ML20127B022

Brief in Support of Application for Waiver of Withdrawal Fees Under 10CFR170.12.Unique Circumstances Described. Informal Hearing Requested.Certificate of Filing Encl

ML20127B022
Person / Time
Site:	Black Fox
Issue date:	06/12/1985
From:	Givray A, Zarrow H DOERNER, STUART, SAUNDERS, DANIEL & ANDERSON, PUBLIC SERVICE CO. OF OKLAHOMA
To:	NRC COMMISSION (OCM)
Shared Package
ML20127A998	List: ML20127A996 ML20127B007 ML20127B022
References
NUDOCS 8506210330
Download: ML20127B022 (39)

Text

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UNITED STATES OF AMERICA g' NUCLEAR REGULATORY COMMISSION t c]o BEFORE THE COMMISSION

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fQ Docket Nos.

STN 50-556 STN 50-557 In the Matter of the Application of PUBLIC SERVICE COMPANY OF OKLAIIOMA, ASSOCIATED ELECTRIC COOPERATIVE, INC.,

AND WESTERN FARMERS ELECTRIC COOPERATIVE (Black Fox Station, Units 1 and 2)

BRIEF IN SUPPORT OF APPLICATION FOR WAIVER OF WITHDRAWAL FEES UNDER 10 C.F.R. $170.12(b)

DOERNER, STUART, SAUNDERS, DANIEL & ANDERSON ALBERT J. GIVRAY 11ILARY I . ZARROW 1000 Atlas Life Building Tulsa, Oklahoma 74103 (918) 582-1211 Attorneys for Public Service Company I I

of Oklahoma, Associated Electric I Cooperative, Inc., and Western

Farmers Electric Cooperative, as Co-Owners of the cancelled Black Fox Station nuclear proiect June 12, 1985 0"J jb2{0 ha p A

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION Docket Nos.

STN 50-556 STN 50-557 In the Matter of the Application of PUBLIC SERVICE COMPANY OF OKLAHOMA, ASSOCIATED ELECTRIC COOPERATIVE, INC.,

AND WESTERN FA11MERS ELECTRIC COOPERATIVE (Black Fox Station, Units 1 and 2)

BRIEF IN SUPPORT OF APPLICATION FOR WAIVER OF WITHDRAWAL FEES UNDER 10 C.F.R. $170.12(b)

DOERNER, STUART, SAUNDERS, DANIEL & ANDERSON ALBERT J. GIVRAY IIILARY I . ZARROW '

1000 Atlas Life Building Tulsa, Oklahoma 74103 (918) 582-1211 Attorneys for Public Service Company of Oklahoma, Associated Electric Cooperativo, Inc., and Western Farmers Electric Cooperative, as co-Owners of the cancelled Black Fox Station nuclear project June 12, 1985 s

TABLE OF CONTENTS Page Tcble of Authorities . . . . . . . . . . . . . . . . . ii Introduction . . . . . . . . . . . . . . . . . . . . 1 Fcctual Background . . . . . . . . . . . . . . . . . . 3 Argument . . . . . . . . . . . ... . . . . . . . . . 9 I. CHARGING THE BLACK FOX STATION CO-OWNERS WITH A WITHDRAWAL FEE UNDER 10 C.F.R. $170.12(b)

WOULD VIOLATE THE FAIRNESS, PUBLIC-POLICY, AND VALUE-TO-APPLICANT PRINCIPLES OF 31 U.S.C.A. 5 9701; ACCORDINGLY, THE COMMISSION SHOULD WAIVE SUCH A FEE HERE. . . . . . . . . 9 A. N.R.C. Formulation of New Safety

Requirements

Completion of the

administrative record for the BFS Co-Owners' construction-permit application occurred in February 1979; the ever-changing regulatory course of the N.R.C. during the next three years

. was the sole reason for the BFS Co-Owners' forced withdrawal of such application. . . . . . . . . . . . . . . 11 B. N.R.C. Adoption of New Withdrawal Fees: )

Were it not for regulatory developments controlled exclusively by the N.R.C.,

the BFS Co-Owners could have fully avoided a million-dollar withdrawal fee. 20 II. GRANTING A FEE WAIVER TO THE UNIQUELY SITUATED CO-OWNERS OF THE BLACK FOX STATION PROJECT WOULD ESTABLISH NO UNFAVORABLE PRECEDENT AND WOULD AFFECT NO OTHER NUCLEAR CONSTRUCTION-PERMIT APPLICANT . . . . . . . . 29 Conclusion. . . . . . . . . . . . . . . . . . . . . . . 31 s

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TABLE OF AUTHORITIES  :

f Page i

N1w England Power Co. v. NRC, j 683 F.2d 12 (1st Cir. 1982) . . . 10, 21, 22, 24, 25, 27, 29

Public Service Company of Colorado v. Andrus, L

! 433 F.Supp. 144 (D. Colo. 1977) . . . . . . . . . . 24, 25 j Independent Offices Appropriation Act j of 1952, Title V, 31 U.S.C.A. I 9701 i (West 1983) . . . . . . . . . . . . . . 2, 3, 9, 11, 26, 27 ,

i I 10 C.F.R. Il70.12(b)(as amended  !

! effective Nov. 6, 1981) . . . . . . . . 1, 3, 9, 10, 27, 29 i I

l j 44 Fed. Reg. 58,559 (1979) . . . . . . . . . . . . . . . 5

44 Fed. Reg. 65,049 (1979) . . . . . . . . . . . . . . . 17 46 Fed. Reg. 18,045 (1981) . . . . . . . . . . . . . . . 18 i

46 Fed. Reg. 49,573--49,577 (1981) . . . . . . . . . . 7, 10, 24

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1 l 47 Fed. Reg. 2,286 (1982) . . . . . . . . . . . . . . . 19 l

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l UNITED STATES OF AMERICA NUCLEAR REGULATORY CCMMISSION l

BEFORE THE CCv_wISSICS .

In the Matter of the Application of )

PUBLIC SERVICE COMPANY OF OKIAHOMA, )

ASSOCIATED ELECTRIC COOPERATIVE, INC., ) Docket Nos.

AND ) S N 50-556 WESTERN FAPMERS ELECTRIC COOPERATIVE, ) STN 50-557 (Black Fox Station, Units 1 and 2) )

BRIEF IN SUPPORT OF APPLICATION FOR WAIVER OF WITHDFAWAL FEES UNDER 10 C.F.R. $170.12(b)

Introduction This catter ceces before the Nuclear Regulatory Cc=sission (the "Cc==ission" or "N.R.C.") cn an Application For Waiver Of Withdrawal Fees Under 10 C.F.R. $170.12(b). This Application is cade by Public Service Cc=pany of Oklahc=a, Associated Electric Cooperative, Inc., and Western Far=crs Electric Cocperative as co-owners of the cancelled Black Fox Station nuclear project (respectively, the "BFS Project" and the "BFS Co-Owners") .

The contested fees relate to the BFS Co-Cwners' withdrawal of their application for a construction permit to build their BFS Project. The total of such fee is $1,009,275. Of this, $125,000 was paid in 1975 when the BFS Co-Owners first applied for a nuclear construction permit. By invoice $C0203 dated May 3, 1964, the N.R.C. sought a fee balance of $884,275 (plus interest at

$6,632.06 per conth) following withdrawal of such construction-permit application from further N.R.C. consideration.

l The BFS Co-Owners respectfully subnit that the Corr.ission's assessnent of such a withdrawal fee against them violates the

1 i

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.i I principles of the Independent offices Appropriation Act of 1952, 31 U.S.C.A. 5 9701 (West 1983). Specifically, the unique q circu= stances surrounding the BFS Project show that a withdrawal fee in the =illion-dollar range is canifestly unfair. It contra-j venes the N.R.C.'s public policy of nuclear regulatory refers.

And it does not fairly reflect "value" to the ETS Co-Cw.c rs as l required by 31 U.S.C.A. S 9701.

i j The unfairness cc=es frc= two parallel lines of regulatory 1

developcents, both within sole N.R.C. control, which finally intersected to the severe prejudice of the BFS Co-Cvners and their nuclear Project. Cne line is the N.R.C. 's actiens to adept new 1 safety require =ents for nuclear constructicn per=its to be issued 1

} after the March 1979 accident at Three Mile Island. The other line traces the N.R.C. 's adoption of a new regulation to charge, for the first time ever, a withdrawal fee against any construction-permit application withdrawn on or after Nove.-her 6, I

1991.

I i

l Especially after March 1979, the DFS Co-Owners acted in good I

faith and with utsest dispatch in their willingness to ec= ply with each N.R.C. prcncunce=ent en new safety requirements. When the N.R.C. eventually spoke in January 1962 with ec=pleteness and 1

I j finality on such safety require =ents, the BTS Co-owners teck caly

.I one conth to assess that the BTS Project was no longer econo =i-cally feasible, and to withdraw their constructien-pereit i

1 application. But by then, the new rule on withdrawal fees had l taken ef fect. Thus, regulatory events not only stalled the BFS J

Project fre= early 1979 to early 1982 and destroyed the Project's i

4

economic viability, but also deprived the DFS Co-Owners of any meaningful opportunity to withdraw their construction-permit

't application before November 1981 when they would have been spared a million-dollar withdrawal fee.

Therefore, the principles of fairness, public policy, and i

value to recipient as embodied in 31 U.S.C.A. S 9701 call for <

l I

waiver of the withdrawal fee now sought from the DFS Co-Owners <

i i under 10 C.F.R. S170.12(b). That such waiver is both warranted

! i and proper appears from the relevant facts and their unique effect l upon the DFS Co-Owners as set forth more fully below.

I l

] Factual Background

i.

j On December 23, 1975, Public Service Company of Oklahoma had l 1

l l its application docketed for a nuclear license to construct and i operate the DFS Project on behalf of itself and Associated  !

1  !

Electric Cooperativo, Inc. In July 1976, Western Farmers Electric  ;

the were Cooperative joined Project. Public hearings hol<1

periodically betwocn 1976 and 1978 on issues relating to sito suitability and the environment. The Atomic Safety and Licensing Board (the "ASLB") reached a favorable partial initial decision I concerning the DFS Project on July 25, 1978. From this decision,

r j the Commission issued the DFS Project a Limited Work Authorization I

("LWA") on July 26, 1978. The DFS Co-Owners thorcupon began ,

4 preparatory work on their nuclear power project. At the samo,

] they worked to complete tho administrativo record for issuanco of a full nucicar construction permit. Completion of this record was i achieved February 1979. t

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From 1975 through February 1979, the BFS Co-Owners proceeded diligently towards N.R.C. issuance of the necessary construction permit. The regulatory rules and process for obtaining such

permit were straightforward and predictable. The administrative I proceedings duly progressed as expected.

The last essential step for construction-permit issuance was the conclusion of the public hearings on radiological health and I safety before the ASLB. Once these hearings concluded and the i administrative record was closed in February 1979, the I

! Commission's issuance of a construction permit for the DFS Project

! seemed assured. This predictable administrative procedure, j however, was soon crippled.

l On March 28, 1979, the accident occurred at Metropolitan i Edison's Three Mile Island Unit 2 ("TMI-2") nuclear-fueled, l

l electric generating station. That such an accident would disrupt j the N.R.C.'s usual administrative processes could be expected, i

That a licensing pause might ensuo in issuance of construction

) permits could also be expected as the N.R.C. considered adoption of new safety requirements for all nuclear projects. What could j.

not be expected was a three-year period of unsteady regulatory

developments marked by a constantly shifting N.R.C. course on new cafety requirements and delay af ter delay in construction-permit issuance. Throughout this period, the BFS Co-Owners kept close j

contact with the Commission in an offort to remove any and all j cafety obstacles to issuance of a construction permit for the BFS Project. These three-year developments may be summarized as follows:

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

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l C: August 20, 1979, the Ccenissicn issued a licensirg hasis l cn safety, cnly te receive sharp criticis free -** r ezeny i

Cen=issien fer issuing s:ch rules prier te receiving the Ienemy I

] C-ission's evn report ce the accident at ~x'-2. With 'icensing 1

i rules still  ::available, the STS Ce< vrers penitiened **e '

i Ccenissien en Septerher 5, 1979 te establiar its nev safety : les i se that the ETS Project eculd preceed. The Cc==isti n p blished l ,

l i

i its Interin Statement of Felity and Precedure en Cetater 10, 1979.

l See 44 Ted. Feg. H,559 11979).

is i

While the Interis Statement alleved the Ce==issien staff te f

i proceed with licensing en an ad h : case-by-case basis, it 4

i previded the ETS Cc- vner s with to delineatics cf what safety j adaptatiers er design nedificatiens veuld be required befcre their j constructicn perrit eculd issue. This case-by-case precedere led a

te still =cre disenssica terveen the ETS Cc-Cv.ers and the !

i j Ccesissics as varicus alternatives and requirenents vere 1

1 censidered. Each time the STS Cc-Cvners reasenativ - telieved that 4

1 i, the Cc==issi- 's new safety. re s.:t rements were final er nearly .

l final, the Cc==issica changed its requirc=ents er af pted I

i additienal enes, i Sir ltanecusly with its ineen 1:sive activities en safety, I

j the Cce=issics alse began anendin9 certun precedural rules n::

i l

related to safety. Tcr example, the CO:=issien .andated f

i additienal appellate channels cf licensing review tefere any nev 1

i nuclear censtreetien per=it eculd issue. The ETS 7:o ect it s i

j steed en shif ting sands: The STS Cc-Cvners eculd neither predict i

3 the C = issica's new safety requirements nor rely 0;ce the I

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Commission's established procedures for processing pending l applications. Worse, the Commission's technical requirements on safety were often changed with only seldom explanation why the BFS Co-Owners' design and safety proposals did not meet the requirements.

In August 1981--some 2} years after completion of the BFS administrative record--the Commission met to codify a " policy" on final safety and non-safety licensing requirements. With the actual regulations yet unpublished, the BFS Co-Owners used this

" policy" to begin immediate re-evaluation of construction costs and schedule estimates for their Project. This August 1981

" policy" gave the BFS Co-Owners the very first opportunity since the March 1979 TMI-2 accident to re-evaluate the BFS Project's economic feasibility under the new safety and design requirements.

Even so, re-evaluation was incomplete because the August 1981

" policy" left open certain provisions concerning hydrogen control.

Finality on these provisions was essential before the BFS Co-Owners could meaningfully decide whether to proceed with the Project or whether to withdraw their construction-permit applica-tion.

Finality in all new safety, design, and licensing require-ments, including those left open in August 1981, came on January 15, 1982. On that date, the Commission fully and finally published for the first time what would be required for all new issuances of construction permits. Immediately, the BFS Co-Owners began intensive consideration with the utmost expediency to assess for the first time what they had been unable to assess for almost 1

l l

l three years: the impact of the complete new regulations upon their BFS Project.

Only one month after first awareness of the new regulations, the BFS Co-Owners were able to reach a decision they had tried so hard to reach since March 1979. Unfortunately, three years of shifting regulatory developments and delay had finally rendered the BFS Project no longer economically feasible. A project valued at several hundred million dollars had to be cancelled. The intensity of the BFS Co-Owners' disappointment and frustration is expressed in their February 16, 1982 letter 1/ advising the Commission that regulatory developments had forced the BFS Co-Owners to withdraw their construction-permit application.

Ironically, the BFS Co-Owners' withdrawal coincided with the effective date of the Commission's final safety requirements published on January 15, 1982.

The BFS Co-Owners were thereafter reminded that such with-drawal carried with it more than the loss of a valuable project.

Parallel to the regulatory developments on new safety require-ments, the N.R.C. had undertaken to amend fee assessments against nuclear license applications. On October 7, 1981, the Commission adopted a regulation charging for the first time ever a fee against withdrawn construction-permit applications. See 46 Fed.

Reg. 49,573--49,577 (1981). The effective date of this new withdrawal-fee rule was November 6, 1981. Every construction-1/ The letter was from Public Service Company's President Martin E. Fate, Jr., to Harold R. Denton, Director of Nuclear Reactor Regulation.

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Argument (I)

CHARGING THE BLACK FOX STATION CO-CWNERS WITH A WITHDRAWAL FEE UNDER 10 C.F.R. S170.12(b)

WOULD VIOLATE THE FAIRNESS, PUBLIC-POLICY, AND VALUE-TO-APPLICANT PRINCIPLES OF 31 U.S.C.A. 5 9701; ACCORDINGL't , THE COMMISSION SHOULD WAIVE SUCH A FEE HERE.

The N.R.C.'s authority for i= posing a fee upon withdrawal of a construction-permit application cores frc= Title V of the Independent Offices Appropriation Act of 1952, 31 U.S.C.A. S 9701 (West 1983) (the "IOAA"). Section 9701 grants authority to federal agencies to prescribe by regulation proper fees and charges for agency services rendered:

"(b) The head of each agency (except a cixed-ownership Governnent corporation) may prescribe regulations establishing the charge for a service or thing of value provided by the agency. Regulations prescribed by the heads of executive agencies are subject to policies prescribed by the President and shall be as uniform as practicable. Each charge shall be --

(1) fair; and (2) based on --

(A) the costs to the Government; (B) the value of the service or thing to the recipient; (C) public policy cr interest served; and (D) other relevant facts."

31 U.S.C.A. S 9701 (West 1963) (formerly codified at 31 U.S.C.A. S 483a).

The IOAA does not itse.f set or require fee schedules. If a particular agency fails to include certain fees or charges in its implementing regulations, t.ho s e fees cannot be collected. Thus, the N.R.C. is without statutory authority to collect fees on withdrawn construction-permit applications unless its own regula-tions specifically authorize such fees. See New England Power Co. v. NRC, 683 F.2d 12, 15 (1st Cir. 1982).

By the time the BFS Co-Owners were able to withdraw their construction-permit application, the N.R.C. had amended 10 C.F.R.

S170.12 (b) to provide:

" (b) License fees. Fees for review of applications for construction permits, operating licenses, manufacturing licenses, and materials licenses, are payable upon notifica-tion by the Commission when the review of the project is completed. For the purposes of this part the review of a project is completed when a permit or license is issued, or an application for a permit or license is denied, withdrawn, suspended, or action on the application is postponed."

See 46 Fed. Reg. 49,576 (Oct. 7, 1981) (ef fective Nov. 6, 1981).

Before this October 1981 amendment, no regulation properly empowered the N.R.C. to charge withdrawal fees of the kind presently sought from the BFS Co-Owners. See New England Power, 683 F.2d at 17-18. But even withdrawal fees sought under the amended version of Section 170.12 (b) must meet the mandates of the IOAA. Therefore, such fees (i) must be fair as applied to each construction-permit application being withdrawn, (ii) must be based upon the actual cost incurred by the N.R.C. on the individual application withdrawn, (iii) must depend upon the value of the N.R.C.'s service to the applicant of the withdrawn construction permit, (iv) must not contravene public policy as it bears upon the withdrawing applicant or his application, and (v) must rest upon the relevant facts affecting the withdrawn construction-permit application.

See 31 U.S.C.A. S 9701(b) (West 1983). Applying these principles to the unique facts of the BFS Project shows that charging the BFS Co-owners with a million-dollar withdrawal fee violates the fairness, public-policy, and value-to-applicant principles of Section 9701.2_/ The violation of these principles appears from two lines of N.R.C. regulatory developments which unfolded in parallel between March 1979 and January 1982: formulation of new safety requirements in the aftermath of the accident at TMI-2 and adoption of a new withdrawal-fee rule effective November 1981.

A. N.R.C. Formulation of New Safety Requirements:

Completion of the administrative record for the BFS Co-Owners' construction-permit application occurred in February 1979; the ever-changing regulatory course of the N.R.C. during the next three years was the sole reason for the BFS Co-Owners' forced withdrawal of such application.

The BFS Co-Owners filed their original application for a nuclear construction permit on August 8, 1975. After extensive public review, they were granted a LWA on July 26, 1978. This allowed non-safety related work to begin.

Once the BFS Co-Owners had procured their LWA, they moved to the second phase of the construction-permit licensing process.

2/ The BFS Co-Owners have not yet completed a proper review to verify that the withdrawal fee charged against them rests upon the actual costs of the N.R.C.'s work performed on their individual construction-permit application. The BFS Co-owners reserve the right, should it become necessary, to conduct such a review and to challenge the withdrawal fee if the N.R.C. cannot substantiate actual costs as required.

l 1 This began with public hearings before the ASLP on the radiolog-ical health and safety of the BFS Project. The administrative record was completed on February 28, 1979. The BFS Co-Owners were advised that a decision by the ASLB could be expected by June 15, 1979. With their construction permit virtually assured, the BFS Co-Owners used a July 1979 target date in their cost calculations for actual issuance.

However, less than a month after completion of the BFS administration record, the TMI-2 accident intervened on March 28, 1979. Understandably, this accident disrupted the commission's usual processes as the Commission paused to reconsider the safety aspects of all nuclear power projects, those operating and those still on the drawing board.

But for at least three reasons, this pause unfairly stalled issuance of a construction permit for the BFS Project. First, the safety design of the BFS reactor differed materially from the design at TMI-2. TMI-2 was a pressurized water reactor ("PWR").

The BFS reactor was to be a boiling water reactor ("BWR").

Whatever the concerns about the PWR design, those concerns did not reasonably extend to the BFS Project's BWR design.

Second, even assuming that the PWR and BWR designs were equally suspect, several projects with the same BWR design as the DFS Project had received construction permits before the TMI-2 accident.M But unlike the BFS Project, these projects were 3/ Detroit Edison's Fermi 2, Cincinnati G&E's Zimmer, Washington l Public Power's Itanfort 2, Long Island Lighting Co.'s Shoreham, Commonwealth Edison's LaSalle 1 & 2, Pennsylvania 1

l l

allowed to continue with active construction despite the TMI-2 accident.

For examp.e, the BFS design was substantially the same as the Tennessee Valley Authority units. Construction of these units was freely permitted, virtually unhampered by the TMI-2 accident. But as a "near-term" project, the BFS construction permit was placed on hold by the Commission. Such disparate treatment of projects so similarly designed makes little sense.

A third reason why the BFS construction permit should not have been halted comes from the BFS Project's uniqueness among other "near-term" projects. of all the near-term projectc, only BFS had an LWA. And only BFS was under construction at the time of the TMI-2 accident. It should thus have been treated like the active-construction projects which BFS so closely resembled.

In the af termath of Three Mile Island, ample cause existed for the Commission's , safety concerns. But no matter how well-intentioned, these concerns did not justify the Commission's indefinite and blanket halt upon all pending construction-permit applications, without distinguishing the potentially dangerous (PWR designs like TMI-2) from the reasonably safe (BWR designa like UFS).

The Commission's blanket halt against all pending construc-tion applications seems capecially difficult to justify, given the l

l P&L's Susquehanna 1& 2, Mississippi P&L's Grand Gulf 1 & 2, Philadelphia Electric's Limerick 1 & 2, Illinois Power's Clinton 1 & 2, Gulf States' River Bond 1 & 2, Cleveland Electric's Perry 1 & 2, TVA's !!artsville Al and A2, llartsville B1 & B2, and Phipps Bend 1 & 2.

Commission's decision to allow other projecto already underway to proceed freely toward completion. Safety concerns would have compelled the Commission to halt even projects already in construction. Since these were closer to completion, they posed l far mGro threat to cafety than construction permits not yet issued.

Nevertheless, the Commission did not stop any BWR plants in construction. Thus, while the BFS construction permit stood stalled, other utilities constructing units similar to BFS were allowed to continue unabated.

Despite all efforts by the DFS Co-Owners, the Commission would not progress towards granting the BFS Co-Owners their construction permit. Instead, three years passed of Commission inconsistent action and inaction, until the DFS Project lost its economic feasibility. Eventually, the Commission's regulatory course caused the DFS Project's cancellation and the BFS Co-Owners' withdrawal of their construction-permit application in early 1982.

The regulatory developments which led to the demise of the DFS Project began shortly af ter completion of the administrative record on construction-permit issuance. In June 1979, the BFS Co-Owners and other construction-permit applicants met with Harold Denton, Director of Nuclear Reactor Regulation. Mr. Denton verbally requested that the utilities prepare for submission l

plant-specific evaluations of the " lessons learned" from Three Mile Island. The DFS Co-Owners had closely followed the activity of the Advisory Committee on Reactor Safeguards and its analysis IIl I lI, O .4 .J@ j o 8 ['!. -

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towards construction-permit issuance. On October 10, 1979, the Commission issued its Interim Policy Statement. Though applicable to all pending licensing matters, the Interim Policy Statement responded directly to the BFS Co-Owners' Motion. The Interim Policy Statement authorized the Commission staff to proceed by its own discretion in individual cases where the staff felt satisfied with relevant TMI-2 investigations. This Interim Policy opened the door for ad hoc administrative review, which in turn provided very little predictability to utilities (like the BFS Co-Owners) awaiting construction permits. Neither this Interim Policy nor any other signal from the Commission gave the BFS Co-Owners even a hint (expressly or impliedly) that issuance of their construction permit might be long in coming. Instead, the Commission encouraged the BFS Co-Owners to be patient.

On October 10, 1979, the N.R.C. staff submitted yet another set of new licensing and safety requirements to the BFS Co-Owners.

On October 12, 1979, the BFS Co-Owners pledged commitment to these new requirements. As before, the BFS Co-Owners reasonably believed that these new requirements were substantially final.

But again, the BFS Co-Owners would soon be disappointed. A possibility of progress appeared on October 25, 1979, when the ASLB ordered interested parties to confer informally about a schedule for reopened public hearings on new safety requirements and other issues to be considered. But only five days later, on October 30, 1979, the Kemeny Commission report was made public.

It recommended sweeping changes to N.R.C. practices. This spelled yet more uncertainty in the licensing process for the BFS Project.

On Novemcar 9, 1979, the Commission made several significant changes to non-safety rules and regulations. See 44 Fed. Reg.

65,049 (1979). First, it modified its adjudicatory procedures by suspending the "immediate-effectiveness" rule. Second, the Commission mandated Appeal Board and full Commission review prior to any further license issuance. This effectively denied the DFS Co-Owners' September 5, 1979 Motion which had scught Commission action under procedures as existed before these latest rule changes. Thus, the BFS Co-Owners once again stood without meaningful delineation of any new safety or licensing require-ments. The Commission simply continued to encourage the BFS Co-Owners to persevere through the administrative process, implying that neither the new safety requirements nor the needed construction permits were far from reach. Especially given these encouraging signals, the BFS Co-Owners could at no time have reasonably inferred that the Commission's regulatory course would I lead to a long-term (or even mid-term) delay in constructionpermit issuance.

Prompted by such signals, the BFS Co-Owners on November 16, 1979 filed another Motion for Clarification asking the Commission to specify a policy for proceeding ahead and to reconcile the Commission's Interim Policy with the public statements of the Commission's then Chairman Hendrie regarding a " licensing pause."

The N.R.C. never responded to this Motion.

As the months passed, the lack of N.R.C. progress persisted in formulating new safety requirements, in processing applica-tions, and in issuance of any construction permits. At the same

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. BFS Co-Owners would have been afforded a meaningful opportunity to withdraw lont; before they did in February 1982.

The regulatory holding pattern eventually took its toll. It unfairly forced the BFS Co-Owners to cancel their Project for economic infeasibility. But beyond the unfairness of having lost a valuabic nuclear project lay the ultimate degree of unfairnoon for the BFS Co-Owneras a new rule imponing a million-dollar fee for the forced withdrawal of the BFS construction-permit applica-tion. The denied opportunity for early withdrawal was key to avoiding this unfairnons becauco the new fee rule took offect in November 1981, only three months before the BFS Co-Owners were first abic to withdraw in February 1982.

B. N.R.C. Adoption Of New Withdrawal Fnon: Woro it not for regulatory developmentn controlled exclunivoly by t ho, N.R.C., the DFS Co-Ownern could have fully avoided a million-dollar withdrawal too.

Alongnido the regulatory developments on new nafety requiro-mento, the N.R.C. initiated rulo amendmento shifting from charge-free withdrawals to full fee annonnment for withdrawn construction-permit applications. The N.R.C. controlled thone two linen of regulatory developments at all timon. In the end, the N.R.C.'n courno on new nafety requirementa caused the Br3 Co-Ownern to be unfairly nubjected to the new withdrawal-fee rule.

1

! Thin offect upon the BFS Co-ownora in uniquo. I:very other applicant nituated at all nimilarly to the Br8 Co-Owr. a r u had a free and meaningful choice to avoid any withdrawal foon by withdrawing before the of fective dato of the now foo rule. Given these unique circumstances, charging a withdrawal fee against the BFS Co-Owners is not only unfair, but contravenes the public policy of regulatory reform which the N.R.C. has so carefully sought to advance. And whatever value may inhere in the N.R.C.'s services for the BFS construction-permit application, such value is dwarfed by the monumental loss in value from the forced cancelling of the BFS Project.

When the BFS Co-Owners first applied for a conntruction permit in 1975, the N.R.C. regulationn imposed no charge whatsoever for subsequent withdrawal of such application. See tiew England Power Co. v. 11RC , 683 F.2d 12, 15 (1st Cir. 1982).

This no-fee rule continued when the DFS administrative record was completed four years later in February 1979. See M. at 10-17.

Withdrawain of construction-pernit applications remained charge-free for another two and one-half years, until October 1981 when the fl.R.C. finally adopted a contrary rule. See M. at 18.

The new rule took effect on tiovember 6, 1981. It applied retroactively in that it imposed withdrawal feen on all construction-permit applicationn filed before flovember 6, 1981 and withdrawn therea f ter. The new rule, however, gave one month'n Icad time in which any application might be withdrawn without auffering a fee. Partien with applications pending in October 1981 were thun neant to have a free choice and meaningful opportunity to decide whether to withdraw their constructionpermit application before llovember 6, 1981, and thereby to avoid all withdrawal feen under the new rule.

Among such pending applicants, however, the DFS Co-Owners occupied a unique position. The period surrounding October 1981 marked the most crucial phane in the conat:uction-permit applica-tion of the DFS Project. It was during this timo that the Commission acemed to como closest in delinenting new safety requiremento which would allow the DFS Co-ownera to decide once and for all whether to continue prencing or whether to withdraw their construction-rcrmit application.

Still, the Commincion's delineation stood incomplete in October 1981. The BFS Co-owners had only the Commionion's August 1981 " policy" to guide them. Significant gaps in that " policy" hept the BFS Co-Owners riveted to further N.R.C. pronouncements key in determining whether the DFS Project was still economically foanible.

The key N.R.C. pronouncemento did not como until January 15, 1982, over two monthu after the new withdrawal-fco rule had already taker, effect. F.ven no, the DFS Co-ownera took only one month to reach a decinion which they had waited to reach for over throo years.

Ilad the N.R.C. adopted a conciatent courno on now safety requiremento during thono three yearn, the DFS Co-Ownera could have canily reached a proceed-vernun-withdrawal decision before November 1901, and thereby have avoided a million-dollar with-drawal foe. The DFS Co-ownero could not have roanonably anticipated auch a new feo either when they initially applied for a conutruction permit in 1975 or at any timo during the next nix yearn until 1981. Accord, Now I: ngl and '!nwnr, 683 F.2d at 15, 17.

Even if the N.H.C. had completely ignored the DFS Co-Owners' pleas between February 1979 and mid 1981, the BFS Co-Owners would have realized after six months, one year, or certainly after two years that a construction permit could not reasonably be expected.

They could have thus withdrawn their construction-permit applica-tion freely, and would have donc so, during the rule's avoidance period between October 7 and November 6, 1981.

The depth of N.R.C. responsibility for unfairly subjecting the BFS Co-Owners to the new withdrawal-fee rule appears most vividly from the timing of eventu between August 1981 and February 1982. Once the N.R.C. fully and finally promulgated its new safety requirements in January 1982, the DFS Co-Owners took only one month to make their withdrawal decision. At no time before January 1982 did those new safety requirements carry any reliabic measure of finality or completeness. N.R.C. actions had changed them or otherwise unsettled them so many times before that the DFS Co-owners could not reasonably rely on anything less than promulgation of a full and final rule concerning new safety requirements.

The N.R.C.'s August 1981 pronouncement seemed at long last to approach settled finality, but it was critically incomplete and it still characterized the new safety requirements merely as

" policy." Had the N.R.C. spoken even as late as August 1981 with any conpleteness and reliable finality, the BFS Co-Owners would still have taken one month (as they actually did) to withdraw their construction-permit application. But they would have avoided the unfairness of a million-dollar withdrawal fee because their month would have run not from January 1982, but from August 1981. The BFS Co-Owners' withdrawal would have thus come in September 1981, long before the November 6, 1981 effective date of the new withdrawal-fee rule, and even before the October 1981 adoption date of such a rule.

Even if the N.R.C. had fully and finally spoken on new safety requirements as late as October 7, 1981, when the N.R.C. actually adopted the new withdrawal-fee rule, the BFS Co-Owners could still have avoided the million-dollar fee now cought from them. If the BPS Co-Owners knew on October 7, 1981, what they learned for the first time on January 15, 1982, the BFS Co-Owners would have again taken only one Sonth to withdraw. But since the month would have run from October 7, 1981, the BFS Co-Owners would again have withdrawn before the November 6, 1981 effective date of the new fee rule. Although the BFS Co-Owners would still have lost the BFS Froject, they could have escaped the stinging unfairness of an additional million-dollar expense in withdrawal fees.

Being forced to pay a million-dollar fee is especially unfair, given the retroactive impact of the new withdrawal-fee rule. Such unfairness may be illustrated by Public Service Company of Colorado v. Andrus, 433 F. Supp. 144 (D. Colo. 1977),

and New England Power Co. v. NRC, 683 F.2d 12 (1st Cir. 1982).

In Andrus, the Bureau of Land Management (the "BLM") adopted a new rule charging certain fees, not charged previously, for right-of-way applications. The new rule reached even applications pending on the rule's ef fective date. The Andrus court expressly acknowledged the retroactivity in such a rule:

"The fact that the regulations provido for recovery of all l chargeable costs involved in processing application (s) then pending scoms a clear indication that some retroactivo ,

offect was anticipated and intended."

Andrus_, 433 F. Supp. at 154 (emphasis in original) .

The Andrus court also hold, as did the court in New England Power, that illegality results when retroactivo enforcement of a foo rule impacts unreasonably or unjustifiably upon an applicant j covered by the rule. Soo M.; New England Power, 683 F.2d at 15 &

n.4, 17-18. For examplo, the Now England Power court declared unronsonable the N.R.C.'s attempt to enforce its now withdrawal-foo rule retroactively against a withdrawal achieved

] before the November 1981 offectivo date of the now rule.

Wow England Power does not control the BFS Co-Owners' 1

post-November 1981 withdrawal, because its holding leaves open j whether unique circumstances like thoso of the BFS Co-Owners j warrant foc-waiver relief when the now rule's retroactive aspects have added to unfairness.

Andrus, however, does address the key to the unfairness

! suffered by the BFS Co-Owners. The contesting applicants in  ;

Andrus sought reliof from foos which did not exist when their applications had boon filed, but which woro being charged moroly i because their applications woro pending before the BLM when the now rule took offect. Given the circumstances surrounding thoso

! epplicants, the Andrus court could not conclude that such ratroactivo aspect was unreasonablo. But crucial to the court's conclusion was that the contesting applicants actually had a froc choice and a meaningful opportunity to withdraw before the now

! gule became offectivo:

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" Plaintiffs [ contesting applicants] were not mislead (sic] by the BLM. Instead, they woro warned in advance of the of fectivo date of the regulations that if applications woro pending on June 1, 1975 the applicant would become liable for proper costs of processing and monitoring. Plaintiffs had the option to withdraw their applications beforo June 1, l 1975, but chose not to do so."

Andrus, 433 F. Supp. at 154 (citations omitted).

By contrast, the BFS Co-owners woro mislod--not intention-ally, but misled nevertheless by the combined offect of the N.R.C.'s regulatory developments on now safety requirements and 1

l now withdrawal foes. The now foo rule in November 1981 marked a i

sharp departure from the past chargo-froo rulo governing with-l drawals of construction-permit applications. Concededly, the BFS l

) Co-owners hsd thirty days' advanco notico before such now foo rule formally took of fect. But solely because of the N.R.C., the DFS j co-owners lacked the froo choice and the meaningful opportunity to l withdraw, both so key to fairness. IInd the Andrus court faced 1

I those unique circumstancos of the DFS Co-Owners, the court would j have undoubtedly acknowledgod the unfairness of subjecting the DFS 1

j Co-owners to a million-dollar withdrawal foe.

I i Given the combined offact of the regulatory developmonts j which soverely and uniquely prejudiced the DFS Co-owners, charging 1

i them with a withdrawal fee would violate the principios of tho

IOAA, 31 U.S.C.A. S 9701(b). First, such a foo would be manifestly unfair. 500 M. S 9701(b) (1) . Nothing which the BFS J

j Co-owners did, failed to do, or could have dono is to blame for i

] the delayed withdrawal of their construction-permit application.

t Whatever the justification, the N.R.C. 's own actions are solely l

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responsible for denying the DFS Co-Ownern a timely and meaningful opportunity to offect withdrawal.

Second, a withdrawal foo here would violato the public-policy principle of the 10AA. Son 31 U.S.C.A. S 9701(b) (2) (C) . Since Throo Milo Island, the N.R.C. has brought about connidorable regulatory reform in the nuclear induntry. A key goal of such reform in, and should be, to discourago premature withdrawals of i construction-permit applications. Imposing a withdrawal foo I

l against the DFS Co-Owners would violato that public policy, I

i because it would mean that the BPS Co-owners should have prematurely withdrawn their construction-permit application when it might have boon saved.

Finally, a withdrawal foo hero would violato the principio in the IOAA that auch a foo must be for valuo given to the with-l drawing applicant. Soo 31 U.S.C.A. S 9701(b) (2) (B) . Ordinarily, i

the application process for a construction permit imparts a value

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4 gain to an applicant like the DFS Co-Ownern. Son Now England Power, 603 F.2d at 14. But here, such value gain must bu viewed against the tremondous valuo loss stemming from tho

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forced cancellation of the BFS Project. Tho unique facto currounding the construction permit sought by the DFS Co-owners ohow that the only ronidual valuo in a not value loss of soveral hundred million c'ollars. Doyond such loan are the substantial l oxpenson incurred by the UFS Co-ownern betwoon March 1979 and I

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l February 1982 in pursuing their conntruction permit.O Imposing en additional million-dollar expenso would be particularly harsh.

Applied to the unique circumstancos of the DFS Co-Owners, soo 31 U.S.C.A. S 9701(b) (2) (D) , the principles of the IOAA call for waiver of withdrawal foes that might ordinarily be due under 10 C.P.n. S170.12 (b) . To further the onds of fairness and public j policy, the Commission should grant the DFS Co-owners' request for I

] waivor of auch withdrawal foon. An appears more fully in l

Proposition (II) infra, such waivor would affect no other

cpplicant for a construction-pormit and would load to no unfavorabic administrativo procodont.

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Whatever actual conto (non noto 2 supra) the N.R.C. itnolf

! might have incurred on the DFS application after March 1979, i auch costo cannot be fairly viewed as imparting any valuo to j the DFS Co-Owners. The N.R.C. must assumo responsibility for i the throo years' costs triggered by its own non-formulation of full and final now safoty requiremonto. Under no circumstancos should such costs be shifted to the DFS j Co-ownern or their Project.

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CPAN*!NG A TEE WA !'.*I F TC *HI 'Ni!CCI!.Y S:!t A7IC CO-c%?.EFS CF 7HE E.ACT TCX 57A7;CN F VA rc- wee:.D rs;An:sa no enrAvnFA3:.I P h EC IC Ibi AND W.'.':.0 A F I E C" h 3 C'! F I F WC:EAP l ccus7Fec ::s-PEFx!? APF:,: CANT.

i The unique circu.natances that led to the withdrawal of the ecnstructien-persit applicaticn for the BTS Pre;ect distinguish the BTS Co-Cvne rs frc= all ether like applicants. When the *M:-2 accident cccurred, only five pre-censtructicn projects had nuclear permit applicatiens pending t< sides the BTS Prc;cct Pilgrim 2, Febble Springs, Allens Creek, Ferkins, and Skagit. Tne ITS Cc-Cvners' present revac t.t for vaiver cf withdraval fees ::uld af fect at nest the evners of these five nu:1 car projects. But the facts cf each such pre;cet shev that nene veuld warrant a valver cf withdrawal fees like the BTS Freject.

Filgrin 2 was cancelled in 1961. The N.R.C. assessed .

withdraval fee under 10 C.T.P. 5 170.12(b). But the decisten in New En;1and i ver Co. v. NFC, (E3 T.2d '2 (1st Cir. 1H2),

rendered assesstent cf such fees impreper against Pilgri 2 as irpe rni s sibly retroactive. Unlike the BTS Pro;ect, then, the evners of Pilgrin 2 have to need to seek a vaiver cf withdrawal fees.

Febble Springs, Aliens Creek, and Ferkins vere all cancelled in 1962. The N.E.C. has assessed withdrawal fees against Pettle Springs and Allens Creek. Both paid them. Since neither seu;ht valver cf such fees, neither can to expected to icd;e a request for such valver hereafter. "he BTS Project differs frect teth Pebble Springs and Allens Creek in tvc ether key respects. Cnlike the DFS Project, neither Pobblo Springs nor Allenn Crook over had their administrative recorda completed or were over innued a I,WA.

Regarding the Porkins project, its owners woro preoccupied with concerns over soveral other on-lino and near-term projects of design similar to THI-2. Apparently, the Perkins owners stopped l

cetivo pursuit of the construction-pormit application for Parkins long beforo the DFS Co-ownern woro forced to withdraw. Unlike the BFS Project, the administrative record was never completed for j Perkinn. And unlike the DFS Co-Owners, the Porkinn owners woro i

! never issued a LWA. Thoso differences show that the Porkins i

j. owners woro simply not affacted unfairly as the DFS Co-Owners woro by the N.R.C. 's regulatory courso on now nafety requirements for near-term projects liko DFS and Parkins.

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j rinally, the ownors of the Skagit project withdrew their i

j construction-pormit application in 1903. The N.R.C. has assossed withdrawal foon against auch project. Although Skagit's ownern 1 might conceivably nook a waivor of withdrawal foes, the facta i

j surrounding Skagit may be readily and matorially distinguished from the facts of the BrS Project. Pirst, the administrativo record for the Skagit project was never completed an was for the 3

DPS Project.

4 i Second, the Skagit project won never granted a LWA. Unliko

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J the DPS Co-owners, then, the ownorn of Skagit never bogan i

i significant construction. By contrast, the DFS Co-ownern had from early on undertaken significant work on their Project before boing forced to withdraw their construction-permit appliention.

Third, the construction nito of tho Skagit project was changed during the courno of Commission review. This noconnitated great additional input from the Commission. Such a change in construction sito may well have supersodod the N.R.C.'s non-formulation of now safoty requirements as the cause for why the Skagit owners had to withdraw their construction-pormit application. In sharp contrast, the construction sito for the DFS Project was never changed. The solo reason for the forced withdrawal of the DFS conntruction-permit application was the throo-yuar regulatory developments surrounding now nafoty requirements.

A last key dif ferenco betwoon the Skagit ownora and the !!rS Co-owners lion in the timing of their respective withdrawals. The Skagit owners withdrow their construction-pormit application in 1983, well over a year af ter the N.R.C. had finally losued its full and final now nafoty requirements. By contrast, tho !!PS Co-owners took only ono month to of fect withdrawal. They missed occape from the now withdrawal-foo rule by only a alim margin.

Tho Skagit ownern, on the other hand, withdrew long after the new withdrawal-fou rule took offact. Thoroforo, tho Skagit ownars are far loan likely to show that they woro tied to N.R.C. control an tightly an the BFS Co-owners worn.

In sum, regulatory dovolopmento controlled by the N.R.C. havo

( not af facted any other construction-pormit applicant as uniquely or unfairly as tho DFS Co-owners. Whatevor hardship other cpplicanta may havo nutforod by withdrawal of their conutruction-4 permit applications, nono can traco hardship as the DFS Co-owners l

t ccn so directly to N.R.C. actions. Thoroforo, granting the Brs Co-Owners' prosent request for a foo waiver would yield an [

cdministrativo decision limited to the unique facts of the DFS

) Co-ownern and their Project. Such a waiver would load to no i

1 j unfavorable administrativo procedent which might hampor the J

N.R.C.'s collection of withdrawal foos in other canoo.

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conclusion j t

Almost from the very start, truly unique facto havo i currounded the construction-pormit application of the DPS l

l Co-Owners. Safety concerns in the aftermath of Throo Hilo Island I

cicuded further issuanco of construction permits. Operating under

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o Limited Work Authorization and with full pormit inuunnco r

j imminont, the DFS Co-Owners ondeavored vigorously to do almont i l

enything required by the N.R.C.'s safoty concerns. But for almost throo years, from March 1979 to January 1982, the N.R.C. adopted on unsteady (if not unstablo) courso of actionn and policios on what safoty modifications would ho required in the design of tho l

DFS Project. Timo after timo during those thron years, the N.R.C.

ecemod to tako a given direction in formulating now nafety l

requirements, only to retront from such direction. This over-changing chift in N.R.C. courso kept the DFS Co-owners at  ;

b:y, ready to fulfill ovary N.R.C. nafoty suggestion in the hopo that thu curront suggestion might hocomo the nooded full and finni t

cofoty requiromontn. j During this unsteady courno on now safety requiromontn, the 1

N.R.C. embarked on a para 1101 courso to amend its too rulus l t

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governing withdrawals of construction-permit applications.

Dsparting from all past rules, the N.R.C. eventually adopted a i i

rulo which imposes substantial foes upon withdrawal of an cpplication for a nuclear construction permit. The N.R.C.'s I

course on now safety requirements and its courso on now withdrawal '

fees ultimately intercocted and unfairly prejudiced the DFS Co-Owners.

Had the N.R.C. not convoyed so many conflicting signals about the prospects for construction-pormit issuanco, the DFS Co-Owners would havo boon able to withdraw their permit application before withdrawal foos unexpectodly became the now rule. Alboit well-intentioned, the N.R.C.'s own actions were colely responsiblo for denying to the DFS Co-Ownero a meaningful opportunity to offect withdrawal without a million-dollar consequence.

Of all the applicanto conceivably affacted by the now withdrawal-foo rule, only the DPS Co-ownern have so directly and 1

unfairly sufforod hardship from the N.R.C. regulatory procosa. l divon thin uniquonone, granting the BFS Co-Owners' request for a waivor of withdrawal foon creates no unfavorable administrativo  ;

procodont. The BFS Co-Owners ank for an opportunity to moot with l'

representativon of the N.R.C. and to participato at an informal hearing, no that further claboration and factual exchango may take place on the pointo of thin Brief, h

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l For all these reasons, the BFS Co-Owners respectfully submit that the waiver they seek is amply warranted. Public policy supports it. Fairness compels it.

Respectfully submitted, DOERNER, STUART, SAUNDERS, DANIEL & ANDERSON 1000 Atlas Life Building Tulsa, Oklahoma 74103 (918) 582-1211 By: ,

Albert J7 Givray V b  !<

Ililary I. - ow Attorneys for Public Service Company of Oklahoma, Associated Electric Cooperative, Inc., and Western Farmers Electric Cooperative, as Co-Owners of the cancelled Black Fox Station nuclear project

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CERTIFICATE OF FILING l

I hereby certify that on the 14th day of June, 1985, I deposited in the U.S. Mails, postage prepaid, one original and three true and correct copies of the above and foregoing Brief In Support of Application For Waiver Of Withdrawal Fees Under 10 C.F.R. 5170.12(b), addressed as follows:

-William O. Miller, Chief License Fee Management Eranch U.S. Nuclear Regulatory Co=nission Washington, D.C. 20555 Robert Fonner, Esq.

Office of Executive Legal Director U.S. Nuclear Regulatory Cc=sission Washington, D.C. 20555 Acconpanying such original and copies was a written request that the same be filed of record with the United States Nuclear Regulatory Co= mission.

s Albert J. Givray j/

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