8
Act provisions from where we are now to getting on through 9
Ow Q
10 the steps in the cleanup of the damaged unit.
m O
I have had some concern, and I think other members of the ij E e Commission have had some concern, that we try to look through O $
12 5
that maze and not find ourselves tangled up in procedural
.2 33 a;
Zo p5 j.4
, might impede some needed further decontamination steps that mu OZ steps at the site.
1 15 WL e
I don't know how much further along this line you would 16 Z
O like me to go, but that may indicate somewhat better.
j j7 E
Senator Hart.
What is the Commission's position with 18 regard to the desirability or requirement of an environmental 39 impact statement?
l 20 Mr. Hendrie.
Well, certainly the cleanup of Three Mile-l 21 Unit 2 has to be agreed to by the NRC, by Federal aut ho ri t i e s.
22 I*
' * ' ' Y b*'
- * ' " Y 23 connection with NEPA, and it needs an impact statement.
-I 24 have talked this past week to Chairman Speth and CEQ officers c 25
41 1
and I see we have Mr. Yost with us this morning -- obout going 2
through that environmental analysis process in a way which 3
fully satisfies the intent of the legislation but also is 4
cnnsistent with t,he time scales and need for action in the 5
decontamination program, and we are still at a fairly 6
preliminary stage in terms of mapping out that course of actier.
7 Senator Hart.
I guess we are back to where we were 8
yesterday in terms of how much time we have for some of these 9
things, and I would like to get your judgment on public and Ow 10 workers' health and safety implications of various time frames H
<m 2
11 and various delays.
Let me just run through a series of them.
E o O$
12 First of all, your judgment on the risks of delaying the z:
.E 13 resolution of the radioactive atmosphere presently contained Un Zo p5 14 in the reactor building and how soon you think that is going 20 OZ to have to be done to protect the public health.
aS 15 wa m
1,6 Mr. Hendrie.
I think the sooner that it is done, the Z
O F
better.
I don't think there is any pressing danger or urgent 17 I
18 risk.
That containment has stood the test well, and I have no 19 doubt it will continue to do so.
On the other hand, the longer 20 these materials are allowed to remain in gaseous or liquid forms, simply loose in the containment building, the more 21 chance there is that somebody will open the wrong valve or
~
22 something else will happen and some of it will get out.
It is 23 a concern of this kind in connection with the tank in the 24 auxiliary building and the fact that it was just filling up anc 25
42 I
the prospect was for having to start f i.l l i n g tanks in the 2
other unit that led me to become this concerned back before 3
we started the EPICOR stay to begin to pound on the table and a
say we have got to move, it is going to the dimension of an 5
emergency situation.
Now the materials within the containment, the krypton in 6
7 the atmosphere and material there in the wate, I think I certainly wouldn't classify it as an emergency situation.
As 8
9 I say, I think that containment will kep them in there in good OW Q
10 shape for a good long time in necessary.
But it just adds a
11 some increment, however small it may be, to the public risk to O
E o 12 go for extended periods of time without processing.
We need U
z
.E 13 to get on with it.
Da Zs p5 14 S e n a t.o r H a r t.
On the one hand this, but on the other han@
m3 Oz that.
We heard testimony yesterday from the people in the are6 ai 15 W1 m
16 who feel that they haven't been dealt with as candidly as z
O b
17 possible.
I understand on the one hand this, but on the other l
E 18 hand that.
But what we have got to'know and provide to the 19 people is a sense of when.
So I guess what I am asking is a little more specific question.
20 1
Mr. Hendrie.
A schedule hasn't been developed.
21 Senator Hart.
When will it be developed?
22 Mr. Hendrie.
I expected Met Ed is due to come in with 23 their layout of where they hope to go and some approximate 24 scale of-time they would hope to accomplish it; I ju'dge from 25-
43 t
1 the discussion yesterday that that was pretty close.in.
2 Senator Hart.
WeLL, it was late as hell, frankly, and 3
it is awfully hard to pin anybody down on this.
Everybody 4
says they are waiting for somebody else.
Frankly, I am on the 5
side of that second panel yesterday.
I don't live there, but if I did I would want the Government of the United States and 6
7 the State of Pennsylvania and the utility to begin to give me a little more specific answers instead of they are going l
8 9
to move and then we are going to move, and on the one hand O
Q 10 this, but on the other hand that.
I think what people want w
2 0
is a sense of certainty, and I guess what I want is a sense 11 m
of when they are going to have a sense of certainty.
Are we O
12 z a
.E 13 talking about a month?
Three months?
Six months?
Or a year?:
0n Zo Mr. Hendrie.
There ought to be a reasonable layout, I p5 ja mu Oz would think, available on a preliminary basis in several month; 15 15 W4 m
Senator Hart.
Several months.
16 Z
O Mr. Hendrie.
I think that that will not become sort of a:
}
37 I
ja semi-firm schedule for a longer time than that simply because it becomes involves in the analysis requirements under NEPA; f
39 it is part of making those decisions.
I will point out when 20 l
the staff publishes its environmental impact statement, which l
21 1
l is inevitably going to take some time, that that still doesn'.
22 fix the schedule in an absolute, concrete way, because as you 23 take each of these steps, you then learn a further piece of
(
24 inf rmation, and after we have done whatever is necessary to 25
44 I
do with the containment atmosphere, the radioactive material 2
in the containment atmosphere, good, now we can start 3
processing the water.
But the schedule on the processing of 4
the containment water wiLL be contingent on how the gas 5
processing goes.
The entry to the containment will be 6 l contingent on th e processing of water.
Any extended entry 7
to the containment wiLL be contingent on how well the cleanup 8
of the residual materials on the wall of the containment go.
9 And all of these affect how soon you might get down to the Ou y
10 primary system and talk about openin g the vessel and getting 2
0 11 the core out.
E Oo$
12 So people ere simply going to have to recognize there are a
certain variabilities in these schedules.
I think the point
.E 13 Ua Zc p5 14 your are punching, and I must say with, I regard, good EU Oz justification, is here we are some seven months or so on down a
15 W4 m
16 the line after we collected ourselves after the accident and z
O 17 there is not that at least preliminary laying out of how do
)
I 18 we get from here to there, "there" being decontamination.
19 Senator Ha rt.
Not even a ball park.
And apparently 20 nobody is even giving the people up there in the area the information you have just stated about contingencies.
I think-21 it is very frustrating, and I think very, very frightening, 22 when you are saying is we don't know when all these things can-23 be done because we don't know how long each step is going to 24 take, and until.we know that we can't really issue anything 25 I
a i
L
45 1
publicly, and we have an EIS to do here, but at the same 2
time we can't wait too long because the longer you wait, 3
somebody can operate a valve and something may leak and we can 4
cause ourselves more problems.
Somehow this committee and the 5
people in the area are going to have to get a much better 6
sense.of the low side and high side of time tables.
First of 7
all, we are going to have to get a sense on when the low side 8
and high side will be estimated and available.
You said 9
several months now.
But then it could be longer because of the QW Q
10 EIS.
Then as we undertake each step of the process it could 2
0 11 be longer than that, and the people up there are going to m.
O$
12 have to get used to it.
Well, I think they have gotten used z:
.E 13 to a lot of things.
They could get used to more if they had Da Zo p5 14 more specifics than if the NRC or utility have to hedge about mc OZ with uncertainties here.
They have just got to get more 1
15 w1 e
16 information than they have gotten, and so do we.
Z O
l'7 I don't the the EIS are the saviors of the world, and Z
18 I certainly don't think so when the'y are used to delay things.
19 If an EIS is necessary to help us do our job, we ought to get 1
20 on with the EIS so we can get under way with thing.
On the l
other hand, if it is not necessary but it is just a delaying _
l 21 l
tactic that just slows down the whole process, tnen we ought 22 to just throw it out the window.
Mr. Yost might want to 23 comment on that.
24 (Laughter.)
25
46 j
Mr. Hendrie.
Senator, I would Liko to applcud your last 2
remark.
3 Mr. Yost.
Mr. Chairman, I am Nicholas Yost, General Counsel of the CEQ.
The Council has had disucssions going on 4
5 between CEQ and the NRC, including between Chairman Speth and Chairman Hendrie, on this partfcular' subject.
It has been 6
7 our purpose, for several reasons, to press for the preparation of an comprehensive EIS, while ensuring that that be a device 8
for property analyzing the potential effects for involving the 9
Ow public but not involving any delay.
It was, in fact, on an Q
10 m
issue of delay which we first got into the problem with the k
11 e
Oy NRC, which was the question of the disposal of the TMI Unit 2 12 3
intermediate low-level waste, which the EPICOR system was
,9 j3 Oa Zo finally used.
We emphasized while we be li eve the environmental p5 y
au O*
impact statement system is both legally required and useful, ay 33 wa m
extremely useful toward focusing on issues and alternatives, 16 O
that the provisions within our regulations provide for b
j7 2
18 emergency actions to take place, with consultation with the CEQ, in the interim.
So if something had to be done, we did 39 n t want any obligation of paperwork to stand in front of 20 handling a real problem.
21 There was an exchange of correspondence between the g
respective chairmen'on that issues, which I might submit for 23 the record.
24 (The correspondence referred to follows:)
25 t
i
47 1
Mr. Yost.
Our basic point was that in that caso, we 2
were convinced that this amounted to an emergency, that things 3
had to be done in the interim to deal with the problem of the disposal of that waste, and we, in writing, gave our view that 4
5 the NRC could properly proceed, in the absence of a final EIS, to deal with that problem.
6 7
Nevertheless, we have said that a comprehensive EIS is something which is appropriate for several reasons:
8 9
First, it does see that the environmental effects are Qw Q
10 appropriately considered by all involved.
Secondly, it m
focuses on alternatives, and alternatives here on, for O
11 m!
O instance, how to dispose of contaminated water by an EPICOR j7 j3 system or by shipping or by evaporation or by release are U A Zc the kinds of things that should be focused on.
pe 34 mU Oz Thirdly, the EIS system involves the public, makes the aj j3 W1 e
alternatives known to the public, in particular the affected 16 O
j7 public, in a way which they can make their views known.
]
I 18 Fouth, NEPA places obligations on Federal agencies, and an EIS has a function of ensuring that the NRC itself, 39 as the responsible Federal agency, focuses on what the options 20 are going to be early, rather than be placed in the position l
21 f accepting what Met Ed presents to them without sufficient 22 time to review that.
23 l
Senator Hart.
Mr. Yost, who is going to do the 24 envir nmental impact statement, as b ri e f ly as you can tell us, 25
48 1
and how long will it take?
If it is the NRC won't that be 2
taking them away from the actual solving of the problem?
3 Mr. Yost.
I understand Chairman Hendrie's reluctance 4
to speak definitively in light of his position as one of 5
five members of a commission.
Nevertheless, in discussions between him and Chairman Speth, we had understood that 6
7 Chairman Hendrie was convinced of the necessity and desirabilit 8
of preparing a comprehensive environmental impact statement.
9 We talked in terms of a time of somewhere between six months OW Q
10 and a year for the entire process to be completed.
We 2
O 11 understood at the time that this EIS might be prepared by eOj 2
a contractor selected by the NRC, which would have the effect r:
.E 13 of keeping NRC responsibility but not taking needed staff away Us Zo p5 ja away from other functions; and simultaneously, we agreed with as O@Z a
15 them to continue discussions so that should other sorts of ws z
16 emergency situations arise where the public health or safety Z
0 17 was at issue, that that could be dealt with immediately withouG
}
I 18 waiting.
19 Senator Hart.
Who makes that decision?
20 Mr. Yost.
That would be basically the NRC's decision.
And if they_ are to consult with us, if there is time to 21 consult with us before, to do so before; if it is an emergency 22 l
l of an immediate nature, to go ahead and discuss it with us as l
23 24 soon as possible.
Senator Hart.
Short of an emergency, what do.either or 25
49
'- ^..
j both of you contemplate will happen to deal with containment 2
water and trapped easte?
What is an emergency and isn't?
How i
3 much is going to be helped by an EIS and how much is not go ng to be in terms of cleaning this operation in the next six 4
5 months to a year?
Mr. Hendrie.
I think the place that we are going to 6
have a pinch is in dealing with the atmoshere of the containmed 7
building as a necessary preliminary step to getting on to 8
processing the water in the base of the containment, or a 9
O F
10 step that has to go along with the processing of the water in w
<E O
the containment.
Now what I would like to do is to avoid jj E o the need for emergency action in the sense that we just stop 0$
12 ZS the envrionmental review processes and say never mind, we have;
.9 13 Ds Zo p5 ja got to do something, and this is as good a thing as we can Eu OZ see to do, so we do it.
We went, in effect, through that with' ay 15 W1 E
the CEQ on EPICOR-II because things had just dragged on and 16 O
j7 there was argument about whether we -- there are always peo'ple I
18 who want you to do five more analyses.
Senator Hart.
Exactly.
j9 Mr. Hendrie.
I agree that we ought to get out to the 20 people around that area and explain what we plan to do and whe 21 we reasonably can get to it and what the pros and cons are.
22 Nick says the environmental impact statement is the ideal 23 l
vehicle for doing this.
But there are also people out there 24 who, no matter.what you submit, are going to be suing because 25
50 I
we haven't done 40 more analyses to EPICOR effects to the 2
environment.
There was a great list of comments, "You haven't 3
analyzed this and that and you haven't ananlyzed the other,"
4 and I guess we are in court over that matter now.
There is 5
a hearing that has been requested on the matter.
But you are I
6 sort of in a sense fighting uphill against people who are 7
saying, " Wait a minute, you are going too fast."
What that 8
tends to od is put a pressure on the system to go into more 9
and more detail in these analyses.
The difficulty that I have OW y
10 seen is that when we do an environmental impact statement on 2
0 11 a reactor case, the applicant spends years preparing m
O 12 environmental reports, and it is a bookcase, and we study and z e
.E 13 grind on it and prepare our environmental impact statement, D &
Zo pS 14 and that takes a year and a half, or something like that.
And ma OZ aS 15 we have sort of gotten into a mode of operating in our NEPA wa m
16 analyses which are so massive and clumsy that they seem to z
O 17 me to present some real problems in getting on and doing what h
I 18 needs to be done and Three Mile Island.
19 Senator Hart.
There is no question the Congress is going 20 to take care of that very shortly.
Mr. Hendrie.
Let me say because of that concern we are 21 22 working with CEQ.
I am convinced that the concept of the 23 envrionmental impact statement was not meant to be one that l
24 just paralyzes action, and that certainly isn't CEQ's view 25 of things either.
They feel that the regulations that we have
51 I
which guide us in how to go about these things have ample 2
flexibility in them.
And one of the things we are going to be 3
consulting with them about is reasonable truncations; that is, 4
we can't just analyze this thing forever.
And their help in 5
setting scope for us in how far we go in the overall 6
programmatic statement and then how much detail each steo has 7
to take up as we go along has to be important to us.
I think 8
we can do it, and I have some hope we can crank it in a good 9
deal less than a year.
Qw y
10 Senator Hart.
I think the lawsuits are one problem.
If 2
0 11 I hea rd t he mayo r o f Lar. caste r and Mr. Smith yesterday, it 2
m O$
12 was that they want the government and utility to tell them as a:E 13 quickly as possible how many steps there are, what the da 2a p"
14 likelihood,of those steps being taken within a specific mu OZ a?
15 time frame are, and how you intend to go about it, as much as W4 m
16 you know step-by-step.
Now if you get sued by somebody, Z
O 17 that is not your fault, and they will understand that and they ;
)
I 18 will deal with whoever sues you in their own way.
But what I 19 am saying to you is that this committee and those people want 20 as soon as possible your best estimates.
And if you want to 21 give them to us straight without consulting with the CEQ, tha_t is fine with me.
We will deal with the CEQ.
' Don't wait aroun 22 for this bureaucratic clash that constantly goes on.
Just 23 i
let us know your best judgment.
CEG can do the same thing if 24 it wishes.
You are responsible to this committee and we want 25 l
52 1
to deal with you.
Forget about the lawsuits.
Jus.t give us 2
the low side and high side, step-by-step, when you think both 3
things can be done and when you think they have to be done, 4
and we will work with you on tne EIS and"CEQ'and all the rest 5
of it.
When this self-described conservative supervisor statet that he and his people are being driven batty by the situation c 6
7 I take them seriously.
I must say I am being driven batty by it.
8 9
Now on the reactor, that is the ultimate goal, we have Ow y
10 got a problem, as I understand, of boron concentration, in 2
0 11 maintaining that in the reactor to keep it suberitical.
I
=.
need two bits of information.
What happens if that O$
12 Z%
concentration decreases, for whatever reason, and what happens
.9 g3 D &
Zo p"
ja to the degree of criticality, or recriticality I guess is now 2U OZ the phrase, and how long can we maintain that reactor in this aj 15 wa m
sort of limbo state, and what are the risks of human error, a n (.
16 O
17 when do you think we are going to have to handle that reactor, I
18 how long do we have?
Mr. Hendrie.
Let me go back and start at the beginning j9 with the boron.
20 I am not very concerned about losing boron out of that 21 reactor water.
They keep a chart on the analysis and it just 22 isn't that much of a problem.
We have to keep the boron 23 concentration amply high.
What happens if it comes down, if 24 we lose _it?
As the boron concentration _comes down, the 25 1.
L
a 53 1
reactivity of the core configuration will increase.
I was 2
trying to think if I could remember boron concentrations for 3
cold start of life, a couple thousand opm, pounds per million,.
4 of boron are required, as I recall it, to offset the reactivits 5
of a normal start of life cold core.
This one can be classed 6
for these purposes as cold core, which is a more reactive 7
configuration.
The geometry has changed some.
We know there 8
has been a fair amount of fuel damage.
The core geometry has 9
probably moved the configuration, my guess is, to a less, O
l W
Q 10 slightly less reactive geometry.
So maybe we would need a newf a
2 11 hundred parts per million less bo ron.
Neve rt he les s, get the 2
m O$
12 concentration down far enough, you get a chain reaction going,l ZE
.S 13 and it will go until the fuel and coolant around it heat up, Oa Zo p"
14 which heating induces a negative reactivity until there becomei 1a OZ 1E 15 a balance, until tnat negative reactivity f*om the chain
(
W1 E
16 reaction and heat generated there balances the initial Z
O 17 reactivity situation, and it will equilibriate and it will i
I 18 sit there bubbling or murmuring because the after heat l e v e l-19 is fairly low at this point.
20 I have no reason to believe that will occur.
That is an extraordinary like circumstance, because keeping boron in the gj reactor water is just not that much of a problem and, secondly; 22 if it..did go,-the configuration I think would just settle out 23 24 and run along at some moderate low procedure or void formation f rom moderate boiling.will pose reactivity, and you just sit I
25
l 54 1
there until you crank the boron up again and shut it down.
So 2
I don't regard it as a particularly perilous situation at all.
3 You asked how long do we have and what are the risks of 4
human error.
I think in view of what has happened and the 5
care which we believe everybody is taking with this machine, 6
the risk of human error is pretty small.
I say that in full 7
humility, recognizing this is the precise machine in which 8
human error was exercised to put us in the situation.
9 Senator Hart.
The last part of the situation was how Qw Q
10 Long do we have?
Can you keep it a year?
Five years?
Ten m
2 11 years?
E m O$
12 Mr. Hendrie.
I think all of those time scales I would; EN 13 think that times like five to ten years would just be da Zo p5 14 unconscionable.
It is not necessary from an engineering and mG az health physics standpoint.
To have that just sitting there wi-ai 15 W1 m
16 a damaged core endlessly would be unspeakable.
But in terms Z
O 17 of some technological driving point which says it is seven I
is years, we are really getting to the-point wnere the remaining 19
. cladding is all going to fall down.
Senator Hart.
So somewhere between one and five years is:
20 the level of unconscionability and unspeakability.
21 Mr. Hendrie.
Well, it seems to me getting anywhere near 22 in less than a year is practically out of the question, and 1 23 we haven't got it out of there in five_ years, why that really 2I will be pretty poor performance.
25 i
55
<i 1
Senator Hart.
So one to five years.
2 Mr. Hendrie.
Yes.
3 Senator Hart.
Do we know what we are going to do with i:
when we get it out?
4 5
Mr. Hendrie.
The core debris, the radioactive core debrif will be placed in heavy shielded casks, and then we will look 6
around and say, goo, now what do we do with the casks?
It 7
is good to get it in the shielded casks, that is the right this 8
9 to do, it is a lot less likely to be harmful there than OW elsewhere.
But that still isn't the full answer.
Then there Q
10 m
are about two options in the time frame we are talking about.
k 11 m
Oh One of them is to keep the casks on site for some period that 12 a:
I can't estimate for you, and the other one would be for one
.2 13 U A Zo of the major government processing centers to accept those p5 ja mG OZ casks, where they would reamin, again for a time I can't ai 15 w1 E
estimate for you, until we finally get on to solving the 16 O
high-level waste problem in this country.
[
37 Z
Senator Hart.
All right, back to the principal purpose 18 of the hearings, which is the legal and financial accountabilit j9 question and who is financially in charge here.
Mr. Bickwit 20 may want to join in on this.
21 Section 186(c) of the Atomic Energy Act states, "In cases g
found by the Commission to be of extreme importance to the g
health and safety of the public, the Commission may recapture 24 any special nuclear material held by the licensee or maf en:er 25
{
56 1
upon and operate the facility prior to any of the procedures 2
provided under the Administrative Procedures Act."
Doesn't 3
this, when read with Section 201(f) of the Energy Reorganizatio 4
Act, give the NRC the power to run TMI 2?
5 Mr. Hendrie.
Sounds like it to me, but let me talk to 6
my lawyer, Mr. Chairman.
Mr. Bickwit.
I think it does, Mr. Chairman.
I don't 7
think there is any doubt about that.
8 Senator Hart.
If Metropolitan Edison were to go into 9
aw receivership or become insolvent, and for one reason or anothee 10 m
U GPU were unable or unwilling to assume r+sponsibility, what 3;
=.
would be your recommendation to the Commission in this regard?
U S 12 5
Mr. Bickwit.
You want to look at the options, but at
.9 13 Un Zo this point I would advise them, if it happened tomorrow, I pS ja mG Oz w uld advise them to take it over, and if the expertise of a@
15 ws 2
the Commission was not up to the problem, contract with 16 O
those who could assist.
}
37 I
18 Senator Hart.
Do you think legally the F e d e r a i. government j9 has any responsibility for the cleanup costs?
Mr. Bickwit.
For the costs?
20 Senator Hart.
Of cleanup.
21 Mr. Bickwit.
I don't see it.
22 Mr. Hendrie.
I don't, unless we get to some situation g
where it is an urgent public safety matter and there simply 24 i
isn't any other ir.stitution around that is able to take action 25
56 I
upon and operate the facility prior to any of the procedures 2
provided under the Administrative Procedures Act."
Doesn't 3
this, when read with Section 201(f) of the Energy Reorganizatio 4
Act, give the NRC the power to run TMI 2?
5 Mr. Hendrie.
Sounds like it to me, but let me talk to 6
my lawyer, Mr. Chairman.
Mr. Bickwit.
I think it does, Mr. Chairman.
I don't 7
think there is any doubt about that.
8 Senator Hart.
If Metropolitan Edison were to go into 9
OW receivership or become insolvent, and for one reason or another k
10 2
GPU w'e r e un ab l e o r unwilling to assume responsibility, what 0
11 m!
O would be your recommendation to the Commission in this regard?
j7 ZS Mr. Bickwit.
You want to look at the options, but at
.2 13 U R Zo this point I would advise them, if it happened tomorrow, I pe 34 mu OZ w uld advise them to take it over, and if the expertise of a?
15 wa e
the Commission was not up to the problem, contract with 16 O
those who could assist.
}
37 I
Senator Hart.
Do you think legally the Federal governmen9 18 has any responsibility for the cleanup costs?
39 Mr. Bickwit.
For the costs?
l 20 l
Senator Hart.
Of cleanup.
l 21 Mr. Bickwi*.
ion't see it.
g Mr. Hendrie.
I don't, unless we get to some situation where it is an urgent public safety matter and there. simply 24 isn't any other institution around that is able to take action 25
57 1
But short of that, which I* don't see being the case, it-is 2
not a Federal responsibility, in a financial sense, I wouldn't 3
think.
4 Senator Hart.
Do you agree with Mr. Dieckamps statement S
that this, being the accident, is an important ooportunity f
6 to add to the Nation's nuclear expertise or experience, and if 7
so, what is it worth to the Federal government to add to this 8
expertise?
9 Mr. Hendrie.
Well, it is certainly worth a good many OW y
10 million dollars, and I have written John Deutsch in the m
O 11 Department of Energy and recommended very strongly that the m
O 12 Department of Energy plan on a core examination program.
We z a
.E 13 have, over the years, going back in fact a good many years, Un Zo p5 14 done assor.ted fuel performance experiments, some of it d i r e c t e C.
mu Oz toward normal operation and some of it pressing the aS 15 WL m
16 e xpe ri men t a l fuel pins very hard to try to see what they would Z
O l'7 do in accident situations.
That research is not cheap because
)
I 18 a lot of careful preparation is necessary and you are working 19 in pile with the radiations and so on.
And over the years, I 20 would hate to estimate how much money we have spent on that, and it is still going on and it is still i mp o r t a'n c e.
23 What has happened in the accident at Three Mile Island is 22 an honest to God power reactor full core 23 we have a, full core,.
24 subjwcted to a set of conditions that just go very substantial l farther than what we would have anticipated a core to take and; 25
58 I
survive.
And to not use every resource that we have to 2
understand fully the things that went on in there in detail 3
in order to have that knowledge available to us for safety 4
uses, for better fuel design, better reactor design, and all 5
kinds of things, it just would be a great mistake.
I think it is in this light that it is very worthwhile for the 6
7 Department of Energy to add to its nuclear research and 8
development programs, this section on examinations, after 9
we can get to.it.
Ow Senato r Ha rt.
Well, it is one thing to spend a few F
30
<m 0
11 million to learn the kinds of things you need to learn.
It m!
o is another thing to take what I perceive to be Mr. Dieckamps 12 z:
.2 33 position, this is an opening for a substantial Federal Ua Zo p5 14 commitment,to the cleanup cost, the cost of cleaning up it mu Oz seems is what he is talking about.
In fact, he uses the a?
15 W1 m
16 phrase " substantial."
Again, I am relying on press accounts.
z O
17 But it seemed to me at one point he left the strong inference b_
I 18 that GPU might be using this so-called DOE research applicatio 39 as a means of getting substantial Federal participation in the cost of cleanup.
That is another thing, in your judgment.
20 Mr. Hendrie.
I think that is ouite a different thing.
21 L ok, if I had Mr. Dieckamp's job, why I guess I would be glad; i
22 to have any Federal money that I could get my hands on for 23 i
whatever purpose.
24 Senator Hart.
You would have to stand-in line behind 25
)
l
58 1
survive.
And to not use every resource that we have to 2
understand fully the things that went on in there in detail 3
in order to have that knowledge available to us for safety 4
uses, for better fuel design, better reactor design, and all 5
kinds of things, it just would be a great mistake.
I think it is in this light that it is very worthwhile for the 6
7 Department of Energy to add to its nuclear research and 8
development p rog rams, this section on examinations, after 9
we can get to it.
OW k
10 Senator Hart.
Well, it is one thing to spend a few E
O million to learn the kinds of things you need to learn.
It 11 E m is another thing to take what I perceive to be Mr. Dieckamps O$
12 zl
.E 13 position, this is an opening for a substantial Federal D &
Zo p5 14 commitment,to the cleanup cost, the cost of cleaning up it EG OZ seems is what he is talking about.
In fact, he uses the aE 15 w1 E
16 phrase " substantial."
Again, I am relying on pr'ess accounts.
Z c
O 17 But it seemed to me at one point he left the strong. inference p
I 18 that GPU might be using this so-cal' led DOE research applicatic 19 as a means of getting substantial Federal participation in the cost of cleanup.
That is another thing, in your judgment.
20 Mr. Hendrie.
I think that is quite a different thing.
21 L
k, if I had Mr. Dieckamp's job, why I guess I would be glad 22 t
have any Federal money that I could get my hands on for 23 l
whatever purpose.
24 Senator Hart.
You would have to stand in line behind 25 i
59 Mr. - acocca.
1 g
e 2
Mr. Hendrie.
Yes, indeed.
I think clearly from the 3
utility standpoint it can't be anything but a helo to them.
4 But what I have been talking about 'is t'he opportunity in termi 5
of scientific and engineering knowledge that is very importantc And I certainly hope we don't have that many opportunities 6
7 to do this kind of research.
Senator Hart.
I understand.
I am just trying to draw a 8
9.
distinction.
W y
jo Mr. Hendrie.
There is a clear distinction, and it is 2
0 11 the research I am interested in.
"x 0$
12 Senator Hart.
On the question of takeover, if you will, z:
.E 13 to use a bad term, last month, a couple weeks ago, at a Oa Zo p"
1,4 meeting of the NRC, while discussing delicensing of Unit 2,
mU O@Z I believe you said something to the f o '. '. v w i n g effect:
"the a
j3 wa m
16 Licensee has the responsibility for it.
I don't propose to z
O b
17 discover, take some action and then discover that we, or E
18 my God, let alone I,
have discovered that my name is the first 19 name at the bottom of the place that the buck stops for Unit 2; Not knowing the context in which that statement was made, I 20 would be interested in whether your views are that under no 21 set of circumstances would you exercise your authority under 22 the law to take over that plant given the kind of financial 23 things that may happen?
24 Mr._Hendrie.
No, obviously if there is a need to do it t 25 i
60 1
protect the public safety, why I guess I conceivably could end 2
up, in principle, a plant superintendent, Mr. Chairman.
But and I guess 3
the context in which that remark was made 4
parenthetically I would point out I guess that is one of the 5
benefits of Sunshine, these materials are freely available at appropri ate times -- t he context there was I was arguing 6
7 with my colleagues against the revocation of the TMI 2 licenseg Now we have suspended their operating rights, so they can't 8
9 operate.
But some of my colleagues wanted to pull the O
W g
to license, and one of my concerns-was if you pull the license, m
2 11 why, it wasn't clear to me what the legal instrument was by 2
whi ch NRC retained formal control over that facility, and that Oh 12 z:
is hwat I was saying:
you pull that license and I may discovel
.E 13 Us Zs p"
- 4 when we sort out the legalities ~we own it.
So I was arguing 20 OZ that I didn't want that to happen.
a?
15 wa e
But obvioulsy if there is an urgent need because Met Ed 16 g
O for some reason just withdraws from the site, although I find b
j7 I
18 that hard to envision, but if there is an urgent need, we do what we have to do.
19 Senator Hart.
I would be interested in the views o.f any 20 e all comm'ssioners on the question of the financial 21 qualification of uti li ty licensees.
For example, Mr. Gilinsky 22 in June of this year, in his nomination hearing, I think used; 23 I
the phrase " excess baggage" with regard to too much attention!
24 being paid by NRC to certain categories of information.
'I 25 I
i i
61 1
think, Commissioner, you mentioned financial qualification is 3
a part of that excess baggage.
The staff time required is a 3
good deal, Little is done with it, essentially it hever bears on the outcome of any decision.
Then you mentioned one minor 4
case.
In light of what has happened and in light of this 5
6 p ssibly tenuous situation with regard to the liquidity of Met Ed, do you have any reconsideration on that?
7 Mr. Gilinsky.
Mr. Chairman, I would draw a distinction 8
between the financial qualification inquiry that was conducted 9
OW and still is condu:ted by NRC and more specific sorts of Q
10 e
O inquiries directed to the question of decommissioning and now j;
e{
O cerhaps the ability of a utility to withstand the results of 12 E:
an accident.
The financial qualifications inquiry was largely
,8 13 U
Z o&
directed to determining whether a utility had enough money p5 ja za g2 to build the plant, and it was a concern if they were short of 1
15 wa m
16 money then there would be a certain amount of corner cutting O
and unsafe practices while the plant was constructed.
There
}
37 I
18 really wasn't any evidence that there was a tie in between, you might say, the bond rating and the manner in which the 39 plant was constructed.
And in the absence of any real showing 20 that there was a connection between the utility's financial 21 qualification, as it was determined in their process which g
reviewed their standing with Wall Street and so on, and its 23 ability to build the plant safely I felt that that was 24 something that was excess baggage and could be abandoned.
25 l
62 1
In a note on the subject to my follow commissioners, 2
because we are in the process of trying to revise our rules on financial qua'ifications reviews, I drew a distinction between 3
4 that review as
't was conducted and a review connected with 5
the ability of a utility to decommission a plant, which 6
everyone is going to have to do at some point.
What this accident suggests is that we may well have to have a requiremen 7
which is conncected with the ability of a utility to cope with 8
the effects of an accident, and that would probably be in the 9
O w
nature of requiring a certain amount of insurance rather than y
10 m
O looking at thei r bond ratings.
jj "n
Mr. Hendrie.
I think it is in the kind of situation O $
12 E?
post-accident that Met Ed finds itself in.
I think when you
.E 13 Da Zo are reviewing an application, there hasn't been an accident; p5 34 mU
~
O@z people certainly hope there won't be one.
I think it is very, a
15 wa m
16 very difficult to try to look through the financial data on a
a utility and perceive what its situation might be in the p
37 I
18 event of an accident.
So I think the comments that Vic has made about the financial qualifications review done on normal 39 application processing has considerable me ri t, and really the 20 accident financial situation, I think, is something that has 21 to be looked at in a little different way to get a decent g
handle o'n it.
23 Senator Hart.
Are you saying that the Commission will 24 the future and with regard to the pending applications l o o '< a:
25
63 1
at applicant's ability to handle the costs of a major acciden 2
in the licensing process or not?
I am not sure what I have 3
heard you say here.
Mr. Hendrie.
It is certainly an element.
We have been 4
S Looking at it more from the standpoint of we think of higher 1
pressure to ensure there is intrinsic management capability 6
to organize for an accident in the event of an accident in 7
the post-accident situation.
So it has been more in the sense 8
of utility organization to deal with the situation rather 9
Ow than the financial side.
I guess tS e financial side does have H
10
<m O
an interest here.
You would want to have reasonable confidence-jj m
that you weren't licensing a plant or a utility that was in 0
12 Z$
~, 2 such shakey condition they would just go into bankruptcy and 13 U R Zo there would be some question about their survivability as an p5 ja as z
a?
perating entity to take care of the site.
Yes, I think we a
15 wa m
have to look.
I an not quite sure how we treat or how well 16 O
37 you could do any analyses, but I think we need to look at it.
}
2 Senator Hart.
How about given.the complicated holding of 18 some subsidiaries in this country, what about a licensing 39 requirement that, in effect, required the holding company or 20 parent company to commit its assets to cleanup of an accident 21 at a subsidiary?
That requirement would have clarified the g
situation here enormouly, GPU required by law, in effect as a condition of receiving its license, to stand behind, in the 24 interest of public health and safety, the costs of cleaning j
3
64
?,
1 up a mess by one of its subsidiarios.
2 Mr. Hendrie.
It may be a practical thing to do.
I just 3
don't know.
What I found is that sometimes these things 4
appear to be very sensible and reasonable things to do, and 5
by the time you get through learning about all the complicated 6
interrelations, state law and detail, bond and share, and 7
corporate law complications, sometimes you wish you never would 8
have started the whole thing.
So there may be some 9
complications down there in the details that would make one OW Q
10 wnat to think differently about it.
m 2
11 Senator Hart.
As a matter of public policy, if I may say
"=
0S 12 so, it sounds like a dynamite idea to me.
3E E
13 Mr. Gilinsky.
As I understand it, Mr. Chairman, Met Ed Ua Zo P5 14 had $3 million of insurance for the plant itself.
That is ea OZ 15 something I don't believe we ever looked into before the m
16 accident or at any particular requirements on it.
We have comt z
O
)
17 to appreciate how expensive an accident of this sort can be, I
18 and it may well be we may have to impose a tcouirement for a 19 higher level of insurance on each plant.
20 Senator Hart.
I think you could accomplish that again by 21 imposing a restriction I have suggested.
Then if GPU wants 22 to go out and get the insurance to cover itself, then it can en 23 so.
24 Commissioner Ahearne.
25-Mr. Ahearne.
There is one aspect that I think we have
65 1
to try to understand *and I would suspect the industry has to 2
see, and that is what t il e action of, in this particular case, 3
the Pennsylvania Utility Commission is going to be.
As you 4
know, as large part of the cost of any kind of an accident, 5
whether it is this kind of a very serious one or one that 6
takes a ptnt out for a month or two, is replacement power 7
costs.
I think the Pennsylvania Commission and other 8
commissions will be going through and establishing they 9
are breaking new ground just as all of us are, and I think that W
y 10 is going to have a signi4icant impact on the question of a
2 11 insurance and responsibility.
2 12 Senator Hart.
That is right, and if they reject the a n g=
13 application for a rate increase, that seems to me that Met Ed za PU 14 is in a very, very difficult position.
Everybody says it is ac 0Z 15 not going to happen, it would be unprecedented and so on.
m 16 Mr. Hendrie.
Unprecedented th'ings have happened.
Z O
17 Senator Hart.
Unprecedented things have happened.
All I
18 I am say:ng is I would hope phe Commission would allow a backus 19 situation, to see the assets of the holdings companies are 20 on line, and then if somebody wants to go out and get insurancq 21 they could do so.
22 We have had these two days of hearings for two purposes:
23 (1) to look at this question of legal and financial 24 responsibility and (2) to get a time frame nailed down.
In 25 conclusion, Mr. Chairman, let me ask you and any other panet
_,o'
66
'~J, 1
membors hero on the second issue as specifically as we can.
2 Let me restate once again that it will take six to 12 months 3
to do an EIS; that any steps that have to be taken of an 4
emergency nature in the interim will be taken; that for all 5
practical purposes an EIS will represent at least the 6
government's side of the comprehensive plan; it is a little 7
unclear how you weld the other half of the coin, particularly 8
the utility's comprehensive plan; there is the chicken and 9
egg problem we faced yesterday, and I don't think we have QW y
10 resolved as to who moves when before the other one moves; thaty 2
0 11 finally, the NRC will do everything it can with the utility
=.
0$
12 as soon as possible -- and I want to find out when you think Z2 5E 13 that is -- to get a near term and long term, high side and Dn Zo p5 14 low side, for taking the steps of cleanup at that site.
ma gz aE j3 Mr. Hendrie.
I hink we ought to write you a letter in wa m
16 30 days and lay out our best judgment on that.
I would like.
Z O
17 to have that long to have a chance for some interactions with
)
I 18 Met Ed.
We will recognize that it will be a best effort 19 l estimate, but it will go on down the line and cover the whole 20 recovery, later analysis and obviously when one should get there.
The actual events, as they go on, may change that.
But 2j 22 the message I hear is that we haven't settled down to make our best effort estimate, and the lack of that is a concern, and :
23 24 think I agree with that.
So let us get back to you in 30 days, Senator Hart.
No later than.
Not only on what your best 25
67
'-/,
1 estimate on time table of cleanup, but also how you expect to 2
relate that to the planning of the company; that is to say, 3
do you have to provide guidelines before they take the cleanuo 4
steps or do they propose the cleanup steps to you and then 5
you approve it?
That is still a problem that hasn't been 6
resolved here.
7 Mr. Hendrie.
We will attempt to speak to it in the let t e r:
8 in addition to schedules.
It is a close-coupled process.
9 There is little point in us, without having any idea where they W
Q 10 think they ought to go in terms of these steps, there is little; z
11 point in us trying to lay out a whole set of criteria that
=,
O$
12 cover every conceivable thing you might do.
The initial thing z:
E 13 is you find out from them what directions they think they would Us Zo P"
14 want to go, whether we think they are sensible, and try saying mG 15 if you are going this way, we would want you to conform to z
16 the following.
Then when we shake out the EIS process, Z
O
)
17 that becomes the more normal setting down of the arguments I
18 and alternatives and is the context.in which the final decision 19 is made.
We indicate what kind of criteria, they can look at 20 that and see how badly that pinches in one place or another.
21 We refine and carry on the analyses.
So it is a close-coupled 22 things, and I think part of the reason you have a terrible time 23 getting clear action on who does what first so we can find out 24 what step one has to do with what aspect.
Let us see if we can 25 talk to that in the 30-day letter.
f
68
- P g i
Senator Hart.
Mr. Ahearno.
2 Mr. Ahearne.
Let me just make a couple of philosophical 3
comments.
I expect one of the difficulties we will be having 4
in putting the letter together -
and I concur with the is that along with this 5
chairman we should do that unprecedented situation there are a couple of aspects of it 6
7 that are every difficult in the environmental area.
I am not 8
talking about the technological questions or what what system, 9
nor.the great uncertainty of what you are going to find when Ow Q
10 you go in, but the kind of questions that have already come 2
k 11 ep in dealing with EPICOR, that when you get the water treated 2
m from EPICOR, the water treated from the containment, when you O $
2 E.E 13 Look at the atmosphere in the containment, do you require it U G Zo p5 14 to meet the current EPA /NRC type regulations?
In which case mU O@z if those are the limits, then you run into the situation which a
15 w1 2
16 led, I believe, to the suit that was already filed against us, g
O 17 the concern that the water coming out of EPICOR might meet all Z
18 of the existing regulations which would then allow, in the absense of already having told the company not to do it, it j9 20 might have allowed the company to just dump the water into the river, or it might allow the venting of gas into the 21 atmosphere because it might meet existing requirements.
So 22 i
another very difficult situation is what requirements should 23 you end up requiring the system to meet?
That gets back to 24 the situation you have a highly stressed population and they 25 l
l l
A
--(
-- --- }
n
~~
y1 deserve to know not only what is going to 60 done, but have 2
to be involved in the discussions of these sets of alternatives
,I 3
Senator Hart.
We heard very clearly yesterday that the 4
public, at least through some of its elected representatives, j
5 doesn't believe practically anybody feels that concerned.
6 Mr. Yost.
I think, first, your statement a dm i r a b,L y 7
summarizes that.
I just want to assure you for the CEQ we I
i I
8 wilL. work with the NRC to ensure that NEPA causes no delay in t
t 9
any process, but rather that it is a
used to constructively help w
y 10 plan, select alternatives'and get the public into th'e process z
i U
11 so that this cleanup can move,as rapidly as possible.
x, O!
12 Senator Hart.
Thank you.
That is very reassuring.
E?
n
.o 13 Thank you all very much.
I i4 The hearing is adjourned.
if l'-
rs ar 15 (Whereupon, at 11:45 a.m., the subcommittee recessed, to
- t s I
r f
16 reconvene subject to call of the chair.)
I o
J 17 l
i l
18 e
l 19 20 l
l 21 u
t
{
22 j
23 l
24 25 1
/
9
's' I
l
'