ML20066G913

Forwards NEPA Memorandum Re Transfer of Facility from Lilco to Lipa

ML20066G913
Person / Time
Site:	Shoreham File:Long Island Lighting Company icon.png
Issue date:	05/16/1990
From:	Kessel R LONG ISLAND POWER AUTHORITY
To:	Carr K NRC COMMISSION (OCM)
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ML20066G868	List: ML20066G913
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FOIA-90-340 NUDOCS 9101280282
Download: ML20066G913 (28)

Text

.ong 200 Garcen C.ty Ptata R o ato M Kessei liland Garcen City. NY 11530 Chairman Powef

.516) 742 2200 Authority

,N *t ;

,NC 30 FAY 16 P 3 59 May 16, 1990 5 ".y.,%].,-

Chairman Kenneth M.

Carr Iif U.S.

Nuclear Regulatory Commission

~

Washington, D.C.

20555 Re:

Encicped N EA_E9ERIADdE

Dear Mr. Chairman:

As you are aware, the Long Island Power Authcrity (LIPA) has entered into binding agreements with the Long Island Lighting Company (LILCO) regarding the Shoreham Nuclear Power Station (Shoreham).

Under t::o agreements, LILCO will not operate Shoreham and, after approval from the Nuclear Regulatory Commission (NRC), will transfer the plant to LIPA.

LIPA will decommission Shoreham after receipt of NRC epproval.

LIPA has a substantial inter 1st in decisions by the NRC formulating policy regarding plants such as Shoreham that will be decommissioned prior to the end of their operating license terms.

LIPA is aware that one matter that has been raised in this regard concerns the application of the National Environmental Policy Act (NEPA) to linasing activities related to such plants.

It has been ouggested that NEPA requires the NRC, in licensing activities involving plants which have been shut down, (a) to consider as an alternative operation of the plants as nuclear plants, (b) to assess the environmental impacts of constructing and operating fossil-fuel plants in lieu of the nuclear plants, and (c) to defer all licensing activities related to the plants pending NEPA review of proposed decommissioning plans.

LIPA believes that there is no support in either the Atomic Energy Act or NEPA for any of these positions.

To assist the Commission in its decisionmaking on these matters, attached is a memorandum of law prepared by LIPA, in conjunction with its Washington, D.C.

counsel from O'Melveny &

Myers and Bishop, Cook, Purcell & Reynolds.

9101280282 901010 PDR FOIA WILLIAM 90-340 PDR

Page 2 - Chairman Kenneth M.

Carr - May 16, 1990 By copy of this letter, LIPA is also providing a copy of t'his memorandum to NRC Staff counsel anA the other individuals identified below.

/

o R

• Md M.

K ss 4

Encloeure cet Corcissioner James R.

Curtiss Comissioner Torrest J.

Remick Comtaissioner Thomas M.

Roberts Commissioner Kenneth C.

Rogers Joseph F. Scinto, Esq.

James P. McGranery, J r., Esq.

Donald P.

Irvin, Esq.

Wh9 200 Gorcen City Piera Isleno Garcen City. NY t1530 P0aer t$16 742 2200

, Authofity N

M E M 0 R A ti D U M May'16','1990 litEh._10RVED_ AElhTED_I9_.EMBERNi_s1 Rang _ldip_ DECoMMIgflangq I.

IMRQnnqilgE The Long Island Lighting Company (LILCO) presently holds a racility operating License isnued by the liuclear Regulatory Commission (!!RC) for the shoreham fluclear Pcwer Station (Shoreham).

Iloweve r,

pursuant to agreements de-scribed below, LILCO will not operate the Shoreham plant and, af ter !1RC approval, will transfer the plant to the Long Island Power Authority (LIPA).

Like LILCo, LIPA will not operate Shoreham as a nuclear power plant.8 Rather, af ter receipt of

!iRC approval, LIPA will decommission Shoreham in accordance with an approved decommissioning plan.

In the period prior to the transfer of Shoreham to LIPA, LILCO has defueled the plant and has applied for a Defueled operating License '

In discussing the operation or non-operation of Shoreham, this memorandum rofers solely to operation or non-operation as a nuclear-power ?lsnt.

Consictant with its statutory obligations, LIPA

.s currently m mining the possible conversion of Shoreham to a natural-gas fired power plant or other non-nuclear use.

LILCO also has sought various other license amendments 2

in the wake of its decision and agreement not to operate Shoreham.

Discussion barein regarding the application for a Defueled operating Lictmse would be equally applicable to LILCo's other pending license amendment applications.

- ~. _..... _. _ _ _ _.... _. - _. _ _ _.. _ _. _ _ _ _. _ _ _. _.... _... _

'l NRC actions are subject to the procedural require-i monts of the National Environmental Policy Act (NEPA), 42 U.S.C.

I 4321 31 agg.

It has been suggested that NEPA requires the NRc, in licensing activities involving Shoreham, to consider the alternative of Shoreham operation, to consider the environmental impacts of constructing and operating new power plants to replace Shoreham, and to dofer all licensing activities pending NEPA review of a proposed decommissioning plan.

LIPA submits this memorandum to demonstrate that there is no support in the Atomic Energy Act, 42 U.S.C.

9 2011 gi 110.=,

or NEPA for any of these positions.

II. g_t)}QiARY OF ISSVES AND ANsirERS i.

i A.

Is the decision not to operate Shoreham subject to NEPA review-by the NRC7 7

N6. - NEPA applies only to " federal actions." The 1

decision -not, to operate Shoreham was not a federal action.

Rather, that decision _ vas made by the plant owner (LILCO) and New York State government authorities,-and no federal approval

- was required..

Accordingly, there is no NEPA authority to review the-decision not to operate Shoreham.

Instead, the NRC's'NEPA authority is limited. to reviewing the environmental issues intrinsic. to the specific applications for license -

amendments which follow the non-federal decision not to operate the plant' (" follow-on applications") -- e. cr.., applica-2 u.

...-._..._a__..__~~,__.._.-..__._-_.__..._._._.;..._..

~

tions for a Defueled operating License, for license transf er, or for approval of a decoraissioning plan.

3.

Is operation of shoreham a cognizable "alterna-tive" for purposes of any NEPA review to be conducted in connection with the follow-on applications?

No, for two independent reasons.

Eirsl, NEPA empowers the NRC to consider alternatives only to actions proposed for lig approval.

As discussed above, the decision not to operate Shoreham was made by non-federal decisionmak-ers.

Alternatives to that decision are outside the scope of NEPA review of follow-on applications.

The NRC's NEPA authority to consider alternatives in the context of such applications is confined to rease. Table alternative means to accomplish the objective of the application in question.

Operation of Shoreham is not a reasonable alternative means to achieve the objectives of follow-on applications for a Defueled operating License, for license transfer, or for approval of a decoraissioning plan.

Second, the decision not to operate Shoreham reflects the considered policy of the i

State of New York and is embodied in binding agreements among i

LILCO, the State, and LIPA.

Both the courts and the NRC have i

consistently refused to consider supposed alternatives that could come to f ruition only af ter substantial legislative or 4

administrative changes.

3 l

(

C.

Are the effects of possible replacement generating facilities, built in lieu of shoreham, within the scope of any NEPA review to be conducted in connection with the follow-on applications?

No, for two independent reasons.

First, NEPA empowers the NRC to consider the environmental impacts only of actiona proposed f or its approval.

Here, any need for replacement plants would be caused by the non-federal decision not to operate Shoreham, not by any NRC decision that will be made as to follow-on applications for a Defueled operating License, for license transfer, or f or approval of a decommis-sioning plan.

Second, NEPA does not require assessment of hypothetical or speculative impacts.

The direct and indirect effects of any replacement facilities can only be considered in a meaningful way (and will in fact be considered) in the context of future proposals for projects that would cause those impacts.

D.

Under HEPA precedents regarding " segmentation,"

must all NRC action as to the follow-on applications await NEPA review of a decommissioning plan?

No.

The " rule against segmentat.on" is intended to i

ensure that interrelated " federal actions," the overall ef fect of which.is environmentally significant, not be fractionalized-into less significant actions to avoid NEPA review.

As discussed above.,

environmental alternatives and impacts related to the non-federal decision not to operate Shoreham 4

l l

l

4 are outside the scope of flEPA review of follow-on applica-tions.

Thus, ilEPA review of such applications will not be icproperly segmented if those applications are reviewed separately and sequentially.

Taken in isolation or collec-tively, the rallow-on licensing activities that have been or will be brought to the flRC for approval the " federal action" relevant under 14 EPA are not environmentally significant.

Each of the follow-on applications that will ripen prior to 11 EPA review of decommissioning -- the Dofueled operating License application and a license transfer applica-tien involves segregable issues and has independent utility.

Moreover, any 11RC approvals on such matters will not foreclose in any way the 11RC's later flEPA review of LIPA's decommissioning plan.

It is thus entirely consistent with NEPA precedents for the t1RC to review such matters on an independent basis.

III.

BACKGRo_qEQ A.

The-Decision Not to coerate Shoreham The Shoreham facility was a source of controversy and litigation in liev York State for many years.

Ultimately, the tiew York State Legislature in 1986 enacted the Long Island Power Authority Act.8 The Legislature found that rising 8

tiew York Public Authorities Law

$ 1020 21 1R9' (McKinney Supp. 1990).

5

4 electricity costs-on Lor,g Island and the related controversy over Shoreham were having serious economic impacts on the State, Long Island, and its residents and that an end to the controversh was necessary. The Legislature thus created LIPA, a

corporate municipal instrumentality and political subdivision of the State, and granted it-authority to acquire all or a portion of LILCO's assets or securities.

In the event of a

LIPA acquisition of Shoreham, the LIPA Act prohibits LIPA from operating Shoreham as a nuclear power j

i

' facility and mandates that LIPA close and decommission the

.p ant.

N.Y.

Pub. Auth. Law 5 5 1020-h (9), 1020-t.

l After extensive negotiations in 1988 and 1989, the I

f

controversy over Shoreham was settled by an agreement between-the State and LIlr0 dated February 28, 1989.

The 1989 Settlement Agreement has now become fully effective and legally binding.

It specifically provides that LILCO."will not operate Shoreham pursuant to any authorization to operate Shoreham that may or has been granted by the Nuclear-Regulatory. Commission" and, upon NRC approval, will transfer

- Shorenam to LIPA.' LILCO's obligation not to operate Shoreham'-.

was further confirned in a subsequent Asset Transfer. Agreement between LILCO and LIPA.8 In opinion No. 89-9, issued April.

'. Settlement. Agreement-LILCO Issues, February 28, 1989, at 2.

The Amended and ' Restated Asset Transfer - Agreement dated-April 14, 1989 also commits LILCO to work cooperatively with LIPA in connecticn with the transfer of Shoreham to LIPA (continued...)

6

=.. - - - -

.. = -. -... - -. -

... -. =

13, 1989, the Public Service Commission of New York State approved the 1989 Settlement Agreemant and the Asset Transfer Agreement.

Re Lono - Is1and IJ,ghtino C q,,,, 101 P.U.R.

4th 81 (1989).

B.

Anticipated Licensina Actigjlg LILCO has permanently ceased to operate Shoreham, pursuant to binding agreements entered into with the State and LIPA.

LILCO and LIPA are now obliged to work together on follow-on matters, looking ultimately to radiological decon-tamination and termination of Shoreham's NRC license. Without committing to all specific steps that may be taken, it can be assumed that LILC0 and LIPA will seek several separate NRC approvals subsequent to the decision not to operate the plant, o

LILCO, for example, has already sought amendment of Shoreham's 1-icense to a defueled operating status, such that LILCO is authorized to " possess,

use, but not operate" Shoreham.'

LILCO. and LIPA anticipate submitting an application for authorization to transfer such Defueled operating License, upon.or af ter issuance, to LIPA.

In accordance with the NRC's deconenissionir -

rule (10 C.F.R.

$ 50.82),

LIPA will also 5(... continued) and in connection with the plant's decommissioning.

In.

addition, LILCO is obliged to pay for all Shoreham-related costs. incurred by LIPA in connection with the license trans-fer, maintenance, and decodmissioning of Shoreham.

SNRC-1664, Letter from W.E.

Steiger, Jr.,

LILCO, to NRC (Document Control Desk), dated January 5, 1990.

7

1

(

submit.for NRC' approval a decommissioning plan, along with an application _ to terminate tne Shoreham license.' Part IV below U

- discusses the application of HEPA to these licensing actions.

f

~

IV. DISCUSSION i

Section-102 of:NEPA, 42 U.S.C.

5 4332, establishes.

i 4

the basic requirement that federal-agencies prepare-an environmental impact statement (EIS) for "ma j o r-federal actions," including licensing decisions, that "significantly affect ()'the quality of the human environment."

42 U.S.C.

5 4332(2)(c).

.Several issues have been raised concerning_the application of. NEPA to f ollow-on licensing activity < involving l t

Shoreham: '(1) ~ whether the NRC's. environmental-review may or-must consider the supposed " alternative" of operating Shoreham notwithstanding the 1989 Settlement _ Agreement and the Asset i

Transfer. Agreement! -(2) whether such _ review may - or must evaluate the environmental impacts-of_ alternative generating-facilities that mig'.

oventually be built in lieu of Shoreham; andi (3) whether the NRC may or must withhold 1. any ' f ollow-on 4

licensing ' approvals.until the. agency has completed -environmen-i tal review of a decommissioning-plan..These specific issues

- will ~be addressed-separately in Sections - B, C, and D below.

Before-turning to those : separate questions, however, Section LIPA -already, has prepared and submitted through LILCO a Decommissioning. Report concerning Shoreham.

SAq SNRC-1713,

' Letter f rom W.E.. Steiger, Jr., LILCO to NRC (Document Control

. Desk), dated April 16, 1990.

-8

-?

q

.j A first ' considers certainD fundamental HEPA principles that

'=

y

< bear on.all three of-the above-teferenced issues..

Thu Necision Not to operate _ Shoreham Involved No "rederal A.,

Action"-And Hen.ce-Can Occasion-No NEPA Activity.

i The NEPA authority _ and duties of federal agencies attach only to " federal actions" proposed to or by the agency.

j I

42 U.S.C.

5 4332 (2) (C).

Where " federal action" is lacking, there-is no NEPA authority.

Sag, e.g.,

Edwards v.

First Bank of Dundee, 534 F.2d _1242, 1245-46 (7th _ Cir. -1976).

.This fundamental principle is of great importance here because-there. has_ not been and will not: be any " federal action" l

associated with the. decision not to operate Shoreham.

Hence, the NRC has no"NEPA -authority to study alternatives or impacts l

1 irelated'to.that decision.

Instead,_ the, agency is empowered q

to ' co'nsider -only alternatives to, and-impacts of, specific follow-on applications brought to the NRC for approval.

The ' decision not to operate Shoreham was: ~ not a federal-decision.

It was made;by the plant _ owner and Now York:

State _ government authorities.

Moreover,Ethe parties to that.

non-federal decision were not_ required to obtain federal

. approval of the decision not to operate Shoreham.

In this

_ connection,-f it 'is clear that, under the Atomic Energy Act, the NRC is1without authority to review or reverse a_no-operation decision.

In Pacific Cas & Electric Co.

v.

State Enerav Resources Conse rva1[pn

&' Develooment Comm'n, 461 U.S. -190, g

I

_--------1---_--___---------.--

218-19 (1983),- for example, the Supreme Court stated that the 11RC "does not and could not compel a utility to develop a nuclear plant."

Plainly, if the tGC cannot compel construc-tion, the$ agency likewise cannot compel operation.'

Tne NRC has acknowledged its inability to override a licensee's no-operation decision, stating that "(t]he decision as to whether a (plant will be) shutdown.

is, of course, the licens-ee's."

50 Fed. Reg. 5600, 5605 ( 198 5 ) ; giq jLljLq 4 9 Fed. Reg.

9352, 9356 (1984).

Since the deci ion not to operate Shoreham was not a federal action, that decision triggers no !4 EPA authority or obligations.

Sf_g Winnebacto Tribe of Nebraska v. Ray, 621 F.2d 269, 272-73 (8th Cir. ), cert, denied, 449 U.S.

836 (1980).

tiEPA does not make federal agencies into environmental onbudsmen.

It is a procedural statute that applies if, but only if, a substantive statute defines a -" federal action,"

including licensing activities, having environmental impacts.

See Natural Resources De fensq. Council. Inc. (NRDC) v. EPA, 822 F.2d 104, 129 (D.C. Cir. 1987),

Moreover, NEPA "as a proco-dural device, does not work a broadening of the agency's subst%ntive powers."

1s1 Consistent with these principles, the courts have held that NEPA's applicability to downstream

' The only exception' would arise if Congress had declared-a state of war or national emergency and the NRC found that the common defense and security required issuance of an order requiring _a licensee to operate a nuclear plant.

42 U.S.C.

5 2138; s10 also ist. 55 2236, 2238 (in defined circumstances and upon paying compensation, the NRC itself may operate plant for which the license has been revoked).

10

" federal actions" (here the follow-on licensing activities at Shoraham) does not allow federal agency NEPA review of upstream non-federal decisions (here the decision not to operate Shoreham).

Particularly relevant here are the decisions in NRDC

v. EPA and Liwards v.

First Banx of Dundec, In t!RILC v.

EP2, the EPA, citing its NEPA authority over applications for discharge permito under the Clean Water Act, sought to ban construction of industrial plants needing discharge permits for operation, pending an environmental review of alternatives to, and impacts of, construction of such plants.

In that case, the upstream non-federal activity was g_gpstruction of an industrial plant; the downstream " federal action" was the EPA's jurisdiction over discharge permits needed to operate the plant.

The D.C.

Circuit held squarely that NEPA's application to the downstream " federal action" concerning discharge permits did nga authori:e the EPA to conduct a NEPA review of alternatives to, or impacts of, the upstream non-federal deci<ilons concerning whether and where the plant should be built.

822 F.2d at 129 & n.25, 131 n.27.'

The court emphasized that NEPA review of applications for discharge permits was limited to securing environmental information on alternatives to, and effects of, the specific that a

" proposal" which was subject to " federal action" discharge permit should issue.

822 F.2d at 129 & n.25.

The court specifically held that the environmental ef fects of the non-federal construction decision were aga effects of the discharge-permit application.

I.d. at 131 n.27, 11 4

Similar reasoning was followed in EdE.ardp v.

FirsiAn)L_21. Dundca, where it was claimed that NEPA applied to demolition of a building. There the upstream non-federal decision (nvolved danglition of a building by a bank, and the downstream " federal action" involved statutorily required FDIC approval f or the bank to r3.Lqp.At3 its headquarters in a new building to be constructed on the demolition site. Again, the court ruled that NEPA's application to the downstream " federal action" concerning relocation did not allow NEPA study of the upstream non-federal decision to demolish the existing structure. 534 T.2d at 1245-46. The same princ ple applies here. Under the Atomic Energy Act, the decision not to operate Shoreham is left in non-federal hands. The applicability of NEPA to downstream NRC licensing activities does not allow the NRC to study the alternatives to, er impacts of, the upstream non-federal decision not to operate Shoreham. Rather, the NRC's authority and duties under NEPA are confined to alternatives to, and impacts of, the specific applications brought before the agency. For Shorehan, these include the applications for a Defueled Operating License, for license transfer, and for approval of a decommissioning plan. Theqe matters are considered in further detail in Sections B and C below. 12

I B.- The; Hypothetical Possibility of Operating Shoreham Is Not j g__Q,qqnizable Alternative Under NEPA. i

b

. Urider NEPA, an EIS must include an evaluation;of 4 " alternatives to'the proposed. action." 42 U.S.C. $ 4332(2)- -(C) (iii). : The issue. here is = whether the NRC may or must consider-operation of Shoreham as an " alternative" to issuing-q l a Defueled operating License, granting. license transfer, or approving a' decor.imissioning plan. Under applicable precedent', -j l it is clear that operation of Shoreham is not a_ cognizable-i " alternative" --in' connection with such licensing activities. The first reason for. this conclusion arises directly o from-the non-federal nature of the decision, not to~ operate-s i Shoreham. As-already discussed, the requirements for environ - mental study under= NEPA do not extend to:non-federal deci-sions, much less to:possible alternatives to such decisions.- ERDC-v. EPA, 822 F.2d at :129; Edwards v. First Bank of Dundee, 534 F.2d at:1245-46. -Stated otherwise,' an agency's authority ' securing the.information - 3 under NEPA is " limited to - pertinent"ito? the specific -"p roposa l s over which it has = jurisdiction.. NRDC v. EPA, 822 F.2d.at 129 & n.25~ There will be no 'LILCO :or LIPA " proposal"E to operate Shoreham. To the ' contrary, - LILCO and LIPA are each bound D21 to operate Shoreham. - And operat' ion of - Shoreham is not an alternative. ,means_of' effectuating applications for_a Defueled' operating

License,

for.

license

transfer, o r-for approval of

.a S_e e Process Gas consumers Grouc v. decommissioning plan.- e 13 =- y -- eg ---sw gn-,+- . ~, ,e >w, ag--w-,- w m. , - ~, - -. -. - -.. - - -

ic Dacartrent of Acriculture, 694 F.2d 728, 769-(1981), nodified 4 on rehearino en banc, _ 694 F.2d 778 (D.C. Cir. - 19 8 2 ), g3IL. denied,:461-U.S. 905 (1983) ("The range of alternatives need _ not _ extend beyond th(o)se reasonably related to the purposes _ of.the project").. Accordingly, the hypothetical _ possibility of Shoreham operation-_is not within the scope of the _ NRC's environmental-review of follow-on applications." { At most, in this context, the NRC's environmental review may need to include the alternative of "no action," as opposed to. issuance of requested approvals. $_ca, o.a.., Rankin v. Coleman, 3941F. Supp. - 64 7-, 658-59-(E.D. N.C. 1975). But operation of Shoreham is.not the "no action" alternative - to issuing-a Defueled operating

License, granting license-i

-t rans f e r, or approving a_ decommissioning plan. Instead, the "no action" alternative would be to continue Shoreham indefi-nitely in its present shtitdown condition, under-the present license and under LILtf ownership,_ with no plan for decommis-sioning. The NRC, however,. has already rejected the - notion m This point may be-illustrated with' reference-to the NRC's: review of a Shoreham decommissioning plan. _ Requested approval ' c of a - decommissioning _ plan is -not' _ tantamount to 1 requested approval of non-operation.-. The proposal before the: - NRC will be for' approval of a plan to decontaminate' a nuclear-p l a n t a t -- w h i c h operations - _ have ceased - permanently. The alternatives pertinent to the NRC's NEPA decisions when that -_ proposa l - is made' will include the choice - between: DECON,- ' S AFSTOR, = and - ENTOMB. These are ' the' same alternatives that --must;be considered with respect to the decommissioning of any other nuclear-power _ plant,,regardless-of when in a facility's ~ life.that decommissioning will occur. 14 l

that closed plants should continue without decommissioning, -and no'-responsible party would so propose. SAR 5 2.4.1-of Generic Environmental Impact Statement (GEIS)._" I-A-second line of analysis' leads independently to -the conclusion that the NRC may not' consider Shoreham opera-tion-as an " alternative" to a request for a Defueled operating

License, for liennse

transfer, or for approval of a-

' decommissioning plan. Under NEPA precedent, the ' "alterna-tives":to be considered to proposed federal action are not . unbounded. In evaluating whether alternatives have been considered adequately, the courts are' guided by a " rule of- -i ,g reason" articulated in IMDC v. Morton, 458 F.2d 827, 834, 337-38--(D.C. Cir. 1972): U NEPA was not meant to require detailed-discussion of the environmental ef fects of "alterna-Etives". (that arc) only remote.and speculative _ D possibilities, in view of ' basic changes required in making = statutes and policies of other agencics them available, if at all, only af ter protracted' debate and litigation not meaningfully compatible with the time-frame of the needs to which the underlying proposal is addressed. Sag jlLLas Vermont Yankee Nuclear Power Coro. v. NRDC, '4 3 5 U. S.

519, 551 (1978).

This rule' of resson as applied to consideration of alternatives was - specifically_ _ acknowledged by the NRC;in its issuance of 10 C.F.R.'Part 51 to' implement NEPA. Sag 49 Fed. Reg. 9352, 9355-56 (1984). NUREG-0586, " Final Generic Environ = ental Impact Statement on Decommissioning of Nuclear Facilities" (August 1988). 15 ~. _ _

j-Under this rule of reason, agencies do not consider l "' alternatives which could _only be implemented af ter signifi-cant changes in government policy or legislation. '" City of-New York?v. Deca rtme nt of Transoortation, 715-F. 2d 7 3 2, 7 4 3 ' S_eg (2d Cir. 1983),-appeal disin.iAqsd, 465 U.S. 1055 (1984). g alg,q Publ ic S e rvic e Co. of;New Hamoshire (Seabrook Station, Units 1 and 2), AIAB-4 71, 7 NRC 477, 486 (1978) (rule of reason eliminates consideration of alternative site involving legal obstacles to construction). - By-force of the 1989 i Settlement Agreement and the Asset Transfer Agreement, LILCO is legally bound not to operate Shoreham. Thus, operation of the plant is' not even a " remote and speculative -possibilit(y)." Eorton, 458 F.2d at 838. The clear-policy of New. York State against operating -Shoreham rules out i consideration of that potential alternative. S_qa City o f New York, 715-F.2d at 743. The Supreme Court has stated that "[t)o make an impact statement something more than an exercise in frivolous boilerplate the concept -of alternatives must be -j bounded by some notion of feasibil-ity." Vermont Yankee, 435 U.S. at 551 (emphasis added)." 1" Supporting the conclusion that' the NRC is not entitled-i to consider Shoreham operation as an " alternative" is the NRC Staf f's own prior practice with respect to the Humboldt Bay opted to discontinue facility. The licensee in that case operation.of the plant'and to decommission it prior to the-end of its -.' use f ul life. In the Draft Eavironmental Statement (DES) issued' in April 1986 (note that this-was well before the issuance of the GEIS)., the Staff'gave no attention.to the " alternative" of restarting the plant.- The Staff' accepted that'"(f)acility restart is not a viable alternative because-the licensee has concluded that-the restart of Humboldt Bay. Unit 3 -is economically unattractive. " DES at 4-1. The Staff did not evaluatt the environmental costs and benefits of a (continued...) + 16

L C. The. Environmental Impacts l of' Replacement Generating 'Facili. ties Arg_Not Subj e_c t to NRC NEE M eyiew. , closely related to the question of alternatives is the' queItion whether the NRC's HEPA review of follow-on applications may or must address the environmental linpacts of-new generating facilitics that might be built in lieu of Shoreham. :The answer is clearly "no." -Aga in, - the - f irst reason for this conclusion flows directly from the non-federal nature of the decision not to operate: Shoreham. It is that-fundamental non-federal deci-sion, not any follow-on NRC licensing actions, that would lead . to_ any_. need for replacement power _ sources. Resolution of f 611ow-on applications by the NRC simply will not contribute, one way or -- the other, _ to any greater or lesser impacts.of . hypothetical-replacement power.. In these circumstances,-the NRC's NEPA authority and duties do not extend to the study of possible-impacts of replacement power. NEPA authority is 1imited to addressing questions ~ z concerning the environmental impact of-the specific "propos-l als" brought-before a federal' agency;(here,-for example,:the. -impacts.of various alternatives for decontaminating..the-p: facility). - S,gjt NRDC-v. EPA, 822 F.2d at-'129 & n.25; -State of Alaska v. Andrus, 429 F.-Supp. 95_8 (D. Alaska 1977), aff'd, 12 (... continued) restart alternative.- There is no valid reason to treat the Shoreham case differently. 17

1 591 F.2d.537 (9th Cir. 1979); Save the Bay. Inc. v. Corps. o f Ea91n2 Ara, 610 F.2d 322, 326-27 (5th Cir.), s.grL denied, 449 U.S. 900 (1980). The environmental effects of upstream non-federald$cisionsareneitherdirectnorindirecteffectsto i be considered in a federal NEPA review. Sag ((RDC v. EPA, 8 22 T 2d at 131 n.27 ("the environmental effects of the (non-federal) construction siting decision cannot be deemed to be either direct or indirect effects of EPA's (subsequent) issuance of a discharge permit"). There is a second and independent reason why replacement power impacts are not witnin the scope of any NEPA review to be conducted as to follow-on applications. Undar the regulations promulgated by the Council on Environmental Quality (CEQ) to implement NEPA, indirect effects to be considered in an environmental review incl'ade only those ef fects which are " reasonably foreseeable." 40 C.F.R. 1508.8(b) (1988) (emphasis added) ; gag alp _q State v. Andrus, 4 83 F. Supp. 2 55, 260 (D.N.D.1980) ; Northern States Power Co. 1 (Prairie Island Nuclear Generating Plant, Units 1 and 2), ALAB-455, 7 NRC 41, 48 (1978) (under NEPA, "the environmental assessment of a particular proposed Federal action. . may be confined to that action together with, inter alia, its unavoidable consequences") (emphasis in original). Such cases indicate that environmental impacts that cannot yet be described with any specificity arc outside the scope of NEPA. Sag giorra Club v. Marsh, 769 F.2d 868, 878 (1st Cir. 1985). The rationale for this rule of reason is that an environmental 18

n - \\.' 'd' 7 analysis :is~ not - necessary or meaningful until a project is concretely defined.- j I Apart from the fact that no " federal action" will causel c r.aed for replacement power, the possible need for and F ef fects of replacement power on Long Island are not presently ~ ascertainable. It cannot now be known when and in what quantities such power might be needed. Moreover, the impacts - of replacer.ent f acilities will depend upon the size, type, and-inanner of operation-of any proposed facilities, as well as the-location of those facilities. In the absence of any specific -' proposals for replacement facilities, so many contingencies- - i now exist that any discussion-of those possible impacts would be'more akin to speculation than to analysis. .Moreover, before any alternative energy production i facility is constructed, a detailed environmental review will be prepared under the New York State Environmental _ Quality Review Act" and other applicable laws.- This review will - consider the'need for-the facility, the reasonable alterna-tives, and 'any adverse-environmental impacts. The review will-be circulated. for appropriate State / local review. Therefore, the construction of an alternative energy source 'does not have b -to be analyzed now-to preserve decisionmaker flexibility.. In e sum, the impacts of the - construction of alternative power sources to replace the Shoreham nuclear plant.are outside the l: L N.Y. Enytl. Conserv. 9 8 - 0 1 0 1 a t p.,t q. (McKinney 1984). I L b 19 - ~ ~ _

l scope of NEPA review of *ollow-on matters-brought before the .NRC for. approval. D.:

NEP5 Does - Not ' Require All Licensing _ Actions to _ Await Environmenta)_ Review of a Decommissionina Plan.

The foregoing sections demonstrate that NRC NEPA review of = feollow-on applications -cannot include consideration of alternatives to, or impacts of, the non-federal decision not-to-operate Shoreham. Instead,- the NRC's NEPA review is - to' focus on the environmental information pertinent to __ specific applications before the agency. Assuming that NEPA review will-be 1imited to its proper scope, it remains to be 4 considered whetherL NEPA requires all follow-on licensing activities to;be deferred ponding environmental review of a -proposed decommissioning-plan. If such a-course were followed, there could be considerable delay --_at great cost- -- intacting!upon the Defueled-operating License application, the license-transfer application, or any -other approval sought before - cor71etion of the NEPA review o f -- a decommissioning -plan. However, NEPA precedents and NRC practice make clear 'that;any'such-delays would-be entirely unwarranted. Under.NEPA, an agency ' may not divide - up a large " federal action".into smaller parts, each individually with minimal environmental impacts, to avoid the need for environ- -mental review of'the entire federal action. This -is called the " rule against segmentation." Impermissible segmentation 20 l

occurs when the agency defines a project too narrowly for purposeo of appropriate environmental analyses. Eqa City of ' dest Chicaao. Ill

v. NRC, 701 F.2d 632, 650 (7th Cir. 1983);

see also $cientists' Institute fqr Public Infor ation. Inc. v. AEC, 481 F.2d 1079 (D.C. Cir. 1973). But the " rule against segnantation for EIS purposes is not an imperative to be applied in every case. " Sierra Club v. Ca_llaway, 499 F.2d 982, 987 (5th Cir. 1974). To the

contrary, the courts have recognized that it is entirely proper for an agency.to proceed with one step in a series of related steps if the first step is segregable, has independent utility, and does not foreclose the opportunity to consider alternatives relevant to the steps to follow.

Egg Piedmont Heichts Civic-Club. Inc. v. Moreland, 637 F.2d 430, 439 (5th Cir. 1981). Consistent with these principles, the NRC and other federal agencies regularly consider the environmental impacts of related agency actions separately and sequentially. Specifically, where each independent approval will not result in "any irreversible or irretrievable commitments to the remaining segments," agencies do not prepare a complete EIS -- or a more abbreviated environmental assessment (EA) -- for all seguents as a prerequisite to the first. U.S. Denartment of Enerov (Clinch River Breeder Reactor Plant), CLI-82-23, 16 NRC 412, 424 (1982)." In the ca'so of Shoreham, appropriate Accord QMke Power Co t (Amendment to SNM-1773 Transportation of Spent Fuel from oconee Nuclear Station for Storage at McGuire Nuclear Station), ALAB-651, 14 NRC 307, (continued...) 21

environmental review of the decommissioning plan would nct be prejudiced by earlier issuance of a Defueled operating License or approval of license transfer. 5 The pending application for a Defueled operating License and the anticipated license transfer application are segregable from an eventual application for approval of a decommissioning plan to decontaminate the plant. There also is indisputable independent utility to such applications ( hL., to reduce requirements to save money, to effect a transfer of control), apart f rom authorization to decommission pursuant to an approved plan.

Moreover, issuance of a Defueled operating License or grant of a license transfer application will leave the NRC unfettered in later evaluating the technical merits of a coccu.iusioning plan."

It also bears noting that the NRC has already expressed the view that action on a possession-only license should not be delayed "(... continued) 313 (1981) (NRC Staff correctly confined its environmental review to spent fuel shipments presently before the agency for approval; the Staf f did not -need to address immediately the environmental consequences of a broader " Cascade Plan" for shipments). The alternatives and consequences related to physi-cal decontamination of Shoreham are not in danger of escap-ing review or becoming foreclosed by earlier action on a Defueled operating License or a license transfer. The decommissioning. plan will identify LIPA's choice from among the NRC-approved decommissioning alternatives and will provide LIPA's plans and procedures for carrying out the selected alternative. In addition, supplemental environmental data related to decommincioning will be filed at the time the decommissioning plan is filed. This is clearly contemplated by HRC regulations. hq 10 C.F.R. $ 51.$3(b). S_Q_q fLblQ p. 14 n.10 p m,n. 22

l q

pending. review ~of.a-decommissioning plan. The. agency stated that ancoperating'11 cense will "(njornally" be amended to a _ possession-only status prior to finalization-of the decommis-sioning pian, so as "to confirm the nonoperating status of the: plant = and to reduce some requirements which are important only -i for operation." 53 Fed. Reg. 24018, 24024 (1988). Therefore, under the'_ Atomic Energy Act and NEPA, the NRC should consider the environmental effects of each follow-on application separately, limiting its review-to the impacts caused.by that action.- It. remains only-to discuss- 'briefly whether an EIS or an EA will be required for follow-1 on applications that-have been or willibe brought to the :NRC. = For. the - reasons, shown below, the pending and anticipated follow-on-applications-require no more than an EA to comply. with NEPA'.

LILCO's application for a Defueled Operating License

-involves no consequences not previously considered in the full l DIS. forJthe S.;.reham operating : license 1. - Moreover, as already noted,- the NRC _ has ' stated that? a possession-only license merely " confirm (s)- thec.nonoperating status _ of the plant and ... reduce (s) some' requirements which.are important only for - y operation." '53 Fod. Reg. 24018, 24024 (1988). Applying;the NRC's own regulations to the Defueled Operating License' application, an 'EA would be prepared in-accordance-with 10 23 l

r 3 C.F.R. 55 51.30-51.35, leading to a finding of no significant impact." It is also clear that an amendment authorizing transfer of Shoreham to LIPA, especially in a non-operating status and in view of LIPA's statutory duty not to operate Shoreham, does not involve environmental consequences. An ownership change is strictly an administrative change with no physical impacts at the Shoreham site. The NRC has typically issued amendments of this variety based upon an EA and a finding of no significant environmental impact.

Ssa, e.g.,

54 Fed. Reg. 49368 (1989) (finding no impact from an amendment changing the licensed operator for Arkansas Nuclear one); 54 Fed. Reg. 35737 (1989) (finding no impact from a transfer of an ownership share of Comanche Peak), With respect to the NRC's review of a decommission-ing plan, the NRC has previously announced that NEPA require-ments have been largely fulfilled by the GEIS already prepared Indeed, the application may qualify for a categorical -exclusion from NRC's NEPA review. Sag 10 C. F. R. $ 51.22. For

instance, in connection with the decommissioning of the Humboldt Bay facility, the licensee applied in 1984 to amend its operating license to possession-only status and to decommission the plant in accordance with a plan submitted with the application.

The NRC issued the possession-only portion of the requested amendment in 1985. In its safety evaluation report on that amendment, the NRC Staff concluded that the amendment - involved no significant increases or changes in the amounts or type of effluents, and no signifi-cant increase in occupational radiation exposures. The Staff then concluded that the possession-only amendment met the criteria of 5 51.22 (b) and (c) (9) for a categorical exclusion. Sag Safety Evaluation Supporting Amendment No. 19 to Facility operating License No. DPR-7 (July 16, 1985). 24

i by the NRC for decommissioning. SAR 53 Fed. Reg. 24018, 24039 j (1988). In accordance with the procedure nov outlined by the NRC for decommissioning approvals, an EA would be prepared for shoreham ihat would ' supplement' the GEIS to address site-specific circumstances. sag id. at 24039. A full site-specific Shoreham'EIS supplement would only be necessary if the-NRC Vere to determine that the Shoreham case involves i significant impacts not adequately addressed by the GEIS. t This is' inherently implausible because the GEIS considered the environmental consequences of decommissioning plants after - prolonged operation at full power. Shoreham decommissioning, by contrast, comes af ter very limited operation of -the - plant - and thus will : involve very _ reduced radiological risk." i i In this > regard, Shoreham is 'a unique case, distin-

guishable'even from the currently pending decommissioning case-involving the Rancho Seco Nuclear - Plant. _

Like Shoreham, RanchoiSeco_.~is-being decommissioned-prior to_the end of its- --license term, but RanchofSeco has operated at full power for a significant period-of time, thereby-. building up.aLcorre-sponding inventory of ' radiological materials. In contrast, Shoreham never operated above 5% of its rated power capabili-ty, and the burnup of fuel equalled the equivalent of only two full-power _ days. -Accordingly, there is only-a small amount-_ of radiological contamination at Shoreham. 25 i l 1 1

V. qQ.1LqhqslpE The Atomic Energy Act leaves to non-federal de-cisionmak6rs the question whether to cease operation of Shoreham. In connection with follow-on applications, NEPA does not

permit, much less

compel, consideration of alternatives to, or impacts of, the non-federal decision. The conclusions of this memorandum are more fully summarized in Part II above.

Stanley B. Klimberg Executive Director and General Counsel Long Island Power Authority William T. Coleman, Jr. Carl R. Schenker, Jr. O'Melveny & Myers Nicholas S. Reynolds David A. Repka Bishop, Cook, Purcell & Reynolds 26 . - _ _ - - - ~ - - _ - _ _ - _ -. _. - _ _ _

/q..s eg%, UNiit 0 S T AT E S Action: Murley, fiRR 4 NUCLEAR REGULATORY COMMISSION Cys: Taylor w At>mctoN. o c 2os55 Thompson l Blaha / .e August 2$, 1989 Russell, R1 or t:c t or 1"E LIMITED DISTRIBUTION -- NOT FOR PUBLIC RE1. EASE SEC RE T A R Y MEMORANDUM FOR: James M. Taylor Acting Executive Director kr Operations ,+ b FROM: Samuel J. Chilk, Secret r f

SUBJECT:

STAFF REQUIREMENTS - SECY-U -247 - SHOREHAM STATUS AND DEVELOPMENTS ( This is to advise you that the Commission, with Chairman carr and Commissioners Roberts and Rogers agreeing, has approved, subject to the following guidance and modifications, your proposed actions in regard to the Shoreham Nuclear Power Station. ~ W l 1 ToIn'mIssioner Curtiss approved in part and disapproved in part the staff's proposed actions. He noted that: "Under the terms of the Shoreham operating license, LILCO is legally entitled to engage in those activities LIMITED DISTRIBUTION -- NOT FOR PUBLIC RELEASE I k'h & Y 0 Ii

LIMITED DISTRIbOTION ~~ NOT FOR PUBLIC RELEASE, permitted by the license, so long as those activities conform,.to the conmission's regulations and ensure adequate protection of the public health and safety when considering the particular mode or condition that the plant might be in at a given time. For this reason, and in view of the assurances that we have received from the licensee that it does not intend to operate this plant, it is not clear to me that we have a legal basis under the existing license to require LILCO to preserve "all systems required for full power operation" from degradation, so as to ensure that "the plant is preserved as a physical entity capable of being returned to service without untoward resource expenditure" -- the second condition proposed by the staff in SECY-89-247. At the same time, in view of the requirements in the commission's decommissioning rule, the licensee should not be permitted to take any steps that would have a material and demonstrable impact on any aspect of the decommissioning of this plant, prior to the submittal and approval of a decommissioning plan in accordance with the requirements of this rule. " l f j LIMITED DISTRIBUTION -- NOT FOR PUBLIC RELEASE

LIMITED DISTRIBUTION -- NOT fic : PUBLIC RELEASE r ~3-Additional comments are attached to the Commissioners' vote sheets,-as previously provided to you. g cc: Chairman Carr Commissioner Roberts Commissioner Rogers Commissioner Curtiss OGC LIMITED DISTRIBUTION -- NOT FOR PUBLIC RELEASE}}