ML20058E214
| ML20058E214 | |
| Person / Time | |
|---|---|
| Site: | Byron  |
| Issue date: | 07/26/1982 |
| From: | Matt Young NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD) |
| To: | Atomic Safety and Licensing Board Panel |
| Shared Package | |
| ML20058E218 | List: |
| References | |
| NUDOCS 8207280098 | |
| Download: ML20058E214 (13) | |
Text
7/26/82 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of COMMONWEALTH EDISON COMPANY
)
Docket Nos. 50-454
)
50-455 (Byron Station, Units 1 and 2)
)
NRC STAFF RESPONSE TO ROCKFORD LEAGUE OF WOMEN V0TERS PETITION FOR WAIVER OF OR EXCEPTION TO FINANCIAL QUALIFICATIONS REGULATIONS I.
INTRODUCTION On July 6, 1982, the Rockford League of Women Voters filed a petition 1/
pursuant to 10 CFR Section 2.758 for a waiver of, or exception to, the the recently promulgated regulations eliminating financial qualifications considerations for power reactor operating license applications.2/
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Section 2.758 provides that a party can seek to demonstrate by means of a petition, and accompanying affidavit, that special circumstances exist with respect to the subject matter of a particular proceeding such that the application of an individual Commission rule or regulation would not serve the purposes for which it was adopted.
If the Board determines that the petitioner has made such a prima facie showing, it shall certify the matter directly to the Commission for decision.
10 CFR 9 2.758(d).
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10 CFR S 2.104(c)(4); 10 CFR Part 2, Appendix A, Section VIII(b)(4);
10 CFR 66 50.33(f)(1), f(1)(ii), f(2), and f(3), 50.40(b),
50.57(a)(4); and 10 CFR Part 50, Appendix M, paragraph 4(b). The regulations became effective as of their date of publication in the Federal Register. 47 Fed. Reg. 13750 (March 31, 1982).
DESIGUATED ORIGINAL Certified B7
'S D 0
h P
G
. The petition alleges that special circumstances exist because
" substantial new studies and testimony by nationally recognized experts" have become available which demonstrate that the Applicant lacks the financial qualifications necessary to complete, operate and decomission the Byron facility safely. Petition at 1.3/ The League claims the "special circumstances" are generally that:
(a) the Applicant does not possess or have reasonable assurance of obtaining funds necessary to complete, operate and decomission Byron safely; (b) the alleged presumption which underlies the new regulations (i.e., that the state regulatory body, the Illinois Comerce Comission, will set rates high enough to finance Byron) is inaccurate; (c) the costs of construction completion, operation and decomissioning will exceed estimates made at the time the construction permit was issued, and cost overruns will be so great that the Applicant does not possess or have reasonable assurance of obtaining the necessary funds; and (d) the Applicant's lack of financial qualifications to complete and operate Byron would jeopardize public health and safety. Petition at 3-4.
Attached to the petition are 13 so-called exhibits which largely consist of testimony related to the 1982 ongoing state rate proceedings
-3/
The petition cites both the League's revised Contentions 9, 114, 119, 125 and 126 concerning financial qualifications, which were admitted by the Licensing Board's Memorandum and Order of December 19, 1980, and "new evidence" raised in the petition.
Petition at 2.
. involving the Applicant.4/ The League further incorporates its separate July 6,1982 petition for waiver of need for power and alternative energy source rules and attached " exhibits" to attempt to demonstrate a prima facie showing of "special circumstances."El Both petitions make reference to portions of the voluminous attachments to support general arguments in the petition and are accompanied by an affidavit by counsel for the League attesting to the statements in the petitions and attached " exhibits." The Staff opposes the petition for the reasons set forth below and in the attached affidavit if Jim C. Petersen.
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The 13 exhibits are: Testimony of Comonwealth Edison Company (CECO) Vice President Robert J. Sc hltz in Illinois Commerce Commission (ICC) Docket No. 82-00 L, filed January 1982 (Exhibit A);
- Testimony of Mark D. Luftig (CECO) in ICC No. 82-0026, filed January 1982 (Exhibit B); Testimony of Saunders Miller in ICC No. 82-0026, filed March 1982 (Exhibit C); Redirect Testimony of Saunders Miller in ICC No. 82-0026, April, 1982 (Exhibit D); Testimony of Irvin C.
Bupp, Jr. in ICC No. 82-0026, filed June 23, 1982 (Exhibit E); ICC Interim Order of May 6, 1982, in No. 82-0026, (Exhibit F); Public Fixed Income Rating of CECO by Duff and Phelps, Inc., dated June 18, 1982 (Exhibit G); Testimony of Charles Komanoff in ICC No. 82-0026, filed June 23,1982(ExhibitH);
Interim testimony of C. Komanoff (Exhibit I); Testimony of Dale Bridenbaugh in ICC No. 82-0026, filed June D,1982 (Exhibit J); Interim testimony of D. Bridenbaugh (Exhibit K); Testimony of Michael Hurst in ICC No. 82-0026, filed April 1982 (Exhibit L); and Affidavit of Richard B. Hubbard and Gregory C. Minor, dated November 12, 1980, filed in ICC No. 78-0646 (Exhibit M).
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Petition at 8.
The " exhibits" to the need for power petition are: a 1980 independent load forecast (and 12 exhibits) prepared by the Governor's Office of Consumer Services for presentation in Illinois Commerce Commission (ICC) Docket 80-0706 (Exhibit A); undated Testimony of Roy Czabar of the California Public Utility Comission regarding capital expansion programs for Philadelphia Electric Company (Exhibit B); and a November 1981 document by the Environmental Defense Fund, entitled " Annual Alternative to Completing Nine Mile Point 2 Nuclear Station:
Economic and Technical Analysis" (Exhibit C).
m
. II. DISCUSSION A.
Criteria for Waiver of Comission Rule or Regulation under 10 CFR % 2.758 Pursuant to 10 CFR 5 2.758, no Comission rule or regulation may be challenged in an individual licensing proceeding unless there is a prima facie showing of special circumstances. A party may attempt to make this showing by submitting a petition for waiver of, or exception to, a rule or regulation which is accompanied by an affidavit that identifies the specific aspect or aspects of the subject matter of the proceeding as to which application of a rule or regulation would not serve the purposes for which the rule or regulation was adopted and sets forth with particularity the special circumstances alleged to justify the waiver or exception.
10 CFR Q 2.758(b).6_/ If a Licensing Board determines that petitioner has made a prima facie showing of special circumstances, the Board must certify the petition to the Commission for determination.
10CFR%2.758(d).E
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See e.g., Metropolitan Edison Co. (Three Mile Island Nuclear
' Station, Unit 1), LBP-80-1, 11 NRC 37, 38 (1980); Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit 2), LBP-78-37, 8 NRC 575, 584-85 (1978); Duke Power Co. (Catawba Nuclear Station, Units 1 and 2), LBP-75-35, 1 NRC 701 (1975).
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In the present instance, the petition is accompanied by a brief affidavit of counsel for the Leagt.e attesting to the statements contained in the petition cod documentary exhibits. This is not a suitable means of authentication for evidentiary purposes. The affidavit also fails to particularize the special circumstances l
alleged to justify waiver of the rules as required although such circumstances are fairly described in the petition itself.
In the opinion of the Staff, these factors alone should not render the petition deficient.
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. B.
Waiver of the New Financial Qualifications Pegulations in the Byron Operating License Proceeding In promulgating the rule eliminating review of financial qualifications of electric utilities that apply for construction permits and operating licenses for production or utilization facilities, the Comission noted that " existing financial qualifications review had done little to identify substantial health and safety concerns at nuclear power plants." 47 Fed. Reg. 13750. The Comission referred to its decision in Public Service Co. of New Hampshire (Seabrook Station, Units 1and2),CLI-78-1,7NRC1(1978),whichdirectedtheStaffto begin rulemaking, and the notice of proposed rulemaking (46 Fed. Reg. 41786) concerning financial qualificaticns review for nuclear power plants.
Id.
In Seabrook, the Commission viewed the proposition that an applicant's financial qualifications can contribute to its ability to meet safety standards as "less compelling in the case of a regulated public utility engaged in a cnnstruction project which is itself subject to high safety standards and ongoing inspection." 7 NRC at 18.
Finding that there was no evidence that the Seabrook applicant would be likely to engage in substandard construction should they ever run short of funds, the Commission reasoned, "[i]n the absence of any demonstrated direct connection between financial qualifications and safety in the nuclear industry -- either generally or [for Seabrook] in particular --
we are left with the essentially speculative claims of the parties." _Id.
The above-quoted language applies with equal force to the petition submitted by the League. The petition has not shown that a nexus exists between the Applicant's alleged financial difficulties and the
. safety of the Byron facility.
Instead, the League has made general and speculative claims regarding financial qualifications and safety which are not plant-specific to Byron.
The Commission set forth that an exception to, or waiver from, the new rule could be obtained to require submission of financial information for a particular applicant if special circumstances are shown pursuant to 10 CFR 5 2.758. Since the purpose of the rule was to eliminate the financial qualifications review of electric utilities in view of the lack of any demonstrable link between public health and safety concerns and a utility's ability to make the requisite financial showing, the special circumstances needed to justify waiver must establish that such a link exists.
The League's petition fails in all respects to make such a showing. The following section addresses the four categories of "special circumstances" alleged by the League.
C.
The Petition Fails to Identify Special Circumstances Which Justify Waiver 1.
The alleged lack of financial qualifications alone does not raise substantial health and safety matters a.
No reasonable assurance of obtaining necessary funds The League claims that the Applicant does not possess or have reasonable assurance of obtaining the funds needed to complete, operate and decommission Byron.
Petition at 3-6.
To support its claim, the League refers to testimony filed in the 1982 rate proceeding before the Illinois Commerce Commission (ICC). The primary concern evidenced by this testimony, the ability of the Applicant to finance the completion of its construction program including Byron, is outside 1
I
. the scope of an operating license proceeding. The League may not relitigate the construction cost or the construction financing of the Byron facility, which was decided at the construction permit stage, even assuming the League could set forth other special circumstances which warrant waiver of the rule.
10 CFR S 50.33(f); Cleveland Electric Illuminating Co. (Perry Nuclear Power Plant, Units 1 and 2), LBP-81-24, 14 NRC 175, 193-195 (1981).
Whether the statements contained in the League exhibits have merit or not, the Commission has made it clear that only a substantial public health and safety concern would necessitate waiver of the rule.
47 Fed. Reg. 13750-52.
By promulgating the rule, the Commission effectively removed from this Licensing Board's jurisdiction any inquiry into the financial ability of a regulated electric utility. The arguments the League raises regarding the Applicant's financial constraints and its adverse effect upon the safe completion of construction, operation and decommissioning of the Byron facility, were considered in generic terms in the Commission's rulemaking. The Commission has noted that utilities encountering financial difficulties generally respond by postponing or cancelling their plants, actions which clearly do not endanger the public health and safety. 47 Fed. Reg. at 13751; Seabrook, 7 NRC at 18-19.
Financial difficulties have also been overcome by selling part ownership in a facility. 47 Fed. Reg. at 13751. Therefore, the claim that the Applicant lacks the financial ability to complete, operate and decommission l
- Byron, will not suffice as a special circumstance without any demonstrable link between such alleged deficiency and the public health and safety.
b.
No reasonable assurance of ICC rate relief The League claims that there is no reasonable assurance that the ICC will grant the Applicant rate hikes necessary to complete and operate Byron. Petition at 6-8.
In particular, the League argues that the presumption that state utility commissions will grant rates high enough to finance power plants, which underlies the new regulation, in part, is'not applicable to the Applicant.
Id. at 8.
According to the League, there is no need for the power to be generated by Byron, other alternatives are economically more feasible,8_/ two state agencies have filed substantial expert testimony challenging the financial viability of the Applicant, and additional testimony is to be filed within the next two months. Petition at 6-8.9/
The League has misstated the presumption relied upon by the Commission as a basis for the new rule.
In its notice of proposed rulemaking, the Commission noted that regulated utilities generally recover the costs of construction and operation because public utility commissions establish rates that enable the recovery of all reasonable costs of serving the public, assuming 8]
The gravamen of the League's position on need for power and alternative energy sources is addressed in the separate staff response to the League's petition regarding these issues.
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The League requests that the Board defer an unfavorable ruling on its petition until the filing of additional evidence expected within 30 to 60 days of it petition. However, the League does not give a hint as to the substance of the evidence. This attempt to delay a Board ruling on the petition should not succeed. The League may seek to petition the Board for the same relief at a later time if it can produce significant new information plant-specific to Byron which is not presently available.
s s-prudent management. 46 Fed. Reg. 41788 (August 18,1981). The assumption is not that a level of rates will beLset which guarantees the completion and operation of a facility by an applicant. Rather, the presumption is that state and federal regulatory bodies will allow' recovery of reasonable costs for safe construction and operation ih accordance with state and federal regulations. Affidavit of Jim Petersen at 4, 6.
An adverse determination may result in deferral or ca'ncellation of Byron or any other of the Applicant's facilities.
_Id. at 4-5.
Itissolelyw)thina state regulatory body's jurisdiction to determine when commercial operation of the facility is needed.10/ Even assuming ther is no reasonable assurance that the Applicant will receive favorable ra'tes from the ICC, given the
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above considerations, it does not follow that a substantial public health and safety risk related to the Byron facility would result thereby. The League has not demonstrated otherwise.
c.
Cost overruns in the Byron project The petition also claims that the costs of completing construction, operating and decommissioning Byron are likely to exceed the Applicant's estimates. This assertion is closely related to the first two points raised by the League.
If cost escalations proved unduly excessive, the Staff could expect the Applicant to consider actions taken by numerous other nuclear facilities, including possible deferral or suspension of construction. Affidavit of Jim Petersen at 5.
-10/ Sections 271 and 272 of the Atomic Energy Act of 1954, as amended, provide that the jurisdiction of the NRC shall not affect the authority or regulations of any state or federal agency which regulates electric utilities. 42 U.S.C. 65 2018, 2019.
k'
' ' The Commission considered the effects of cost escalations on nuclear licensees in its rulemaking and noted in particular that the Washington Public Power Supply System's (WPPSS) response had been to cancel or defer its plants. 47 Fed. Reg. at 13751. The Commission rulemaking did not conclude that these actions endangered the public health and safety.
_Id. at 13751.
2.
The League has failed to demonstrate a link between the public health and safety and the alleged lack of financial qualfications Finally, the League has failed to demonstrate that the Applicant's alleged lack of financial qualifications will endanger the public health and safety. See Petition at 10-12. The League contends that the Applicant is likely to respond to its alleged financial difficulties by " cutting corners" on safety during construction of Byron and thus attempt to complete such construction "despite its foreseeable inability to meet Byron operating and decommissioning costs." M.at10-11. The League further posits that the Applicant is allegedly predisposed to act against prudence due to " psychological and institutional constraints" and the resulting shoddy construction practices will go undetected by NRC inspectors as was I
the alleged case at the LaSalle plant. M. None of these claims is i
substantiated in the petition and the Staff rejects any inference that the NRC.inspectionprogramisdeficient.E 11/ If the League has knowledge about substantial safety problems that are present at Byron which have not been disclosed by NRC inspection efforts, its proper remedy is to file a 10 CFR 9 2.206 petition, and not a petition for waiver of the financial qualifications rule.
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- The League further argues that the plant should not operate until it possesses the funds to meet operating expenses associated with unresolved safety issues.
Id. at 11. There is no specification as to the amount of those perceived expenses nor a showing that the Applicant could not meet the costs when necessary. Affidavit of Jim Petersen at 6.
The second presumption underlying the new regulation, which the League seeks to challenge by claims of harm to the public health and safety, is that NRC inspection and enforcement efforts are a more direct means of ensuring safety and such efforts are reasonably effective in deterring any " corner-cutting and remedying safety problems." 46 Fed.
Reg. 41788. The Comission specifically found that violations of safety regulations have not been shown to arise from a licensee's lack of financial qualifications. 47 Fed. Reg. at 13751.
Nothing raised in the League's petition rebuts this presumption with regard to the Byron facility.
The League has not demonstrated any link between the construction defi-ciencies at LaSalle and any financial problems of the Applicant respecting Byron.I2/ Nor has the League shown that any such alleged practices are occurring at Byron. Even assuming NRC inspection efforts fail to identify every noncompliance, it remains the most direct means to provide effective protection of public health and safety and, once disclosed, prompt corrective and enforcement actions, including fines, have been taken.
See 47 Fed. Reg. at 13751.
-12/ The Director of Nuclear Reactor Regulation recently issued two 10 CFR % 2.206 decisions denying the petitions of the State of Illinois and the Illinois Friends of the Earth regarding the deficiencies at LaSalle.
. The bare assertion by an economist (Exhibit H) that the Applicant is psychologically constrained to continue its construction projects is unsubstantiated. The League has not shown that the Applicant's " freeze" on overall nuclear division general office and operating station employment will cause safety considerations to be disregarded during the completion of construction at Byron.
The League has also failed to establish that the alleged inability of the Applicant to meet the operating costs associated with generic safety issues will cause substantial health and safety concerns at Byron.
If the Applicant is unable to pay the costs of modifications that may be required at Byron following the resolution of an unresolved generic safety issue or obtain rate relief to meet the cost of compliance with any NRC safety requirement, it may be forced to shut down. The Conrission has found that such action is " clearly not inimical to the public health or safety under the Atomic Energy Act."
47 Fed. R_eg. 13751. The NRC has e
evaluated these issues in the case and determined that a sufficient basis for the licensing of Byron exists pending resolution of any relevant I
unresolved safety issues. See e.g., Appendix C of the Byron Safety Evaluation (NUREG-0876), dated February 1982.13_/ Moreover, the 1
l
-13/ There was no requirement under the fonner financial qualifications regulations that the Applicant show it has the ability to raise i
money for capital expenditures such as a steam generator replacement. Virginia Electric Power Co. (North Anna Nuclear Station, Units 1 and 2), LBP-77-78, 6 NRC 1127, 1163 (1979). Thus, even assuming the League obtains waiver of the new rule based on other grounds alleged inits petition, the Applicant would not have to provide evidence that it could pay for capital expenditures associated with unresolved generic safety issues.
1
. Commission's new requirement that power reactor licensees obtain on-site property damage insurance, or an equivalent amount of protection (e.g.,
letter of credit, bond, or self insurance), from the time the Connission first issues an operating license for the reactor further protects public health and safety should an accident occur at Byron. Therefore, the League has failed to demonstrate a nexus between any alleged financial difficulties of the Applicant and substantial health and safety concerns specific to Byron; and has otherwise failed to demonstrate that special circumstances exist to justify waiver of the new rule.
III. CONCLUSION Based on the foregoing, the Staff opposes the League's petition for waiver of or exception to the new financial qualifications regulations cited in the League petition.
Respectfully submitted, Y Y.
Mitz' A. Young Counsel for NRC Staff Dated at Bethesda, Maryland l
this 26th day of July, 1982