ML20041G446
| ML20041G446 | |
| Person / Time | |
|---|---|
| Site: | Clinch River |
| Issue date: | 03/16/1982 |
| From: | Chilk S NRC OFFICE OF THE SECRETARY (SECY) |
| To: | |
| References | |
| CLI-82-04, CLI-82-4, NUDOCS 8203220310 | |
| Download: ML20041G446 (46) | |
Text
_ _ _ _
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION
'b2 !" i ; o ::m COMMISSIONERS:
Nunzio J. Palladino, Chairman Victor Gilinsky Peter A. Bradford John F. Ahearne Thomas M. Roberts ggg l
In the Matter of
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UNITED STATES DEPARTMENT OF Docket No. 50-537 ENERGY (exemptionrequest PROJECT MANAGEMENT CORPORATION under 10 CFR 50.1 q
TENNESSEE VALLEY AUTHORITY
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b f/EqjND (Clinch River Breeder Reactor g
Plant) 7 i
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ORDER (CLI-82-4) d 6
On November 30, 1981 DOE, for itself and on behalf of its co-applicants Project Management Corporation and the Tennessee Valley Authority -(Applicants), requested an exemption from 10 CFR 50.10 pursuant to '10 CFR 50.12 to conduct site preparation activities for the l
Clinch River Breeder Reactor (CRBR) prior to the issuance of a construction pennit or limited work authorization.
The scope of those proposed activities is described in the Commission's Memorandum and Order of December 24, 1981 in which the Commission established the informal procedures for considering this request.
14 NRC
, CLI-81-35 (1981).
Grant of the exemption was opposed by the Natural Resources Defense Council, Inc. and the Sierra Club (Intervenors) who are intervenors in the now reopened proceeding for a construction permit for CRBR.
After receiving comments on the exemption request from 8
8203220310 B20316 DR ADOCK 05000 9g
P Applicants, Intervenors, and several other persons, the Comission conducted an oral presentation on February 16, 1982.
Subsequently, in the early part of March, the Comission conducted two public meetings to discuss the exemption request.
The Comission has decided to deny the rcquest.
Chairman Palladino and Comissioner Roberts dissent and would have granted the exemption.
Individual Ccmissioners' views are attached.
It is so ORDERED.
?gs.AR Re ap7 For the Comis ion f W (P: b>
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Secretary of fthe Comission hkk%
Dated at Washington, D.C.
this((-dayofMarch,1982.
COMMISSIONER GILINSKY'S SEPARATE VIEWS ON DOE'S EXEMPTION REQUEST FOR THE CLINCH RIVER BREEDER REACTOR l
I have voted against granting the Clinch River Breeder Reactor an exemption from NRC's licensing regulations to permit early site work because I am not persuaded that such an exemption would be in the public interest.
Background
The Clinch River reactor is subject by law to NRC licensing.
Normally, a utility cannot begin site preparation and excavation until it has received a Construction Permit
("CP") after satisfactory resolution of all environmental and safety issues.
The NRC's regulations, however, do provide that an applicant may be granted an exemption, known as an Limited Work Authorization 1 ("LWA 1"),
from this requirement if the Licensing Board has made all the environmental fin' dings required at the CP stage and has made a preliminary safety finding that the site is suitable.1 The Department of Energy
(" DOE") is eager to obtain the benefit of this exemption so that it may break ground as soon as possible.
But given the state of the licensing proceeding, it does not appear that the Clinch River project I
will be eligible for an LWA 1 until sometime in 1983.
In l
l these circumstances, DOE has asked the Commission for a further relaxation of licensing requirements, under section 50.12 of our regulations, to enable it to begin site l
\\
preparation now, roughly a year before it can satisfy the requirements for an LWA 1.2 DOE has, in effect, asked for an exemption on top of an exemption.
If the section 50.12 exemption request presently before the Commission is granted, DOE apparently intends to apply as soon as it can for an LWA 2 which, if granted, would permit additional work to be performed in advance of receipt of a Construction Permit.
I will pass over two preliminary legal questions: whether i
section 50.12 of our regulations, which sets out the standards for granting the exemption in question, is in fact applicable to a one-of-a-kind research reactor which will as an incidental matter produce power; and, whether section 50.12 is consistent with the provisions of the National Environmental Policy Act.
The answers are unclear, and will presumably be p.rovided by the courts in due-time.
For the purposes of this decision I will assume that the Commission can grant an exemption if that is in the public interest.
As I stated at the outset, I do not believe it is.
(
Effect of an Exemption on NRC and Power Reactor Safety The source of my concern is that granting the section 50.12 exemption would be the first step in placing Clinch River on i
a fast track within the NRC license review process.'
Such high-priority, fast-track treatment for Clinch River is bound to impact licensing and safety supervision of the power reactors which constitute our principal responsibility, The Clinch River reactor involves a new technology for which l
there is no established body of NRC safety criteria.
These need to be developed while the safety review is being i
performed.
If this work is to be done properly, it will inevitably make substantial demands on the limited resources and skills of the NRC.
In view of the budgetary situation this agency's resources are tight.
If Clinch River is placed on a fast track, other projects will likely have to be put on a slow track.
For most of last year, licensing schedule projections seemed to suggest that NRC would not complete power plant license
. reviews for a number of power plants before their construction was finished and they were ready to operate.
It now appears that these fears were exaggerated.
We have managed to gain control of these licensing schedules and we are now working apace with plant construction.
However, we do not have a wide margin for dealing with unplanned contingencies. Moreover, in order to accelerate our licensing reviews, we have been forced to delay the resolution of a number of safety issues.
Any resources which are freed by slowdowns in reactor construction schedules should be devoted to resolving these issues, which affect the protection of this country's $100-200 billion investment in light water power reactors, rather than to accelerating the breeder's licensing.6 While the President and Congress have urged us to deal expeditiously with both the breeder and light water reactors, there has not been any suggestion, of which I am aware, that the interests of the latter should be sacrificed in favor of the former.
Such a suggestion would in fact be extremely unfortunate.
Our predecessor agency was often distracted from the pressing safety and waste problems of the light water power reactors by the demands of the breeder reactor.
This has proven to be an expensive mistake.
It is also interesting that the Edison Electric Institute, in its testimony at cur hearing in support of the exemption request, was not prepared to recommend that licensing the breeder should take precedence over the licensing of its member utilities' light water power plants.
The issue, let ne reiterate, is not whether the NRC will undertake the Clinch River review, but whether NRC will conduct it at a pace which is unnecessarily harmful to NRC's other responsibilities.
Applicant's Claim that Exemption Will Reduce Costs Set against these concerns are the applicant's claims that substantial benefits will result from speeding up this project.
There is presumably some advantage in having a year earlier the information which the project is supposed to generate.
The gain is intangible, and no persuasive argument was presented that it would be substantial.
Whatever the economic incentives once were for developing breeder reactors, they are much dimin.ished.
Breeders, which compensate for their expense by conserving uranium, were economically interesting when uranium was thought to be scarce and large numbers of conventional reactors were expected to use it up quickly.
But uranium supplies are plentiful and increasing, while the projections for the
- number of reactors to be installed have been sharply deflated.
The chief problem in the uranium market is not finding uranium but coping with falling prices.
The applicant has also argued that, quite apart from any research benefits, substantial economic savings will result from an earlier start of construction.
In its initial presentation, DOE asserted that a one year gain in the construction schedule would result in savings of $120-240 million.
When asked to justify these assertions, DOE 8
submitted an analysis which, as was pointed out by one of O
e the parties to the proceeding, failed to consider the time-value of money and, as a consequence, did not suitably discount future expenditures.
When this was done properly, the gains which DOE claimed for rapid completion of the project effectively vanished.
DOE then tried to revive its conclusion with an argument which purported to demonstrate that there would be a difference in the cost attributable to past expenditures depending upon whether or not the site preparation exemption were granted.9 Both the Deputy Secretary an'd the applicant's expert witness, Arthur Andersen & Co., attempted to defend this argument at the hearing before the Commission.
Needless to say, this proposition is wrong.
It also contradicts the analysis of an almost identical problem, the cost of delays in licensing commercial power plants, done by DOE for.the House Appropriations Committee.10 That analysis correctly recognized that sunk costs cannot affect the choice among future alternatives.
In other words, while it is valid to assign an interest charge to past expenditures, that charge is the same for all future options and therefore drops out of any cost comparison among them.
What matters for choosing among l
future alternatives are future benefits and future costs.
In response to criticisms made at the hearing, DOE and Arthur Andersen filed additional written statements with the
I.
Commission.
DOE conceded that from "the economic or resource perspective" interest on past expenditures is not a factor to be considered in deciding between the costs of future options.11 In spite of this, the Deputy Secretary persisted in presenting a " financial cost" analysis which is the same incorrect analysis DOE originally put forward.
DOE thus lists $190 million in interest on past expenditures as the principal cost of not granting the exemption.12 The S190 million figure.comes from Arthur Andersen's co6clusion that "In the event of a one-year delay in the j
construction of Clinch River, interest will be incurred for one extra year."13 Arthur Andersen's error lies in comparing project costs l
measured in dollars of two different years, the accelerated project's costs being measured in dollars of one year and l
the unaccelerated project's costs measured in dollars of the l
following year.
When a correction has been made to measure the costs in dollars of a common reference year, (which can be any year) the conclusion of every example presented by Arthur Andersen is re' versed.14 l
l The conceptual difficulty seems to stem from overlooking the fact that the accounting convention for the cost of a project produces a result in dollars of the year of l
l completion.
An economic comparison between projects, however, must be made in dollars of a common reference year.
The error is a common one.
As a standard textbook on engineering economy puts it, although the principle that a decision made now necessarily deals with the future is simple enough,
...many people have difficulty in accepting the logical implications of the principle when they make decisions between alternatives.
This seems particularly true when sunk costs are involved.
Although some of the failures to recognize the irrelevance of sunk costs involve a misuse of accounting figures, these mental obstacles to clear reasoning are by no means restricted to people who have had contact ygth the principles and methods of accounting."
When interest on past expenditures has been eliminated from
'the calculation of the cost of not granting this exemption, three._ ems remain:
a management charge of about $40 million, a $20 million charge for (discounted) deferred.
revenue, and a negative figure which reflects the discounting of future expenditures.
The sum of these figures, in the example presented by DOE, yields $28 million as the cost of not granting the exemption.
Lest anyone look to the $28 million to tip the balance toward an exemption, it should be noted that the figure is an arbitrary one, based on the artificially low discount 6
rate assumed by DOE.
If a more realistic discount rate were employed, the cost might well be zero or, more likely,
might become a benefit.17 In any case, the uncertainty in the analysis is larger than the result.
In sum, no compelling argument has been made, on the basis of the cost estimates provided by the applicants, for the proposition that granting this exemption would serve the public interest by siginificantly lowering the cost of the Clinch River project.
l Putting Clinch River on a Fast Track i
Should Congress, nevertheless, want this reactor to be built earlier than contemplated by the licensing schedule, it i
I would be best for Congress to exempt Clinch River from NRC licensing altogether.
If NRC could easily accommodate an I
accelerated review, I would come to a different conclusion.
However, it cannot.
I am concerned not only about the impact of'a fast track breeder licensing review on NRC's other responsibilities, but also about the quality of NRC's work if there is heavy pressure to accelerate the review.
Even if this project were exempt from licensing, the NRC could still conduct a safety review, on the same "best efforts" basis as it performs others reviews for DOE.
To exempt Clinch River entirely from licensing may seem at odds with one of the original goals of this program -- to demonstrate the licensability of a breeder reactor -- but i
that goal is no longer as important as it once was.
Such a demonstration was important when the CRBR was thought to be the prototype for dozens of commercial breeder power plants which were to follow on its heels.
It now seems unlikely that there will be any commercial breeder plants in the United States for decades.
And, even if breeders are built in the distant future, it is doubtful that the standards applied to this plant will be a satisfactory model for the later plants.
~
NOTES 1.
10 CFR 50.10 2.
10 CFR 50.12 governs the grant of an exemption from the requirements of 10 CFR Part 50.
The Commission may grant an exemption if it finds that the exemption is authorized by law, will not endanger life or property or the common defense and security, and is otherwise in the public interest.
Section 50.12(b) prescribes that, in deciding whether to permit construction prior to the issuance of a construction permit, the Commission will consider and balance:
(1) whether the construction will have a significant adverse impact on the environment; (2) whether any adverse impact can reasonably be redressed; (3) whether the construction would foreclose the subsequent adoption of alternatives; and, (4) the effect of delay on the public interest, including the need for the power to be generated by the proposed facility, the availability of alternate sources of energy, and the cost of delay to the applicant and to consumers.
3.
DOE presently seeks permission to clear and grade the site, build access roads and construction facilities, and excavate the reactor's foundations.
These are the type of activities normally permitted under an LWA 1.
The installation of structural foundations prior to the issuance of the construction permit normally requires the issuance of an LWA 2.
This requires the Licensing Board to find that the requirements of an LWA 1 have been satisfied and that there are no unresolved safety issues that would constitute good cause for not allowing the activities proposed under the LWA 2 to proceed. -
.~
~
DOE expects that beginning site preparation in 1982 will enable construction to be completed one year earlier than if site preparation were to begin in 1983.
4.
42 U.S.C.
4321 et seq.
5.
There is a view that nothing of the sort is involved here, and that we have only to deal with an isolated exemption.
i l
This used to be called salami tactics.
The modern name is segmentation of decisionmaking.
6.
I am aware that the NRC staff recently informed the Commission that speeding up Clinch River licensing would not require much additional effort.
This does not relieve my l
concern over resources; the staff estimate is implausible unless the Clinch River review and the development of its licensing criteria are to be superficial affairs.
If i
anything, the staff estimate heightens my concern about how the staff would interpret a Commission decision to authorize a speedup in the Clinch River licensing schedule.
-2r 7.
Letter from Secretary Edwards to NRC Chairman Palladino, November 30, 1981.
8.
Letter from Deputy Assistant Secretary Chipman to NRC Chairman Palladino, December 31, 1981.
9.
DOE Submission to the Chairman, "Re: Clinch River Breeder Reactor Plant", January 28, 1982.
10.
In its report, DOE states that "the monthly carrying costs of the completed units... would be incurred even if the units operated and are therefore not part of the direct costs of the delay."
DOE went on to explain that "any cost that would be incurred with or without the delay does not affect this cost differential and is therefore not part of the cost of the delay."
See letter of April 14, 1981, from Richard E. Weiner, Director, Division of Power Supply Reliability, Office of Utility Systems, Economic Regulatory Agency to Darrell G. Eisenhut, Director, Division of Licensing, Office of Huclear Reactor Regulation, Nuclear Regulatory Commission.
At the hearing, the Commission asked the Deputy Secretary to provide it with the Economic Regulatory Agency's views on DOE's method of calculating the gains to be realized by granting the section 50.12 exemption.
DOE's written response states that DOE no longer provides cost analyses to the House Appropriations Committee and that in view of "recent reorganizations within the Department, the Office of Policy, Planning and Analysis is the organization with the relevant responsibility and expertise for this review."
Letter from Deputy Secretary Davis to the Commission, "Re:*
Clinch River Breeder Reactor Plant", February 25, 1982.
11.
Letter from Deputy Secretary Davis to the Commission, "Re:
Clinch River Breeder Reactor Plant", February 25, 1982, p.
3.
12, ibid., p. 5.
13.
Letter from Arthur Andersen & Co. to the Commission, February 23, 1982, p. 3.
- 14.
Arthur Anderson submitted the attached chart which purports to demonstrate that completing the illustrative project one year earlier will result in a savings of S563 million in the overall project cost.
As can readily be seen from the chart, however, the cost of the accelerated project is measured in 1994 dollars while that of the unaccelerated project is measured in 1995 dollars.
If the cost of the accelerated project is measured in 1995 dollars, using Arthur Andersen's assumption of an 11% rate of interest, the cost of the project is $8,903 million
($8,021 plus 11%).
This cost is $317 million greater than the cost of the S8,584 million cost of the unaccelerated project (also measured in 1995 dollars).
15.
Eugene L. Grant, W. Grant Ireson, Principles of Engineering Economy, New York, 1970, p. 315.
16.
DOE has assumed an inflation rate of 8% and interest rate of 11%.
These assumptions result in an effective discount rate of 3% and, in this case, a saving of approximately $30 million.
17.
I would also note that DOE initially valued the deferred power output of Clinch River at $6 million per year but that it has revised this estimate to $10-20 million.
There does not seem much point in quibbling, however, about this figure.
l t
l
CHART SUBMITTED BY ARTHUR ANDERSEN (SEE FCOTNOTE 14)
ILLUSTRATION OF THE COST OF A ONE YEAR DF. LAY IN 198 2 i
No Delay One Year Delay (N1111ons)
(Millions)
Carrying Cost Yearly Carrying Tutal' Yearly Carrying Total Increase Year Investment Cost Cost Investment Cost Cost (Decrease )
4 1974
$100
$ 11 Sill
$100
$ 11
$ 111 1975 100 23 234 100 23 234
.i 1976 100 37.
371 100 37 371
]
1977 100 52 523 100 52 523 1978 100 68 691 100 68 691 1979 100 87 878 100 87 878 100 108 1,086 :
100 108 1,086
{
1980 1981 100 130 1,316 100 130 1,316 145 1,461 (11) 1982 100 156 1,572 1983 100 184 1,856 100 172 1,733 (12) 1984 100 215 2,171 100
' 202 2,035 (13) 19h>
100 250 2,521 100 235 2,370 (15) 1986 100 288 2,909 100 272 2,742 (16) 1987 100 331 3,340 100 313 3,155 (18) 1988 100 379 3,819 100 358 3,613 (21) 1989 100 431 4,350 100 408 4,121 (23) s 1990 100 490 4,940 100 464 4,685 (26)
)
1991 100 554 5,594 100 526 5,311 (28) l 1992 100 626 6,320 100 595 6,006 (31) 1993 100 706 7,126 100 672 6,778 (34) 1994 100 795 8,021 100 756 7,634 (39) 100 850 8,584 850 1995 l
s Total
$8,021
$8,584-
$563 l
The $563 alliton cumulative cost that would.be incurred as a result of a one-year delay represents the future l
value of the $145 million cost during the year of delay.
It is based on the delay being a full year, the i
nucceeding construction period being 13 years and an interest rate of lit.
I i
i 1
?
COMMISSIONER BRADFORD'S SEPARATE VIEWS ON CLINCH RIVER I have only a little to add to the views of Commissioners Gilinsky and Ahearne.
I agree in general with the points that they have made and concur specifically in Commissioner Gilinsky's discussion of delay costs 1/ and in the latter part of Commissioner Ahearne's discussion of the DOE analysis.2/
In particular, I f
see nothing useful to be had f rom DOE's attempt to calculate costs three different ways.3/
The economic costs are what i
matters, and the Commission majority is in agreement that they do not exceed $28 million using the implausibly low DOE discount rate.
I As Commissioner Gilinsky has noted, a more realistic discount l
rate would show a net benefit from not accelerating this project.
l Indeed, there is likely always to be a net benefit from deferring a project unless the discounted value of its operation is sufficient to tip the balance the other way.
With Clinch River, the value of accelerating the operation is non-existent.
The benefits from its operation occur only when a scarcity of uranium drives the l
cost of conventional reactor fuel above the cost of reprocessed plutonium.
Since that event now does not seem at all likely in this century (a' proposition not challenged by DOE or industry witnesses or Commissioners Palladino and Roberts), there is no economic benefit to be assigned to having the Clinch River Breeder in 1988 rather than 1989.
i 1/
Gilinsky opinion, pp. 5-9.
l 2/
Ahearne opinion, pp. 3 2-39.
3/
Letter from Deputy Secretary Davis to the Commission, "Re: Clinch River Breeder Reactor Plant," February 25, 1982.
I agree in general with Commissioner Ahearne's analysis of the non-economic f actors although I do r.ot attach much significance to the history of Section 50.12.
Specifically, I agree that the Commission could grant the exemption consistently with Section 50.12.S/
I agree also that nothing in the first three factors under 50.12 appears to preclude the exemption.
However, the exemption is emphatically not in the public interest.
The economic dimension of the public interest test has been cove red.
All that remains is a discussion of the implications for the NRC licensing process.
One must start with the realization that the " normal" licensing process defines the public interest as the NRC has come to view it over three decades.
During this time it has licensed nearly half of the free world's nuclear generating capacity without any delay of completed plants and.
with minimal delay of any sort.
Consequently, special exemptions are not lightly given, especially to one-o f-a-kind reactors.
The dif ficulty with special exemptions that go beyond the Limited Work Authorization procedures is that they slice applications into inscrutable segments.
Bit by bit, plants 4/
Whether such an action would contravene NEPA is less clear.
The segmentation question and the foreclosure of alternative points are subs *.antial and would need more careful refutation than they receive in the opinions favoring the exemption.
This point is especially important because it is hard to see how the Commission could be keeping an open mind on the NEPA issues while finding that the public interest requires accelerated completion of the project at Clinch River.
get built, with their full implications unreviewed until completion.
As the economic commitment grows, the safety l
l and environmental reviews are inevitably subject to increasing economic pressure.5/
For all of the Commission's past pro-testations to the effect that the work is done at the risk of the applicant, this has rarely been completely true and is in any case unpersuasive when the applicant is government funded to so great an extent.
The issue here is not licensability.
It is whether anything about this project merits the kind of special treat-ment that a shorteircuiting of our Limited Work Authorization procedures wo'uld involve.
The Commission's most tangled and costly proceedings (Seabrook and Diablo Canyon) have come when it has allowed substantial investment prior to completion of difficult licensing reviews.
In a recent case, the Court of Appeals 5/
declined to allow the NRC to. postpone hearing a sign.ificant safety issue until after the plant was built.
These cases are not specifically analagous to this exemption t
request, but they serve to illustrate the broader point about the unwisdom of piling large sunk costs on the licensing process 5/
As Justices Black and Douglas observed in their dissent in the only previous breeder licensing case, the ill-fated Fermi I
- plant,
...when millions have been invested, the momentum is on the side of the applicant, not on the side of the public.
The momentum is not only generated by the desire to salvage an investment.
No agency wants to be the architect of a white elephant."
Power Reactor Development Co. v.
Electrical Union, 367 U.S.
396, 417 (1961).
6/
State of Illinois v. NRC, No. 8 0-116 3, July 1,1981, unpublished opinion.
. unnecessarily.
While it appears that the environmental issues here are clearcut, the Commission should not go by appearances untested in hearings absent compelling circumstances.
The NRC has been surprised'before, and the allowing of increasing economic commitment to a project before the record merits a Limited Work Authorization is in itself contrary to the public interest.
l l
t I
SEPARATE V~EWS OF COMMISSIONER AHEARNE
SUMMARY
The Department of Energy (DOE) has requested an exemption under 10 CFR 50.12 in order to begin site preparation for the Clinch River Breeder Reactor (CRBR).
In addressing this re-quest, I conclude it is not for the NRC to address (1) the need for an LMFBR program or for a demonstration scale facility or ~2) the total cost of the CRBR.
Section 50.12 has a long history.
A version of 50.12 (a)
~
authorizing specific exemptions has been in. existence for over 20 years.
When the Atomic Energy Commission (AEC) modified its regulations in 1972 to place restrictions on site prepara-tion activities because of its new National Environmental Policy Act (NEPA) responsibilities, it introduced a version of 50.12(b) to provide a specific method by which applicants could show why work already begun should not be suspended until the AEC did an environmental review.
In 1974 the AEC developed an alternate way to approve site preparation activities prior to issuance of a construction permit -- the Limited W rk Authorization (LWA). A 50.12 exemption o
was still an option, but the Commission noted it was to be used
" sparingly and only in cases of undue hardship."
Since the LWA provisions became final in 1974, only one 50.12 exemption for site preparation activities has been issued.
i 2 -
I conclude 50.12 can be applied in this case.
- However, DOE must make a strong showing on the four 50.12(b) factors since 50.12 is to be used only in very unusual circumstances.
The factors to be considered are: environmental impact, re-dressability, foreclosure of alternatives, and public interest.
The NRC staff has concluded the work that would be done under the exemption would have no significant environmental impact, and the local authorities strongly support the request.
Nevertheless, site preparation inherently involves some en-vironmental impacts and $88 million would be spent on project construction.
Reasonable restoration is possible, although there may be some potential problems because of funding con-siderations.
No alternative appears to be foreclosed by the proposed work.
Addressing the effect of delay on the public interest, I considered whether there is (1) a Congressional mandate, (2) a need to move ahead on the project for pro, duction of power or research and development (R&D) purposes, or (3) a substantial dollar cost to the taxpayer for delay.
After reviewing many letters from Congress and the Con-gressional legislative history, I conclude there is no mandate l
l to waive - or not to waive - our standard procedures.
The i
project is not being justified by need for power, and Congress has confirmed such a need is not a factor.
Since I defer to DOE on the general need for R&D and it has not made that case, R&D needs do not provide a justification for the exemption.
ii
Thus the decision rests on the cost.
And it is here the applicant presented its worst case.
We have the following DOE estimates for a one-year delay:
November 30, 1981:
$120 million January 18, 1982:
(a)
$120 million, " clearly con-servative" (b)
$175 milli,n January 28, 1982:
(a)
$120 million, " clearly con-servative" (b)
$161 million (c)
$166 million (d)
$175 million February 25, 1982:
(a)
$129 million, " appropriations perspective" (b)
$28 million, " economic perspective" (c)
$218 million, " financial perspective" I ponclude the DOE has finally agreed ',that as far as the true dollar cost of delhy, it is in the region of $30 million -
coincidentally, about the cost of the management team.
This is sufficiently different from the original estimate as to indicate the DOE paid little attention in preparing its original statement, although the series of estimates does not lead me to have confidence in agg of the estimates.
In the case of a utility applicant we would look with strong disfavor on such rapidly shifting submissions.
iii
i Thus, I conclude the DOE has failed to make the public interest case and, in the cost area, badly.
I am also concerned that DOE may not understand the appropriate controls that should be applied when assuming the role of a license applicant.
The NRC has high standards for license applicants -- which underlie the concept of li-censability, which is a CRBR objective.
It is because of these standards that showing licensability is an important accomplishment.
Therefore I vote to deny the exemption request.
iv
I.
Areas Not Considered In addressing the request for an exemption from the Department of Energy, 1/ there were two issues which I did not consider.
It is not for the NRC to decide the need for a liquid metal fast breeder reactor program or the need for a demonstra-tion scale facility, e.g., whether such is a sound use of tax monies.
Determination of these needs, including the timing and objectives, is more properly determined by DOE. 2/
In 1976 the Commission directed:
"that the following be assumed as established by the ERDA impact statement and associated processes:
a.
The need for a liquid metal fast breeder reactor program, including its objectives, structure and timing; L
1/
The request is from the Department of Energy, for itself and the Tennessee Valley Authority and the Project Management Corporation.
In this opinion this group is collectively referred to as the applicant or DOE.
2/
This position mirrors the Commission's earlier decision on whether NEPA required the NRC to address broader environmental issues previously addressed in the ERDA Program Statement.
Project Management Corporation, et al.
(Clinch River Breeder Reaccor Plant), CLI-76-13, 4 NRC 67 (1976).
The Commission was " guided largely by the
' rule of reason' generally applicable to NEPA issues
[ citation omitted], by the implications of the Energy Reorganization Act and Congressional consideration of the Clinch River project, and by considerations of practicality." Id at 79.
I find the Commission's reasoning and gilidance pursuasive.
2 b.
The need for a demonstration-scale facility to test the feasibility of liquid metal fast breeder reactors when operated as part of the power generation facilities of an electric utility system, including its timing and objectives."
3/
Thus these needs are to be assumed.
Therefore, we should not address such questions as whether and by how much the drop in reactor orders, the reevaluation of uranium resources, l
and the drop in uranium prices have delayed the need for a demonstration reactor such as the CRBR. 4/
These are not appropriate issues for the NRC.
We should defer to DOE.
We also are not estimating the full cost of the CRBR.
i Considerable debate has taken place over the "true" cost of this project, with much of the debate on how long will it really take to bring a first-of-a-kind machine to successful operation.
Although costs of delay are an issue here, the full cost of the project is not.
II.
Application of Section 50.12 There are three issues with respect to the use of Section 50.12: (1) can it be used; (2) should it be used; and (3) if so, does consideration of the factors support granting the present request?
t The applicant argues that the section is a valid part of the NRC regulations; was consciously retained following 3/
Id at 92.
-4/
E.g.,
Letter from F. von Hippel to ' Chairman Palladino (January 13, le82) (submitted in response to December 24, 1981 NRC invit2ttion for comments on DOE exemption request).
3 introduction of the LWA procedures; that the Atomic Energy Act of 1954 requires that procedures such as this be available for demonstration projects; and, therefore, Section 50.12 is usable in this case.
The opponents argue that 50.12 is a vestigial remnant -- with little applicability after the 1974 LWA procedures were issued, as shown by the fact that virtusily all exemptions were issued before the LWA provision was a portion of the regulations; that it was not meant to be used for first-of-a-kind designs; and that a contention in the reopened hearing precludes the use of Section 50.12.
Background of Sections 50.12 and 50.10 In 1960 the Commission added a new paragraph to Section 50.10 which provided "No person shall begin construction of a production or utilization facility on a site on which the facility is to be operated until a construction permit has been issued." 5/
The new regulation went on to define construction to include pouring of foundations or installation of any portion of the permanent facility.
It explicitly excluded activities such as excavation, and construction of roadways, railroad spurs, and non-nuclear facilities such as turbine buildings and temporary construction buildings.
This was not an absolute prohibition.
The Commission did grant requests for specific exemptions. 6/
In fact, in 1969 5/
25 Fed. Reg 8712 (September 9, 1960).
6/
At that time the regulations included 50.12, " Specific Exemptions," which is virtually identical to the current 5 0.12 (a).
l 4
l the Commission proposed specific procedures and criteria for issuing exemptions to allow certain categories of activity prior to issuance of a construction permit. 7/
- However, this proposal was later withdrawn.
The enactment of the 1
National Environmental Policy Act (NEPA) in 1970 caused a significant change in the Commission's approach.
Changes to Reflect NEPA In response to NEPA, the Commission proposed a rule in 1971 8/, which became final in 1972 9/, to " redefine the
' commencement of construction'" and " provide for Commission l
environmental review prior to ' commencement of construction.'"10/
Under the new definition of " construction" an applicant could no longer clear land, excavate, build a non-nuclear building, or take other substantial action which would l
adversely affect the environment.
Some activities, such as those reasonably necessary for determining site suitability, were still permitted provided efforts were taken to minimize environmental harm.
l l
In some cases the proposed rule would have affected activities already underway.
Activities which were no longer authorized but which had been authorized, either at the applicant's option (because they were not covered by the 7/
34 Fed. Reg. 2357 (February 19, 1969) (proposed rule to allow exemptions for installatien of foundations and below grade walls prior to issuance of construction permit).
8/
36 Fed. Reg. 22848 (December 1, 1971).
9/
37 Fed. Reg. 5745 (March 21, 1972).
i 10/
Id.
i 5
original definition of construction) or by a previously issued specific exemption (under 50.12), were dealt with by the addition of two new sections -- 50.10 (d) and 50.12(b).
In essence, affected applicants were required to show cause why their activities should not be suspended until the Commission had an opportunity to do an environmental review.
The Commission reached its decision on the show cause requests by considering.and balancing a set of factors. The factors to be considered were virtually identical to the factors listed in the current version of 50.12(b).
The proposed rule addressed only transition cases.
The final rule added a footnote to the standard exemption provision, Section 50.12 (a), which provided "In acting upon an application for an exemption permitting the conduct of the activities prior to the issuance of a construction permit prohibited by E50.10, the Commission will consider and balance the environmental factors [ applicable to the show cause determination as] described in paragraph (b) of this section."
The Commission explained:
"In making this rel'ief generally available only to those persons who have commenced actual site preparation activities prior to the effective date of these amendments, the Commission realizes that in individual cases, l
particularly those instances where plants are in an advanced stage of development, but where no site preparation work has yet been started, undue hardship may be incurred.
In those situations, relief may be sought by requesting l
l l
l_,
1 6
a specific exemption under 350.12.
Although it is expected that specific exemptions will be used only sparingly for this purpose, appropriate relief may be granted in particular cases where the facts so warrant I
and a favorable determination can be made with respect to the specified environmental considerations listed in the new E50.12 (b). " 11/
l Limited Work Authorizations and Section 50.12 l
l In 1974 the Commiasion introduced a new set of amendments which "would provide for a procedure different from that set forth in E50.12(a) of the Commission's present regulations in 10 CFR 50 whereby site preparation and excavation and l
l certain other on-site activities could be undertaken prior to issuance of a construction permit for a nuclear power reactor."12/
The procedure, a limited work authorization (LWA), differed from an exemption in several important respects.
Although the LWA was routinely available, the scope of activities was defined and limited, the staff had to complete its final environmental statement before issuance, and the Licensing Board had to make the required NEPA findings before issuance. 13/
The proposed rule included an snendment to 50.12 which precluded any exemption from 50.10 authorizing activities bevond the scope of an LWA.
However this was l
l 11/
Id. at 5746.
12/
39 Fed. Reg. 14506 (April 24, 1974).
13/
39 Fed. Reg. 4582 (February 5, 1974) (p.oposed rule).
7
" deleted as unnecessary in light of the Commission's policy of granting exemptions from 850.10 (c) sparingly and only in cases of undue hardship." 14/
The Commission explicitly considered the value of the LWA procedures and the relation to exemptions:
"A number of comments suggested that the Commission should adopt a more liberal policy regarding granting of exemptions from 850.10 (c) pursuant to 850.12(a).
The Commission has rejected this suggestion and will continue the present policy of granting such exemptions sparingly and only in cases of undue hardship.
A number of comments also suggested that the provisions in 850.10(e) requiring a full:iNEPA review and hearing prior to grant of authorization were unnecessary and would unduly delay plant construction.
The Commission believes however, that such provisions, which facilitate public participation and ensure appropriate consideration of NEPA matters, are in the public interest and should be retained in the rule."15/
The following comment made by the Commission in 1974 is of interest in the present case:
" Consideration of the instant amendments arises at a time of deep national concern over energy sources and supply -- a concern which the Commission fully shares." 16/
The LWA procedures were an attempt to accommodate the Commission's NEPA responsibilities with a need to bring nuclear power plants on line:
14/
39 Fed. Reg. at 14507.
i 15/
39 Fed. Reg. at 14507-08.
16/
39 Fed. Reg at 14508.
l i
1
o
~
8
" Prior to the enactment of the National Environmental Policy Act of 1969 (NEPA) and the amendments to E50.10 1
adopted by the Commission on March 21, 1972 (37 FR 5745),
site excavation for safety-related structures was generally permitted to be undertaken by applicants without any prior Commission review.
The essential distinction between the past situation and the present one is that NEPA now applies to certain Commission actions.
However, this essential difference is accom-modated in the amendments by the requirement that there be a full NEPA review and hearing on NEPA issues covered by the Commission's NEPA regulations prior to authorizing any on-site work otherwise generally pro-hibited by 850.10(c).
The Commission believes that this approach reflects a reasonable approach toward timely decision making within the framework of the present Act." 17/
In 1975 Section 50.12 was modified as part of a number of changes issued to reflect the abolition of the Atomic Energy Commission and the creation of the Nuclear R,igulatory Commission. 18/
The amendments were characterized as technical and conforming amendments rather than substantive amendments.
The footnote to E50.12 (a) was deleted, and 850.12 (b) was
. revised to cover a request for an(exemption from 50.10 rather than an attempt to show cause why the Commission should not suspend activities which were ongoing during the specified transitional period in 1972.
Presumably the transitional determinations had been completed and the original 50.12(b) was no longer necessary.
Consequently 17/
39 Fed. Reg. at 14507.
18/
40 Fed. Reg. 8774 (March 3, 1975).
e 9
this change appears to accomplish little more than deleting an unnecessary section and transferring a related section from a footnote to a new paragraph.
One final change of. interest occurred in 1976 and 1977.
While considering early site review regulations, the Commission proposed to " extend the so-called ' limited work authorization' concept to include production facilities such as commercial isotopic enrichment plants and fuel reprocessing plants, and testing reactors." 19/
The Commission did extend the LWA procedures to specified utilization facilities rather than just power reactors.
However, the final rule did not include production facilities.
The Commission simply asserted it decided not to extend the LWA procedure to production facilities "because this would be premature and unnecessary." 20/
Can Section 50.12 be Used?
Based on the, development of the rules, I reach the following conclusions:
The approach currently found in 550.12 (b) was originally developed to deal with a transition period which occurred in 1972 when the AEC adopted new restrictions on construction activities to implement its NEPA responsibility.
Although it was primarily intended for applicants who had already begun affected activities, there 19/
41 Fed. Reg. 16835 (April 22, 1976) 20/
42 Fed. Reg. 22882 (May 5, 1977).
10 was a recognition from the beginning that exemptions might be justified in a few limited other instances.
This exemption option has been deliberately maintained, although the Commission has consistently insisted it should be used " sparingly" and only in cases of " undue hardship" or " extraordinary" circum-stances. 21/
This high threshhold for exemptions was maintained in the face of serious energy concerns in 1974.
However the AEC may have intended the provision, it is nevertheless present in the regulations.
Although plausible, there is nothing in the background of Section 50.12 to I
suggest the Commission intended to preclude an exemption for a first-of-a-kind facility.
The failure to expand the scope for LWA's is consistent with simply not extending a routine procedure to a category of facilities for which there is little experience and little necessity.
It does not follow the Commission intended to preclude use of a nonroutine,
procedure for a nonroutine facility.
Finally, to forbid its use because of a contention in the hearing essentially l
repeals the provision, since such an interpretation would 1
l transform a 50.12 exemption into an LWA-1, which can be issued after a hearing.
21/
E.g.,
39 Fed. Reg. at 14507; Louisiana Power & Light Company (Waterford Steam Electric Generating Station, Unit 3),
l CLI-73-25, 6 AEC 619, 622 n.3 (1973); Washington Public Power Supply System (WPPSS Nuclear Project Nos. 3 and 5),
CLI-77-ll, 5 NRC 719, 723 (1977).
l
11 Basically the Commission appears to have preserved its options to act on a case-by-case basis in the event that unusual circumstances justified unusual actions.
Consequently, I do not reject on its face the applicants' request.
- However, they have a heavy burden.
Thus, I conclude the section can be applied.
Should Section 50.12 be Used ?
Whether it should be applied turns on whether the exemption route should be used for CRBR.
The issue is linked to 50.12 (b) (4),
i.e.,
it is a public interest question.
In essence, if everyone agrees CRBR should be licensed, then what type of licensing procedure should be followed?
The exemption opponents argue that for a first-of-kind reactor, the full, standard (canonical) proceeding should be followed.
The applicant argues that what is necessary is for the licensing procedures in the regulations to be followed.
Then, since 50.12 is in those regulations, the applicant believes granting the exemption is consistent with following NRC licensing procedures.
I find the applicant's arguments slightly specious.
The provision is in the NRC regulations - and was used extensively until the LWA provision was included in_the NRC regulations.
The 50.12 exemption route was used for 49 facilities in the last fifteen years.
However, after the LWA rule was published in April, 1974, LWA-l's were issued for 55 plants.
The only 50.12 request granted since April 1974
12 was in a case where (a) an LWA-1 had already been granted (and therefore the initial environmental hearing had been held), (b) the applicant wanted approval for construction activities going beyond those approved in the first LWA, (c) the NAC had in place a policy statement prohibiting issuing additional LWA's until a particular rulemaking was completed, and (d) the request (referred to variously as a request for a broader LWA and for an exemption) was unopposed by the parties to the hearing.
Thus, while the applicant is correct -- a 50.12 exemption is part of the NRC licensing procedures -- granting such an exemption would place the CRBR proceeding in the rare category, the category of l
extremely unusual precedures.
To the extent that meeting full NRC licensing procedures is among the objectives of the l
CRBR program, usa of a 50.12 waiver prevents meeting these objectives.
A major issue relating to the public interest is what is meant by licensability.
As I recall, one objective of the CRBR project from its beginning has been to demonstrate licensability.
The requested exemption is perceived by many as removing CRBR from the NRC's normal process and thereby damaging the possibility that the project can meet the l
l licensability objective.
Thus, for example, Senator Quayle wrote:
l l
m w
13 "The legislative history of the Clinch River project clearly shows that a major goal of this project is to demonstrate the licensability of the liquid metal fast breeder reactor.
Any deviation frcm licensing pro-cedures established by NRC would obviate this purpose and deprive the nuclear industry of the clear precedents needed to proceed with additional LMFBR plants.
I believe the best way to assure a stable future for the nation's nuclear industry, which represents a vital part of our present and future energy supply structure, is to stabilize and clarify the regulatory environment.
Exempting demonstration plants from normal regulatory requirements can only delay progress toward meeting this goal.
It will also retard the progress of proving new technology.
For these reasons, therefore, I request that you deny DOE's request for exemptions." 22/
These arguments do not lead me to reject the request, however, since it is not an NRC requirement that we follow our normal licensing procedures.
However, DOE must make a strong showing on the 50.12(b) factors.
III. Consideration of Section 50.12 (b) Factors Section 50.12 (b) instructs the Commission to consider and balance four factors:
(1) environmental impact, (2) redressability, (3) foreclosure of alternatives, and (4) public interest.
Environmental Impact The first factor concerns "significant adverse impset on the environment."
Inherently this is not a trivial issue for site preparation activities.
The Commission originally redefined construction to include site preparation activities 22/
Letter from Senator Quayle to Chairman Palladino (February 5, 1982).
14 because " site preparation constitutes a key point, from the standpoint of environmental impact, in connection with the licensing of nuclear facilities and materials." 23/
In 1977 the NRC staff prepared a final environmental statement (FES) for the CRBR. 24/
The staff concluded that site preparation activities, conditioned as proposed in the FES, would not result in significant adverse environmental impacts.
Although there have been changes since that evaluation, the NRC staff continues to believe no significant adverse inipacts will result.
In addition, the local authorities are strongly in favor of the project.
We have received letters of support from the Mayor and the Administrator of Clinton, Tennessee, from the Mayor and City Coordinator of Harriman, Tennessee, from Tencassee State Representative McNally, who represents Oak Ridge, from Govern,or Alexander of Tennessee, and from, Mayor A. K. Bissell of Oak Ridge, who spoke at the Commission's public meeting on February 16, 1982.
Such support, while a strong positive indication, is probably not sufficient to show negligible environmental impact (I believe the authorities 23/
37 Fed. Reg. at 5746.
24/
" Final Environmental Statement Related to the Construction and Operation of the Clinch River Breeder Reactor Plant,"
NUREG-0139 (December 1976).
15 of West Valley, New York also supported that project when it was proposed).
But if the Commission weighs heavily the opposition of local authorities to siting a facility, we should similarly weigh such support.
The local authorities also agree with DOE's contention that some of the proposed work would also be valuable for future industrial development of the site.
Nevertheless, $88 million would be spent on project construction and, even at today's high prices, that represents a significant construction project -- it clearly will have an impact on the area.
Although the impacts are not so trivial that they can be entirely ignored, they do not weigh strongly against the exemption.
Redressability The second criterion, whether redress of adverse impacts "can reasonably be e.ffected" is not completely separate from the first.
The applicant argues that all but the detailed topography can be restored for about 10% of the construction cost, and that some of the activities (e.g., the railroad spur and roads) could be left to enhance industrial development.
I do not read the criterion as asking whether the site would be restored but, rather, whether it could be restored.
The former addresses Congressional funding; the latter, the facts of construction and restoration.
Although I am skeptical
16 that what takes $88 million to do can - at a later date - be undone for $8 million, I agree with the applicant that it should be possible to undo what they propose to do.
The applicants will not be able to restore all of the original topographic features.
However, I believe some consideration should be given to the industrial zoning which indicates local feeling about appropriate uses.
This factor does not weigh against granting the exemption.
Reasonable restoration is possible, although there may be some practical problems because of funding considerations.
Foreclosure of Alternatives The third factor concerns whether the activities would
" foreclose subsequent adoption of alternatives."
The inter-venors argue it would foreclose their contention that an LWA cannot be granted for a first-of-a-kind reactor.
This is a bootstrap argument.
To forbid the use of exemption authority because of a contention in an LWA hearing effectively nullifies the exemption authority.
If the exemption must await the LWA-1 hearing, the authority becomes meaningless because an LWA-1 itself can be issued after the hearing.
As for the merits of the issue, I see no reason why it needs to be discussed in a hearing.
It is basically a legal argument.
I do not believe the intervenors ' foreclosure argument is pursuasive.
No other arguments were raised as to issues that would be foreclosed.
17 The staff concluded in its 1977 final environmental statement that the ERDA sites at Hanford, Idaho and Savannah River "are better than the proposed site or any of the other alternative sites because the isolation provided would result in lower radiation doses in the event of an accidental release of radioactivity, in terms of both the nearest receptor and the number of people exposed." 25/
However:
"A delay of 2-1/4 years in completion of the project appears to be the minimum result of a change in site location at this time, assuming current schedules would otherwise be met The staff's overall conclusions hinge on a balancing of the reduction in accident risks achievable with a remote location against the resulting costs and inability of the demonstration plant to accomplish its goals on a time frame compatible with the present timing goals of the LMFBR program.
In balancing the factors discussed above, the staff's judgment is that the applicant's preferred proposal, utilizing the Clinch River site, is reasonable and that no substantially better alternative is available." 26/
The $88 million for project construction represents a significant investment.
More important than the money, the. work will give this site an additional edge in terms of timely completion.
Thus there is potential prejudice to the alternate sites issue.
However, the Clinch River site already has an edge as evidenced by the staff's decision in 1977, and there is no reason to believe the incremental advantage obtained through work under the proposed exemption is sufficient to foreclose 25/
Id. at 9-22.
l 26/
Id. at 9-23.
18 consideration of alternative sites.
This conclusion is influenced by the redressability considerations discussed above.
In addition, anyone following this project at all closely realizes that there is no real possibility of an alternative site for the CRBR.
On balance, I believe factor (3) of Section 50.12(b) is neutral regarding this exemption request.
Finally, the public interest factor must be addressed --
as has been obvious from the beginning.
Since the Applicants have a heavy burden and the other three factors are marginal, it is clear that consideration of the public interest criterion will be determinative for me.
IV.
Puolic Interest In considering the effect of delay on the public interest, there are three issues:
(1) Is there a Congressional mandate for the exemption?
(2) Is there a need to quickly move ahead on the project for either the power or the R&D?
(3) l Is there a substantial dollar cost tc the taxpayer for delay?
If some or all are stronaly "yes," then it would seem 50.12 (b) (4.) would carry the waiver request.
Congressional Mandate On December 24th the Commission asked the DOE: "Is there any indication in the acts providing for CRBRP authorizations l
I
~
19 or appropriations, associated committee or conference reports, or legislative history that speaks to the licensing procedures to be used by the NRC?." 27/
In response, the applicant
~
quoted the Omnibus Appropriations Bill:
"The Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, includes a Congressional mandate for expeditious project completion.
The Conference Report accompanying this legislation and the contemporaneous statements of the floor managers at the time of the enactment conclusively demonstrate the following elements of Congressional intent:
a.
The plant must be constructed in a timely and expeditious manner; construc-tion must be undertaken as expeditiously as possible; the cooperation of all agencies is required." 28/
However, in testimony before us, the lead spokesman for the applicant, Mr. Edgar, was less positive:
l
" Commissioner Ahearne:
My question is, do you read the omnibus budget bill as at least implying Congressional intent that the NRC should grant the exemption?
Mr. Edgar:
It implies Congressional intent, or in fact reflects the Congressional intent that Clinch River should be completed as expeditiously as possible.
It does not address 50.12 per se.
It provides a basis upon which the Commission can take that into account as a matter of policy in whether to exercise its dis-cretion to use 50.12.
l l
27/
" Memorandum and Order," CLI-81-35, Attachment A, Ouestion 2 (December 24, 1981).
28/
" Applicants' Answers to Questions Set Forth in Attachment A to the Commission's December 24, 1981 Order" at 5-6 (January 18, 1982) (footnotes omitted).
l l
l
20 Commissioner Ahearne:
My question is, do you read it as implying that it's the Congressional intent that we should grant the exemption?
Mr. Edgar:
It reinforces it."
29/
Several Senators and Congressmen have warned us not to interpret the language as endorsing the waiver and others have advised us it is consistent with the waiver request.
Those endorsing the request all point out the exemption would be consistent with the Congressional intent.
The Chairman of the House Committee on Science and Tech-nology, Representative Fuqua, joined by fourteen other members, including the Chairman of the Subcommittee on Energy Research and Production, Representative Bouquard:
"We would, therefore, confirm that the Secretary's-request is consistent with Congressional intent." 30/
The Chairman of the Senate Subcommittee on Nuclear Regulation, Senator Simpson, joined by Senator Domenici, Chairman of the Senate Budget Committee:
"We believe that NRC approval of the Secretary of Energy's request pursuant to Section 50.12, l
l provided the Commission finds that all other l
29/
Unofficial transcript of Commission meeting on February 16, 1982 at 188.
30/
Letter from Representative Fuqua et al. to Chairman Palladino (February 11, 1982).
I l
21 requirements of that section are met and that such action is consistent with its statutory responsi-bilities for protection of the public health and safety, would be fully consistent with the expressions of Congressional intent respecting this project.
." 31/
The Chairman of the Senate Committee on Energy and Natural Resources, Senator McClure:
"I therefore confirm that the Secretary's request is consistent with Congressional intent." 32/
And, finally, 33/ the Senate Majority Leader, Senator Baker said:
"If the Commission finds in its deliberations and considerations that the four criteria of 10 CFR 50.12 are satisfied, then I believe it is consist.ent with the established and continuing purpose of section 50.12, and in the public interest as e> pressed repeatedly by the Congress, for the Commission to act favorably on the submission by the Secretary of Energy.
The intent of the
(.
Congress has most recently again been expressed in the Conference Report on the Omnibus Budget Reconciliation Act of 1982, (P.L. 97-35), wherein 31/
Letter from Senators Domenici and Simpson to Chairman Palladino (February 25, 1982).
1 32/
Letter from Senator McClure to Chairman Palladino (February 17, 1982).
33/
It should be noted that the Science Advisor to the President, Dr. Keyworth, has also advised us that:
l "From the standpoint that Congress has funded the program and that the President has directed the completion of the CRBR, the requested exemp-tion is consistent with national policy and the public interest."
Letter from Dr. Keyworth to Chairman Palladino (February 24, 1982).
l l
.--.m.,,.-
-9
~.a9
,--,..,,_.-,___~m
22 the Clinch River Breeder Reactor Project is identified as an essential element of the Liquid Metal Fast Breeder Reactor program.
The Conferees directed that the Project should be constructed in a timely and expeditious manner.
The accompanying floor statements by the managers of the Reconciliation Act in both Houses of the Congress interpret and amplify that report language.
In my judgment, if the Commission finds that the requirements of section 50.12 are met, favorable action on the DOE request would be entirely in harmony with the Commission's statutory role to protect the public health and safety, while con-tinuing to reserve for the Congress the policy determination related to the funding, timetable, and role of the Project in the LMFBR program." 34/
However, the quoted letters do not indicate a belief that Congress considered the 50.12 waiver provision and intended for us to use it.
This point has been made by several other Congressmen:
The Chairman of the Senate Appropriations Committee, Senator Hatfield, joined by Senator Cohen:
If the NRC were to authorize site preparation activities at this time, it would be compelled to grant exemptions from established regulatory procedures for the CRBR.
We have serious doubts about the wisdom of granting such exemptions.
The Clinch River Breeder Reactor was authorized in 1970 by P.L.91-273 as a demonstration project that would lead to the early commercialization of breeder reactors.
Since its inception, NRC
(
licensing of the CRBR has been an integral part l
of the project.
34/
Letter from Senator Baker to Chairman Palladino (February 20, 1982).
l t
i
23 Throughout the annual debates over the CRBR, Congress has never expressed support for regulatory exemptions for the project.
To the contrary, the Omnibus Budget Reconciliation Act conference agreement reaffirms the need for proceeding with the established regulatory course for the CRBR in order to make future commer-cialization possible.
The Conference report states,
'The conferees intend that the plant ~should be constructed in a timely and expeditious manner, so that a decision on the commercialization and deployment of breeder reactors can be made on the basis of information obtained in the operation of the plant.'"
We do not agree with Secretary Edward's assertions that the CR3R '
. must be expeditiously con-structed to meet the objectives of the CRBR program.'
To the contrary, we believe it is in the bes.t interests of future commercial development of LMFBRs for the CRBR to undergo the established regulatory procedures with-out exemption.
Furthermore, we believe granting ex-emptions to the CRBR could seriously erode the public's confidence in the federal nuclear energy programs in general and breeder reactors programs in particular." 35/
The Chairman of the House Committee on Interior and j
Insular Affairs and Chairman of the Subcommittee on Energy and the Environment, Representative Udall:
. As chairman of the Committee with primary jurisdiction in the House over the nuclear regulatory process, I am concerned about the implications of the Commission's actions (pursuant to the Secretary's request) on the siting and licensing of the CRBR.
Existing regulations (10 CFR Part 50.10) provide for a procedure whereby site preparation and exca-vation and certain other onsite activities could be undertaken prior to the issuance of a construction permit for the CR'R.
The purpose of this regulatory procedure is to lessen the impact of the licensing 35/
Letter from Senators Hatfield and Cohen to Chairman Palladino (December 15, 1981).
24 process on an applicant's construction schedule and expedite completion of the project.
The Secretary has determined, however, that this orderly procedure is inadequate in the case of the CRBR.
He has requested, therefore, that the Commission provide the extraordinary regulatory relief of granting an exemption (under 10 CFR Part 50.12) that would allow CRBR site preparation prior to and without fulfilling the requirements for issuance of a limited work authorization (LWA).
To my knowledge, the Commission has not granted an exemption under 10 CFR 5C.12 in a contested proceeding since the adoption of the LWA regulations in April 1974; a practice in keeping with the Commission policy of granting such exemptions sparingly and only in cases of undue hardship.
Prior to a final decision on the Secretary's request, I hope the Commission will consider fully the adequacy of established LWA procedures to allow a timely com-mencement of CRBR site preparation while protecting the integrity of the licensing process and the rights of all parties to participate in the proceeding.
Finally, to the extent that Clinch River is intended as a demonstration of the commercialization potential of breeder reactors (including their ability to be licensed by NRC), it appears somewhat self-defeating to shortcut the normal licensing process at the first opportunity.
In the event that the Commission grants the exsmption sought by the Secretary,.public confidence in the regulatory process as it applies to Clinch River l
and future breeders may suffer unnecessary and irreparable harm."
36/
Tae ranking minority member of the Senate Subcommittee on Nuclear Regulation, Senator Hart, joined by Senators Tsongas, Humphrey, Bumpers, and Bradley:
"We do not believe that it has ever been the intent l
of Congress to encourage such exemptions, nor do we believe that such exemptions are in the best interests of possible future commercial development of Liquid Metal Fast Breeder Reactors (LMFBRs).
36/
Letter from Representative Udall to Chairman Palladino (December 8, 1981).
25 The legislative and contractual history of the Clinch River project clearly state that one of the goals of this project is to demonstrate licensability of LMFBRs for commercial application.
To exempt this project now would merely postpone this determination and cause extensive delay and increased cost of any LMFBR plant that might follow.
The time to clearly demonstrate LMFBR licensability is now.
This report language [ Conference Report accomoanying the Omnibus Budget Reconciliation Act of 1981} is not a request for regulatory exemptions.
To the contrary, it reaffirms the need to go through all steps of established regulatory procedure now to pave the way for possible future commercialization.
We urge you to consider these points and deny DOE's request for exemptions."
37/
l Examination of the legislative history does not show any I
indication that a 50.12 waiver request was addressed even by i
suggestion - in discussions on the bill.
Hence, although it is clear Congress supported moving ahead expeditiously on the CRBR, there is nothing to show this was not intended to direct DOE.to get the licensing process restarted - rather than to direct the NRC to waive our normal procedures.
Consequently, I do not read the Congressianal action as a directive to waive - or not waive - our normal procedures.
Need for Power or for R&D Turning to the second point, "although the Clinch River facility will produce electricity for the TVA power system, l
3y Letter from Senator Tsongas e_t_ a_1_.
to Chairman Palladino (December 9, 1981).
26 the proposal is not being justified on the basis of the electricity it will generate." 38/
In addition, the Conference Report for the Appropriations Bill stated:
"The conferees intend that the plant should be constructed in a timely and expeditious manner, so that a decision on the commercialization and deployment of breeder reactors can be made on the basis of information obtained in the operation of the plant.
The plant should therefore be con-structed on the basis of that objective, and not on the basis of providing needed power in the specific region of the Clinch River site." 39/
Of course, this should also remove need for production of power as a factor supporting the exemption.
(Fortunately, since with TVA deferring power rapidly and with an extremely aggressive conservation program 40/ it would have been difficult to rest on the need for 350 MWe for the TVA system.)
As for the R&D need, in its 1976 decision the NRC decided to defer to DOE on questions of the general need, including timing.
DOE has made little effort to support this exemption on the basis of the adverse impacts of delaying R&D results.
(Although I defer to DOE's judgment, I note DOE has merely provided a few conclusory statements with little supporting material.)
Thus the need for R&D does not provide a justification for the exemption request.
38/
CLI-76-13, 4 NRC at 77.
39/
H.R.
Rep. No.97-208, 97th Cong., 1st Sess, at 827 (1981)
(Conference Report for the Gmnibus Budget Reconciliation Act of 1981).
40/
Office of Power, Division of Energy Conservation and Rates, Tennessee Valley Authority, " Program Swnmary" (October, 19 81)
(TVA/OP/ECR-82/1).
27 V.
Dollar Costs of Delay Which rests the decision upon the cost.
And it is here that the applicant has presented his worst case.
The cost of delay has been the subject of substantial discussion, both in filings by the applicants and the NRDC and in the public meetings held by the NRC.
The applicant has presented several substantially different cost estimates - for the most part unrelated - and has used creative accounting.
It has been difficult to get a firm estimate from the DOE.
The DOE has shifted position substantially.
On November 30th, when DOE initially submitted their application, Secretary Edwards wrote:
" Absent approval of this request, procedural delays will cause undue hardship in the form of another 1-2 years of delay and S120-240 million of increased costs.
. Approval of this request would avoid hardship to the project and Federal taxpayer, since it would avoid another 1-2 years of delay and $120-240 million of increased
~
~
~
costs." 41/
Secretary Edwards went on to reiterate this last point:
" Approval of the request would.
save the taxpayers $120-240 million." 32/
And later,
" Additional.
cost increases of $120-240 million can be avoided if the Commission recognizes the unique and extra ordinary circumstances surrounding the project." 43/
41/
Letter from DOE Secretary Edwards to Chairman Palladino at 2 (November 30, 1981).
12/
Id. at 3.
43/
Id at 3-4.
28
~
Secretary Edwards enclosed a November 1981 Site Preparation Activities Report, 44/ which he said "provides the detailed justifi-cation and support for this 50.12 request."
The only addressal of the delay cost came in Section 7.0.,
"Effect of Delay on the Public Interest," where the total discussion of the cost consists of the following:
"If approval to initiate site preparation activities identified herein is granted by March 1, 1982, it is estimated that the current Project schedule can be shortened by at least 12 months.
Taking into account only the costs of those activities that are sensitive to schedule changes, the estimated 12 months reduction in schedule is conservatively estimated to result in a direct savings of $120 million." 45/
Certainly this magnitude of cost would be a significant factor and would weigh heavily on the side of granting an exemption in the public interest.
Therefore, the Commission requested DOE in our order of December 24th to:
"(a) Provide the documentation which forms the basis for projected cost of delay and environmental impact estimates referred to-in the Site Preparation Activities Report and Secretary Edwards' letter.
(b)
Demonstrate the validity of the cost estimate." 46/
i 44/
" Clinch River Breeder Reactor Plant: Site Preparation Activities Report" (November 1981).
45/
Id. at 7-2.
46/
CLI-81-35, Attachment A, Question 9.
l l
I 29 The DOE responded on January 18th:
" Applicants estimate that, absent authorization pursuant to Section 50.12 to begin site preparation activities the Project will incur (1) additional delays at one-to-two years duration and (2) corresponding l
increased costs in the amount of $120-240 million." 47/
l i
The DOE went on to state:
l "The range of delay costs can be conservatively
[
estimated on the basis of: (1) an estimate of cost l
increases for certain unavoidable management activities which are particularly sensitive to delay; (2) an estimate of the effects of inflation assuming a delay in initial criticality from September 1988 to February 1990; and (3) an estimate of the cost of capital expended on hardware for the period of delay.
Each of these estimates are more fully described below; they show that the cost. estimate of $120-240 million l
in the SPAR is clearly conservative." 48/
l "The Applicants' estimate that the cost of maintaining the various management groups for an additional one-to-two year period is $42.3 million per year." 49/
Turning to inflation, the DOE noted:
. the CRBRP Project is funded through Congressional appropriations and thus operates with, and all costs are estimated based upon, year of expenditure dollars.
Total project costs are estim'ated hsing a standard 8% escalation value.
Any increased costs due to delay in this case will be borne by the nation's taxpayers, and the Commission should not ignore the adverse effects of inflation upon the taxpayer.
l The Applicants estimate that the impact of a one-l to-two year delay amounts to $88.8 million per year.
." 50/
t 47/
Applicants' January 18, 1982 Answers at 40.
48/
Id. at 41 (footnote omitted).
49/
Id. at 42.
50/
Id. at 44.
30 Finally, the DOE argued:
"Whenever an organization, including the United States Government dedicates funds to a capital project, it foregoes the opportunity to invest those funds in al-ternative projects which will earn an equal or greater return on investment or to pay off debt on which the capital costs are being incurred.
In short, the organization ' ties-up' capital and incurs an oppor-tunity cost.
Although certain components of the cost may be difficult to measure, it is, in an economic sense, a real cost and is included as a cost in an investor owned utility's accounting and ratemaking.
A one-to-two year delay in the Project schedule will result in additicnal cost on expended capital during the delay period.
In order to arrive at a conservative estimate of the cost of capital during the delay period, a rate of 10 percent */ was applied only to the capital costs for hard-ware. **/
The delay costs amount to $43.9 million on a yearly basis.
- /
The interest rate applied is substantially less than that established by the Secretary of Treasury pursuant to Public Law 92-41.
See CAS 417.50.
As of January 1, 1982, the rate
- established by the Secretary of Treasury was 14 3/4' percent.
47 Fed. Reg 366(Jan. 5, '1982)
- /
Applied to total capital costs the yearly cost of capital attributable to delay amounts to approximately $110 million per year." 51/
Therefore the DOE concluded a one-to-two year delay would result in cost increases per year of $42.3 million for l
51/
Id. at 45-46.
l l
l
31 unavoidable management activities, $88.8 million'for inflationary impact, and $43.9 million for " increased interest on expended capital for hardware alone."
52/
Thus, although the DOE never totalled the numbers, the reader could reasonably infer a one year delay would cost $175 million.
However, government agencies, departments, etc., are financed by fund accounts. 53/
That is, they are given money for specific purposes -- those identified in their annual budgets.
If the money is not used for this purpose, it must be " returned" to the Treasury.
Some monies must be spent in the given ficcal year, although much RFD funding is "no-year" money and is available until expended.
Nevertheless, fund money cannot be saved and invested for profit.
Expenditures from fund money then have no real opportunity cost while monies spent from the asset or expense accounts of the private sector do.
52/
Id. at 46.
53/
Funds differ from cash accounts in that assets are l
placed in funds for specific purposes.
The use to
(
which these monies may be put is restricted to the purpose of the fund.
Idle fund money cannot be used to pay the rent, invested for revenue, etc. (unless it is an investment fund).
Only the monies needed to finance the responsibilities of the fund are assigned to it.
The fund does not have title to the money, only the use of it.
32 The money raised in taxes by the Treasury is distributed to the various agency funds via the budgeting process.
However, the government does not tax to accumulate capital.
Thus Treasury monies have no real opportunity because they are also funds.
It follows then that no cost accrues to the use of government funds, e.g.,
to government monies spent on government activities or projects directly operated by the government other than the one-for-one depletion of the fund.
This is true if and only if fund money is used. 54/
On January 18th, NRDC and the Sierra Club filed comments on the November DOE application.
They pointed out that
" delay costs appear to be based almost solely on anticipated inflation.
. When the time value of money is taken into 54/
Normally, when the government wants to build a costly project, it hires a private contractor to do the work.
The contractor pays the cost of the effort and is reim-bursed, often at intervals during the process of con-struction.
The contractor must borrow to pay operating expenses.
The private contractor, because he must borrow at a real cost (interest) or use his own funds which do have real opportunity costs, may claim the cost of interest as a cost to the project.
Therefore, if CRBR were being built by a non-government entity, interest costs would be a cost to the project.
Since CRBR is being built largely by DOE with government funds, no opportunity cost should be imputed to the government money.
l i
1
O 33 account, inflation-related costs of delay vanish, because of offsetting savings from postponing expenditures." 55/
They argued that "Because the interest rate at which the Treasury borrows is currently greater than the inflation rate, there would be an actual savings by deferring expenditures on the project."
5p/
The intervenors cost expert, Charles Komanoff, estimated "that a 1-year deferral in construction actually creates a savings, in present value terms, on the order of
$30 million."
5_7/
58/
Mr. Komanoff also calculated the effect of loss of revenue from the CRBR to be $20 million for a one year l
delay.
(He obtained that by neglecting CRBR fuel processing 55/
" Comments of the Natural Resources Defense Council, Inc.
and the Sierra Club in Opposition to Applicants' Exemption Request Under 10 CFR E5012" at 32 (January 18, 1982).
56/
Id.
57/
" Statement of Charles Komanoff Presented to the Nuclear Regulatory Commission in Opposition to Applicants ' Exemption Request Under 10 CFR 950.12" at 6 (attached to January 18, 1982 NRDC/ Sierra Club opposition to DOE request).
58/
I believe that the arguments introduced by Komanoff and taken up in later presentations by DOE on the time value of money are invalid in the context of a govern-ment run, fund-supported project such as the CRBR.
I summarize the submissions here to document the changing DOE position.
34 and fabrication costs and assuming CRBR maintenance costs would be the same as the 1980 U. S. nuclear plant average and the CRBR capacity factor would be the same as the U. S.
nuclear average to date.)
On January 28th, the DOE provided comments on the NRDC Comments.
DOE agreed that time value of money should be taken into account, but said:
"Unfortunately, NRDC fails to understand that in calculating the cost or saving from delay, not only unexpended funds but also expended funds must be taken into account.
In fact, the Project incurs a substantial cost on expended funds as a result of any delay in beginning site preparation activities.
" 59/
DOE stated that they " continue to rely on their earlier cost submission made in Response to Question 9 of the Commission's Order of December 24, 1981."
60/
They did present a table giving a present worth analysis of anticipated project expenditures and concluded "The net effect after discounting anticipated expenditures to present worth, is a $30.2 million savings." 61/
They went on to consider "the elements of the ' time value of money' neglected by NRDC." 62/
Chart B (following p. 31) shows " Cost of 1
Annual Interest of Expended Capital at 11%" to be $189.9 million.
This is arrived at by taking each year expenditures, i
1 59/
" Applicants' Response to Natural Resources Defense Council, Inc.
and Tennessee Attorney General's Comments" at 28 (January 28, 1982).
6_0/
Id. at 29 n.
32.
61/
Id. at 30.
62/
Id. at 31.
1
35 from 1979 to 1981, inflating at 11% per year to the present, and then taking 11% of the total.
The DOE also calculated the present worth of lost revenue from a one year delay in operating the CRBR to be S5.9 million.
63/
The DOE concluded:
"A complete analysis which accounts for the ' time value of money' results in the following project costs and savings due to delay:
Net Savings on Anticipated Expenditures
$30.2 Interest on Past Expenditures
$189.9 Loss Due to Deferral of Revenue
$5.9 In summary, in the event of a one year delay, the project will incur substantial increased costs.
The elements of the delay costs on a yearly basis include:
(1) increased management costs in the amount of $42.3 million; 30/
(2) inflation in the amount of at least S88.8 mi1ITon; 31/
(3) using NRDC's analysis methods,
~
interest on expended capital on a net basis of $23.5 million; 32/
and (4) losses due to the deferral of revenue in the amount of $5.9 million.
As'these analyses demonstrate, the range of costs estimated in the SPAR OF S120-240 million is clearly conservative.
I 30/
See Applicants' Answers at 77.
31/
See Applicants' Answer at 46, 78.
32/
The net interest on capital of $23.5 million was derived by deducting the gross cost savings I
attributable to a one year delay from the interest costs on expended capital.
Applicants' previous submittal estimated this value at $43.9 million.
Applicants Answers Question 1 Answers 9 (a)-(b),
Appendix C.
The additional refinements suggested by NRDC's methods of analysis provided a basis for the more rigorous analysis herein." i4/
1 1
63/
Id. at Chart C (following Chart B).
l l
64/
Id. at 32-33.
l
36 The reader was thus left to conclude the true cost is
$161 million (using the summary), $165 million (usine."tima value of money"), or $175 million (from the January 18th responna).
NRDC-Sierra Club responded on January 28th, again using Komanoff:
"'[T]he future rate and level of expenditures on CRBRP have no bearing on the cost of past expendi-tures.'
Applicants' capital investments in the project are essentially sunk costs.
They will have to pay interest on these investments at the same rate regardless of the project's start-up date.
Put another way, 'There is no linkage whatsoever between progress of CRBRP and the Government's obligation to pay fixed costs of fi-nancing past expenditures.'" 65/
The DOE position was aggressively questioned by the Commission in the February 12th public meeting.
The Commission requested that the costs be examined by the group that had been calculating cost of utility delay (for use in monthly NRC submissions to the House Appropriations Subcommittee on Energy and Water Development).
The DOE responded, in a February 25th letter from Deputy Secretary Davis, 66/ stating:
--65/
" Supplemental Comments of the Natural Resources Defense Council, Inc. and the Sierra Club in Opposition to Applicants' Exemption Request Under 10 CFR 550.12" at 6 (January 28,1982) (quoting " Supplemental Statement of Charles Komanoff Presented to the Nuclear Regulatory Commission on January 28, 1982 in Opposition to Applicants' Exemption Request Under 10 CFR 550.12" which is attached to the supplemental comments).
66/
Letter fron DOE Deputy Secretary Davis to NRC Commissioners
~~
(February 25, 1982).
37 (1)
The DOE no longer provides cost analyses to Mr. Bevill.
(2)
In view of recent department reorganizations, the Office of Policy, Planning and Analysis has the relevant responsibility and expertise and therefore has developed the response.
(3)
There are "three distinct perspectives on the cost of delay" !7/
(A)
The Appropriations or Fiscal Perspective.
Mr. Davis stated:
"Each year, as Congress debates the funding to be appropriated to the project, the legislator's viewpoint for the decision will be in terms of inflated dollars.
The cost of the project to date is always expressed in inflated dollars, not constant dollars.
From the appropriations perspective, a one year delay will cause the project costs to increase be-cause of inflation on labor and materials, as well as the added costs of management during the delay.
Offsetting these costs will be revenues that are higher due to inflation during the delay.
These have been estimated to be:
$136 million in cost inflation; $42 million in management costs; and higher revenues (a net credit) of S49 million.
This results in a net total of $129 million in in-creased aopropriationi ovei the life of the project." 68/
~
(B)
The economic or resource perspective.
Mr.
Davis identified these by distinguishing them from the third perspective:
" Economic costs measure the total burden upon the productive capacity of the national economy.
Financial costs measure the relative burden upon individual parties and provide a u'eful perspective s
when considering individuals, firms or governments il/
Id,. at 2.
68/
- g. at 3 (footnotes omitted).
38 as operating entities.
Thus, while in a given case, past expenditures may have no economic cost, the individual, firm or government making those expendi-tures may sustain a real financial cost because capital is tied up unproductively." 69/
He calculated this economic cost to consist of $38 million for maintaining the necessary management, $20 million for deferred revenues (DOE now accepts the Komanoff estimate, and a savings of $30 million from deferral of anticipated expendi-tures.
Thus he concluded " Total Quantifiable Economic Costs" would be $28 million.
70/
(C)
The Financial Cost Perspectiv'e.
Mr. Davis stated:
"By analogy to commercial power or industrial plants, the effect of a one year delay in project completion will result in the capitalization of an additional year of interest measured at the time of plant completion." 71/
He then calculated a present worth total financial cost of $218 million.
Thus we have the following DOE estimates for a one-year delay:
November 30, 1981:
$120 million January 18, 1982:
(a)
S120 million, " clearly conservative" (b)
$175 million January 20, 1982:
(a)
$120 million, " clearly conservative" (b)
$161 million (c)
$166 million (d)
$175 millinn February 25, 1982:
(a)
S129 million, " appropriations perspective" 69/
Id.
70/
Id. at 4.
71/
Id. at 5.
O 39 (b)
$28 million, " economic perspective" (c)
$218 million, " financial perspective" I conclude the DOE has finally agreed that as far as the true dollar cost of delay, it is in the region of $30 million -
coincidentally, about the cost of the management team.
- Thus, I need not go into detail as to why I disagree with the earlier DOE estimates.
The DOE has dropped them, insofar as we are to address " economics."
This is sufficiently different from the original estimate as to indicate the DOE paid little attention in preparing its original statement, although the series of estimates dcas not lead me to have confidence in agg of the estimates.
In the case of a utility applicant we would look with strong disfavor on such rapidly shifting submissions.
Thus, I conclude the DOE has failed to make the public interest case and, in the cost area, badly.
I am also concerned that DOE may-not understand the ap-
~
propriate controls that should be applied when assuming the role of a license applicant.
The NRC has high standards for license applicants -- which underlie the concept of licensa-bility, which is a CRBR objective.
It is because of these standards that showing licensability is an important accom-plishment.
Therefore I vote to deny the exemption request.
l
DISSENTING VIEWS OF CHAIRMAN pALLADINO I firmly believe that'the DOE request for an exemption under 550.12 should be granted so that preparation activities can proceed at the CRBR site.
I arrive at this conclusion because I believe that the criteria under $50.12 are satisfied in this case.
The information and analysis which we have received on the public record from the participants and the Commission offices demonstrate that:
1.
the site preparation activities will not have a significant adverse impact on the environment of the CRBR site; 2.
the impacts of site preparation can be redressed and the site returned to a condition suitable for future I
l l
uses; l
3.
the site preparation activities do not foreclose future alternatives, including the use of the site for other purposes; and 4.
delay in conducting site preparation activities, in view of the readiness of the applicant and the national l
l
2 policy to go forward with the CRBR project, can only result *in harm to the public interest.
I do not understand the position of my fellow Commissioners who oppose the DOE request on the basis that granting the exemption would not be in the public interest.
It appears to me that in opposing the exemption request they are saying the public interest is better served by denying the petition than by granting it.
How is the public interest served in not going forward with the CRBR project where the Congress has approved its construction and operation on an expedited basis, where the applicant is ready, willing and able, and where the activities proposed pose no lasting threat to the environment or to the public health and safety?
If one agrees that there are no environmental or health and safety reasons to deny the exemption, one must ask the question, "What can be the basis for denying it?"
One reason that has been suggested is that the "licens-ability" of CRBR would not be proved if this exemption were granted.
However, an exemption for site clearing and preparation will not remove the requirement of a construc-tion permit before CRBR is built.
The granting of this exemption would not foreclose the consideration of any proper question about CR3R in that CP proceeding.
I do not
3 understand how "licensability" is at stake in our decision on the exemption unless one aspect of CRBR licensability is to test its, ability to withstand unnecessary delay in regulatory approval of site clearing and preparation.
In addressing licensability, Commissioner Ahearne quotes Senator Quayle that an exemption for DOE would be a devia-tion from NRC licensing procedures and would not serve the Congressional purpose for CRBR to demonstrate licensability.
However, a number of other members of the Senate disagree.
For example, Senator McClure has stated that "the Secre-tary's request [for e'xemption] is consistent with Congressional intent."
Letter to Nunzio J. Palladino, Chairman, NRC, from James A. McClure, Chairman, Committee on Energy and Natural ' Resources, dated February 17, 1982.
The
~
^
issue is not licensability, but rather whether or not the criteria of 50.12 are satisfied.
I believe that they are.
Commissioner Ahearne concludes that Congressional action is not "a directive to waive -- or not waive -- our normal l
procedures."
However, this statement should not end the matter of Congressional intent for our deliberations.
I believe our decision on the exemption can and should be consistent with Congressional policy.
The Congressional policy for " expeditious" construction of CRBR clearly f avors l
the exemption.
The Commission majority does not take issue
0 e
4 with my conclusion that denial of the exemption will delay CRBR construction.
They simply choose to ignore the delay.
Much attention has been given to the economic costs of delay.
I do believe that CRBR will be more costly if we deny the requested exemption.
Unfortunately, 550.12(b)(4) of our regulations, which was probably drafted with a commercial generating station in mind, has unduly narrowed the Commission discussions about the public interest criterion.
In this respect, I cannot agree with several of Commissioner Ahearne's statements.
For example, he " rests the [CRBR]
decision on cost..."
Why is no weight to be given to the Congressional policy for expeditious construction of CRBR?
Also, he states that "R&D need...is not an NRC issue.
However, our regulations make it an issue, and our prior decisions require us to accept DOE's statement as estab-lishing the need for a demonstration facility, including its timing.
United States Energy Research and Development Administration et. al., 4 NRC 67, 79, 83-84, 92 (1976).
Commissioner Gilinsky believes that to grant the exemption would adversely impact NRC's licensing and safety responsi-bilities for power reactors.
The information which the staff has given us does not support this view.
Rather, we
5 have been told that granting the DOE exemption may require less than one staff year of additional effort.
I do not believe that the success of our licensing and safety efforts for power plants depends on one staff year.
In summary, I believe that granting the exemption is in the public interest.
The criteria for the exemption are satis-fied, and completion and operation of the CRBR has already been determined by Congress to be in the public interest.
The Congressional intent for expeditious completion of the project is furthered; the R&D purpose and benefits of the project for our nation will occur sooner; and the hardships and uncertainties created by unnecessary delay of the project are minimized.
Therefore, I dissent and would approve the exemption.
l l
l l
SEPARATE DISSENTING VIEW 0F COMMISSIONER ROBERTS At the outset, I would like to put DOE's request for an exemption in a broader context by looking at the requirements of the National Environ-mental Policy Act (NEPA) in addition to the requirements of the NRC's regulations which were pronulgated to implement NEPA.
NEPA requires Federal agencies to determine whether their proposals for action are major and whether they will significantly affect the quality of the human environment.
If an agency concludes that its action meets this standard, then NEPA requires that an environmental impact statement be prepared and circulated for comment.
NEPA does not require that the conclusions of the environmental impact statement be tested in an adjudicatory hearing.1/
l This contrasts with Sec~ tion'50.10 of the Connission's regulations from l
which DOE has requested an exemption.
Under Section 50.10, site preparation activities may not commence until (1) a final environmental impact statement has been issued, (2) a hearing has been held and all environmental findings required by NRC's regulations have been made, and (3) a licensing board has found the site suitable from a radiological health and safety standpoint.
1/ At a public meeting on the exemption request, NRDC's representative
~
agreed with this conclusion by stating, "I must say, I do not think the National Environmental Policy Act requires an adjudicatory hearing," Transcript, December 16, 1981, at 41.
1 1
2 Thus, in context, it becomes clear that the NRC's regulations impose more procedural hurdles than the statute (NEPA) they were designed to implement.
Specifically, under Section 50.10, an applicant may not commence site preparation until the NRC's final environmental impact statement has been the subject of an adjudicatory hearing.
Thus, DOE has requested an exemption not from the requirements of NEPA but from the NRC's requirement that a hearing be conducted prior to site prepara-tion.
Section 50.12(b) establishes the criteria which must be met in order to permit grant of an exemption from Section 50.10.
While I will not reiterate these criteria here, I conclude that DOE has made the showings necessary to satisfy each of the four criteria.
With regard to the first three criteria, my conclusions rest on the analyses of environ-mental impacts described in the Clinch River Final Environmental State-ment issued in 1977 and in the OPE Report which analyzed the filings submitted by DOE, NRDC, and others.-
With regard to the fourth criteria--public interest--I conclude that it h in the public interest to receive, as soon as possible, the informa-l tion which will flow from operation of the Clinch River Breeder Reactor.
l l
Congress (as the elected representative of the people) has already determined that the liquid metal fast breeder reactor program generally i
and the Clinch River Breeder Reactor specifically are in the public
~
interest.
Given Congress's decision that it is in the public interest that the Clinch River Breeder Reactor be built and operated, the Commis-sion's determination of public interest becomes much narrower.
The
3 Commission merely must detemine whether early operation of the reactor, and thus early receipt of research and development knowledge, enhances the public interest.2./
In light of. the fact that no unredressable environmental ham or safety harm has been alleged by any participant, I conclude that, of course, early receipt of research and development information enhances the public interest.
Because nuclear reactor technology is very complicated, operating experience is gained slowly.
Early operation of the breeder reactor will speed up and increase the infomational benefits to be gained.
Given the narrow scope of the Comission's determination, the debate on whether grant of an exemption is in the public interest became rather confused.
There was a lot of discussion of the issue of "licensa-bility." That term is, of course, undefined.
To me, "licensability" merely means that the Comission is able to license the reactor--in other words, make all the findings required by the Atomic Energy Act
~
Grant 6f an exemption does not affect "'licensability."
Simply put, there are two routes to pursuf rg licensing approval--one route involves an environmental hearing prior to site preparation; the other involves a hearing after site preparation has begun.
Authority to comence site preparation prior to a hearing before a licensing board
-2/
I do not read the Comission's decision of August 27, 1976, to foreclose Comission recognition of research and development bene-fits in its determination of what is in the public interest.
Rather, that decision deals solely with the need for the staff to determine the "need for power" from the Clinch River Breeder Reactor in the environmental impact statement.
United States Energy Re-search and Development Administration Project Management Corporation Tennessee Valley Authority (Clinch River Breeder Reactor Plant),
CLI-76-13, 4 NRC 67, 77 (1976).
4 is based on the Commission (rather than the Staff and a licensing board) making environmental impact and public interest findings.
Thus, regard-less of.which route is followed, every finding required by the AEA and NEPA will be made.
If these findings are affirmative, then the Clinch River Breeder Reactor will be " licensable."
Another issue which dominated the public interest discussion was the question of the impact of grant of the exemption on NRC Staff resources.
Preliminarily, i+ is important to note that when Congress decided that the licensing revi w of the Clinch River Breeder Reactor would be conducted by the NRC, Congress, in effect, allocated staff resources.
The Commission was then under a duty to implement Congress's decision which it did by determining that 15 people would be given the full time responsibility for reviewing DOE's application.
To date, only 12 of these slots have been filled; of these 12, only 8 are from the NRC Staff. This allocation of Staff resources would not appear to affect adversely the NRC's ability to work on safety issues. Many commentors appear to regret Congress's decision that any Staff members be assigned to the Clinch River review.
Be that as it may, Congress acted.
l With regard to the question of whether additional staff reviewers would be required if an exemption were granted, the Staff's best estimate is that no additional people would be needed.
The Staff did acknowledge, however, the possibility of an additional 1-2 man years.
This impact on Staff resources is certainly not sufficient to justify the conclusion that grant of an exemption is not in the public interest.
Additionally, this level of staffing does not support the claim that the Staff's
5 review has been fast-tracked. The present optimistic estimate of when the NRC's licensing process will be complete and a construction permit issued is 1990.
An eight-year licensing review would hardly appear to be fast-tracked.
In any event, the Commission has not directed the Staff to speed up its review process in any way.
A third issue raised in the public interest discussion was the cost of delay.
DOE showed a cost of delay of $28 million.
NRDC admitted that that amount could be $20 million.
In my mind, a uvings to the tax-payers of $20 million is significant and sufficient to justify the conclusion that grant of an exemption is in the public interest.
Moreover, I believe that the cost analyses done by both DOE and NRDC were incomplete. The effect of delay on the liquid metal fast breeder reactor program was not discussed.
There was no discussion of escala-tion cost.
There was no attempt to determine what effect delay would have in terms of increased regulatory requirements and in terms of the cost of compliance with increased requirements.
In other words, I conclude that while DOE made the showing necessary to demonstrate a significant cost of delay, I believe that if the analyses had been more sophisticated, the cost of delay probably would have been larger.
In sum, I conclude that DOE made the showings required by Section 50.12(b) and I would grant the exemption requested.