ML20141C747

Applicants Reply Brief in Support of Its Petition for Review of LBP-96-25.* W/Certificate of Svc

ML20141C747
Person / Time
Site:	Claiborne
Issue date:	05/15/1997
From:	Mcgarry J, Rowden M FRIED, FRANK, HARRIS, SHRIVER & JACOBSON, LOUISIANA ENERGY SERVICES, WINSTON & STRAWN
To:	NRC COMMISSION (OCM)
References
CON-#297-18314 LBP-96-25, ML, NUDOCS 9705190198
Download: ML20141C747 (26)

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I DOCKETED USNRC UNITED STATES OF AMERICA NUCLEAP REGULATORY COMMISSION VI MAY 15 PS :13 BEFORE Tile COMMISSION.

OfflCE OF SECHETARY DOCKEilNG & T.J RVICE BRANCH

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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. )

May 15,1997 i

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(Claiborne Enrichment Center)

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APPLICANT'S REPLY BRIEF IN SUPPORT OF ITS I

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PETITION FOR REVIEW OF LBP-96-25 i

J. MichaelMcGarry,III Marcus A. Rowden Robert M. Rader Robert L. Draper FRIED, FRANK, HARRIS, SHRIVER

- WINSTON & STRAWN

& JACOBSON 1400 L Street, N.W.

1001 Pennsylvania Avenue, N.W.

Washington, D.C. 20005 Suite 900 South Washington, D C. 20004

' COUNSEL FOR APPLICANT

.I LOUISLWA ENERGY SERVICES, L P.

9705190198 970515 N

PDR ADOCK 07003070 PDR V

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. TABLE OF CONTENTS

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[n TABLE OF AUTHORITIES 1

PRELL\\f1 NARY STATEMENT o

ARGUMENT..

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The FEIS Adequately Discusses the No Action Altemative.

4 11.

. The FEIS Adequately Discusses the Need for the CEC i

III.

LES Has Demonstrated itself Financially Qualified to Build and

8 Operate the CEC A.

The Commission Has Not Imposed Part 50 Requirements

.9 For Financial Qualifications Upon Part 70 Licensees.

[3 B.

LES Has Demonstrated Its Financial Qualifications 15 CONCLUSION

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L TABLE OF AUTHORrnES COURT CASES filigng_ Against Burlington. Inc v. Busev. 938 F.2d 190 (D.C. Cir.),

3 cert denied,~ 502 U.S.994 (1981).

Farmhnd Preservation Asin v Ooldschmidt,611 F.2d 233 (8th Cir.1979) 2 1I Gustafson v. Alloyd Co.,115 S. Ct.1061 (1995) 1I Fancock Oil Co. v. Hookins,67 Cal. App. 2d 218,153 P.2d 993 (1944) 1I Kind v Sugerior Court,143 Ca. App. 2d 100,299 P.2d 414 (1956)

Lecklieder v. Chicago City Rv. Co. 172 Ill. App. 557 (1912)..

1I NRDC v. Morton,458 F 2d 827 (D.C. Cir.1972)..........

.3 Union of Concerned Scientists v NRC,735 F.2d 1437 (D.C. Cir.1984)

. 13 United States v Menasche. 348 U.S. 528 (1955) 1I i

NRC DECISIONS Duke Power Co. (Amendment to Materials License SNM-1773), ALAB-651,

.2 14 NRC 307 (1981).......

Duke Power Co. (Catawba Nuclear Station, Units 1 & 2), ALAB-355, 4 NRC 397 (1976) 1, 2 Florida Power & Linht CL (St. Lucie Nuclear Power Project, Unit No. 2),

3 LBP-72-27,5 NRC 1038 (1977)

Illinois Power Co._ (Clinton Power Station, Unit Nos 1 & 2), ALAB 340, 3,7

~ 4 NRC 27 (1976)_.......

' ' Kerr-McGee Chemical Coro. (West Chicago Rare Easths Facility), LBP-84-42, 7

20 NRC l296 (1984).....

Louisiana Enerav Servicet Lf.,(Claiborne Enrichment Center), LBP-96 25, 44 NRC 331 (1996)....

. 3,4.6,9 e

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1 Isouisiana Enerav Services. L P. (Claiborne Enriclunent Center), LBP-96-7,

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43 NRC 142 (1996)

Public Service Electric & Gas Co. (IIope Creek Generating Station, Units 1 & 2),

3 ALAB-518,9 NRC 14 (1979)

Sguthern California Edison Co (San Onofre Nuclear Generating Station.

2 Units 2 & 3), ALAB-680,16 NRC 127 (1982)

REGULATIONS 9

10 C.F.R.') 50.33(f) 12,13 10 C F RL { 50.47 12 10 C F.R. { 70.22(i)(1) 12 10 C F.R { 70.22(i)(1)(i) 12 10 C F R. { 73.40 12 10 C.F R { 73.55 12 10 C F.R. Q 73.56 12 10 C F R. { 73.57 12 10 C.F R.

73 67

. 12 10 C.F.R. 74 33

. 12 IO C F.R.

74 51 12 10 C.F.R. 74.59

...2

- 40 C.F.R. Q 1500.2(b).

2 40 C.F.R. 61500 4(b).....

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'40 C F R 61500 4(f) d

FEDERAL REGISTER NOTICES 2

43 Fed. Reg. 55978 (1979)

. 13 50 Fed. Reg. 19323 (1985)

LEGISLATIVE HISTORIES Licensing and Regulation of Nuclear Reactors Hearings Before the 10' Joint Committee on Atomic Energy,90th Cong.,1st Sess (1967).

Licensing Uranium Enrichment Plants' Oversight Hearing Before the Subcomm. on Energy and the Environment of the Comm. on Interior & Insular Affairs,101st Cong,2d Sess. (1991)

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION

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In the Mauer of

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Docket No. 78-3070-ML

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LOUISLANA ENERGY SERVICES, L.P. )

May 15,1997 i

(Claiborne Enrichment Center)

)

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APPLICANT'S REPLY BRIEF IN SUPPORT OF ITS PETITION FOR REVIEW OF LBP-96-25 t

PRELIMINARY STATEMENT It bears emphasis that this is the first proceeding to license a privately-owned uranium enrichment plant in the United States. Congress amended the Atomic Energy Act to provide sep licensing procedures to encourage and facilitate the licensing of such facilitics. And the Com i

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I has issued a case-specific Hearing Order under this new law to determine the approval of the application by LES to build and operate its proposed Claibome Enrichment Center (" CEC Accordingly, it is appropriate that the Commission carefuly examine and decide for itself th criteria to govern the CEC application and how they should be applied. Especially for the novel issues here, the Commission is responsible for defining its licensing policy and bears ultimate 4

responsibility for determining, upon the entire record, whether an applicant has met t The Commission now exercises plenary appellate jurisdiction. It was decided long ago that l' -

" acquiescence in licensing board determinations on the evidence in circumstances where ou own considered judgment might call for a ditTerent result.. [would] effectively shift [] fma decisional responsibility to those boards in cases where it was not intended." Duke Power CA (Catawba Nuclear Station, Units'1 & 2), ALAB-355,4 NRC 397, 404-05 (1976). Thus,

[w]here the administrative record considered as a whole will fairly sustain a result d (continued...)

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ARGUMENT L

The FF,lS A' deaustely Discusses the No Action Afternative, in its main brief, LES has shown - and CANT has not refuted - that.

FEIS ( 4.4 discusses the environmental consequences of the no action alternative by j

incorporating previous discussion of environmental impacts eliminated by inaction Nothing in the text of NEPA, or CEQ or NRC regulations, requires discussion of

" avoided environmental impacts" as such.

According to CEQ guidance, detailed discussion of the no action option is necessary only when a choice ofno action "would result in predictable actions by others " 46 Fed. Reg. 18026, 18027 (1981).

I Roth NRC regulations and CEQ guidance encourage paperwork reduction and eliminating repetition by cross-referencing related discussion. 10 C F R. Part 51, Appendix A, s) 5 7,40 C.F.R { 1500.2(b),1500.4(b) and (f),43 Fed. Reg 55978 j

(1979).

NRC format requirements for prepanng an EIS explicitly direct discussion of project alternatives without duplicating" analysis of the no action alternative and other information discussed elsewhere.10 C.F.R. Part 51, Appendix A, @ 5.

For years, the NRC has repeatedly licensed Part 40 and Part 70 facilities with only brief discussion of the no action alternative, referring to other sections of the document to show benefits that would be lost or environmentalimpacts that would be eliminated by no action.

The federal courts have consistently approved summary treatment of the no action alternative because it "would simply have led things as they were " Earmland Presemation Ass'n v fzoldshmidt,611 F. 2d. 233,239 (8th Cir.1979)

P(-. continued) preferable by the agency to the one selected by its initial decision maker, the law is clear that the agency may substitute itsjudgment for its subordinate's " Ld at 403. Sie, tg., L1u.lt Power CR (Amendment to Materials License SNM-1773), ALAB 651,14 NRC 307 (1981)

(scouting the record and reversing the Licensing Board's fact-finding and NEPA conclusions).

In particular, the Commission is completely free to disagree with the Licensing Board's regulatoryinterpretations Southern Califomia Edison Co. (San Onofre Nuclear Generating

. Station, L' nits 2 & 3), ALAD-680,16 NRC 127,135 n.10 (1982).

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b Against this backdrop, CANT simply cites authority for the uncontested proposition that NEPA requires a rigorous analysis of alternatives. What CANT misses, however, is that discussion of ahernatives is guided by NEPA's " rule of reason." NRDC v. Morton. 458 F. 2d. 827, 836 (D.C Cir.1972); lilinois Power Co. (Clinton Power Station. Unit Nos.1 & 2), ALAB-340, 4 NRC 27, 36

~(1976); Elorida Power & Liaht Co. (St Lucie Nuclear Power Project, Unit No. 2), LBP-77-27, 5 NRC 1038,1043 (1977). Hence, just as there is no need to " discuss the environmental etrects of alternatives which are ' deemed only remote and speculative possibilities,"* there is no value in mind-numbing repetition. Although side-by-side comparison of alternatives might be helpful to choose among project alternatives to achieve the same objective (ie, coal, oil, gas or nuclear-fueled generating facility), such a comparison has little value in analyzing the no action alternative, which is simply ictention of the status quo. Moreover, nothing in NRC regulations dictates such a format.

To the contrary, the NRC discourages bulk and duplication.

The only authority upon which the Licensing Board and CANT rely actually supports LES.

In Citizens Aaminst Burlinnton. Inc v Busev. 938 F. 2d.190,194 (D.C. Cir.), cett de_nied, 502 U.S.

994 (1991), the Court mentioned that the EIS discussed the project approval and no action alternatives "in depth." Ssc LBP-96-25,44 NRC at 372; CANT Br. 26. But the no action analysis was actually only four paragraphs and less than a page of the Department of Transportation (" DOT")

EIS attached hereto. And like the FES criticized by the Board ~and CANT here, the DOT EIS similarly concludes that the no action alternative would result in the existing site " remaining as it is today." DOT EIS at p. 2-13. Most discussion of no action relates to the " substantial economic 1

Public Service Electric & Gas Co. (Hope Creek Generating Station, Units 1 & 2), ALAB-518,9 NRC 14,38 (1979), quotina Vermont Yankee Nuclear Power Coro v. NRDC,435 U.S. 519, 551 (1978).

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benents" thereby chmmated, including lost jobs and dollars lost to the local economy. Otherwise, the DOT EIS simply states that the no action ahernative "would avoid the introduction of new significant environmental impacts" discussed elsewhere in the EIS. Thus, the much ballyhooed "in depth" discussion is indistinguishable from what the NRC Staff actually prepared for the FEIS here.

]

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The FEIS Adeauntely Discusses the Need for the CEC, LES established in its main brief that the need for the CEC lies primarily in the availability of an additional market competitor based in the United States to assure a reliable alternative domestic source of competitively priced enriched uranium supplies. Thus, even at comparable prices, LES's entry into the domestic market is supported by the strong utility desire for diverse, reliable sources 1

of supply. Additionally, LES's participation in the market will stabilize, and perhaps even reduce, prices. Finally, LES will bring to the domestic market an environmentally benign and superior

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production technology.

The Licensing Board :r,d CANT completely miss the point, focusing exclusively on significantly lower prices LES has never claimed. CANT correctly states that an agency must review the proposed action "on its own terms." CANT Br.11. Yet, this is precisely what the Licensing Board failed to do, instead substituting its own notion that the claimed benefit of the CEC was "significantly lower prices" in the enrichment services market. 44 NRC at 367; LES Br.14 n 13.

i Hence, the vice of the Licensing Board's formulation is that it does not evaluate the proposed action "on its own terms."I' I

F Citing LES testimony that the CEC wouki not create substantially lower piices, C ANT argues that the Board did, in fact, accept and evaluate the claimed benefits of the CEC. CAhT Br.

12. Again, CANT misses the point. The Board did not cite this testimony as evidence of the asserted benefit, but rather to " prove" that LES would not fulfill the benefit invented by the Board itself, iA, significantly lower prices.

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CANT defends the Board's conclusion with circular reasoning The Board postulates that LES cannot enter the market unless it offers significantly lower prices (iA, ignoring the non-price benefits of the facility a'together). LES admits that its prices may only be slightly (but not substantially) lower, but its experts proved that LES's market entry is driven by benefits other than price. According to CANT, however, the Board "never had to reach" the asserted benefits of supply diversity, price stabilization, and a safe, efficient and advanced technology 'because these benetits are illusory" if LES cannot enter the market. CANT Br.15-16, Such circular logic would permit the

' Board to ignore the very benefits that open the market to LES, and is an appalling abuse of NEPA.

Better than anything else, this illogic underscores the fallacy of the Licensing Board's " market entry" analysis, and shows how far the Board strayed from its limited role under NEPA to assure adequate disclosure of environmental costs and benefits.

Thus, dictating significantly lower prices as the sire qua non of market success,F and ignoring all other competitive factors, CANT like the Board, would eviscerate the benefit side of the cost / benefit analysis for the CEC. In addition, CANT perpetuates the Board's factual and legal errors underpinning its faulty analysis of the CEC benehts tru!y assened by LES:

CANT, like the. Board, belittles total cost savings of $600 million and $900 million over the life of the CEC as having no "significant or even noticeable impact on the average utility's fmancial condition"(CANT Br. I1 n. 9), overlooking the annual cost savings passed on to consumers who, along with rate regulators, just inight care about

"$200,000 - 5300,000 per year" (id_) in reduced bills for each U.S. power reactor.

CANT is wrong that, to challenge the Board's logic, LES must show that competitors will charge predatory prices to undercut LES. CANT Br.13 n.13. This was the Contrary to CANT, LES did prove that it will offer " competitive prices" (CANT Br. 13)

C because its prices will be comparable to those of competing suppliers. As CANT concedes, the Board found that LES's costs (and by clear implication, its prices) would be " comparable to the other market competitors.

" CANT Br.10, Cling 44 NRC at 369.

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j conclusion of theBoard, not LES The aggressive marketing by competitors posited i

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by the Board to keep LES out of the market necessarily constitutes illegal predatory pricing. LES Br. 20 & nn.19 and 20.

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CANT mistakenly relies upon a colloquy between Rep. Clarke and LES President Howard Arnold to assert that LES's market success depends upon substantially lower prices. CANT Br.13 n.14. Actually, Mr. Arnold merely expressed the " hope" that LES prices would be lower, but noted that LES need only be " cost-competitive,"

exactly as Mr. Schwartz testified. Licensing Uranium Enrichment PlantstOversight Hearing Before the Subcomm on Energy and the Environment of the Comm. on Interior & Insular Affairs,101st Cong.,2d Sess.163 (1991) (" Oversight Hearing").

Incredibly, CANT dismisses expressions of enlightened self-interest by numerous e

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utilities as " gratuitous and unsupported" comments on the draft EIS having "no probative weight." CANT Br.15-16 n.16. With LES selling wholly or principally to domestic utilities, no perspective could be more important or probative than the i

publicly stated position of these domestic purchasers The FEIS is part of the agency l

record of this proceeding and deserves appropriate probative weight. Further, Mr.

{

Schwartz's testimony independently proves the desire of U.S. utilities for alternative domestic supplies (LES Br.11-12), as confinned by the NEI amicus brief.

CANT, like the Board, errs in asserting that the existence of an international uranium e

emichment market " refutes the proffered notion that domestic utilities would rather i

l not deal with foreign producers." CANT Br.15 n.16, quoting. LBP-96-25,44 NRC at 369. The strong desire of domestic utilities for diverse, reliable supplies domestically is not inconsistent with the existence of an international market, or with the likehhood that foreign competitors and LES will capture an increasing portion of USEC's market share, given the age and technology of USEC's enrichment facilities 8

and other competitive factors '

CANT wrongly asserts that the USEC Privatization Act of 1996 " assure [s]" the F

success of the 1993 agreement between the U.S. and Russia, allowing for the sale to U.S. utilities of Russian LEU. CANT Br.15, incorrectly quoting 44 NRC at 356.

This law does not " assure" implementation of the U.S.-Russian agreement. That agreement is tenuous at best and remains very much subject to the vagaries of international politics, the stability of the Russian regime, the ability of the parties to agree on each year's prices and other factors. :The agreement is also subject to

. termination by either party with twelve months notice. No congressional edict alters this bilateral agreement so as to deny the parties these rights,.or compels the U.S. or, more absurdly, compels Russia to keep the agreement in force, 4

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CANT has misquoted the predicted market share. Mr. Schwanz predicted that USEC would

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' retain 45% to 75% ofits market share. Tr. 396 Moreover, USEC's lost market share l

includes LES's ' predicted market share of about 17%. Tr. 397; FEIS at p.1-5.

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l CANT overlooks the legislative mandate in both the Privatization Act of 1996 and the Er ergy Policy Act of 1992 requiring a gradual and controlled release into the market of both U.S. and Russian stockpile matedal to minimize or forestall adverse impact on competing domestic suppliers. The FEIS therefore concludes that both the law and the U.S. Russian agreement " anticipate that domestic competition will exist and should not be adversely affected by the Russian ITEU agreement." FEIS at p.1-7.

Fundamentally, these errors arise because the Board has unnecessarily and impermissibly i

intruded into LES's business judgment to decide its likely prospects for commercial profitability.

LES has no quarrel with the proposition that the NRC may censider the construction costs to strike l

4 the overall cost / benefit balance for project alternatives, but that is not what the Board did.6 CAST cites no authority whatsoever that the NRC or any agency may or ever has engaged in market i

forecasting to predict that the asserted NEPA benefits of a project will never be realized. A subject j

i Thus, the cost ofbuilding the CEC is irrelevant to CANT's circular argument that the facility will provide no benefits because it will not be commercially successful. CANT tries but cannot distinguish NRC licensing cases cited by LES that prohibit the agency from considering theprofitabihty of building alicensed facility. Boards may consider project costs, but that is a far cry from forecasting profitability. And even project costs may not be outcome-determinative under NEPA, as the Appeal Board has admonished:

4 We are not authorized.. to require an applicant to accept or reject i

an alternative solely on the basis of its economic costs. That is a business judgment which is outside the scope ofour NEPA reviw.

Ulinois Power Co. (Clinton Power Station, Unit Nos. I and 2), ALAB-340,4 h7C 27,48 (1976)(emphasis added).

c Ironically, CANT also argues that socioeconomic benefits must be excluded altogether from analysis. San CANT Br. 26-28. Not only does this argument ignore NRC guidance and federal case law (LES Br, 16-17) it contradicts NRC practice for years in considering socio-economic impacts in licensing Part 70 facilities. Each of the Environmental Assessments previously cited by LES (LES Br. 8 n. 9) contains discussion of"socioeconornic effects for other Part 70 facilitiesor" effects on.. society." Moreover, socioeconomic impacts were

. environmentally. considered in Kerr-McGee Chemical Coro (West Chicago Rare Earths 1

Facility), LBP-84-42,20 NRC 1296,1320 (l984).

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more foreign than market forecasting to the purposes of NEPA, not to mention the jurisdiction and.

expertise of the NRC, could scarcely be imagined.

IIL LES Has Demonstrated Itself Financially Oualified to Build and Operate che CEC1

.in its main brief, MS has proved that the financial qualifications requirements under Part 50 have not been sub sr/entio engrafted upon Part 70 inasmuch as the two regulations differ markedly f

in text and the rules of statutory construction preclude giving the same meaning to two different provisions and two ditYerent contexts. The regulatory framework of each regulation also differs from j

the other because the Commission has always applied more stringent criteria to the licensing and regulation ofnuclear power reactors. Indeed, Congress amended the Atomic Energy Act to assure 4

that uranium enrichment facilities would be licensed under Part 70 rather than Part 50 And most significantly, the Hearing Order very carefully specifies the source of each regulatory requirement, and does not mention Section 5033(f).

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No matter which criteria apply, the Licensing Board's analysis of LES's financial i

l qualifications is fundamentally defective in its failure to cornprehend how entrepreneurial joint i

ventures such as the CEC are planned, structured and implernented in the real business world.

Ignonng sound expert testimony by those schooled in investment banking, the Board superimposed on LES an extreme and utterly unrealistic regimen that far exceeds what the Commission has deemed necessary to protect public health and safety. Together, these twin defects of misconstruing and misapplying financial qualification requirements under Part 70, left uncorrected, will doom the CEC and any like project initsinfancy.

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_ The Commission Has Not Imposed Part 50 Requirements For Financial Oa=Wicatiana Unen Part 70 Licensees.

At the heart of CANT's argument is the claim that Part 50 and Part 70 provisions regarding financial qualifications must be construed idemically because they deal with the same subject matter, 4

regardless of"what kind of facility is involved." CANT Br. 32. This premise is patently untenabic.

When the Commission supported the amendment of the Atomic Energy Act by adding a new Sectio 193 to distinguish uranium enrichment facilities from power teactors, and to assure licensing of -

ennchment facilities under Part' 70, the Chairman told Congress that "NRC requirements in 10 C F.R.

I Part 50 have been promulgated primarily for licensing of nuclear reactors, which are entirely different from uranium enrichment facilities in concept, complexity amidegree of risk." Oversight Headng at 13. The Director of the NRC Office of Nuclear Materials Safety and Safeguards repeated the same theme, emphasizing that hazards posed by uranium enrichment "are much less than those pot presented by nuclear power plants." Id.at 138. Sm generally LES Br. 31-33. Hence, CANT's v premise for treating Part 50 and Part 70 requirements interchangeably is demonstrably wrong.

The linchpin of the Licensing Board's analysi's is a single letter from Mr. Harold Price, AEC Director of Regulation, to Congress in 1%7. Sm LBP-96-25,44 NRC at 387-88. It is remarkably ironic that the Board's inferences from the Staff's letter (three decades ago) form the cornerstone of its regulatory eddice, yet it chooses to give far less credit to the explicit, currently stated positio the Staff. The Board broadly construed Mr. Price's response as a general statement of how the Comrnission intended to handle fmancial qd%tions for Part 70 licensees. That, however, was not what he was asked. Rather, the Joint Committee en Atomic Energy had inquired about proposed 1-amendments to 10 C.F.R.'l 50.33(f), and asked Mr. Price to " describe the criteria and procedures which the Commission proposes to adopt with respect to determining finarsial qualifications of 9

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[ reactor) licensees in connection with the contractual arrangements with the Commission for obtaining special nuclear material." Licensing and Regulation of Nuclear Reactors: Hearings Before j

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the joint Committee on Atomic Energy,90th Cong.,1st Sess. Part 1, Appendix 12 at 347 (1967)._

' As the very name of the heanngs shows, Congress was focusing on how the Cormnission licensed and L

l regulated ry; clear power reactors, not the facilities of materials licensees.

j Mr. Price's response was therefore specifically geared to a review of a Part 50 reactor applicant's financial qualiScations to assure that the licensee would be able "to pay use, consumption a

I and other charges in the case ofleax and supply agreements or to pay the purchase price of the l

l material in the case of the sales contract." Id. at 349. Mr. Price equated the Commission's review I

with " conventional business practices in the granting of credit" and "in similar contractual arrangements for any Government-fumished goods or services." Id; see also LES Br. 35-36 n. 38.

Hence, the Commission's subsequent amendment of Section 50.33(f) did not, as the Board incorrectly held, provide a defxfo regimen for regulating Part 70 licenses, but ordy those Part 70 licenses held by Part 50 licensees in connection with procuring SNM by sale or lease agreement.

I CANT has cited no evidence from ery Safety Evaluation Report or license issued under Part 70 that shows Part 50 treatment, and hence cannot defend its assertion that "the Commission has long applied essenually the same criteria in a Part 70 fmancial qualifications review as in a Part 50 review."

b CANT Br. 35. CANT's repeated references to this supposedly "well-established policy and practice" (id ) therefore ring hollow. CANT's circular logic, nasuming its very premise to reach a conclusion that Part 50 And Part 70 provisions for anancial qualifications are interchangeable, cannot overcome LES's proof that:

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The textual difference between Section 5040(b) and Section 70 23(a)(5) is unmistakablel The normal rules of sta:utory constmetion direct that disparate terms in two separate provisions should not be construed to have the same meaning LES Br. 30-31.

When Congress added Section 193 to the Atomic Energy Act in 1990, the Commission endorsed the separate licensing of uranium enrichment facilities under Part 70, owing to the lower degree of risk (and appropriately less stringent requirements) for such facilities LES Br. 3133.

The Hearing Order in this proceeding omits any reference to considering financial qualifications under Part 50, despite specific reference to Section 50 81. Its action logically follows Comrnission advice to Congress that crucial radiological and technological differences between nuclear power reactors and uranium enrichment plants render Pan 50 requirements inappropriate for enrichment facilities. Indeed, the Statf advised that ongoing miemaking to correct the application of Part 50 to enrichment facilities could be abandoned if Section 193 were adopted. LES Br. 33-35.

CANT tries to dismiss Section 193 as irrelevant to the substantive criteria oflicensing, urging that the amendment merely expedited licensing by creating a one-step licensing hearing process.

CANT Br. 34-35 n.36. But the one-step licensing objective was achieved in recognit:on of the C ANT's semantic gymnastics are so extreme tha' i relics upon a meaning of" appear" unique 2

to a context steeped in judicial formalities (e.g., "it appearing to the Court") that has no bearing upon NRC findings under Part 70 Second, the difference is not between "is" and

" appears," but rather between "is" and " appears to be." Since both Part 50 and Part 70 regulations utuze the verb "to be," the addition of" appears" in Part 70 cannot be considered surplusage or a nullity, as every word must be given some meaning United StateLv.

Menashe,348 U.S. 528,538-39 (1955)- Sssahofsstafsonv Alloyd Co.115 S Ct 1061, 1069 (1995).

Also, CANT has cited only half of the case it chiefly relies upon, which states that " appears" has one meaning in formal decrees and orders, but in ordinary contexts " carries no other significance than 'it seems to me' in the sense that it iaprobable or hkely " Lecklieder v.

Chicago City Rv Co.172 Ill. App 557,560 (1912)(emphasis added). What the Commission meant is therefore consistent with relevant case law. See also lhns.got Oil Co. v. Ifookins.

67 Cal. App 2d 21S,153 P 2d 993,995 (1944)(" appear" means a " plausible claim" without necessity of a conclusivejudicial determmation), Kind v SuoericLCar_t,143 Ca. App 2d 100, 299 P 2d 414,416 (1956) (" appears" merely requires sufficient evidence to make the finding " reasonably probable," and is not synonymous with" Trove").

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_ greatly reduced risk in operating an enrichment facility in contrast to a nuclear power plant? LES Br. 31-33 (citing statements by NRC Director ofOffice of Nuclear Materials Safety and Safeguards).

For the same reason, the Commission has mied that LES need not obtain Price-Anderson insurance coverage. LES Br. 32 n. 35 Indeed, the entire regimen for licensing and regulation'of enrichment facilities under Part 70 reflects the Commission's appreciation of this greatly reduced risk?

CANT argues that "if the Commission had intended that financial qualifications for newly formed Part 70 license applicants mean something different than financial qualifications for Part 50 applicants, it would have said so in premu! gating the Part 70 regulations" decades ago. CANT Br.

40. Again, this circular reasoning turns logic onits head. The current Part 70 financial qualifications regulations were adopted in 1967. The Commission had no reewn to believe thirty years ago that two distinct regulatory requirements, applied to two different facility licenses, would be identically interpreted identically in years to come unless the Commission clarified that it really meant what There is no merit to CANT's usertion of significance in that the Commission omitted f

8' financial qualifications when describing to Congress the differences between Part 50 and Part 70 licensmg CANT Br. 35 n. 36. The Commission merely mentioned some differences, not all of them. Oversight Hearing at 131. The Commission did not mention, for example, the substantial difference between emergency plannmg requirements for nuclear power reactors l

and Part 70 facilities Comoare 10 C.F R.

50.47 with 10 C.F R. 6 70.22(i)(1).

As noted, emergency planning requirements for enrichment facilities are markedly less S'

detailed and rigorous than for power reactors, and may even be eliminated altogether by analysis. Sg 10 C.FA { 70.22(i)(1)(i). Similarly, LES must comply with physical security requiremerits under 10 C.FA 73.67 and protection of SNM of moderate and low strategic significance as opposed to the more rigorous physical protection requirements at reactor a other fixed sites under 10 C.F.R.~ }{ 73.40 57, including protection against radiological sabotage (10 C FA j 73.55), personnel access authorization requirements for nuclear power plants (10 C.FA ) 73.55), and criminal history checks for persons granted unescorted access to a nuclear power facility or safeguards information (10 C.F R. i 73.57). And for control and accounting of SNM, the Commission has distinguished facilities such as the CEC that will handle SNM oflow strategic significance (10 C.T.RL { 74 33) from facilities possessing SNM 2

in strategic quantities (10 C FA $i 74.51.59).

12-i w

w' 44 w

t ev

l said. Actually, just the opposite is true - if the Commission had intended the same standard to 1

apply to two clearly distinct classes oflicenses,it would have said so explicitly, and for that matter, i

simply incorporated Section 50.33(f) by reference in Part 70. It did not.

H.

LES Has Demonstrated Its Financial Ouslifications.

The fbndamental difficulty of the Licensing Board in evaluating whether LES appears to be financially qualified is its rejection of expert testimony as to how business ventures such as the CEC are planned, structured and financed. Contrary to CANT's accusation that LES's financial qualification are supported only by "self-serving and unverifiable claims" (CANT Br. 45), Mr.

Doudict, a former investment banker and utility financial executive experienced in venture financing.

elaborated upon the specific factors of the LES Financial Plan that reasonably assure LES will be capable of obtaining funds necessary to construct and operate the CEC.* h LES Br. 24-25 Further, Mr. Doudiet explamed that formation of LES as a special purpose company (the Licensing Board's principal concern)is a typical approach for a business venture such as the CEC, and will not cause lenders to ignore the very considerable assets ofits parents. Doudiet at 30 fol. Tr. 563.

. LES has shown that the " reasonable assurance" finding, based on predicted consummation of financial commitments, is analogous to predictive findings the Commission has made for years in approving facility emergency plans. LES Br. 38 n 40. CANT is wTong that predictive findings were invalidated by Union ofConcemed Scientisjs v. NRC. 735 F.2d 1437 (D.C. Cir.1984). He Commission's implementation of that decision specifically stated "The revision (to 10 C.F.R. Q 50.47] does not change the general predictive nature of the Commission's fmdings on emergency planning and preparedness issues." 50 Fed. Reg.19323 (1985) Indeed, the First PID in this proceeding itself demonstrates the predictive quality of emergency planning findings. b LBP-%-7, 43 NRC 142 (1996) (e.g, effectiveness of evacuation plan arxi response by offsite support organizations). In addition to such predictive findings that LES's Financial Plan provides " reasonable assurance" of funding, the Commission will, of course, also rely upon its traditional tools of Staff oversight, inspection and enforcement actions to assure that funchg exists before construction proceeds and that appropriate milestones are met.

l 13

i On the contrary, lending institutions will, as should the Commission, consider the substantial assets of the LES partners as weH as past lending experiences with the parents themselves. Id at 30 i

m l

(Item 7); Tr. 570-75 When one takes into account the considerable assets and experience of the 1

parents, and the fmandal resilience of the subsidiaries in meeting completely the escalating expenses of licensing to date, " reasonable assurance" exists that this group of a#iliated companies has been fidly quahfied financially and will be able to carry through on their reasonable plan for fmancing CEC -

J construction and operation.

1

. in this vein, CANT's assertion that LES is " virtually assetless" (CANT Br. 45 n. 46) demonstrates its ignorance ofbasic financing principles as well as the record. LES has funded more d

' than 530 md/ son in design, engineering and licensing activities over more than sewn years Su Doudiet at 24-25 fol. Tr. 563. The very fact that LES, with such a!!egedly poor corporate coffers, t

i has already spent more than 530 million for merely the prospect of a license speaks volumes about 1

its fmancial wherewithal and the confidence of the LES parents and partners and that the LES Financial Plan can be successfully implemented. C ANT admits that the parents of the LES partners l

are financially qualified and that "fmancial qualifications may well not even be an issue in these proceedings" if they had elected to seek the license themselves. CANT Br. 45-46 n.46 In other

- words, if the Commission were to consider, as LES suggests, the overall financial arrangement 1

- among LES, its partners and parents in assessing reasonable assurance of the LES Financial Plan, CANT now concedes the viabthty of the Plan. Indeed, Mr Doudiet testified that lenders would look

. to the collective resources of the LES partners and parents in evaluating fmancing and, on that basis, n

finan,:e the project. Tr. 570-75.

l Neither CANT nor its only witness on this subject has demonstrated any experience _or expertise in how new ventures such as the CEC are planned and brought to commercial reality. No 14 syv-u "W

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CANT witness has demonstrated any expertise or experience in starting or financing any enterprise at all. CANT's position that either firm or contingent commitments of funds are possible before licensing (CANT Br. 45 n. 46)is directly contrary to Mr. Ocudiet's informed conclusion that no i

prudent investor or lender will commit funds to a project of thi magnitude without a license.

Doudiet at 8-9,31 fol. Tr. 563. To dismiss his expert opinion without any record authority exposes the wakness and spuriousness ofCANT's contention. In any r,ent, because ofits four self-imposed i

conditions for proceeding beyond the venture phase, LES has provided reasonable assurance that it will have sufficient funds to operate the CEC safely. LES Br. 26-27 4

CONCLUSION For the reasons stated here and in its main brief, the Commission should reverse the decision of the Licensing Board and determine that: (1) the ER and FEIS adequately describe the no action altemative, (2) the ER and FEIS adequately state the need for the CEC, and (3) LES appears to be financially qualified to construct and operate the CEC.

[

LOUISIANA ENERGY SERVICES, L.P.

T b)%ue W. )

-ti-i J. Michael McGarry, III Marcus A. Rowden Robert M. Rader

~

Robert L. Draper FRIED, FRANK, HARRIS, SHRIVER

& JACOBSON WINSTON & STRAWN ATTORNEYS FOR LOUISIANA ENERGY SERVICES, L.P.

4 Dated at Washington, D.C.

this 15th day of May,1997

.15

FINAL ENVIRONMENTAL IMPACT STMEMENT U.S. 0cpartment of Transportation j

Ue'n%ff Establishment of Air Cargo Hub Toledo Express Airport Toledo, Ohio VOLUME I Thirstatement is submitted for review pursuant to the requirements cf Section 102 (2) (c) of the National Environmental Policy Act (NEPA) of 1969 (PL 91 190,42 USC 4321 et. seq.), E.O.11990 (Protection of Wet' ands). Title V of the Airport and Airway Improvement Act of 1982 (PL 97 248, as amended by the Airport and Airway Safety and Capacity Act of 1937), Section 4(f) of the Department of 11ansportation Act of 1966, and other laws as applicable.

The Tcledo Lucas County Port Authority, cperator of the Toledo Express Airport, is requesting approval cf an Airport Layout Plan which includes development of a 40-acre ramp, sortat warehouse, fuel farth, access road, maintenance building, a 3,300 foot extension to Runway 7-25, Category II ILS on Runway 1 (including touchdown zone lights and ALSF.2), taxiway extens on each side of Runway 7 25, and acquisition of 96.16 acres ofland (access road (43.M] and runway protection zone [49 6 acres]) to accommodate a national 3' argo hub. This Environrnental Irnpact Statement also assesses the Federal a:tions regarding installationhelecaticn of navigational aids, airspace use and approach and departure procedures asscciated with the preposed devdopm For further information:

Depar: ment of Transponation Federal Aviation Administration Ms. Leslie Haener Air;ons Dutrict Office (313) 942 3341 Willow Run Abpon East Abparts Engineer 9820 Beck Road Bellevale, Mt.t3111 December 1999 Final: May 1990 9

Population [mpacted By Noisc With Hub and With Preferential Northeast Flow (Continued)

Poculation Sub:ect To Aircraft Noise 1990 91 Ldn 1990-91 With Hub Con tour With Ht.b Preferential Flow Baseline anasis To Northeast _

TOTALS 65 70 1.884 2.710 l

70 75-526 518 75r

1.91 127 j

TOTAL 2.811 3,655 LWF

• 2.040 2,574

• The total population in each Ldn contour intervalis multiplied by the appropriate LWP factor.

Generally speaking, the resulting LWP numbers can be interpreted as the number of people who are regularly annoyed by aircraft noise. The LWP factors are as follows: 65-70 Ldn =.625; 70-75 Ldn =.875: 75+ Ldn = 1.000. Because of rounding, the numbers in the columns may sum differently than shown in the table.

ALTERNATIMi OF NO ACTION L

The no action alternative would result in the Airport remaining as it is today. An air cargo hub i

would not be sited at the Toledo Express Airport and the existing facilities and aircraft operations would remain unchanged. This would avoid the increased noise levels over the residences surrounding Toledo Expm; Airport and over Lou:s W. Campbell Nature Preserve and Oak Openings Preserve Metreps.k. However, the no-action alternstive would not provide substantial economic benefits for the Toledo Metropolitan Area, which according to 1939 statistics, has been the urban area of lowest economic growth when compared to all other major urban areas in the State of Ohio.

The no. action alternative would mean foregoing a variety of economic beneSts. For the first full year of operation, it is expected that 750 permanent jobs (150 full time,600 part-time) would be created at the hub with a base payroll of about $9 million. Permanent jobs are expected to increase to 850 the second year of operation and to 1,000 the third year of operation. It is anticipated that as.: result of the new hub,150 airport related jobs also would be created.. These 4

jobs would be directly related to supporting the hub's operations.. fuelers, aircraft operators, maintenance facility personnel, etc.

An economic study for the Toledo.Lucas County Port Authority by the University of To!edo in 1989 evaluated the economic impacts associated with Toledo Express Airpcet. According to the study, the proposed air cargo hub is expected to contribute roughly 17 million dollars to the local economy per year out of a total economic irnpact for the airport (including the hub) of $42,119,636 2-13

h for ;he C:st fall., car of ht.b operations. Tnis fi;ure is comprised et 526A90.337 in direct and 1

ndirect economic impact and $15,629.299 in induced irnpacts. By the third full year of cperation of the air cargo hub, total economic impact associated with the airpcrt is expected to rise to 567,628.322. According to the study, because the analysis assumed a no gecw:h mode fcr the airport, with the exception of the air cargo hub, and because the mean mutoplier of.59 was unlizec, these projections are considered censervat;ve.

The No Action alternative will be considered as a viable alterna:ive by the FAA. It is the baseline environmer:tal conditicn against which the environmental impacts in Chapter Foi. are evaluated.

He No Action alternative would avoid the introduction of new signifcant ensironmentalimpacts at :he Toledo Express Airport that would accompany the Burtington cargo hub eperation.

ALTERNA AIRPORTS Service from Ano Aliport in the Toledo Area Choosing another alt stive airport would aise result in the Toledo & press Airport remaining as It is today and foregci the economic benefits described above. However, locating the air cargo hub at another airport the Toledo Metros tan Area still could accrue significant economic benefits to *he area but 'th substantially higher start up costs, This a!cernative involves shi J g of the air cargo hub to another existing airport within the Toledo Me:ropolitan Area, as illustra d on Exhibit E There are four existing airports in the Toicdo ares that currently have paved runw vs. These include: Metcalf Fictd, Toleco Suburban, Wood County Airport (Bowling Green), and ton County, e'

Toledo Suburban. Located 1 NM northeast of Tc:cdo Express Airport (TOL) in Lambertville, Michigan. This cility has a 3,928'x 50' Runway 9 27, constructed of concrete and provides full serv e for general aviation aircraft.

hfetcalf Field - Located 20 NM 1st of TOL, this airport wa* 'he original Tcledo airport. Its NJ. ties include runwa,14 32, a 4,22Tx 100' concrete runway, Runway 4 22, a 3,6wx 150' cioncrete runwa and fu!! service for general aviation aircraft.

Wood Couety Airport Gowlina Gree - Located 20 NM soutiteast of TOL his

+

facility provides two hard surfaced ru. ways. Runway 13 36 is 2,625'x 50' and Runway 9 27 is 4,200'r 75'.

This air t offers full service for general aviation aircraft.

+

Ea!r m. Located 15 NM west of TO this facility provides a runway 9 27, 3.8% !T,and offer full service for general a 'ation aircraft.

Each of these airports would require the constructi of a significantly greater amount of imprcvements at a significantly greater cost in order to b ble to accommodate the new air cargo hub activities. Impacts related to construction are expect d to generally be greater than those anticipated with the Proposed Project. It is anticipated that operty acquisition would be required at each of these airports. In addition, each of these airports is ' a suburban residential setting with 2 14

SUMMARY

OF ' ALTERNATIVES ANALYSIS In view of the analysis of potential alternatives described in this chapter, the FAA scociudes that there are only two (2) reascnable alternatives relative to its decision snaking process in this si:uation These alternatives are: (1), the cons:ruction and operation of an air cargo hub at the Toledo Express Airport (the sponsors Proposed Project), and (2) the alternative of No Action.

Chapter Four analyzes the anticipated. environmental impacts of the Proposed Pro;cct in comparisen to the baseline condition of No A: tion. The Proposed P ciect would have positive economic benefits to the Totedo area, but would entail some adverse environmental consequences particularly with respect to aircraft noise impacts. The No Action alternatise wculd essentially n:sintain the existing environmental situation around the Toledo Express Airport, but would result in the Tcledo area's foregoing the economic benefits of the Burlington air cargo hub.

e 4

3 4

9 4

1 4

2-17

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l

a,_

DOCKETED UNITED STATES OF AMERICA 8)SNRC i

. NUCLEAR REGULATORY COMMISSION W M 15 PS :13 DEFORE THE COMM]SSION.

OFFICE OF TE:pETARY 00CXEilHG A stav:CE-

).

ER4Nt:4 In the Matter of -

)

Docket No. 704070-ML

)

i LOUISIANA ENERGY SERVICES, L P.

)

May 15,1997 3

)

.(Claiborne Enrichment Center)

)

)

CERTIFICATE OF SERVICE 4

1 i

1 hereby certify that copies of" Applicant's Reply Briefin Support ofIts Petition for Review of LBP-96-25" were served upon the following by deposit in the United States mail, first-class, postap prepaid, this 15th day of thy,1997:

t Administrative Judge Administrative Judge

^

Thomas S. Moore, Chairman

• Richard F. Cole

• Atomic Safety and Licensing Atomic Safety and Licensing i

Board Board U S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, D.C. 20555

. Washin'gton 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 l

U.S. Nuclear Regulatory Attentioni Chief, Rulemakings and Commission.

' Adjudications Staff Nashington, D C. 20555 (Original plus 2 copies)

Office of Commission Appellate Eugene Holler, Esq.*

Adjudication

• Office of the General Counsel

.U.S Nuclear Regulatory.

U.S. Nuclear Regulatory i

Commission

- Commission Washington, D.C. 20555 eWashington, D.C. 20555 '

,i n-4

.e

2.

Ronald Wascom,' Deputy Assistant.

Joseph DiStefano, Esq.

Quinn, Racusin & Gazzola LSecretary' Office of Air Quality &

1401 H Street, N.W:

Radiation Protection Suite 510 -

P O. Box 82135 Washington, D C. 20005 Baton Rouge, LA 70884-2135 Robert G. Morgan-WC26B Marcus A.Rowden Licensing Manager -

Fried, Frank, Harns, Shriver &

Duke Engineering & Services,.

Jacobsen 1101 Pennsylvania Avenue, N.W.

Inc.

. 400 South Tryori Street Suite 900 South '

- Charlotte, NC 28201 1004 Washington, D.C. 20004 Nathalie Walker

• Diane Curran

• Hannon, Cunan, Gallagher &

Sierra Club Legal Defense Fund Spielberg 400 Magazine St.

2001 S Street, N.W.

Suite 401 New Orleans, LA 70130 l

Suite 430

- Washington,D.C. 20009-1125 Roland L Jensen Adjudicatory File

. 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.

4 David S. Bailey, Esq.

Lawyers' Commmittee for i

CivilRights Under Law 1450 G Street, N.W.

Suite 400 4

Washington,D.C. 20555 j

4 2

LOL'ISIANA ENERGY SERVICES, L.P.

Al G

1 Robert M. Rader WINSTON & STRAWN, ATTORNEY FOR LOUISIANA ENERGY SERVICES, L P.

..a

~..

.