ML20041C128
| ML20041C128 | |
| Person / Time | |
|---|---|
| Site: | Clinch River |
| Issue date: | 02/12/1982 |
| From: | NRC COMMISSION (OCM) |
| To: | |
| Shared Package | |
| ML20041C129 | List: |
| References | |
| REF-10CFR9.7 NUDOCS 8202260236 | |
| Download: ML20041C128 (81) | |
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C) 1 UNITED STATES OF AMERICA o00637 2
NUCLEAR REGULATORY COMMISSION O
4 DISCUSSION OF CLINCH RIVER BREEDER REACTOR 5
6 PUBLIC MEETING 7
8 Nuclear Regulatory Commission Room 1130 9
1717 H Street, N.W.
Washington, D. C.
10 Friday, February 12, 1982 11 12 The Commission convened, pursuant to notice, 13 at 2:35 p.m.
U 14 REFORE:
15 NUNZIO PALLADINO, Chairman of the Commission 16 YICTOR GILINGY, Commissioner PETER BRADFORD, Commissioner 17 JOHN AHEARNE, Commissioner THOMAS ROBERTS, Commissioner 18 19 STAFF MAKING PRESENTATIONS AT THE MEETING:
20 S. CHILK L. BICKWIT 21 M.
MALSCH F. REMICK 22 D. RATHBUN G. CUNNINGHAM 23 P.
LEECH S.
FELD (x,._)
24 P. CHECK S. TRUBATCH 25 S. TREBY
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DISCLAIMER'
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This is an unofficial transcript of a meeting of the United States Nuclear Regulatory Comission held on voanwW 19
,og9 in the-Comission's offices at 1717. H Street, N. W., Msnington, D. C.
The meeting was open to public attendance and observation.
This transcript
- has not been reviewed, corrected, or edited, and it may contain inaccuracies.
The transcript is intended solely for general infomational purooses.
As provided by 10 CFR 9.103, it is not part of the forinal or informai record-of decision of the matters discussed.
Expressions of opinion in this. transcript do not necessarily reflect final deteminations or
- p jbeliefs.
No pleading or other paper may be filed with the Qomission in any proceeding as the result of or addressed to any'orize.
statement or argument (m
contained. herein, except as. the Comission may auth c'
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2 CHAIRMAN PALLADINO:
The meeting vill please 3 come to order.
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4 This afternoon's meeting is a discussion of 5 the Clinch River breeder reactor.
This afternoon we 6 vill focus on the report of the Office of Policy 7 Evaluation analyzing responses to the request for 8 exemption to commence site preparation activities for 9 the Clinch River breeder reactor.
10 By way of background, on November 30, 1981, 11 the Department of Energy, DOE, for itself and on behalf 12 of its co-spplicants, Project Management Corporation and the Tennessee Valley Authority, requested the Nuclear 13
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14 Regulatory Commission to grant an exemption from 10 CFR 15 50.10 pursuant to 10 CFR 50.12 to conduct site 16 preparation activities for the CRBR prior to the 17 issuance of a construction perrit or a limited work 18 authorization.
19 DOE's proposed site preparation activities 20 include site clearing and grading, excavation and quarry 21 operations, the construction of temporary construction 22 related facilities, a barge facility and access road and l
23 railroad spur and the installation of services,
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24 including power, water, sewage and fire protection.
25 On December 24th the Commisssion, after
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I hearing from the participants in this matter, issued a 2 memorandum and order setting out its decision to review 3
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and decide whether or not to grant the request for 4 e xe m p tion.
The order further provided a schedule 5 whereby members of the public and government agencies 6 could file written comment on the exemption request.
7 Participants in the CRBB licensing proceeding 8 vere asked to respond to specific questions and DOE was 9 requested to submit currently available documention in 10 support of the exemption request.
11 The Commission staff offices, principally our 12 the Office of Policy Evaluation with the assistance'of 13 others, were reques'ted to prepare a report identifying O-.
14 the technical and policy issues raised by the request.
15 They were also asked to summarize relevant background 16 information and positions of the participants on these 17 issues.
The report has been prepared and is the subject 18 of today's meeting.
19 I would also like to mention that a public 20 hearing is scheduled for 10 a.m.,
February 16th, 1982, 21 in this room for the Commission to receive oral 22 presentations on the exemption request.
23 Now, unless there are further comments by
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24 other Commissioners, I woutd propose turning the meeting 25 over to Dr. Forrest Remick, Director of the Office of O
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1 Policy Evaluation.
2 Forrest.
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3 MR. REMICK:
Thank you, Mr. Chairman.
4 The Commission in its order of 24 December 5
1981 that you referred to established procedures for 6 considering the merits of the exemption request for 7 certain site preparation activities at the CRBR site.
8 Those procedures indicated that the exemption 9 request would be considered in an informal proceeding 10 and involve written comments and oral presentations to 11 the Commission itself.
12 It identified the participants to 'the 13 proceeding as the applicants, the NBDC and Sierra Club,
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14 and any other interested person who had filed written 15 comments in accordance with the procedure schedule.
It 16 indicated that the NRC staff will not participate as a 17 party.
18 It required that the applicants file 19 supporting documentation by 31 December 1981, and it 20 required by 18 January 1982 that the applicants answer 21 11 Commission questions, that other participants could 22 file written comments and/or answers to Commission 23 questions and that government agencies, including the 24 Attorney General of Tonnessee, could file comments.
It 25 required tha t the response to comments and answers be (j
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1 filed by 28 January
'82, and required the Commission 2 staff report by 8 February 1982.
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3 All of these requirements have been met, to 4 the best of my knowledge.
The staff report, which you 5 have received, addresses each of the various factors of 6 10 CFR 50.12 that the Commission must consider and 7 balance in reaching a decision on the exemption request.
8 Briefly those factors are under 50.12(a):
9 The Commission may grant such exemptions from 10 the requirements of the regulations as it determines are 11 authorized by law that will not endanger life or 12 property or the common defense and security and that are 13 otherwise in the public interest.k s
(J 14 rhen under 50.12(b), and this is abstracting 15 from those sectionsa 16 The Commission may grant such an exemption 17 upon considering and balancing the following factors:
18 Whether conduct of the proposed activities will give 19 rise to a significant adverse impact on the environment 20 and the nature and extent of such impact, if any; 21 whether redress of any adverse environmental impact from 22 conduct of the proposed activities can reasonably be 23 affected should such redress be necessary; whether 24 conduct of the proposed activities would foreclose 25 subsequent adoption of alternatives; and the effect of 3
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ALDERSoN REPORTING COMPANY. INC, 400 VIRGIN!A AVE., S.W., WASHINGTON, D.C. 20024 (202).554-2345
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proposed facility, the availability of alternative 4 sources, if any, to meet those needs on a timely basis 5 and delay costs to the applicant and to the consumers.
6 Ihe report also summarizes the various 7 responses to the Commission 's questions.
At this point 8 perhaps I would apologize that question 9 was intended 9 to be segmented into two parts and only one part got put 10 in the report, and I apologize for that.
However, the 11 balance of that question is addressed in the earlier 12 sections of the report.
13 The report was prepared as a cooperative
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14 effort of various staff offices.
These included not 15 only Personnel and OPE, but the Office of General 16 Counsel and the Office of the Executive Legal Director 17 and experts from NRB, including some from the CRBR 18 Program Office.
I wish to acknowledge the effort of 19 these various offices in getting the report to you on 20 time.
21 Now representatives of those offices are 22 present this af ternoon to assist the Commission in the 23 discussion.
Specifically joining me at the table are
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24 Guy Cunningham from the Executive Legal Director's 25 Office, in fact the Director; Paul Leech from the CRB
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1 Rrogram Office. Sid re1d and oennis Rethbun from ORE and 2 Marty Malsch from OGC.
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I might point out in closing that there are 4 opposing views on the several factors such as 5 environmental impact, the redressability of that impact, 6 the foreclosure of the alternatives and the public 7 interest.
These are addressed in the report, as I have 8 indicated.
9 COMMISSIONER AHEARNE:.You mean, Forrest, 10 opposing views from the people that have submitted those?
11 MR. REMICKa Yes, that is right, from the' 12 various participants.
13 COMMISSIONER AHEARNE:
You had just finished
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14 summarizing the staff help 15 (Laughter.)
16 MR. REMICKa I am sorry, no.
I meant from th e 17 participants.
To the best of my knowledge, I don't knov 18 of others.
19 However, looking at these various factors from 20 a technical and policy viewpoint, it appears that the 21 question of public interest rises as a major issue from 22 the perspective of how it should be balanced by the 23 Commission.
O 24 So ith thet, Mr. Cheit.en, I ou1d suggest.e 25 are open for questions.
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we11, I 2 wonder if I migh t begin with one, and then I will my p.
3 colleagues an opportunity, but during the course of the 4 discussion I wi11 have several other questions.
5 In your documents,'only 2 of the 80 responses 6 favored rampino the exemption.
Now I am aware of quite l
7 a number of others thst either were overlooked or were 8 discounted.
For example, on December 17th we L.d a 9 letter from the Governor of the State of Tennessee 10 supporting the project.
On December 15th we had a 11 1etter signed by Howard Baker, Senator Sassar, 12 Congresswoman Bouquard and Congressman Duncan.
13 In addition, I am aware of letters from the i
14 Town of Lake City, the City of Haramis, the Town of 15 011ver Springs, State Representative Randy McNalty and 16 the City of Kingston, all of which support this 17 e xe m ptio n.
18 Yet, the implication is that on1y 2 out of 80 19 supported it, wh'ich leaves me with a question as to 20 whether not we caught all of those that came within the 21 right time frame.
22 MR. HEMICK:
I think, Mr. Chairman, the answer 23 is no, we didn't catch them a11.
Of course, that was a b
24 snapshot of a particu1ar of time, but also we looked at 25 only those that came in after the memorandum and order.
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1 We did not include the others.
But even doing that, I 2 believe there were some tha t we did not have copies of
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3 and subsequently we ask that same question, are we 4 correct on that total number.
For example, I am not 5 sure if you mentioned the City of Clinton which came in 6 on January 5th.
7 CHAIRMAN PALLADINO:
I was aware of some of 8 these and I just have one of my staff trying t2 find 9 them all.
But this is of quite some corcern to me 10 because it implies that there was hardly anybody that 11 was interested in seeing this exemption granted.
I 12 think that these are important letters and many of them 13 are from local people who have the most to bear in both 14 the onus and the beneficial aspects.
15 So I really think that the record ought to be 16 corrected.
It is my impression that people who felt 17 they have already responded would not send that same 18 letter in j ust because a respons'e period was given and 19 therefore should be included.
As a matter of fact, two 20 of the letters were delivered right while we were in 21 session here early.
22 MR. REMICK:
I can suggest that what we do, 23 and I am not sure where the official docket is, is this
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As I say, our original figures were based o
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what we had received in the office.
But we realized 2 that that might not be all of them, so we did some 3 additional checking and realized there are some that we (g
4 missed, although we did discard assumption after the 5 senorandum and order.
6 CHAIRMAN PALLADINO:
Well, do we normally 7 discard any comments that came before that?
8 MR. REMICK:
I can't answer that question.
9 MR. BICKWITs I think we should incorporate 10 all 'of the comments in the docket because I think your 11 point is reasonable.
12 CHAIRMAN PALLADIN0s All right.
I think that 13 it would be worth re-examining this and correcting at i
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14 lea'st that particular point.
15 COMMISSIONER AHEARNE:
Sam, have you kept 16 those that came in even before we put out the order?
17 MR. CHILKa Yes, I am sure I have.got them all.
18 COMMISSIONER AHEARNE:
We probably ought to 19 put in anything that came in following the original 20 submission of the exemption request.
21 MR. CHILK I will go through our records and 22 identify all of them.
23 CHAIRMAN PALLADINO:
Now I can proceed with k_)
24 other questions, but I will defer to some of my 25 colleagues.
I hardly know where to begin except perhaps
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1 at the beginning.
2 (Laughter.)
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3 CHAIRMAN PALLADINO:
Some of the'se items are 4 mentioned several times during the course of the 5 document.
The first time I wrote a question had to do 6 with page 5 and then it also came about when I got to 7 page 14 8
I would like to get OPE's assessment, of if 9 you want to quote the staff's assessment, the 1977 EIS.
10 It is not clear to me at the moment what needs changing 11 snd what does not and have the conclusions changed?
12 MR. REMICKs I would suggest that perhaps Paul
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13 Leech could answer that.
14 MR. LEECH:
Mr. Chairman, we have of course 15 been the process of examining that same question for the 16 upcoming hearings on the construction permit.
We have 17 been examining every part of the FES to see what data 18 has changed.
Of course, in doing that se go through the 19 environmental report, talk wi th the applicant and all 20 that.
There are many bits of information throughout the 21 whole document that have minor variations.
22 In terms of anything of great significance, I 23 can't say that we have discovered anything so far in our 24 review, and the review is not complete, I must caution, 25 that would change in any substantial way our conclusions I
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so far.
2 There are, however, still many things to look
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3 at.
For example, the fuel cycle is different than it 4 once was.
The fuel cycle back when we wrote the 5 statement before depended upon some commercial 6 facilities such as Barnwell that were expected, and of 7 course it is all now a DOE fuel cycle.
So we have asked 8 DOE to define what that fuel cycle would be and wha t 9 their estimates are of the impacts and we are in the 10 process of looking at that.
11 In terms of the alternative sites, you had a 12 number of decisions in cases like Seabrook and Pilgrim 13 which followed on the heels really or almost 14 simultaneously in a way overlapping with our review 15 before.
16 We did some things, I am sure, in similar 17 fashion, but net entirely,so.
So we have been looking 18 at the precedents that are set by those cases to see 19 whether our review back then was adequate to meet the 20 requirements legally today and we are in the process of 21 doing that.
22 The accident analysis has to be looked at 23 again because there are some changes in the design of k-24 the core.
Consequently, we need to look that over.
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variations throughout the document, so far we haven't 2 found anything to change our conclusions as far as we Q
3 know.
4 COMMISSIONER AHEARNE:
You had mentioned 5 because of core changes, I guess that is the main 6 difference between the homogeneous and heterogeneous 7 core?
8 MR. LEECH:
Right.
9 COMMISSIONER AHEARNE:
How would that impact 10 on your EIS?
11 MR. LEECH:
Well, Chapter 7 of all FES's has a 12 discussion of postulated plant accidents, the so-called 13 realistic look at the accidents.
We had to just have 14 people re-examine the basis of those accidents.
We did 15 do a rather large bounding source term at the time which 16 was analyzed.
17 COMMISSIONER AHEARNE:
That is what bounds it.
18 MR. LEECH Yes, and probably still bounds it.
19 COMMISSIONER AHEARNE:
So it is more the scene 20 of to what extent the accident scenarios might change 21 because of the core changes?
22 MR. LEECHs Yes, mostly details.
23 CHAIRMAN PALLADINO:
Now, let's see, is the U
24 staff reviewing the 1977 EIS?
25 MR. LEECH:
Yes, we started with that.
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1 CHAIRMAN PALLADINO:
And they will come up 2 with an observation as to whether any more needs to be (3
3 done?
4 MR. LEECH:
Well, we at the present time are 5 not decided as to whether a document should be issued 6 for comment or not, but I believe our approach currently 7 is in the direction that we vill issue some kind of a 8 document to update the information so that everyone vill 9 understand that this is all we looked at and we have 10 come today's conclusions.
They may be the exact same 11 conclusions or they may be slightly varied.
12 CHAIRMAN PALLADIN04 When would this be done?
13 MR. LEECH:
Our schedule presently is for 14 issuing that in June.
We hope to beat that, but we are 15 presently scheduling that vt y.
16 CHAIRMAN PALLADINO And what takes till 17 June?
This sounded to me like you have already looked 18 at a number of aspects.
19 MR. LEECHs What takes till June is the 20 necessity still of receiving some information f rom DOE 21 and going through that raterial.
The changes in the 22 environmental report, which were made between 1977 and 23 October 1 of '81 when we resumed our review, were
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24 supplemented still further during the fall and currently 25 by several more admendments and we are expecting perhaps
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two more yet that come in with some of the information 2 ve have requested.
3 Until we get that, we can't tell you precisely (l
4 when it will be finished, but we expect it momentarily, 5 and when we do get it, then it is going to take an 6 effort to re-examine this with various kinds of manpower 7 throughout the agency.
8 COMMISSIONER ROBERTS:
But based on what you 9 have seen to date you don 't know of any shocking 10 surprises?
11 MR. LEECH Not yet.
I don't expect any 12 really.
13 COMMISSIONER ROBERTS:
You are saying this is
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14 essentially pro forma?
15 MR. LEECH:
Well, I wouldn't say it is just 16 pro forma.
We have got to be certainly carefully to 17 examine it.
18 CHAIRMAN PALLADINO:
I also got the impression 19 that really is a pa rallel to the one that Commissioner 20 Roberts has, that some of the refinements would be 21 primarily a description of a changed situation, and only 22 if those situations lead to something unexpected wo uld 23 you expect to see a change in the finding.
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24 MR. LEECH.
That is right.
Of course, many 25 things about a site don't change really much at all, as T
ALDERSON REPORTING COMPANY. INC.
400 VIRGINIA AVE., S.W., WASHINGTON. D.C. 20024 (202) 554-2345
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2 COMMISSIONER AHEARNE:
The one I guess I am 3 not clear on is to what extent are you going to have to 4 rely on redoing some cold runs on the core and, if you 5 do, do we have the codes redone for the core changes?
6 HR. LEECH:
I am afraid you have reached a 7 point of unfamiliarity to me.
Perhaps Bob Check would 8 answer that one.
9 HR. CHECK:
Paul Check.
I think we are moving 10 now from the kind of review that would be characteristic 11 of an environmental review.
There is a peculiarity that 12 ve need to address that comes upon us due to the passage 13 of time.
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14 Ihere is an interim policy statement on how we 15 are to handle matters of accidents beyond the design 16 basis.
We are in the process of forging what we 17 consider to be a legally and technically sufficient 18 bridge between what was done before and wha t will be 19 examined fully and explained in great detail in our 20 safety review.
21 For the purposes for which we are gathered 22 here today I see not importance to attach to codes.
23 COMMISSIONER AHEARNE:
On this update of
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24 accident analysis that was mentioned in the Chapter 7, 25 you do not see that as being needed?
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MR. CHECK:
Well, I don't see it as a single 2 limiting thing.
There are a number of things, as Paul
(,~)
3 Leech has tried to explain, that we must do in order 4 that when in fact if all we do is affirm a previous 5 conclusion that va are in a technically and legally 6 sufficient condition to litigate.
7 COMMISSIONER AHEARNEs Pardon me for not 8 understanding.
Let me see if I can reask my question.
9 Paul leech mentioned that in Chapter 7 there are some 10 accident analyses.
My question is, do you see that you 11 are going to have to do some cold runs to verify or do 12 anything on those accident analyses to update that 13 section, and, if you do, are the codes redesigned to 14 take the new core?'
15 MB. CHECK:
I think in terms of establishing 16 to our satisfaction wha t environmental consequences 17 there vill be to accidents the codes that we have are 18 sufficient for that.
What we need to do is affirm that 19 the source term is correct.
20 CHAIRMAN PALLADINO:
Incidentally, on any 21 subject I would encourage any of you to chime in with 22 any questions because I am going through as the 23 questions occurred and I went through.
v 24 to change the subject, and I am not sure who 25 is going to answer, on page 7 where I think we talk ALDERSON REPORTING COMPANY,INC.
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about NEPA requirements there is a statement that says 2
"The intervenors believe that an exemption under 50.12
(-)
3 has been granted only in exceptional and exigent 4 circumstances."
I was wondering what is OPE's finding 5 on _ the Commission practice with regard to exemption 6 50.127 7
MR. REMICK:
Mr. Chairman, I think that is 8 more appropriate to OGC unless you specifically want 9 our's.
10 CHAIRMAN PALLADINO:
You have quite a 11 discussion somewhere later on the present practice or 12 what the practice has been.
13 ER. REMICK:
I think that was in the 14 memorandum and order.
There was a discussion by the 15 Commission in a footnote addressing that.
OPE did not 16 go anything in addition to that on that particular 17 item.
In the memorandum and order footnote No. 2.
18 CHAIRMAN PALLADINO:
Perhaps that is right.
19 You made no observation or drew any conclusion?
20 MR. REMICK:
We did not do anything further 21 inasmuch as the Commission ha,d addressed that in their 22 memorandum and order.
23 CHAIRMAN PALLADINO:
On page 9 Mr. von s;
24 Hippel's position talks about nonproliferation i
25 problems.
Is that an issue in this exemption request?
l
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1 MR. REMICK:
Inasmuch as I believe it fits 2 under common defense and security, the question of 3 common defense and security.
("}
4 CHAIRMAN PALLADINO:
I wasn't aware that this 5 had been discussed in other aspects of this proceeding.
6 I think it is the only comment I got on that direction.
7 COMMISSIONER AHEARNEs You are concluding that 8 is the 50.12(a) common defense and security point?
9 MR. REMICKa Yes, that is right.
10 COMMISSIONER AHEARNE:
I gather you were going 11 through a list of various laws or provisions.
12 MR. REMICK:
That is correct, yes, and this 13 was an outside comment.
It seemed to fit u nder that so 4
14 we included it and it seemed to apply to that particular 15 section.
This was a comment by an interested party 16 making a comment and we thought it would fit under that.
17 CHAIRMAN PALLADINO Well, it is specific 16 primarily to the breeder program and not necessarily to 19 Clinch River.
20 MR. REMICK:
That is correct.
The statement 21 addresses the breader program and not specifically CRBR.
22 CHAIRMAN PALLADINO:
On page 9 and then much 23 later on page 36 we get into costs, and I don 't whether k
24 to pick them up here or pick them up later.
I guess 25 aost of my comments eventually came out of page 36 where
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the staff concludes that the actual cost of delay is 2 significantly less than the $120 to $240 million cited 3 by the applicants.
((}
4 I wonder if you could expand on OPE's basis 5 for evaluating costs, because I do have some difficulty 6 in following it, and compare it with DOE's basis?
Then 7 what is the basis for the conclusion on page 36.
8 MR. REMICKs Mr. Chairman, I would like to 9 defer to Dennis Rathbun and Sid Feld f o r th a t.
10 MR. RATHBUN:
We have reviewed the applicants' 11 cost of delay estimates and the comments p'rovided by the 12 intervenors.
As we said in the report, we believe the 13 applicants' cost of delay emphasis delay costs from an i
14 appropriations perspective, and it is from that 15 perspective that the applicants' analysis measures delay 16 cost.
17 COMMISSIONER AHEARNE:
Dennis, what do you 18 mean from an appropriations perspective?
Do you mean 19 they sum appropriations?
20 ER. RATHBUN4 What we mean is from a financial 21 outlay perspective.
What we are coming to, though, in 22 our own analysis is an adoption of a real resource flov 23 perspective.
k 24 What I will do is go through and summarize the 25 elements of the applicants' estima te of cost of delay ALDERSON REPORTING COMPANY. INC.
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and how we come out on each one of those from the 2 perspective of what we have included here on page 36.
3 We think that the delay costs should be 4 measured in real resource terms with recognition for the 5 time value of money.
Now the applicants in their 6 January 28th submission endorse the time value of money 7 concept, that is a discounted cash flow approach.
8 Let me just summarize the principal elements 9 of their estimate of cost of delay for you.
There are 10 four constituents in that.
11 The first is net savings on anticipated 12 expenditures.
In their analysis, the a pplicants' 13 analysis of January 28th they showed that to be a net 14 benefit from ritierral of $30.2 million.
15 CHAIRMAN PALLADINO:
Could you explain that to 16 me?
Are you saying that if you don ' t spend money you 17 have a saving?
18 MR. REMICK:
In effect it is a negative, yes, 19 sir.
20 CHAIRMAN PALLADINO:
But I don't understand 21 that.
If they didn 't do the project at all they would 22 save even more money.
23 (Laughter.)
24 MR. EEMICK:
I guess the question is if one 25 lays out the cash flow over the years ahead and working ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE, S.W, WASHINGTON, D.C. 20024 (202).554 2345
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the problem the way the applicants did, that is 2 escalating the projected annual expenditures at an 3 assumed r.igh t percent rate, and then discounting at 11 4 percent to reflect a time preference of money, they came 5 up with, by their own estimate, a benefit f rom deferral 6 of $30.2 million.
We will come back to that in just a 7 soment.
8 CHAIRMAN PALLADINO:
I have a hard time 9 understanding that.
10 MR. RATHBUN:
I can understand that..
11 COMMISSIONER AHEARNE:
You are going to come 12 back to that?
13 MR. RATHBUN Yes.
The second element is
[,)
~
14 interest on. past expenditures which the applicant has 15 estimated a t $189 9 million.
16 The third element is loss due to deferral of 17 revenue and that means electricity generation when the 18 CRBRP comes on line which they estimate in January 28th 19 at $5.9 million.
20 The last entry is increased management and 21 overhead costs and I understand storage costs of $42.3 22 million.
23 The sum of all those is $207.9 million.
s' 24 In the January 28th piece the applicants 25 discounted the projected expenditures and found that for
~
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project expenditures the delay cost was $30.2 million of 2 benefit.
3
(~s, I will come back to that, and let me proceed 4 on.
5 In the applicants' revised January 28th cost 6 estimate, in Chart A which precedes page 31, the cost of 7 delay attributable to inflation is prepared by taking 8 the anticipated future expenditures by year and assuming 9 increased costs at,an eight percent escalation and a 10 one-year delay.
11 CHAIRMAN PALLADINO:
You have a table that 12 precedes page 317 13 MR. RATHBUN4 It is Chart A.
14 COMMISSIONER AHEARNEs This is in the January 15 28th.
16 CHAIRMAN PALLADIN0s Oh, I am sorry.
17 MR. RATHBUN Yes, Janua ry 28th.
Comparing 18 the two expenditure streams in a present worth context, 19 these two ssh flow streams are discounted by an 11 20 percent factor to account for the time preference of 21 money.
22 For the anticipated project expenditures we 23 believe tha t the applicants ' methodology in the
's s 24 treatment of inflation and the resulting estimate of a 25 $30 million savings from delay appears to be reasonable.
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1 CHAIRMAN PALLADINO4 Have you got a question 2 on this?
(7, 3
COMMISSIONER AHEARNE:
If he is passing Chart 4
A.
5 MR. RATHBUN We will come back to it.
6 COMMISSIONER AHEARNE:
Are you still on Chart 7 A?
8 MR. RATHBUNs I would like to go on through 9 and then we will come back to that $30 million.
10 For the project management overhead the 11 applicant has projected increased direct manpower at 643 12 staff-years total for all of the various mangement teams 13 as a result of the one-year delay.
14 Based upon staff and overhead charge rates are 15 costs ranging f rom $36.6 thousand per year to, $110.5 16 thousand per staff-year.
The applicant estimates the 17 management and overhead cost of delay at $42.3 million 18 per year.
This estimates includes roughly $500,000 for 19 storage, maintenance and inspection costs.
20 As we suggested in the staff paper, to the 21 extent that these management resources could be 22 reassigned to other projective useg, that and the 23 estimate prepared in present value terms, we think this 24 estimate may be in the upper bound.
25 CHAIRMAN PALLADINO:
Are you suggesting that k
ALDERSON REPORTING COMPANY. INC.
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25
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1 they should not have the management teams and should not 2 store this stuff?
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3 MR. RATHBUN No, sir.
We are saying that 4 rather than have 643 staff-years, and say that this is a 5 cost of delay and it is a legitimate cost entry item, 6 but I think the thing that one would want to do is try 7 and make sure that the people are used as productively 8 as possible so that it is not charged on the account of 9 cost of delay.
10 CHAIRMAN PALLADINO:
Well, the alternative you 11 have is to disband the management team, but then you 12 have to introduce other costs.
13 MR. RATHBUN:.That is right.
That is exactly
(,)
~
14 right.
That is why we have some reluctance to make some 15 estimate as to how much reduction might be possible 16 there.
DOE maintains that they should continue these 17 managenent teams in place.
18 COMMISSIONER AHEARNE:
This is 643 staff-years?
19 MR. RATHBUN Yes, sir.
20 CHAIREAN PALLADINO:
You said this is on the 21 high side of your estimate?
22 MR. RATHBUN I think that our position is 23 that it is an upper bound.
One might ring something out 24 of that, but I am not quite sure how much.
25 CHAIRMAN PALLADINO:
How do you establish that ALDERSON REPORTING COMPANY,INC, 400 VIRG!NIA AVE., S.W., WASHINGTON, D.C. 20024 (202).554 2345
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it is upper bo und ?
Have you made a separate analysis, 2 or have you got somebody else to do a separate analysis, 3 or is there some intuition that says that it is an upper
(],
4 bound?
5 MR. FELD:
Well, we considered two factors in 6 tha t conclusion.
7 The first was what Dennis already alluded to, 8 the recognition that there appeared to be a possibility 9 that these man-years of management could be doing 10 something productive during this delay period that 11 result in some type of a pet benefit to the Clinch River 12 project.
To the extent that they could improve the 13 Clinch River design or make other quests more effective 14 or improve the Clinch River project itself, then there 15 is a compensating benefit associated with this cost and 16 it should be deducted from this incremental cost.
17 CHAIRMAN PALLADINO:
New you are making the 18 presumption that they are not satisfied with the design 19 and that it should be re-examined?
I am not sure what 20 presumptions you are making because.you can speculate.
21 You know, you can make a lot of work if you want to make 22 work, but it is not necessarily of benefit.
23 COMMISSIONER GIIINSKY Well, it appears the s/
24 way it is beina treated, if I understand it correctly, 25 is that all of these people are just sitting doing a
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absolutely nothing.
2 CHAIRMAN PALLADINO:
They are babysitting the pg 3 situation, which sometimes takes quite a bit of time, 4 and I think this is a real cost.
5 Now I don't know what assumptions you are 6 making and what assumptions they are making about the 7 utilization of this staff 3 but I don't think one can 8 just sit here and speculate and say, well, they could 9 have been doing something usef ul and then say that is 10 the upper bound.
In other words, I am really not 11 convinced that we have exanined the situation well 12 enough to make some of the statements we are making.
l l
13 COMMISSIONER AHEARNE:
Sid, excuse me.
Did we 1
(.
~ '
14 have any kind of detail as to what those people would be 15 doing?
Was there a work breakout for those individuals?
16 MR. FELD:
Not really, no, but there was a 17 second element to our conclusion that this would be an 18 upper bound.
19 COMMISSIONER GILINSKY:
Let me ask you this.
20 Is that number fixed by wha t the Chairman called the 21 babysitting requirements or is that some larger number 22 which reflects the fact that you have to keep the team 23 around and you don't want to break it up?
I mean it 24 would be that difference that would be interesting to 25 understand.
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CHAIRMAN PALLADINO:
Was there any question 2 raised with the applicant as to whether or not they have 3 already subtracted the benefit that they might gain?
{}
4 MR. FELD:
We were able to follow through very 5 carefully the calculations that the applicant made and 6 it was quite clear that there wasn't any deduction made 7 for any type of net benefit that could be achieved 8 during this period.
9 CHAIRMAN PALLADINO:
But was that specifically 10 explored?
11 MR. FELDa Just to the extent tha t the 12 calculations showed that they were just looking at it.
13 CHAIRMAN PALLADINO:
Well, what assumption do 14 you make out of this Su2.3 million?
What is it that you 15 do think could be saved, $2 million, $3 million, 540 16 million?
17 MR. FELD:
Well, we really haven't done an 18 independent estimate.
I think our position is that, you 19 know, we are looking here.
In this particular instance 20 ve are looking at a real cost of delay and there is 21 going to be some real incremental resource commitment to 22 Clinch River as a result of the delay.
But we were 23 arguing that it would appear to be less than this number
^s kJ 24 because of the potential for net benefits to be derived 25 from this additional work that they would be doing.
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1 CHAIRMAN PALLADINO:
Even af ter you vent 2 through all their numbers you got 207 and then they gave 3 a range of 120 to 240.
4 MR. RATHBUN 120 to 240, yes, sir.
5 CHAIPHAN PALLADIN0s That is quite a range.
6 MR. RATHBUN I think we should bear in mind l
7 there was one element which I don't think was present in 8 their analysis.
They discounted the projected 9 expenditures for the rest of the plant except for the 10 management and overhead expenses.
Those were not 11 discounted.
If one did discount it, it certainly would 12 be less than the $42.3 million.
13 CHAIRMAN PALLADINO:
What do you mean by
- )
14 discounting?
15 MR. RATHBUNa Well, in effect just simply to 16 recognize that a dollar today is worth more than a 17 dolla r tomorrow.
These staff-related expenses do occur 18 over the next several years and they would really fall 19 in the same cash flow with discounting category as the 20 projected plant expenditures which were discounted in 21 Chart A.
22 CHAIRMAN PALLADINO:
How do you discount your 23 management costs, because probably they are going to go Ot.J 24 up, and are they going up at about the same rate as what 25 you would discount them?
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1 MR. RATHBUN Possibly, but generally the way 2 that type of problem is handled is to look at the cash 3 flows on an annual basis and to make an allowance for 4 inflation, as they estimate eight percent, then to 5 reflect the factor that you just cited and then to 6 discount those at some appropriate rate.
They used 11 7 percent.
That means in effect that the real discount 8 rate is the difference between the two, or three 9 percent.
10 COMMISSIONER GILINSKYs The basic point is 11 that to make comparisons you have to be working with 12 dolla rs in the same year.
When you say discounting that 13 is what they mean.
(')
14 CHAIRMAN PALLADINO:
But I want to make sure 15 that they add a cost.
You know here I am not sure that 16 eight percent is right and I am not sure that eleven 17 percent is right.
The eight percent sounds to me more 18 like about eleven percent and the eleven sounds more 19 like eight, but that is an uncertainty factor.
But to 20 say therefore tha t they are underestimated gives me a 21 little bit of a problem because you are making 22 assumptions in both the discounting rate and the ---
23 MR. RATHBUN:
I guess the discoun ting to
,$/
24 present values, as Commissioner Gilinsky points out, l
25 doesn't really. trouble me.
The productive reassignment l
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is to me anyway more troublesome because I really don't 2 know and I don't think we have the information at hand 3 to show just exactly what kind of flexibility there is.
4 COMMISSIONER ROBERTS:
Well then I don't think
~
5 you would have enough information to make a judgment.
6 MR. RATHBUN Well, except with respect, I s
7 suppose, Commissioner Roberts, to the discounting factor.
8 COMMISSIONER GILINSKY:
As I understand what 9 this is doing is it is trying to deal consistently with 10 the numbers that we have been given.
He is not 11 generating new numbers.
12 CHAIRMAN PALLADINO:
But, aside from numbers, 13 there is a statement saying they can put them to work.
14 I have been involved in projects that were delayed and I 15 have been kept busy.
We made more studies and we made 16 more studies ---
17 (Laughter.)
18 CHAIRMAN PALLADINO:
--- and put out a report, 19 but it did not advance the project.
Now if you want to 20 say therefore we got a benefit, it wasn 't to the 21 pro ject, and it is a chargeable cost against the project 22 to say, well, the project paid for somebody else's 23 benefit and it did not pay for the benefit of that 1
24 project.
25 MR. RATHBUN I guess that is why as between 9
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the two factors the one that I would lean a little bit 2 more heavily on is the discoun ting f actor because to me
(])
3 that is clear.
4 CHAIRMAN PALLADINO:
That is about three 5 percent using your numbers.
6 COMMISSIONER AHEARNE:
Do you have any comment
~
7 on the two factors that they used, the eight and eleven 8 percent?
Why should they not as a first approximation 9 take them as the same?
10 COMMISSIONER GILINSKY:
You would be saying 11 that there is no discount.
12' MR. RATHBUN:
No discounting a t all.
I could 13 take them at 10 percent.
14 COMMISSIONER GILINSKY:
That takes up back to 15 the Corps of Engineers.
16 MR. RATHBUN:
At 10 percent in real terms 17 which would mean eight percent and escalation at 18 18 percent as a discount rate.
19 COMMISSIONER GILINSKY:
Let's see, OMR I think 20 proposes a real discount rate of 10 percent for 21 evaluating regulatory actions for one thing.
22 COMMISSIONER AHEARNE.
They have a variety of 23 discount rates for personnel services, for hardware 24 purchases and there is a wide range.
I was just more 25 asking did you have any comments on the choice that they
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made?
Did they really choose those two or were they 2 trying to redo a calculation that NBDC had done?
(])
3 MR. FELD4 The eight percent escalation rate 4 was their choosing, and that number has been a part of 5 their cost escalations going back to certainly '77 when 6 the staff did the initia] FES.
7 The eleven percent cost of money was the 8 number that NRDC has used to provide an illustrative 9 example.
The NRDC vent on to say that based on current 10 money costs to the government for long-term bonds and 11 notes that they felt the more appropriate rate would be 12 14 percent which would essentially double the real 13 discount rate from three to six and therefore double the 14 savings associated with these expenditures.
15 CHAIRMAN PALLADIN0a Well, go ahead, Dennis.
16 BR. RATHBUNs We have a couple more to go 17 through.
18 CHAIRMAN PALLADINO:
I think you have more on 19 this point.
20 COMMISSIONER AHEARNE:
Well, I was going back 21 to the management question.
In the absence of any 22 detailed information on what the people would be doing, 23 was there any detailed information on the 643
, m.
24 staff-years?
Is the 643 staff-years the one year?
25 3R. RATHBUN I think that is correct because
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they just simply displaced in time the ---
2 COMMISSIONER AHEARNE:
bid.
3
)
MR. FELD:
Technically it appears as if the 4 applicant is treating the 643 years delay as the 5 management that is going to be on hand during the delay 6 period, that is during this 1982-83 twelve-month 7 period.
However, when you look at the tables that they 8 have prepared for each of the management teams, it is 9 clear that there are differences in management levels 10 over each of these eight or nine years that are going 11 out over the f uture.
12 Therefore, that is really technically the 13 correct way to view the differences as they are 14 occurring over time and that is why we were taking the 15 position that it would be then appropriate to apply a 16 discount range to these differences to come up with the 17 present worth value of this management cost.
18 COMMISSIONER AHEARNE:
Can you speak to 19 whether or not in the year of delay, are they on a 20 build-up or are they currently at the level that they 21 would stay at?
22 MR. FELD:
They are typically on a build-up.
23 COMMISSIONER AHEARNE:
Thank you.
24 CHAIRMAN PALLADINO:
Do you want to go on?
25 COMMISSIONER ROBERTS:
Well, I ---
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CHAIRMAN PALLADINO:
Oh, I am sorry, Tom.
2 COMMISSIONER ROBERTSa didn't make my 3
(],
point or it wasn't acknowledged.
I not arg uing about 4 the choice of what sort of numbers you want to use.
I 5 just take exception with the statement " Management or 6 overhead costs should be reduced to reflect the 7 possibility.
That is absolute crystal balling 8 and we don't have those answers.
You don't have enough 9 inf orma tion to qualify that in any way, and that is not 10 a criticism of your abilities, but you just don't have 11 the information.
12 COMMISSIONER BRADFORD:
But if you don't do 13 that you are also assuming something.
You are assuming
_'i 14 that all of those man-years will be from the point of 15 view of the project completely wasted, every one of 16 them, every day, every second.
You a re using a number 17 and the number you are using is zero.
They are 18 acknowledging there is uncertainty in terms of how much 19 you reduce it by, but what they are saying is that zero 20 is no better a number for that factor than any other.
21 COMMISSIONER BRADFORD:
But this question of 22 benefit to the project or benefit to something else, 23 which in the first place nobody ever put money for.
So 24 these benefits may be for things that Congress never 25 intended.
s s
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COMMISSIONER BRADFORD:
Sure.
2 CHAIRMAN PALLADINO:
I don't see how it could 3 benefit the project.
4 COMMISSIONER BRADFORD:
Well, one just doesn't 5 know, but it is hard for me to believe that all those 6 people on salary for all that time would do absolutely 7 nothing that was of any benefit to the project.
8 CHAIRMAN PALLADINO:
Oh, they have a lot of 9 reports to read and they have management documents to 10 fill out, they have personnel problems ---
11 (Laughter.)
12 COMMISSIONER BR ADFORD:
I am sure there are a 13 lot of ways to waste time on Clinch River.
14 CHAIRMAN PALLADINO:
No, I meant on any 15 project and there is no need to waste time.
That is my 16 point.
17 COMMISSIONER AHEARNE:
Since we a re still on 18 the way the people are spending their time, can you get 19 a sense from the information you have, for their year of 20 deferral are they holding off the build-up?
Sid 21 mentioned that they are on a build-up.
22 MR. RATHBUN:
Let me just call attention to 23 the January 18th DOE submission and they have these logs 24 in there and you ought to take a look at pages 53 and s..
25 54 You can get a sense, Commissioner, as
'u point up, ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554-2345
37 1
that there is a substantial build-up at least in some of 2 the elements.
3
()
COMMISSIONER AHEARNE:
Well, the problem I had 4 there was that the chart started at 382.
5 COMMISSIONER ROBERTS.
You mean in the hopeful 6 circumstance that an extension will be granted.
7 COMMISSIONER AHEARNE:
It started in March of 8
'82 so I couldn't tell, but that is all you have.
9 CHAIRMAN PALLADINO:
Do you want to go on with 10 the rest of the costs?
11 MR. RATHEUNa The next iten is deferral of 12 revenues that come from electricity generation.
In the
~
13 January 28th submission the applicants provided a 7-14 present worth estimate of $5.9 million from loss of 15 revenue, deferral in revenue really from electricity 16 generation due to a one-year delay.
We agree with the 17 applicant that the deferred benefits which would result 18 from not granting the exemption costs constitute a real 19 cost of delay.
20 CHAIRMAN PALLADINO:
What was it?
21 MR. RATHBUN:
$5.9 million.
22 COMMISSIONER AHEARNE:
Once under the 23 current, and I am not sure whether it is a contract or 24 what it is, once the plant would be butit and operating 25 the electricity would go into the TVA system, correct?
v ALDERSoN REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202).554-2345
38 1
MR. RATHBUN Yes, sir.
2 COMMISSIONER AREARNE:
To whom would the 3 revenues go?
4 MR. RATHBUN I will defer to Sid on that.
5 MR. FELD:
Presumably they would go into the 6 Clinch River account.
When you look at the Clinch River 7 cost estimates for the total project you see costs going 8 out through 1994, and for the periods when the plant is 9 on line there are deductions for the revenues that are to being received fron the sale of electricity.
11 COMMISSIONER AHEARfE Well, in the Clinch 12 River account, but on the input side of the Clinch River 13 account there are two contributions.
There is one that
~
14 is through the Congressional appropriation and there is 15 another through' the contributions of the utilities.
16 Now in the Clinch River account then does this 17 return also flow back or is it split?
18 MR. FELDs I do not know the answer to that.
19 The cost analyses that we are looking at are looking at 20 Clinch River as a single entity.
21 COMMISSIONER BRADFORD:
Before you leave that 22 one, just offhand this is power that is going to be sold 23 into the TVA system?
Now that system is cancelling 24 nuclear plants.
25 CHAIRMAN PALLADINO:
Is what?
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COMMISSIONER BRADFORD:
Cancelling and 2 deferring nuclear plants continuously for three or four 3 years now.
Why does it need this one?
Why is this one 4 any more beneficial than all the ones it is cancelling?
5 MR. FELD:
There is really no presumption that 6 they need the electricity.
The agreement with TVA is 7 that they will purchase the electricity from the Clinch 8 River reactor for what it would cost them at the margin 9 to have generated that electricity on their own system.
10 So they will be displacing their highest cost energy 11 from their system and purchasing this.
12 COMMISSIONER BRADFORD:
So that if in fact 13 that electricty is costing more than it is being sold 14 for then somebody is losing money.
15 MR. FELD4 Correct.
16 COMMISS.?NER BRADFORD:
And if that were the 17 case then how could one look only at the benefit to TVA 18 without looking at the loss to the seller who I take it 19 is ultimately the taxpayer?
20 MR. RAIHBUN:
What you are really looking at 21 is the net rather than the revenues.
That number is 22 case in terms of the gross revenues.
23 COMMISSIONER BRADFORD:
So there is no net 24 calculation made?
25 MR. RATHBUN:
Not to my knowledge.
',]
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COMMISSIONER GILINSKY:
The operating expenses 2 aren 't in there?
3 MR. RATHBUNs That is correct.
(])
4 Let me go on.
The thing that I think we found 5 most troublesome.
Our most important concern on the 6 applicants' delay cost analysis centers on the interest 7 part for the project.
It is expenditures and interest.
8 In the January 28th submission the applicant estimates 9 expenditures and interest to 1982 of $1.73 billion.
10 This was arrived at by capitalizing previous 11 expenditures back into the Seven ties, I think really 12 beginning in 1974, at an 11 percent rate.
The applicant 13 then estimates an annual interest expense for 1982 of 14 $189.9 million as their estimate of the cost of delay.
15 Our view is that the interest on capital in 16 1982, imputed or otherwise, would be $189.9 million 17 based on an 11 percent interest rate.
18 However, our res6rvation is whether -the $189.9 19 million is a cost of delay.
It is a cost, but we don't l
20 think that it is a delay cost and we would not have 21 included this item in the cost of delay because it will 22 be incurred regardless of whether the exemption is 23 granted or not.
24 The opportunity f oregone in the event of delay 25 would be the deferral in the revenues and the RED x
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f benefits from earlier operation of the CRBRP plant.
In 2 this regard we cite two references to bolster our 3
,)
position on that.
One is Professors Grant and Ireson's 4
" Principles of Engineering Economy."
The other is from 5 DOE's "Estmates of the Cost of Delay in Operating 6 Licenses for Nuclear Plants."
I can go through a little 7 bit of either one or both if you wish.
8 CHAIRMAN PALLADINO:
Could I put it into lay 9 terms?
10 (Laughter.)
11 MR. RATHBUN:
Sure.
12 CHAIRMAN PALLADIN0s If I start a business and 13 I invest $500,000 in it and I am paying a high interest i
14 because I borrowed most of the money and a delay comes 15 about because of licensing or something or other and I 16 am delayed a year.
Now to me that is a real cost, all 17 that interest that I paid.
18 MR. RATHBUN:
It certainly is.
19 CHAIRMAN PALLADIN04 And even if it happened 20 last year and I was delayed two years and here I am 21 talking about this year, it is still a real cost.
Nov 22 why should you exclude that?
I could go backrupt while 23 I was waiting for that to happen.
)
24 (Laughter.)
25 ME. RATHEUNs You certainly could, and we are J
ALDERSoN REPORTING COMPANY,INC.
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'])
1 not saying that a person, an individual or a firm could 2 have a major cash flow problem.
3 CHAIRMAN PALLADINO:
It sounds like a cost 4 problem to me as well as a cash flow problem.
5 MR. RATHBUN:
Yes, sir, that is right, and we 6 haven't said that there isn't a financial or monetary 7 cost associated with that.
8 Assume you borrowed $100,000 to buy a 9 condominium and you borrowed it at 15 percent.
After a 10 simple first approximation the carrying charges on that 11 investment are $15,000 a year.
You are going to rent 12 this facility or this condominium and the question 13 before you is whether you can rent it this year or rent 14 it next year.
You are going to have to pay the $15,000 15 in either case.
Let's assume that it rents for 16 $20,000.
The real delay is whether you get the $20,000 17 beginnin g this year or the $20,000 beginning next year.
18 COMMISSIONER GILINSKY:
The cost of delay.
19 MR. RATHBUN:
That is the cost of delay.
Tha t 20 is exactly right.
That is the opportunity foregone, the 21 $20,000 that you weren't able to get.
22 But if you did a discounted cash flow and you 23 had $100,000 of sunk investment from this point forward
)
24 and your cash flow for the first case would be $15,000 25 in interest, on the one hand, and $20,000 from time zero ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W, WASHINGTON, D.C. 20014 (202).554-2345
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43 4
1 for gross revenues, on the other, and then for cash flow 2
"B" you would have the same $15,000 to pay in th a t 3 scenario and a delay of one year of $20,000 in the 4 receipts.
5 CHAIRMAN PALLADINO:
You are making an 6 assumption that this condominium has a forever life.
It 7 doesn't.
These two years cut down from the life.
It is 8 a real loss.
9 COMMISSIONER GILINSKY:
But it is discounted 10 at the other end.
11 CH AIRM AN PALLADINO:
No, it is not.
It is a 12 real loss.
You can't have it both ways and pretend'it 13 is going to lost forever and then say, well, you will 14 eventually recover your money.
15 COMMISSIONER BRADFORD:
But the two years 16 don 't cut down f rom the other end.
17 COMMISSIONER GILINSKY They cut down very 18 little because when you come back at 11 percent a year, 19 back to the present, they don't matter a whole lot.
20 CHAIRMAN PALLADINO:
I am going to defer to 21 more expert people, but it doesn't quite make sense to 22 me.
23 MR. RATHBUN4 I understand.
(m) 24 (Laughter.)
25 COMMISSIONER AHEARNE:
You are ri gh t, it is
- s 0
w ALDERSON REPORTING COMPANY,INC.
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(
1 very analogous to the cost of delay.
2 COMMISSIONER GILINSKY Th e real point is that 3 you have to look at the difference between two courses 4 of action.
5 CHAIRMAN PALLADINO:
There is also something 6 that is not analogous to this situation.
The government 7 is doing this to buy background.
If it weren't for 8 revenue it might have done something different, but it 9 is trying to buy something of value presumably and tha t 10 is why the Congress is doing it.
So you can't quite 11 measure it in teras of this piddling little amount of 12 money they are going to get in.
It is really in terms 13 of what it is costing to delay the project.
14 MR. RATHBUNs It is the re search and 15 development benefits and they are not quantifiable.
16 CHAIRMAN PALLADINO Well, one one to 17 represent them is by this investment cost and the cost 18 of the interest.
19 MR. RATHBUN No, sir, I don't think so.
20 CHAIRMAN PALLADINO:
I don't want to make a 21 debate out of it here, but I would be willing to sit 22 down with the Professor that wrote that book.
23 (Laughter.)
b 24 CHAIRMAN PALLADINO:
No, seriously, because we 25 are trying to make an analogue out of one situation that ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202).554 2345
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is airrerent in enis situ tioa-sut erne a vias 2 brought up the point is enough for the time being.
3 COMMISSIONER AHEARNE:
I will have to admit, 4 Dennis, I am on your side in this one.
5 MR. RATHBUN:
Thank you, Commissioner.
6 (Laughter.)
7 CHAIRMAN PALLADINO:
But I do want to make the 8 point that it is not analogous.to saying I am going to 9 get that $20,000 a year and we are going to end up to deferring it.
I have got to pay this cost anyhow.
I am 11 paying this cost and I am 'not getting my results, 12 whatever the avowed results of the Congress is.
13 COMMISSIONER AHEARNE:
That is true, but the
.q 14 results are in a different currency.
The results are a 15 variety of things but they aren't ---
16 CHAIRMAN PALLADINO:
Well, maybe it isn't $189 17 million, maybe it is only $89 million.
All I am caring 18 is the 120 to 290 ---
19 COMMISSIONER GILINSKY:
It shows up on both 20 sides of the equation.
21 COMMISSIONER AHEARNE:
On the dollars.
22 COMMISSIONER GILINSKY:
Yes.
23 COMMISSIONER AREARNE:
,'he point that Joe is O
24 making is that if you do buite the plant and get it 25 running a year earlier you get your results a year
~.)
~
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46 4
1 earlier.
2 COMMISSIONER GILINSKY Well, that isn 't 3 factored in here at all.
4 CHAIRMAN PALLADINO:
I am trying to equate it 5 here.
6 COMMISSION ER GILINSKY s That is right, that is 7 a whole separate argument.
What Dennis is dealing with 8 is, you might say, a bookkeeping argument that has been 9 presented by DOE, and it turns out it doesn 't stand up.
10 CHAIRMAN PALLADINO:
Well, no.
It does stand 11 up, but you have to put it in my context.
12 (Laughter.)
13 CHAIRMAN PALLADINO:
The context the DOE is 14 putting it in, they are not putting in the fact that 15 they are trying to get money f rom a condominium.
16 COMMISSIONER BRADFORD:
The DOE actually put 17 it in the context of nuclea r power plants.
18 COMMISSIONER AREARNE:
Well, the way they 19 presented it, there is really a lot more at stake than 20 dollar costs, that you have invested this money ---
21 CHAIRMAN PALLADINO:
And I think it is a real 22 dollar cost.
23 COMMISSIONER AHEARNE:
The money that is spent 24 is a real dollar cost.
That is true.
25 CHAIRMAN P ALL ADIliO Well, I don't know how ALDERSON REPORTING COMPANY. INC, 400 VIRGINIA AVE. S.W, WASHINGTON, D.C. 20024 (202) 554-2345
47 Il 1
long to debate this, but I would appreciate some 2 evidence that shows that 120 to 240 is not a realistic 3
range.
4 COMMISSIONER GILINSKYs Cr is.
5 CHAIRMAN PALLADINO:
And I think it is a 6 realistic range.
7 COMMISSIONER AHEARNE:
I guess I would have to 8 'come out on the side of Dennis' argument, and I don't 9 think it is realistic based on it.
10 COMMISSIONER GILINSKYs Let me ask you, Joe, 11 when you say 120 or 240, or whatever the numbers are, 12 are you factoring in what you think the knowledge that 13 would be gained is worth, or 'are you following through
)
14 their argument?
See, they have got a column of figures 15 tha t adds up to those numbers.
16 CHAIRMAN PALLADINO:
It says that "In 17 addition, carrying charges on monies already expended 18 should be excluded. "
That is all you have concluded, 19 and I say no, they should not.
20 (Laughter.)
21 CHAIRMAN PALLADINO:
The reason being is that 22 the analogue is not the condominium analogue.
It is a 23 different circumstance and you are trying to buy some I
24 information experience and you are getting it a year 25 late, and because you deferred it this is a real cost.
8 1
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^'
1 COMMISSIONER GILINSKY:
But the world starts 2
anew every day.
What has happened has happened.
All 3 you can do is affect the future.
c.
U.
4 CHAIRMAN PALLADINO:
But it is now that they 5 are spending the money.
6 COMMISSIONER BRADFORD:
Not that money 7 though.
That money was already spent.
8 CHAIRMAN PALLADINO:
All the money?
9 COMMISSIONER AHEARNE:
Yes, this money is all 10 spent.
11 MR. RATHBUN:
This is interest on monies 12 already spen t, carrying costs, the financial carrying 13 costs on monies already spent.
fm 14 CHAIRMAN PALLADINO:
It is not for this time 15 frame in which we are talking?
16 COdMISSIONER AHEARNE:
No.
17 MR. RATHBUN:
No.
18 COMMISSIONER BRADFORD:
The interest would 19 have to be paid during this time frame but there is no 20 flexibility to it.
21 COMMISSIONER AHEARNE:
The money has already 22 been spent.
23 CHAIRMAN PALLADINO:
The interest is what I am 24 talking about.
25 MR. RATHBUN:
Well, they capitalized the ALDERSON REPORTING COMPANY. INC.
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49 1
previous expenditures and came up with $1.73 billion.
2 At an 11 percent carrying cost rate they arrived at 3
COMMISSIONER AHEARNE:
If the government was 4 not run as a deficit would there be any interest costs?
5 (Laughter.)
6 MR. RATHt3N:
You could say imputed or debt 7 finance.
8 COMMISSIONER AHEARNE:
Joe was talking about 9 money actually spent and I was ---
10 (Laughter.)
11 CHAIRMAN PALLADINO:
Well, maybe we ought to 12 go on, Dennis, but I would appreciate if you have some 13 clear way of supporting that 120 to 240 it would help 14 me.
15 COMMISSIONER ROBERTS:
Well, not to put words 16 in your mouth, but you mean clarif y the significantly 17 less than the 120 to 240.
Is that what you are asking?
18 CHAIPMAN PALLADINO:
Yes.
19 MR. RATHBUN:
I will summarize.
I said at the 20 beginning that when one added the four elements of cost 21 of delay from the applicant one came to $207.9 million 22 which they argued was within the range of $120 to $240 23 million.
24 We had, as I said, reservations about the 25 interest on past expen'ditures of $189.9 million.
If one m
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decided that that was not a charge which should be 2 included, then an adjusted cost of delay would be $19 3
{
million rather than $207.9 million.
4 CHAIRMAN PALLADIN04 What happened to the $43 s
5 million?
6 MR. RATHEUNa That is one of the elements in 7 the 207.
8 COMMISSIONER AHEARNE:
There wee a 530 million 9 saving.
10 MR. RATHBUN An $18 million.
11 CHAIRMAN PALLADINO:
I don 't understand.
How 12 do you get a saving?
It sounds to me like you are 13 taking two apples out of a barrel.
14 COMMISSIONER GILINSKYa That was DOE's number.
15 MR. RATHBUN:
Let me just say, the $30.2 16 million came from the applicant and that is a benefit 17 from delay.
I would draw a ttention to the Chart A in 18 that regard.
As you can see, in that Chart A they have 19 shown their anticipated expenditures during the years of 20 expenditure, 1982 through 1995.
They applied a present 21 worth factor to the first entry, the first line in that 22 Chart A, and then they have worked a second pro.blem, the 23 delay problem, with a one-year delay with eight percent 24 escalation.
That is to say, the $70.7 nillion in 1982 25 becomes $76.4 million in
'a3, and similarly $165.8
\\_,'
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million becomes $179.1 million, and so forth and so on.
2 Then they discount that time series at an 11 percent 3 present worth f actor again and they compare the two 4 present worths in order to obtain their estimate of cost 5 of delay.
6 They find that the delay case is actually less 7 expensive than the spend now case.
They delay case has 8 a present worth of $1.09 billion compared to the spend 9 now of $1.12 billion.
The diff erence between the two is 10 a benefit from their analysis of $30.2 million.
11 CHAIRMAN PALLADINO Well, I of ten use m-12 homer type of check points.
What we are saying is if wo 13 delay this thing we are going to get benefit.
There is 14 no cost or there is very minimal cost.
I will bet you 15 that had we completed this project eight years ago we 16 would have saved a hell of a lot of money in this 17 country.
I find it very difficult to say, therefore, 18 one year is really no big deal and we are not going to 19 lose any money but not delaying it.
I think we are 20 losing money hand over fist.
21 MR. RATHBUN.
I guess it is possible that they l
22 underestimated the escalation rate.
23 CHAIRMAN PALLADINO:
I don't know what it is,
()
24 but I just know that if you keep a budget going long 25 enough it kills you ar.d it takes a lot of money and you m
k,)
ALDER $oN REPORTING COMPANY. INC, AA 4 ( 02).554-W5
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(^',
1 don't get your results.
If you get it done is a hurry 2 you get your results.
I am not convinced that this 3 isn't the realistic number.
Of course, I as taking into 4 account my point of view about getting results in a time 5 frame where I can make effective use of' the money.
6 Well, maybe we ought to go on to other 7 questions.
I have got some more.-
8 COMMISSIONER AHEARNE:
I was going to say that 9 as far as the costs and making them clear, I suspect 10 that the underlying problem is that Dennis can't make 11 the DOE's estimates any clearer because he has explained 12 here is the way they got to their number.
13 COMMISSIO'NER GILINSKY:
Yes.
He is working
(~',I 14 with a list of specific entries.
15 COMMISSIONER AHEARNE:
And he has explained 16 how they got there.
Then whether or not one accepts 17 their argument is more judgemental rather than a 18 clarification.
19 CHAIRMAN PALLADINO But they did have 20 carrying charges on money already expended.
i 21 MR. RATHBUN Yes, sir.
That was the major 22 item.
~
23 CHAIRMAN PALLADINO ' And you saying they
()
24 should be excluded.
25 MR. RATHBUN Yes, sir, that is our position.
O ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON. D.C. 20024 (202) 554 2345
53
/ ')
1 CHAIRMAN PALLADINO:
That is where I am having 2 some difficulty.
3 Do you have any other questions?
)
4 COMMISSIONER AHEARNEs If you are going to 5 shift away from costs.
6 CHAIRMAN PALLADINO:
Yes, I am shifting away 7 from costs.
8 COMMISSIONER AHEARNE:
Let me ask you another 9 question on the costs.
The structure of this 10 arrangement, DOE is a co-applicant with TVA and Project 11 Management Corporation; is that correct?
12 MR. RATHBUN Yes.
13 COMMISSIONER AHEARNE:
PMC is the manager for O
14 the organization; is that also correct?
~
15 MR. LEECH:
I am not certain that you would 16 characterize it that way now.
It was in the beginning.
17 COMMISSIONER AHEARNE:
How would you 18 characterize it now?
19 MR. LEETH I think DOE today is the lead 20 applicant.
21 COMMISSIONER AHEARNE:
What is the 22 relationship between those three groups which will get 23 back to the question of the body of people managing.
So 24 what is the relationship of those three?
s 25 MR. LEECH:
I will do my best to answer that 1
ALDERSON REPORTING COMPANY. INC.
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54 1 though I haven't researched it lately.
It is my 2 understanding that DOE is the lead applicant today.
3 Whether they manage all the facilities at the Oak Ridge
(..)s 4 Office, I can't say.
I believe the top person there is 5 a DOE person, but Project Management people are there 6 and they man the thing.
There are about 23 people from 7 TVA and about 23 people, as I remember, from I thought 8 it was Commonwealth Edison.
9 COMMISSIONER AHEARNE:
That is the other big 10 one.
11 MR. LEECH:
Yes, and a sprinkling of a few 12 people from elsewhere in the industry.
13 COMMISSIONER AHEARNE:
Are those people 14 employees of TVA and employees of Commonwealth?
15 MR. LEECH:
Yes, they are employees of those 16 organizations that are there.
17 COMMISSIONER AHEARNE:
Project Management is 18 an umbrella under which they sit?
19 MR. LEECH:
Well, yes, it is an amalgamation 20 of all these utility interests.
21 COMMISSIONER AHEARNE:
So the mangement 22 structure is each person then has a joint label, 23 PMC/ Commonwealth Edison and PMC/TVA?
'[']
24 MR. LEECH:
Except they don't go around with 25 the TVA label.
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COMMISSIONER AHEARNE:
Whose payroll are they 2 on?
3 MR. 1EECH:
I don 't know for sure.
I believe
{)
4 it is a Clinch River project payroll, but I am not sure 5 of that.
I believe it is that, the PMC payroll, but I 6 am not certain of that.
I think some of these other 7 people who come from other utilties, the sprinkling, are 8 on the payrolls of those utilities.
But I believe the 9 TVA/ Commonwealth people or DOE people are in ef fect all 10 in the project payroll.
11 MR. CUNNINGHAM:
It has been some time since I this, Commissioner Ahear'e, but it is clear to m'e 12 saw n
13 that the DOE people are paid by DOE.
p.
14 COMMISSIONER AHEARNE:
I would think so.
15 MR. CUNNINGHAM:
The Project Management 16 Corporation, exactly who is on its payroll and who might 17 be on TVA's, I am not sure of.
18 COMMISSIONER AHEARNE:
Is the structure that 19 Project Management Corporation is a contractor for DOE 7 20 MR. CUNNINGHAM:
No, it is a partner in this 21 tripartite agreement.
22 COMMISSIONER AHEARNE:
Is there a board then 23 tha t is the joint director?
r;(.)
24 MR. CUNNINGHAM:
There is an overall board 25 structure but I am not sure who the members are.
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COMMISSIONER AHEARNE:
Now you mentioned about 2 40 people, 46 or so.
The rest of the 600 are Project
(])
3 Management's?
4 MR. LEECH:
There are a lot of contractor 5 people around there, like Stone and Webster people and 6 Burns and Howe and others that are there.
7 COMMISSIONER AHEARNE4 I see.
So the 600 8 staff-years are not Project Management Corporation's 9 staff-years?
10 MR. FELD:
That 643 man-years is a compilation 11 of about six or seven different management teams, Stone 12 and Webster and GE.
13 COMMISSIONER AHEARNE:
Thank you.
That is all.
7..
i 14 CHAIRMAN PALLADINO:
I have a little question 15 on page 21 where "The staff therefore recommends that 16 the applicant be required, prior to initiation of site 17 preparation, to conduct a mussel survey in the vicinity 18 of site, report the results to the NRC and revise the 19 water runoff control measures as necessary to protect 20 the mussels."
21 How long would such a survey take?
22 MR. LEECH:
I understand it would only take a 23 matter of a few days.
()
CHAIRMAN PALLADINO:
Only a few days?
24 25 MR. LEE"H:
Yes.
.s
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CHAIRMAN PALLADINO:
Because I was wondering, 2 if that was a long-time proposition, how that sat with 3 your conclusion that your observations are no different J
4 with regard to the environmental situation now as they 5 were before?
But this is only a few days?
6 MR. LEECHs Only a few days, and this is only 7 to verif y our tentative conclusion that these mussels do 8 not exist in that location.
9 COMMISSIONER AHEARNE:
What would happen if 10 you found them?
11 MR. LEECH:
If we found them, then I assume we 12 would have to go through some analysis of what 13 probability would be of an impact on the project by the m
14 mussels.
15 COMMISSIONER AHEARNE:
So your few-day 16 estimate is really a negative finding as the net impact?
17 MR. LEECH:
The few days is only to see if the 18 mussels are there.
19 (Laughter.)
20 CHAIRMAN PALLADINO:
If they are there, then 21 would this be a departure from what was found in '777 22 It this a new wrinkle?
23 ER. LEECH:
This is a new wrinkle.
Th: 2 comes
(
24 up from the Fish and Wildlife Service that identifies 25 these items as being on their particular list of ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554-2345
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('T 1 threatened and endanged species.
2 CHAIRMAN PALLADINO:
So this is a new wrinkle.
3 MR. LEECH:
I should explain that today, 4 contrary to what we did some years ago, we have a 5 procedure by which we contact Fish and Wildlife on every 6 project.
So currently we will do it again if a project 7 revives, as this one did.
They will look into their 8 computer program and pick out what currently is the 9 information registers for a certain area, basically a 10 county I think of the. United States, and out comes this 11 information.
Then it is up to the applicant or in dur 12 case the regulatory agency to analyze or review or find 13 out the information.
gs 14 COMMISSIONER AHEARNE:
You say that it 15 something new.
Was that not done previously?
16 MR. LEECH:
I don 't really remember that.
17 Certainly I don't remember these mussels being discussed 18 before.
19 CHAIRMAN PALLADINO:
I am going to pose an 20 example, but I have a broader question.
My specific 21 reference is on page 23.
Several times statements are 22 made, and-I use this as an example, "The staff believes 23 that additional teachers may be required."
24 COMMISSIONER GILINSKY:
Additional what?
(,
25 CHAIRMAN PALLADINO:
Additional teachers,
)
ALDERSON REPORTING COMPANY. INC.
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59 1 speaking about the socio-economic impset.
2 In another one it says "However, water 3 distribution and wastewater collection systems may 4 require limited expansion I was wondering, 5 have we made some specific studies or are these just an 6 inituitive feel?
7 HR. LEECH 4 Well, if I can take one of those 8 at a time.
9 CHAIRMAN PALLADINO:
Take the teachers.
10 MR. LEECH:
There is another staff member who 11 isn 't here today who will look at this, but as I 12 understand it, we are, talking now about a county whe're 13 the schools are already slightly overburdened.
I 14 presume teschers and facilities are already ---
15 CHAIREAN PALLADINO:
--- slightly overburdened.
16 MR. LEECH That is what it says in this one 17 county.
18 CHAIBMAN PALLADINO:
The problem I found, and 19 maybe it is peculiar to Pennsylvania, but the school 20 bound population is going down.
They are closing 21 schools in our town left and right.
22 MR. LEECH:
May I point out on the previous 23 page 22, the first sentence of the bottom paragraph says
(
24 " Schools in Western Knox. County could experience slight 25 increases in existing overutilized conditions from the ALDERSON REPORTING COMPANY. INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202).554 2345
60 1 addition of approximately 65 students."
This comes in 2 DOE 's own statement of information to us.
I am not 3 certain it is in the SPAR document, but it is in s
4 information that has been submitted at least in our 5 updating of the FES.
6 Now because it is already overutilized, then 7 just common sense tells you that you may need some 8 teachers to deal with these additional students.
But 9 apparently that overutilization, at least in our 10 reviewer's estimate, is not so much that you can't 11 accommodate physically,.the physical rooms and desks and 12 all that, these students.
There are not a lot of 13 students.
(
14 CHAIRMAN PAL 1ADIN0s Having coming from the 15 education picture and being familiar with what has 16 happened in one sta te, it surprised me to see that these 17 are overcrowded or that they are growing.
18 The other is if you are not going to add more 19 rooms you don't usually put two teachers in a room 20 eXCept in certain kinds of activities.
21 I was more interested in when you say "may" 22 you feel that you have investigated them.
23 MR. LEECH 4 I think these are conclusions 24 drawn fr'om a general discussion of the situation and not 25 going to the schools themselves in trying to figure that
(
C ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554-2345
61 1 out.
2 CHAIRMAN PALLADINO:
I am going to ask one 3 more and then I am going to quit.
4 On page 24, and I am now on noise, there is a 5 sta tement that " Consequently, the noise at that 6 residence," and there is a residence that is relatively 7 close by, "might be greater than the ' clearly 8 scceptable" level when the rock drills are in 9 operation."
Is this different from the 1977 situation?
10 HR. LEECH 4 No, it isn ' t.
11 CHAIRMAN PALLADINO:
It isn't.
Okay.
I 12 thought maybe there was something amiss.
13 Why don't I let somebody else ask some t
14 questions.
15 COMNISSIONER AHEARNE:
In the $120 to $240 16 million they talked about a possible one-year delay, and 17 then they went on, and then the $240 million was on the 18 basis of possibly a two-year delay.
The one-year delay, tg is that an estimate that we gave them and they are using 20 this as a postulated one-year, or is it the staff 21 position that the difference between an exemption and an 22 LWA-1 is one year?
23 MR. REMICK:
There are three cases, as I n,
April 1.
24 recall.
They took the assumption of starting 25 Then they took what was the staff's best estimate for an N
N-ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W. WASHINGTCN, D.C. 20024 (202) 554-2345
~
62 1 LWA-1.
Then everything I read was exactly just say 2 suppose we add a year to that, and I cannot find any
')
3 justification for adding a year.
They got a spectrum of 4 months there which I scratched out, 16 to 17 months, 28 5 to 29, and then they said, well, let's figure 12 to 24.
6 Tha t is how I interpreted their words when I read it 7 several times what they had stated.
8 For some reason they appeared to select the 9 one-year delay on top of what the staff said.
I do not 10 know why, and I don't know if anybody from the Program 11 Office knows.
That puzzled me also, and I figured out 12 then, as I say, a spectrum of months from when they'then 13 chose 12 to 24.
On the basis of that using $20 million 14 a month they came up with $120 million.
15 COMMISSIONER AHEARNE:
Are you saying tha t the 16 LWA-1 is the staff's best estimate of when that would 17 occur?
Is that correct?
18 KR. LEECH:
At that time that they made up 19 this document it was based upon our estimate of an 20 LWA-1.
Our schedule would produce an FES and from there 21 I am sure DOE then extrapolated their own schedule for 22 hearings and all that to get to an LWA-1.
23 COMMISSIONER AHEARNE:
I see.
You didn't give 1
24 them an LWA-1 time?
25 ER. LEECH:
No.
Well, I have to think now.
uj ALDERSoN REPORTING COMPANY,INC.
400 VIRGINTA AVE, S.W., WASHINGTON, D.C. 20024 (202) 554-2345
63 1 Maybe we did.
At least we discussed it, we know tha t.
2 Whether they modified that in making their choice, I 3 don 't know.
4 COMMISSIONER AHEARNE:
What is our best 5 estimate of an LWA-1 now?
Is the one year an accurate i
6 estimate?
7 MR. LEECH:
I didn't bring our schedule with 8 me, I am afraid.
9 MR. CHECK 4 I am afraid I wasn't paying 10 attention at the very beginning of this conversation.
11 (Laughter.)
12 COMMISSIONER AHEARNE:
DOE is talking about a 13 one-year delay which I gather is from April 1 of this r~,
14 year to a time when they would say ---
15 MR. CHECK:
The middle of next year, the 16 middle of '83.
17 COMMISSIONER AHEARNE:
Yes, and that is when 18 an LWA-1 would issue.
19 MR. CHECK:
Under earlier assumptions there 20 was to be a CP granted in the middle of '84 and an LWA-1 21 in the middle of
'83.
22 COMMISSIONER AHEARNE:
My question though is 23 how good is that on our current thinking?
Is it true 24 that it would be a one-year delay between granting the
()
25 exemption and getting to an LWA-1?
ALDERSON REPORTING COMPANY. INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554 2345
64
}
1 MR. CHECKS Yes, I think it is as good as any 1
2 assumption or any projection I could make.
3 COMMISSIONER AHEARNEs So our current 4 projection would still characterize that as a year?
5 MR. CHECKa Yes.
6 COMNISSIONER AHEARNE:
Now the second thing, 7 are they assuming that the progress of the construction 8 following would still be the samei 9
MR. CHECK 4 Let me say it in my words.
I knov 10 it is their plan that if they get the exemption ther 11 will do the 12 or 14 months work that that entails and y
12 then they will begin construction of a different kind, 13 which is the beginning of the plant proper for those 12 rm 14 months.
15 COMMISSIONER AHEARNE:
The period of time 16 between examption to plant construction is approximately 17 the same as the period of time between LWA-1 and plant 18 construction?
19 MR. CHECK:
There will do site preparation 20 activities f rom March of '82 until the summer of
'83.
21 COMMISSIONER AHEARNE:
Let me try to ask the 22 question more clearly.
23 If we agree that it is approximately one year
(>
24 between exemption to LWA-1, tho se two paths, do you also 25 agree that the difference between when the plant would ALDERSON REPORTING COMPANY. INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554 2345 w
w
65
~J~
l be ready to operate is one year?
2 MR. CHECKa Yes, that is an assumption.
Yes.
3 COMMISSIONER AHEARNE:
Do you agree with that ?
4 MR. CHECK:
I agree with that, yes.
5 COMMISSIONER ROBERTSa You are saying that the 6 lack of the granting of the exemption will increase the 7 length of the project by a year?
8 MR. CHECK:
Yes, I believe that is the whole 9 plan.
It is the whole project.
10 COMMISSIONER AHEARNE:
Well, I understand 11 their plan.
I am not asking wha t DOE projects.
12 MR. CHECK:
I understand.
13 COMMISSIONER AHEARNE:
I am asking what NRC (3
\\-
14 projects.
15 MR. CHECK 4 On the basis of the analysis we 16 have done, yes.
17 MR. REMICKa Commissioner Ahearne, I am not 18 sure I am reading you completely and perhaps I am 19 misunderstanding what you are saying.
Basically their 20 assumptions were assuning an exemption in M arch or early 21 April.
If they did, they indicated that they presumed 22 the LWA-1 would be in August or September '83 which is 23 16 to 17 months.
Then the one year, they said, and then
((
24 their other case was to add a year to that making it 28 25 to 29 months.
ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554 2345
66
^-
1 COMMISSIONER ROBERTS:
Well, that is different.
2 COMMISSIONER AHEARNEs But I think Mr. Check 3 just said the best estimate is one yea r.
4 MR. CHECK:
I am talking nominally.
5 (laughter.)
6 MR. CHECK:
I must be missing the point that 7 you are trying to make.
8 COMMISSIONER AHEARNE:
I was asking what is 9 our best estimate of how long it would take from now to 10 when an 1WA-1 would issue, and I think you said about a 11 year.
12 MR. CHECK:
I said a year and several months.
13 It would be to the middle of 1983.
I believe our early 14 schedules showed that it would be accomplished ---
15 COMMISSIONER AHEARNE:
I was just wondering 16 whether you had better estimates now because the answer 17 seemed to be originally, and that is several months ago, 18 and you have been having many meetings with DOE, and I 19 thought perhaps you would have a better estimate.
20 HR. CHECK:
I don 't have the schedule in f ront
(
21 of me, but to the extent I am recalling correctly, that 22 schedule is just as good today.
23 MR. TREBY My name is Stewart Treby.
Maybe I
(')
24 can nelp.
I am the attorney in the Office of the l
25 Executive Legal Director's Office who would be involved e#
ALDERSON REPORTING COMPANY. INC.
400 VIRGINfA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554 2345
67 1 in trying the case.
We have~in fact had a prehearing
( )
2 conference with the Licensing Board, and at that I
3 prehearing conference we indicated to them the dates tht 4 the staff's documents would be out would be June of '82 5 for the environmental document and July of '82 for our 6 saf ety document or an update' of the safety evalua tion 7 report.
8 In order to issue an LWA-1 you would have to 9 have findings on the environmental case and the site to suitability report, that is, is this site suitable for a 11 faallity of the general size and type.
12 If our documents are out in this time frame, I 13 think it is a reasonable assumption that we would be O
14 able to than get to hearing and perhaps get a decision 15 by early '83 in which case it would be a one-year delay 16 if they started in
'82.
17 COMMISSIONER AHEARNE:
Let me ask another 18 question on your report.
On page A-9 you have the point 19 under " Hardship."
You have the point "The applicants 20 could not.have applied sooner for an exemption because 21 no money had been appropriated by Congress to carry out 22 the activities."
23 Now I don 't know whether that is an OPE
()
24 question or a General Counsel question, but is that, to 25 the best of your understanding of the law, is that Ni ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE, S.W., WASHINGTON, D.C. 20024 (202) 554-2345
68 1 correct that they could not apply?
2 MR. CUNNINGHAM:
Well, off the top of my 3 head ---
4 (Laughter.)
5 MR. CUNNINGHAMs Off the top of my head, Mr.
6 Aherne, I see no obstacle to their having applied.
The 7 problem would be if they got it and they couldn't use 8 it, and the Commission might well ask why are you 9 applying?
10 COMMISSIONER AHEARNE:
I understand that.
I 11 was just speaking to the question of they could not 12 apply.
13 MR. CUNNINGHAM:
I think there is probably no
,rm 14 legal obstacle to their applying, a practical obstacle.
15 COMMISSIONER ROBERTS:
You are not accusing 16 them of a material f alse statement of fact, are you?
17 (laughter.)
18 COMMISSIONER AHEARNE:
I hadn't thought of it 19 that way.
l 20 (Laughter.)
l l
21 COMMISSIONER AHEARNE:
All right, on page 22 46 ---
COMMISSIONER ROBERTS:
Excase me.
On this 23 l
<s l
,)
24 point, this is the NRC write-up.
COMMISSIONER AHEARNE:
No, no.
25 I
i 3
..J ALDERSON REPORTING COMPANY,INC, l
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400 VIRGINIA AVE, S.W., WASHINGTON, D.C. 20024 (202) 554 2345
o 69 1
COMMISSIONER ROBERTS:
This is our summation s
2 of their position.
3 COMMISSIONER AHEARNE:
Yes.
4 COMMISSIONER ROBERTS:
So I mean I think we 5 ought to be careful if you want to pursue that.
I don't 6 know whether they said they could not have applied.
In 7 the practical sense it is like our arguing whether we 8 are going to schedule TMI restart.
9 COMMISSIONER AHEARNE:
Sure.
I will have to 10 go back and read exactly what they say.
If they did say 11 exactly thst, then on Tuesday I would expect to ask them.
12 On page 46 you have the statement following
~
13 the quotation, you say "There is debate in the Senate
(
14 indicating that at least that body was on notice that
~
15 DOE intended to apply for a valver of certain licensing 18 requirements."
17 I wonder if you could address which licensing 18 requirements DOE had indicated they would apply for a 19 waiver of?
20 MR. TRUBATCH:
I wrote that piece.
No.
That 21 is why it was written in those terms.
It would have 22 been neater had they specified that it was lef t open.
23 COMMISSIONER AHEARNE:
Wait, Sheldon.
It says
.that body was on notice that DOE intended to apply I
24 25 for a waiver of certain licensing requirements."
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70
(
1 MR. TRUBATCH:
That is because I can't 2 remember which Senator got up and in his speech brought 3 tha t up as an issue.
O 4
COMMISSIONER AHEARNEs The one that I could 5 find was Senator Humphrey and he seemed to be referring 6 to the letter that Bill Dircks had writts' to the GAO in 7 which Dircks had said that the only var we could make 8 this tighter schedule was if the Congress were to waive 9 the NEPA requirements.
10 MR. TRUBATCH:
Well, I don't recall the 11 circumstances now.
12 CHAIRMAN PALLADINO:
Have you got any other 13 questions?
A i;
14 COMMISSIONER BRADFORD:
I do, but it doesn't 15 need to interrupt John's.
16 COMMISSIONER AHEARNE:
No, I was pausing here.
17 COMMISSIONER BRADFORD:
I was curious, and I 18 think it has been done before, but what is the current 19 estimate of the difference in staff resource 20 requirements whether we grant the exemption or not?
21 That is, how much more effort do you have to put in over 22 the next couple of years if the exemption is granted?
23 MR. CHECK:
I don't recall discussing it in
}',
24 those terms.
25 COMMISSIONER BRADFORD:
Well, if you haven't 4M e
ALDERSON REPORTING COMPANY. INC, 400 VIRGINIA AVE, S.W, WASHINGTON. D.C. 20024 (202) 554 2345
O 71 1 discussed it before, can you'do it now?
2 MR. CHECK 4 It is not that I neglected to, but 3 I don't believe it was a factor.
Althousth in saying 4 that, I acknowledge that when we talked about this we 5 had not given as much study of the path which assumes 6 exemption.
7 COMNISSIONER AHEARNE:
I believe it was Harold 8 Denton who might have mentioned it, or somebody from NRR 9 in talking to the ACRS made a comment that at least 10 could be interpreted as ---
that more would be required.
11 MR. CHECK:
12 COMMISSIONER AHEARNE:
Yes.
13 COMMISSIONER GILINSKYs or at least it would l'^
x-14 be required earlier.
15 MR. CHECKS I certainly acknowledge that, 16 yes.
There is going to be redistribution of effort and 17 it may in fact turn out that more effort will be spent.
18 COMMISSIONER BRADFORD:
Can you describe the 19 redistribution then?
20 MR. CHECK:
Well, it is under the assumption 21 that there will be s request for the LWA-2 to follow on 22 to the exemption.
23 COMMISSIONER BRADFORD Right.
24 MR. CHECK:
In order for us to be in a 25 position to approve that kind of activity we have to ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554 2345
72 1 identify the safety issues related to the work, that 2 early stage of construction of the plant proper that 3 will take place beginning in the middle of
'83, identify C',
4 those issues and resolve them in time to go to hearing 5 and adjudicate them.
6 COMMISSIONER GILINSKY:
But in very rough 7 terms what would be the difference, say, over the next 8 year in your staff level between the two cases, case one 9 of say granting an exemption, and case two of not 10 granting an exemption in rough terms?
11 NR. CHECK:
I have not identified a figure.
12 It may be as much as a man or two.
But I haven't 13 identified it yet.
I have not told my management what I 14 need.
15 COMMISSIONER GILINSKY:
You are saying the 16 difference between granting an exemption or not granting 17 an exemption in terms of its impact on your reviewers is 18 one and perhaps two persons over the next year?
19 MR. CHECK:
Yes.
It is as yet indeterminant 20 because I have not identified the particular issues that 21 I need to resolve more quickly than I had planned to.
22 COMMISSIONER GILINSKY:
What is your overall 23 staff size?
24 MR. CHECK:
I beg your pardon?
25 COMMISSIONER GILINSKY:
What is your overall ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W, WASHINGTON, D.C. 20024 (202) 554-2345
73 1 staff size that you are projecting, say, over the next 2 year?
3 ER. CHECK:
In the office itself it is 15 and 4 we are just now approaching ceiling.
Full-time 5 equivalence is something different for the year, but 6 nominally 15, and for the office it is 25.
For NRR it 7 is 25.
8 COMMISSIONER GILINSKYa Let's see, what is the 9 difference between your staff and the office?
10 MR. CHECK Nuclear Reactor Regulation is the 11 office that I an in and we rely upon expert reviewers in 12 the technical review groups that are sprinkled around.
13 CHAIRMAN PALLADINO:
So you are saying you
.m f
14 have 15 in your office and you drawing another 107 15 NR. CHECK:
Another ten, yes.
16 COMMISSIONER ROBERTS:
So the one man-year is 17 an increase ot four percent?
18 MR. CHECK:
That is because I was pressed for 19 a guess.
20 COMMISSIONER ROBERTS:
Okay.
21 MR. CHECK:
At the moment I have not 22 identified.
I have not specifically put a manpower 23 figure on that.
24 COMMISSIONER AHEARNE:
Was your rise to 15 25 predicated upon getting ready for the exemption request?
ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554-2345
74
^
1 MR. CHECK:
No.
It was the traditional path.
2 COMMISSIONER BRADFORD:
Paul, somehow the one 3 man-year doesn't feel right to me.
4 HR. CHECK:
I withu av it.
5 (Laughter.)
6 COMMISSIONER BRADFORD:
The trouble with that 7 of course is that if it does feel right to somebody else 8 you will have to reinstate it again.
9 (Laughter.)
10 MR. CHECK You asked for a guess and I 11 guessed.
That is a guess.
I have not done the anaysis.
12 COMMISSIONER BRADFORD:
Is there a greater 13 pick-up in effort later on that would be moved back in
(~)
14 time by the granting of the exemption, or is the 15 in 15 your shop and 25 in_NRR about the maximum overall level 16 of effort that would go into licensing Clinch River?
17 MR. CHECK:
The figures that Denton has 18 discussed with you on an ea rlier occasion, the 25, was 19 for the granting of a CP, at least the first year of 20 that activity.
Now if we are faced with doing some 21 pieces of work that we had identified sooner than we had 22 planned to, it may require us to spend a little more.
23 COM.YISSIONER BRADFORD4 If the exemption were 24 granted and things go as you see them for now through
(,
25 the granting of the CP, what is the maximum level of ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554 2345
75 1 effort that would be required for any one year during 2 that period?
3 MR. CHECK:
I believe, if I recall the
(",
4 projections correctly, that this 25 was the maximum.
5 COMMISSIONER BRADFORD:
So you really are 6 already at pretty close to the maximum.
7 COMMISSIONER GILINSKY:
You have got 25 people 8 employed now full time, or I mean the equivalent of 25 9 people employed?
10 MR. CHECK:
Yes, give or take a bit.
As I 11 say, we are coming up.
12 COMMISSIONER BRADFORD:
Is that also true-for 13 the contractual level of effort?
Do you have a fair O
\\...'
14 amount of review going on outside of NRC7 15 MR. CHECK:
Oh, yes, we have.
16 COMMISSIONER BRADFORD:
Is that also at about 17 its peak annual level now?
18 MR. CHECK:
The current projections show that 19 the fiscal '82 is the peak year, yes.
20 COMMISSIONER BRADFORD:
How much is involved?
21 MR. CHECKS It is around $2 million.
It is a 22 bit u nd e r.
We had talked in terms of two and a half and 23 ve haven't spent that much.
24 COMMISSIONER ROBERTS:
In the same vein,
([,)
25 forget the timeliness, but is there a difference between
(~
us ALDERSoN REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W WASHINGTON, D.C. 20024 (202) 554 2345
76 I the resources to be expended, total resources expended
(~)
2 between the two scenarios, the granting of the exemption 3 contrasted to the " normal procedure"?
Would you make 4 any dif f erentiation ?
5 MR. CHECK:
You are going to get me back to 6 the man I had trouble with.
\\
7 (Laughter.)
8 COMMISSIONER ROBERTS:
Okay.
9 MR. CHECK:
There may be.
10 COMMISSIONER ROBERTS:
I am ignoring the 11 passage of time.
That related to whether you might have 12 to do some things earlier than later.
13 MR. CHECKS That is what exemption does to us.
A
\\ /
14 COMMISSIONER ROBERTS:
Okay, I understand.
15 That is not the question ~I am asking.
The total, and 16 put it in aan-years, the total expenditures, will they 17 differ depending on which scenario might be followed?
18 MR. CHECK:
I am afraid I don't see the 19 difference in the questions.
20 '
COMMISSIONER BRADFORD:
I think that question 21 is the one I asked you.
22 COMMISSIONER ROBERTS:
You were asking the 23 same thing.
()
24 COMMISSIONER BRADFORD:
Yes, I think I asked 25 that question first and, Paul, you said that you just
,g N
ALDERSoN REPORTING COMPANY,INC, 400 VIRGINlA AVE, S.W., WASHINGTON, D.C. 20024 (202) 554 2345
77 1 didn't have a feel for that.
2 MR. CHECK:
I do not know at the moment 3 whether the acceleration that we are going to have to 4 undergo will cause us to spend more than we would 5 otherwise if we played it on the traditional path.
6 CHAIRMAN PALLADINO I am going to ask one more 7 question, and that is on page 28 where it says "The 8 current staff opinion is that affected areas of the site 9 could be restored essentially to their present 10 conditions of vegetation and animal life, but that 11 perfect restoration of the topography could not be 12 achieved."
13 Is it necessary to achieve perfect restoration
-s 14 of topography, and what is perfect restoration?
15 (Laughter.)
16 CHAIRMAN PALLADINOa And I raise this because 17 every once in a while I get the feeling here that you 18 almost say.it is okay but then it isn't, and I use this 19 as one that caught my eye.
20 MR. LEECH I will give you a first answer.
21 If you want it expanded, I will get the man that is in 22 the back of the room.
23 I believe our point here is that to try and
( ['
24 exactly restore the site after you have moved' all that 25 rock and all that dirt would be a rather difficult thing ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON. D.C. 20024 (202) 554 2345
78 c
1 to do and actually it isn't necessary from an ecological 2 point of view.
From the point of view of simply trying 3 to make the place look nice again and cover it with 4 trees you don't really have to restore this saddle 5 arrangement that is there now.
6 CHAIRMAN PALLADINO:
As a matter of fact, 7 sometimes one improves the topography.
8 MR. LEECH:
But, on the other hand, if by 9 chance you have insisted that it be restored to its 10 original condition, then of course they would have to 11 presumably put the saddle back there.
So that has been 12 addressed.
13 CHAIRMAN PALLADINO:
But perfect restoration 14 you don 't f eel is necessary?
15 MR. LEECH:
Not from an ecological point of 16 View.
17 MR. CUNNINGHAM:
Nor from a legal point of 18 view.
I mean the question comes at all because 19 redressability is one of our four criteria which you 20 balance.
21 CHAIRMAN PALLADINO:
I am just trying to 22 understand it.
~
23 John, do you have more questions?
[^]'
24 COMMISSIONER AHEARNE:
Yes.
I wonder if it x-25 would be possible, and I am not sure from whom in the u
ALDERSON REPORTING COMPANY,INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554-2345
79 1 staff, to get the best estimate of the time difference
~
2 to construction, completion and in between granting the 3 exemption and going the LWA-1 route?
Now I realize you 4 have to make some assumptions, and the assumption I 5 would make is there are no problems.
The reason I make 6 that assumption is because if there turned out to be 7 serious problems we shouldn 't grant the exemption 8 anyway.
So I make the assumption that there are no 9 serious problems and I would like the staff 's best 10 estimate of the time difference.
11 MR. CUNNINGHAM:
Certainly, we can provide 12 that.
13 COMMISSIONER AHEARNE:
The second question is s
14 in going through the legislative history did you find 15 much that addressed licenseability, the question of 16 licenseability, the criteria that should be applied?
17 MR. MALSCH:
I think the answer is no.
It has 18 been assumed to be licenseable as a 104(b),demonctration 19 project from the inception.
There has been very little 20 by way of detailed discussion of criteria or licensing 21 standards and no discussion certainly specifically of 22 g ra n ting, denying or availability of exemptions.
23 COMMISSIONER AHEARNE:
Or even the details of
()
24 the kind of criteria that they would be talking about.
25 MR. MAL 5CH:
I don't think so.
.~
s.)
i l
ALDERSON REPORTING COMPANY. INC, 400 VIRGINIA AVE., S.W., WASHINGTON, D.C. 20024 (202) 554-2345
4 80
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1 COMMISSIONER AHEARNE4 The last question would 2 be on A-25.
It is really with the assumption that you 3 have you are describing the UCS position, and I wanted 4 to ask whether anybody else had any points similar to 5 that.
6 It says the UCS stated tha t the applicants' 7 filing of the request indicates they are most interested 8 in seeing that tangible activity takes place before the 9 beginning of the '83 Congressional budget cycle.
10 Was there anything in DOE's filings that would 11 give you that same sense?
12 MR. MALSCHa I don't remember seeing 13 anything.
I didn't look at them specifically for that em k-14 kind of material.
15 CHAIRMAN PALLADINO:
Wasn't there a statement 16 by Silverstein, was it?
17 COMMISSIONER AHEARNE4 Well, he said if we 18 don 't get it by March of '82 the project would be dead 19 in the water.
We asked him specifically what he meant 20 by dead in the water and I didn't recall this being an 21 issue that he addressed in response.
22 HR. REMICKa I don't recall seeing a response
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23 either to that.
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24 CHAIRMAN PALLADIN04 Well, I thank you very 25 much.
This is a very interesting report.
~( 'b su' ALDERSCN REPORTING COMPANY INC, 400 VIRGINIA AVE, S.W. WASHINGTON, D.C. 20024 (202) 554-2345
81 1
Thank you and I appreciate your coming down.
2 We will stand adjourned.
e 3
(Whereupon, at 3:20 p.m.,
the meeting 4 adjourned.)
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ALDERSON REPORTING COMPANY. INC,
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PUBLIC MEETING - DISCUSSION OF CLINCH RIVER BREEDER REACTOR CaCa cf Prcceeding:
February 12, 1982 Dockat !!unber:
Flace cf Proceeding:
Washincton, D.
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