ML20135F950
| ML20135F950 | |
| Person / Time | |
|---|---|
| Site: | Claiborne |
| Issue date: | 03/13/1997 |
| From: | Bachmann R NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| To: | NRC COMMISSION (OCM) |
| References | |
| CON-#197-18209 LBP-96-25, ML, NUDOCS 9703180011 | |
| Download: ML20135F950 (36) | |
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lf$0 DOCKETED USNRC i
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION 37 MAR 13 P4 :36 OF SECRETARY BEFORE TIECOMMIStSION OFFIC[TlHG & SERVIC 00CKt BRANCH l
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In the Matter of
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Louisiana Energy Services, L.P.
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Docket No. 70-3070-ML
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(Claiborne Enrichment Center)
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i NRC STAFF'S BRIEF IN SUPPORT OF COMMISSION REVERSAL OF LBP-96-25 Richard G. Bachmann Counsel for NRC Staff March 13,1997 PoR "88u 7J88s870 35o7 C
-i-TABLE OF CONTENTS P_ag l
TA B LE OF AUTHORITIES.................................. i I NTROD U CTI ON....................................... 1 BACKGROUND........................................
1 STATEMENT OF ISSUES 3
l DISCUSSION 3
1.
Whether the Board Erroneously Concluded That the Staff's Treatment of Need for the Facility in the FEIS Is Inadequate......................... 3 II.
Whether the Board Erroneously Concluded that Secondary Benefits Must Be Excluded from a Source Material and Special Nuclear Material Licensing FEIS Cost-Benefit Analysis................................. 7 111.
Whether the Board Erroneously Concluded that the Staff's Treatment of the No-Action Alternative in the FEIS Is inadequate......................
11 IV.
The Board Erroneously Concluded that the Applicant Has Not Demonstrated that LES is Financially Qualified to Construct the CEC within the Meaning
.ii.
TABLE OF CONTENTS Page of 10 C. F. R. Q 70.23(a)(5)............................
15 CONCLUSION
....................................15
l i-
-lii-TABLE OF AUTHORITIES Page COURT CASES Citi: ens Against Burlington, Inc. v. Busey, 93 8 F.2d 190 (D.C. Cir.1991)..........................
8,12,13 NRDC v. Morton, 4 5 8 F.2d 827 (D.C. Cir.1972)........................
12 New England Coalition on Nuclear Pollution v. NRC, 582 F.2d 87 (1st Cir,1978).
I FarmlandPreservation Assoc. v. Goldschmidt, 611 F.2d 233 (8th Cir.1979)..............................
13.
Robertson v. Methow Valley Citizens Council, 490 U.S. 332 (1989)..........
12,14 Robinson v. Knebel, 550 F.2d 422 (8th Cir.1977).............
7, 8 Sierra Club v. Adams, 578 F.2d 389 (D.C. Cir.1978).
12,14 Tongass Conservation Society v. Cheney, 924 F.2d ll37 (D.C. Cir.1991)............
12,14 ADMINISTRATIVE DECISIONS Commission:
Louisiana Energy Services, L.P. (Claiborne Enrichment Center), CLI-97-3,44 NRC (February 13, 1997) passim Louisiana Energy Services, L.P. (Clalborne Enrichment Center), CLI-97-2,44 NRC (January 29,1997)....
2 Louisiana Energy Services. L.P. (Claiborne Enrichment Center), CLI-96-8,44 NRC 107 (1996)......
2
i 1
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TABLE OF AUTHORITIES Page j
Curators of the University ofMissouri, CLI-95-1, 41 NRC 71 (1995) 9 Petitionfor Emergency & Remedial Action, CLI-78-6, 7 NRC 400 (1978)................
9 Public Service Company ofNew Hampshire (Seabrook Station, Units 1 and 2), CLI-78-1, 7 NRC 1 (1978) 1 i
Appeal: -
Commonwealth Edison Co. (Carroll County Site),
ALAB-601,12 NRC 18 (1980).
16 Long IslandLighting Co. (Shoreham Nuclear Power Station, Unit 1), ALAB-900,28 NRC 275 20 Northern Indiana Public Service Co. (Ballly Generating Station, Nuclear-1), ALAB-619, 12 NRC 5 5 8 ( 19 8 0)...........................
16 i
Public Service Company ofNew Hampshire (Seabrook Station, Units 1 and 2), ALAB-471, 7 NRC 477 (1978) 8 Vermont Yankee Nuclear Power Corp.
(Vermont Yankee Station), ALAB-179, 7 AEC 159 (1974) 8 Licensing:
Louisiana Energ Services. L.P. (Clalborne Enrichment Center), LBP-96-7, 43 NRC 142 (1996) 2 Louisiana Enery Services, L.P. (Clalborne Enrichment Center), LBP-91-41, 34 NRC 332 (1991) 16 Duke Power Co. (Catawba Units 1 and 2), LBP-74-22, 7 AEC 659(1974) 14 1
.v.
TABLE OF AUTHORITIES P,_aE_e STATUTES The Solar, Wind, Waste, and Geothermal Power Production Incentives Act of 1990, Pub. L. No.
101-575 (104 Stat. 2834)(1990) 42 U.S.C. Q 2014v..
4,10 42 U.S.C. Q 2232(a)
.1 42 U.S.C. Q 2243
.5 REGULATIONS 10 C.F.R. Q 30.33 16 10 C.F.R. 40.32 16 10 C.F.R. 40.32(e) and 70.23(a)(7).................
11,14 10 C.F.R. 50.33(f) 19 10 C.F.R. 50.40(b) 20,21 10 C.F.R. 50.81 16 10 C.F.R. 70.22 17,18 10 C.F.R. 70.23(a)(5)
. 3,17,18,20 i
11,14,17 10 C.F.R. Q 70.23(a)(7) 10 C.F.R. 70.23(e)
. 21 10 C.F.R. Part 40 passim 10 C.F.R. Part 50 passim j
l 10 C.F.R. Part 70 passim MISCELLANEOUS 21 Fed. Reg, 764 (1956)...
18 31 Fed. Reg. 14,881 (1966)....
18
- vi.
TABLE OF AUTHORITIES P_agte 32 Fed. Reg. 405 5, 4056 (1967)..........................
18 56 Fed. Reg. 23,310 (1991 )...................................
5,16 57 Fed. Reg. 18288 (1992).............
10 57 Fed. Reg. 18,398 (1992)........
5 Reg. Guide 4.2 6, 9 Reg. Guide 4.9 6,9,11 Reg. Guide 4.18 9
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March 13,1997 5
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION l
BEFORE THE COMMISSION j
In the Matter of
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LOUISIANA ENERGY SERVICES, L.P.
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Docket No. 70-3070-ML j
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(Claiborne Enrichment Center)
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NRC STAFF'S BRIEF IN SUPPORT OF COMMISSION REVERSAL OF LBP-96-25
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INTRODUCTION On February 13, 1997, the Commission issued an Order granting petitions filed by Louisiana Energy Services, L.P. (LES or Applicant) and the staff of the Nuclear Regulatory Commission (Staff) for review of a Partial Initial Decision (Resolving Contentions J.4, K, and Q) by the Atomic Safety and Licensing Board (Board) designated to preside over this proceeding.' 'Ihe Staff hereby files its brief in this matter. For the reasons set forth below, the Board's Partial Initial Decision in LBP-96-25 should be reversed.
BACKGROUND In this combined constmetion permit-operating license proceeding, LES seeks a 30-year license to possess and use byproduct and source materials, and special nuclear material (SNM),
to enrich uranium using a gas centrifuge process at the proposed Claiborne Enrichment Center Louisiana Energy Senices, L.P. (Claiborne Enrichment Center), CLI-97-3, 44 NRC 2
(February 13, 1997), granting review of LBP-96-25,44 NRC (December 3,1996).
4 i.
l (CEC) to be constructed in Claiborne Parish, Louisiana. Citizens Against Nuclear Trash 4
(CANT) opposes issuance of the license and, after establishing standing and proposing several j
i admissible contentions, was granted leave to intervene and admitted as a party to the proceeding.
l On December 3,1996, the Board issued a second Partial Initial Decision, LBP-%25, resolving i
three of these contentions.' 'Ihe Board sustained Contentions J.4 and K, dealing with LES's i
environmental report (ER), by concluding that the Staff's treatment of the need for the facility l
and the no-action alternative in the final environmental impact statement (FEIS) is inadequate.'
l LBP-96-25, slip op. at 181-182. The Board also sustained Contention Q which challenged LES's i
l financial qualifications to construct the CEC. Id.
i i
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' In its first Partial Initial Decision, the Board resolved three safety contentions in favor of the applicant. leuisiana Energy Services, L.P. (Claiborne Enrichment Center), LBP-%7, 43 NRC 142 (1996); petition for review granted in part and denied in part, CLI-%8, 44 NRC 107 (1996); motion for partial reconsideration denied, CLl-97-2, 44 NRC _
(January 29,1997).
In Contention J.4, CANT challenged the adequacy of LES's ER for failing to demonstrate 8
that there is a need for the facility. LEP-%25, slip op. at 4,94. The Board decided that
"[b]ecause the Staff's discussion of the issue of the need for the CEC in the FEIS is based upon, and parallels, the information provided in the ER... we need not @tely address the adequacy of the Applicant's treatment of the need issue in the ER." 14. at 30-34 (footnote omitted), 93-94. In Contention K, CANT challenged the adequacy of LES's ER for failing to include any discussion of the no-action alternative. LBP-%25, slip op. at 4,94. 'Ihe Board decided, 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. "Ihe Board noted that the Commission's Hearing Order obligates the Board to ensure the agency's compliance with the National Environmental Policy Act (NEPA) independent of
- CANT's environmental contentions. Id. at 11.
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STA"FMENT OF ISSUES a
1 l
1.
Whether the Board Erroneously Concluded Hat the Staff's Treatment of Need for the l
Facility in the FEIS Is Inadequate.
II.
Whether the Board Erroneously Concluded that Secondary Benefits Must Be Excluded from a Source Material and Special Nuclear Material Licensing FEIS Cost-Benefit l
Analysis.
J III.
Whether the Board Erroneously Concluded that the Staff's Treatment of the No-Action Alternative in the FEIS Is Inadequate.
4 IV.
Whether the Board Erroneously Concluded that the Applicant Has Not Demonstrated that i
LES Is Financially Qualified to Construct the CEC within the Meaning of 10 C.F.R.
I 70.23(a)(5).
DISCUSSION l
3 1.
The Board Erroneously Concluded that the Staff's Treatment of Need for the Facility in the FEIS Is inadequate.
4 f
The issue of what con'titutes adequate treatment of the need for the proposed uranium s
enrichment facility pursuant to NEPA is one of first impression. In the Staff s view, the Board, I
j in applying the incorrect legal standard and disregarding relevant evidencz, erroneously 1
concluded that the Staff's treatment of the need for the facility in the FEIS is inadequate. The I
Board relied on reactor licensing decisions holding that "need for power is a shorthand i
expression for the benefit side of the cost-benefit balance which NEPA [the National i
j Environmental Policy Act] mandates for a proceeding considering the licensing of a nuclear i
plant." LBP-96-25, slip op. at 31 n.5. The Board equated the need for power in a nuclear power plant licensing case to the need for additional separative work units (SWUs) in a uranium a
enrichment facility licensing case. Id. Having reduced the benefit side of the NEPA cost-benefit
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balance to a consideration of need for additional SWUs in the enrichment market, the Board
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I.
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I i L concluded that the actual " benefit of the CEC is not accurately represented... by the Staff in the 1
l FEIS and the discussion of need in the FEIS is inadequate." Id. at 90-91,181.
'Ihe FEIS describes the 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. The Board reasons, however, that pria competition (low cost SWUs) is the " principal benefit against which l
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the costs of the facility are weighed" in striking the NEPA cost-benefit balance. LBP-96-25, l
slip op, at 46. Consequently, the Board asserts that the price competition LES will bring to the j
enrichment market must be quantified. Id. at 83. Accordingly, the Board only addresses, in detail, supply and demand of the uranium enrichment market, and LES's price competitiveness to reach the conclusion that the project will have little, if any, effect on price competition in the j
enrichment services market. Id. at 34-90. Having determined that the issues of supply and i
l l
demand determine the need for the facility, the Board dismisses the FEIS description of need in i
i terms of an additional domestic supplier using more efficient and secure production methods.
i Id. at 46. The Board concludes that "the CEC wiil have little, if any effect on price competition I
in the enrichment services market." Id. at 91. In the Board's view, "whether LES will bring j
real price competition to the SWU market as an additional domestic supplier," is the principal l
benefit to be weighed against the various costs of the facility. Id. at 71, 83-84.
l l
'Ihe Board relied for its conclusion that the Staffs treatment of the need for the proposed l
enrichment facility was inadequate, on reactor licensing decisions. Such reliance is contrary to the decision of Congress and the Commission to treat enrichment facilities such as the CEC in a manner different from nuclear power plants. 'Ihe Solar, Wm' d, Waste, and Geothermal Power i
j Production incentives Act of 1990, Pub. L. No. 101-575 (104 Stat. 2834) (1990), amended the Atomic Energy Act (AEA) section 11v definition of " production facility." 42 U.S.C. I 2014v.
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l r
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The 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 l
193, 42 U.S.C. I 2243. The principal effect of section 193 of the AEA is to make licensing i
j 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 (SNM) (sec. 53),
I rather than the provisions persaining to a nuclear reactor or other production facility.* Further, 1
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this proceeding, which concerns the licensing of the CEC, is subject to the specific requirements identified in a Commission Hearing Order.8 f
In its Hearing Order, the Commission identified the requirements generally governing
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the issuance of source material and SNM licenses as well as special standards and instructions that govern the licensing of the CEC. See 56 Fed. Reg. at 23,313. Nothing in the Hearing Order modifies the application of the Commission's regulations regarding NEPA requirements j
l for the CEC from those that would apply to any other applicant for a source material or SNM license.
1 l
' Under the new provisions, a license for a uranium enrichment facility is issued pursuant to 10 C.F.R. Parts 40 and 70 of the Commission's regulations rather than under 10 C.F.R. Part
- 50. 57 Fed. Reg. 18,398 (1992). Prior to the addition of section 193, a uranium enrichment facility would have been licensed as a prnAu*m facility under AEA Chapter 10, which includes restrictions on foreign ownership, domination, or control (sec.103), the need for an antitrust i
review (sec.105), and the need to license operators (sec.107). Such requirements do not apply l
to licenses issued pursuant to parts 40 and 70.
j
" Notice of Receipt of Application for License; Notice of Availability of Applicant's 8
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 (1991).
De Staff's guidance concerning how an environmental report should be prepared for an enrichment facility is contained in Regulatory Guide 4.9, Preparation of Environmental Reports for Commercial Uranium Facilities. De Board bases its position on an erroneous application of Regulatory Guide 4.9.' LBP-96-25 at 30 n.5. De Board states that the need for the CEC "is simply a catchword for the principal or primary benefit of the proposed facility that goes on the benefit side of the cost-benefit ledger." Id. While that statement is consistent with the Staff j
guidance for environmental reports for nuclear power stations, it is not consistent with the Staff's guidance on this subject for uranium enrichment facilities. The regulatory guide for nuclear power station environmental reports states 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.
De regulatory guide for commercial uranium enrichment facilities environmental reports does not articulate a primary benifit, 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 source material or SNM licensing cases, nor is the Staff aware of any, that support the proposition that need for the praduct of the licensed activity is the primary benefit to be considered in striking the cost-benefit balance for source material or SNM license environmental cost-benefit analyses. The Board's conclusion that the benefit of price competition "is the benefit that must be weighed against the various costs of the project in the NEPA mandated cost-benefit analysis" (LBP-96-25, slip op. at 91-92), is based on its reading of reactor licensing cases. This conclusion ignores the 1
difference in the treatment of enrichment facilities mandated by the Commission. In judging whether the Staff a FEIS is adequate, the Board should not have applied reactor licensing precedents.
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l The Board further erred in ignoring the Applicant's evidence regarding diversity of i
producers and security of supply. See, e.g., Testimony of LES witnesses at 12-13, ff Tr. 383.
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'Ihe Board's failure to consider competition and security of supply as factors in determining need
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for the CEC caused it to reach an erroneous conclusion regarding the description of the need for i
j the CEC in the FEIS. In'aum, the Board's conclusion that the Staff's treatment of the need for i
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the facility in the FEIS is inadequate is based on inapposite case law and the disregard of i
relevant evidence. Thus, the Board's decision must be reversed, to avoid establishing an i
l inappropriate precedent regarding how "need" is to be considered in an FEIS for uranium
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l enrichment facilities.
II.
The Board Erroneously Concluded that Secondary Benefits Must Be Excluded from a Source Material or Special Nuclear Material Licensing FEIS Cost-Benefit Analysis.
4 I
i As with the issue of the need for the proposed facility, the Board's finding that secondary l
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benefits must be excluded from a source material or SNM licensing FEIS cost-benefit analysis is based on the application of the incorrect legal standard and is contrary to established Commission policy regarding enrichment facilities and source material or SNM license applications. The Board found that the Staff's cost-benefit analysis in the FEIS incorrectly includes and heavily relies upon secondary benefits of increased employment and tax revenues in the benefit side of the NEPA cost-benefit analysis 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 analysis. LBP-96-25, slip op. at 106.
At the outset, it is clear that inclusion of tax base benefits and increased employment on the benefit side of a cost-benefit analysis is not contrary to law. In Robinson v. Knchel, 550 F.2d 422 (8th Cir.1977), petitioners challenged the adequacy of the FEIS for a proposed u---- -
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L.
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' l recreational development on, among other things, the accuracy of the cost-benefit analysis. The court found the analysis adequate, noting that it contained, among other things, "the expected j
l direct and indirect impact upon employment and the area economy. The loss of productive farm l
land was found to be offet by favorable effects on the economy produced by the project." Id.
at 426. Similarly, in Cfrizens Agaiart Rurfington, Inc. v. Busey, 938 F.2d.190,197-198 (D.C.
Cir.1991), the court refers to the Federal Aviation Administration s consideration, in the FEIS, l
of employment and wages as " appropriate factors."
The Board challenges the inclusion of the secondary benefits of increased employment and tax revenues in the cost-benefit balance not as a matter of federal law, but as contrary to
]
I agency adjudicatory decisions. LBP-96-25, slip op. at 105-106. The Board relies on the line l
of cases following Vermont Yankee &ciear Power Corp. (Vermont Yankee Station), ALAB-179, J
j 7 AEC 159 (1974), as standinii for the proposition that semndary benefits such as taxes and local employment "should be noted in the EIS [ environmental impact statement] onlyfor triformational purposes in describing the socioeconomic impact." LBP-96-25, slip op. at 105 n.11 (emphasis added). The Board's interpretation of Vermont Yankee, however, appears to be incorrect. As subsequently discussed by an Appeal Board (with reference to the earlier decision in ALAB-179) f
"...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, i
the Board below recognized this in discounting the socioeconomic ingpact ofplant constructidn spon the town of Seabrook. " Public Service of New Harrgpshire (Seabrook Station Units 1 and i
2), ALAB-471,7 NRC 477,509 n.58, citing the decision below, 3 NRC at 913 (emphasis in original).
4 i
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- b. !,
While the regulatory guide for nuclear power station environmental reports comports with the case law cited by the Board, (Reg. uide 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). When issued for comment in August 1972, Regulatory Guide 4.2 for nuclear power plants urged reactor plant applicants to include items such as local employment and tax revenues on the benefit side of the cost-benefit balance. After the receipt of comments on the regulatory guide, Chapter 8 was revised, in January 1975, to exclude such secondary benefits directly in considering the cost-benefit balance. However, Regulatory Guide 4.9 for uranium enrichment facilities, although revised in October 1975, continued to urge applicants to include such secondary benefits in the cost-benefit balance for the licensing of uranium enrichment facilities.' See Regulatory Guide 4.9 at 4.9-25,4.9-26.
While it is clear that regulatory guides are not regulations, they do provide guidance as to acceptable modes of conforming to specific regulatory requirements which the Commission has recognized. See 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, CLI-8021,11 NRC 707 (1980). Thus, contrary to the assertion by the Board, by including the secondary benefits in the cost-benefit balance for the CEC, the Staff was
- 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 balance. Regulatory Guide 4.18 at 4.18-15,4.18-25, and 4.18-26.
t 10 -
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following rather than deviating from prior agency practice.' See IEP-9025, slip op. at 105-106.
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Further indication that the Commission intended that secondary benefits should be included in a cost-benefit analysis for uranium enrichment facilities is demonstrated by the i
Commission's amendment of its regulations to conform with the requirements of the Solar, 1
Wind, Waste, and Geothermal Power Production Incentives Act of 1990, Pub. L. No. 101-575 l
'(104 Stat. 2834) (1990). As previously noted, on April 30,1992, the Commission amended its i
l regulations to reflect that uranium enrichment facilities would be licensed subject to the provisions of the Atomic Energy Act of 1954, as amended, pertaining to source material and i
SNM rather than under the provisions pertaining to a production facility. 57 Fed. Reg.18288 (1992). Among the changes r==ry to conform with Public law 101-575 was the requirement i
that an environmental impact statement (EIS) be prepared in accordance with NEPA. Id.
at 18389. The Commission amended the Part 40 and Part 70 regulations dealing with the NEPA j
i j
cost-benefit balance to be performed by the Director of Nuclear Material Safety and Safeguards I
or his designee to include "granium enrichment facility construction and operation" among the i
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' 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 i
26, 1995 Proposed Findings on Contentions J.4 and K at 7. The argument was not part of i
Contention J.4 as submitted or of any contention as admitted. Further, in its reply to CANT's i
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 i
Proposed Form of Decision, the Applicant argued tha't "the power reactor licensing decisions l
relied upon by Intervenor in support of its 'need' arguments are inapplicable to LES and that 1
the single materials license decision cited by Intervenor supports LES's position on the need for i
the CEC." LES August 1,1995 Proposed Form of Decision at 5. Thus, to the extent that CANT's argument rested on the application of agency case law apposite to the licensing of nuclear power plants, the Staff and the Applicant addressed the issue when it was first raised.
i
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activities within the scope of the regulations (10 C.F.R. Il 40.32(e) and 70.23(a)(7)).* Id.
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at 18390-18391; 18392-18393. The pertinent parts of 10 C.F.R. Il 40.32(e) and 70.23(a)(7) require a conclusion by the Director that the proposed license abould issue after, among other things, " weighing the environmental, economic, technical, and other benefits against i
1 environmental costs." Thus, the Comminion's replations specifically require considering i
j
" economic, technical, and other benefits" on the benefit side of the NEPA cost-benefit balance f
for a uranium enrichment facility.
I
%e Board cites no source material or SNM licensing casee., nor is the Staff aware of any that support the proposition that secondary benefits should be excluded in striking the ultimate cost-benefit balance for source material or SNM license environmental cost-benefit analyses.
l In the absence of such cases or other compelling authority, the Board erred in adhering to the l
i nuclear power plant cases, rather than giving deference to the Commission : regulations in i
amended Part 40 and Part 70 and to the guidance in Regulatory Guide 4.9. Thus, the Board's 4
l decision holding that secondary benefits be excluded from the cost-benefit balance for a uranium enrichment facility should be reversed.
111.
The Board Erroneously Concluded that the Staff's Treatment of the No-Action Alternative in the FEIS Is inadequate.
l De Board's requirement that, in regard to the no action alternative, an EIS must tabulate i
and discuss anew impacts adeptely discussed in the evaluation of the impacts of the proposed 4
action is a departure from the established legal standard. The Board found that the FEIS failed l
- Prior to amendment of the regulations to add uranium enrichment facility construction and operation, the activities embraced within 10 C.F.R I 40.32(e) included uranium milling and i
production of uranium hexafluoride, and the activities embraced within 10 C.F.R. I 70.23(a)(7) included processing and fuel fabrication, scrap recovery, and conversion of uranium hexafluoride.
i I
l to adequately address the numerous impacts avoided in the no-action alternative, such as those to surface and ground water and air quality, and the elimination of depleted uranium tails.
LBP-96-25, slip op. at 96-101. Although the Board finds no fault with the FEIS's discussion i
of these matters as negative impacts of licensing the CEC, the Board would have the FEIS 1
l separately list and discuss these same matters as impacts avoided in not licensing the CEC (the i
i no-action alternative) rather than stating that the impact is avoided and referring to the detailed i
i j
discussion of the impact in another part of the FEIS. Upon reaching this conclusion, the Board 1
i suggested that the Staff consider filing a supplement to the FEIS to reanalyze the no-action alternative. Id. at 1%.
The purpose of the FEIS, as the Board correctly notes, is to have the agency take a hard look at the environmental consequences of the action. Id. at 16, citing Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989) and NRDC v. Morton, 458 F.2d 827, 838 (D.C. Cir.1972). Further, the FEIS mun be read as a whole and information may be available in other sections of the FEIS for consideration in a particular section. See Otizem Agalmt Burlington,938 F.2d. at 194 n.7; Tongass Consermtion Society,924 F.2d at 1143; Sierra Club, 578 F.2d at 3%.
'Ihe Board takes the Staff to task for not mentioning in the FEIS, much less addressing, the avoided environmental impacts to, among other things, surface and ground water and air quality from not building the facility, and the avoided impact of not generating depleted uranium tails. LBP-96-25, slip op. at 99. Notwithstaliding this observation, the Board acknowledges that the 'first matter addressed in the FEIS discussion of the no-action alternative is that "the no-action alternative is the denial of the NRC license so that the impacts, both positive and negative, discussed in the previous 76 pages of chapter 4 of the FEIS regarding the various environmental
4 consequences of the project would be eliminated and the site is assumed to revert to its former l
use." Id. at 94 (emphasis added).
An examination of chapter 4 of the FEIS addresses the environmental impacts avoided by not building the CEC in detail. Specifically, the very matters the Board claims are not addressed, in fact, are discussed with particularity, i.e., impacts to surface and ground water and to air quality were the facility to be built (FEIS at 4-1 to 4-7 and 4-13 to 4-16), and the impact of generating depleted uranium tails during facility operation (FEIS at 4-65 to 4-68, A-1 4
i l
to A-15).
The Board finds the FEIS inadequate because of the relative brevity of the discussion in the no action alternative section of the FEIS that results from referring to another section of the document for a discussion of the impacts avoided rather than repeating the discussion.
4 LBP-96-25, slip op. at 98-99.' The Board relies on Citizens Against Burlington, Inc. v. Busey, i
l 938 F.2d.190,194 (D.C. Cir.1991) for authority that the no-action alternative should be i
l discussed "in depth." LBP-96-25, slip op. at 99. The court in Osizens Against Burlington did not speak to the location of the alternative discussions in the'FEIS under review, only to the i
j quality of the discussions. In fact, the Otizens Against Burlington court rejected the notion that information available for consumption elsewhere in the EIS need be repeated, stating that "[t]he EIS demonstrates that the discussion of the socioeconomic and environmental impacts of inaction i
i is the flip side of the discussion of the impacts of action." Id. at 198 n.7.
In Fanniand Prestruation Assoc. v. Goldsdynidt, 611 F.2d 233, 238-239 (8th Cir.1979), the court found that a two paragraph discussion of the no-action alternative was adequate in that, "[t]here was i
i not much to say about that alternative. The adoption of the alternative would simply have left things as they were...." The Licensing Board designated to preside in the Catawba Nuclear l
I
=..-.
]
Section construction permit proceeding reached the same conclusion in considering the extent to I
which the "no new plant" alternative was considered in the final environmental statement. 'Ihe Board found that the "[djirect environmental benefits of not building are, of course, the absence 1
of the direct environmental costs of building and operating the plant." Duke Pour Co.
(Catawba Units 1 and 2), LBP-74-22,7 AEC 659,672 (1974). The Board in this proceeding abandans this logic. See LBP-96-25, slip op. at 102 n.10. In any event, the FEIS must be read as a whole in determining if it is adequate. Tongass Consermtion Society v. Osency, 924 F.2d 1137,1143 (D.C. Cir.1991); Sierra Club v. Adans, 578 F.2d 389, 3% (D.C. Cir.1978).
In summary, the purpose of the FEIS is met when the agency takes a hard look at the environmental consequences of its decision. Robertson v. Methow Valley Otizens Council, 490 U.S. at 350. The CEC FEIS discussion of the no-action alternative meets this applicable legal standard and the Staff's' treatment of the alternative in the FEIS, therefore, is adequate.
The requirements set by the Board for discussing the no-action alternative go well beyond what is required by the cases interpreting the requirements of NEPA, and should be reversed.
i ij-.
IV.
The Board Erroneously Concluded that the Applicant Has Not Demonstrated that LES Is Financially Qualified to Construct the CEC within the Meaning of 10 C.F.R.
l 6 70.23(aXSL 1
f The Board sustained CANT's contention Q, concluding that LES has not demonstrated i
j that it is financially qualified to construct the CEC.' LEP-96-25, slip op. at 180-181. In so i
doing, the Board accepted CANT's argument that the provisions of Part 50 regarding financial j
qualifications, including Appendix C, provide the definitive guidance for determining whether i
LES is financially qualified pursuant to Part 70.14. at 128. As a result of not recognizing differences between the financial qualifications regulations of Part 50 and Part 70, the Board i
erroneously concluded that LES has not t stablished that it is financially qualified to build the facility and that no reasonable assurance exists that funds will be available to construct the facility.
ne Board's resolution of Contention Q is contrary to the Comminion's regulations and policy regarding the financial qualifications of an applicant for a source material or SNM i
license. 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-96-25, slip op. at 127,149-150. De Board also rejected the Staff's assertion that j
Appendix C to Part 50 should be used only as a guide in determining the financial qualifications l
of an applicant, and that not all of its provisions are suitable, particularly application of the provisions in Appendix C dealing with newly formed entitics.14. at 156-157.
j
' While the contention asserted that LES was not qualified to build and operate the CEC, the Board did not reach the question on whether LES is financially qualified to operate the
]
facility. LBP-96-25, slip op at 181.
l The Staff asserted that a newly formed entity only needs to show that its corporate (continued...)
i i
I 1
i* <
he Commission, in its Hearing Order, listed the applicable rules and regulations for this proceeding, and generally excluded Part 50 regulations. 56 Fed. Reg. at 23,313. The j
Commission could have made the more specific financial qualifications regulation in Part 50 applicable, as it did for other aspects of the proceeding, but chose not to do so. For example, l
the Commission determined that one specific Part 50 regulation,10 C.F.R. I 50.81, would j
apply to the creation of certain creditor interests. 56 Fed. Reg. 23,312. De Board previously held, in ruling on the applicable regulations regarding the disposition of depleted uranium
[
hexafluoride tails in this proceeding, that "[i]n licensing matters the hearing notice published by the Commission for the proceeding defines the scope of the proceeding and thus binds this licensing board." leuisiana Energy Services, L.P. (Claiborne Enrichment Center), LBP-91-41, 34 NRC 332,337-338 (1991), citing Nordern Indiana Public Service Co. (Bailly Generating Station, Nuclear-1), ALAB-619,12 NRC 558, 565 (1980) and Commonweald Edison Co.
(Carroll County Site), ALAB-601,12 NRC 18,24 (1980). The Board's decision provides no reason to depart from this ruling now.
Regarding financial qualifications of the Applicant, the Order states that the matters of fact and law to be considered are "whether the application satisfies the standards set forth in 10 C.F.R. 30.33, 40.32, and 70.23." 56 Fed. Reg. at 23, 310. De Commission's Order regarding the criteria Or the issuance of a license states only that " specific regulations are to be applied according to their terms." Id. at 23,313. No specific direction regarding the standards to be applied to financial qualifications is given. Of the cited regulations, neither 10 C.F.R. 6 30.33 nor 10 C.F.R. I 40.32 set forth any provisions pertaining to financial qualifications.
(... continued) affiliates have the capability of providing construction funds and not that the corporate affiliates have committed to provide the funds to the applicant. LBP-96-25, slip op, at 127-128.
f-l Only 10 C.F.R. I 70.23 contains such provisions. The Staff set out its position on assessing financial qualifications to construct and operate the CEC in memoranda in response to a Board i
j Order dated March 24,1995," and in the Staff's FiW Form of Decision.82 De Staff tabs 5
l the position with respect to this contention that in order to support issuance of a license for the j
CEC, the Applicant must demonstrate, pursuant to 10 C.F.R. I 70.23(a)(5), that LES " appears to be financially qualified."
De Commission has not provided guidance on how to determine whether an applicant for a Part 70 license " appears to be financially qualified" to engage in the proposed activities.
The regulations, when first promulgated in 1956, were not amplified with or explained by supplementary information such as statements of consideration. See 21 Fed. Reg. 764 (1956).
" See NRC Staff Memorandum in Response to Licensing Board Order Dated March 24, j
1995 Regarding legal Status of Depleted UF. Generated at the Claiborne Enrichment Center and Legal Standard for Assessing Financial Qualification (April 21,1995) (hereinafter Staff Financial Memo April 21,1995), and Reply of the NRC Staff to Memorandum of CANT in Response to Licensing Board Order Reprding legal Standard for Assening Financial Qualification to Construct and Operate the CEC (May 1,1995) (here'mafter Staff Financial Memo May 1,1995).
See NRC Staff's Proposed Form of Decision regarding Contentions B, J, K, and Q (August 1,1995) (hereinafter Staff's Proposed Decision).
88 Language regarding financial qualifications was found in two places. First, under 10 C.F.R. I 70.22 " Contents of Applications," in the note following i 70.22 (a) (8):
NOTE: Where the quantity of material r=W, or the nature of the proposed activities, is such as to require consideration of the following factors, the Commission will request the applicant to submit information with respect to his financial qualifications (1) to engage in the proposed activities in accordance with the regulations in this chapter, (2) to assume responsibility for the payment of Commission charges for use, consumption or loss of special nuclear material and (3) to undertake and carry out the proposed use of special nuclear material for a reasonable period of time. Consideration of such factors will normally not be involved in the consideration of applications for small quantities of special nuclear material for use in research and development.
21 Fed. Reg at 766.
Second,10 C.F.R. I 70.23, " Requirements for the approval of (continued...)
-~--.-
1 f 1 j
Further, the Atomic Energy Commission offered no guidance as to the nature of the financial information to be submitted or as to how the application was to demonstrate that the applicant i
" appears to be financially qualified" to engage in the proposed activities. 'Ihe regulations were i
amended in 1%7 to account for private ownership of nuclear material. No substantive changes l
(... continued) applications," stated that:
4 l
A license application will be approved if the Commission determines that:
(5) ~ Where the quantity of material requested, or the nature of the proposed activities are such as to require consideration of these factors by the Commission, l
that the applicant appears to be financially qualified to assume responsibility for i
the payment of Commission charges for use, consumption or loss of special i
nuclear material and to engage in the proposed activities in accordance with the 1
regulations in this part. If the allocation (pursuant to i 70.31 (b)) of a substantial quantity of special nuclear material is requested, the application should demonstrate that the spplicant appears to be financially able to undertake and l
carry out the proposed use of special nuclear material for a reasonable period of time.
21 Fed. Reg. at 766.
l
The requirement that an applicant should have sufficient resources to pay the Commission 1
j for the then government-owned special nuclear material was removed in 1%7 when the regulations were amended to account for private ownership of nuclear material. The " Note" was revised to read as follows:
l l
NOTE: Where the nature of the proposed activities is such as to require consideration of the applicant's financial qualifications to engage in the proposed 4
activides in accordance with the regulations in this chapter, the Commission may request the applicant to submit information with respect to his financial j
qualifications.
l 32 Fed. Reg. 4055, 4056 (1%7). Neither the promulgation of the final rule, nor the proposed rulemaking, 31 Fed. Reg. 14,881 (1966), contain any explanation of why the language in the last phrase of the note was changed from, "the Commission will request the applicant to submit i
information..." to "the Commission may request the applicant to submit information..." The i
language change, however, does comport more closely with the language in section 182a of the Atomic Energy Act, as amended.
i In addition to revising the note following 10 C.F.R. I 70.22(a)(8), the 1%7 change J
(continued...)
3 i
t
io l
O
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l to the sections of Part 70 relating to financial qualifications have been made since then. 'Ihus, by 1%7, the financial qualification requirements for Part 70 licensees were in their present j
form, and with no further guidance by either the Atomic Energy Commission or NRC as to their l
interpretation.
l The Staff considers that the more detailed financial qualifications standard in Part 50 can f
be used for guidance. The regulations in 10 C.F.R. I 50.33(f) and the guidance in Part 50, Appendix C, apply to applicants for power reactor limnses and call for reasonable assurance that an applicant can obtain funds to cover costs of construction and operations. But in applying this guidance, the Staff takes the position the requirement that an applicant show that it " appears to j
be financially qualified..." is satisfied where, as here, the Applicant has presented a reasonable i
financing plan which supports a finding that it has reasonable assurance of obtaining the funds l
necessary to construct and ohrate the facility. Staff's Proposed Decision at 62. The Board disagrees with the Staff regarding the applicability of the Commission's Part 50 financial 1
l qualifications regulations to the showing required pursuant to Part 70.12P-%25, slip op.
at 121-122. Instead, the Board applies the 10 C.F.R. Part 50 financial qualifications standard 4
]
in this proceeding. See LBP-%25, slip op. at 178. As explained below, the Board's reasons
]
for applying the Part 50 regulations do not with;tand close examination.
i i
4
(... continued) revised 10 C.F.R. I 70.23(a)(5) to read as follows:
Where the nature of the proposed activities is such as to require consideration by the Commission, that the applicant appears to be financially qualified to engage in the proposed activities in accordance with the regulations in this part.
32 Fed. Reg, at 4056.
i l- ~
j.
l De Board asserts that, given the close identity of the subject matter and the near identity l
of language in the two regulations, the financial qualifications regulations in Part 50 and Part 70 should not be treated differently, and undertakes to apply the same meaning to both regulations. LBP-96-25, slip op. at 129. De Board does not explain its view that financial I
qualifications to enpge in two different types of licensed activity (activities pertaining to a nuclear reactor as contrasted to activities pri.ining to the possession of source material or SNM) are closely identified subject matters. The Board is incorrect in its view that the operative language in the two regulations (is financially qualified as contrasted with appears to be financially qualified) are nearly identical." Interpretation of any regulation must begin with the l
language and structure of the provision itself. Long Island Lighting Co. (Shoreham Nuclear j
power Station, Unit 1), ALAB-900, 28 NRC 275, 288, review declined, CLI-88-11, I
28 NRC 603 (1988). Thelanguage of section 70.23, on its face, suggests a less restrictive standard than the language of Section 50.40. Further, in its extensive review of the history of
" The pertinent part of the less specific financial qualification regulation in Part 70 requires:
Where the nature of the proposed activities is such as to require consideration by the Commission, that the applicant qppears to be Anancially quali#ed to enpge in the proposed activities in accordance with the regulations in this part.
10 C.F.R. I 70.23(a)(5) (emphasis added). The pertinent part of the more specific financial qualification regulation in Part 50 requires:
The applicant is technically andfnancially qual (#ed to enpge in the proposed activities in accordance with the regulations in this chapter.
10 C.F.R. I 50.40(b) (emphasis added)
" The 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 requirement." 10 C.F.R. Part 50, Appendix C at " General Information."
- i. j the financial qualifications regulations (LBP-96-25, slip op. at 130-145), the Board overlooks a
the fact that the Commission could have, but did not, make the language of the Part 70 l
l regulation the same as the Part 50 regulation.
To further explain the applicability of the Part 50 regulations to a Part 70 license i
i applicant, the Board looks to a January 30,1%7 response from the then Director of Regulation l
of the AEC to questions from the Joint Committee on Atomic Energy regarding financial qualifications for AEC licenses." LBP-%25, slip op at 136-137. Citing the Director's i
response to the Joint Committee's third question regarding financial qualifications in connection with obtaining SNM, the Board concludes "that the Director informed Congren that the l
Commission used the same criteria and procedures in determining the financial qualifications of f
a Part 70 applicant under then 10 C.F.R. I 70.23(c) as it used in determining the financial qualifications of a Part 50 applicant under 10 C.F.R. I 50.40(b).
LBP-96-25, slip op, at 139-140. The language the Board relies on for this conclusion is that "[t]he determination of the financial qualifications of licensees to pay Commission charges for SNM has been based 1
l essentially on the same principles of financial analysis referred to under question 1, and this j
policy is expected to continue in the future regardless of the particular contractual arrangement i
j involved."8' LBP-96-25, slip op. at 139-140 (emphasis added).
i
" The questions from the Joint Committee dated November 28,1966, and the response j
thereto from the Director of Regulation dated January 30,1%7, are reprinted in Licensing and Regulation of Nuclear Reactors: Hearings before the Joint Committee on Atomic Energy, Part 1, 90th Cong.1st. Sess. 347-350, Appendix 12 (1%7) and are attached hereto as Attachment 1 j
(hereinafter Attachment 1).
The referenced " question 1" was:
What criteria and procedures are used by the Commission in determining l
whether an applicant is financially qualified to engage in the proposed activities j
in accordance with the Commission's regulations?
4 (continued...)
i i
However, the questions from the Joint Committee and the response of the Director of Regulation thereto, when read in context, lead to a different conclusion from that reached by the i
Board. Read in context, it becomes clear that the Director's response informed the Joint Committee that "the issues explored regarding an applicant's financial resources to design, l
construct and operate the licensed facility," in the answer to Question 1 was referring to applications for licenses to construct and operate nuclear power reactors; With respect to applicants for SNM licenses, the concern with financial qualifications only went to the ability i
of applicants for reactor licenses to pay any charges in connection with the contractual arrangements for the material to be used in conjunction with operation of the Part 50 facility.
f
'Ihis, we suggest, is an entirely different situation from a non-reactor materials license applicant, and is inapposite to the case at hand. Thus, the Board's conclusion that "the Director informed Congress that the Commission used the same criteria and procedures in determining the financial qualifications of a Part 70 applicant... as it used in determining the financial qualifications of a Part 50 applicant...." (LBP-96-25, slip op. at 140) is incorrect.
l As a result of not recognizing a difference between the Part 70 and the Part 50 financial qualifications regulations, the Board drew an erroneous conclusion regarding the financial 4
qualifications of LES, finding that there is not reasonable assurance that funds will be available l
to construct the facility, and that LES has failed to establish it is financially qualified to build 4
the CEC.
in its Decision, the Board provides a description and analysis of the Applicant s financial plan. LBP-96-25, slip op. at 159-172 et seq. The plan includes construction financing with 4
(... continued)
LBP-96-25, slip op, at 136-137 citing Attachment I at 347.
i 1
4 i
!. ;~
i' j
term debt from international lending banks and equity contributiens from LES limited partners.
l Id. at 159. LES would borrow between 60 to 70 percent of the construction costs and the LES i
limited partners would contribute between 30 to 40 percent of those costs. Id. at 160. 'Ihe plan states that the CEC project has four phases: the venture phase, the construction phase, the i
operation phase, and the decontamination and decommissioning phase. Id. The venture phase capital contributions cover the costs associated with obtaining engineering services for the reference design of the CEC and all administrative, licensing and marketing costs. Id. at 160-
- 61. Subsequent to the receipt of an NRC license, and upon successful marketing, LES would be in a position to seek and obtain project funding. Id. at 163. The conclusion of the Board on this matter goes to the probability of the success of the Applicant's plan, not to the reasonableness of the plan, nor the ability of the Applicant to go forward with the plan. This erroneous conclusion regarding the reasonableness of the Applicant's financial plan for obtaining funding should be reversed.
Citing an interview given by an LES official, in an industry journal, which indicates 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, the Board also concludes that, even under the standard urged by LES, LES has failed to demonstrate reasonable assurance of obtaining debt financing. LBP-96-25, slip op. at'178 n.33. This again goes to the success of the project, rather than the reasonableness of the plan.
CONCLUSION As demonstrated above, the Board erroneously applied legal standards and Commission policy applicable to power reactor license applicants, and disregarded relevant evidence, in resolving Contentions J.4, K, and Q. Accordingly, the Board's Partial Initial Decision in LBP-96-25 should be reversed.
Respect ~ully submitted, Richard G. Bachmann Counsel for NRC Staff Dated at Rockville, Maryland this 13th day of March,1997 D
ATTACHMENT 1 LICENSING. AND REGULATION OF NUCLEAR REACTORS 347 U. CLEAR REACIORS accordance with the Atomic Energy Act, each operating license issued by s'ituations requiring oparation InAtomic Energy Commbialon must contain technical speci6 cations. In gen-i 1 technical speci8 cations include those technical operating limits. conditions, postul t'ed equipment fallo 2
d requirements imposed upon facility operation in the intettsts of the health
' the core and coolant bounda'I hsafety of the public. The applicant for an operating speciacations for his facility which are reviewed by the AEC and modioed d
ED as necessary before becoming a part of the operating license.n cf coolant, rod ejection, s%
i be provided.
t safety limits, conditions and surveillance requirements has been indiented.
[t is from such information that technical specifications and supporting analyses
$ Ussa developed. The technical spect)foottons proposed by on applicant for his included explanatory material
"#'gtity should be included as an appendia to the Safety Analysis Report, t sequintially must take place l'eIt is beyond the scope of this guide to provide detailed guidance on the con-tents of technical specifications. For such purpose, reference should be made to lo CrR rart so, i so.36.
ectiva systems must function PPENDIX 31 ekup protective functions, th$
eted performance is achieved, Jotxt Coxwrrrzz-AEC Connzarownzwcz ox FINAwcIAL QUALIrIc I erlenced. The purpose of such TIONS OF AEC Liczxszza resulta to system effectiveness.
CoNoaEss oF THE UNrrED STARES, j ptions casociated with the ac.
JOINT CouvrrrEE oN ATou1C ENEnoT, o published data or research Washington, D.C., November 28,1966.
Gtion of the assumed or cal.
Mr. HAnot.D W. PaIcE,
- tivity, cud release rate of the Director of Regulation, loactiva Inaterials within the l'.8 A #0*I# A".'C.'#F CO**I#8IO"'
Washington, D te snvironment via leakages in DcAn Ma. Patet: This is in reference to the provisions in the AEC's regulations dealing with the financial qualifications of applicants for licenses. In this con-(containment system and other nection.the Committee would appreciate responses to the following questions:
tly or indirectly to controlling
- 1. Wiiat criteria and procedures are used by the Commission in determining i st m, such as the contributions whether an applicant is financially quallfled to engage in the proposed activities
) containment air cooling sys.
in accordance with the Commission's regulations?
rystems, (d) reactor core spray
- 2. Have any significant problems arisen in connection with determining the heat removal systems.
6nancial qualifications of applicants for licenses, particularly when new corpora-
, i casumed in the analyses and tions are formed to build and operate reactors and in the case of publicly-owned l (c) distribution and fractions electric power producers?
- dessed from the fuel. (b) the
- 3. In the proposed arnendments to 10 CFR section 50.33(f) concerning alloca-luct inventory airborne in the tions of special nuclear material, announced by the Commission on November 24,
- ( ident time interinIs analyzed, 1966, the following statement is made
- "If the [special nuclear] material is ole the radioactively contaminated tained from the Commission, the financial qualifications of the applicant to pay dint leakage and dispersion to any charges can be considered in connection with the contractual arrangements
- eorology, topography or other for the gnaterial."
- conditions, considered in the Please describe the criteria and procedures which the Commission proposes to 1
adopt with respect to determining financial qualifications of licensees in connec-t Ited dose rates and integrated tion with the contractual arrangements with the Commission for obtaining
.n cf distance from the contain.
! luding (c) The time <3ependent speciai nuclear material.
i ed source (within containment Thank you for your cooperation.
f source intensities associated Sincerely, yours, JoEN T.OoNwAT, Eteoutive Director.
the containment building; (e) i from ground deposition contrib.
U.S. ATouro ENzaar Couvission,
! a after vertical transport frorn Washington, D.C., January 30,1967.
it whole body doses to potential nd.nt doses froin inhalation or Mr. JonN T. CoNwAY, Executive Director, Joint Committee on Atomic Energy.
l Congress of the United States.
DEAa Ma. CoswAT : This replies to your letter of November 28,1966, relating to the provisions in the Commission's regulations dealing with the financial quall-
- ctrroArzons R port is to provide sufBelent 6 cations of license applicants. Our response to each of the questions raised in rnission that the nuclear facility your letter is set forth in the Enclosure.
operated in such manner that You will note, with respect to the response to question 1, that we are currently tblic will result. This finding of exploring the feasibility of prescribing in the regulations general standards for ersting license, determining financial qualifications of applicants. and describing in the regula-
' See also p. 71.
i
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LICENSING AND E 348 LICENBING AND BEGIEATION OF NUCLEAR REACIORS 8below. In the case of applicai l tions the kinds of documents and informatihn to be included in applications. We no assessment is made of th l cre also considering the preparation of a guide to assist applicants in complying
- 2. Have any significan l with such regulationsin various types of cases.
the finanoial qualification l Sincerely yours, IIAnonn L. Parcz, corporalions are formed i
Director of Regulation.
publicly-osoned electric po l In some instances it has be -
Enclosure : AEC response to JCAE questions.
quallacations of certain applii l
- 1. What criteria and procedures are used by the Commission in detennin.
solely for the purpose of con l Cases Anal flnancial arrange l ing scherher on applicant is financially quJlifted to espGge in the proposed preliminary technical approv. '
actitdries in accordance toith the Commission's regulationst construction permit, and upor The assessment of a lieense applicant's financial qualifications to engage in the For example, in the case o proposed activity in accordance with the Commission's regulations is based upon the review of financialinformation which we require the applicant to submit and relating to power purchase c(
such checks of independent sources of financial information on the applicant as subscriptions could not be con ment agencies had completed I cppear warranted in any particular case. Essentially, the issues explored are had indicated its technical at l whether the applicant has adequate financial resources to design, construct and struction permit contained a i
operate the licensed facility, contracts had been executed While the detailed analysis of financial qualifications will vary, depending Similar deferral of the fin.
tpon the circumstances of the particular case, the principal matters examined in the case of Nuclear Fuel Ber, the case of a construction permit include-agreements. Another case in l (a) A review to determine the reasonableness of the applicant's estimates company formed for the purpc l of costs to construct the proposed facility, l
(b) Analysis of the applicant's plan for financing the cost of the faculty; and dependent upon corporat '
identification of the sources of funds relied upon, e.g., external sources such cation, as amended, request < l' as borrowings and stock subscriptions, or internal sources such as earnings for a license term of 18 monti tional information from the ( I or depreciation reserves, (c) Analysis of the applicant's certified financial statements and support-facility for 18 months and i :
ing schedules to assess his current financial condition in relation to his condition in the event that l plemented its application witi j financing plan, (d) In those cases in which external sources are relied upon for all or part qualifications in this respect. :
to above may also occur in c: l of the required funds, documentary or other evidence relating to contractual bond issues for their financ: '
arrangements or commitments for such financing, and sometimes the con-Power producer has had an tracts themselves, are also reviewed.
(e) Where the applicant is a newly formed antity, the review particularl7 qualifications.
covers the capitalization of the organization and the reliability of sources
- 8. Please desorfbe the < l of capital funds needed to construct the facility.
Pose
- fo adopt seith respe<
- g On the basis of these reviews and analyses, conclusions are drawn as to wheth
is connection soffh the e, 1
there is reasonable assurance that the required funds are or win be avanable to obtaining specialnuclear-The contractual arrangem.
the applicant in accordance with his financing plan.
With respect to an application for an operating license, the review covers the anclear materials (SNM) in applicant's current financial statements, with particular reference to current and owned, have involved Gover:
projected earnings, from which conclusions are drawn as to whether there is agreement or a supply agreen reasonable assurance that funds will be available to pay the antleipated operating SNhl under a contract of sal will be continued. The determ' costs of the facility,The reviews and analysos referred to above are performed, in consultation with pay Commissiou cL. es for i opl*8 of financial analysis rt '
f the OfBee of the General Counsel, by staff members of the OfDee of the Controllar Sected The issue of the financial qualifications of an applicant for a constructics arrange,to be continued in th assigned, in each case, for that purpose to the regulatory staff.
ment involfed 8 ecifically, the de'terminat permit is always considered in the proceedings, and a' finding with respect to dW talls a review and analysis o P
issue is made either by the staff or by both the staff and an atomic safety and licensing board. The finding as to financial qualifications with respect to app]a esaclusions as to whether the ce that funds will be a tions for operating licenses is normally made by the staff, but would also be m the case of lease and su by the board in any case in which a hearing on the issuance of the license is gterial in the case of th against which the applicant's financial qualifications will be judged, because rmation upon which suel the variability in the significance of specific financial factors and indica conventional business p we require in similar contri which exist in the financial arrangements involved in each case. In all cases 88Mo or services.
employ conventional principles of financial analysis in evaluating the fl qualifications of applicants. We are exploring, however, the feasibility of forth in the regulations general standards that must be met and describiDs y the regulations the kinds of documents and information to be furnished in M A4'c Paopoars AMENDMEN AEC Pr ons types of cases (e.g., applicants that are newly formed entities).With respect to applic qualifications of applicants are evaluated as described in response to queff APPLICANTS M,ould provide additionsto 9
s
?
A h
349 LICENSING AND FJGULAT.ON OF NUCLEAR REACIORS AR REACTORS g pol 0W. In the case of applications for licenses for source a ment is made of financial quallacations of license applicants.
included in applleatlons'. g ooe any sipM)tcant problems arisen in connection softh determining
'sist cpplicants in complytag po a the financial qualijtcations of applicants for licenses, particularly schen n corporations are formed to build and operate reactors and in the case o ILAnoLn L. Paicz, blicly osoned electrio poscer producerat I (ome instances it has been necessary to defer the final anding of A Director of Regulatt#"-
11 cations of certain applicants, particularly in cases of corporations foun y for the purpose of constructing and operating nuc
'he Commission in determg"'
"" 1minary technical approval of the AEC as evidenced by the issuance of a 1 to enpape in the pmpo###
nstruction permit, and upon approvals from other Federal and State agen 1
gulationst W
For example, in the case of Connecticut Yankee, the applier.nt's negotia 2allacations to engage in th' relating to power purchase contracts, stock commit a'a regul2tions is based upo the cpplicant to submit ani t agencies had completed their financial reviews, and until the Commission rmation on the applicant a had indicated its technical acceptance of the projec 117, the issues explored are ces to design, construct and contracts had been executed be submitted before the Itfons.will vary, depending the case of Nuclear Fuel Services because of the need for co incipal matters examined in agreements. Another case inPW Nwer Mador he@ ment Wany, a company formed for the purpose of constructing and o of the applicant's estimates cation, as amended, requested authority to operate the reactor at 200 mwt eing the cost of the facility-1, e.g., external sources such' for a license term of 18 months. In the course of our review, we requested add tional information from the cornpany to show sufBelent financing to operate the el sources such as earnings facility for 18 months and to deactivate and maintain the reactor in a safe
! 2111 statements and support-condition in the event that operations were discontinued. The Company sup-plemented its application with additional information l ondition in relation to his i
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re relled upon for all or part to abor'e may also occur in cases of organizations which depend primarily upon bond issues for their financial nesources. To date, no publicly-owned electric lence relating to contractual ng, and sometimes the con-power producer has had ary particular difBeulty in demonstrating financial l
qualifications.3. Please decadbe the or'.ria and procedures schfoh the Comenission pr
! itity, tl.o review particularly l 2d the reliability of sources poses to adopt sc4th respect to determiMng financial qualijtcations of licenseeF
- j ons tre drawn as to whethet in connection soith the contractus! arraosgements seith the Commiselon for-obtaining specia! nuclear material.
s cre er will be available to The contractual arrangements under which licensees have obtained special' nuclear materials (SNM) in the past, wherr all such material was Government-cens2, the review covers the owned, have involved Government-furnished material under contract, a lease-
) ilIr reference to current and agreement or a supply agreement. In the future, licensees will be able to obtain-twn as to whether there is ay th3 anticipated operating SN3f under a contract of sale in addition to the existing arrangements whkir will be continued. The determination of the financial qualifications of licensees to
-formed,in consultation with par Commission charges for SNM has been based essentially on the same prin-f ths OfDee of the Controller elples of Anancial analysis referred to under question I, and this policy is ex-
. n sta t pectad to be continued in the future regardless of the particular contractual pplicant for a construction arrangement involved.
2 finding with respect to the 9pecifically, the determination of the a.pplicant's financial qualifications en.
I cnd cn atomic safety and talls a review and analysis of his financial status in sufBelent detail to permit l lons with respect to applica-conclusions as to whether the applicant's financial resources provide reasonable l taff, but would also be made assurance that funds will be available to pay use, consutnytfon and other charges su2nce of the license is held.
In the case of lease and supply agreements or to pay the purchase price of the l
e criteria or standards material in the case of the sales contract. 'In general, the kinds of financial s
judged, because of information upon which such conclusions are based are those normally used e
under conventional business practices in the granting of credit and are the same ey 3 gf etors,and indicators in similar contractual arrangements for any Government-furnished f$an'efa$
gYd in evtlua ing t r
ic ver, the feasibility of setting st be m:t and describing in tion to be fornished in vari-AEC Paras RELEAsz, JuwE 12, 1967 i 3rmed entities).
RC raoPosEs AMENDMENTS To kEoULATIONs oN FINANCIAL QUAUFIcATIoNs oF b
l tterial licenses, the financia]
APPLICANTS Foa NUCLEAa FACILITY LICENSES l
bed in response to question The Atomic Energy Commission'in proposing amendments to its regulations I
which would provide sdditional guidance on the general kinds of information that
4 DOCKETED USNRC UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION 97 NAR 13 P4 :36 REFORE THE COMMIRSION 0FFICE OF SECRETARY l
In the Matter of
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00CKETlNG & SERVICE
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BRANCH LOUISIANA ENERGY SERVICES, L.P.
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Docket No. 70 304ML
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4 (Claiborne Enrichment Center)
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CRRTIFICATR OF MERV1CR l
i I hereby certify that c; pies of "NRC STAFF'S BRIEF IN SUPPORT OF COMMISSION REVERSAL OF LBP-96-25" in the above captioned pr*ing have j
l been served on the following through deposit in the Nuclear Regulatory Commission's
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internal mail system, or by deposit in the United States mail, first class, as indicated by i
an asterisk or by facsimile transmission, as indicated by a double asterisk, or by hand i
delivery, as indicated by a triple asterisk, this 13th day of March,1997:
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' Office of the Seeirtary (16)***
Richard F. Cole NITN: Docketing and Service Branch Administrative Judge U.S. Nuclear Regulatory Commission Atomic Safety and Licensing Board j
Washington, DC 20555 U.S. Nuclear Regulatory Commission Washington, DC 20555 Thomas S. Moore, Chairman Administrative Judge Frederick J. Shon i
j Atomic Safety and Licensing Board Administrative Judge l-U.S. Nuclear Regulatory Commission Atomic Safety and Licensing Board Washington, DC 20555 U.S. Nuclear Regulatory Commission Washington, DC 20555 i
i Mr. Ronald Wascom*
J. Michael McGarry, III, Esq.**
Deputy Assistant Secretary Winston & Strawn Office of Air Quality &
1400 L Street, N.W.
Radiation Protection Washington, DC 20005 l
P.O. Box 82135 Baton Rouge, LA 70884-2135 1
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i l
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';a
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Robert G. Morgan
- Roland J. Jensen*
i Duke Engineering & Services, Inc.
Louisiana Energy Services, L.P.
P.O. Box 1004 2600 Virginia Avenue, N.W.
Charlotte, NC 28201-1004 Suite 608
]
Washington, DC 20037 i
Marcus A. Rowden, Esq.*
Office of the Commission Appellate Fried, Frank, Harris Adjudication j
Shriver & Jacobsen Mail Stop: 16-G-15 OWFN 1101 Pennsylvania Avenue, N.W.
U.S. Nuclear Regulatory Commission Suite 900 South Washington, DC 20555 l
Washington, DC 20004 f
Atomic Safety and Licensing Board Nathalie M. Walker, Esq.**
Panel Sierra Club I4 gal Defense Fund U.S. Nuclear Regulatory Commission 400 Magazine Street, Ste. 401 j
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 I
Washington, D.C. 20009-1125 2600 Virginia Ave., N.W.
Washington, DC 20037 i
David S. Bailey, Esq
- l Thomas J. Henderson, Esq.
Lawyers' Committee for Civil Rights Under Law 1450 G Street N.W., Ste. 400 Washington, DC 20005 1
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' Richard d. 'Bachmann Counsel for NRC Staff
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