ML20132F696

NRC Staff Petition for Review of LBP-96-25.* Staff Petition for Review Should Be Granted.W/Certificate of Svc

ML20132F696
Person / Time
Site:	Claiborne
Issue date:	12/23/1996
From:	Bachmann R, Holler E NRC OFFICE OF THE GENERAL COUNSEL (OGC)
To:	NRC COMMISSION (OCM)
References
CON-#496-18118 LBP-96-25, ML, NUDOCS 9612260054
Download: ML20132F696 (13)

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(. 00CKETED l UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

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Imisiana Energy Services, L.P. ) Docket No. 70-3070-ML

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NRC STAFF'S PETITION FOR REVIEW OF LBP-96-25 ,

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4 Richard G. Bachmann Eugene Holler Counsel for NRC Staff December 23,1996 9612260054 961223 b PDR ADOCK 07003070 $O C PDR I

t, December 23,1996 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION In the Matter of )

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IDUISIANA ENERGY SERVICES, L.P. ) Docket No. 70-3074ML

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(Claiborne Enrichment Center) )

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! NRC STAFF'S PETITION FOR REVIEW OF LBP-96-25 1

l INTRODUCTION Pursuant to 10 C.F.R. I 2.786 of the Commission's regulations, the staff of the Nuclear Regulatory Commission (Staff) hereby petitions the Commission for review ofIoulslana Energy Services, L.P. (Claiborne Enrichment Center), LBP-96-25,44 NRC (slip op., December 3, 1996). For the reasons set forth below, the Staff's petition for review should be granted as it demonstrates the existence of substantial questions with respect to the considerations set forth in the Commission's regulations at 10 C.F.R. { 2.786(b)(4).

BACKGROUND In this combined construction permit-operating license proceeding, Imuisiana Energy Services, L.P. (LES) seeks a 30-year materials license to possess and use byproduct, source, and special nuclear material to enrich uranium using a gas centrifuge process at the proposed Claiborne Enrichment Center (CEC) to be constructed in Claiborne Parish, Louisiana. Citizens l

Against Nuclear Trash (CANT) opposes issuance of the license and, after establishing standing l.

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and proposing several admissible contentions, was granted leave to intervene and admitted as l

i a party to the proceeding. On December 3,1996, the Atomic Safety and Licensing Board 1

, (Board) designated to preside over the proceeding issued a partial initial decision, LBP-96-25, 1

i l resolving three of these contentions.* De Board sustained Contentions J.4 and K, dealing svith LES's environmental report (ER), by deciding that the Staff's final environmental impact statement (FEIS) did not adequately address the need for the facility and the no-action alternative.' LBP-96-25, slip op. at 3,181-182. The Board also sustained Contention Q which t

challenged LES's financial qualifications to construct and operate the CEC. Id.

l DISCUSSION i

j A petition for review must raise at least one of the following kinds of substantial i

questions to merit Commission consideration:

(i) A finding of material fact is clearly erroneous or in conflict with a finding

, as to the same fact in a different proceeding;

(ii) A necessary legal conclusion is without goveming precedent or is a j departure from or contrary to established law; 4

' In its first partial initial decision, the Board resolved three safety contentions in favor of the applicant. Louisiana Energy Services, L.P. (Claiborne Enrichment Center), LBP-96-7, 43 NRC 142 (1996); petition for review granted in part and denied in pan, CLI-96-8, 44 NRC_(slip op., October 2,1996); motionfor pantal reconsideration pending.

2 In Contentions J.4 and K, CANT challenged the adequacy of LES's ER for failing to demonstrate that there is a need for the facility, and for failing to include any discussion of the no-action alternative, respectively. LBP-96-25, slip op. at 4, 94. ne Pard decided that it "need not separately address the adequacy of the Applicant's treatment of the need issue in the ER," and, regarding Contention K, that "the contention also is deemed to challenge the sufficiency of the Staff's treatment in the FEIS of that same alternative." Id. at 30-34 (footnote omitted),93-94. Although the Commission's Hearing Order (See n.3) obligates the Board to

ensure the agency's compliance with the National Environmental Policy Act (NEPA) independent i

of CANT's environmental contentions, whether or not the admitted contentions, can be read to include the environmental impact statement and its treatment of need, and the no-action alternative, is a separate matter.

(iii) A substantial and important question oflaw, policy or discretion has been raised; (iv) The conduct of the proceeding involved a prejudicial procedural error; or (v) Any other consideration which the Commission may deem to be in the public interest.

10 C.F.R. I 2.786(b)(4); Babcock and Wikar Co. (Pennsylvania Nuclear Service Operations, Parks Township, Pennsylvania), CLI-95-4, 41 NRC 248, 250-251 (1995).

This proceeding, which concerns the licensing of the CEC, is subject to the specific regulatory requirements identified in a Commission Hearing Order.8 'Ihe Solar, Wind, Waste, and Geothermal Power Production Incentives Act of 1990, Pub. L. No. 101-575 (104 Stat.

2834) (1990), amended the Atomic Energy Act (AEA) section lly definition of " production facility." 42 U.S.C. 6 2014v. Tne effect of the amendment was to remove, with one exception not pertinent here, the licensing of a uranium enrichment facility, such as the CEC, from the provisions of the AEA applicable to facilities such as nuclear power plants. Section 5 of Pub.

L. No.101-575 further amended the AEA with respect to the licensing of uranium enrichment facilities by adding a new section 193,42 U.S.C. I 2243. The principal effect of section 193 of the AEA is to make licensing of uranium enrichment facilities a single step process with a license issued under the provisions of the AEA pertaining to source material (sec. 63) and special nuclear material (sec. 53) rather than the provisions pertaining to a nuclear reactor or other production facility.' In its Hearing Order for this proceeding, the Commission identified 3

" Notice of Receipt of Application for License; Notice of Availability of Applicant's Environmental Report; notice of Consideration of Issuance of License; and Notice of Hearing  ;

and Commission Order; louisiana Energy Services, L.P.; Claiborne Enrichment Center;"

(Hearing Order) 56 Fed. Reg. 23,310 (May 21,1991).

Prior to section 193, a uranium enrichment facility would have been licensed as a production facility under AEA Chapter 10 which includes restrictions on foreign ownership, (continued...)

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. the requimments generally governing the issuance of byproduct, source, and special nuclear

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{ material licenses as well as special standards and instructions that govern the licensing of the i

, CEC. Sec 56 Fed. Reg. at 23,313. As discussed below, the Board rejected some relevant i

e evidence and applied the regulations and policy swmydate to the licensing of a 10 C.F.R. Part 50 facility rather than those applicable to a materials license as required by the statutes and the Hearing Order governing this prMing.

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A. The Board Erred in Finding the FRIR Discussion of Need hadequate.

4 The Board applied the wrong law in determining that the actual benefit of the project is not accurately represented by LES in the ER and the Staffin the FEIS.5 LBP-96-25, slip op.

at 90-91. The Board relied on reactor licensing decisions holding that "'need for power' is a shorthand expression for the ' benefit' side of the cost-benefit balance which NEPA [ National Environmental Policy Act] mandates for a proceeding considering the licensing of a nuclear plant." Id. at 31 n.5. While the regulatory guide for nuclear power station environmental reports confirms that the primary benefits of a nuclear station are those inherent in the value of generated electricity delivered to consumers (Reg. Guide 4.2 at 8-1), the regulatory guide for commercial uranium enrichment facilities environmental reports imposes no such limitation regarding the benefits to be considered and urges the applicant to compare the " aggregate benefits" against the " aggregate costs" (Reg. Guide 4.9 at 4.9-25). The Board cites no materials  !

licensing cases, nor is the Staff aware of any, that support the proposition that "need" is the 4

d(... continued) domination, or control (sec.103), the need for an antitmst review (sec.105), and the need to ,

license operators (sec.107).

8 The FEIS describes need for the facility in terms of an additional domestic supplier using more efficient and secure production methods. FEIS at 1-5 through 1-9.

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pnmary benefit to be considered in striking the cost-benefit balance for materials license i

environmental cost-benefit analyses. Thus, this decision presents a substantial question of law and policy meriting Commission review pursuant to 10 C.F.R. I 2.786(b)(4)(iii).

Further, in finding that the FEIS discussion of need was inadequate and in sustaining

Contention J.4, the Board rejected relevant evidence. De Board reasoned that price competition

] (Iow cost separative work units (SWUs)) was the " principal benefit against which the costs of j the facility are weighed" in striking the NEPA cost-benefit balance. LBP-96-25, slip op, at 46.

i i Accordingly, the Board addressed supply and demand of the uranium enrichment market, and i

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I LES's price competitiveness, to reach its conclusion that the project will have little, if any, effect l on price competition m the enrichment services market. Id. at 34-90. The Board erred in i

! ignoring the applicant's evidence regarding diversity of producers and security of supply. See, j c.g., Testimony of LES witnesses at 12-13, ff Tr. 383. He Board's failure to consider l competiti on and security of supply as factors in determining need for the CEC caused it to reach 1

] an erroneous conclusion regarding the description of the need for the CEC in the FEIS and l merits Commission review pursuant to 10 C.F.R. I 2.786(b)(4)(i). In sum, the Staff's

! discussion of need in the FEIS was not inadequate and the Board's decision that it was raises -

substantial questions of law and policy regarding how "need" is to be considered in an environmental impact statement (EIS) for materials license applications.

B. The Amrd Erred in Findine the FEIS Disemion of the No-Action Altemative Inadequate.

The Board's requirement that an EIS must tabulate and discuss anew impacts adequately discussed for other alternatives is a departure from established law. He Board found that the FEIS failed to adequately address the numerous impacts avoided in the no-action alternative,

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1 such as those to surface and ground water and air quality, and the elimination of depleted uranium tails. LBP-96-25, slip oo. at 96-101. Although the Board finds no fault with the )

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! FEIS's discussion of these matters as negative impacts oflicensing the CEC, the Board would 1

4 l have the FEIS separately list and discuss these same matters as impacts avoided in not licensing the CEC (the no-action alternative) rather than stating that the impact is avoided and referring l

to the detailed discussion of the impact in another part of the FEIS. The Board's decision places 4

form over substance. The purpose of the FEIS, as the Board notes, is to allow the agency to i

j take a hard look at the environmental consequences of its action. 14. at 16, citing Robenson v.

i Mr+ow Valley Citirens Council,490 U.S. 332,350 (1989) and NRDC v. Monon,458 F.2d 827, i

838 (D.C. Cir.1972). The FEIS discussion of the no-action alternative meets this standard and the Staff's treatment of the alternative in the FEIS is adequate. The requirements set by the l Board for discussing the no-action alternative go well beyond what is required to meet the I

j standard, and therefore merit Commission review pursuant to 10 C.F.R. I 2.786(b)(4)(iii).

C. The Board Erred in Finding that Seandary Renefits Must Be Exclmiad from a Mmeerials j Licensing.FEIS Cost-Benefit Analysis.

i l The Board's finding that secondary benefits must be excluded from a materials licensing i

FEIS cost-benefit analysis raises a substantial policy question. The Board found that the Staff's l

cost-benefit analysis in the FEIS incorrectly includes and h^eavily relies upon secondary benefits ofincreased employment and tax revenues in the benefit side of the NEPA cost-benefit analysis i

or, alternatively, its cost-benefit analysis is inadequate for not explaining why it is now deviating from prior agency practice by including such secondary benefits in its ultimate cost-benefit 1

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! analysis.' LBP-9625, slip op. at 106. While the regulatory guide for nuclear power station l

environmental reports comports with the case law cited by the Board, (Reg. Guide 4.2 at 8-1),

the regulatory guide for commercial uranium enrichment facility environmental reports imposes no such limitation regarding the benefits to be considered and urges the applicant to compare the

" aggregate benefits" against the " aggregate costs" (Reg. Guide 4.9 at 4.9-25).' While it is clear I

that regulatory guides are not regulations, they do provide guidance as to acceptable modes of conforming to specific regulatory requirements which the Commission has rameni=d. See ne Curators of the University of Missouri, CLI-95-1, 41 NRC 71, 98 (1995); Petition for Emergency & Remedial Action, CLI-78-6,7 NRC 400,406-407 (1978); reconsideration denied,

• The Board asserts that the applicant and the Staff have ignored the intervenor's argument on this point. LBP-96-25, slip op. at 103-104. The intervenor first raised this matter as a proposed finding on the relevant legal standard for the analysis of Contention J.4. CANT's May 26, 1995 Proposed Findings on Contentions J.4 and K at 7. The argument was not part of Contention J.4 as submitted or of any contention as admitted. Further, in its reply to CANT's proposed findings on Contention J.4, the Staff argued that " CANT continues to analogize the ,

CEC to nuclear power plants." Staff's June 26,1995 Reply at 14-15. In its August 1,1995 l Proposed Form of Decision, the applicant argued that "the power reactor licensing decisions relied upon by Intervenor in support of its 'need' arguments are inapplicable to LES and that the single materials license decision cited by Intervenor supports LES's position on the need for the CEC." LES August 1,1995 Proposed Form of Decision at 5. '

' Prior to its revision in January 1975, Regulatory Guide 4.2 urged reactor plant applicants to include items such as local employment and tax revenues on the benefit side of the cost-benefit analysis. Chapter 8 of the regulatory guide was revised to exclude such secondary benefits directly in considering the cost-benefit analysis. However, Regulatory Guide 4.9, although revised in October 1975, continued to urge applicants to include such secondary benefits in the cost-benefit analysis for the licensing of uranium enrichmen'. facilities. See Regulatory Guide 4.9 at 4.9-25,4.9-26. Thus, contrary to the inconcet an:mion by the Board, by including the secondary benefits in the cost-benefit balance for the CEC, the Staff was following rather than deviating from prior agency stated practice. See LBP-96-25, slip op.

at 105-106. Further, Regulatory Guide 4.18 (Standard Format and Content of Environmental Reports for Near-Surface Disposal of Radioactive Waste) issued in June 1983, also urges applicants for materials licenses of this type to include secondary benefits such as tax revenues and employment in the cost-benefit analysis. Regulatory Guide 4.18 at 4.18-15,4.18-25, and 4.18-26.

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!, - CIJ-80-21,11 NRC 707 (1980). The Board cites no materials licensing cases, nor is the Staff i

j aware of any that support the proposition that secondary benefits should be excluded in striking the ultimate cost-benefit balance for materials license environmental cost-benefit analysis.'

j Further, inclusion of tax base benefits and increased employment on the benefit side of a cost-benefit analysis is not contrary to federal law. See, e.g., Robinson v. Knebel, 550 F.2d 422, l

t j 426 (8th Cir.1977). Thus, the Board's decision holding that secondary benefits be excluded l from the cost-benefit balance for a uranium enrichment facility raises a substantial question of l law and policy meriting Commission review pursuant to 10 C.F.R. I 2.786(b)(4)(iii).

F. The Board Erred in Resolving Contention O.

The lward's resolution of Contention Q raises substantial queshon of law and policy.

In resolving Contention Q, the Board rejected the applicant's assertion that the Commission's Part 70 financial qualifications standard is less prescriptive than the Part 50 standard (LBP 25, slip op, at 127,149-150), and the Staff's assertion that while Appendix C to Part 50 could be used as a guide in determining the financial qualifications of an applicant, not all of its

• The Board relies on the line of cases following Vermont Yankee Nuclear Power Corp.

(Vermont Yankee Station), ALAB-179,7 AEC 159 (1974) as standing for the proposition that secondary benefits such as taxes and local employment should be noted in the EIS onlyfor friformational purposes in . describing the socioeconomic impact. .LBP-96-25, slip op at 105 n.11. The Appeal Board decision cited by the Board, however, referred to the earlier decision in ALAB-179, and stated: "But the presence of such factors can certainly be taken into account in weighing the potential extent of the socioeconomic impact which the plant might have upon local communities. Indeed, the Board below recognized this in discounting the socioeconomic impact ofplant corutruction upon the town ofSeabrook." Public Service ofNew Hampshire (Seabrook Station Units 1 and 2), ALAB-471, 7 NRC 477, 509 n.58, citing the decision below, 3 NRC at 913 (emphasis in original). This treatment of secondary benefits (l.c.,

using the secondary benefits for countering socioeconomic impacts to the affected community rather than for informational purposes) is consistent with Regulatory Guide 4.2 which indicates that the secondary benefits "may partially, if not fully, compensate for certain services, as well as external or environmental costs and this fact should be reflected in the designation of the benefit." Regulatory Guide 4.2 at 8-1.

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9 provisions are suitable, particularly application of the provisions in Appendix C dealing with newly formed entities.' In its extensive review of the history of the financial qualification regulations (LBP-%25, slip op. at 130-145), the Board ignores the fact that the Commission

! could have, but did not, make the changes to the Part 70 regulation that it made to the Part 50 regulation. 'Ihe Board also ignores the fact that the kind and depth of information in Part 50, Appendix C, by its terms, "is not intended to be a rigid and absolute requimment." 10 L.F.R.

Part 50, Appendix C at " General Information." Lastly, the Board ignores the fact that the Commission, in its Hearing Order, could have made the Part 50 regulation applicable, as it did for other aspects of the proceeding, but chose not to do so. As a result of not recognizing a dinerence octween the Part 70 ar.d the Part 50 fmancial qualification regulations, the Board drew an erroneous conclusion regarding the financial qualification of LES.

The Board also concludes that, even under the standard urged by LES, certain published I

statements by an official of the applicant's corporate parent demonstrates that LES has failed to demonstrate reasonable assurance of obtaining debt financing. LBP-%25, slip op. at 180 n.33.  !

The Board cites an interview given by the official, as reported in an industry journal, as LBP-%25, slip op. at 156-157. The Staff asserted that a newly formed entity only needs to show that its corporate affiliates have the capability of providing construction funds and not that the corporate affiliates have committed to provide the funds to the applicant.14. at 127-128.

3' The Commission listed the applicable rules and mgulations, and generally excluded Part 50 regulations, in the Hearing Order. 56 Fed. Reg. at 23,313. However, the Commission also determined that one specific Part 50 regulation,10 C.F.R. I 50.81, would apply to the creation of certain creditor interests. 56 Fed. Reg. 23,312. Further, even if the Commission had applied the 10 C.F.R. I 50.33(f)(3) requirements regarding newly formed entities, that regulation refers to "the legal and financial relationships the entity has orproposes to how with its stockholders or owners." 10 C.F.R. I 50.33(f)(3)(i)(emphasis added). Clearly,. an entity would not have firm contracts with regard to relationships it proposed to have.

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! indicating the official's apprehension about obtaining the necessary financing and going forward,

due to the conditions of the market at the time of the interview. Id. This conclusion of the l

i Board, however, goes to the confidence of the applicant regarding the success of its plan, not  !

to the reasonableness of the plan, nor the ability of the applicant to go forward with the plan as required by the Commission's financial regulations under Part 70. Thus, the Board's erroneous j conclusion regarding the reasonableness of the applicant's financial plan for obtaining funding l presents a substantial question for Commission review pursuant to 10 C.F.R. I 2.786(b)(4)(i). ,

i i l CONCLUSION l j As demonstrated above the Board's reliance on reactor plant licensing law and policy resolving Contentions J.4 and Q, and in addressing secondary benefits in a materials license  !

application EIS, raises substantial and important questions meriting Commission review.  !

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! Accordingly, the Staff's petition for review should be granted pursuant to the Commission's j regulations in 10 C.F.R. { 2.786(b)(4).

i l PW11y submitted,

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I Richard G. Bachmann Counsel for NRC Staff

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i Eug Holler j Counsel for NRC Staff Dated at Rockville, Maryland i this 23rd day of December,1996 if 9

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. DOCKETED UNITED STATES OF AMERICA llSNPC i NUCLEAR REGULATORY COMMISSION

. '96 DEC 24 A , .9 3 REFORE THE COMMISSION OFFICf (? $U RE TAR Y j In the Matter of ) DOCKE:!NG 3 & nv!CE

) bcLil LOUISIANA ENERGY SERVICES, L.P. ) Docket No. 70-3070-ML

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, (Claiborne Enrichment Center) )

4 CFRTIFICATF OF SERVICE 1

I hereby certify that copies of "NRC STAFF'S PETITION FOR REVIEW OF LBP I 25" in the above captioned proceeding have been served on the following through l 7

deposit in the Nuclear Regulatory Commission's internal mail system, or by deposit in j the Uniteo St. .e, mail, first class, as indicated by an asteral this 23rd day of i December,1996:

l Thomas S. Moore, Chairman Richard F. Cole i Administrative Judge Administrative Judge 4 Atomic Safety and Licensing Board Atomic Safety and Licensing Board I U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission i Washington, DC 20555 Washington, DC 20555 i

Frederick J. Shon Mr. Ronald Wascom*

Administrative Judge Deputy Assistant Secretary j Atomic Safety and Licensing Board Office of Air Quality &

U.S. Nuclear Regulatory Commission Radiation Protection

Washington, DC 20555 P.O. Box 82135 Baton Rouge, LA 70884-2135 4

J. Michael McGarry, IU, Esq.* Robert G. Morgan

• Winston & Strawn Duke Engineering & Services, Inc.

1400 L Street, N.W. P.O. Box 1004 Washington, DC 20005 Charlotte, NC 28201-1004 f

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l Roland J. Jensen* Marcus A. Rowden, Esq.*

l Imuisiana Energy Services, L.P. Fried, Frank, Harris

2600 Virginia Avenue, N.W. Shriver & Jacobsen Suite 608 1101 Pennsylvania Avenue, N.W.

Washington, DC 20037 Suite 900 South Washington, DC 20004 Office of the Commission Appellate Office of the Secretary (16)

Adjudication ATrN: Docketing and Service Branch Mail Stop: 16-G-15 OWFN U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, DC 20555 Washington, DC 20555 Atomic Safety and Licensing Board Nathalie M. Walker, Esq

• Panel Sierra Club 12 gal Defense Fund U.S. Nuclear Regulatory Commission 400 MagaAe Street Ste. 401 Washington, DC 20555 New Orleans, LA 70130 Diane Curran, Esq.* Joseph DiStefano, Esq.*

Harmon, Curran, & Spielberg Urenco Investments, Inc.

2001 S Street, N.W., Suite 430 Suite 610 Washington, D.C. 20009-1125 2600 Virginia Ave., N.W.

Washington, DC 20037 David S. Bailey, Esq.*

'Ihomas J. Henderson, Esq.

lawyers' Committee for Civil Rights Under law 1450 G Street N.W., Ste. 400 Washington, DC 20005 Eugene J) Holler l Counsel for NRC Staff

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