ML20141C626
| ML20141C626 | |
| Person / Time | |
|---|---|
| Site: | Claiborne |
| Issue date: | 05/09/1997 |
| From: | Mcgarry J, Rowden M FRIED, FRANK, HARRIS, SHRIVER & JACOBSON, LOUISIANA ENERGY SERVICES, WINSTON & STRAWN |
| To: | NRC COMMISSION (OCM) |
| References | |
| CON-#297-18306 91-641-02-ML, 91-641-2-ML, LBP-97-03, LBP-97-3, ML, NUDOCS 9705190114 | |
| Download: ML20141C626 (12) | |
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION 1
W MAY - 9 1997 i
BEFORE THE COMMISSION ggga
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q, In the Matter of
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Docket No. 70-3070-ML G
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LOUISIANA ENERGY SERVICES, L.P. )
ASLBP No. 91-641-02-ML
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(Claiborne Enrichment Center)
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May 9,1997
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PETITION OF APPLICANT LOUISIANA ENERGY SERVICES FOR COMMISSION REVIEW OF LBP-97_-3 L Introduction Pursuant to 10 C.F.R. Q 2.786, Applicant Louisiana Energy Services, L.P. ("LES") petitions 4
the Commission for review of LBP-97-3, the Licensing Board's third partial initial decision (" Third PID")in this proceedmg In the Third PID, the Licensing Board nominally held that LES has satisfied the Commission's requirement that it piresent a " plausible disposal strategy" for depleted uranium hexafluoride tails ("DUF ") to be produced as a byproduct of the enrichment process at the Claiborne Enrichment Center (" CEC"). Third PID at 20. Yet, the Board found that one element of LES's tails
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disposition cost estimate - the cost of conversion of DUF to DU 0, prior to disposal -is not j
3 reasonable.1' id. at 39-50. Specifically, the Board found that LES's cost estimate is deficient for l
failure to include the cost of neutralizing hydrofluoric acid ("HF") produced as a byproduct of the conversion process. Id. at 39.
Hence, the Licensing Board Itally mied that a plausible strategy for DUF disposition mun
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involve HF neutralization and that a reasonable estimate of the cost of DUF. disposition must The Licensing Board also ruled that LES's estimates of the cost of transportation and disposal l'
of DUF.- the other two elements of LES's tails disposition cost estimate - are reasonable.
id at 31,35.
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t therefore include the cost of HF neutralization. This was a clear error. LES seeks Commission review and reversal of the Board's decision on the grounds that it is contrary to the established law governing this proceeding, and contains determinations that are clearly erroneous and inconsistent with those in other NRC proceedings. Sg 10 C.F.R. Q 2.786(b)(4).
II. Background In the Notice of Hearing, the Commission ruled that LES need only provide a " plausible strategy," not a concrete plan, for disposition of uranium hexafluoride tails. 56 Fed. Reg. 23310, 23313 (1991). The Commission also ruled that the decommissioning funding requirements of 10
. C.F.R. Part 70 would apply. Id. The Board acknowledged these basic principles. Third PID at 3-4.
Further, the Board had earlier made findings central to this appeal:
The NRC has no regulatory requirement that there must be a concrete plan for the disposal of the depleted uranium that the facility would generate each year and that, before a license may issue, such disposal plan must comply with all applicable environmentallaws.
The Commission in noticing the application for hearing indicated that the applicable regulations only require that an applicant have a plausible strategy for the disposition of depleted uranium hexafluoride tails...
r The regulations do require that an applicant submit a decommissioning funding plan which must contain a cost estimate for decenmissioning. 10 C.F.R. 70.25(a) and (e).
Cost estimates may be adjusted periodica3y over the life of the facility. For the regulation to have meaning, the cost estimate sroult' contain reasonable estimatesfp_t an adeouately described decommissioning stratect.
Louisiana Enerav Services. L.P. (Claiborne Enrichment Center), LBP-91-41,34 NRC 332,337-38 (1991)(emphasis added). In this context, the Board admitted Intervenor's Contention B " insofar as it challenges the reasonableness of LES' decommissioning funding plan." 34 NRC at 33'7. In Basis 1 to Contention B, Intervenor challenged the basis for LES's cost estimate for disposing of DUF. (at that time estimated at $9.5 million per year)..
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LES's " plausible strategy" for tails disposition is to convert DUF, to DU 0, and dispose of 3
DU 0,(by deep burial) as ifit were a waste. Ld LES has estimated the total cost of tails disposition 3
(including conversion, transportation, and disposal) at $485.3 million or $16.175 million per year of CEC operation.# Funds to cover these costs will be set aside during the operating life of the CEC.
The NRC StafT has found LES's disposition strategy acceptable and the associated cost estimate reasonable. Third PID at 18-19. The cost of converting DUF to DU 0, is based on an estimate of 6
3 54.86 per kilogram ofuranium provided by COGEMA, Inc., the U.S. affiliate of a prominent French nuclear fuel services company.F LES Exhs. 5 and 6.
COGEMA would assume responsibility for handling any non-DU 0, material produced during 3
conversion, including HF. LeRoy at 24 fol. Tr.1016. LES is responsible for disposing of the DU 0, 3
only. & This follows Urenco's conversion practices in Europe, where HF has remained with the converter. E at 25. HF produced by COGEMA's conversion activities in Europe is reused commercially, such that neutralization is unnecessary. LES Exh. 3 at 3; Tr.1051. In the United States, the NRC has approved at least one license application for recycling of HF containing small amounts of uranium contamination for commercial use in the United States. Tr. 1057;1161-1162.
This evidence clearly establishes a " plausible strategy" for disposition of DUF that does not involve 6
HF neutralization. Nonetheless, the Board ruled against LES on the reasonableness ofits cost i
l LES's plans for disposition of DUF and the associated cost estimate are set forth in Exh. I 6
to the CEC License Apphcation, Section 11.8 of the SAR, and in correspondence between l
LES and the NRC (Exhs. 4a through 4q).
F The estimate is comparable to as1933 sosta incurred by LES-afIlliate Urenco for conversion of DUF to DU 0, in Europe. LeRoy at 24 fol. Tr.1016. This estimate is also consistent 6
3 with current estimates by the U.S. Enrichment Corporation ("USEC") for its Paducah and Portsmouth enrichment facilities.
Src "Portsmouth Gaseous Diffusion Plant Decommissioning Funding Program Description," Rev. 2, Jan.19,1996, at 4-5; "Paducah i
Gaseous Diffusion Plant Decommissioning Funding Program Description," Rev. 2, Jan.19, 1996, at 4-5.
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estimate for converting of DUF, to DU 0, because no cost component exists for HF neutralization:
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- Third PID at 39; nos alan ist at 44-45, 59-60.
III. Arnument A.
The Board's decision is contrary to the law governing this proceeding because it fails to acknowledge that LES need provide only a " plausible strategy" for conversion of
' DUF, to DU 0, and that a plausible strategy need not include HF neutralization.
3 The Board ignored the Conunission's direction that LES need provide only a " plausible I
strategy" for tails disposal and thus departed from its initial ruling on Contention B (quoted above)
- and its rulings on the transportation and disposal elements of LES's tails disposition strategy, which
, correctly apply that standard. Third PID at 31,35. Here, by contrast, the Board stated:
[LES] has not... provided any supporting evidence that there Mll be a suscient market in the United States for the byproduct HF allowing it to be economically recycled or otherwise sold. Without evidence to show that there will be a suscient market for the bvoroduct HF in the United States, we can only conclude that a domestic conversion facility.. will have to neutralize the HF as an additional step in the conversion process and that the additional cost must be included in the cost of conversion.
Id at 40-41 '(emphasis added). The Board's call for evidence "to show that there will be a sufficient j
market for the byproduct HF in the United States" (id. at 41; emphasis added), or else include the cost of HF neutralization in the disposition cost estimate, is inconsistent with the Commission's
" plausible strategy" standard. The Board need only have determined that it is plausible that HF will be marketable in the future such that HF neutralization will not be necessary, not that there sll he l
1 a market for HF when LES must begin tails disposition as many as 15 years after commencement of plant operationsc By comparison, the Board correctly ruled, with regard to transponation and burial cost elements ofLES's tails disposition strategy, that LES need not "show" that tails sll be disposed of in a deep mine or that they will be transported to a particular location in the United States for disposal, only that its strategy is plausible.
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Thus, by ruling that neutralization of HF is " clearly an essential element" of the cost of converting DUF, to DU 0, (Third PID at 47), the Board necessarily found implausible the future 3
marketing or reuse of HF. This unsupported ruling is at odds with the views of at least six industry participants and other knowledgeable institutions, including LES, the NRC Staff, COGEMA (the i
world leader in the DUF conversion market), USEC and the preparers of two studies commissioned 6
by U.S. Depanment of Energy (" DOE") - Idaho National Engineering Laboratory ("INEL"), author of the "EG&G report" (LES Exh. 8) and Martin Marietta, author of the " Martin Marietta report" (LES Exh. 7).
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For example, LES's witness Mr. LeRoy explained that LES's conversion cost estimate derives from a COGEMA estimate of the cost of providing conversion services, including expenses associated with handling HF. Tr. 1049-1050. Both the NRC (in SECY-91-019) and COGEMA have j
recognized that, after converting DUF to DU 0,, COGEMA could use the HF for converting natural 6
3 U 0, to natural UF or could sell the HF on the industrial market. Tr.1049. COGEMA currently 3
6 converts large quantities of DU 0, and his no problem marketing the HF generated by the conversion 3
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process.8' Tr.1051. Given COGEMA's expertise in DUF conversion, its cost estimate accurately 6
reflects its confidence that "they can reuse the HF and that no extra additional expense is necessary to be included in their estimate for conversion." Tr.1052.
j Mr. LeRoy's testimony is supported by the " Depleted Uranium Hexafluoride Management Study" submitted to the NRC by LES. That study states:
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Mr. LeRoy noted that "Cogema is a recognized converter. They are a [world-wide]
4' recognized nuclear fuel cycle supplier...." The detailed conversations that we had with the l
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Cogema representative indicated that this was a total price for deconverting our tails (from the CEC)." Tr.1063. Intervenor's witness acknowledged that COGEMA contemplates the sale or use of HF produced by conversion of tails from the CEC. Tr.1208.
- A An additional benefit of conversion to a uranium oxide is the recovery of fluorine as a byproduct. This recovery is an important economic consideration for the process because the recovered fluorine can be solo or reused, eliminating the disposal cost of the fluorine. The French have demonstrated the commercial feasibility of recovering fluorine, primarily as aqueous HF. However, the aqueous HF would likely be slightly contaminated with uranium and may not be marketable in this country. The most efficient way to utilize recovered HF would be in the conversion ornatural uranium to UF6 for feed to an enri
- hment plant. Uranium contamination would not be a concern in this process.
LES Exh. 41 at D-3. Indeed, the Siemens Corporation has received approval from the NRC to sell recycled HF with small amounts of uranium contamination. Tr.1057. This demonstrates that marketing slightly contaminated HF in the United States is surely " plausible."3' Deciding otherwise, the Board mistakenly relied on testimony by Intervenor's witness Dr.
Makhijani that "his past evaluation of the demand in the United States for hydrofluoric acid showed that it was a declining market," (Third PID at 38) and, second, an observation from a 1990 Martin Marietta report (Exh. LES 7) as to the market for recycled HF in the United States before Siemens was licensed to sell this product in 1994. Third PID at 39.
Dr. Makhijani testified that "more and more hydrofluoric acid was being imported [into] this country and that production in this country was going down," and that "there has been quite a bit of 3'
The NRC Stafi's position likewise supports HF recovery and commercial reuse. In SECY.
019, the NRC StafTrecognized that HF produced by the COGEMA facilities in France was being put to " current commercial use" and that COGEMA currently sells HF on the industrial market and/or uses it in the process of converting natural U 0, to UF. Tr.1050; LES Exh.
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3 at 3. In fact, COGEMA annually produced "4,300 tonnes of 70 percent aqueous solution of HF, which are sold for current industrial applications." & at 6. The Staff noted that HF "is marketable because ofits wide commercial applications. Marketed in solution strengths of 30, 51, 60, and 80 percent, HF is used for etching glass and for cleaning metals, (i.e., as pickling acid in stainless-steel and non-ferrous metal manufacture)." E at 3. NRC Staff witness Mr. Hickey testified that the NRC Staff had no concerns that recycling of HF would j
be difficult. Tr. I130. Overall, the NRC Staff found that "LES's estimated depleted uranium tails disposition cost provided in Exhibit I to the License Application and in Section 11.8.4 of the Safety Analysis Report is based on an acceptable plausible strategy. This strategy includes conversion of depleted UF. to U 0, with subsequent deep subsurface disposition."
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7 decline in the' prospects for selling more and more hydrofluoric acid." Tr.1207 (emphasis added).
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Dr. Makhijani provided no evidence, however, that the domestic market for HF is declining.
Moreover, he could not explain the obvious contradiction between the increased importation of HF, i
which would indicate an expandmg market, and his conclusion that the domestic market for HF was
" shrinking." Third PID at 43, He certainly did not testh) that the existence of a future market for
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h recycled HF is not " plausible."
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. Likewise, the Martin Marietta report merely states that, as of 1990, there was no domestic
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market for slightly contaminated HF, as will be produced by conversion of tails (Exh. LES 7 at 14).
It did not forecast a general decline in the market for HF suggested by Dr. Makhijani. Moreover, in 1990 the NRC had not yet approved the sale of recycled HF, as with the recent Siemens license amendment. Tr.1057,1161-62. As for a market forecast, the Martin Marietta report clearly suggests that development of a domestic market for slightly contaminated HF is not only plausible, 4
but in fact a high priority:
A maior obiective of a DU oxide' conversion / disposition orogram should be to recoyst and recycle the fluorine. This is important both for economics and for minimizing waste for the industry as a whole. The French have demonstrated the commercial i
feasibility ofrecovering the fluorine, primarily as aqueous HF. However, the aqueous HF would likely be slightly contaminated with uranium and may not be marketable in this country. The most efficient way to utilim recovered HF would be in the conversion of natural uranium to UF for feed to the diffusion plants. Uranium contamination would not be a concern in this process. However, this conversion i
l process requires anhydrous HF. Consequently, there is an imminent need to start development on a conversion process that will permit full recovery of fluorine as anhydrous HF As backun. an effort should be rnade to develo_o a market for recovered agueous HF.
i Exh. LES 7 at 14 (emphasis ~ added). Significantly, the report notes: "Since the French process is the only available commercial process for' UF conversion to U 0,, the best estimate of conversion cost 3
is provided by their information" (Exh. LES 7 at 17)- the very basis of the LES cost estimate.
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B.
The Board compounded its legal error with a clearly erroneous finding that LES's cost estimate for the conversion of DUF. to DU 0, is not reasonable.
3 The Board's ruling that HF reuse is implausible led it to reject LES's conversion cost estimate because the estimate contained no cost component for HF neutralization. The Board acknowledged the Commission's requirement that LES need only have a " reasonable" estimate of an adequately descnbed plan for tails disposition, but ruled that LES's decommissioning cost estimate cannot be a
" rough approximation that can be adjusted in the future upon periodic reviews" and "must include the substantial cost ofneutralizing the HF from the conversion of DUF to U 0,." Third PID at 49.
3 This ruling is at odds with NRC regulations, guidance, and case law by which a decommissioning funding plan need only be detailed enough to establish a reasonable cost estimate. The Board also overlooked Commission practice that cost estimates may be adjusted periodically to reflect a more refined accounting ofdecommissioning activities and costs '
6 Hence, the Board's speculating as to the appropriateness of a particular line item expense in a tails disposal cost estimate provided by an experienced, reputable vendor is contrary to these sound principles, requiring reasonable, not absolute, assurance and continued updating to reflect present conditions. LES's conversion cost estimate of $4.86/kgU is based on specific data from an experienced converter. 'Ihe Board went well beyond regulatory requirements in formulating a $15.7 6'
Sep 10 C.F.R. 70.25; NRC Reg. Guide 3.66 at 1-10. Even by reactor licensing standards, the Board's ruling is too exacting. Ses Public Service Company of New Hamo3 hire (Seabrook Station, Units I and 2), CLI-88-10,28 NRC 573, 586 (1988) (" approximate estimates of costs so that a reasonable minimum sum could be determined"); Reg. Guide 1.159, " Assuring the Availability of Funds for Decommissioning Nuclear Reactors" at p.1.159-3 (Aug.1990). Even in reactor licensing, licensees may estimate low-level waste disposal costs based on prices charged by disposal site operators, without an itemized basis for those price schedules. The NRC Staffrecognizes that such estimates require revision over time and do not eliminate uncertainty. NUREG-1307, " Report on Waste Burial Charges,"
Rev. 4, June 1994, at p. vii. Likewise, LES could revise its cost estimates based on developments in marketing aqueous and anhydrous HF.
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million cost estimate for DUF, conversion. The Board chose $1.50/kgU as its estimated cost of HF 7
neutralization, based loosely on figures in an EG&G Report (LES Exh'. 8), and arbitrarily added that amount to the $4.86/kgU conversion cost estimate provided by COGEMA, increasing it by roughly one-third. Third PID at 40 n.10. The Board's approach is not sound science or economics and, in any event, far exceeds its authority to determine whether the overall decommissioning estimate is reasonable. ~ In fact, the NRC Staff testified that the LES cost estimate'of $4.86/kgU would be adequate to cover the cost of neutralizing HF. Tr. 1130-1137.
C.
The Licensing Board's decision is at odds with the NRC's treatment of LES's sole domestic competitor and contrary to the Atomic Energy Act mandate favoring free competition.
The NRC just last year certified continued operation of the USEC's gaseous diffusion plants
. based, in part, on the same DUF, disposal strategy and cost estimate as that proposed by LES.
USEC's conversion' cost estimate expressly adopts the COGEMA estimate prosided to LES. 61 Fed.
Reg. 49360 (1996). Consequently, the Licensing Board's rejection of LES's conversion plans and cost estimate would cause the NRC to'depan from past practice without any explanation for the different treatment of LES. The NRC may change course only ifit fully explains why its previous position was in error and why it is advancing a new position. Louisiana Enerav Services. L.P.
(Claiborne Enrichment Center), LBP-96-25,44 NRC 331,375 (1996), citing Citizens Awareness Network. Inc. v. NRC. 59 F.3d 284,291 (1st Cir.1995).
The Licensing Board's disparate treatment of LES also runs counter to the Atomic Energy Act mandate that the " development, use, and control of atomic energy shall be directed so as to.
strengthen free competition in private enterprise " Section 1.b of the Atomic Energy Act of 1954,.
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j as amended,42 U.S.C. I 2011. By approving USEC's cost estimate and rejecting ' he same estimate t
as applied to LES, the NRC would place LES at a distinct competitive disadvantage, requiring LES l
to escrow larger sums to fund tails disposition, and therefore charge higher prices, than USEC. LES Exh 4(o) at 3. If HF neutralization becomes necessary, other enrichers will be subject to this cost, f
such that market prices would be adjusted and borne by all customers. It would be fundamentally unfair, however, to require LES alone to increase its decommissioning funding now to account for the hypothetical cost of HF neutralization.
IV. Conclusion The Board was charged with deciding whether LES has a " plausible strategy" for tails i
disposal, not predicting which of two or more scenarios on disposition of HF would prove correct.
t By insisting upon HF neutralization as a necessary cost component of tails disposal, the Board improperly rejected LES's plausible strategy in favor of another approach the Board regarded as more plausible, contrary to expert testimony and actual market experience. The Commission should grant review of LBP-97-3, reverse the decisioit and find that LES has presented a " plausible strategy" for i
' tails disposition, including a reasonable cost estimate for converting DUF, to DU 0,.
3 LOUISIANA ENERGY SERVICES, L.P.
Marcus A. Rowden
/. Michael McGarrf, III /)
Robert M. Rader V
FRIED, FRANK, HARRIS, Robert L. Draper SHRIVER & JACOBSON WINSTON & STRAWN, ATTORNEYS FOR LOUISIANA ENERGY SERVICES, L.P.
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Dated at Washington, D.C.,
.this 9th day of May,1997 1,
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE CO.MMISSION 1
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In the Matter of
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Docket No. 70-3070-ML
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LOUISIANA ENERGY SERVICES, L.P.
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ASLBP No. 91-641-02-ML
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(Claiborne Enrichment Center)
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May 9,1997
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CERTIFICATE OF SERVICE s
I hereby certify that copies of" Petition of Applicant Louisiana Energy Services for Commission Review of LBP-97-3" were served upon the following by deposit in the United States mail, first-class, postage prepaid, this 9th day of May,1997:
Administrative Judge Administrative Judge l
Thomas S. Moore, Chairman
- Richard F. Cole
- Atomic Safety and Licensing Atomic Safety and Licensing j
Board Board U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, D.C. 20555 Washington, D.C. 20555 (2 copies)
Administrative Judge Office of the Secretary
- Frederick J. Shon*
U.S. Nuclear Regulatory Atomic Safety and Licensing Commission Board Washington, D.C. 20555 U.S. Nuclear Regulatory Attention: Chief, Rulemakings and Commission Adjudications Staff Washington, D.C. 20555 (Original plus 2 copies)
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Office of Commission Appellate Eugene Holler, Esq.*
Adjudication
- Office of the General Counsel
- U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, D.C. 20555 Washington, D.C. 20555 i
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Ronald Wascom, Deputy Assistant _
Joseph DiStefano, Esq.
' Secretary
- Quinn, Racusin & Gazzola j
. Office of Air Quality &
1401 H Street, N.W.
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Radiation Protection.
Suite 510
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P.O. Box 82135.
Washington, D.C. 20005 Baton Rouge, LA 70884-2135 I
Robert G. Morgan - WC26B-Marcus A. Rowden Licensing Manager Fried, Frank, Harris, Shriver &
Duke Engineering & Services, Jacobsen Inc.
I101 Pennsylvania Avenue, N.W.
400 South Tryon Street Suite 900 South j
. Charlotte, NC 28201-1004 Washington, D.C. 20004 Diane Curran
- Nathalie Walker * -
Harmon, Curran, Gallagher &
Sierra Club Legal Defense Fund l
Spielberg 400 Magazine St.
2001 S Street, N.W.
Suite 401 Suite 430 New Orleans, LA 70130 Washington,D.C. 20009-1125 j'
Adjudicatory File Roland J. Jensen Atomic Safety and Licensing Louisiana Energy Services, L.P.
Board Panel 2600 Virginia Avenue, N.W.
U.S. Nuclear Regulatory Commission Suite 608 Washington, D.C. 20555 Washington D.C. 20037 Thomas J. Henderson, Esq.
David S. Bailey, Esq.
7 Lawyers' Commmittee for Civil Rights Under Law 1450 G Street, N.W.
Suite 400
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Washington, D.C. 20555
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a LOUISIANA ENERGY SERVICES, L.P.
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Robert M. Rader
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WINSTON & STRAWN, i
ATTORNEYS FOR LOUISIANA ENERGY l
L
. SERVICES, L.P.
- Via facsimile j
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