ML20091R931
| ML20091R931 | |
| Person / Time | |
|---|---|
| Site: | Shoreham File:Long Island Lighting Company icon.png |
| Issue date: | 06/13/1984 |
| From: | Letsche K, Palomino F KIRKPATRICK & LOCKHART, NEW YORK, STATE OF, SUFFOLK COUNTY, NY |
| To: | |
| References | |
| OL-4, NUDOCS 8406150351 | |
| Download: ML20091R931 (76) | |
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';fqf UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION
'g 4 J W I S m ; q a Before the Atomic Safety and Licensing Board _
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In the Matter of )
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LONG ISLAND LIGHTING COMPANY ) Docket No. 50-322-OL-4
) (Low Power)
(Shoreham Nuclear Power Station, )
Unit'l) )
)
SUFFOLK COUNTY NND STATE OF NEW YORK MEMORANDUM IN OPPOSITION TO LILCO'S MAY 22, 1984 MOTIONS FOR
SUMMARY
DISPOSITION ON PHASE I AND PHASE II OF LILCO'S PROPOSED " LOW POWER TESTING" In this Memorandum, Suffolk County and the State of New York set forth their opposition to the two motions dated May 22, 1984, entitled "LILCO's Motion for Summary Disposition on Phase I Low Power Testing," and " Motion for Summary Disposition on Phase II Low Power Testing" (hereinafter, " Phase-I Motion" and " Phase II Motion", respectively). For the reasons' set i
forth below, and because there are in dispute issues of fact 1
which are material to the issuance of the licenses LILCO seeks in the Phase I and Phase II Motions (see Statement of Issues Material to Summary Disposition on LILCO's Request for Licenses for Phase I and Phase II as to Which there are Facts. in ~ Dispute attached hereto), the County and the State submit-that the LILCO motions must be denied.1/
1/ .By filing this Memorandum, the County and' State do not concede that either.LILCO's March 20, 1984-Supplemental gg)
O a 51 O M E g 615@x (Footnotecont'dnextpage)@ >
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I. Introduction l
LILCO, by its Phase I and II license requests, is asking this Board: )
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-- To take action Which is beyond the authority of the NRC. (The NRC is authorized'to issue only construc-tion permits and operating licenses; a low power license is an operating license. LILCO, however, is requesting an impermissible fragment of a license: a no power license.)
To take action Which contradicts the May 16 Order of the Commission. (The Commission ruled that LILCO-cannot be eligible to attempt to show that it is en-titled to a license unless it first qualifies for an exemption from GDC 17 and other applicable regula-tions. LILCO has not done so yet, and, the County and State submit, it will not be able to do so even after the pending low power litigation.)
(Footnote cont'd from previous-page)
Motion for Low Power Operating License,for'its May 22, 1984 Application for Exemption, is, in whole or in part, proper, adequate, complete, or authorized as'a matter of
. law.
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Moreover, by its Motions for Summary Disposition, LILCO is asking this Board to ignore genuine issues of material fact that are here in dispute. For these reasons, the County and I State urge the Board to reject LILCO's Motions for Summary Dis-position of Phases I and II.
It is important to place LILCO's Phase I and II Motions in the context of what has occurred in this proceeding since January, 1984, When it became clear that the defective TDI die-sels would bar the issuance of a low power license for Shoreham. From that time through the present, LILCO has sub--
mitted low power proposals which conflict with or misinterpret the NRC's regulations. The reasons for such LILCO proposals are well-documented: LILCO is in severe financial trouble be-cause of its inordinate cost overruns at Shoreham; credit markets are thus closed to the company; and LILCO looks upon an NRC license -- an official-looking paper seemingly of any kind and for any purpose -- as a key to reopening those credit markets. For the moment, therefore, the device Which LILCO has fashioned to serve its financial purpose.is a "no power" license. Stripped of the trappings of legitimacy with which-LILCO has adorned this type of " license" in its Summary Dispo-sition Motions, however,.the "no power" license is nothing more than a gimmick. -There is no basis in law or fact for such such.
f a gimmick, and the Board should say'so.
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In essence, LILCO's Summary Disposition requests are an invitation for this Board to commit legal error. The alterna-tive, instead, is for the Board to do as the Commission ex-pressly instructed in its May 16 Order: to conduct this pro-ceeding in accordance with the rules. Those rules contemplate this Board considering only bona fide operating licenses for either full power or low power. They do not contemplate "no power" licenses or any other gimmick which LILCO creates out of thin air to satisfy its momentary urgings.
LILCO is clearly n6t entitled to a bona fide low power license by means of summary disposition. What LILCO has done, therefore, is to fragment the low power licensing process into the smallest possible piece with which LILCO can argue it complies ---thus, come the Phase I and'II fragments of LILCO's self-styled operating license. This is merely a tactic of LILCO -- a satire of the Atomic Energy Act and-the NRC's regu-lations. Th'e County and State therefore request that LILCO's' Phase I and II Motions be rejected.
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s II. The Board Has_No Authority to Issue the License Requested by LILCO in its Phase I Motion In its request for issuance of a license for Phase I, LILCO states that during " Phase I" it intends to load fuel into the reactor, and to perform various procedures, involving the loaded fuel, oescribed as " core verification." Phase I Motion at 2. According to LILCO, during Phase I "the reactor will not be taken critical." Statement of Material Facts attached to Phase I Motion, para. 5. Indeed, throughout Phase I, the pres-sure vessel will be uncovered. Minor and Bridenbaugh Affidavit attachr' hereto, at para. 3. Thus, during Phase I, no power would or could be generated by the reactor. Id.
It is clear that none of the activities contemplated dur-ing Phase I can be said to constitute " operation" of the Shoreham reactor. Although fuel will be loaded into the core and certain manipulations performed, and during and following Phase I the reactor will be closer to being ready for future operation, in seeking a license -for Phase I only, - LILCO seeks a "no power" license that is nowhere authorized or contemplated in the Commission's regulations or the Atomic Energy lAct.- Ac-cordingly, the Board _ has no, authority to issue the license that is requested by LILCO in its Phase I Motion, and the Phase I
-Motion must be summarily rejected.2/
2/. The Phase II Motion is similarly deficient. While low levels of-criticality are achieved, this does'not; (Footnote' cont'd next page)
N The Atomic Energy Act contemplates the issuance of con-struction permits and operating licenses for nuclear reactors.
There is no authorization in that Act for the issuance of a license to load fuel, or to manipulate a loaded core, as an end in itself without operating the reactor. See 42 USC 6 2133 (authorization to issue commercial licenses pursuant to { 2131 eti seq.); 5 2232 (requirements of license applications for "a const~ruction permit or an operating license"); and { 2235 (granting of construction permits, and granting of a license "upon finding that the facility authorized has been constructed
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and will operate"). And, the 1egislative history of the Act provides no indication that any such non-operating license _was contemplated, intended, or authorized by the statute. What LILCO is requesting, therefore, has no foundation in the Atomic Energy Act.
Similarly, the Commission's regulations, which implement the Atomic Energy Act, authorize only the issuance of construc-tion permits and operating licenses with respect ta) nuclear power plants. See e.g., 10 CFR {$ 50.23, 50.30, 50.57.3/
. (Footnote cont'd from previous page)
I constitute operation of the plant in any normal sense and there is no regulation authorizing _such limited testing absent a.more general permiusion to conduct operations.
-3/ The Commission is also authorized to license operators of.
licensed facilities, 10 CFR, Part 55, and to issue l -(Footnote cont'd next page)
N There is no mention, let alone authorization, in any regulation of a license, that could be issued to a holder of a construc-tion permit, involving the use of a commercial nuclear reactor, other than for operation of that reactor. To the contrary, the regulations clearly contemplate only two types of licensing for the use of a reactor -- the issuance of a construction permit and the issuance of an operating licence. See e.g., 10 CFR {
50.33 on. contents of applications (references only construction permits and operating licenses), and 10 CFR $ 50.51 on duration and renewals of licenses ("Where the operation of a facility is involved . . . [and] Where construction of a facility is in-volved . . . . ").
Thus, the regulations clearly contemplate only two steps or threshhold determinations in_the licensing process relating to the use of a nuclear plant: the issuance of-a construction permit and the issuance of an operating license. For example, 10 CPR 4 50.55(d) provides:
(Footnote cont'd from previous page) licenses for the ownership, transport, and possession of nuclear fuel, 10 CFR Part 70. however Part 70 licenses are conditioned to prohibit the.use of-such fuel in a nu-clear reactor, cxcept in accordance with the other-Commission regulations. See 10 CFR $ 70.32(a)(5).
At or about the time of completion of the construction or modification of the facili-ty, the applicant will file any additional information needed to bring the original application for license up to date, and will file an application for an operating license or an amendment to an application for a license to construct and operate the facility for the issuance of an operating license, as appropriate . . . .
(emphasis added).- Similarly, Section 50.56 states in pertinent part:
Upon completion of the construction or al-teration of a facility, in compliance with the terms and conditions of the construc-tion permit .'. . the Commission will . . .
issue a license of the class for which the construction permit was issued . . .,
and Section 50.57 follows with:
Pursuant to 6 50.56, an operating license may be issued by the Commission . . . upon finding that:
(1) Construction of the facility has been substantially' completed . . .; and (2) The facility will operate . . . .
i (emphasis added). The fact that Section 50.57 provides for both low power and full power licenses-does not change the: lim-itation of authority, set forth in that section, to the issu-ance of only licenses for operation.
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to Clearly, if the NRC had been authorized by Congress or "no power" step in the establish an interim "no operation" low power licensing process between construction completion and so in its regula-operation, the Commission could have done tions. Pursuant to its authority under the Atomic Energy Act, in its regulations an elaborate the Commission has created such scheme of specific licenses for particularized activities, IO CFR Parts 30-33 and 35, as li' censes concerning by-products, 10 CFR Part 34, licenses concerning radiographic operations, 10 CFR Part 40, licenses licenses concerning source materials, for respecting the packaging of radioactive materials transport, 10 CFR Part 71, and licenses concerning the storage of spent fuel in independent spent fuel facilities, 10 CFR Part
- 72. The fact that this extensive licensing scheme doas not include provision for a license limited to loading fuel 'and the I,
other no power activities included in LILCO's proposed Phase is further evidence of the Commission's lack of authority to issue such a license.
LILCO has cited two alleged " precedents" for its no power license request. First, LILCO persists in relying on the Commission's Diablo Canyon decision. See Pacific Gas &
Units 1 and Electric Co. (Diablo Canyon Nuclear Power Plant, Diablo Canyon is completely i l
2), CLI-83-87, 18 NRC 1146 (1983). 1 l
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distinguishable: the Commission had already granted an operating license; the operating license had been suspended; and the Commission ordered a staged reinstatement of the license in the context of an enforcement proceeding.
Second, LILCO relies upon a Licensing Board decision in North Anna. See Virginia Electric and Power Co. (North Anna Power Station, Units 1 and 2), LBP-77-64, 6 NRC 808 (1977).
The County and State submit that that-decision constitutes no precedent here. No party contested, and no portion of-the Board's opinion concerns, whether a "no power" license is legal-under the Atomic Energy Act or the NRC's regulations. Thus, the issue raised herein is one of first impression.4/
It is well established that an agency cannot act beyond the authority delegated to it in its enabling legislation. It is also beyond dispute that an agency must act in accordance with its own regulations. See 2 Davis, Administrative Law-Treatise 98 ff 4 7:21 (2d ed. 1979).
It is clear that the NRC
-4/ The County and State note, however, that even-in a "no power" situation, the North Anna Board required full' implementation of all aspects of the physical security plan. See 6 NRC at 813. As discussed in Section'IV.B.5 hereof, LILCO does not comply with security requirements, thus constituting a further reason why the Phase I and1II Motions must be denied.
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is not authorized to issue a license that involves neither construction nor operation of a nuclear power plant. Accord-ingly, this Board does not have the authority to issue the Phase I license requested by LILCO, and for that reason alone, the Phase I Motion must be denied.
III. The Requested Licenses Cannot be Issued Without the Prior Grant of an Exemption for LILCO's Non-Compliance with GDC 17 and Other Regulations LILCO's motions are premised on LILCO's assertion that onsite AC power is not necessary for the activities involved in Phases I and II. See Phase I Motion at 4, 5; Phase II Motion at 3, 4, 6. Building on this assertion, LILCO argues further that no exemption is required under Section 50.12(a) for l
LILCO's proposed Phase I and Phase II licenses. Indeed, the motions expressly state that "even assuming that LILCO's onsite diesel generators do not operate," the summary disposition motions should nonetheless be granted. Phase I Motio. at 5; Phase II Motion at 6. Although LILCO argues that its Phase I and Phase II proposals satisfy the requirements of GDC 17, even assuming there is no operable onsite AC' power source, LILCO appears to recognize that that argument flies in the face of the Commission's May 16 Order. Thus, LILCO states:
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If the Licensing Board believes the Commission's May 16 Order requires an ex-emption from the regulations for all four phases of low power testing, then the Board should treat this motion as a motion for summary disposition of all health and safe-ty issues with respect to Phase I.
Phase I Motion at 5, note 1. An identical statement, with
" Phase II" substituted for " Phase I" is in footnote 2 of the Phase II Motion.
A. The Commission's May 16 Order Requires an Exemption for Phases I and II There can -be no dodbt that the Commission's May 16 Order requires that LILCO must first obtain an exemption from appli-cable General Design Criteria, including expressly GDC 17, before its low power operation proposal, or any portion thereof, could be granted.
First, the Commission's May li. Order, in the Commission's words, was:
on the applicability of the General Design Criteria (particularly GDC
- 17) to the proposal of the Long Island Lighting Company (applicant) to operate the Shoreham facility at low power.
May 16 Commission Order at 1 (emphasis added). The LILCO " pro-posal" with which the Order dealt was that contained in LILCO's Supplemental Motion for Low Power Operating License, dated March 22, 1984, which, in turn, included a description of the four phase " low power testing program" which is also the subject of LILCO's May 22 Application for Exemption. Thus, the LILCO proposal which was the subject of the May 16 Commission Order included Phase I and Phase II which are the subject of the pending summary disposition motions. Accordingly, the rulings contained in that Order are applicable to Phases I and II.
Second, the Commission's.May 16 Order was based upon "the oral arguments and written submissions of the parties." May 16 Order at 1. LILCO filed with the Commission the'following
" written submissions" relating to its Low Power Motion:
- 1. LILCO's Response to various Suffolk County /New York State Requests Dated April 16 and Received April 17, 1984, dated April 19, 1984.
- 2. LILCO's Comments in Response to the Commission's Order of April 30th, dated May 4, 1984.
- 3. LILCO's Motion for Summary Disposition on Phase I Low Power Testing, dated May 4, 15'34.
- 4. Motion for Summary Disposition on Phase II Low Power Testing, dated May 4, 1984.
- 5. Letter to Chairman Palladino from Anthony F.
l Earley, Jr., dated May 9, 1984, with copies to the other Commissioners.
With the exception of Item 5, every one of LILCO's written sub-missions to the Commission explicitly discussed Phase I and Phase II as integral parts of LILCO's low power motion. See, e.g., April 19 submission at 10; May 4 " Comments at 26-27, 33-36; both of the May 4 Summary Disposition Motions in toto.
Similarly, during the May 7 oral argument before the Commission, LILCO's counsel discussed Phase I and Phase II at considerable length in arguing that no exemption from GDC was required prior to the issuance of a low power license to per-form Phase I and Phase iI activities. For example, the follow-ing statements were made to the Commission by LILCO's counsel:
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-- GDC-17 states that the AC power systems that are available, have to provide suffi-cient capacity and capability to assure that the specified acceptable fuel design limits and design conditions of the reactor coolant pressure boundary are not exceeded, as a result .of the anticipated operational occur-rences, and two, that the core is cool and that the containment integrity and other vital functions are maintained in the event of postulated accidents.
LILCO has that capacity and its proof has shown that, indeed, for Phases 1 and 2, no such capacity is even needed in this case because no AC power is required to ensure the public health and safety. But for all the phases, Phases 1, 2, 3, and 4, of the low power program that LILCO outlines in its supplemental motion, for all those phases LILCO will prove, and indeed has proved in the hearings, that it has the capacity to provide these assurances. (Rolfe, Tr.
9-10).
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We meet [GDC 17] in light of its appli- l cation to [a] low power license. We do not !
have an onsite power system strictly speak-ing. However, in order to apply GDC-17 at this level of operation, you have to take into consideration the meaning of 50.57(c).
And what LILCO says is that in interpretating the regulation for low power licensing, one ought to look at the level of operation intended and interpret the regula-tion, the General Design Criterion, accordingly . . . .
We meet it, sir, in that the functions prescribed in GDC-17, the safety functions listed there, are met. (Rolfe, Tr. 15).
LILCO . . . demonstrates that in Phases 1 and 2 you d6n't need any AC power and in Phases 3 and 4 that there is sufficient AC power available and it can be restored well within the time parameters for the limiting event and the Loss Of Coolant Accident. And that's the method in which LILCO approaches that and provides the technical justifica-tion to show that the public protection will be equivalent to or greater than that [at]
full power operation. (Rolfe, Tr. 22).
[F]or Phases 1 and 2 there is no risk to public health and safety because there is no need for AC power . . . . And for those reasons, LILCO asks that the Commission rule now and grant its motions for summary dispo-sition for Phases 1 and 2. (Rolfe, Tr. 24; emphasis added).
[offsite emergency planning is] not an important ingredient here because the level of protection afforded by LILCO during this operation at five percent power is equiva-lent to what you would have in a plant that did have onsite diesels. And let me hasten to add that again, this is only an important 15 -
1 issue for Phases 3 and 4 because in Phases 1 ,
and 2 you don't need any AC power. (Rolfe,
-Tr. 32).
We've been after.those four phases from the beginning. And we pointed out, from the beginning, that Phase 1 ain't Phase 4, in effect. It 's a pale shadow of Phase 4. So we are, in fact, interested in all four phases. We would like to get the ones that can be gotten.quickly as quickly as we can
- get them, but [what] we are suggesting in the papers that we filed with you on the 30th is the following
- that as to Phases 1 and 2, we proceed by summary disposition.
If the summary disposition is granted, then there's no need for further hearings. If it's not granted,.then obviously whatever remains.must go to hearing . . . .
Commissioner, we are very interested.in getting Phase 1, even, if that's all we can get, soon. But you have pending before you, summary disposition papers on Phases 1 and 2 . . . . We hope.you all will act on them, '
but as to the first -two phases we strongly believe they can be resolved by affidavit.
And if they can't be wholly resolved by af-fidavit, we believe that process ought to focus what-the remaining issues are and
.they, then, can_go back for evidentiary.
hearings.
So yes, we want all four phases,.and we think that the lower numbered phases should be easier to obtain, given the facts then the higher numbered phases . ...
We are asking that the four phases be looked at separately, if that's necessary.-
(Reveley Tr. 47-49).
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The Commission rejected LILCO's express arguments that no exemption from GDC 17 was necessary for Phases I or II of its low power proposal. It stated:
After reviewing the oral arguments and written submissions of the parties, the Commission has determined that 10 C.F.R. 50.57(c) should not be read to make General Design Criteria inapplicable to low-power operation.
May 16 Order at 1. The Commission stated further:
[T]he applicant made clear at the May 7 oral argument its intent to seek an exemp-tion under 10 C.F.R. 50.12(a). If it intends to follow that course, the applicant should modify its application to address the determinations to be made under 10 C.F.R.-50.12(a).
May 16 Order at 2 (emphasis added). The " application" refer-enced by the Commission necessarily meant the items submitted by LILCO for the Commission's consideration -- that is, LILCO's Supplemental Motion for Low Power Operating License, and LILCO's summary disposition motions on Phase I and Phase II.
Thus, the Commission's rulings that GDC 17 is applicable to LILCO's low power proposal, and that LILCO must address in a modified application for a low power license the determinations which must be made in granting an exemption from' regulatory l
requirements under 10 C.F.R. # 50.12, are applicable to Phase I and Phase II of LILCO's proposal. l If the Commission had intended to limit its ruling on the requirement for an exemption to only portions of LILCO's low power license application, it certainly would have said so.
Indeed, LILCO had expressly requested the Commission to rule that it could obtain a license for Phase I and Phase II activities without having first obtained an exemption by having submitted to the Commission its motions for summary disposition on Phase I and Phase I I ,' and by its counsel's statements during oral argument cited above. However, the Commission did not grant LILCO's summary disposition motions, and did not in any way limit or restrict the applicability of its May 16 ruling on LILCO's need for an exemption in order to obtain its requested low power license.
At best, LILCO's pending motions can be considered only as motions for. partial summary disposition, although, for the reasons set forth in Section IV_ below, even those partial
! motions must be denied because material issues are in dispute l
and because it.is not at all clear precisely what issues LILCO
. seeks to have this Board decide summarily.5/ In fact,
-5/ The LILCO footnote states only that the Board should treat-the motions as."for summary disposition of all health-and (Footnote cont'd next page)
however, the LILCO motions are premature, because'they cannot be granted, consistent with the Commission's May 16 Order, unless LILCO is first found to be entitled to an exemption fol-lowing the instant litigation.
B. LILCO's Argument that Onsite AC Power is not Required by the Commission's Regulations for Phases I and'II is Contrary to the Commission's May 16 Order and is Without Basis.
In its motions LILCO has attempted to justify its hope that this Board would rule that obtaining an exemption from GDC 17 is not a prerequisitG to the issuance of LILCO's selfstyled licenses for Phases I and II. Thus, LILCO asserts that summary disposition is proper on Phases I and II because "the reliability of LILCO's onsite diesel generators is not material" to either of those phases since, according to LILCO, "there is no need for any AC power" during those phases. LILCO uses this logic to conclude that the requirements of GDC 17 would be met during Phases I and II, even assuming LILCO's onsite diesel generators do not operate. See Phase I Motion at (Footnote cont'd from previous page) safety = issues with respect to" Phase I and Phase II. See Phase I Motion, footnote 1; Phase II Motion, footnote 2.
Those " issues" are nowhere discussed or even _ identified by LILCO in its motions.
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v l 4, 5; Phase II motion at 3, 6. The identical argument was made by LILCO in its May 4 Comments submitted to the Commission.
Thus, in that pleading, LILCO asserted as follows:
For low power testing however, such an "onsite" qualified power source is not nec-essary to satisfy GDC 17. (at p. 25)
[F]or proposed Phases I (fuel load and pre-criticality testing) and II (cold _criti-cality testing) at Shoreham, the evidence before the Commission demonstrates that no AC power is needed to achieve compliance with GDC 17. That criterion requires only that an onsite electric power system and an offsite system " provide sufficient capacity and capability" to achieve the specified goals. With respect to Phases I and II, the
" sufficient capacity"'is zero. Hence, no cnsite AC power source is necessary to meet the criterion's requirements. (at pp.
26-27)
The technical justifications for operation
-of Shoreham during [ Phase I3 is set out in more detail in LILCO's motion for summary disposition concerning' Phase I activities, filed with these comments. In' summary'. . .
no AC power, either ons'ite or offsite, is required to protect the public h'ealth and safety during this phase. (at p.c35)
Again, detailed justification for. permitting operation of Shoreham during Phase II is contained in LILCO's motion for summary dis-position concerning Phase II. As in Phase-I, during Phase II,-the accident and tran-sient events analyzed in Chapter 15 would pose.no threat to the public health and safety, even assuming the unavailability of an onsite power source. (at p.R35)
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Se3 also citations from transcript of oral argument set forth above. /
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These LILCO arguments were considered and re'jected by the e
< Commission. By reiterating thbse rejected arguments here as X t '
+ the premise of its Phase Istnd'II summary disposition motions, e LILCO is requesting this Board to rule contrary to the decision of the Commission that went against LILCO. LILCO thus asks this Board in effect to contradict the Commission's ruling that the GDC 17 requirement of an onsite AC power source g applica-
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ble to all' phases of.LILCO's proposed low power proposal, and that ,LILCO must modify its low power license application to include a request for an exemption from compliance.with GDC 17 and other pertinent regulations. Clearly, this Board cannot rule as LILCO requests. LILCO's transparent attempt.to reargue a position already rejected by the Commission must be summarily rejected by this-Board. In the absence of a properfy granted j exe ion from GDC 17, and other pertinent. regulations, LILCO's s
summary disposition motions must be denied.
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1 Parthermore, LILCO's argument that the requirements o'f'GDC 17 would be met during its proposed Phase I and Phase II ig- ,
l ,nores the plain languag'e of that criterion. The first sentence s'
,c!Iof GDC 17 statess' / -//
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An onsite electric power system and an offsite electric power system shall be provided . . . .
(emphasis added). The LILCO motions are premised on the as-sumption that there is no operable onsite power system at Shoreham. All LILCO's arguments about its supposed "compli-ance" with GDC 17 consti.tute a challenge to GDC 17, since they amount to nothing but a rehash of LILCO's belief that despite the p' lain words of GDC 17,.an onsite electric source does not have to be provided for low power. Since the Commission has already categorically rejected LILCO's argument, this Board must do the same, and should deny LILCO's summary disposition motions.
IV. The Motions Must Be Denied Because There Are Material Facts in Dispute As discussed in Section III above, LILCO' .is - a r e
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premature, since the requested licenses c=' _ 1ssued unless LILCO first obtains an exemption from and other.-perti-nent regulations. The motions.must also be deniedi pursuant.to the standards set forth in 10 C.F.R. { 2.749(d), because this Board cannot find either "that there is;no genuine issue as to-any material- fact," or that.LILCO:is entitled, as a matterfof
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law, to a license under lO. C.F.R. _i 50.57(c) - for its proposed -
Phase 'I and Phase II- activities.
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,The LILCO footnotes which we discuss in Section III above 1
(note 1/in the Phase I. Motion # and note 2 in' the Phase II
,. , Mot. ion), request that the Board treat LILCO's motion as one for sumacry disposition "of all health and safety issues with i respect to" Phases-I and II respectively. The motions, how-
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ever, do not identify, define, or describe those issues which, in LILCO's view,! constitute "all health and safety issues" rel-
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} event to.the grant of a Se'etion 50.57,(c) license for Phase I or b '1 T
(,for Phase II, even though LILCO purports to seek a summary de ,
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j cision on such issues. LILCO's motions are thhs deficient unde,r 10 C.F.R. $ 2.749, whicli places upon . the proponent of a ,
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t ,1 summary disposition motion the-burden of identify 1ng what deci-
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' sion is sought. ' Clearly, without such an identification, nei -
ther the other parties nor the Board can evaluate, respond to,
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'N > l* or r'ule upon thd request.
If LILCO believes that either (1) the issues-listed in the 1 . . ,
" Statements of Material Facts as to Which There Is No Genuine-A.r' Issue of Facts to be !!eard" which are attached to its motionsi or (2) the nearly identical discussion at ps. gen 8-10 of its Xp-plication for Exemption, identify "all the health and safet;y .
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t w s issues" relevant to its request for summary issuance of f, h3' licenses for Ph,ase -I and for Phase II, LILCO is incorfecEl
, - y Set forth below are " health and safety issues," the resoltNionTof t t
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l which is a prerequisite to a decision on LILCO's application for licenses for Phase I and for Phase II, and as to which there are material facts in dispute.
A. LILCO's Failure to Comply With Regulations Other Than GDC 17.
LILCO's Phase I and Phase II Motions are premised upon the unavailability of the TDI diesel generators and the absence of any operable onsite AC power system. In its March 20, 1984 Supplemental Motion for Low Power Operating License, LILCO de-scribes a proposed alternate AC power configuration involving a gas turbine and mobile diesel ~ generators. As recognized by the Commission in its May 16 Order, and reflected in LILCO's Appli-cation for Exemption, the.Shoreham plant configuration postu-lated by LILCO for its proposed " low power" operation including its Phase I and Phase II activities, differs substantially_from the configuration mandated by the regulations. Thus, in its Application for Exemption, LILCO states that it seeks an exemption under $ 50.12(a) from that portion of General Design Criterion
, 17, and from other applicable regulations, if any, requiring that the TDI diesel gen-erators be fully-adjudicated prior to conducting the low power testing described.
in'LILCO's March 20 motion. .. .
Application for Exemption at 4 (emphasis added). .LILCO thus appears-to acknowledge that its proposal to operate Shoreham1
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m_ _ _ _ _
i
with its unique plant electric power configuration rather than that required by the regulations and identified in the Shoreham operating license application and FSAR, requires an examination of that configuration's compliance with " applicable regula-tions" in addition to GDC 17. Although LILCO fails to identify the "other applicable regulations" from which it needs and seeks an exemption, the state of compliance of its newly pro-posed' plant configuration with those "other" regulations raises factual issues which (1) are not identified or addressed in LILCO's summary disposition motions, and (2) must be resolved prior to the issuance of the licenses for Phase I and II sought by LILCO.
As set forth in -the Affidavit of Gregory C. Minor and Dale G. Bridenbaugh attached hereto, the plant configuration now proposed by LILCO does not satisfy the requirements in the fol-lowing regulations:
GDC 1 -- Quality Standards and Records GDC 2 -- Natural Phenomena GDC 3 -- Fire Protection GDC 4 -- Envirt' mental and Missile Design Bases GDC 17 -- Electric Power Systems GDC 18 - Inspection and Test of Electric Power ~ Systems GDC 33 -- Reactor Coolant Makeup GDC 34 -- Residual Heat' Removal GDC 35 -- Emergency Core Cooling GDC 37 -- Testing of Emergency Core Cooling System GDC 38 -- Containment Heat Removal GDC 40 ---Testing of Containment Heat Removal System
l
. . j GDC 41 -- Containment Atmosphere Cleanup GDC 43 -- Testing of Containment Atmosphere Cleanup Systems GDC 44 -- Cooling Water GDC 46 -- Testing of Cooling Water System Part 50, Appendix B -- Quality Assurance Criteria.
See Minor and Bridenbaugh Affidavit at paras. 6-8. LILCO is not in compliance with GDC 1, 2, 3 and 4 because its proposed plant configuration does not include any safety-related, seismically or environmentally qualified onsite AC power sources. I d, . at para. (i . LILCO does not comply with GDC 17, 18, 33, 34, 35, 37, 38, 40, 41, 43, 44 and 46, because (a) there is no onsite emergency AC power source in the proposed Shorehan plant configuration, and (b) since there is no such source, the transfer from offsite to onsite power cannot be tested as required by those criteria. Id. at para. 7, 10. Fi-nally, the proposed alternate plant configuration has not been designed, installed, tested, nor will it be operated in accor-dance with the criteria set forth in Part 50 Appendix B. Id.
at para. 8.
In addition, the proposed alternate'AC power configuration renders LILCO unable'to comply with the new ATWS rule approved by. the Commission on Jurce L1, 1.984,.which requires.that ATWS mitigating systems and a. diverse reactor trip: system-must be capable of performing in; the event of a' loss of offsite _ power.
Id. at 9.-
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Clearly, LILCO must obtain an exemption from compliance with-all the above regulations before any kind of operating license or license for Phase I or Phase II activities could be issued. LILCO's summary _ disposition motions completely ignore this fact, by discussing only GDC 17. This Board cannot prop-erly grant LILCO's motions without resolving the issues raised by LILCO's blatant non-compliance with the NRC's regulations.
B. LILCO's Failure to Meet the requirements of Section 50.57(a)
In order to grant LILCO's summary disposition motions on Phase I and II -- that is, to issue a license under Section 50.57(c) for Phase I or for Phase II activities, as requested in LILCO's March 20, 1984 Supplemental Low Power Motion -- this Board "shall make findings on the matters specified in para-graph (a) of [Section 50.57] as to which there is a controver-sy. . . ." 10 C.F.R. { 50.57(c). As detailed in the affida-vits of Gregory C. Minor and Dale G. Bridenbaugh, and Michael D. Dirmeier and Jamshed K. Madan which are_ attached hereto, the Shoreham plant with LILCO's recently proposed alternate AC power configuration, does not satisfy the requirements set-forth in Section 50.57(a).
LILCO's March 20, 1984, Supplemental Motion'for Low Power' License does not address any of'the Section 50.57(a) i
l l
requirements or the Section 50.57(c) requirement that the-50.57(a) findings must be made. In its original Motion for
. Low-Power Operating License filed with the Brenner Board on i June 8, 1983, LILCO asserted that the only matters in contro-versy (apart from offsite emergency planning) fo purposes of
$ 50.57(c), were those identified in the contenti.ons upon which hearings were held in.1982 and 1983.
At the time of that filing -- June 1983 -- LILCO may have been correct. Clearly, however, the facts have subsequently changed as a result of the failure of the TDI diesels, the LILCO's precarious financial situation, the totally new alternate AC power configuration first proposed by LILCO as a part of its Supplemental motion for a Low Power Operating License in tiarch 1984, and the security-related concerns raised by the new AC power configuration. The prior contentions, the litigation thereon,-the Security Settlement Agreement of December 1982, and the Partial Initial Decision issued in September 1983, did not consider -- and could not have consid-ered -- the new AC power configuration which LILCO'first pro-posed as a basis for licensing Shoreham operation in March
~
1984. While it may. generally be true that, in the normalicase, where a low power license application is based upon the same plant configuration as the full power license-application (as
=was the version of LILCO's Motion filed in 1983 before the failure of the TDI diesels), existing contentions and Partial Initial Decisions may limit the matters in controversy for purposes of Section 50.57(c), it cannot be denied that this is not the normal case. Here, LILCO has itself placed into con-troversy an entirely new proposal for the provision of onsite AC power in connection with its most recent version of its low power license motion.
Although aspects of prior litigation or decisions may be pertinent to LILCO's nes proposed plant configuration, they cannot be said to eliminate from controversy in this proceeding the question whether the new configuration satisfies the re-auirements set forth in Section 50. 57 (a) . Thus, by the mere fact of its hcving requested that a brand new, previously unheard of plant configuration be licensed for fuel load and the activities prepared for Phases I and II, LILCO-has itself placed into controversy -- indeed, it has created -- the'factu-al issue Whether the required Section 50.57 findings can be made with respect to that new Shoreham plant configuration.
For the reasons discussed below, there are material issues of fact concerning each of the Section 50.57(a) findings Which have not been addressed by LILCO, and accordingly, summary dis-position on LILCO's license requests cannot be. granted.
i it' e
- 1. Construction of Shoreham has not been substantially completed in conformity with the construction permit and LILCO's operating license application.
LILCO's operating license application, as detailed in its primary licensing document, the FSAR, includes the provision of onsite emergency AC power by three independent, environmentally and seismically qualified, safety grade, TDI diesel generators.
The FSAR postulates the inclusion of such diesels for both ful?
and l'ow power operation. Those diesel generators were to be designed and constructed in accordance with Part 50 Appendix B quality assurance and quality control standards, and were to be designed to meet the single _ failure criterion. See Minor and Bridenbaugh Aff., para. 4. LILCO's Supplemental Low Power License Motion requests a license for a plant without the die-sel generators relied upon in the FSAR. Instead, LILCO pro-poses to use four mobile diesel generators and one 20 MW gas turbine, none of Which is seismically or environmentally quali-fled, safety-grade, designed or constructed in accordance-with Appendix B, or designed to meet the single failure criterion.
The new LILCO proposal is nowhere mentioned in the FSAR. Thus, the plant configuration now proposed'as a basis for-obtaining its requested Phase I and Phase II licenses, is radically different from the configuration postulated in LILCO's licensing application documentation.
Furthermore, construction of the Shoreham plant, as envi-sioned in the FSAR, is not only not "substantially completed,"
it is no longer apparently even contemplated, and certainly will not be completed before LILCO's proposed fuel load and other activities included in Phases I and II. First, LILCO now plans to install three new diesel generators manufactured by Colt Industries, to replace the defective TDI diesels. Appar-ently, only one of the Colt diesels has even been delivered to the Shoreham site; the other two have not yet been delivered.
None have been installed. See Position Paper -- Shoreham Nu-clear Power Station, dated May 30, 1984, submitted to Governor Mario Cuomo by LILCO, page 19.
Second, LILCO is in the process of constructing or planning construction of (1) a fuel storage facility for the Colt diesels; (2) a new Class I structure to house the three Colt diesels in separate compartments with safety-related support equipment; and (3) an underground concrete-raceway between the two structures described in.(1)'and (2). Minor and Bridenbaugh Aff. at para. 1.. As of May 24, 1984, when the County's consultants visited the site and observed -the ongoing construction, none of this construction was even' nearing com -
pletion. Id.
- _ i
Third, before construction can be described as being sub--
-stantially completed," LILCO must also install and test the
' Colt diesels and all supporting equipment, and it must construct safety-grade raceways and connections for the cable which will connect the Colt diesels to the auxiliary building, the emergency switchgear rooms, and the control room. As of May 24, it did not appear that'any of this construction had even begun. Id. at para. 14. . Thus, this Board cannot find that construction is "substantially completed" with respect to the onsite emergency AC power source-that is described in LILCO's FSAR.
Fourth, LILCO also plans to. perform the construction work necessary to run underground a 50 foot section of the cable-connecting the EMD diesels to the auxiliary building. This work had not been started as of the May 24 inspection.- Id..at'.
i para. 13. 9mus, even with respect to the new LILCO proposed j power configuration, this Board cannot find that construction is substr.ntially' completed, as required by-Section 50.57.
Finally, for the reasons set forth in detail in the'Affi-davit of Michael D. .Dirmeier and Jamshed K. Madan attached i
hereto, given LILCO's current: financial condition, including:
.the facts that it will run out.ofJmoney-in. September 1984 and t
A ,
e + - m-,* -e - = - + g m ~
,f
r has no available source of additional cash, LILCO may be unable i 1
to complete construction of Shoreham. See Dirmeier and Madan Aff., para. 8.
Although LILCO's motions ignore the facts that construc-tion is not substantially completed, that because of its dire financial condition LILCO likely cannot complete construction, and that construction, even if it could be completed, would not be in conformity with its FSAR, such facts clearly prohibit the granting of its summary disposition motions for Phase I and Phase II licenses. LILdO has failed to demonstrate that this Board can make the findings required under Section 50.57(a)(1).
For all the same reasons, this Board cannot find that Shoreham will operate at low power, or that the activities pro-posed for Phase I or Phase II, will be conducted in conformity with LILCO's operating license application, as required by Section 50.57(a)(2) and (a)(3).
-2. Shoreham has not been constructed, it will not operate, and the -proposed Phase I and Phase II activities cannot be conducted, in compliance with the NRC regulations For the reasons set forth in Part IV. A above, which give rise to LILCO's need for an exemption from the requirements of GDC 17 and the other regulatory requirements discussed in that T
f l
part, LILCO has failed to demonstrate (1) that construction of l Shoreham has been substantially completed in accordance with the Commission's rules and regulations; (2) that Shoreham will operate in-conformity with the rules and regulations of the Commission; and (3) that there is reasonable assurance that the Phase I and Phase II activities proposed by LILCO will be conducted in compliance with the Commission's regulations.
Minor'and Bridenbaugh Aff., para. 11. Accordingly, summary disposition cannot be granted with respect to the requestad Phase I and Phase II licenses because this Board has no basis for making the findings required under Section 50.57(a)(1),
(2), and (3).
- 3. LILCO is not financially qualified to engage in the activities proposed for Phase I and Phase II During the last half of the 1970's and the early 1980's (indeed, until 1983), LILCO's financial condition, while perhaps not. the best in the utility industry, was sufficiently healthy that there was no serious question whether it was fi-nancially qualified to operate a nuclear plant. Thus, during that period LILCO paid common stock dividends regularly, and possessed the traditional indicia of financial health (e.g.,
SEC coverages, etc.) so that it was able to, and did, success-fully raise monies in the capital markets. Ditmeier and Madan r
l Affidavit, para. 12. However, beginning in 1983, LILCO's financial condition and the perception of that condition by the financial community deteriorated rapidly. Id., para. 13. In-deed, LILCO's financial condition, even according to LILCO's own statements to the public, has deteriorated to the point that presently no outside sources of cash are available to LILCO. The State and County submit that in light of LILCO's current financial straits, which place it in immediate danger of bankruptcy, this Board'cannot make the Section 50.57(a)(4) finding, reauired for issuance of a license under Section 50.57(c), that LILCO is financially qualified to conduct ti.e activities for which it seeks a license.6/
In order to conduct the activities proposed for Phase I and Phase II, LILCO will need to expend monies in addition to those which it currently is expending on Shoreham. Although the precise nature and extent of such additional expenditures cannot be determined at this time,_such expenses likely would-include, at a minimum, additional costs attributable to a
6/ The State and County yesterday received a June 7, 1984 Commission Policy Statement issued, by three Commissioners, concerning the Commission's response to the mandate of the U.S. Court of Appeals for the D.C. Circuit in New England Coalition on Nuclear Pollution v. NRC, 727 F.2d 1127 (D.C. Cir. 1984). For the reasons set forth in the dissent of Commissioner Asselstine, the State and-County believe that policy statement is illegal.
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personnel and security. Dirmeier and Madan Aff., para. 5.
Even if Phase I and -Phase II did not require additional expen-ditures by LILCO, however, there is no assurance that LILCO has or will be able to obtain the financial resources necessary ei-ther to complete Shoreham or to finance the proposed Phase I and II activities, for the reasons set forth below.
LILCO is on the brink of financial disaster. All its fi-nancial and' operating resources are committed at this time.
Unless additional sources of cash are made available, the company will run out of' cash in September 1984 and there is no reasonable likelihood of an improvement of that condition. If LILCO is predicted to or in fact does run out of _ cash, it can-not be found to be financially qualified to conduct the pro-posed Phase I and II activities. Accordingly, under the present circumstances, the grant of a license or an exemption to permit a license would be a violation of the regulations and contrary to the public interest. Dirmeier and Madan Aff.,
para. 7 and 4.
Due to its financial condition, LILCO may be unable to continue to provide safe and adequate. electric service on Long Island, and unable to safely operate a nuclear unit, even at' the Pha se I and Phase II levels being proposed. Thus, at page 46 of LILCO's 1983 SEC Form 10-K, LILCO stated:
r
[L]ittle or no assurance can be given regarding the Company's ability to raise additional funds in 1984 and in future years in order to meet its construction and other capital requirements and opera-tional needs.
Similar statements appear elsewhere in LILCO's 1983 10-K:
The Company may be unable to obtain the necessary financing or adequate rates or to conserve sufficient cash to meet its operating and capital requirements pending the completion, installation and testing of the new generators. (p. 23)
The Company's ability to continue its planned construction program, including the completion of Shoreham, depends upon the ability of the Company to continue to obtain the funds required. (p. 45)
Dirmeier and Madan Aff., para. 8(a).
LILCO has also recently implemented a severe " austerity" program, canceled its common stock dividends, and suspended payments on its obligations as a part owner of the Nine Mile Point Nuclear Plant in New York. LILCO's Vice President for Finance, Mr. Sideris, has stated in recent testimony filed before the New York Public Service Commission ("NYPSC"):
Furthermore, the austerity program, the elimination of the common stock dividend, and the suspension of scheduled payments in connection with Nine Mile Point Unit No. 2 are all extraordinary measures --~ measures which neither LILCO nor any other utility would consider for more than an ~ instant.
except for the most critical 'and urgent of-circumstances.
p P
Dirmeier and Madan Aff., para. 8(b) (emphasis added).
i LILCO's " austerity" program was implemented in March 1984, and was designed to save $100 million in 1984. This program involved layoffs of 741 LILCO employees and 246 outside con-tractors, and the loss of 11 percent of the budgeted 1984 con-struction program. Page 456 of LILCO's May 30, 1984 " Position Paper -- Shoreham Nuclear Power Station" submitted to New York State Governor Mario Cuomo, indicates that customers are subject to longer service response times and reduced customer service as a result of the-austerity plan. Thus,. customer service has already been negatively affected by.the existing LILCO austerity program. Dirmeier and Madan Aff., para. 8(e).
Furthermore, LILCO's - austerity program .itself may- lead to further deterioration in LILCO's financial and operating posi-tion. For example, in a letter to NYPSC~ Administrative Law Judge Robinson dated May 3, 1984, LILCO's counsel stated "LILCO is now assuring safe and adequate service for: the short run --
not'the long haul. It will continue:to do so. JLsF a result, .
substantial cost increases for necessary operations will be
- identified.with very short lead times, and.their magnitude and timing simply.cannot be forecast." Dirmeier and Madan Aff.,
- para. 8(c).jand (f). It'is thus-clear that LILCO's austerity.
38^- .
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r
r program is an extreme step which provides strong evidence-of 1
the seriousness of LILCO's current financial difficulties, l 1
Similarly, LILCO's cancellation, in March 1984, of pay-ments of common stock dividends for the remainder of 1984, is a highly significant indication of LILCO's serious financial troubles. Ready access to capital markets is a ma,instay of utility financial operation, and cancellation of the common stock dividend makes such access extremely difficult, if not impossible. Dirmeier and Madan Aff., para. 8(g). Indeed, even prior to the cancellation of stock dividends, in its 1983 SEC Form 10-K, LILCO stated "At December 31, 1983, the Company had borrowed all of the $400 million of funds available under its Revolving Credit Agreement and its Eurodollar Revolving Credit Agreement." And, more recently, in a letter dated May 3, 1984, LILCO's counsel stated, [T]he Company can no longer obtain external financing for its operations." Dirmeier and Madan Aff., para. 8(c). In addition, suppliers ~to LILCO have tightened up the availability of normal credit to the. Company, increasing the Company's cash difficulty. As Mr.- Sideris, LILCO's Vice President'for Finance, stated at page 11 of his recently' filed testimony before the NYPSC, [0]ur major oil ~
suppliers now require payment-at the time of or prior to deliv--
ery." Dirmeier and Madan Aff., para. 8(h).
u:
l
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l In February, 1984, LILCO placed at risk its $570 million j investment in Nine Mile Point Unit No. 2 by unilaterally sus-pending its payments toward the completion of that plant.
Niagara Moha'ik has informed LILCO that it considers LILCO to be in default of its obligations to the cotenants in that project.
Dirmeier and Madan Aff., para. 8(d). LILCO had financed its share of the Nine '.ile Point No. 2 plant construction program through a Construction Trust, and its failure to make construc-tion payments constitutes a default under the Trust Agreement unless a grace period is agreed to by banks holding two-thirds of the Construction Trust debt. Such grace periods are for only 30 days. A default means that the entire $500 million v
loaned by the banks to LILCO would be immediately due and pay-able. In addition, due to cross-default terms, a default on the Construction Trust is likely to lead to a default on all LILCO's long term debt. Thus, LILCO is now subject to potential default on all its long term debt obligations at 30 day intervals. In addition, LILCO's default on its Nine Mile Point obligations has increased the possibility of reorganiza-tion under the federal bankruptcy laws. Dirmeier and.Madan Aff., para. 8(i). LILCO's actions with respect to the Nine Mile Point plant, and the dire consequences of those actions, are a further and clear manifestation that it lacks the
. . 1
. financial qualifications to conduct its proposed Phase I and Phase II activities.
As a result of_all the above, LILCO presently has no abil-ity to raise cash either by borrowing or by additional sale of
-stock. It'is likely that LILCO will not have any such ability l
unless and until'the major _ existing uncertainties surrounding emergency planning, emergency diesel generators, the potential reorganization due to the Nine Mile Point plant, and rate treatments for -the Shoreham and Nine Mile Point investments are resolved in LILCO's favor. Thus, LILCO's ability to conduct its proposed Phase I and II activities depends on whether its current revenues from operations are sufficient to cover all expenses. Dirmeier.and Madan Aff., para. 9.
At the present time, LILCO has included'in'its base rates
$94.5'million of emergency rate relief granted by_the:NYPSC in the Fall of 1983. LILCO has asked the NYPSC that the interim relief be made permanent and that an additional $186.5' million be added to its' rates' effective October 1,'1984...' Opponents,-
including Suffolk County and the New York State Consumer-Protection Board, have argued that none of this relief is
. proper.and that, in addition, $116 million should be removed' from LILCO's base rates because the LILCO austerity program
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f
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represents-a reduction in the level of service being provided.
-It is~' impossible to predict What rate relief, if any, LILCO will ultimately receive. It is nonetheless projected that LILCO will run out of money by September 1984 even if it' were to-receive the full rate relief it has requested. See Dirmeier and Madan Aff., para. 9 and the table therein.
.I t is clear, therefore, that the cash necessary to satisfy LILCO's current requirements cannot be obtained by LILCO. Fur-thermore, even assuming that the entire amount of LILCO's pend-ing rate increase were to be granted, LILCO still would face considerable borrowing requirements during 1984 and 1985, at a
~
time When its borrowing capacity has already-been fully uti-lized. Dirmeier and Madan Aff., para. 9.
Finally, there is no reasonable probability that:LILCO will be able to make up the cash shortfalls . projected ; for 1984 and 1985 by either borrowing or' sale of stock;-the1 capital markets - are effectively closed to LILCO due ' to its desperate financial situation. Id. at para. 10. - Since-LILCO_already'is in desperate financial condition and"since it shortly _will'-run-out of cash,-LILCO is not financially qualified to# carryfoutL Phase I and II activities.=
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1 LILCO's motions fail even to mention LILCO's precarious financial conditions, and the impact of that condition upon its ability and qualification to perform the activities for which
'it seeks a license. LILCO has not demonstrated -- and the State and County submit it cannot demonstrate -- that it is fi-nancially qualified to operate Shoreham or to conduct-the activities proposed for Phases I or II. Accordingly, this Board'cannot make the finding required under Sections 50.57(c) and 50.57(a)(4), and LILCO's summary disposition motions must be denied. ,
- 4. LILCO has failed to demonstrate that issuance of licenses for Phases I and Phase II will not be inimical to the security of ' the public Under Section 50.57(a)(6), the NRC must find that issuance of the licenses sought by LILCO "will not be inimical to the common defense and security . . . . There are material facts in dispute concerning this issue. However, until the Board establishes the requisite procedures for handling safeguards information here, the County and State cannot lawfully discuss the facts and implications of security' matters and thus, can only highlioht the issues. (Please note that we have repeated, requested the establishment of necessary safeguard procedures, and we hereby.do so once again.) -Briefly, therefore, the fol-lowing points document material security-relate issues in
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disputed which preclude summary disposition the grant of the requested licenses.
(a) In 1982, the Licensing Board admitted 9 County secu-rity contentions in the Shoreham proceeding. The contentions were predicated on alleged security deficiences pertaining to the LILCO's proposed method of operating Shoreham at that time, including certain matters related to LILCO's. proposed emergency onsite power system, the TDI diesels.
(b) On December 3, 1982, the Board approved a Security Settlement Agreement and considered the contentions resolved.
The Settlement Agreement was premised on actions taken by LILCO to resolve the County's concerns. The County found these actions adequate given LILCO's proposed method of operating Shoreham that existed at that time.
(c) In March 1984, LILCO announced a-radical change ~in its planned operation and plant configuration. Most signifi-cant from a security viewpoint is the fact that the TDI diesels are now considered inoperable and are " replaced" by a'20 MW gas turbine located completely outside the protected area and 4 mo-bile EMD diesels located within the protected area but in an exposed location and with their cable and conduit supplying the safety loads in an exposed location.
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i (d) The security concerns which were resolved as of December 3, 1982, can no longer be considered fully resolved because the County asserts that LILCO has inadequate means to protect its proposed alternate emergency AC power system.
Therefore, the County's prior contentions are revived to the extent they pertain to matters pertinent to the new power con-figuration, particularly in relation to the standards set forth in Se'etion 73.55.
(e) The NRC Staff has recognized' security matters to be_a concern at low power. See SSER Supp. 5, at pp. 13-2 through 13-4. However, the-Staff has concluded erroneously that there is no identifiable need to protect the offsite power sources as vital equipment. See id. at 13-3. The County and State disagree with this conclusion and note that in NUREG-0992,
" Report of the Committee to Review Safeguards Requirements at Power Reactors," it is recommended (p. 14) that "[d31esel gen-erators or other onsite AC power sources and principal-DC power sources" be protected as vital equipment. The County and State also disagree with the Staff premise that a sabotage induced LOCA can be assumed to be precluded at low power, thus leading to the Staff view that the LILCO AC power sources need not be-protected as vital equipment. See Supp. 5 at 13-2. In fact,
, the County submits that there are bases to be concerned about a l
4 A ,
simultaneous LOCA and loss of all AC power induced by the Part 73 design basis threat. Finally, the County and State allege that LILCO's new proposed emergency AC power system, as pres-ently configured in its exposed location, does not comply with 10 CFR 6 73.55 in that LILCO has failed to provide the required "high assurance" of protection against the Part 73 design basis threat.
(f) For any license issued for Shoreham, the plant's se-curity system must be fully implemented and in compliance with
- Co. (North Anna Power Station, Units 1 and 2), LBP-77-64, 6 NRC 808, 813 (1977). Suffolk County and the State of New York
, allege that the security system at Shoreham does not comply wit. Part 73.
The foregoing data, set forth only in summary form in the absence of the necessary safeguards procedures, demonstrate that LILCO's motions for summary disposition must.be denied.
There are material facts in dispute, particularly, whether LILCO's security plan meets Section 73.55 and adequately protects the exposed new LILCO AC power. system which-must be relied upon for emergency power in the event of a sabotage induced LOCA. Given the material facts that are in dispute,
this Board cannot even consider granting the summary disposition motions.
V. Conclusion For the foregoing reasons, LILCO's Phase I and Phase II Motions must be denied.
Respectfully submitted, Martin Bradley Ashare Suffolk County Department of Law Veterans Memorial Highway Hauppauge, New York ll7A8 Herbyt H. Brown Lawrence Coe Lan er Karla J. Letsche KIRKPATRICK, LOCKHART, HILL, CHRISTOPHER & PHILLIPS 1900 M Street, N.W., Suite 800 Washington, D.C. 20036 Attorneys for Suffolk County i
Pabian G. Palomino i Special Counsel to the Governor of New York State Executive Chamber, Room 229 Capitol Building Albany, New York 12224
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Attorney for Mario M. Cuomo Governor of tha State of New York Dated: June 13, 1984
l 6a,s. ~ l e -
i STATEMENT OF ISSUES MATERIAL TO' i
SUMMARY
DISPOSITION OF LILCO'S REQUEST FOR LICENSES FOR PHASE I-AND PHASE II AS TO WHICH THERE
!. ARE FACTS IN DISPUTE i
.l. Whether- during LILCO's proposed Phase II, the total time ;
j during which the reactor is critical is substantially
! - greater than five minutes, contrary to the assertion in paragraph 4 of the Statement of Material Facts as to Which L
j There is no Genuine Issue.to be Heard which is attached to i the LILCO Phase II Motion. Minor and Bridenbaugh Affida-
! vit, para. 16.
! 2. Whether, given LILCO's proposed alternate AC power config-uration,-the Shoreham plant complies with any of the fol-lowing regulations:
i l General Design Criterion 1
! . General' Design Criterion 2 General. Design Criterion .3 l General Design Criterion 4
. General Design Criterion 17 General Design Criterion 18 g
General Design Criterion 33-( General-Design Criterion 34 l General Design' criterion. 35 j ' General ~ Design Criterion 37.
General Design Criterion . 38 General Design. Criterion 40 General Design Criterion 41 General Design Criterion' <4 3 '
General Design Criterion ~ -
44 General Design Criterion 46 Part 50, Appendix B, Criterion III Part 50, Appendix B,1 Criterion..VII Part.50,. Appendix'B,. Criterion VIIIL Part 50,. Appendix B,. Criterion X Part 50,~ Appendix B,-Criterion. ~ XI u
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2-
- .i ' /,, < " J J Part 50, Appendix B, Criterion XIII Part 50, Appendix B, Criterion XVII Minor and Bridenbaugh Affidavit, paras. 6,7,8,10.
} ,
- 3. Whether, given LILCO's proposed alternate AC power config-uration, the Shoreham plant complies with the final ATWS ,
rule as approved and described by the Commission on June 1, 1984. Minor and Bridenbaugh Affidavit, para. 9.
. 4. Whether construction of Shoreham is substantially complet-ed in conformance with the operating license application as detailed in the FSAR. Minor and Bridenbaugh Affidavit,
, paras. 11-15.
- 5. Whether, given LILCO's proposed alternate AC power-config-uration,# the activities proposed for Phases I or II,'or
~
operation of the Shoreham plant, will be conducted in con-formanc'e with the,NRC's regulations. Minor and
, Bridenbaugh Affidavit, paras. 6-11, _ 17.
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- 6. Whether given LILCO's present financial; condition of'being 4
on the brink of bankruptcy anc projected to run out of f
. cash in September 1984, LILCO Js financially qualified to operate <the Shoreham plant or to conduct the activities
. proposed for Phase .I or , Phase' II. Dirmeier and Madan Af-q, e
,, fidavit; paras. 4-13. s. W
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- 7. Whether,'given LILCO's proposed alternate power configura-tion, operation of the Shoreham plant, or the activities Proposed in~ Phase I or Phase II, would be inimical to the security of the public.
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. UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION
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i Before the Atomic Safety and Licensing Board v
)
In the Matter of )
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LONG ISLAND LIGHTING COMPANY ) Docket No. 50-322-OL-4 ,
) (Low Power) l (Shoreham Nuclear Power Station, ) i Unit 1) )
)
AFFIDAVIT OF GREGORY C. MINOR AND DALE G. BRIDENBAUGH Gregory C. Minor and Dale G. Bridenbaugh, being duly sworn, state as follows:
- 1. We are both consultant engineers, founders, and partners of MHB Technical Associates, 1723 Hamilton Avenue, San Jose, California. We have both been working on the Shoreham operating license issues since 1977. Our professional qualif.1-cations have previously been fil'ed in the Shoreham proceeding.
- 2. The purpose of this Affidavit is to identify and discuss various technical issues related to LILCO's May 22, 1984 Motions for Summary Disposition on Phase I and Phase II of its Supplemental Motion for Low Power Operating License, dated March-20, 1984. In our opinion, the facts we address'below in-dicate that the Shoreham design-is not in compliance with many I
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of the NRCs regulations and that the findings required under 10 C.F.R. Section 50.57 for the issuance of an operating license cannot be made for Shoreham at this time.
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- 3. In its Motions for Summary Disposition, LILCO re-quests licenses to perform certain activities that are de-scribed as " Phase I" and " Phase II." Phase I, according to LILCO, consists of loading fuel into the core and the perfor-mance of certain core verification activities involving no criticality, but requiring the movement of control rods. LILCO Phase I Motion, p. 8. During Phase I, the pressure vessel head ,
will be removed, and no power generation will occur. Phase II, I
according to LILCO,. consists of criticality up to 0.001% of rated thermal power, and the performance of certain cold criti-cality testing. LILCO Phase II Motion, p. 2.
- 4. LILCO's operating license application, as supported and detailed in the FSAR, includes the provision of onsite emergency AC power by three safety-related, seismically and en-9 vircnmentally qualifi'ed_ diesel generators manufactured by Transamerica Delaval Inc. (the "TDI diesels"), and designed to meet the single failure criterion. (FSAR Section 8.3'and Table i
3.2.1-1) l u
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- 5. In its Motions for Summary Disposition, LILCO postu-lates the unavailability of the TDI diesels during its proposed Phases I and II. LILCO Phase I Motion, p. 5; Phase II Motion,
- p. 4, 6. It also proposes, in its Supplemental Motion for Low Power Operation, an alternate AC power configuration consisting of a 20 MW gas turbine and 4 mobile diesel generators (the "EMD diesels").
- 6. LILCO has not classified either the EMD diesels or the gas turbine as safety-related, even though they are impor-tant to safety in that they will be relied upon to prevent exceedance of fuel design limits during operation. Therefore, GDC 1, 2, 3 and 4 are applicable to this equipment.- The FSAR for Shoreham describes an onsite emergency power source which is safety-related and meets GDC 1, 2, 3 and 4. FSAR, Table 3.2.1-1, page 11, and Section 8.3. Absent an onsite emergency AC power source as described in the FSAR, Shoreham is not in compliance with these GDC. Although LILCO is requesting the issuance of an operating license, it;has not obtained an exemp-tion from the requirements in GDC 1, 2, 3 and 4.
- 7. The newly proposed Shoreham design also does not meet-several. GDC which involve the design and . testing of systems im-portant to safety during periods when the onsite power-source 1
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'is' supplying power (and offsite power is not available),
because (a) there is no onsite emergency AC power source postu-lated in the proposed Shoreham configuration, and (b) as a result, under the proposed configuration, the transfer from offsite to onsite power cannot be tested as required. The ap-plicable GDC, which are not satisfied at Shoreham, are as follows:
GDC 17 -- Electric Power Systems GDC 18 -- Inspection and Testing of Electric Power Systems GDC 33 -- Reactor coolant makeup GDC 34 -- Residual heat removal Gnc 35 -- Emergency core cooling GDC 37 -- Testing of emergency core cooling systems GDC 38 -- Containment heat removal 4
GDC 40 -- Testing of containment heat removal system GDC 41 -- Containment atmosphere cleanupf GDC 43 -- Testing of containment atomsphere cleanup systems GDC 44 ' -- Cooling water GDC 46' -- Testing of cooling water systems f LI'LCO has not obtained an exemption from:the requirements of' the GDC listed above.
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- 8. Shoreham also is not in compliance with the Part 50 Appendix B requirements for quality assurance with respect to the design, installation, testing and operation of the EMD die-sels and gas turbine. A fully qualified onsite emergency AC power source as envisioned by GDC 17 must meet these Appendix B requirements. See FSAR Table 3.2.1-1. However, the Appendix B requirements are not satisfied by the alternative AC power con-figuration propcaed by LILCO. Among the specific criteria which are applicable to the EMD diesels and gas turbine power
~
sources, but which are not satisfied, are:
Criterion III Design control Criterion VII Control of purchased material, i equipment and services Criterion VIII Identification and control of material, parts and components Criterion X Inspection Criterion XI Test control Criterion XIII Handling storage and shipping Criterion XVII OA records
- 9. A final rule on ATWS, unanimously approved by the Commission on June 1, 1984 (Letter Chilk to'Dircks, et al.,
dated June 1, 1984,-
Subject:
Staff Requirements;- Affirma-tion / Discussion and Vote, 11:30 a.m., Friday, June 1, 1984),
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i contains two requirements: (1) a diverse reactor trip system and (2) mitigating systems. In its discussion of the rule, the Commission stated that these systems "must be capable of per-fprming safety functions with loss of offsite power" (Chilk Letter at p. 24). With LILCO's proposed alternate AC power configuration, _LILCO does not comply with the ATWS rule.
- 10. LILCO's proposed alternate AC power configuration fails to meet the requirements of GDC 17 because it does.not provide for an "onsite electric power system."
- 11. In light of LILCO's failure to demonstrate compliance with the regulations we cite in paragraphs 6-11 above, the Shoreham plant will not be constructed, would not operate,' nor could Phase I or Phase II activities be performed, in con-formity with tha NRC's regulations.
- 12. - During a recent inspection of the Shoreham site on i
May 24, 1984, Mr. Minor observed substantial amounts of ongoing construction. These, involved the following areas important to safety, some of which were safety-related or security areas:
- a. Construction of-an'onsite safety-related diesc1 fuel storage facility is at the stage of major concrete emplacement', involving numerous workers and heavy equipment.
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- b. Major construction is underway on a new building to house the safety-related diesel generators manufactured by Colt Industries, which are in-tended eventually to replace the TDI diesels.
This is a Class I structure which will house the three Colt diesels in separate compartments, and also necessary safety-related support equipment such as day tanks, fuel pumps, _ cooling systems, controls, fire protection, electrical equipment and ventilation equipment.
I c. An underground concrete raceway between the above two structures is also under construction.
This raceway appears to be. designed to carry fuel and/or control lines between the two build--
ings described in paragraphs'(a) and (b).above,-
but does not appear to connect either structure ~ -
to the auxiliary building.
- 13. Mr. Minor was informed by LILCO,during.the site-in-spection that it plans to perform the construction work.neces-sary to run underground a 50 foot section-ofithe cable connecting'the mobile EMD diesels to th'e auxiliary building.-
As of May .:24, 1984, this cable was above ground mounted on1 wood
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4 blocks, and the planned construction had not been started.
This proposed construction would disrupt the availability and reliability of the EMD power source.
I
- 14. Before the Colt diesels, which are intended to replace the TDI diesels, can be made operational, LILCO must construct and install the necessary electrical and control con-nections between the Colt diesel building (not yet complete) and the auxiliary building and the control room. This con- ,
struction will involve the tie-ins to the safety-related and security areas of the control room and emergency switch gear ,
room. As rf May 24, 1984, there was no evidence that any of this work had begun.
- 15. Construction is not completed, and the proposed Phase I and Phase II activities will,not be performed in conformance with LILCO's operating license application as reflected in the FSAR and Technical Specifications, for the following reasons :
- a. The FSAR describes operation, including preoperational testing and low power-testing, with redundant, safety-related, seismically and environmentally qualified diesel generators which are designed to meet the single failure criterion. LILCO's proposed Phase I and Phase
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II activities, using EMD diesels or the 20 MW gas turbine, would not be in conformance with the standards set forth in the FSAR for onsite AC emergency power.
- b. The activities proposed in Phases I and II will necessitate the violation of many of the Shoreham Technical Specifications, including limiting conditions for operation and subsequent-actions to be taken with one or more onsite emergency diesel generators inoperable.
Technical Specifications require a plant shut down within a limited time if one onsite diesel 1 -
is unavailable. If two or more onsite diesels are unavailable, the plant must shut down imme-diately.
- c. -LILCO has proposed to take,certain actions be-
~
yond the exicting Technical Specifications in-an attempt to ~ provide protection from a potential loss of AC power (e.g.,' shut down in the event of seismic event of 0.01 g or a severe weather warning). To the best of our knowledge, these proposed limiting. conditions of=operationLhave g -
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not been incorporated into the Shoreham Technical Specifications, nor have all of the ,
necessary procedures to implement such conditions been finalized, submitted, and approved,
- d. The new Class I buildings being constructed to house the not-yet-delivered or installed Colt diesels, their fuel, and the.necessary interconnections, have not been incorporated into the drawings for the plant nor are they de- -
scribed in the FSAR. Also, the equipment, both safety-related and important to safety, to be housed in the new structures has not1been in-clude'l in the plant operating procedures.
- 16. The LILCO Phase II Motion appears'to contradict LILCO's earlier Supplemental Motion for Low Power Operating License'of March 20, 1984. Dur'i ng ~LILCO's proposed . Phase II, according to LILCO's witness Notaro (Notaro.AffF at para. 8, attached to March 20 Supplemental Motion), there will be many approaches to criticality, involving repeated control rod ' with-drawals and insertions, as part of LILCO's proposed operator training. In contrast,-the May 22, 1984 LILCO' Motion for.
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Summary Disposition on Phase II implies that the reactor will only be critical for a 5 minute period and then will be shut down (LILCO Phase II Motion, p. 2 and Statement of Material Facts As to Which there is No Genuine Issue to be Heard on Phase II Low Power Testing, para. 4).
- 17. For the following reasons, LILCO's proposal to per-form the activities defined as Phase I and Phase II, given the proposed alternate AC power configuration at the Shoreham plant and the LILCO assumption of no onsite AC power during Phases I and.II, would be contrary to normal industry practice and NRC regulations:
aj Construction of vital safety facilities is not complete.
- b. Noncompliance with Technical Specifications is inherent in the proposed actions.
- c. Procedures impacted by the lack of a safety-related source of onsite AC power are not finalized.
- d. The FSAR does not reflect the-proposed configu-ration which-is being used.as;a basis for these license requests.
- 1 9
- e. The possibility that the plant may no' receive an operating license or may be abandoded has not i
been evaluated in considering whether to make the plant radioactive as part of thi6 expedited pursuit of low power operation. The potential for worker exposure during the proposEw\ d Phase I, Phase II and subsequent low power activities and decommissioning would be eliminated (consistent with ALARA) if the decisions on LILCO's requests for licenses for Phase I, Phase II, as well as on its other low power phases, were deferred until the full power decision is imminent.
- f. This unusual action and its deviations ,from s
normal regulatory practices, has an inheront Iisk of instilling in the inexperienced Shoreham operators a disregard for compliance with regu-lations and establishing a poor precedent for future. decisions and actions.
Dale G. Bridenbaugh id Gregor9 C./ Minor 12 -
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Subscribed and sworn to before me by Gregory C. Minor this /3 day of June, 19F4, in the City of f o[ f ,l d. [ -
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hdN M Notary Public '
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My commission expires: N58 IcW3Ot2f Subscribed and sworn to before me by Dale G. Bridenbaugh this day of June, 1984, in the City of. , ;
State of . .
Notary Public My commission expires:
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- o. e-UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board
)
In the Matter of )
)
LONG ISLAND LIGHTING COMPANY ) Docket No. 50-322-OL-4
) (Low Power)
(Shoreham Nuclear Power Station, )
Unit 1) )
)
AFFIDAVIT OF MICHAEL D. DIRMEIER AND JAMSHED K. MADAN Michael D. Dirmeier and Jamshed K. Madan, being duly sworn, do state under oath:
- 1. We are both employed by Georgetcwn Consulting Group, Inc., located at ~456 Main.St., Ridgefield, CT 06877. Georgetown Consulting Group, Inc. is a financial and management consulting firm with extensive experience'in the regulation of public utili-ties. We have been engaged by the County of Suffolk to analyze
-the effect of Shoreham on the rates and finances of Long-Island'
-Lighting Company ("LILCO") and to otherwise assist the County ~in analyzing financially _relatediissuesipertaining to Shoreham.
Statements of our professional-qualifications are: attached.
- 2. 1We understand that-LILCO is seeking a license from the
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Nuclear. Regulatory Commission ("NRC")cto operate Shoreham.at lows power. Such low power: operation would'likely' precede ~any NRC' decision regarding LILCO's-request forfa full power. operating-
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- 3. We further underst and that for LILCO to receive a low power licence, even for so-called Phases "I" and "II," there must be findings by the NRC that LILCO has demonstrated it is finan-cially qualified to carry out the low power activities it is proposing and that such operation is in the public interest.
- 4. The purpose of this Affidavit is to describe presently available information and data which document that LILCO, due to its deteriorating financial condition, is not financially quali-fied to operate Shoreham, or even to carry out the Phase I and II activities, and that the grant of a license to conduct such activities would not be in the public interest.
- 5. In order to conduct the" proposed Phase' I and Phase II activities, LILCO will certainly need to expend monies in addi-tion tc. those which it currently is expending on _Shoreham. The precise nature and extent of such additional expenditures cannot be precisely quantified in this Affidavit; Suffolk' County has sought such data from LILCO in discovery ~ requests, but has not-yet. received the requested information from LILCO.- We expect, ,
such expenses to include, however,'at a minimum, the.a'dditiona'l-time required of: personnel ~to load ifuel and to~ conduct the. Phase.
I'and II activities, and the need f'or more stringent' security once' fuel is actually placed in.the reactor..
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- 6. Regardless whether Phases I and II will require addi-tional monetary expenditures by'LILCO, however, in our opinion, there is no assurance that LILCO has or will be able to obtain the financial resources necessary'to complete Shoreham or to finance the proposed Phase I and II activities.
- 7. Long Island Lighting Company is on the brink of finan- .
cial disaster. All its financial and operating resources are committed at this time. Unless additional sources of cash are made available, which we believe is unlikely, the Company will ,
run out of cash in September 1984. If LILCO is predicted to or in fact does run out of cash, in our opinion, it is not.finan-cially qualified to conduct the proposed Phase I and II activi-ties; the grant of a-license or an_ exemption to-permit'a license in these circumstances would be contrary to the public interest.
- 8. Data documenting LILCO's financial-crisis include'the
- following:
a) LILCO may be unable to continue to provide safe and adequate electric service on:Long Island, and unable to safely
~
operate a nuclear unit,-even_at low power levels. Thus,Jat page 46 of.-LILCO's 1983 SEC Form'10-K, LILC'O , states : ~
-. . .Elittle'or no' assurance can've:
- given
- regarding the Companyts abil~-e <
l ity'to. raise additional funds--in
! ~1984 and:in future years'in-order to meet its construction and other
- capital ~requirementsJand. operation '
al needs.
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a Similar statements appear elsewhere in the LILCO 1983 10-K:
The Company.may be unable to obtain the necessary financing er adequate rates or to conserve sufficient cash to meet its operating and capital requirements pending the completion, installation and test-ing of.the new [ diesel] generators.
(p. 23)
The Company's ability to continue its planned construction program, including the completion of Shore-ham, depends upon the ability of
.the Company to continue to obtain the funds required. (p. 45) b) LILCO has implemented a severe " austerity" program, canceled its common stock dividends, and suspended payments on i
its Nine Mile Point No. 2 obliga'tions. LILCO's Vice President for Finance, Mr. Sideris, states in recent testimony filed before the New York Public Service Commission ("NYPSC"):
Furthermore, the austerity program, the elimination of the common stock dividend, and the suspension.of scheduled payments in connection with dine Mile Point-Unit No. 2 are all extraordinary measur.es --
measures which neither LILCO nor any-other utility would consider '
for more than an instant except for the most critical and urgent of
. circumstances. (Page 16 of pre-filed NYPSC testimony).
c) The 1983~LILCO.SEC. Form 10-K,1 page 58, st'ates "At December.31, 1983, the. Company had borrowed all of the $400 million of funds available under its-Revolving Credit Agreement
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and its Eurodollar Revolving Credit Agreement." In a letter dated May 3, 1984, LILCO's counsel states, . . . the Company can-no longer obtain external financing for its operations."
d) In February, 1984, LILCO placed at risk its $570 million-investment in Nine MilefPoint 2 by suspending its pay-ments toward the completion of that plant.. Niagara Mohawk has informad LILCO that it considers LILCO to be in default of its obligations to the cotenants in that project.
e) In March, 1984, LILCO implemented an " austerity" ,
program designed to save $100 million in 1984. This program represents a loss of 741 positions at LILCO, 246 jobs with out-side contractors, and 11 percent of the budgeted 1984 construc-tion program. Page 46 of LILCO's.May 30, 1984 " Position Paper --
Shoreham Nuclear Power Station" indicates-that customers are-subject to longer service response times and-reduced customer service under the austerity plan. Thus, customer service has already been negatively.affected by the existing LILCO austerity.
program.
f) The austerity program, .itself,-may lead to'further-deterioration'in LILCO's financial and operating position. LIn a: ^
letter,to NYPSC Administrative Law Judge. Robinson' dated Mayl3,,
1984,fLILCO's counsel stated "LILCO is now assuring-safe and adequate service lfor the short run -- not the long haul.-lit will' b
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I continue to do so. As a result, substantial cost increases for necessary operations will be identified with very short lead times, and their magnitude and timing simply cannot be forecast."
g) In March, 1984, LILCO cancelled payment of its common stock dividend for the remainder of 1984. It would be difficult to overstate the importance of this action. Ready '
access to capital markets is a mainstay of utility financial
. operation, and cancellation of the common stock dividend makes-such access extremely difficult, if not impossible.
h) Suppliers to L1LCO have tightened up the avail-ability of normal credit to the Company, increasing the. Company's cash. difficulty. As Mr. Sideris, LILCO's-Vice President for Finance, states at page 11 of his recently filed testimony ~before the NYPSC, . . . our major oil suppliers now require-payment-at the time of or prier to delivery."
i) LILCO had financed its share of the Mine Mile Point.
2 construction program through a Construction Trust. .After the'
- cancellation of payments for Nine Mile Point.2, LILCO negotiated
-an amendment to the Trust Agreement to the effect that the fail-ure.to make construction payments would not constitute aldefault prior.to April 27, 1984, with:additionalJ30 day grace periods to be agreed to by banks-holding two-thirds.of the Construction Trust debt. A default'would mean thatithe entire. S500 million
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' loaned by?the banks would be~due-and payable., Iniaddition, due
- to cross-default ~ terms,.a default on the ConstructionLTrust'is 1
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likely to lead to a default on all of LILCO's long term debt.
Thus, LILCO now finds itself subject to potential default on all ts long term debt obligations at 30 day intervals, as well as l
possible reorganization.
- 9. Based on the foregoing, our experience in utility financial matters, and our work related to LILCO, it is our opinion that LILCO presently has no ability to raise cash either by' borrowing or by additional sale of stock. It is unlikely that
'LILCO will have any such ability unless the major existing un- ,
certainties surrounding emergency planning, emergency diesel generators, the potential reorganization due to Nine Mile Point No. 2, and rate treatments for the Shoreham and Nine Mile Point investments are resolved'in-LILCO's favor. Thus,.LILCO's ability to conduct Phase I and II activities depends on whether its 1
current revenues from operations are. sufficient ~to-cover all=
expenses. At the present time,~LILCO has included in its base-rates $94.5 million of emergency rate relief granted by the NYPSC in the Fall of 1983. LILCO has asked the NYPSC that.the interim relief be made permanent and that an additional S186.5 million be
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added to its rates effective October 1, 1984. Opponents-includ-
-ing the County of Suffolk and the New~ York State Consumer Protec-tion Board have argued that none.of this' relief is' proper and that, ~ in addition, $116 million should be reinoved from. LILCO's
- base'ratesisince the LILCO austerity program represents a g : reduction in-the-level of service being'provided. It'is-J .
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impossible to predict what rate relief,-if any, LILCO will ultimately receive. What is significant, however, is that LILCO is projected to run out of money by September 1984 even if it receives the full rate relief requested.
LILCO's Projected Cash Shortfalls (in millions of dollars)
No Relief (1) Full Relief (2)
, 1984 September S 12.8 $ 12.8 October 9.1 4.3 November December 59.5 39.3 1985- , .
January 148.5 113.7 February 139.6 86.1 March 164.8 98.1 April 165.3 84.9 May 210.1 114.7 4
June. 242.7 133.0 July 258.5 133.3 August 324.0 180.8 September 341.3 179.7
' October 343.0 161.6 November 352.8 155.8 December 378.9 167.3 (1) .Beyond present level of. interim relief of $94.5 millio'n.
(2) Entire request of $281 million.is granted on October.1, 1984.
The above schedule shows that, assuming the:present level of interim relief is made permanent, LILCO will have significant-additional borrowing and capital requirements 'during 1984 and 1985. The' cash necessary to satisfy-these: requirements' appears-e r -p
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to be unattainable to LILCO. Even assuming that the entire amount'of LILCO's pending rate increase were granted, LILCO still faces considerable borrowing requirements during 1984 and 1985, at a time when its borrowing capacity has already been fully utilized.
- 10. There is no reasonable probability that LILCO will be able to make up the cash shortfalls described in paragraph 9 via either borrowing or sale of stock. This is because the capital and debt markets are effectively closed to LILCO due tx) its des-perate financial situation.
- 11. Since LILCO already'is in desperate financial' condition and since it shortly will run out of. cash, we conclude that LILCO is not financially qualified to carry out Phase I and II or other low power activities and no exemption would be in the public interest. y
- 12. LILCO's current financial condition is of relatively recent origin. During the.last half of the 1970's and the early 1980's (indeed until.1983), LILCO's financial condition, while perhaps not the best in the utility-industry, was sufficiently healthy that'there was no serious question whether-it was finan-cially qualified to operate a nuclear. plant. Thus, during.that period LILCO paid common stock dividends regularly, and'had other '
traditional indicia offfinancial-health (e.g., SEC coverages,
[- etc.) so that.it.was able to, and did,:successfully raise monies in the capital markets.-
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- 13. Beginning in 1983, LILCO's financial condition and the perception of that condition by the financial community deterior-ated rapidly. The Form 10-K data cited above document the de-cline in 1983, which decline has now reached the point that we predict that LILCO is likely'to run out of money very shortly.
Michael D. Dirmeier Jamshed K. Madan Subscribed and sworn to before-m'e this day of Juner 1984, in-the City of -, State of .
Notary Public My commission expires:
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g STATEMENT OF QUALIFICATIONS 2
t 3 Q. WOULD YOU STATE YOUR NAME AND ADDRESS?
4 A. My name is Michael D. Dirmeier and my business address is 456 5 Main Street, Ridgefield, Connecticut. I am a member of the 6 firm of Georgetown Consulting Group, Inc..
7 8 Q. WHAT IS THE BACKGROUND OF YOUR FIRM?
9 A. Georgetown Consulting Group, Inc. is a financial manassment 10 consulting firm specializing in utility regulation. Members ,
jj of our firm have analyzed petitioner's testimonies, and have 12 testified, before numerous commissions in regulatory cases for 13 telephone, water, electric and gas utility companies 14 throughout the United States.
15 0
16 WHAT REGULATORY EXPERIENCE HAVE YOU HAD?
17 A. I have analyzed Company testimony, managed the preparation of 18 accounting testimony _ or testified in the following 39 jurisdictions:
20 21 Colorado i 22 Public Service Company of Colorado (1981) I&S.1525 j (1983) IES 1640 23 -
Mountain Bell l Telephone (1982)- IES.1575
[ g (1984) IES-1655 i 25 L
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Delaware 2
Diamond State Telephone Company (1982) Docket No. 82-32 3
Maryland 4
Delmarva F3wer & Light Company Case No. 7734 5
Baltimore Gas and Electric Company 6 (1977) Docket No. 7070 (1983) Docket No. 7695 7
Potomac Electric Power Company (1982) Docket No. 7662 8
g Minnesota 10 Northwestern Bell Telephone Company Docket No. P-421/
(1981) GR-80-911 11 Northwestern Bell Telepohone Company Docket No. P-421/
12 (1983/4 divestiture case) GR-83-600 13 Mississippi -
14 South Central Bell Telephone Company Docket No. U-4415 15 Accounting and Divestiture 16 New Jersey 17 Atlantic City Electric. Company (1982) Docket No. 822-116 Elizabethtown Gas Company (LPGA, 1981)
Hackensack Water Company .(1980) Docket No. 804-275 20 (1981) Docket-No. 815-447 (1982) Docket No. 815-447 2I 1
Jersey Central Power & Light Co. Docket No. 795-427 22 (2 cases: 1979,1980) 23 Middlesex Water Company Docket No. 793-269 (2 cases: 1979, 198G) 24 1
' 25 E
9
3 New Jersey Bell Telephone Co.
(1978) Docket No. 7711-1136 2 (1981) Docket No. 815-458
- Expensing Station Connections Various Dockets 3
New Jersey Bell Telephone Co. Docket No. --
4 (1983 divestiture case) 5 New Jersey Natural Gas Company (1982) BPU Docket No. 815-459 (Phase II) 6 ~
PURPA L. Omaking standards (1980) 7 Rockland Electric Co. (LEAC, 1979 Docket Nos. 7911-920 8 and 1980) & 7611-1100 9
South Jersey Gas Company (Overearnings Docket No. 808-517 case, 1981) 10 West Keansburg Water Co. (1978) Docket No. 7710-1026 11
- 2 New Mexico 13 Mountain States Telephone and Docket No. 877 Telegraph Co. (1979) 14 15 New York 16 Consolidated Edison Company (1980) Docket No. R-800-11069 17 Long Island Lighting Company gg (1980) Rate Case Docket No. 27774 (1982/3 Shoreham Phase-In) Docket No. 28252 New York Telephone Company Docket Nos. 27469 &
20 (2 cases 1979, 1980) 27710 21 Ohio Columhus and Southern Ohio Electric 23 Co. (1977/8) Docket No. 77-545-l EL-AIR I
24 (1978/9) Docket No.- 78-1439-EL-AIR i 25 l
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Toledo Edison Electric Co. (1979) Docket No. 79-143-EL-AIR 2
3 Pennsylvania 4
Bell,of Pennsylvania RID 1819 (1982 accounting) 5 Bell of Pennsylvania (1983) Docket R-811319 6 (Accounting & Divestiture) 7 Duquesne Light Company (1982) Docket No. R-21945 g -
Metropolitan Edison and Pennsylvania Docket Nos.I-79040308 Electric Co. (2 cases: 1979, 1980) & M-79040129 9
Metropolitan Edison Company (1980) Docket No. R-80051196 10 (1981) Docket No. R-800ll601 (1983) Docket No. R-822249 11 Pennsylvania Electric Company (1980) Docket No. R-80051197 13~ (1981) Docket No. R-800ll602 (1983) Docket No. R-822250 13 UGI-Luzerne Electric Division (1979) Docket No. R-78030572 Pennsylvania Bell Telephone Co. 1982) Docket No. 811819 15 16 Rhode Island 17 Newport Electric Company (1979) Docket No. 1410 18 South Carolina -
PURPA ratemaking standard (1980) 20 U.S. Virgin Islands 21 32 Virgin Islands Telephone Company Docket No. 180 (1978) 23 -
Virgin Islands Water & Power Authority 24 25
_ . _ . - . - . _ _ ....m. . . _ . . . . . . . . _ -
I l
} Q. WHAT OTHER PROFESSIONAL EXPERIENCE HAVE YOU HAD?
2 A. Prior to joining Georgetown Consulting Group, Inc., I was 3 employed by Touche Ross and Co. My consulting experience 4
includes operations reviews, system implementation and 5 Product-line analysis.
6 Before joining Touche Ross, I was a financial analyst 7 with the Bendix Corporation. My work included capital 8 budgeting, investment analysis, financial modeling and 9 planning, analysis of. acquisitions and divestments, and 10 Preparation of financial reports for the Board of Directors. ,
- 11 i
12 Q. WHAT IS YOUR EDUCATIONAL BACKGROUND?
13 A. I hold a Master of Business Administration degree in' finance 34 from the University of Chicago, received in 1973, and a 15 Bachelor of Science degree in Physics, received from Texas A&M 16 University in 1971.
17 I hold a Certificate in Management Accounting,~which is a
-18 Professional certification _for management accountants and 39 financial managers awarded by the. Institute of_ Management 20 Accounting of the National Association of Accountants'.
21 22 23 24 l
i - 25 l
O
- -- ,.,e, , , . -
N 1 STATEMENT OF QUALIFICATIONS 2
3 Q. WOULD YOU PLEASE STATE YOUR NAME AND ADDRESS?
4 A. My name is Jamshed K. Madan and my business address is 456 5 Main Street, Ridgefield, Connecticut.
6 7 Q. BY WHOM ARE YOU EMPLOYED?
S A. I am a principal in the managemer.t consulting firm of 9 Georgetown Consulting Group, Inc.
10 11 Q. WOULD YOU DESCRIBE THE GENERAL NATURE OF YOUR FIRM'S 12 SERVICE,S? ,
13 A. Our firm offer,s services in financial and management 14 consulting with special emphasis on utility regulation.
15 Members of our firm have performed or are performing analyses 16 of petitioners' testimonies and have presented testimony 17 before many commissions and boards in reg ulatory cases 18 involving telephone companies, air carriers, pipeline 19 companies, and electric, gas and water utility companies.
20 21 0 WHAT IS YOUR EDUCATIOMAL BACKGROUND?
22 A. I graduated from the Massachusetts Institute of Technology in 23 1966 with a Bachelor of Science Degree in Electrical 24 Engineering. I continued my graduate studies at M.I.T. and in 25 1968 I graduated with a Master of Science Degree in Management
-R s,,
I from the Alfred P. Sloan School of Management. During my 2 graduate studies, I held the position of research assistant 3 and teaching assistant in areas related to financial 4 management.
5 6 0 WHAT IS YdUR EMPLOYMENT EXPERIENCE?
7 A. From August of 1968 through April 1979 I was primarily 8 employed by Touche Ross & Co., an international public 9 accounting firm. I was promoted to principal in September 10 1977 and held the position of National Director of Regulatory -
jj Consulting. I left Touche Ross & Co. to become a principal in 12 Georgetown Consulting Group in May of 1979.
13 '
14 Q. PLEASE PROVIDE A BRIEF
SUMMARY
OF YOUR EXPERIENCE IN UTILITY 4
15 REGULATION.
16 A. I have presented testimony on accounting and related matters 17 on behalf of Rate Counsel, the public or intervenors before 18 vari us public utility commissions in the following rate 1
39 proceedings:
20 21 Alabama 22 Continental Telephone of Docket No. 17968 the South - Alabama
'3 South Central Bell Case Nos'. 10875 &
24 10876-25 O
+
. 'N '
g Arkansas 2
Southwestern Bell Telephone Company Docket No. 83-045-U 3
4 colorado 5
Mountain States Telephone & Docket Nos. 1400 Telegraph Company and 1575 6
Public Service Company Docket Nos. 1425 7 of Colorado and 1525 8 Connecticut.
9 -
Southern New England Telephone Docket Nos. 770526 &
Company 800418 10 Delaware 33 Delmarva Power and Light Company Docket No. 41-79 13 Delmarva Power and Light Company Complaint Docket No. 279-80 14 Delmarva Power and Light Company Docket Nos. 80 15 Delmarva Power and Light Company Docket No. 81-23, 16 81-13, 81-12 17 Georgia 18 - Southern. Bell Telephone Company Docket No. 3393-U 19 20 Maryland 21 Baltimore Gas and Electric Company Case No. 6985 Potomac Electric Power Company Case-No. 734S
'3
~
Chesapeake and Potomac Telephone Case Nos. 7467 Company and 7591 24 I 25 Delmarva Power and Light Company .
-Case No. 7427 i
6
T
, . N 1 Massachusetts 2 -
Boston Edison Company DPU-906 3 Minnesota 4 Northwestern Bell Company Docket No. P-421/GR80-911 5 6 New Jersey 7 - Atlantic City Electric Company Docket Nos. 701-641 & 772-113 8 Elizabethtown Gas Company Docket No. 727-624 9 Elizabethtown Water Company Docket No. 727-606 10 - Hackensack Water Company Docot No. 744-315 l - Jersey Central Power and Light Docket Nos. 743-184 & 1 12 7610-1021 13 - New Jersey Bell Telephone Docket No. 747-522,_ Company 7512-1251,7711-1136, 14 802-135 and 815-458 15 Public Service Electric and Docket Nos._744-335 & Gas Company 794-310 and 812-76 16 17 New York 18 Long Island Lighting Company Case Nos. 27374 & 27375 19 Case No. 27774 20 New York Telephone Company Case'Nos. 27100 & 27469 21 22 Ohio 23 Columbus and Southern Ohio Docket No. 78-1439 Electric Company EL-AEM
'4 Ohio Bell Telephone Company Case No. 79-1184 25 TR-AIR l -
Cleveland' Electric Illuminating Case No. : 81-146 EL-AIR _W
l
} Pennsylvania 2
Bell Telephone Company of R.I.D. 367 and 811819 Pennsylvania 3 Metropolitan Edison Company R.I.D. 434, 626 & 4 308 5 Pennsylvania Electric Company R.I.D. 392, 599 & 308 6 Philadelphia Electric Company R.I.D. 295, et al. 7 8 vermont 9 - New England Telephone and Docket No. 3806 Telegraph Company 10 ji Virgin Islands j, Abramson Bus Lines 13 Manassah Bus Lines Docket No. 150 14 Virgin Islands Telephone Docket Nos. 104, 105, Company 108, 126, 121, and 180 15 Virgin Islands Water & Power Docket No. 193 16 Authority 17 18 Q. PLEASE DESCRIBE YOUR OTHER EXPERIENCE. 19 A. Besides regulatory consulting, I have been the project leader
'O on other projects, including:
l - operations reviews
~
financial feasibility studies ,
'3
~
l economic ~ studies -
'4 marketing studies 25 k
~ _ ,
1 cash flow analyses 2 cost reduction studies 3 - system planning studies 4 5 I have given talks before American Management Association 6 meetings entitled, " Rate of Return Concept - A Management 7 Tool." 8 9 10 11 12 13 14 15 l 16 17 18 19 i 20 ! l 21 22 23 24 25 a D t
+ - a
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~
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before The Atomic Safety And Licensing Board
)
In the Matter of )
)
LONG ISLAND LIGHTING COMPANY ) Docket No. 50-322-OL-4
) (Low Power)
(Shoreham Nuclear Power Station, ) Unit 1) )
)
CERTIFICATE OF SERVICE I hereby certify that copies of Suffolk County and State of New York Memorandum in Opposition to LILCO's May 22, 1984 Motions for Summary Disposition on Phase I and Phase II of LILCO's Proposed " Low
~
Power Testing" have been served on the following this 13th day of June 1984, by U.S. mail, first class, except as otherwise noted. Judge Marshall E. Miller, Chairman Edwin Reis, Esq. Atomic Safety and Licensing Board Counsel for NRC Staff U.S. Nuclear Regulatory Commission Office of the Executive Legal Washington, D.C. 20555 Director U.S. Nuclear Regulatory Commission
- Judge Glenn O. Bright Washington, D.C. 20555-Atomic Safety and Licensing Board U.S. Nuclear Regulatory Commission Edward M. Barrett, Esq.
Washington, D.C. 20555 Long Island Lighting Company 250 Old Country Road
** Judge Elizabeth B. Johnson Mineola, New York 11501
- Oak Ridge National Laboratory P.O. Box X, Building 3500 ~ Honorable-Peter F. Cohalan Oak Ridge, Tennessee' 37830 Suffolk County Executive H. Lee Dennison Building
- Eleanor L.-Frucci, Esq.
. Veterans Memorial Highway Atomic Safety and Licensing-Board -Hauppauge, New York 11788 .
U.S. Nuclear' Regulatory Commission Washington, D.C. 20555 i l l l
6'
** Fabian Palomino, Esq. James B. Dougherty, Esq.
Special Counsel to the Governor 3045 Porter Street, N.W. Executive Chamber Washington, D.C. 20008 Room 229 State Capitol Mr. Brian McCaffrey Albany, New York 12224 Long Island Lighting Company Shoreham Nuclear Power Station
** .W . Taylor Reveley, III, Esq. P.O. Box 618 Anthony F. Earley, Jr., Esq. North Country Road Robert M. Rolfe, Esq. Wading River, New York 11792 Hunton & Williams P.O. Box 1535. Jay Dunkleberger, Esq.
707 East Main Street New York State Energy Office Richmond, Virginia 23212 Agency Building 2 Empire State Plaza Mr. Martin Suubert Albany, New York 12223 c/o Congressman William Carney 1113 Longworth House Office Bldg. Stephen B. Latham, Esq. Washington, D._ 20515 John F. Shea, Esq. Twomey, Latham and Shea
- Martin Bradley Achare, Esq. 33 West Second Street Suffolk County Attorney Riverhead, New York 11901 H. Lee Dennison Building Veterans Memorial Highway . Docketing and Service Branch Hauppauge, New York 11788 Office of the Secretary U.S. Nuclear Regulatory Commission Washington, D.C. 20555 O
ll Ka'rla J. Letscfk KIR$ PATRICK, CKHART, HILL, CHRISTOPHE PHILLIPS 1900 M Street, N.W., Suite 800 Washington, D.C. 20036 DATE: June 13, 1984
- By Hand '
** By Federal Express -
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