ML19325D587
| ML19325D587 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 10/19/1989 |
| From: | Chilk S NRC OFFICE OF THE SECRETARY (SECY) |
| To: | PUBLIC SERVICE CO. OF NEW HAMPSHIRE |
| References | |
| CON-#489-9326 ALAB-920, CLI-88-10, CLI-89-20, OL, NUDOCS 8910250080 | |
| Download: ML19325D587 (26) | |
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UNITED STATES OF AMERICA
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NUCLEAR REGULATORY C0f9t!SSION d.. '
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j C000l!SSIONERS:
'89 OCT 19 All:58 q
v Kenneth M. Carr, Chaiman Thomas M. Roberts Kenneth C. Rogers
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James R. Curtiss pw i
. SERVED OCT 19198 PCJLIC SERVICE COMPANY OF j
1 NEW HAMPSHIRE Docket Nos. 50-443-OL 50-444-OL l
(SeabrookStation, Units 1and2 MEMORANDUM AND ORDER CLI-89-20 1
For a second time in this operating license proceeding, we ere l
called upon to decide with respect to financial qualification whether there are special circumstances that warrant the exceptional action of a waiver of 'the Connission's rules.2 On both occasions, we were asked to waive those rules which, in sum, effectively find that public utilities c!
l are financially qualified because they are assured a source of funds for L
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1 A group of New England owners, led by Public Service Company of New Hampshire (jointly " Applicants"), seeks a license to operate Seabrook r
Station, a nuclear power facility located in New liampshire.
2Two requests for waiver or exception from the rules were presented L
by Applicants in this proceeding.
The first, to reduce the size of the EPZ.was rejected by the Licensing Board, Public Service l~
Company of New Hampshire, (Seabrook Station Units 1 and 2),' LBP-87-12, 25 NRC 324 (1987); the second, to seek an exemption from the requirement for an onsite emergency exercise within one year of the issuance of a full power license, was decided by us and similarly rejected.
Public Service Company of New Hampshire, (Seabrook Station Units 1 and 2), CLI-89-19,
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5ept. 15, 1989.
L 8910250080 891019 PDR ADOCK 0500 3
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safe ' operation. The first waiver was sought in order to embark on a
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financial qualification review with respect to the Applicants' financial ability to operate their Seabrook nuclear facility at low power. We found that' there were special circumstances which undercut the rationale supporting an assumption of financial qualification for public utilities.
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but once we had established certain decommissioning requirements for low power operation, no significant safety problem remained that would l
justify such an undertaking.
Public Service Company of New Hampshire, L
(Seabrook Station Units 1 and 2), CLI-88-10, 28 NRC 573 (1988). Today, we find, as we will amplify below, that the circumstances do not undercut the assurance of the availability from governmental rate-setters of a l
source of funds adequate for safe operation pursuant to a full power license.3' Nor have we been shown any other significant link between Applicants' financial situation and a safety problem. Accordingly, we do not grant -the waiver sought.
q I.
Background
A.
The Framework Established by CLI-88-10 Less than a year ago in this docket, we construed and applied the Commission's waiver rule,10 C.F.R. I 2.758.4 We applied a three-part test for certification of a waiver petition to the Consission. Two parts followed from the explicit terms of the rule:
(1) The waiver petitioner must have oresented "special circumstances" in the sense that the petitioner has properly pleaded 3See 28 NRC at 597.
4See 28 NRC at 596.
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one or more facts, not conson to a large class of applicants or facilities, that were not considered either explicitly or by y
pecessary _1mplication in the rulemaking proceeding leading to the rule sought to be waived; i
(2) those special cire'anstances must be such as to undercut the i
I rationale for the rule sought to be waived.
28 NRC at 597.
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The third prong'of the test was implicit in long-standing Cosmission law, that a rule waiver would be granted only in unusual and compelling circumstances, Public Service Company of New Hampshire, (Seabrook Station, Units 1 and 2), CLI-89-03, 29 NRC 234, 239 (1989), and explicitly served notice that the Cossaission would not exercisc its discretion to waive a rule for less than significant safety reasons:
(3) from the petition and other allowed papers it should be evident
_7 that a waiver is necessary to address, on the merits, a significant safety problem related to the rule sought to be waived.
28 NRC at 597.
1 Applying that test, the Consission found that the bankruptcy of Public Service Company of New Hampshire (PSNH) and the applicability of 5
New Hampshire anti-CWIP statutes were "special circumstances".
In L
SAnti-CWIP statutes prohibit the rate authority from authorizing increased rates based on the costs of construction work in progress. Only when the plant begins consercial operation or delivering power to the public, may any of those costs be passed on to the public in the fom of increased rates. We need not determine whether New Hampshire's anti-CWIP prohibition will teminate when the Seabrook facility furnishes net generation to the grid or at some later point.
In the nomal course of (FootnoteContinued) 3
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addition, the Consission assumed without deciding that delay and i
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cessation of. project payments by some of the minority owners qualified under the first part of the test as a "special circumstance".
The Commission next found that bankruptcy and anti-CWIP in 0
combination undercut the rationale of the rule. This was so because j
under anti-CWIP "the utility cannot, strictly speaking, recover 3 i
portion of the costs of low-power testing" so long as it was not licensed to and did not produce commercial power. The Commission, on the strength of its recognition in its rulemaking that regulatory delays and phase-ins by the ratemaker did not undercut the rationale of the rule,7 said that the anti-CWIP provisions, standing alone, might not be critical for most c
utilities, but that those provisions in combination with PSNH's bankruptcy did undercut the rationale of the rule because the bankruptcy signalled that the anti-CWIP provisions' bar of a source of funding had been criti. cal to PSNH.
(FootnoteContinued) events it would come relatively soon after comencing vns under a full power license.
For the most recent 10 facilitier.
granted a full power operating license the average time to achim
~l consercial E
operation was four months from the date of license ism u.
See
" Licensed Operating Reactors, Status Summary Report Data as of 6-30-89",
1.
NUREG 0020. Vol. 13, No. 7, passim (1989).
In some cases a low power 1
license had not been granted in advance, and thus the time was lengthened by inclusion of the duration of low power testing and time that was necessary to accomplish any remedial work.
6Because it was not pivotal to the decision, the Comm1'ssion assumed without deciding that the minority owners' delay or cessation of project payments also undercut the purpose of the rule for low power when in combination with bankruptcy and anti-CWIP.
28 Ni'.C et 599.
7 28 NRC at 598, n.25, citing 49 Fed. Reg. at 35,749 (1984).
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' The Commission then looked to the underlying safety purpose of the j
requirement to conduct a financial qualifications review from which the rule sought to be waived provided an exception for public utilities.
The l
Commission concluded that the sole reason was to " provide some added assurance that a licensee would not, because of financial difficulties, be under pressum to take some safety shortcuts." 28 NRC at 600.8 kHth this framework, we briefly set forth the administrative history of the petition for waiver certified to us by the Atomic Safety and Licensing Appeal Board (" Appeal Board").
Public Service Company of 1
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t 8The Commission quoted its 1984 rulemaking:
A financial disability is not a safety hazard per se because the licensee can and under the Consission's regulations would be obliged to simply cease operations if necessary funds to operate safely were not available. At most, the Atomic Energy Commission, in drafting l
the rule, must have intuitively concluded that a licensee in e
L financially straitened circumstances would be under more pressure to i.
commit safety violations or take safety " shortcuts" than one in good financial shape. Accordingly, the drafters of the rule sought to l-achieve some. level of assurance, prior to licensing, that licensees would not be forced by financial circumstances to choose between
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shutting down or taking shortcuts while the license was in effect.
& at 600 citing, 49 Fed. Reg. at 35,749.
The Consission then cuanented that:
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"[w]hatever may be the legitimacy of this safety purpose for full-power operation, it stretches reason to suppose that the safety rationale would have any bearing on a limited iicense for low-power F
testing. Shortcuts in safety at full power evnceivably could avoid shutdowns or derating and thereby contribute to greater plant availability and revenue from power sales. But shortcuts in low-power testing safety will not lead to generation of more revenue that would benefit the plant owners."
f Id.
(Emphasisadded.)
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j tt NewHampshire,(SeabrookStationUnits1and2),ALAB-920,29NRC (1989).'
B. The Massachusetts Attorney General's' Petition for a Waiver
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On February 1,1989 the Massachusetts Attorney General (MassAG),
..f filed a petition under 10 C.F.R. I 2.758 (the petition) that the rule exempting utilities from a financial qualification review be waived so i
that Applicants would be required to "cstablish prior to full power operation, financial qualifications sufficient to cover the cost of Seabrook Unit l's operation for the period of the license."
Petition at 2.
The petition argued that the continued existence of two of the "special circumstances" found to exist in CLI-88-10--(1) the bankruptcy, and (2) delay and cessation in project payments -- was sufficient to undercut the rationale for the rule. Massachusetts also asserted that the Commission's reasons in support of its conclusion that there would be-no significant safety problem at low power would not' hold at full power.
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To the contrary, asserted Massachusetts, there are incentives to take shortcuts in safety at full power, the amount of money to operate the plant at full power is significant, and the safety risks at full power are substantial.
4 ILess than a week before MassAG filed the petition certified to us, Seacoast Anti-Pollution Lescue (SAPL) moved for admission of a financial qualification contention assertedly based on its assumption.that the Commission had effectively waived the financial qualification exception by recognizing that its rule was undercut by full power. The motion was denied by the Licensing Board. SAPL did not take a separate appeal; however, SAPL submitted a brief in support of MassAG's appeal of the Licensing Board's rejection of his petition.
It was SAPL's brief that carried the day for the MassAG before the Appeal Board.
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L Staff joined Applicants in opposing the petition, and on March 8, l
1989, the Licensing Board denied it. Public Service Company of a
1 NewHampshire,(SeabrookStation, Units 1and2),LBP-89-10,29NRC297 (1989). The Licensing Board found that the MassAG had failed to rebut the presumption that the ratesetter would allow Seabrook's rate base to
' include the costs of safe operation that were prudently incurred.
Id. at 303.
In addition, the Licensing Board found the Affidavit of E. A. Brown, President and Executive Officer, New Hampshire Yankee Division of PSNH, to be of particular importance.
Id. at 304. The Massachusetts Attorney General appealed and was supported in that appeal
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'by SAPL.
l C.
ALAB-920 After receiving briefs, hearing oral argoment and receiving response to a request for supplemental briefing, the Appeal Board decided the l
matter before it on August 21, 1989. The decision concluded that a prime facie case for waiver had been made.
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En route to its ultimate conclusion the Appeal Board had rejectea the original position of the MassAG set forth in his petition and brief..
The rejection specifically included any argument that bankruptcy standing t
alone sufficed as a basis for waiver. See ALAB-920, slip op. at 18. The l
Appeal Board also found no warrant for speculation respecting ultimate
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ownership of Public Service Company of New Hampshire's share and other uncertainties respecting what regulatory ratesetting authority will 1
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govern Seabrook.10 Nonetheless, addressing itself to MassAG's " secondary argument", incorporated from SAPL's brief, the Appeal Board found that the effect of anti-CWIP could be felt for as long as 18 months into operations at full power and thus that the same combination that the Commission found to have undercut the rule at low power also would be present at full power. The Appeal Board then considered whether there was a significant safety question and decided that "under the Commission's analysis [in CLI-88-10] operation above five-percent, unlike l
low-power testing, potentially gives rise to a 'significant safety problem' warranting waiver of the 1984 rule."11 ALAB-920, slip op. at 25.
The Appeal Board provided an additional reason for referring this matter to the Comission. That reason springs from the Appeal Board's 12 concern tliat under the UCS case a
review by the Staff of fir.ancial qualification requires a rule waiver, and from the Commission's conclusion, shared by the Appeal Board, that the utility's bankruptcy
" clearly signals that something very unusual and serious has occurred."
i l.
10The Appeal Board noted that the license recites "that Public i
I Service 'has exclusive responsibility and control over the physical construction, operation and maintenance of the [Seabrook] facility'" and thus, under our regulations, that a transfer could not be effected without Commission approval. ALAB-920, slip op. at 17, n.30.
11The Appeal Board claimed addition 61 support from the Commission's failure to exempt public utilities from its 1987 rule requiring all licensees to notify the agency upon the filing of bankruptcy petitions.
12Union of Concerned Scientists v. NRC, 735 F.2d 1437 (D.C. Cir.
1984)(1955).
cert denied sub nom Arkansas Power & Light Co. v. UCS, 469 U.S.
1132 l
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l ALA8-920, slip op. at 29.
In these circumstances the Appeal Board believed the matter should be referred to the Consission for decision.
1 D.
Positions of the Parties i
On receipt of the Appeal Board's certification of the petition, the Counission promptly established an opportunity for the parties who opposed the waiver to address the Appeal Board's finding and for a response to those papers by the MassAG and any other party wishing to L
L respond.
" Applicants' Response to the Commission's Order of August 22 1989" (Applicants Response) was filed on Sept. 7, 1989, as was the "NRC l
Staff's Opposition to Waiver of Financial Qualifications Regulations t
Applicable to Full Power Operation of Seabrook" (Staff Response).
ResponseswerefiledbytheMessAG(MassAG'sResponse)andbySAPL(SAPL i
J Response)onSept. 26, 1989. SAPL also provided supplemental infonnation r
in a cover letter which the Commission has considered.
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1.
Position of the Applicants f.
Applicants argue that the Connission's holding in CLI-88-10 is not transferable, as the Appeal Board would have it, to the circumstances surrounding full power licensing because in CLI-88-10 the Commission was presented with the possibility that after low power operations there would not be the grant of a full power license.
In addition, they argue that the Appeal Board erred in considering regulatory delay following anti-CWIP as significantly different from the regulatory delays found by the Commission not to affect recovery of operating expenses.
In addition, Applicants criticize the Appeal Board for speculation that the regulatory delay will be sufficient to cause a problem and for not addressing, in its consideration of safety significance, the 9
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Licensing Board's reliance on the affidavit of the President of New Hampshire Yankee.
2.
Position of the NRC Staff 1
i Staff asserts that the Appeal Board improperly overreached to detemine that a prima facie case for waiver had been made. Staff's next a
major point is that the Appeal Board wrongly concluded that the CLI-88-10 L
tests for waiver had been met for the relevant period of the full power
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license. Staff understands the relevant time to be that periE before a power level is reached that would justify inclusion of costs in the rate base regardless of when higher rates are in fact pemitted.
Finally, the Staff maintains that the Appeal Board erred in finding L
l Staff's actions improper under the UCS case.
In Staff's view, it may l
i gather information on financial qualification in order to advise the Comunission on whether a waiver is necessary.
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3.
Position of the MassAG and SAPL MassAG argues first that PSNH's bankruptcy meets the Consnission's three part test:
(1) Bankruptcy is a special circumstance, (2) the 14
. operation of the anti-CWIP law and the effect of the bankruptcy on the extent and timing of any rate recovery of the construction snd operation costs undercut the assumption on which the rule is based, and (3) safety significance is present because "[n]o more powerful example [than 13We treat the positions of MassAG and SAPL under one. heading since each has specifically adopted the arguments of the other.
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MassAG also argues as a separate point that the Appeal Board was correct in finding that the delay in cost recovery due to anti-CWIP does not disappear on the grant of a full power license, and notes that the Appeal Board found that some delay was a virtual certainty.
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bankruptcy) of a company encountering severe pressures to cut corners can
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be imagined." Response of MassAG at 3.
See also SAPL Response at 2-5.
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MassAG next argues that recovery of the construction and operating costs of Seabrook will occur outside of the nomal ratemaking process and will be significantly and materially delayed. He asserts that the "benkruptcy has triggered an entirely different rate setting process" t
free that contemplated by the Consiission. MassAG Response at 7.
See also SAPL Response at 5-12, arguing that anti-CWIP will rqEsin in i
force until the plant is "used and useful," not merely providing net power to the grid. SAPL's response additionally emphasizes that financial qualification review is needed in light of the defaults of certain other Seabrook owners. See SAPL Response at 12-14.
II. DECISION-The Consnission has reviewed the record on the waiver petition before the Licensing Board and the Appeal Board and has particularly considered l
the Appeal Board's co-tification (ALAB-920) and the papers of the l
parties. One fundamental issue--the effect of the delay in a rate increase beyond full power licensure-- governs our result, and thus we turn to it directly, Thereafter, we address the remaining retters mquiring our attention.
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....J A.
Whether Delay of a, Rete Increase Undercuts the Rule lb The Appeal Board correctly recognized that bankruptcy, not alone
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but in con 61 nation with the anti-CWIP law, was the basis for our holding at low power that special circumstances had been shown which undercut the 1
basis of our regulation exempting public utilities from any requirement a
to demonstrate financial qualification. Bankruptcy remains a factor in full power licensingII, but the critical dispute centers on whether. the potential for delay in receiving the increase to cover the costs of safe i
operation is a special circumstance that undercuts the basis of the Coemission's exemption for public utilities.
One side would have it that the following circumstances obtain: (1) the Casmission had not considered anti-CWIP in its rulemaking; (2) the delay in receiving the costs'of construction was due to anti-CWIP; (3) the anti-CWIP-caused delay in receiving a rate increase on construction costs makes critical an immediate rate increase to cover operation costs; and (4) such a raise is prohibited by anti-CWIP until the plant is "used and useful". Therefore, the argument concludes, anti-CWIP remains a 15 l.
This is not to say that bankruptcy standing alone could never l
undercut the purpose of the rule. We do not here speculate on what circumstances could elicit such a finding, but simply note that the l
circumstances of this Chapter 11 reorganization do not, insofar as we are aware, undercut either the presumption that an adequate source of funds for safe operation will be allowed by the ratesetter or that the L
Applicants will be able to use those funds for operations.
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16It is less clear that defaults will remain after the grant of a L
full power license in that full power operations can be expected to l
provide a source of revenue. Moreover, the sums defaulted by defaulting
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owners do not appear significant and appear to have been made up by other l'
coowners as needed.
In any ever+., our analysis does not depend on this factor.
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special circumstacce relevant to full power which, together with i
.g bankmptcy, continues to undercut the assumption of the rule that a source of funds for safe operation will be av'ailable.
II
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. Applicants argue the other side that anti-CWIP by its tenas is not
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4 factor that diminishes the assurance that ratemakers will allow sufficient rates to produce adequate funds for safe operation at full power, on which the Commission relied when it promulgated the rule excepting public utility operating license applicants from financial qualification requirements.
We believe the Applicants' argument better reflects our intent.
It was not simply a delay in recovering costs from low power 'until full power that dictated our result in CLI-88-10. Rather, because significant hurdles lay between the Applicants and a full power license, the l
possibility that such a license would not issue following low power was at the heart of the matter. The anti-CWIP law, in the 1
no-full-power-license circumstance that the Consission hypothesized in L
CLI-88-10, would operate so that recovery of construction costs and costs e
of low power operation could never be allowed.
Indeed, this conclusion infused the Commission's entire consideration of the issues presented in 1
CLI-88-10 and led to a requirement for assurance in the sum of $72.1 17The Staff asserts that anti-CWIP has force only until a power level is reached that satisfies the requirement that power is being supplied to the public.
For that interim term, staff argues that power levels would be so low that the same holdings that applied 'at low power would be applicable for the same reasons. Beyond that point, the Staff says that any delsv is too speculative to warrant consideration. We agree that delays a*e speculative but, as discussed in the following text, our decision here is based on the ground that the Conraission considered such delayt in its rulemaking.
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J million for decomissioning after low power if that became necessary. We are satisfied that had Applicants then held a full power license, the anti-CWIP law would not have been e' factor, much. lass have played such a critical role, as is argued by petitioners here, when Applicants l
undertook low power testing. Nothing in the enti-CWIP law, as we understand it, prohibits including Seabrook's operating costs in the rate
. base'when the plant is operating to serve the public, as it will be fully 4
authorized to do if it receives its full power license.1E m
While a delay is possible, and some minimal. delay is probably l
l likely, such a delay is of the kind that the Commission recognized in its rulemaking and accepted as a circumstance that would not undercut the i
rule. No party has shown that the potential delay in New Hampshire for a rat's relief to cover operating expenses is exceptional and outside the range of regulatory delay acknowledged by the Commission.
li Further, the Comission has not been shown any other factor that would make it unreasonable for us to continue to rely on the presumption of reasonable assurance of adequate funding for public utilities. As l
l noted above, commercial operations that would trigger rate relief are b
I reasonably to be expected within a few months from the grant of a full l
power license.
In addition, materials provided by MassAG appear to indicate that PSNH has access to adequate revenues and casn on hand to l
cover its share of Seabrook's operating costs during the period in which 1
1 18Although we place no reliance on it, we find that MassAG's failure l
originally to make the anti-CWIP argument at full power and reluctance to espouse it when suggested, is at least an indication that he too found it a bad fit.
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b it has not yet reached commercial production.18 Moreover, the grant of a
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full power license, without more, by reducing the possibility of cancellation and making eventual recovery of prudently incurred costs likely may be expected to significantly enhance the ability of the i
company to raise cash in the credit markets. E Coalition for the Environment v. NRC, 795 F.2d 168,175 (D.C. Cir.1986).
Thus the Commission finds that the grant of a full power license can, as presumed u
p in the generic exemption for public utilities, reasonably assure that Applicants will be able to bridge the gap of any ressonably expectable regulatory delay and will be assured recovery of the costs of safe operation.20 Because the rule serves its purpose under these circumstances, no waiver is warranted, and none will be granted.
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IIPSNH's 10-Q filing with the SEC indicates that PSNH likely does l
have adequate revenues to cover its 36% share of Seabrook operations, t
particularly in the few months between issuance of the full-power operating license and rate recovery allowed by the New Hampshire PUC.
In 1
any event, the filing does not support Intervenors' position that there is clearly such a lack of funds as to raise a significant safety problem.
7 The filing shows that PSNH generated operating income (i.e., operating revenues after expenses other than interest and taxes) of $17.8 million for the three month period ending June 30, 1989 (compared with $21.9 million for 1988).
For the six-month periods ending on June 30, 1989 and 1988, the respective amounts are $46.2 million and $58.4 million.
Additionally, cash flow for the six months ending on June 30, 1989 and 1988 was $60.3 million and $122.4 million, respectively.
" Cash and cash equivalents on hand", which are good indicators of the degree of short-tem or medium-term solvency, was $91.7 million as of June 30, 1989. See PSNH's filing of SEC Fom 10-Q for Quarterly Period Ended June 30, 1989, provided as Exhibit B to Response of MassAG.
20MassAG tells us that reorganization plans are under consideration in bankruptcy court and are all expressly contingent on the consumation of rate agreements. The agreements provide for temporary increases that do not provide revenues to the utility until after final court approval of the reorganization plan and necessary acquisitions are complete.
(FootnoteContinued) 15
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B.
Indication of a Significant Safety Problem Given our determination above, we need not reach a discussion of whether a safety-significant problem would be shown were the rationale of j
the rule undercut. However, we believe it is useful to address the issue in light of the misunderstanding by the Appeal Board, MassAG, and SAPL, of the Commission's discussion of its finding that there was no y
significant safety problem at low power. Even were the Commission to agreewiththeAppealBoard,andwedonot,thatMassAGhadma7ehiscase that special circumstances were present that undercut the rationale of l
l the rule, we disagree that the pleadings of these parties irdicate in I
terius of CLI-88-10 that a waiver is "... necessary to address... a l.
significant safety problem related to the rule sought to be waived.." 28 L
l NRC et 597.
In CLI-88-10, the Cossaission said:
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l' (FootnoteContinued) i L
MassAG Response at 7.
MassAG thus concludes that if " licensure were to l'
occur prior to the completion of the bankruptcy a potentially very lengthy time period would exist in which a bankrupt utility would have a l
ful'-power operating license with no or virtually no rate recovery of the
' costs of construction 'and operation of Seabrook." MassAG's Response at 8.
We think that MassAG's premise does not necessarily support such a conclusion.
It appears to us that there are other more obvious explanations for an agreement not to permit revenues to an acquiring utility that has not received all necessary approvals to its acquisition i
than to exhibit an intent not to grant legally required rate increases to the current utility licensees.
In this regard, it is also far from obvious to us that an injunction I
against a rate commission from a proceeding against a utility need also be read, as SAPL reads it, to bar a successful application for a rate increase needed for safe operation of a nuclear facility. And, wers it to be so read, it would, in appropriate circumstances, be subject to alteration by the court that issued it.
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- Whatever may be the legitimacy of this safety purpose [213 i
for full-power operation, it stretches reason to suppose that the safety rationale would have any bearing on a limited license for low-power testing.
Shortcuts in.
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safety at full power conceivably could avoid shutdowns or derating and thereby contribute to greater plant availability and revenue from power sales.
But shortcuts o
in low-power testing safety will not lead to generation of more revenue that would benefit the plant owners.
Low-power testing does not generate revenue from power-sales. The only purpose of low-power testing is to further ensure plant safety... There is every incentive to do the job well and no rational incentive to cut areadded][. emphasis of "only" in original; other emphases corners.
l 28 NRC at 600.
Contrary to the apparent or professed understanding of the Intervenors,2, and the apparent reading that led to the constraint felt 2
by the Appeal Board to certify the instant petition to us, CLI-88-10 can not fairly be read that the Commission found that where exceptional
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circumstances at full power undercut the. rationale of the exception for public uti-11 ties, there is necessarily a significant safety problem.
In-F the quoted material and following text, the Commission contrasted the circumstances of full power with low power testing operations where it said there was no conceivable incentive for cost-cutting. And, in many other ways, the Consission made clear that in its view there could be no
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21The only safety purpose of the rule discerned by the Conmission was the intuitive judgment that some additional assurance could result from avoiding a situation where a lack of funds could cause pressure to cut corners. 28 NRC at 600. Nonetheless, the Conmission retained its principal reliance on other regulatory means to assure the public health and safety.
22 o
SAPL would have us believe that it read our language in comparing low power with full power as so strong as to have constituted a waiver of the rule at full power. We reject that reading.
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significant safety problem at low power that required attention in the circumstances that prevailed. What was inconceivable at low power was
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merely stated to be conceivable at full power.
But the standard for showing a significant safety problem has never been "what is conceivable". Thus the Commission did not intend to and did not resolve the question for full power. The Commission made no determination on a matter not before it and left for a later day, if necessary, to decide in the circumstances then before it whether a significant safety problem was presented by any certified petition for waiver on which it was ruling.
Also, there can be no doubt that the Commission intended that the f
indication of a significant safety problem be something more than simply showing that exceptional circumstances undercut a rule with some basis in safety. Since the vast majority 'of Cosmission rules have some basis in safety, if that was all the Commission meant it would have been 7
I superfluou.s for the Commission to announce to its Boards that it did not want a rule waiver certified absent the indication of a significant safety problem. The Commission used the terminology "significant safety problem" to note that it intended to require something more than a theoretical--or conceivable--issue, but insisted on there being a real matter that required resolution.23 As we stated earlier, even were there to have been a showing in the matter before us that the rationale of the rule was undercut, the 23Under Consission precedent and the Consission's rulemaking 1
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pronouncement, predictions that PSNH will not properly use its source of funds may not be addressed in financial qualification hearings were they I
(FootnotoContinued) 1 1
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Comission ' sees no indication that PSNH's financial uncertainty will l
overcome the substantial protections that the Comnission has in place by i
g
-l means of all its requirements to prevent the occurrence of a significant 1
nuclear safety problem.24 In the event any full power license is L
l granted, the Commission requires a greater than usual presence by the l
staff throughout power-ascension. This will be the case at Seabrook as well. After normal full power operation is underway the Cosmission can 1
1 direct greater than usual surveillance, if there is any indication that it would be advisable to do do. Any scrimping on compliance with safety requirements will be dealt with promptly and aggressively.
C.
The Commission's Role in 2.758 rule waivers We have concluded, in' the part of the process that is tantamount to a review of the certification of the petition, that the petition failed to make a prima facie case and to indicate a significant safety problem.
Because the arguments of the parties suggest that the Commission's role in a'10 C.F.R. I 2.758 proceeding is simply to affirm or overrule the L
certification of the referring board, we think it is important also to l
L 1
(FootnoteContinued)
L initiated.
Financial qualification review is satisfied if there is an adequate source of funding. 49 Fed. Reg. at 35749. How funds are spent is a management integrity issue.
g 24We cannot now know whether a case could realistically be hypothesized where we would disturb the financial qualification rule exception for public utilities. Perhaps public utilities' status makes them less likely to succumb to a temptation to cut corners to save money because the prospect of savings is not a realistic one. When funds t
expended for safe operation are recoverable and when a rate of profit is allowable on the investment portion, any incentive to cut corners could be highly speculative.
In any event, we need not decide this generic matter at this time.
19
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- discuss briefly the Commission's role, even though the Commission does not here reach the policy decision that is contemplated under its regulation at section 2.758 in that it has found that Intervenors did not -
i make 'a prima facie case.
Under i 2.758 the boards are not perinitted to make a rule waiver
. decision, but a board must simply certify a rule waiver petition to the Commission after finding that the petitioner has met extremely high standards--compelling circumstances in which the rationale of a rule is undercut. What the Commission has protected by this process is the ability of the Conurission itself to decide as a matter of policy, once a prime facie case has been made, when, and if so, to what extent its codified regulations are to be waived. This is done only after an informed judgment'in the totality of the circumstances, recognizine and evaluating any relevant circumstance that in the judgment of a majority of the Cosmiissioners should be taken into account.25 Only the Commission
~
has the necessary authority and perspective to respond to whatever exigent circumstances it finds upon review of a waiver request.26 Indeed i
25It is significant that under i 50.12(a)(2)(vi) the regulations perinit the grant of a rule exemption where "there is present any other material circumstan;e not considered when the regulation was Ta opted for which it would be in the public interest to grant an exemption." No less latitude would be availeble to the Conunission under 2.758 when deciding to let an exemption stand, i.e. in this case NOT to waive a rule.
260n a related point, we agree with the Appeal Board that the staff may not make financial qualification determinations relativ.e to licensing without a rule waiver. On the other hand the staff is surely correct that it may make threshcid inquiry sufficient to decide whether to seek a rule waiver. Any such threshold inquiry will be conducted outside the adjudicatory portion of an ongoing operating license proceeding.
Staff inquiries without more cannot be sufficient to waive the rule contrary to the Commission's carefully constructed Section 2.758 regulation.
20
p p
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l.
1 o[ I' there-is: precedent in this prpceeding for the Consission to take special-e L<
steps, short of rule waiver, to deal with potentially significant safety i
A issues.
Specifically, we refer to the deconnissioning requirement imposed at low power. Typically, parties should expect that~ where I
appropr.iate the Consission will attempt to find practical solutions to alleged safety issues associated with petition, to waive its rules.
.The Cosmission~ expects here that the Staff shall apply the necessary t
resources to monitor Seabrook's compliance with safety regulations. The Staff shall be particularly sensitive to any signs that cost-cutting is -
impinging on safety. The Commission has consistently preferred to place
[
its reliance on the ability of its inspectors to discern the indicia of f
corner-cutting'that could lead to a lack of safety rather than on its i
ability to make financial predictions. See e A, 49 Fed. Reg. 13044, 13046(1984).
In addition, other financial protections will be in place before a full power license is granted as a result of our requirement l
that Applicants be in compliance with property insurance and decommissioning plan requirements relevant to full power before such a L
l license is issued.
In consideration of the foregoing, we find that no financial matter l
?
need be expected to disturb a finding of reasonable assurance that L
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I 21
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f Seabrook's operations will be consistent with public heelth and safety if it is allowed to operate et full power.
It is so ORDERED.
~l 27 For the Comission
..m\\
1N i
smun al puu Secretary of p Commission i
Dated at Rockville. Maryland af' this f7 day of October, 1989 6
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i 2 Coanissioner Rogers was unevailable to participate in the formel vote on this order; if he had been present he would have approved it.
22
UNITED STAftl DF A tRICA NUCLEAR Rt9ULATORY COMM18810N in the Matter of I
4 I
PUBLIC SERVICE COMPANY OF NEW I
Decket No.(s) 50-443/444-OL HAMPSHIRE, ET AL.
I (Seatreek Station, Units i and 2) 1 I
1 CERT!FICAtt OF SERVICE i
)
! hereby certify that copies of the foregoing COMM!$0!ON M60 (CL1 Og-20) have been served upon the fellowing persons by U.S. sell, first class, encept as otherwise noted and in accordance with the requirements of 10 CPR Sec. 2.)12.
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Adeintstrative Judge Adelnistrative Judge
- 8. Paul tellwerk, !!!, Chatrean Alan 8. Rosenthal Ateelt Saf ety and Licensing Appeal Ateetc Safety and Licensing Appeal Board leerd U.S. Nuclear Regulatory Coeriesten U.S. Nuclear Regulatory Cessiesten l
,c l,
Washington, DC 2C555 Washington, DC 20555
}
Administrative Judge Howard A. Wilber Administrative Law Judge Ateetc Safety and Licensing Appea!
Ivan W. Seith, Chairman i
leerd Ateelt Safety and Licensing Board l
U.S. Nuclear Regulatory Caseission U.S. Nuclear Regulatory Coseission I
Washington, DC 20585
- Washlagten. DC 20555 l
t Administrative Judge Administrative Judge Richard F. Cole Kenneth A. McCc11oe i
Ateetc Safety and Licensing leerd Ateetc Safety and Licensing Board U.S. Nuclear Regulatory Ceesission U.S. Nuclear Regulatory Canalesien I
Washington, DC 20555 Washington, DC 20555 i
Adelnistrative Judge Robert R. Pierce, Esquire James M. Carpenter Ateelt Safety and Licensing Board Alternate Technical Moeber i
U.S. Nuclear Regulatory Ceseission Ateetc Safety and Licensing leard l
Washington, DC 20555 U.S. Nuclear Regulatory Cassission Washington, DC 20555 i
I Edwin J. Reis, Esq.
Mit:1 A. Young Of fice of the Seneral Counsel Attorney l
U.S. Nuclear Regulatory Consission Office of the General Counsel l
Washington, DC 20555 U.S. Nuclear Regulatory Coseission Washington. DC 20555 5
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Decket No.(e)S0-443/444-OL COMM19810N M60 (CL1 09-20) l l
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Diane Curran, Esq.
Theses 8. Dignan, Jr., toe.
]
l Hereen, Curran 6 Tousley Repes 6 Oray e
)
2001 8 Street, N.W., tutte 430 One International Place i
Washington, DC 20009 loston, MA 02110 l
Robert A. Backus, Esq.
Paul Metachern, Esq.
i Sackus, Meyer 6 Selesen thaines 6 Metachern 116 Lowell Street 25 Mapleweed Avenue, P.O. Sen 360 Manchester, NH 03106 Portsecuth, NH 03801
(
Sary W. Helees, Esq.
Judith H. Minner holees 6 Ells Silverglate, Bernter, taker Fine.
47 Winnatunnet Road Seed and Mitaner Haaston, NH 03042 80 Greed Street testen, MA 02110
)
Isrbara J. Saint Andre, Esq.
Jane Doherty Kopelean and Paige, P.C.
Seacoast Anti-Pellution League 77 Franklin Street 8 Market Street j
Boston, MA 02110 Portsecuth, NH 03801 i
Searge W. Watsen, Esq.
Ashed N. Astrian, Esq.
Federal teergency Managesent Agency
)
376 Main Street 800 C Street, I.W.
Haverhill, MA 01830 Washington, DC 20472
]
Edward A. Thomas leerge D. Sistes, Esq.
Federal toergency Managesent Agency Assistant Attorney Beneral 442 J.W. McCormack (PDCH)
Office of the Attorney General
)
Sesten, MA 02109 25 Capitel Street Centerd, NH 03301 l
Paul A. Frit sche, Esq.
Suzanne troiseth Office of the Public Advocate leerd of Selectmen State House Station 112 Town of Haspten Falls Augusta, Mt 04333 Orinkwater Road Haaston Falls, NH 03944 l
- .z.
- .T -. -
._ ~_
l Decket No.(sl50-443/444 OL I
COMMISSION M60 (CLI-89 20) i l
John Traficente, toe.
Peter J. Brann, toe.
Chief, Nuclear Safety Unit Assistant Attorney General Office of the Attorney General Office of the Attorney General One Ashburten Place, 19th Floor State House Statten, te l
Boston, MA 02100 Augusta, Mt 04333 l
The Honorable Edward J. Markey, Chaireen Richard A. Heepe, Esq.
A1 tnt Linda Cerrota Naepe 6 McNicholas j
lubcessittee en Energy Conservation and 35 Pleasant Street l
Power Concord, NH 03301 l
Neuse Caseittee on Energy and Caseerte Washington, DC 20515 l
J. P. Wadeau Allen Leopert i
Soard of telecteen Civil Defense Director l
10 Central Street Town of $rentueed i
Rye, NH 03870 20 Franklin Street j
tuoter, NH 03033 j
l
)
Williae Arestrong tendra Savutts, Chairman I
Civil Defense Director Board of Selecteen fewn of tuoter RfD 41 Ben 1854 10 Front Street Kensington, NH 03027 tuoter, NH 03033 l
t Calvin A. Canney Anr.e Goodson, Chairman l
l City Manager Board of telectmen i
i City Ha!!
13-15 Newsarket Road 126 Daniel Street Durhee, NH 03024 Portsecuth, NH 03801 1
I N!!!!as 5. Lerd teard of Belectmen Michael Santosuosso, Chairman l
fown Hall - Friend Street Board of Selecteen l
Asesbury, MA 01913 South Hampton, NH 03027 i
R. tcott Hill-Nhilton, Esquire Stanley W. Know!'1s, Chat.raan Lagoulis, Hill-Nhtiton b Mcluire Board of telectron 79 State Street P.O. Bou 710 Newburyporti, NA 01950 North Hampton, NH 03862 e
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i Decket No.(e)80-443/444-OL CONN 18010N M60 (CL1-09-20)
I Nereen C. Katner Sandra F. Mitchell Superintendent of Schools Civil Defense Diretter 4>
School Adelnistrative Unit No. 21 Town of Kensington Aluent Drive les 10, RR1 j
Neopton, NN 03842 feet Kingeten, NH 03827 John F. Doherty Deverly Hellingeerth l
1616 P Street, N.N.
209 Ninnatunnet Road I
Washington, DC 20036 Maspten, MN 03042 l
l i
The Menorable The Nenorable i
Serden J. Humphrey Nichelse Marveulee ATTNs Janet Cett ATTN Michael freenstein
)
United States Senate 70 Nashington Street Nashington, DC 20510 tales, MA 01970 j
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