ML20080L040

Motion to Reconsider & Admit Contention 58 Re Financial Qualifications of co-applicants.Certificate of Svc Encl

ML20080L040
Person / Time
Site:	Harris
Issue date:	02/13/1984
From:	Eddleman W EDDLEMAN, W.
To:	Atomic Safety and Licensing Board Panel
References
82-468-01-OL, 82-468-1-OL, ISSUANCES-OL, NUDOCS 8402160226
Download: ML20080L040 (7)

Text

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1.E Du yETED U '. M C UNITED STATES OF AMERICA NUCLEAR BEGULATORY COMNISSION 84 ' F"" 15 N0:02 cm ~ ;;; Mfy '

BEFORE THE ATOMIC SAFETY AND LICENSING BOARDECCAE. Igg",[W' '

Glenn Dr. James O. Bri H.ght Carpenter James L. Kelley, Chairman In the Matter of i CAROLINA POWER AND LIGHT CO. et al. )

.(Shearon Harris Nuclear Power Plant, )

Units 1 ani 2)

) ASLBP No. 82-h68-01

) ot Nells Eddleman's Motion to Admit Contention $8 (2d) on Financial Qualifications of Co-Applicants 1

On 7 February 1984 the DC Circuit Court of Apteals granted the petition of New England Coalition on Nuclear Pollution et al o

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(I am.one of the petition.ers) for review of the rule (h7 PR 13,750 (1982))

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barring -consideration of f inancial qualifications in NRC licencing proceedings.

The Court found that the rule.is not suported by its accompanying statenant of \ basis and nurpoce as reauired by 5 USC 553(c)

(1982). A copy of the opinion is enclosed for the Board, Staff 0FL")

and Applicant's. If any other party wants one, ask & I'll send it.

My counsel in thistpetition advises no that'this Court ruli.ng

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puts the pre-1982 financial qualifications rule back into effect.

(1982) 1 01The new 3 rule certainly is not in effect. Therefore I vesnectfully g request a.

the Board to reconsider its 9/22/82 ruling on Eddleman contention j 58 '(2d) (Order of 9/92/8? 'at 5h) which said that 58 (?d) "concerr.:

1e o financial cualifications of small owners. It is barred by 10 CP9 2.1014

.( as amended, 47 Fed. Reg.-13750 (1982) and is therefore rejected."

i,4 I believe at 157) review of the contention as filed ( 5- 111- 8 2 Eddlenan contentions will reveal adeqaute' basis and specificity. I have no objection

- to timely staff & Applicants resnonses to this notion & the contention, l ,& have so advised them 2-13-Slt by thone. g (Yh hp

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UNITED STATES OF AMERICA NUCLEAR REGULATORY C010{ISSION In the matter of CAROLINA POWER k LIGHT CO . Et al. )) Decket 50-h00 Shearon Harris Nuclear Power Plant, Units 1 and 2 0.L.

CERTIFICATE 0F SERVICE I hereby certify that copies of Wells Eddleman's Motion to Admit Content'on $8( 2d ) on Financial Qualifications of Co- Annli cant s beer ser eh . sb 1b" 8ay lt

( arp,ggn gg,& by posN D.

the US Mail, first-class postage prepaid, upon all parties whose names are listed below, except tho se whose name s are nrked with an asterisk, f or whom service was acconplished by Inclusion in next re jor nailing , for nartiec unaffected hv thin Conies of DC Circuit Court Decision on Financial Qualifs Rule J es a Ke 1 , n r h ane ".ha4Ns *CN=pfMN PFhf each)

Atomic Safety and Licensing Board

US Nuclear 9egulatory Commission a Washington DC 20555 5 GeorEe F. Trowbridge (attorney for Applicants)

Shaw, Pittman, Potts & Trowbridge

• R uthanne G. Miller

• 1600 M St. NW ASLB Pe.nel WashinEton, DC 20036 Washington DC 2055 5 USNRC Office of the Executive Legal Director o Phyllis Lotchin, Ph.D.

A t tn Da cke t s 50-400/401 0.L. 108 Bridle Run

USNRC Chanel Hill NC 2751h Washington DC 20555

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• D*" d Docketing and Service Section (3x) CEA??GE 8'"/FLP Attn Docke ts 50-h00/hc1 0.L. Raleigh,y707 NC waveross

; Office of the Secretary 27606

USNRC o Dr. Linda W. Little Washington DC 20555 Governor's Waste Mgt. Bd.

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• John Runkle E"

• 8 0 Granville Rd i Chapel Hill Ne 2751h

• Bradley W. Jones (copy or e

• Robert Gruber USNRC Hegion II m tior

• Travi s Payne Exec. Director 101 Marietta St. "17)

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i Edelstein & Payne Public Staff Atlanta GA 30303 4 Lwx 12e07 Box 991 E Rale 15 h NC 27805 2 Raleigh NC 27602 Richard Wilson, M.D. Certified by h 729 hunter St.

Apex NC 27502 n -- .

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Notfee: This opinion is subject to formal revision before publication F

' in the Federal Reporter or U.S. App.D.C. Reports. Users are requested to notify the Clerk of any formal errors in order that corrections may be made before the bound volumes go to press, f lhtitchBiatra(Emtriaf Appeals [

r H)R THE DISTRICT oF COLUMBIA CIRCUIT h

h No. 82-1581 g.

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NEW ENGLAND COALITION ON NUCLEAR POLLUTION, i

. ET AL., PETITIONUS i!

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' NUCLEAR REGULATORY COM1ISSION AND THE UNITED STATES OF AMERICA, RESPONDENTS [

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b CAROLINA POWER & LIGHT CO., ET AL., INTERVENORS k

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Petition for Review of Order of the Nuclear Regulatory Commission 7 g '

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Argued February 23,1983 Decided February 7,1984 g

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William S. Jordan, III, with whom Diane Curran was g ,;'

' on the brief, for petitioners.

p 3farforie S. Nordlinger, Attorney, Nuclear Regulatory l R

Commission, with whom B. Leo Slaggie, and Katj L. Rich-

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E Bills of costs must be filed within 14 days after entry of judgment. The i F court looks with disfavor upon motions to file bills of costs out of time.

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cial qualification would produce an unconstitutional dele-  ;

man, Attorneys, Department of Justice, were on the gation of kgislative power; (3) that the Commission's ,

brief, for respondents. conclusions that no link exists between financial qualifi-James B. Hamlin, with whom Jay E. Silberg was on cations and safety, that current inspection erTorts can assure safety, and that utilities can meet the costs of the brief, for intervenor. construction lack substantial evidence in the record; (4)

Before .TIIKvA, EowAnos, and ScAua, Circuit Judges. that the Commission's failure to disclose the factual Opinion for the Court filed by Circuit Judge ScAua. basis underlying its decision precluded etTective comment; and finally (5) (implicit in petitioners' discussion of the i

1 ScwA, Circun Ju 4 e: The h.ew E,ng!and Coalition last two points combm.ed with their chah,enge to the tme on Nuclear Pollutw.n (NECNP) and others .meludm.g as be.mg arbitrary and capriciousi that the rule .is w

. Kansans for Sensible Energy iI.ansas bem.g a state where supported bv its acecmpanvine statement of basis and an appheation for a license to operate a nuclear generat- purposo, as required b'y 5 U.S.C. s 553(c) (19S21 We i l mg statmn is currently pendingl-petition under 28 agree vcith the last, and accordingly remand the ruk to U.S.C. s 2342 I4 <1976 for review of a rule. of the the agene""

Nue! ear Regulatory Commission. Elimination of Recicte y of Financiai Qualitications of Elcctric Utilitics in Li- .

Since 196S, the Commission's rules have required thr-cer<. sing Hcarings for Nuclcar Forcer Plants,47 Fed. Reg.

13,750 (1952 > ,10 C.F.R pts 2 and 50 t 19S3i. In the applict.nts for licenses to construct or operate nu:b r aspect here under challenge, the ru!e amends the Com- ,

power p! ants provide the following financial informatis.

mission's Rules of Practice for Domestic Licensing Pro- Information sufficient to demonstrate to the Gm.

ceedings,10 C.F.R. Part 2 (19S2), and its substantive mission the financial qualifications of the applicait to requirements governing Domestic Licensing of Production carry out, in accordance veith the regulations in 6 and Utilization Faci!ities 10 C.F.R. Part 50 (1982 i, to chapter the activities for which the permit or liew eliminate the need for applicants who are electric utilities is sought. If the application is for a construeF mn to establish their financial qualifications." Petitioners mit, such information shall show that the ap,.aev.

contend (1i that the rule contravenes a requirement of possesses the funds necessary to cover estimated esn-struction costs and related fuel cycle costs or thatt .

tinancial qualifications review contained in the Atomic applicant has reasonab!c assurance of obtaining tim Energ Act, in particular f s 100tb) and IS2(a), 42 U.S.C.'y!!2133(bi and 2232(al (1976., (2) that an l

• "?"7 un<ls,f or a combination of the two. If the

".pp!ic un is f r an peratmg license, such inknna.

interpretation of the Act which would grant the Com- tion shall show that the app.icant posserses the ftMs mission authority to eUminate the requirement of fman- necessary to cover estimated opeiating costs or dat 1 the applicant has reasonable assurance of obta!nirg 2 The rule also requires power reactor licensees to obtain the necessary funds, or a combmatmn of the tw on-site property damage insurance, or to provide an equiva- With respect to any production e" utilb;ation facility lent form of protection (e.g., letter of credit, bond, or self_ of a type described in ! 50.21thf or s '50.22 {facili-insurance), from the time that the Commission first issues an ties for industrial or commercial purposes], or a test.

operating license for the reactor. This portion of the rule is not challenged, is severable, and is therefore not af ected by ing facility, the following specific requirements thall the present opinion. In our subsequent discussion, references apply; to the rule pertain only to the challenged portion.

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. establish a utility's rates such that all reasonable If the application is for an operating license, such costs of serving the public may be recovered assum-information sha!! show that the applicant possesses ing prudent mr.nagement of the utility.

or has reasonable assurance of obtaining the funds . .

necessarv to cover the estimated costs of operation Id. The second premise assertedly 3ustifying the proposeo.

for the period of the license or for 5 years, whichever ( rule was that there was no demonstrated relationchip be-is greater, plus the estimated costs of permanently tween finarcial qualifications and safety, direct inspettion shutting the facility down and maintaining it in a and enforcement being a more effective means of chiev-safe condition. ing the latter goal. In the Commission's words:

10 C.F.R. ! 50.03 if1 t 1982). IT]echnical reviews and inspection efforts are effee-On August 18,1981, the Commision published a nc tice t.ive, direct methods or hscovenng deficiencies tha' of proposed rulemaking, announcing that .it w ts con- could atTect the pubh. c health and safety. %,hile anal.

( templat.ing amendment of the foregeing requirements and vsi3 of financial cualifications has been viewed in the past as possibly an additional method of determinim f alhed provisions, to eh,m, m ate them entirely with regard to e!ectne utihty app:icants ior construction permits; an applicant's ability to satisfv safety requirements and either to eliminate them entirely or to limit their experience has faile/l to show a clear relationship b<

tween the NRC's review of an applicant's finan h i

app;ication to demonstration of financial ability to cover qualifications and the applicant's ability to sa: .

[ decommissioning costs, with regard to electric utility ap- construct and operate a nuclear power plant.

dicants for operating licenses. Financial Qualidcations;

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! Domestic Li:ensing of Production and Utili:ation Facili- . .

14. t h.is ,tutter poi nt by itself, of course, could not ex l

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t:.cs. 46 Fed. Reg. 41,4 oG ( 1981 '. The proposal was said pla.in the rule wh. h the Comnu.ssion was proposmg ic  !

. . c to be based upon two premises. First, that " regulated a rule + hat .' retain {s] . . . current review under > 50.3. . .

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of applicants for any production or utih.zation facd. ity , , - ,:

electric utd. ities (or those able to set their own ratesi . .

.b will be able to meet the costs for safe constructien end cense. If such applicants are not electric utilities.

- . t v... The Commission was not. evidenti; operation of a nuci3 tr production or uttuzatmn tacm.. . . .

Id. at 41,78a. The Lommission explamed:  ;

asserting that m its view financial quah...ucation re< par.

ments were utterly useless, but only that their questh,u IS]uch utilities are usually regulated by st.ue and ' able etTectiveness, combined with the pccellar el,aractm or federal economic regulatory agencies, and gen-crally recover the costs of construct;ng generating istics of public utilitics that acure rulvency, aryunh}

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facilities through the ratemahing process, subject t justify elimination of the requirements for that parn the oversight of suen, state and, or teneral agencies. A- m.corv of applicant. If sustained by the facts, thu As a result, reasonable costs necessary to meet a  ; was a rehso'nable enough approach; even if a ttatutor; .

utility,s obhgatmns i meludmg NIK -imposed safetv mandate for review of f.mancial quanh. eat.mns c.ustx 6 requirements , are normally recovered through th is issue v.e need not dec.da. i .ti does not preclude the adep ratemaking process. Sec, c.q., FPC r. Itope Nataraf tion of ap;mopriate generah, zed erneria that would rer>!ct

< Gas Co., 320 U.S. 391 O941 ; Bluctictd Water some case-by-case evaluations unnece :ary. Snc livrW IVorks and improrement Co. c. Public dcrcice Com- ' r. Camphril, lo:t S. Ct. lW,2.10.i1 t 1um . Cf. Vermw mission of the State of West Virginia, 2G9 U.S. Gio Yunkce Nrr'rar l'umer Corp. v. N/lDC, 435 U.S. 519, f3 (1923). These landmark court decisions es+rblished

. the principle that public utility conunissions are to s

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[fn.13 (1978); Permian Basin Arca Rate Caseg, 390 U.S. elimination of the financial qualifications review be-T 747 (196S). cause of the lack of any demonstrable link between t

' l public health and safety concerns and a utility's abil-Opponents of the proposed rule attacked it on various ity to make the requisite financial showing.

grounds, but the most concerted attack was upon the k . .

The actual financial situation analyzed in that case premise that a public utility's regulated status assures

. . has not chanced. There is no evidence that the safety

. , adequate fundm.g. That was controverted both in prm- of the public has been adversely alTected by Public ciple (for example, through reference to the refusal of Service Coinpany of New Hampshire's (PSCNH) some regulatcr3 commissions to permit rate charges for difliculties in obtainin construction work in progress ("CWIP"), J.A. at 150, ' raise capital, PSCNH'g financing.

has sold part of itsItownership is true that to and to the political pressures a:Tecting rate-setting, J.A. in the Seabrook p! ant, but such action does not have at 137-39) and thro 0gh the citstion of specific instances any demonstrable link to any safety problems. Simi-(in which needed funding was not forthcoming and finan- larly, citing WPPSS' experience is not convincing, cial difliculties were experienced (e.g., J. A. at 143-45, because WPPSS' response t and that of most other 149, 150-51). utilities encoantering financial difliculties) has been to postpone or cance: their plants, actions cIcarly not r.

After receiving and considering comments, the Commi3- inimical to public health and safety under the Atomic i sion issued its final rule on March 31, 1952, adopting Energy Act.

, precisely the course it had proposed d without the alterna-47 Fed. Reg. at 13,,w.1.

tw.e provision Ior retalmng financial,qua .,nucation require-ments with regard to decommissioning costs 9. In its II statement of basis and purpose accompanying the rule,

, , , In saying that it found it unnecessary "to consider, in the Commission resrmded to the attacas upon its major a vacuum, the general ability of utilities to finance the premise of pubh,c uuhty solvency as follows:

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construction of new generation facilities," the Commi:

As to the first point raised by commenters opposing sion chose to abandon, rather than defend, the first prem-elimination of the financial qualifications review, t.he ise of its proposed rule. As we have noted, that premise 1 Commission dees not find any reason to consider, in was essential because it exp ained wh, public utilities l

l a vacuum, the general abi!ity of utilities to finance could reasonably be treated ditTerently which was the l the construction of new generation facilities. , Only whole object of the rule. In its place, the Commission h.u l when jomed with the issue of adequate protection of inserted the factual observation that rehen certain public the pubhc health and safety does this issue bwome utility licensees have encountered financial difIlculties I

pertinent. , As to this, the commenteis second point, ~

they have deferred or cancelled their construction plans the Commission in its Scabrook decision mdicated its l -

support for the substance of the propv. ed rule- rather than skimp on safety-related features. yt is not an adequate substitution, because we fail to see any ra-h : This option remains under consideration "in the context tional ecmnection between that obwrvation ml the U-( of [a] generic rulemaking [on decommissioning] now being ccnsces' character us public utilities. It may be possible

. cond ucted. Until that [is completed], the Commission has to believe (though we do not pass upon the point), as the concluded that it is premature to include any final decision

, Commission evidently lelieved when it issued its pro.

ion 17 d eg 1, 51 (1 )

posed rule, that the very nature of government. rate p ,.

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regulation--a~ compact whereby the utility surrenders its bined seith the observation (substituted for its original b freedom to charge what the market will t$ ear' in exchange first premise of utility solvency) that financially dis-i for the state's assurance of adequate profits-assures fi_ tressed public utilities have cancelled or deferred their

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nancial stability for public utilities. But the mere fact Projects---makes no sense. For all we know, had the A that some public utilities, when financia!!y unstab'e. chose Commission been forced to rely upon the second premise i to abandon or defer proposed nuclear faci!ities instead a'one it ml;ht have found that insuflicient. We must af-11 of completing them inadequately, does not lead to the con. firm its action on the basis of the reasons assigned or not i b clusion that all financially unstable public utilities, as op, at all. See SEC r. Chencry Corp., 318 U.S. S0, 87-88 g posed to other firms in that. situation, will generally do (1913).

/- so; nor do we see any a priori reason to believe that would be the case In short. in refusing to consider "in In order to comply with the " procedure required by b law," 5 U.S.C. s 70Gi2) (D), an agency rule must be ae.

";i~ a vacaum, the general ability of utilities to finance the anpanied by a statement of basis and purpose, 5 U.S.C.

construction of new generation facilities," the Commis- g 553(c), which demonstrates a " rational connection be-sion has abandoned what reems to us the only ratienal tween the facts found and the choice made." Burlinytm basis enunciated for generally treating public utilities Truck Lines. Inc. r. United States. 371 U.S.156, IG differently for the purpose at hand.

(1962) (princip!e applied under corresponding APA pr.#-

The final rule continues to relv upon the second prem- vision governing adjudicationi: Warcsdiewicz r. Depart.

f. isc set forth in the proposal, i.e.$ that financial qualifica - . >nent f Treascrif, 670 F.2d 296, 301 (D.C. Cir.1981) l tions review has not been demonstrably successful in (Per curiam). That fundamental requirement has nv.

}[ meetirg safety concerns, and that direct inspection and been met here. Since the other challenges raised by pe6 enforcement aire more effective. But it does not rely upon tiener do not, even if valid, preclude all action that ,e l that premise alone-and indeed, such exclusive reliance Commission may take in connection with this rulemak .;.

would be irrational, since it would only support a rule we need not considei them here. "[W]here agency w-l eliminating financial qualifications review entirely, and tion must be set aside as invalid, but the agency is sfll not a rule exempting public utilities. Assuming that the legally free to pursue a valid course of action, a review-Commission had the choice between finding financial ing e urt will ordinarily remand to enable the agency to qualifications review univers:dIt worthless and finding enter new order after remedying the defects that that electric utilities are generally so financially compe- vitiated the original action." Williams v. Washinytn tent as to render financial qualificati<ms review for them , Metmpoman elrea Transit Commission, 415 F ?d 522, 2

superfluous, "it cannot adopt one and apply the other. 939-40 (D.C. Cir.1968) (en banci (footnote omittd),

To do so is the essence of arbitrary and capricious ae- 3 cert. denred, 393 U.S.1081 (1969): City of Clercland 4 tion." Squaw Transit Co. v. United States, 574 F.2d FPC, :i25 F.2d 845, S5G n.89 (D.C. Cir.1976). Accord-492, 496 (10th Cir.1978 6 While the petitioners mav ingly, we remand the rule to the Commission for further L not have standing to comp!ain of this rul#3 underinclu-pr cocdings e a stenc with this opinion.

siveness, they assuredly do have standing to complain Petition granted.

that the reason which the Commission gave %r its acticn

-the !ack of demonstrated effectiveness of financial i qualifications review (its original second premise) com-  !

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