ML20205D819
| ML20205D819 | |
| Person / Time | |
|---|---|
| Site: | San Onofre  |
| Issue date: | 05/02/1984 |
| From: | Carlos M CALIFORNIA, STATE OF |
| To: | |
| Shared Package | |
| ML20205D636 | List:
|
| References | |
| FOIA-84-885 NUDOCS 8510170097 | |
| Download: ML20205D819 (39) | |
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ilublic Etilities (Commission .
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STATE OF CAUFORNIA *
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Decision 84-05-013 May 2, 1984 ,
f TO: ALL FARTIIS OF RICORD IN OII 83-10-02 l
The Ad=inistrative Law Judge's proposed decision was signed 1
without change by the Co==ission.and accordingly, a separate docu=ent vill not be filed and served under A3 2570 in order to .
save the expense of-reproduction and postage.
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Mary Carles
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Chief Ad=inistrative Law Judge ' 3 l
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! Decisien 84-05-013 May 2, 1984 0 7 [2l 3EFCRt THE PUBLIC UTILITIIS COMMISSION OF THE STATE OF CALIFS'RNIA e e Investigation on the Co==ission's own )
motion to deter =ine whether San )
Onofre Nuclear Generating Station )
Unit 1 should be ordered removed from ) OII E3-10-C2 the rate base of Southern California { (Filed October 5, 1983)
Edison Cetpeny and San Diego Gas &
Ilectric Cc=pany. ,
, ?
f Richard K. Durant, James A. Ecoletto, and Stephen E. Pickett, Attorneys at Law, for Seuthern California Edison Company; Randall W. Childress, Attorney at Law, for San Diego Gas & Electric Company, respondents.
Jon F. Elliott, Attorney at Law, for Towards Utility Rate Nor=alization; Julie E.
Mcdonald, Attorney at Law, and Donna Erenski., for the Sierra Club, intervenors.
F. E. John and T. D. Clarke, Attorneys at Law, l
for Scuthern California Gas Cc=pany; Willis: Knecht, Attorney at Law, for California Association of Utility Shareholders; William S. Shaffran, Deputy City Attorney, for City of San Diego; Peter W. Hanschen and Steven Greenwald, Attorneys at Law, for Pacific Gas and Electric Company; and Erobeck, Phleger and Harrison, by. Richard C. Harper, Attorney at Law, for California Manufacturers ,
Association, interested parties. j Rcbert C. Cagen, Attorney at Law, and A. V. ;
I Garde, for the Commission staff. l INTERIM OPINION Su==ary of Decision ,
s This interim decision concludes that Southern California .
Edison Company (Edison),.the operator of San Onofre Nuclear :
Generating Station Unit 1 (SONGS 1), has achieved an understanding {
with the Nuclear Regulatory Commission (NRC) as to the scope and ;
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i methods of making.the plant modifications required by NRC for initial restart of SCNGS 1, and that those plant modifications vill be cost-offective. Idison is reasonably certain that it vill achieve NRC
&; prev =1 fer restert by January 1, 1985 The decision provides two alternative methods of secounting
, for capital ecsts pending restart. Respondents may choose to i==ediately re=cve SONGS 1 from rate base, place current capital coats in a separate deferred debit account, and earn on such capital costs at the utility's authorized Allowance for Funds Used During Constructicn (ATUDC) rate. Alternatively, respondents may choose to centinue to boek SONGS 1 capital costs and earn on euch capital costs at the utility's authorized rate of return, subject to refund if SONGS.1 is net operating at full power by January 1, 1985 The decision also concludes that Idison has made a pri=a facio sheving that the presently known capital cents necessary to achieve the re=aining NRC-required plant modifications vill be cost-sJfective ever the life' of the plant, but the full extent of such
, costs are net kncvn. Therefore, respondents are directed te seek
.l prict Cc==issien approval for plant modifications made after restart.
! We also conclude that Towards Utility P. ate Nor=alizatien's
> (CURN) request that we direct respondents to file for i==ediate abandon =ent of SONGS 1 should be denied.
This investigation was instituted by the Cc==ission te deter =ine whether SONGS 1 ehould be ordered removed from the rate base of Edison and San Diego Gas & Ilectric Cc=pany (SDG&E}, the i
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c.r.srs and cperaters of SONGS 1.1 These utilities were made respondents and were directed to make, as a compliance filing, a repert on the current status of SONGS 1. That compliance filing was
=ade on November 14, 1983 by Edison (Exhibit 1).
The Com=ission acted upon the Motion of the Commission Staff (staff) filed February 1, 1984 to immedistely re=ove SONGS 1 ,
frc= respendents' rate base by settinE hearings for the considerations of the issues raised in the motion on February 27 thrcugh March 2, 1c24 before Ad=inistrative Law Judge Mallory in San Francisec. This interi= phase of the investigation was submitted upon receipt of concurrent clcsing briefs on March 27, 1994.
Evidence was presented on behalf of Edison, SDG&E, and staff. 3riefs were filed by Edison, SDG&I, staff, TURN, Sierra Club, and the City of San Diego (City). .
~ Eistery cf Recent SCNGS 1 Outare On February 27, 1982, SONGS 1 was shut down for the purpose of ec=pleting NEC backfit require =ents resultine frc= the Three Mile
!aland (TX:' incident, NEC fire protecticn requirecents, and li=ited cois=ic cedifications to the turbine building and other miscellaneous etructures. At the ti=e the outage began, Fdison e::pected to return, the plant to service in June 19S2. During the course of the outage, several events occurred which considerably prolonged the outage.
SONGS 1 is one of 11 older plants that are subject to the NRC's Syste=atic Ivaluation Program (SEP). The purpose of the SEP is to evaluate these plants against current licensing criteria and cerine spect:1c backfit requirements where found necessary. Cne of
I Order Instituting Investigation (OII) 83-10-02 was amended by i
Docision (D.) 84-03-044 of March 7,1984 to include evaluation of the reasonableness of charges for replacement fuel during SONGS 1 cutages, and by D.84-01-063 of January 19, 1984, to include
!. evaluation of resleeving expenses as an extraordinary maintenance expense.
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0:I E3-10-02 AEJ/vd1 withstand seis=ic events. This reevaluation of seis=ic capability began in 1973 and nas continued in one form or another to the present. Fo11cvf.ng the inftiation of the SEP in 1978 this seismic reevaluatien ; cgra: vas incorperated inte the SFP.
The seismic criteria being applied to SONGS 1 in the SIP a.e C.67g Ecusner respense spectra, the ca=e criteria used for SONGS 2 and 3 The original seis=ic design criteria for the plant for structures i=pertant to nuclear safety were what in today's ter=inclegy vculd be censistent with 0.25g Housner spectra operating basis earthquake and 0 5g Ecuener spectra safety shutdown earthquake. Cther syste=s, cc=penents and structures, such as the turbine building which contains ce=ponents associated with nuclear safety (static force criteria) were originally designed to a =axi=u:
grcund acceleration of 0.2g. -
- n a Neve=ber 16, 19'81 report ,the NRC staff r. greed with Edisen's cenclusion that continued operation of the plant veuld be ecceptab'_e in the interi: until the seis=ic reeveluatien and any necessa y ups.ading were ec=pleted. ~he NRC steff a'se cencluded, hcVever, that "near ter: =cdifications" were reouired in the North Turbine Bui' ding Extension end West Feedvater Eeater Platfor= vhich were originally designed to 0.2g static.
At a =eeting with NRC staff on May 3, 1962 Edison presented the results cf its reevaluation, using the 0.67g Ecusner spectra, cf the balance of plant =echanical equipment and piping required to shutdevn the plant. The reevaluation apparently disclosed stress values for certain equip =ent, piping, and suppcrts which caused the NRC staff concern as to whether the existing piping, pipe supperts, and =echanical equipment including its anchorage =et the original licensing design basis for the plant.
At a subsequent meetinE between Edison and NRC staff in May 1982, the NRC concluded that the plant could return to service end
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centinue to operate at least until January 1, 1963 if Edison could de=enstrate that the plant =et its criginal license design basis.
Sc=eti=e during May 1982 Edison atte=pted to de=onstrate thct the plant cet its original design basis by presenting to the NEC 3.e!! a discussion of the criginal design criteria, an explanatien cf hev the criteria veuld have been i=ple=ented in the =id-1960s, and exa=ples of lesser designed structures that with' stood severe earthquakes. The NRC staff found Edison's presentation inadequate.
Apparently the original f.esign calculations and supporting =aterial actually used te construct the plant were not presented to the NEC because they were not retained after the original design was ec=pleted and approved.
'a'i t h cu t such calculations, new engineering analyses veuld have been required to de=enstrate the plant's actual seis=ic capability te the NEC which Edisen'elleges would have required Edisen te divert its staff frc= the reevaluatio,n efforts then underway to l bring the plant up to -the C.676 require =ent and veuld ulti=ately have been fruitless because the new analyses cculd net have been ec=pleted and appreved by the NEC prior te the January 1, 1cE3 deadline for having the plant at 0.67 seis=ic capability. Edisen alleges that the "new engineering work" which would have been' required te de=enstrate the adequacy of the original construction to ceet the original design criteria veuld have required "approxi=ately 6 to 10 =enths."
3y letter dated June 15, 1982, as supple =ented by letter dated June 2A, 1982, Edison infor=ed the NEC that it intended te ec=plete the reevaluation and cake necessary =odifications to =eet the 0.6"g Ecusner criteria rather than de=enstrate that the facility cet its criginal 0 5g design basis. Edison also indicated its intent to accelerate the reevaluation and backfit prograc and expected to be able to co=plete both the reevaluation and the required plant 1
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=cdif; cations .in time to return the plant to service by November 1982 er December 1982.
In July 1982 the NEC issued "new guidelines" for seismic analysis that were different from the criteria Edison had been using. In October 1982 Idisen reesti=ated the scope of seis=ic upgrade work which would be required under the apparent NRC criteria and cencluded that S150 millien to S200 =illion worth of beckfit work j would be required prior to restarting the plant.
Sc=eti=e around Neve=ber 1952 Edison significantly reduced the seis=ic reevaluation activities then undervey due to continuinE uncertainty with respect te NRC evaluation criteria and due to cencern that the high-projected cost of seismic and other pending backfits was approaching the point at which the continued econceic viability of the plant would be in. question. The seismic i
reevaluation and upgrade work was eventually stopped altogether in August 1983 pending the resciution of se'is=ic criteria and the scope of seis=ic upgrade'wcrk that wculd be required. Negetiations with the NE: .egerding seis=ic criteria and secpe cf seis=ic backfit require =ents centinued throughout 19E? and continues to date.
1 In early 1983 Edisen, in conjunction with consultants and venders, initiated a program to develop " acceptance criteria" for seis=ic upgrade work on piping supports. !n December 1983 Edison cub =itted a repert to the NRC detailing docu=entatien in support of its propcsed " acceptance criteria." From a reading cf the NRC staff's respense dated February 8, 1984, it appears that Edisen's acceptance criteria was intended to identify the minimum plant cedifications necessary for the NRC to allow the plant to resu=e service. By letter dated February 8, 1984 the NRC staff agreed that Idison's criteria, as modified by the NRC staff, were suff.icient fer the plant to be restarted "for the short term" until all remaining seistic design issues could be completely resolved. The "short ter="
. 0!! E3-10-C2 AIJ/vd1 vae defined as only until the next scheduled refueling, although actual =odifications deter =ined necessary =ay be =ade at so=e later date. In its letter of February 8, 1984 the NRC staff stated,
" substantial additional analyses and resulting plant =odifications w.all Le necessary to ec=plete the seis=ic upg.=de pregrs=..."
In addition to seis=ic backfit require =ents, other p1'ent
=edifications .ere pending in 1962. These additional =odifications were pri=arily a result' of (a} the fire at the Brown's Ferry nuclear plant in 1975, (b) the TMI incident in 1979, (c) regulations issued in 19~9-80 regarding environ = ental qualification of equip =ent, and (d} the NEC's SEP. Edison estimated in its co=pliance filing (Exhibit 1} that the cost of these additional =odifications to be "in the $'00 =illion range" if i=ple=ented in an " uncontrolled and rande:
=anner" acccrding to the original proposed NRC schedule.
As a result of these esti=ated potential costs, Idison initiated discussions with the NEC in order to establish an
":ntegrated 3ackfit ProEra=" and " Integrated Living Schedule (!IS'"
fer defining backfit require =ents and phesing plant =odifications over a peried cf years into the future. The NRC agreed in principle to such en "IIS" in August 1982, but rejected the schedule Edison initia'_17 preposed. Ecth the scope of requireB backfits and the schedule for i=ple=enting the =edifications to be required were under discussien at the ti=e of the staff's =otion.
Edisen hired an outside consultant so=eti=e in 1983 to evaluate Edison's licensing strategies and technical approaches to
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resolve NRC backfit requirements. Torrey Pines Technology, a division of GA Technology, cc=pleted the analysis in June 1983 and concluded that Edison's approach was " reasonable" and " consistent with that used by other utilities operati.ng nuclear plants."
CII 83-10-02 ALJ/vd1
- ssues referred to Subsecuent Phases of OII The following reasonableness issues, of necessity, could net be explored within the li=ited hearing time alloted to the initial phase of this proceeding and are deferred to subsequent phases:
- 1. Was Edisen's failure to retain the griginal design calculatiens and verk papers which =ay have de=enstrated that FONGS $
was constructed to its original 0 5g seis=ic design standard i= prudent?
- 2. Did Edisen act reasonably in chocsing net to divert staff frc= its C.6?g reevaluation progra= to de=enstrating the plant's 0 5g capability?
3 Should Edison have known in the su=cer of 1982 thet they would be unable to co=plete backfit work to 0.67g'by the end of 1982 and =igh: therefore =ake better use of engineering staff de=enstrating that SONGS 1 was constructed to its original intended 0 5g seis=ic standard?
- 4. Wss it reascnable for Edisen to reduce seis=ic reevaluatien efferts in Nove=ber toS2 and ter=inate them altogether in August 10E3? ,
5 Was the alleged reduction in the scope of backfit werk required for NRC approval to restart SONGS 1 cost-effective when
! cc= pared to the incre= ental replacement fuel costs which were incurred as e result of the prolonged negotiations between Edison and the NEC which were required to achieve the alleged reductien?
- 6. Were the replace =ent fuel costs assessed during the extended outages reasonable?
Icsues Censidered Here
- 1. For restart of SONGS 1, the work remaining to'be done, the osti=ated date of co=pletion, and the estimated costs of such work.
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- 2. For long-ter= codifications of SONGS 1 needed to meet NRC require =ents, the scope of the work to be done, and the projected ecsts of the codifications.
3 Whether it is econo =ical and beneficial to ratepayers for restart work to be completed.
- 4. Whether it is economical and beneficial to ratepayers for icng-ter: plant =odifications to be ec=pleted.
5 Whether respondents should be prohibited frc= =aking any
=cdifications te SCMGS 1 not needed for restart, until the Co==issien finds such =cdifications are ecst-effective.
- 6. Whether SONGS 1 will be used and useful for future cperations.
- 7. Whether the Cc==ission should recove SCNGS 1 frc=
respendents' rate base. .
Res;cndents' Ividence As Idisen is responsible for the operation of SONGS 1, respendents' principal' evidence was presented thrcugh Idisen's witnesses. 51G&I's witness testified to the effect that, as 1* had little centrel cver the cperating decisions that preceded and fc11cved the shutdown cf SCNGS 1, SDG&I shoul,d not be penalized fer delays in restart er pessible cost overruns.
Exhibit 1 in this proceeding is the compliance report directed te be filed in the OII. That document reported in detail the status of the verk being undertaken at SONGS 1 for restart and to fully =eet NEC requirements, among other catters.
Witness ?cearty (Exhibit 2) presented an update of that report describing the current status of SONGS 1. According to the witness, it is Idison's expectation that SCNGS 1 will return to service on January 1, 1985 The witness testified that Edison had reached agreement with NRC as to the work necessary for restart and the criteria under which vork will be perfor ed. Edison esti=ates
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0 I 83-10-C2 AIJ/vd1 that ne plant =odifications necessary for restart can be ccepleted fer $37 5 millian, in addition to that already spent ($30 =illion allocated to Edisen and $7 5 =illion ellocated to SDG&I).
EssentiMiy the work needed to be co=pleted for restart is the ceistic i=preve=ents necessary te achieve the 0.67g Houser respense cpectra. Witness yegarty believes that SONGS 1 Will fully =eet NEC ce scic standards upon ec=pletion of the =cdifications preparatory to res* art. As there is full agree =en* abcut the scope of *he work to be dcne and the cetheds to acce=plish that verk, the witness believes there are no substantial i= pedi =ents to co=pletion of that work by January 1, 1955 Operations fclieving the January 1, 1955 restart wculd be li=ited by NE: te ene 1S-=enth fuel cycle (there is a 15-=enth supply in the ec e at this ti=e), after which respondents vculd have te pe #--- #" *her =cdifications required under SONGS 1's !IS schedule.
The ec=pliance repcr -(Ixhibit 1) contai'ns a "guessti=ste" of $400
=illien te ec:plete all ef.the additional plant =edificatiens
- endsted by NE:. T'is r nu:ber was reduced te "less than $20C tillicr" by the witness after further review. The witness testified that Edisen is ccnducting engeing nogetiations with NEC cencerning the eccpe and criteria fer perfor=ing the additienal work to be done te upgrade SONGS 1 to current NEC standards. The pest-hearing infer:atien furnished by Edisen to counsel as e result of questiens of the witness indicate that the $200 million figure is based en the revised I;S pregra: (late-filed Exhibit 12) and additional ILS costs (late-filed Exhibit 14). The difference between the current $200
=illion figure and the prior $400 =illion "guessticate" assertedly results fro = the following factors:
- 1. A clearer definition fro = the NEC regarding the scope of the backfit work and anticipated negetiatiens with the NEC to reduce the scope of the backfit work based on industry
- experience has allowed Edison to better
OII 63-10-02 ALJ/vd1 esti= ate the cost of the backfit work that will be required.
- 2. Items from Table 3 of Edison's response to the OII are restart items and are not included in the revised $200 million figure.
3 Item 8, " Purging and Venting System Valve Replacement and Debris Screen" of Table 5 of Ediscn's response to the OII has been evaluated as not needed and thus is not included in the "less than $200 million" figure. The recaining ite=s from Tables 4, 5, and 6 are included in the "less than $200
=1111on" figure based on anticipated scope reductions.
- 4. Inclosure 1 of the letter from Mr.
Kenneth P. Easkin to Mr. H. R. Denton, dated February 27, 1984, provides the revised IES (late-filed Ixhibit 12). The items listed in Table 4 of Edison's response to the OII that are not included in the enclosure of the letter are as follows:
- Table 4 -
Ite: N5. Descri;tien 2 Fire Protection Appendix R Safe Shutdown Modifications.
5 Diesel Generator Fans Auto =atic Leading.
6 SIS Annunciator Window Engraving.
8 Control Room Habitability, EVAC Upgrade.
10 Syste= Voltage Degredation 4 kV Undervoltage Delays.
11 ECCS Single Failure Upgrade.
12 Nitrogen Supply for PORVs and FCV 1115 D, E, & F Safety Upgrade.
16 Environmental Qualification of Electrical Equipment.
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CII S?-10-02 ALJ/vd1 The 2:cpe Of Table 4, Items 5, 6, e, 10, 11, and 16 are under negetiation with NEC and are to be resolved as part of SONGS l's ILS pregra=. Therefore, the $200 =illion figure for co=pletion of NRC backfit ite=s does not reflect all of the possible costs which may need to be incurred over the re=aining life of the SONGS 1 plant.
Extensive cross-examination of Fogarty concerned the reasons that restart dates were furnished which had not been met and the underlying reasons for the failure to =eet such co==it=ents. The respenses to these inquiries indicated that Edison was aware that a fir: startup date could not be advanced because it did not know precisely what plant =odificatiens were required to meet the revised FEC seis=ic require =ents. Cn February 8,1984 (after the hearings in the initial phase-cf this proceedin? cere announced) the NRC issued its letter te Idisen agreeing on the criteria applicable to the ceis=ic =cdificatiens nee'essary to return SONGS 1 to ner=al cperations. 3ased en that letter, Edison'new believes a startup date of rece=ber 31, 1954-is'reasenably certain.
Idisen's witness Caniels presented in Ixhibit 5 an evaluatien cf the ecenc=ic viability of the restart and centinued operatien cf SCNGS 1, using a " break-even capi *al ecsts" method. The witness defined that ter= as the maxi =u: capital expenditure that can be incurred for the restart and continued operation of SONGS 1 over t its re=aining useful life while remaining ccet-effective to Idisen's ratepayers when ec=pered to obtainin6 firm capacity frc= other cources. The analysis applies to the maximum capital expenditures that can be econe=1cally justified subsequent to restarting SONGS 1.
Edisen's estimated SONGS 1 break-even capital ecsts ossu=ing capacity factors of 50, 65, and 80% are as felleve:
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OII S3-10-02 ALJ/vd1 .
Table 1 SCNGS 1 Break-even SONGS 1 Capacity Capital Costs Factor (Present Value S1984 !?
(Millions) 50% $150 655 S??5 20% 3520 Edisen has prc'ected that SONGS 1 vill operate at a capacity factor of 657 over its re=aining useful life. Consequently, Edison asserts that it can incur up to $335 million in capital expenditures for plant =edifications contained in the ILS while maintaining the cost-effectiveness to Idison's ratepayers of the restart and continued cperatiens cf SONGS 1.
. Late-filed Exhibit 14 contains Edison's esti=ates of backfit expenditures for each of the first three refuelinE cutaEes f:11cving SONGS 1 restart, as fellows:
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'0II E!-10-02 ALJ/vd1 Table 2 Southern California Edison Co=pany Esti= ate of IIS 3ackfit Expenditures for Each of the First Three Refueling Outages Following SONGS 1 Restart Capital Costs **
3ackfit Prefec*s* Cycle II+++ Cycle I'** Cycle II*** Total T.*ree-Mile Island S 24 M c difi ca t ier.s 14 2 Enviren= ental Cualification 4 7 0 11 Fire Prctection 2 4 0 6 Syste=atic Evaluatien 12 15 14 41 Progra=
Tetal 32 28 22 62 Frejected Additienal ILS Cests - . Less than 100 03:a1 fer :LS :ntegrated ~
3ackfit Fregra-Less than 200 Netes:
- ters identified in Enclosure 1 ef Edisen's letter cf February 27, 1984. Late-filed Exhibit 12.
- Cests shown in =1111cns of undiscounted 10F4 dollars.
- ?;anned outage dates are set forth in Enclesure 2 of Edison's letter of February 27, 1984. Late-filed Exhibit 12.
Edison states that the ce=ponents of the S200 =illion figure are shewn fer infor=ation as the exact level and pattern cf sponding cannet be forecast with accuracy. Edison believes that the svara11 rasult vill be lecs than $200 =illion.
Based on the results of its cost analysis, Edison concluded that the restart and continued operation of SONGS 1 is cest-effective to Edisen's ratepayers. Based on its projected capacity factor for the re=aining life of SONGS 1 and its esti= ate of capital expenditures of less than $200 =illion necessary for co=pleting
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codifications related to the ILS, Edison stetes that its confidence in its conclusion that SONGS 1 operation is economically viable is evidenced by its decision to proceed with returning SONGS 1 to service by Dece=ber 31, 1084.
Idisen's witness Fegarty testified that SONGS 1 has os'tablished an exe=plary operating record over its lifetime. As S 3&I's Eaney testified, the plant has provided afgnificant benefits te *he ratepayers and is expected to centinue to provide energy at beneficial ecs: te the ratepayers. Apart frc= strict econo =ic benefits, Fogarty indicated certain noneconomic benefits of returning
- SCNGS 1 te cperatien. Reductions in the emission of sulfur dicxide, nitrous exide, and hydrocarbons is a benefit to all persons residing in the air quality-sensitive Southern California region. The witness asserted that the goal of a reliable power system performance is also enhanced by =aintaining a mix of generatien sources including SONGS 1, as such a =ix lessens reliance upon unstable foreign oil supplies.
S;G&I pres _ented testi=eny by Haney explaining the utility's pcsitien. SOG&I is cpposed te re=oving SONGS 1 free its rate base because SCNGS 1 has provided useful service and is expected to provide future useful service. Even if the unit were not returned to service, SOG&I believes continued rate base trDatment should be considered because of past benefits to ratepayers and because of the financial i=plications on SDG&E of this and other issues before the Coc=issicn. The witness explained that removal of SONGS 1 frc= rate base will negatively i= pact SDG&I's financial pcsition when considered in conjunction with the Tesoro fuel oil adjust =ent and disallowed construction costs for SONGS 2 and 3 According to +he ;
vitness, if the Commission were to reach adverse decisions in all of those prcceedings, the result could be potentially disastrous for SOG&I.
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O!! 8?-10-02 AIJ/vd1 S nff Iv:dence Staff evidence was presented by witnesses Randhava, long, and Czahar'. The prepared testi=ony of witnesses Randhava (Ixhibit 7} an' Long (attached Exhibits 8, 9, and 10) was prepared in advance cf the hearing and attached to the staff motion. The prepared testi=eny of witness C:ahar was prepared following.Idison's direct in presentatien and centains recc==endations and conclusions based, parc, en Idisen's presentatien.
Witness Randhawa Witness Randhava testified that (1) operation of SONGS 1 is new uncertain because cf NRC concerns regarding the plant's seis=ic safety and because the verk necessary for restart has not been fully defined, (2) Idison had not conducted any ecst-effectiveness study on restarting er backfitting the plant to acccccedate the NRC mendsted plant =edificatiens, (3) Idisen had not completed its* negotiations with NEC en its restart,and integrated badkfit schedule, and (4) it will take Idisen approxi=ately cne year to =ake necessa.y plant
=:difi:sii r.s.
3ased en the above, Randhava recc== ended as fc11cvs:
. The Cc==ission shculd re=cve songs 1 frc=
rate base.
- 2. Idisen should be directed to record ownership cost of SONGS 1 in a deferred acccunt.
3 Idisen should not be allowed to recover cwnership costs free rates.
- 4. Idisen should be alleved to recover in rates mil expense: ncccc nry fer SONGS i cpera*ier and maintenance during the shutdown period and should be allowed to recover decommissioning expense.
5 If and when SONGS 1 resu=es co:cercial operation, Edison ebould be authorized to include SONGS 1 in its rate base along with all reasonable costs incurred for necessary capitalized modifications.
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- 6. Idison should be requirid to seek our approval for performing any retrofit work not required for restart and for any retrofit work in excess of $37 5 =illion for restart.
- 7. Idison should be required to de=enstrate the cost-effectiveness of the proposed
=edifications.
Rece==endatiens 1 through 5 also apply to SDG&I.
V!: ness long Witness Leng presented testi=eny concerning the =anner in which the deferred account =echanis= should be acce=plished.
Long recc== ended that the SONGS 1 capital costs currently in rate base should re=ain in the appropriate plant in service account (FIRC Acecunt 101), but should be excluded fro = rate base en the grcunds that the used and useful criteria does not apply because of the uncertainty surrounding the 'f'uture use of the unit, as discussed by Randhavn. He stated that this position is similar to the trea =ent adepted by this Cc==ission for PG&I's Eu= bold: Eay
?cwer Plan: Unit 3 (hu=boldt). Eu= bold
- was shut down in 19*6 fer refueling and was never relicensed by the NFC. The Cc==ission ordered the re=cval cf Hu=beldt fro = Pacific Gas and Ilectric Cc=pany's (PG&I' rate base in D.91107 dated Debe=ber 19,1979 (2 CPUC 2d 596' and alleved PG&I to accrue the carrying costs associated with the plant in a =e=orandu: account. The witness stated that SC"GS 1 ie in a si=ilar situation to that prevailing for Humboldt at the ti=e of D.91107, in that there is currently no clear indication as to when. if ever. SONGS 1 vculd return to service.
According to Long, the reco== ended rate treat =ent dees net deprive Idison of the opportunity to ecllect carrying charges cssociated with SONGS 1, but rather places the co=pany on notice that until the future of the plant is clarified, Idison's custo=ers will not be required to pay a return on a plant which might never operate again en a co==ercial basis.
,m
O!I 03-10-C2 AIJ/vd1 Icng reccc= ended that Idison should be allowed to continue recovering in base rates all operation and maintenance expenses necessary to keep SCNGS 1 in operation while shutdown, including an allevance for the accrual of decommissioning costs; the disposition of ether evnership costs (carrying cost of the plant) should be deter =ined enly after the future of the plant as'a. generating rescurce has been deter =ined. Thus, that portion cf Edison's return en rete base assceinted with SONGS 1 currently being billed by Edison cheuld be deleted frc= base rate revenues, and carrying ecsts at the a11cwance of funds used during construction rate should be charged to a cubacccunt in the ciscellaneous deferred debits account (FIRC Account 186). F.ecovering any of the accrued carrying cost should be predicated upcn the final disposition of SONGS 1 and recevery of the accrued ownership ecsts in Acccunt 186. The foregoing recc::endatiens also apply to SDG&I as a minority partner with Ediscn in SCNGS 1. ,
The speciffe crdering paragraphs to acec=plish Leng's recc::endatiens are set forth in Ixhibi* 19 l
Icng's Exhibit 9 shews the revenue effect cf his prepospi, as set forth in the fc11cving table: .
i I
I r
. I f
e l
OII 83-10-C2 AIJ/vd1 ..
Table 3 SCNGS Unit 1 Ownership Cests Re=oved froc Rate Base Calendar Year 1984
( .*000 )
FrG&I Idisen Ca'_ifernia Jurisdictional Rate Base -
(Ixcluding Working Cash) 552,924 5159,165 Rate of Return 12.82% 12.65%
After Tax $6,'85 S20,1?4 Not To Gross 1.6937 1.6577 Grcss Revenues $11,492 333,?76 Distribution Accunt Distributien A ccu r.
IRAM Iffects Collected in January 9 01% $1,035 8.28% S2,764 Cc11ected in February 8.40 965 7.82 2,61C Total Cc11ected in Rates 17.41 '
2,000 16.10 5,374 A cunt to Adjust IRAF. ~
3ase Rates 82 59.4 $9,492 83 9C% E25,CC2 long testified that his proposal vould be fair because it would allcw a carrying cost during the period of reconstruction to SONGS 1 prior to its return to service; the stockholders would recover the same type of carrying costs associated with other plan-prior to its entering service; and the ratepayers would not be required to pay any costs of ownership until after SONGS 1 was operational again.
Witness Czahar Witness Czahar's conclusions and reccccendations are different from Randhava's and Long's.
OII S3-10-02 ALJ/vd1 ,. ,
The witness testified
- hat it appeared to hi= that a Cee;sicr. by us en whether to exclude SONGS 1 frc= rate base depends, in part, on how soon SONGS 1 vill be restarted if it is econc=ical to de so.
3ased on his review cf the testi=ony of Edisen's witnesses Omniels and Fogarty, the co=puter =cdel used te calculate the ,
ecenc=ic analysis prepared by Daniels, and the avoided cost assu=ptions assu=ed by Daniels, Czahar reached the following cenclusiens:
~
- 1. There are two distinct decision dates, that is the i==ediate decision concerning the incre= ental invest =ent of $37 5 =1111on for restart on Dece=ber 31, 1964, and
- 2. a decision date in =id-1986, at the end of the.15-=cnth operational period under the fuel now in the reactor core. (The plant would be operable until April 1986 if restert began Dece=ber 31, 1984 or before.}
The witness presented a calculatjen of the increcen*al Ocets ar.d benefits *a Th sen's ratepayers if it expends an edditienal 0?C =1111 n (its sha.e of the $37 5 =1111on esti=ated incre= ental restert c e s t .' and restarts SCNGS 1 er January 1, 1965, as shown bolev: .
i t -
20 -
l l
CII 83-10-C2 AIJ/vd1 l Table 4 Analysis of Idison's Incremental Costs i and Eenefits of Restart of SONGS 1 i on January 1, 1985 (Millions)
Total Incre: ental Operating Cests 1985 1986 N?V 1/1/85 C&M Ixpenses $27.1 $19 2 $39 2 A&3 6.5 43 0.2 Payrell Taxes O.4 0.4 0.7 "uclear Fuel (655 C.F.) 13.6 '3
. 1".7 Total Incre= ental Costs $47.6 S 3 12 566.8 Incre: ental 3enefits Avcided Cests -(CIR 2) 5136.6 $78 9 2182.8 No 3enefit .
$116.0" .
The witness stated that, based en the above, ratepayers veuld be better eff by 2116 cillion in net present value (NPV) revenue recuire=ents'. Using Idison's 1 35 conversion factor used to eenvert N?V revenue require =ent to capital expenditures, $116 rillien cenverts to e maximu= expenditure of 586 million. Therefore, in his epinien, $30 =illion of increcental expenditure appears to be well within the range of net benefits produced by running SONGS 1 for 15 cenths, even if the plant is abandoned after the unit is brought down for refueling. If a 50% capacity factor is assu=ed frather than the 655 capacity facter in the above table' the NPV of nuclear fuel ecsts drops $4.1 million and avoided cost benefits drop S42.2 million, for c net decrease in benefits of $38.1 million. Dividing by 1 35, the
=axicu= justifiable capital expenditure is decreased to $28.2 million. Therefore, the maximum acceptable incremental expenditure veuld be $58 million, assuming an achieved capacity factor of 50%
during the period January 1, 1985 through mid-1986.
- 21 -
~
OII 83 ,10-02 AIJ/vd1/dg Witness'Czahar concluded that an additional $37 5 million expendituretobringSchGS1 on line by January 1, 1985.is justified, banod on Idison's esti=ates; should those esti=ates prove to be overly opti=istic, ratepayers could be harmed if the net plant bcInnee were to continue to earn a return beyond the date of this order. The witness, therefore, reco== ended we give' respondents a choice. Either utility could elect to earn a return subject to i refund until January 1, 1985 on the estimated $?O =1111on fer Idisen and 37 5 million fer SrG&I expenditure and related construction work
- in progress if SONGS 1 is running at full power on January 1, 1985.2 If that startup date is =issed, respondents would begin i accruing (en January 1, 1985) a liability equal to each utility's average short-run avcided cost. The maximum accrued liability would be equal to the revenues cellected on SONGS 1 fro
- Jannary 1, 1984 through Dece=ber 31, 1984, and that accrued liability would be refunded te
- tepayers. The witness esti=ated this maximu= liability to be $?O
=1111 n fer Idisen.
' In the alternative, either respenden cculd elect to re=cve SONGS 1 net plant frc= rate base and accrue interest at the sa=e rate as the AyUDC until SCNGS 1 operations resu=es.
The witness stated that he believed the choices were beth realistic and fair; should respondents chocse to continue to include SONGS 1 in rate base, the risk of delay veuld be borne by stockholders, net ratepayers.
2 The witness reco== ended that the Co==ission adopt a criterien fer operation at .'ull power of 200 consecutive hours as =eans of demonstrating that SONGS 1 is operating at full pcVer, or, in the
-'tornative, SONGS 1 would achieve an average capacity factor of 65%
er a 30-day period.
l OII 83-10-02 AlJ/vdI/da / val
- Czahar also rece== ended that additional expenditures subject to rate base inclusion when SONGS 1 is restarted and brought back to full power be li=ited to $37 5 =illion, plus accrued interest at the AFUDC rate. Any amount expendec cbove such li=1t vculd continue to accrue interent et the A7"00 rate until a deter =ination is =ade whether to per=it invest =ent of additional funds of IIS after the =id-1986 shut down for refueling.
The witness included in his analysis in Ixhibit 11 two schedules which atte=pt to quantify the long-run operating risks should SONGS 1 net operate until 2003 (the end of its current license period). These analyses shev, for exa=ple, that if ILS capital oxpenditures were $200 =illion, SONGS 1 would have to stay on line until 1991, assu=ing a 65% capacity factor, and 1995 assu=ing a 50f capacity factor. The witness rece== ended that ILS expenditures should net be per=itted to approach =axi=u= a=ounts without guarantees that ratepayers vould not bear the full risk for perational failures.. l Pceition of Parties On Issues in Initial Phase The position of parties are as follows:
Staff
- 1. The Cc==ission should order SONGS 1 to be re=oved frc= rete base. Exhibit 19 contains the specific ordering provisions for acco=plishing this.
- 2. In the alternative, SDG&I and/or Idison should have the option of centinuing to earn a return on the plant until January 1, 1985 If the plant does not go into service by then, the ec=pany choosing that option would accrue liabilities (see staff witness Czahar 's Inhibit 11, A.9) .
OII 83-10-02 AlJ/vd1 -
3 The Co==issien should per=it Edison to continue work designed for restart of SONGS 1. Idison has esti=ated the cost of that work to be $37 5 =il:fon (Exhibit 11, A.9). At that cost, the ver2 ic beneficial to ratepayers even if the plant only operates for an additional 16 =enths and then closes (Exhibit 11, A.7-A.9). Any a=cun exceeding that would not be included in rate base upon plant rectart, until it was deter =ined whether te invest additional in centinued plant cperation (Ixhibit 7, A.8 and Exhibit 11, A.9).
- 4. The Cc==ission shculd order Idison and SEG&E to file a ec=prehensive analysis of the cost benefits of further long-ter:
=cdificatiens (these net needed for restart) to SONGS 1. The analysis should be filed only after the NRC has defined the scope of
~
verk required fer future =edifications.
5 Idisen and SOG&I should be prohibited in =aking any
=cdifications :: SCNGS 1 net needed for restart, until the Cc==ission finds the such = edifice.tiens are cost-effective.
~ '
Idiser Idis:n asks the Oc==issien te find:
- 1. SCNGS 1 vill be returned to service in a reasenable ti=e.
- 2. SCNGS 1 is used and useful. -
3 Mcdificatiens necessary for the restart and centinued cperatien of SCHGe i are ecst-effective and in the best interests of Idisen's ratepayers.
e-n.-
..sc t
- 1. SONGS 1 should remain in rate base, as both staff and Idisen have shown that is cost-effective and beneficial to the ratepayers te restart the unit, and as Edisen and the IGC have reached agree =ent on the work necessary for restart, eli=inatin6 provicus " uncertainty."
6 k
I
- 2t - .
1
C!I'83-1C-C2 ALJ/vd1
- 2. Ratepayers have benefited and will continue to benefit from cperatien of SONGS 1. Ecwever, if the Com=ission considers removal-cf the unit from rate base, it should provide respondents the options effered by staff witness Czahar, modified to provide for carrying costs at the authorized rate cf return rather than the inapprcpriate A?U:0 rate. .
. ur .
- 1. The Co==ission should issue an order re=oving all ownership and cpe.ating costs of SONGS 1 frc= the rates of Edison and SDG&I.
- 2. Edisen and SDG&E should be ordered to file applications to abanden SONGS 1 seeking recovery only of reasonable costs associated with the plant.
?. !f the Co :ission rejects nu=ber 2. above, all costs associated with SONGS 1 should be placed in memorandum accounts with the stipulation that neither Edisen nor SDG&E shall be allowed te reccrd any carrying or AFUDC costs in the' account.
~
- i.
- ::ediate-y re=cve SONGS 1 free the respendents' rate bases.
- 2. Make all future SONGS 1 modifications subject to prior Cc::issien approval after respondents sub=it a, cost-effectiveness etudy as suggested by staff witness Randhava including:
- a. Preli=inary enE i neering work.
- b. Design work and engineering studies (all based upon NRC approved criteria and factors).
3 ' Keep all currently completed or in progress =cdifications cut Of rate base until the above decision is made.
City
- 1. SONGS 1 should be recoved from the rate bases of Edison and SDG&I until SONGS 1 is restarted and operating at 00% of full pcwer.
I
DII 83-10-02 AIJ/vdl
- 2. Record the ownership costs of SONGS 1 in a deferred or
=e=orandum account.
3 Require Edisen to seek Cc==ission approval to perfor= any retr: fit vcrh ::t required fcr rcotart and fcr any retr: fit scrk in excess of S37 5 =illion for restart. .
- 4. Ecid additional hearings to deter =ine to what extent rates shculd be adjusted to reflect changes in depreciation expense, cperating and =aintenance expense, and tax expense.
5 Ecid additional hearings to deter =ine the accounting and rate =sking treat =ent for the stea: generater repsirs at SONGS 1 authorized in D.82-12-055 Diecussi:n The felleving discussion covers the issues raised in the staff's =ction and addressed in the initial phase of this proceeding:
Is SCNGS 1 "Used and Useful" Several ef the parties urge that SONGS 1 should be re=cved f.c= rate base 'cr the plant shculd be abandened? cn this basis that S ON:-S is nc 'enger used er usefu'. Staff witnesses Randhave and long d av an analcgy betweer the conditiene at Hu=beldt when PG&I's plant was .e=cved frc= rate base in D.91107, ahd conditiens existing e.: SCNGS 1, and ask that the sa=e rate treat =ent be accorded SCNGS 1.
D.91107 recites the following. Hu=beldt had been shut down for three years for refueling and seis=ic =edifications. NRC had refused to authorize resu=ption until seis=ic verk was ce=pleted.
J.91107 (2 Cal 2d 596 at 624 and 625) states as follows:
"PG&E's showing in this proceeding, with regard to Humboldt, was far short of convincing. The
'testi=eny and crcss-exa=ination not only failed to support PG&I's conclusion that the facility veuld be back 'on stres=' during the 1980-81 period, but also raised serious doubt as to whether it will ever resume co==erciel operation. Humboldt has now been shut down for three years, and continues to be plagued by a l
i .
OII 83-10-02 AIJ[vd1 ,
Variety of preble=s. During this period, PG&E rates'have been set upon the assu=ption that Humboldt was te=perarily out of service, but continued to be 'used and useful' for utility operatien. In view of the great uncertainty that is now apparent with respect to when, and in fact if ever, Hu=beldt will resume operation, it is no lenger appropriate for PG&E's ratepayers to shoulder this eccnomic burden. We are, by this decision excluding Humboldt from PG&I's rate base.
"Until the future of the plant is clarified, PG&I shall record all capital costs associated with the f acility in e =e=crandum account lus rece== ended by the staff. We caution, however, that any additional capital expenditures on Hu=boldt will be viewed by this Commission critically, and will be made entirely at the ec=pany's risk.
"In the interests of public. safety, we will allev PG&I to recover on-site =aintenance and operating expenses fer the present time. ,We are, however, crdering PG&I- to conduct a thorcugh review of the future ec==e-cial pctential of the plant and to i
sub=it to *he Oc==ission, within 6 months' ti=e,
! a repcrt de=enstrating why the Cec =issien should no disallev all expenses which could have been avcided through earlier decoc=ission,ing."
There is not a direct pe.rallel between SONGS 1 end Hu=beldt, as stated by staff witnesses Randhava and Long. While ,
there has been a long cutage at SONGS 1, there appears to be a reasenable indicatien that SONGS 1 will resume operations. The evidence indicates that Edison and NRC have reached agreement on the entent nnd ncture cf the seis=ic and other plant modifications that
=ust be completed for restart of SONGS 1; Edison has provided an esti= ate of the additional cost for such modifications; and Edison nas furnished an anticipated startup date based on the agreement.
The evidence indicates if the estimated additional costs of $?7 5
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OII 63-10-02 AIJ/vd1 rilien are not exceeded and SCNGS 1 restarted on the anticipated date, the startup and operation cf SCNGS 1 through the initial -fuel cycle after startup will be beneficial to respondents' ratepayers.
Absent centrary evidence ve will conclude that SONGS 1 will be cperative on the anticipated date and under the conditions assu=cd by Edisen. Therefc.e, we cannot categcrically find that SONGS 1 will net be used and useful in the future. Iowever, because the plan
- has nc Ope ated ever a icng period of ti=e, and as Edison has furnished us ne gua.antees cf future operation under the conditiens it assu=es, it is enly reasonable that we exercise our regulatory duty to Idison's ratepayers by previding for ratepayer protection in the event SONGS 1 does not return to operation upon the date and under the conditiens assu=ed by Edison.
Sased en t'he foregeing, we will not adept TURN's proposal that respendents be directed te fil'e applications seeking abandon =ent of SCN35 1. As explained abcVe, the reccrd indicates that ratepayers vill tenefit frc= restar: Of SCNGS 1 (at least thrcudhitsinitial'5
=enths of Operatien), if additional =cdifica*ien ecs:s a.e held ic these esticated by Edison, and SONGS 1 is restarted on the anticipated date cf January 1, 1085 '
The staff and other parties argued that, as FOUGS 1 has been cut of service fer several years and e,s it will not operate befere January 1, 1085, it is net currently used and useful; therefore, SCNGS 1 shculd i==ediately be re=oved fro = rate base. We do net agree that SONGS 1 should be re=cved from rete base for that i=&scn.
The evidence shows that the principal reasen for the long chutdcwn is the need to conform the plant to NRC's current seis=ic ;
standards. The difficulty experienced by Edison in ec= plying with l 4
NP.C's seis=ic regulations were primarily a settle =ent of the extent l l
l l
OII S3-10-02 cg . ,.
l of and criteria for the work that would meet WRC's current standards.
- 1. nose standards are more stringent than the JiRC standards ia effect when the plant was built. Similarly, backfic modifications for Ti!I and fire protection are = ore stringent standards than those under which the plant was built. We would have to find that Edison failed in its duty to the public in keeping the plant idle while it and the NRC were reaching agree =ent on these issues in order to fina justified the're= oval of SONGS 1 from rate base oecause the plant is not currently in use. Certainly it is in the public interest that !
nuclear power plants attain the highest degree of safety. Therefore, the extended plant outage necessary to achieve that high safety standard was not inappropriate .
Conditions for Initial Startup Staff' witness Czahar proposed two options with respect to initial startup. One option would.per=it respondents to elect to recove their portion of SONGS 1 from rate base and to accrue an allowance for AFUDC until full power SOSGS 1 operations resu=e.
SDGLI argued for r6tention of this option.
i The other option would permit respondents to earn a return on SONGS 1 subject to refund until January 1, 1985, subject to a cap on codification costs and a repay =ent feature should SONGS 1 fail to begin full power operations (200 consecutive hours at 90% of capacity or 30 days' operation at 657. capacity) by January 1, 1985. This option would provide Edison a reasonable opportunity to bring ene plant back on line on a timely basis at its anticipated cost. If the ti=ely startup does not occur, or if estimated costs are exceeded, Czahar's proposal protects respondents' ratepayers.
The plan is fair to Edison, as Edison's witnesses testified that Edison fully expects to meet all the conditions i= posed. We will make one modification, however, to give the Commission some flexibility in the startup date, particularly as it may affect the future capacity level of plant operation. For good cause, the Co==ission may extend the January 1, 1985 startup date for up to one additional month.
.- n-. --. . ,. --.,-.-,.,,,.2 - - - - - . - , . -
OI! 83-10-02 cg .
We cannot agree with SDG&E arguments concerning the possible cu=ula:ive eff ect .on earnings and cost of capital of what it perceives te be adverse decisions in this, SONGS 2 and 3, and its Tesoro proceeding.3 While SDG&I does not control the operation of SONGS
, it is an active partner in that plant and has reaped the benefits of low-ecst energy produced by SONGS 1. SDG&I's ratepayers should boar no greater risk for failure of SONGS 1 to cporate en a ti=ely basis than Idison's ratepayers. If SDG&I elects to place plant I invest =ent ecs s in a =e=crandu: account, that account shculd be subject to the icver AFUDC rate rather than SOG&I's rate of return.
We vill authorice respondents to elect either of the above optiens inas=uch as SDG&I =ay wish to act differently fic: Idisen.
Conditiens under which ILS Medificatiens =ay be Made The record is not clear with respec* to the ecst-effectiveness cf future IIS =edifications. Idison and NRO have not rasched full agree =ent on.the. scope of the'=0difications necessary te teet current NRC standirds. *he record indicates that agreed-te !!E
=cdificatiens vill be less than $2CC =illien, but the secpe cf sc=e
=cdifications have not been defined and these costs will be in
, additien to the S2CC =illion figure. Mereover . subsequent events =ay require additienal =cdifications unknown at this ti=e.
It appears that the agreed-to IIS =cdificatiens cesting less than $200 =1111 n vill be ecst-effective over the expected ro=aining life of the plant, but = ore infor=atien is required to ccefirm the initial infer =ation shevn. Under staff witness C:ahar's propesai, we veuld pass on the ecst-effectiveness cf additional :15 '
=cdificatiens after restart, but before costly IIS changes are 3 Ve take official netice of the fact that SDG&I's bond, debt, and
- cek issues were accorded higher ratings by Moody's Investors bervice, Inc. and S.andardt & Poor's Corp. on April 3, tost.
CII 83-10-C2 ALJ/vdl - !
actually cade. This prograc will give us continuous oversight over SONGS 1 operations, will encourage Edison to reach pro =pt ag'reement with NRC concerning the scope and cost of future ILS changes, will per=it us to pass on such expenditures before they are made, and will
=ini: ice rntepayers' expceure resulting frc= excessive =edificatien ecsts or prolonged shutdowns.
Therefere, we will gdopt a program unde'r which we will erder respendents to file a ec prehensive analysis of the IIS
=cdifications te SONGS 1 (those not needed for restart,'. This analysis shculd be filed prior to commencing IIS or other codifications te SONGS 1 (other than those necessary for restart or underway on the effective date of this decision) and should reflect the scope of the work required for future modifications as defined by the NRC. Respendents will be prohibited frem earning AFUDC or including in rate base any codifications not needed for restart until we find that such =odifications are cost , effective. ,
- nterested parties (other than TURN} agree with the forescing. C'.'EN weuld have all costs associated with SCNGS 1 placed in =e:crandu: acccunts without provision for those accounts earning ct respendents' rate of return or AFUDC rate. We do not believe that cuch treat =ent is fair to respondents' sharehelders nor necessary te protect respondents' ratepayers. Such teatment would re=ove any
- incentive for respondents to return SONGS 1 to full operation and, i
thus, =ay precaturely recove an economic resource beneficial to Califernia electric consumers.
F__indings of Fact
- 1. SONGS 1 is an electric power generating facility jointly owned by Edison and SDG&E. Edison owns 80% and SDG&E owns 20% of the facility. Edison is operator of the facility.
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OII S3-10-C2 ALJ/vd1
- 2. SONGS 1 has been out of service since February 22, 1982.
At that ti=e, the decision was =ade by Edison to shut down the unit ic ec=plete NRC backfit =edifications relating to seis=ic, TMI, and fire protection modifications.
3 Cn Octcher 15, 1953, we instituted this preceeding to investigate the uncertainty with respect to when SCNGS 1 would resu=e ner=al ec==e.cial operation to deter =ine whether the unit shculd re=ain ir rate base.
- a. The CII in this preceeding directed respondents to file a report which explained the current status of SONGS 1, including respenses to questions propounded in the OII. That report, filed by Idisen en Neve=ber 14, 1983, was received as Exhibit 1.
5 On February 1, 1984, the staff filed its =ction to re=cve SONGS 1 frc= the respondents' rate bases. The staff =otion recc== ended expediticus hearing for 'the purpose of censidering its
.trer esal. .
- 6. Public hearin's was held, li=ited te issues raised by the staff =ct en, at which respondents, staff, and interested parties had c;pertunity to appear and be heard. The evidence showed the fc110 wing. '
- 7. As a result of engoing seis=ic evaluations, certain
=cdificatiens had been identified as necessary to =eet the NRC's .6?g criterie and Idison intended to perfor= these seis=ic cedificetiens during the cutage.
- 9. In July 1982 the NRC issued new guidelines fer seis=ic
- 15 cie different frc= the criteria Edison had been using. As a l
result Idison decided to slow the seis=ie field work until final resciuticn with the NRC was achieved.
9 On February 8, 1984 the NRC agreed by letter with the criteria proposed by Edison for restart.
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O!I'83-10-02 ALJ/vd1
- 10. Having reached agree =ent with t'he NBC, Edison estimates that it is now-possible to ec=plete the seis=ic upgrade work for
.~ e s t a r t cf the plant at a total cost of approxi=ately $37.5 million.
- 11. The plant is expected to return to service by December 31,
'cCa.
- 12. After SCNGS 1 has been restarted, Edison plans to complete the work necessary to acco=plish the remaining NRC required backfit werk including CM! =cdificatiens, er.virenl= ental qualificatien, fire prctectien, and SIP work.
13 Idisen and the NEC are currently atte=pting to resolve the secpe and ti=ing of this work through an ILS progra= which will provide fcr ec=pletion of the work during future refueling outages.
- 14. In Augu.st 1983, the NRC accepted the methodology Edison prcpeses to use to establish an IIS backfit prograc.
15 At the end of 1983, Edison' submitted its proposed IIS to NRC. Che NEC responded in January 1984 affirming the cethodology but ,
rejectir.g Idisen's propcsed schedule.
- 16. Idiscr. subsequently revised the schedule and sub=itted the new :15 prepesal to the NRC on February 27, 1984.
- 17. Idisc.; anticipates that the work associated with the ILF backfit prograc will cost less than $200 million. Not all the work l
which =ay be required is included in Idison's cost estimate.
- 18. Respondents expect SONGS 1'to restart at the end of 1984 after ce=pletion of the NRC agreed seismic work. All other NRC known required codifications will be completed throughout the IIS schedule at an anticipated cost of less than $200 million.
19 Idison's econo =ic analysis shows that a present value of capital expenditures of approximately $335 million, subsequent to the 1
l restart of SONGS 1, is cost-effective to Idison's ratepayers.
Idison's analysis shows that the ILS modifications will be cost-effective as presently planned.
I' OII 83-10-02 AIJ/vd1 c
- 20. Data presented by witness CzsFar shewed that it is beneficial to the ratepayers to co=plete the seis=ic. work and restart the unit. The staff analysis shows that ratepayers would be better eff by $116 million if the unit were to be restarted, and that the the =axi=u: cest-effective capital expenditure is SS6 million, well abeve $37 5 tillion to restart the unit. -
- 21. An additional !?7 5 million expenditure to brine SONGS 1 o r.
line by January 1, 1Ca* is justified.
- 22. All cf the ecer.c=ic analyses preser.ted illustrate that it is ecst-effective and beneficial to the ratepayers to restart SCNGS t.
2?. Idisen's analysis also shows that is may be beneficial and ecet-effective to the ratepsyers te pursue the IIS modificatiens as currently prepcsed by Idisen to the NRC under Idisen's assu=ptions net fully tested en this record. i l
Cenelusiens cf law
- 1. Idisen and NRQ have reached aEree=ent en the criteria for ceis=ic ar.d ether plar.: =cdificatiens necessary fer restart of SON 3S 1
- 2. Under the agreed upon criteria Idison plans to ec=plete the
=edifications necessary for NRC approval cf restart cf SCNGS 1 abcut January 1, 1CS5 at an incremental cost of $37 5 million. L 3 The expenditure of $37 5 million would be cost-effective if SON 3S 1 operates only through the initial 15-=enth period until its next shutdown for fuel replacement.
- 4. Respendents' ratepayers will benefit from restart of 50555 1 under such conditions.
5 Eased on the two prior conclusions, i==ediete closure and abandon =ent of SONGS 1 is not reasonable nor beneficial to respondents er their ratepayers.
l L
' o!I 43-10-02 cs /vd1 *
- s. A pri s facie showing was presented to indicate that it may
- bo cos: effec:ive to co=ple:e ILS plant modification necessary for lleng-term operations.
- 7. We should encourage cost-effective =odifications to 50 HGS 1
- ha: will pe- ' to operate as a viable generation resource.
- 8. As =odified to S i ve the Coc=ission so=a flexibility in the s:ar:up da:e. the progra= advanced by staff witness Czahar concerning
- a:e=aking condi:icns under which SOUGS 1 =ay be res:ar:ed and =ay opera:e af:er res:ar:. is reasonable and justified, and will be fair
- o respendents and to their ratepayers.
9 We should ad pt the progra= specifically set forth in the crder which follows.
~
- 10. This proceeding should be kept open fer receipt cf further evidence en issues ne censidered herein. i INTERIM ORDE.R
- 15 CROIRID that:
. S:uthern Oa'ifernia Idis:n Cc=pany (Idis:n' and San Cieg:
Gas & Ile::ric Cc=pany (SOG&I} (respondents) shall elect within 1:
days after the effective date of this order whether to i= ediately re=ove San Oncfre Nuclear Generating Station Unit 1 (SCNGS 1) frc=
their respe::ive rate bases as provided in Ordering Paragraph 2, or
<shall elect to follow the procedures set forth in Ordering Paragraph 3 (Idisen and SDG&I need net =ake the sa=e election.)
- 2. If Idison or SDG&I elects to re=ove SCNGS 1 fre= its rate b sc it shall ::=;17 with the follewing:
- a. Respondent shall reduce 'its authorized base revenue a= cunt currently in effect for calendar year 1984 in its electric revenue adjustment mechanis: (IRAM' by $33,376,00C for Idison or $11,492,000 for SOG&I to re=ove the costs of ownership of SONGS 1 fro =
suthorized base rates.
- b. Respondent shall make the appropriate
- adjust =ent to its electric revenue adjustment
, billing factors in conjunction with its next scheduled revisions to IRAM.
l OII 83-10-02
. .w l ,
- c. The effect of this reduction shall be i reflected in the months of April through l December 1984 and shall not cause an l overcollection attributable to IRAM collectible base revenues for periods prior j to the effective date of this order. j b
- d. On the effective date of this order, respondent shall accrue as a deferred debit the carrying costs of the monthly depreciated j plant-in-service book value of its investment '
in SONGS 1 using its rate for the allevance ,
for funds used during construction. This secrual shall continue until one of three events occur: (1) SONGS 1 returns to full .
commercial operations (200 consecutive hours ,
at 90% of capacit oper. tion at 65% of y or 30 days continuing capacity);
(2) ' respondent (s) file (s) an application to decom=ission SONGS 1; or (3) the Commission ,
orders the accrual stopped. i 3 If Edison or SDG&I does not elect to comply with Ordering
?aragraph 2, it shall, comply with the foll'eving: r
- m. Respendent shall establish a SONGS 1 ;
balancing accoun.. i
- b. Revenues collected by respondent pursuant to ;
its last general rate proceeding (under which j rates were made subject to refund) reisted to i return on investment on SONGS 1 (excluding i cetron plant) and the associated income taxes f r r -- January 1, 1984 through the date SONGS 1 re irns to full service (200 consecutive hours at 90% of capacity or 30 days !
continuing operation at 65% of capacity), or the effective date at which SONGE 1 is removed from rate base by further order of the Commission, shall be credited to the SONGS 1 balancing account. Operation and ,
maintenance expenses for SONGS 1 shall net be j subject to balancing account treatment.
- c. Should SONGS 1 fail to return to service by January 1, 1985, or by February 1, 1985, shoule the Commission decide for good cause to extend the return to service date by up to one month, respondent shall begin to accrue a liability i equal to the difference between actual kilowatt- l hours (kWh) generated and the kWh that vnuld he.ve l been generated by SONGS 1 if it had reached a !
monthly capacity factor of 65%, cultiplied by respondent's l t
01I' A3-10-02 jv* /vdl * - -
4 .u ,
average short-run avoided cost (energy plus capacity) .
That amount shall be credited to Account 253 (Other
. Deferred Credits). The offsetting charge shall be charged to the SONGS 1 balancing account.
J. Should the charges to the SONGS 1 balancing account equal or exceed the revenue credits to the SONGS 1 balancing account for revenues collected from January 1, 1964 through Decemher 31, 1984, respondent shall:
(1) Cease the accrual of the liability.
(2) Inform the Commission's Executive .-
Director in writing. I (3) Continue to credit revenues until SONGS 1 is out of rate base.
(4) File an advice letter to remove SONGS 1 from rate base, reduce rates, and start
- accruing allowance for funds used during I construction.
(5) Refund all revenues credited to the balancing account within 30 days efter the effective date of the advice letter. Refunds should include interest at the balancing account rate on all revenues collected from January 1, 1984 to the date of refund.
f
- e. Should SONGS 1 return to full service as defined in !
Ordering Paragraph 3.b, when the charges to the SONGS 1 balancing account are less than the revenue credits to the SONGS 1 balancing account for revenues collected from January 1, 1964 through i' December 31, 1964, respondent shall:
(1) Cease the accrual of the liability.
(2) File a letter with the Commission setting out the accounting entries to clear the net revenues remaining in the balancing account.
- 4. The incremental expenses for SONGS 1 plant modifications
' incurred after the effective date of this order shall not exceed
$37.5 million, except upon further approval by this Commission.
- 5. Respondents shall seek further approval of this Commission for plant modificat.'ons required under the Nuclear Regulatory
- Commission's Integrated Living schedule before commancing such modifications.
- l
4 CII.t 83-10-02 ALJ/vdl * -
- 6. This proceeding shall remain open for the receipt of further evidence.
- 7. This interim order resolves the threshold issue of whether SONGS 1 should be immediately removed from rate base and holds the proceeding open for further hearing. '
This order is effective today. ,
.7ated May 4, 1984, at San Francisco, California.
LEONARD M. GRIMES, JR.
i
-President VICTOR CALVO PRISCILLA C. GREW DONALD VIAL WILLIAM T. BAGLEY
- Commissioners e
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UNITED STATES
- ^,% NUCLEAR REGULATORY COMMISSION
, {[ E CASHINGTON, D. C. 2055$
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% ,,,,,* November 7, 1984 CHAIRMAN l COMNP 84-45 MEMORANDUM FOR: Commissioner Roberts Commissioner Asselstine Commissioner Bernthal Commissioner Zech FROM: Nunzio J. Palladino k
SUBJECT:
DECISION REGARDING RESTART OF THE SAN ONOFRE NUCLEAR GENERATING PLANT, UNIT 1 Yesterday morning Commissioner Zech and I met with NRC staff, OGC, 0I and others to discuss the above subject.
As a result of this meeting, it appears that there is a need for direction on several issues. Your votes on the following issues are requested:
_ (1) S h o u l d a n o p t i ctn s p a p e r f r o m _ th e s t a.f_f a n d O G C b e prepared?
(2) Should the options paper include broad-basid recommendations which take into account both policy and legal considerations?
(3) Should there be a public Commission meeting on the restart question? If so:
- 1) should the meeting be only with the staff?
ii) should the meeting include the licensee?
(4) Should there be a Commission meeting with 01 in closed session?
SECY please track before our agenda planning session on Thursday., November 8, 1984.
As a saparate matter, my office received a call from a Southern California Edison (SCE) representative on' Tuesday morning. My office returned the call that afternoon and was informed by the SCE representatiie'that SCE believed the Commission needed to 5 act by the end of next week if SCE is to satisfy the conditions set by the California PUC. My office has not sought to verify the SCE statement with the NRC staff so as not to -
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- delay this memo. By copy of this mem , I request ED0's view on the SCE statement.
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.~ NUCLEAR REGULATORY COMMISSION 5.$N2pii w AsHINGTON. O O. 20$55 ll November 16, 1984 OFFICE OF THE -
SECRETARY MEMORANDUM FOR: Chairman Palladino Commissioner Roberts Commissioner Asselstine Commissioner Bernthal
. Commissioner Zech FROM: Samuel J. Chilk, SecreydI ff
SUBJECT:
hh BRIEFING AND DISCUSSION ON ISSUES IN OPERATIONOFSANONOFRKUgIT1, 9:30 A.M., WEDNESDAY, NOVEMBER 21, 1984 (OPEN)
On November 15 this office was advised that a majority of the Commission (Chairman Palladino, Commissioners Asselstine and Bernthal) agreed to hold a San Onofre meeting on Wednesday, Noverter 21 and requested the
~~ -
licensee be present. -'
On November 16 the Commission voted on the following additional details pertaining to this meeting.
- 1. A majority of the Commission decided that the EDO would not be required to make broad-based recommen-dations which take into account both the policy and legal considerations pertaining to the restart of San Onofre Unit 1. The comments of the Commissioners who responded in writing are attached.
- 2. The Commission decided:
(a) by a vote of 3-2 (Chairman Palladino and Commissioner Asselstine dissentino) not to have the licensee make a formal presentation at the meeting; and
~
(b) by a vote of 3-2 (Cornissioners Roberts and Zech dissenting) to have the licensee answer questions at the meeting.
Attachments:
As stated cc: EDO %
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uvscw L.rea45 Sulahv.Ftnais October 3, 1984 C.r_tCts.Cs CL'Paa%* = DOUG$a5.L APC5 CL n0=160 D. LUCwTT MEMORANDUM
SUMMARY
This memorandum discusses the authority of the Nuclear Regulatory Commission to permit immediate restart of San onofre Nuclear Generating Station, Unit No. 1, which for the last two years has been in a shutdown condition while engaged in a program to strengthen seismic safety protections. The facility is now
\ subject to an order, issued in August, 1982, confirming licensee ccmmitments to complete seismic upgrading prior to restart. The memorandum concludes that the order constitutes a suspension order that the Commission can lift or modify without a hearing prior to resumption of operation.
The central issue in this case is whether the August, 1982, order constitutes a license amendment. If it does, then relaxing the order would also constitute an amendment and, in the absence of a finding of no significant hazards consideration, would require a potentially lengthy hearing prior to restart. .
The memorandum notes that the order was not intended as an amendment, that it did not state that it was an amendment, that
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it was not issued pursuant to regulations specifically governing amendments and that representations by the NRC staff confirmed
- 1. . e . . s e = = ' anderstand ng to the contrary. It is concluded that the applicable law, serious and compelling policy considerations and the inequitable consequences for the licensees in this case of characterizing the order as a license amendment support the conclusion that it should not be so characterized.
The memorandum points out that the Commission has extensive and perhaps unique authority to choose the regulatory tools by which it runs its administrative program. It further notes that other regulatory agencies with licensing regimes use their authority to impose requirements that do not affect the terms of the license. It urges the Commission to adopt a similar approach both to achieve an equitable r,esult in this case and to preserve the flexibility essential to an effective nuclear regulatery program. It contends that the failure to do so can produce serious adverse consequences for the regulated industry, can seriously impede the objective cf voluntary enfercement and can even curb the safety-related activities of the regulators themselves.
Finally, the memorandum reviews the holding of the U.S.
Cu : . of Appeals for the District of Columbia in Sholly v. NRC, which has been viewed by some as an impediment to the decision advocated by the memorandum. It distinguishes that case as applicabletoordersdifferingsubstant9hlyfromtheorderat issue here. While'the order in Sholly attempted to expand a licensee's authority beyond then-existing licensing restrictions, t
t the order at issue here imooses additional requirements above and beyond those in the license. The holding of Shelly that the i II order in that case must be construed as a licensa amendment is thus inapplicable here. Accordingly, the Commission should d:::rmine that the August, 1982, crder is act an amendment, that it may be modified without an amendment and that the facility may i
restart without a prior hearing.
- w * * **
- BACKGROUND i San Onofre Nuclear Generating Station, Unit No. 1
(" Unit 1") began commercial operation in 1968 and operated largely trouble-free until 1980. During those years, Southern i
California Edison Co. and San Diego Gas & Electric Co.
(" licensees"), in consultation with the Nuclear Regulatory Commission ("NRC" or " Commission") staff, took certain steps to strengthen seismic safety prote;tions at the plant. During 1982, while the plant was shut down, the NRC intensified its consideration of the plant's seismic design, relative to current i
design criteria. In June, 1982, licensees decided to complete t o
seismic upgrading of the plant prior to returning Unit I to i
- service. To this end, licensees, in letters dated June 15 and 24, 1982, committed to a series of specific seismic retrofits i
- prior to restart.
On August 11, 1982, the NRC issued " Order Confirming
{
Licensee Commitments on Seismic Upgrading" requiring that Unit 1. ;
be mai,ntained in a cold shutdown gondition until the licensees '
had completed 'the actions they had committed to, and the NRC *
)
1 l
1 3
i- .
O 4
staff had granted approval to restart. No portion of that order speaks of a " modification" of the Unit 1 license, nor is there lt any reference to the specific section of the NRC regulations, 10 C.F.R. 52.204, that authorizes the NRC to modify licenses.
Inct cd, the Order cited the NRC regulations generally and the statutory provisions that authorize a number of regulatory actions, including revocation, suspension, modification, or such l
other action as the Commission might deem proper. The order was j
made effective immediately, and neither the licensee nor any third party requested a hearing on the order.
i Thereafter, the licensees and the NRC staff continued -
to evaluate the Unit 1 seismic upgrade program. On October 15, j 1983, the California Public Utilities Commission (CPUC) began an
! investigation to determine whether to allow Unit 1 to remain in rate base.in light of the fact that it had been out of operation 3
for much of the time since 1980. The NRC staf,f, working with l
' licensees and aware of the CPUC investigation, determined, and '
- l
! stated in a February 8, 1984, letter from the Director of Nuclear l
f Reacter Regulation to the licensees, that restart of the plant prior to complete resolution of all seismic issues would be appropriate. The " Safety Evaluation Report, Return to Service
! Plan - Seismic Reevaluation Program, San Onofre Nuclear Generating Station, Unit No. 1" attached to the Director's letter
,i "l
, states: 1 l
Based on the conservative nature of the j
4 seismic analysis conducted thus far, the staff agrees that capability to achieve .
and maintain a hot standby condition is sufficient for restart (at p. 2).
k
i Neither the Director's letter nor the accompanying safety evaluation report suggests any intent to require a license
' modification procedure prior to restart. The letter states:
[T]here are a number of licensing actions that must also be completed to support the issuance of a restart safety evaluation report. These actions have been discussed with your staff and we encourage you to expeditiously pursue their resolution.
The licensees did in fact discuss such " licensing actions" with the NRC staff and clearly understood that such actions did not i include amending the license. Licensees' awareness is reflected in a letter from M. O. Medford of Southern California Edison Company to the NRC, dated April 16, 1984, outlining submittals due from licensees prior to restart. It did not mention amending the license. There is no reason to doubt that both parties understood that restart would be approved based on a safety evaluation report.
On June 26, 1984, the NRC staff visited Unit 1 and met with representatives of the licensees. Darrell G. Eisenhut, Director, Division of Licenses, Office of Nuclear Reactor Regulation, was the NRC staff's senior representative. Lawrence J. Chandler of the Office of Executive Legal Director for NRC was also present. At the meeting the parties discussed what licensing actions would be necessary prior to restart., No one stated that the license would have to be amended. In fact, Mr.
Eisenhut represented that the NRC would not be on the critical
, path to, nor wou.ld NRC procedures impede, , restart. ,
- 5- I i
On May 4, 1984, the CPUC issued its order regarding the Unit I rate base. Because Unit l's prior operating experience t I
had been favorable and because the licensees represented that, based on the Director's letter of February 8, 1984, restart of the plant was anticipated prior tv January 1, 1985, the CPUC order allowed licensees either:
(1) to remove Unit 1 from rate base and accrue the return on plant investment in a deferred account; or ,
I (2) to maintain Unit 1 in rate base, but do so at the '
risk of accruing substantial financial penalties beginning January 1, 1985, if the plant was not restored to essentially full service by that date. j On May 18, 1984, the licensees decided on option 2.
The decision was based on the Director's letter of February 8,
, lo84, with its accompanying safety evaluation report and, more '
significantly, the indications from the wordin.g of the August, 1982, order and discussions with NRC staff representatives that the Unit I license would not have to be amended prior to restart.
In mid-July, 1984, the licensees learned for the first time that some of the Commission legal staff were construing the Au gu s t , 1982, order as a license amendment. Accordingly, staff were now suggesting that licensees be required to obtain a 1
1 Licensees are uncertain what members of the staff take this position. For purposes of convenience, however, the position will be referred to as the " staff position." Licensees do not attribute this position to any particular staff member or office t within the Commissien.
further license amendment to restart Unit 1, and that, accordingly, notice and opportunity for a full adjudicatory ;
hearing would be required prior to operation.
THE CUESTION AT ISSUE Tne crux of the matter here is whether the August, 1982, order amended the Unit 1 operating license. If the order constitutes a license amendment, relaxing it does also. Under the staff position, the amendment to allow restart would require an opportunity for a prior full adjudicatory hearing, with its l attendant delays. If the order is not an amendment to the license, however, a hearing is not required before restart.
The staff position, as we understand it, is that the Au gu st , 1982, order can only be interpreted as a license .
amendment. l We respectfully submit to the contrary that l
interpretation of the order as a suspension order, and not a '
license amendment, is fully consistent with ap.plicable statutes, S
regulations, and case law. Moreover, interpretation of the order as a license amendment --
and acceptance of the legal view that f
crders like this must be so interpreted -- would not only impose I severe inequities on the licensees in this case, but also would
{
have a severe adverse impact on the regulated industry and on public health and safety. Reading the order as a suspension
{
order avoids these effects. Because these policy and equity ;
considerations are so critical, the following discussion addresses them first; it then goes on to establish that interpretation of the order as a suspension order is fu.11y ,
supported by the law. '
POLICY AND EOUITY CONSIDERATIONS The staff position amounts to the proposition that,
't with some very narrow exceptions, the Commission cannot relax specific requirements, once they are imposed on a reactor ,
l .c..see, without triggering overwhelming practical consequences i
for the operation of a plant. By imposing such requirements, i
even in emergency circumstances where comprehensive analysis is :
impossible, the staff would embed those requirements in the license as amendments. As a result, flexibility to modify the requirements would be lost, and, despite what more thoughtful assessment might show, the Commission would be unable to alter them without trigger ng notice and a formal hearing requirement prior to allowing restart.2 If a plant cannot meet the require-(
ments originally thought to be needed but now found to be 1
unnecessary, it can not operate until the hearings are completed !
-- a time period that under normal Commission practice lasts a year or more.
I i
2 Some Commission orders contain provisions purporting to i authorize the Commission or its delegate to act later without a i hearing. E.c., Consumers Power Co. (Palisades Nuclear Power j Freilitf}, Decket No. 50-255 SP (July 30, 1982) ("The Director of '
Region III may_ relax or terminate any of the preceding conditions in writing for good cause."). It can be argued that as a legal {
matter such provisions reserve authority to dispense with a l hearing and that such authority is lost only when the provision ;
is omitted. However, an agency may not reserve an otherwise unlawful authority by incorporating it to a permit or order.
Standard Airlines, Inc. v. CAB, 177 F.2 18, 20 (D.C. Cir. 1949);
Chesaceake and Ohio Ry. v. United States, 392 F. Supp. 358, 365 i
(E.D. Va.), rev'd on other arounds, 426 U.S. 500 (1975). Hence, if the. authority reserved by the Commiss' ion is unl' awful, the {
reservation in the order will not serve to protect it. Once the staff position is accepted, all orders effecting significant f changes in the ertration of a facility fall under its secpe.
_ r .
t The negative consequences of this theory for regulatory pelicy are extreme. Not only can one anticipate long outages and '
lingering requirements that, in light of the most recent information and the regulator's best judgment, are unreasonable, bu t , ere valtically, all impulses toward voluntary entercement will be curbed. Licensees once willing to enhance plant safety voluntarily may be less willing to do so in the fear that their licenses will be amended by inflexible confirmatory orders, any change in which may cause extreme delays.3 Most worrisome of all, however, is the chilling effect this theory would have on the safety-related activity of the regulators themselves. If there is one objective that ought to be paramount in the regulation of health and safety, it is to
. l encourage boldness on the part of the regulator in times of emergency. There should be a willingness to require more rather than less of the regulated sector in circumstances where time does not allow for fine tuning. Public discussions of the Commission show that in the past, when considering orders of a i
sort similar to this one, Commissioners have indicated i significant concern about procedural difficulties in restarting i'
3 As the Commission has explained:
[C onsideration (of public health and safety) calls for a J !
policy that encourages licensees to consent to, rather than contest, enforcement actions. Such a policy would be thwarted if licensees which consented to enforcement actions were routi.nely subjected to f6rmal pr.oceedings possibly leading to more severe or different enf 7rcement actions. [In the Matter of Public Service Co. of Indiana (Marble Hill Nuclear Generatine Station, l Units 1 and 2, 11 NRC 438, 441 (1980).]
. s. -
--______-____x__________.___---_______-____
plants they were otherwise inclined to regulate.4 Acceptance of the legal theory under discussion could aggravate that concern dramatically.
The theory would also impose inequities of the harshest sc. t c.. Cie licensees in this case. While there has been no intent to mislead the licensees over the past two years, they have been seriously misled. As indicated, neither the terms of the order nor the representations of the NRC staff suggested in any way that the Unit 1 license had been modified by the August, 1982, order or that any procedural difficulties would hamper the utility in its efforts to restart the plant. The wording of the order,5 the rules of the Commission, and the representationc of the staff could hardly have given stronger assurances to the contrary. Licensees relied heavily on those assurances in choosing their course of action before the CPUC. Adoption of the staff theory will thus impose a hardship that is both severe and, by any measure, unfair.
That unfairness is compounded by the degree to which other Commission cases resemble this one but, under the staff theory, would produce completely different results. For example, in several instances the Commission has issued orders to show 4
See Transcripts of Public Meeting, Continuation of Staff Briefing on Emergency Planning (April 25, 26, 27, 1979) (on file in NRC Public Documents Room, Wash., D. C.)
5 The Commission has issued numerous otn.<er orders, requiring shutdown pending safety evaluation and mcdification, that it refers to as suspension orders and.that make no reference to
. licensd amendments. E.g., P,acific Gas & Electric Co. (Diablo Canyon Nuclear Power Plant inits 1 and 2), 18 NRC 1146 (1983);
Public Service Co. of Indiana (Marble d~ill Nuclear Genert: ag Station, Units 1 and 2), 11 MRC 438 (1990).
E cause, with immediate suspension of operation, based on seismic safety concerns. It then has lifted the suspensions without
>( hearing prior to completion of the required modifications even i
though the orders to show cause had provided for suspension until c mplaticn of the modifications.6 The Commission lifted the suspensions because it found that the licensees had established 4
- good cause for modifying the original requirements, a showing licensee has also made here, as reflected in the Director's f
letter of February 8, 1984, agreeing that re' start is appropriate. [
t These decisions strongly suggest that the same result reached by the Commission in the circumstances described should be reached here -- the Commission may and should authorize restart without a prior hearing. The staff position, in contrast, requires that these decisions be distinguished from i
i licensees' situation. They can be so distinguished, but only by
)
formalistic differences on which enormous practical consequences l
should not turn. The James A. Fitznatrick and Surry show cause !
j orders expressly reserved the right to lift the suspension upon a !
i " showing of good cause." Such magic words are not present in the r i "
!' August, 1982, order. The protection of the public health and .. l
- safety should be determinative, however, not the presence or '
i.
absence of magic words. It is a fitting measure of the arbi- '
a trariness of the staff position that to support it one must argue t 6 i E.g., In the matter of The Power Authority of the State of i New York (James A. Fitznatrick Nuclear Power Plant), 44 Fed. Reg. 1 49530 ( August 23, 1979) and 44 Fed. Reg. 16510 (March 19, 1979); -
Virginia Electric & Power Co. (Surry Power Station, Unit 1), 44 i
Fed. Reg. 50932 (August 30, 1979) and 44 Fed. Reg. 16511 '
- (March 19, 1979).
i
.1 -
i t
that the words of an order mean both nothing and everything.
Nothing, in that characterizing the order as a suspension order
.( or an or' der to modify does not affect whether it actually amends the license, and everything, in that using the words " good cause" may determine whether a plant is out of operation for a year or two after staff is satisfied that the situation is safe. This simply is not a sensible basis for a regulatory structure when another reading of the law is available.
l LEGAL ANALYSIS The unfortunate policy and equity considerations asso-ciated with this position suggest that the Commission should --
and a reviewing court will -- do what it can to avoid the position unless the relevant statute and case law compel such a result. See Motor & Ecuiement Mfrs. Ass'n, Inc. v. EPA, 627 F.2d 1095, 1108 (D.C. Cir.), cert denied, 446 U.S. 952 (1979). That f
is not the case here. The law on the matters,under consideration supports adoption of an alternative theory that will avoid the concerns just outlined.
The Commission can and should accept the principle that orders directing significant facility changes above and beyond..
those required by the license can leave the license unamended.
In adopting this approach, the Commission.would be exercising authority similar to that exercised by other federal agencies and, at least in one instance, expressly sgnetioned by Congress.7 4 .
The FCC, acting under a less than express statutory ma,ndate, has exercised authority that allows it to maintain
- flexibility through the issuance of modifiable orders. By simply avoiding characterization,of agency action as a modification of a license (footnote continued)
The Commission could then, if it so chose, retain the flexibility
.to modify the changes later without triggering the amendment I process. A't a later date, when any reservations had been eliminated, the Commission could go on to amend the license to inccrpcrate the previously ordered changes. Only then would the inflexibility that was originally of concern attach to the action.
An administrative agency must have substantial discretion in enforcement and regulatory contexts to choose the tools by which it runs its administrative program and to fashion rules of procedure that best enable it to achieve its goals.
See, e.g., Vermont Yankee Nuclear Power Coro. v. NPDC, 435 U.S.
519, 524, 543 (1978); Gulf States Utilities Co. v. FPC, 411 U.S.
747, 762 (1973); Richardson v. Wright, 405 U.S. 208, 209 (1972).
f The Nuclear Regulatory Ccmmission enjoys discretion in this (footnote continued from previous page)
-- defined by the courts as any order having a substantial effect on an unconditional right conferred by the license, see, e.g.,
Temmer v. FCC, No. 83-1580, slip op. at 16 (D.C. Cir. Sept. 14, 1984) --
the FCC can act without regard to the hearing requirement of 5316 of the communications Act of 1934. In the case of the ICC, Congress has expressly acknowledged an agency's need for flexibility in dealing with safety-related suspension actions. Section 10925(d)(2) and (3) of Title 49 of the United States Code allows the ICC to revoke without a hearing a license suspension originally imposed on a carrier because it had been conducting " unsafe operations" that were "an imminent hazard to public health or property." The EPA also has broad administrative discretion. The EPA interprets its general enforcement authority under $309(a)(1) of the Federal Water Pollution Control Act, 33 USC $1319(a) (1984), to allow it to issue and later modify, in its sole discretion, what it terms .
" administrative orders" affecting National Pollutant Discharge Elimination System permits. (We note, however, the EPA's authority is broader than that we are suggesting the NRC may or should adopt. See the discussion of Sho11v v. NRC, infra, at pp.
15-17.)
- n
. ~
regard that is " virtually unique in the degree to which broad j responsibility.is reposed in the administrative agency, free of close prescription in its charter as to how it shall proceed in -
~ ~
1{
i achieving the statutory objectives."'Carstens v. NRC, slip op. at
- 9 (D.C. Cir. Sept. 7, 1984) (qucting Siegel v. AEC, 400 F.2d 778, 783 (D.C. Cir. 1968)); see also Westinghouse Elec. Corp. v. NRC, 598 F.2d 759, 771 (3d Cir. 1979). The Commission should adopt i
! the enforcement approach that allows it to carry out the policies 1 .
- entrusted to it by Congress. In this instance, it should confirm
, that the August, 1982, order did not modify the Unit I license
}
{ and may therefore be modified now without a full adjudicatory hearing.
That the Commis'sion is free to choose such a course is
- supported by applicable statutes', regul'ations and case law.O i,
Regarding the statute, the Atomic Energy Act and its legislative
, t i
history make clear that changes imposed by ame.ndment are subject.
to strict procedural requirements. See, e.g., H.R. Rep. No. 884, 97th Cong. 2d Sess. 37-38 (1982). They are not at all clear, 4
however, on the question of when an agency directive must be an amendment. See, e.g., id. passim; S. Rep. No. 1677, 1962 ~
,i 4
U.S.C.C.A.N. 2207, 2214-15. In providing separately for orders, and distinguishing them from amendments in the procedures 4
8 The staff's consistent representations to the licensee I
further support such a course in this instancWT Where the
- construction of an agency order is in doubt, the agency's intent
! when it issued the order should be given effect. Sowles v.
i Seminole Rock &* Sand Co., 325 U.S. 410, 417-18 (1945); Standard 011 Co. v. DOE, 596 F.2d 1029, 1055 (TECA 1978). The staff's
- contemporaneous representations that a hearing would not be 4
, required provide ample evidence of the agency's intent. Jd.
i i
,....r s,,#. .m ... -,--. , ,w- , ,-.,,m,, . . , , - , - - - , . _ _ . _ ,-,,y,r,,, , . . . , . _ - . , _ , , , _ . , . -
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applicable to them, the statute suggests at least that not all orders affecting licensees are amendments. See, e.g., 42 U.S.C.
t $2239(a)(1) (Atomic Energy Act 5189a) (license amendments); 42 U.S.C. 52201(i)(3) (Atomic Energy Act 5161(i)(3)) (orders).
The Ocmmissien'c prccedural regulatiend, which because of the length of time they have been on the books are entitled to some weight in evaluating congressional intent, Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 103 5. Ct. 2856, 2866 (1983), provide further guidance. Section 2.204 of the regulations provides for procedures to order modifications of a license, 10 C.F.R. 52.204 (1984), while section 2.202 provides for orders to show cause relating not only to modification, but also to suspension, revocation and such other action as may be proper. 10 C.F.R. $2.202 (1984). The clear implication of the separate sections is that significant actions restricting the conduct of licensees, includin; but not limited to license suspensions and revocations, can be imposed by order, and that these are different from orders that actually amend licenses.
Finally, the case law is entirely consistent with this approach. No case has construed an order resembling in any way the August, 1982, order as an amendment, which would thus be subject to the limits on modification accompanying amendments.
While Sholly v. NRC, 651 F.2d 780 (D.C. Cir. 1980), held that an order permitting venting of the Three Mile Island Unit 2 reactor was in fact an amendment, that order could not have been more distinct from the order.at issue here. The court viewed the venting order 'in'. Shelly as an attempt to authorize action not
{ .
l l
permitted by pre-existing license authority, action that, in the absence of an amendment, would have violated the licensing l ' restrictions then in effect. Id. at 791. In light of the court's view of those restrictions, it is hardly surprising that d' censtrued as an amendment an crder intended to relax them.
The August, 1982, order was entirely different in its l purpose and effect. The conduct mandated under that order did not in any way violate or require modification of the provisions
! of the license then applicable. All of the actions called for by
! the order could have been performed voluntarily without modifica-tion of the license.9 In fact the licensee began performance 1 before the Commission.. issued the order " confirming" the actions
, and establishing them as legal requirements. To interpret Shelly 4 as affecting in any way the required ch'aracterization of the 1982 order -- and other orders restricting licensee conduct above and beycnd then-existing license restrictions -- is to read far more into it than is there.
The case contains a dictum, however, that, if taken out i
,of context, might preclude the more flexible approach. But that is not all that it would preclude. The statement in question is remarkably overbroad and, if followed, consistent with other positions of the NRC legal staff,10 would quickly bring the licensing process to its knees. The court observed in Shelly:
1 9
Northern States Power Company (Monticdll..NuclearGenerating Plant, Unit 1), 9 NRC 588 (1979); Portland General Electric Comoany, (Trojan Nucler Plant), ,9 NRC 263, 271-274 (1979) ,
10 As indicated above, we understand that the staff takes the position that the hearing offered must be a full adjudicatory hearing. But see Shelly v. NRC, supra, 651 F.2d at 791 n.27.
(
- ib -
f
. , , , ., - . . - - - -----.m . __ . e--, -- - . . - . . - - . - - ,
Our reading of the Venting Order is also supported by Congress' intent in enacting section 189(a). By requiring a hearing upon request whenever a license is " grant [ed), ;
- (
sospend[ed], revok[ed], or amend [ed), Congress apparently contemplated that interested
) parties would be able to intervene before any significant change in the operation of a ;
nuclear facility. Whatever the Venting order is calle'd, it certainly was such a change.
If the Ccmmission were to act in accordance with this view, not !
1 only would the August, 1982, order be characterized as an amend-
- ment but so also would many suspension orders issued by the Com- ,
i mission and countless Commission approvals authorizing activities, by licensees pursuant to the terms of previously issued licenses, lhendments or orders. In short, such an interpretation of Sholly L
~
could put an end to regulatory practices essential to a coherent !
system. The only suitable way to deal ,with the dictum is to confine it to the context in which it was offered, as courts
- regularly do. I t
] It is submitted that, in light of the strong policy -
?
arguments favoring the proposed approach and its consistency with applicable law, characterization of the 1982 order as a suspen- r sion order that may be modified without a license amendment should be upheld by the courts. Indeed, given the equitable 4 >
crgument: r:garding the licensee's circumstances, this case is a
]
particularly good one for asserting the authority claimed. While i
risks to an agency's program inevitably arise from the exercise ,
of discretionary power, the consequence of failure to assert such ,
power will be to lose it. The Commission will establish an ;
S 4
-. - . . - . . . . - - , __ , , .. . . _ _ _ , _ , _ , -_ y. ,. .,._. _ . _ .. ,. . , . _ . _ , . _ . . , . .
additional precedent against it on the issue, will be in the position of acquiescing in unfairness, and will proceed further
( down the path to acceptance of undesirable regulatory policies.
Miller & Chevalier, Chartered l
. # 3.I,'nkn mno l
- (oge nc%j% UNITED STATES
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f NUCLEAR REGULATORY COMMISSION WASHINGTON, D. C. 20555 c ?
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AUG 2 81984 /}fp $ -97 ,
MEMORANDUM FOR: Willian J. Dircks Executive Director for Operations F RO*.: Harold R. Denton, Director Office of Nuclear Reactor Regulation
SUBJECT:
PROCEDURAL REQUIREMENTS FOR SAN ONOFRE UNIT 1 RESTART .
t As a part of the efforts related to the restart decision on San Onofre Unit 1, the staff has identified a concern relative to its order of August 11, 1982 to the licensee. This concern deals with the approaches the staff could take in relaxing the actions reouired by that order. The licensee has not yet submitted a formal request for restart.
We have discussed this matter extensively with ELD and they have advised us !
to process the licensee's request as a license amendment. In view of the potentially significant schedular implications of such an approach and '
considerations for alternatively lifting the order, we believe that the issue shcuid be forwarded to the Co=.ission to obtain their views.
Accordingly, we have prepared the enclosed notation paper. This paper was prepared with ELD's assistance. In view of the importance of this de:ision for the planning of the San. Onofre Unit i restart review, we reco=,end that this paper ha forwardeo for Comission action as soon as ;
practical.
l
/ - l Harold R. Denton, Director !
Office of Nuclear Reactor Regulation
Enclosure:
Notation Paper i
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i For: The Commissioners
! From: William J. Dircks l Executive Director for Operations l
Subject:
RESTART OF SAN ONOFRE NUCLEAR GENERATING STATION UNIT 1 Puroese: To request the Commission to review the staff's proposed procedural course for a decision to authorize restart
, of San Onofre Unit 1.
- Discussion
- On August 11, 1982, the Office of Nuclear Reactor Regulation issued an immediately effective order entitled " Order Confirming Licensee Commitments on
' Seismic Upgrading" that directed Southern California Edison Company to " maintain San Onofre Unit 1 in the shatdown condition until modifications described in
[the licensee's] submittal dated June 15, 1982 as sup-plemented by letter dated June 24, 1982 are completed 1
and NRC approval is obtained for restart." 47 Fed, i
Reg. 36058, 36059 (Aug. 18, 1982). The licensee has completed some, but not all, of the modifications
! required by the order. Although the licensee has alluded to an eventual request for NRC approval to restart Unit 1, no formal request has yet been made.
The August 1982 order confirmed the licensee's proposal to maintain plant shutdown until modifications it j
described in the referenced letters had been completed.
4 The licensee made its cone.itments as a result of the staff's ongoing seismic reevaluation of the plant under the Systematic Evaluation Program (SEP), which raised questions regarding the plant's capability to safely shut down following a seismic event, not only for the
- SEP reevaluation criterion of 0.679 , but also for the original design criterion of 0.5g.
4 CONTACTS:
' E. McKenns (NRR) 7468 i
.-Lieberman (f.:"
- ^496
. . - -_ =-- ..
The Com.issioners ~
{
As discussed in the licensee's June 15, 1982 letter, '
analyses to reconfim that the plant met its original seismic design basis would consume significant rescerces a-d would net centributt : the ever:ll g::.1 of upgrading the plant to withstand a postulated 0.679 earthouake. Therefore, t.he licensee instead established an implementation plan for upgrading the entire plant in the June 24, 1982 letter. The staff agreed that i the program established by the licensee would resolve the staff's concerns about the ability of the plant to safely shut down following its original seismic design i basis event (0.5g), because the plant would be upgraded to withstand the 0.679 earthquake. Accordingly, the staff issued the " Order Confirming Licensee Commitment on Seismic Upgrading" to bind the licensee to its comitments to undertake the modifications to the plant.
From the staff's understanding of the modifications that the licensee has made to date, it is acceptable from i a technical standpoint to pgmit restart of the facility :
and to allow additional time for completion of any other plant modifications deemed necessary. The licensee i desires and is required to resume commercial operation of San Onofre Unit 1 by January 1,1985, under the tems of ]
an order of the California Public Utilities Commission if Unit 1 is to be ' retained in the rate base. Plant criticality is targeted for the beginning of October 1984 to support this ot,jective. The licensee's representatives have indicated that, if restart is delayed, future -
operation of the plant may be jeopardized. l The staff is seeking the Ccmission's guidance on the appropriate procedural path to follow for a decision to authorize the plant's restart, because the licensee's proposal for restart of San Onofre Unit I would not be on the same tems as. specified in the August 1982 order, even though a principal objective of the order (i.e.,
safe shutdown capability) may be achieved. Before examining this question, the staff offers the following surmary of its technical position with respect to the anticipated request to extend the completion date for j the plant modifications.
i-I
1
~
The Comissioners .
l Revised ProDosal for Plant Restart '
In December 1983, licensee submitted a tentative proposal for returning San Onofre Unit I to operation !
without undertaking all of the modifications described in the letters which were incorporated in the Auoust 1982 order. That plan described the scope of planned !
structures and systems to be upgraded and evaluation l criteria for determining the scope of necessary modifi-cations to ensure safe shutdown capability before -
resuming operation. The basic premise of the plan is ;
that modifications will be completed to ensure that all '
structures, systems and components whose failure could cause an accident and/or whose function is required to achieve and maintain a hot standby condition will be available following a 0.679 earthquake. The evaluation criteria were developed to demonstrate that required i equipment will survive the postulated earthquake and remain functional.
On February 8,1984, NRR issued a safety evaluation report on the proposed criteria for restart. This f SER concluded that the plan and criteria, subject to k the exceptions noted, would, when implemented, be sufficient to demonstrate the capability to achieve a hot standby condition for a postulated safe shutdown earthquake such that the staff would conclude plant restart should be allowed prior to the complete resolution of the SEP seismic issues for Unit 1. This evaluation concluded that the remaining scope of the seismic reevaluation program should be addressed for long-tern resolution and that all seismic issues should be substantially resolved prior to restart from the j next refueling outage. ;
i The scope of structures, systems and components for plant restart includes safety-related structures t (buildings), the reactor coolant pressure boundary, main !
steam and main feedwater piping, auxiliary feedwater system {
and the reactor coolant makeup charging system. The scope also includes supporting equipment needed to operate the above systems. Upgrading of the major system piping provides reasonable assurance that an accident will not be induced as a result of an 0.679 earthquake. The other systems provide a means for decay heat removal such that a hot standby condition can be maintained.
f i
I
~
l The Comissioners '
The above measures, therefore, would minimize the potential for an earthquake to initiate an accident and would provide a means for reaching and maintain-ing a safe shutdown conditien following a postulatec 0.679 earthquake. The remaining systems and com-ponents encompassed by the initial scope of the seismic reevaluation program are those which would nomally be used to reach cold shutdown (such as residual heat removal system and supporting systems) and those used for accident mitigation (such as safety injection). As discussed above, the plant will have ,
the capability to reach and maintain a hot standby l-condition for several days. At that time, other sources of water could be obtained for longer tem cooling. Therefore, for an interim period until the seismic reevaluation program is complete, the' proposed scope of plant upgrading will provide reasonable assurance that safe shutdown can be attained such that operation of San Onofre Unit I would not pose an undue risk to public health and safety.
The modifications to mechanical equipment and pipino in accident mitigating systems have not all been completed. '
However, as discussed above, the reactor coolant pressure I boundary and large steam and feedwater piping have been upgraded to withstand the 0.679 earthquake. Therefore, [
the staff believes that the risk of a seismically- !
induced large accident which woulti require use of the j accident mitigating systems would be sufficiently low !
until a technical evaluation could be completed to define f' all plant modifications for the remainder of plant life.
The licensee has proposed to continue reevaluation of ;.
these rer.aining systems and components and provide the '
results by the end of the present core cycle. The j implementation schedule for any identified modifications would then be defined by the relative safety significance of the needed modifications. Staff review of the appro-priate schedule for long-tem seismic resolution is '
continuing. )
Lecal Aspects of Authorizing Restart '
i The appropriate path toward detemining whether to authorize restart depends on which of two views of the order is taken. A conservative reading of the order is that the order modified the San Onofre Unit 1 lice 1se to incorporate conditions on operation which could only be altered or removed by further amendment of the license. Alterretivalv, the order might be
,4 s n primari; c t ..
. :r. order until c m 'r.
The Commissioners .
actions were taken and, though the order limits operation of the plant, .the order did not " modify" the license. Under this latter theory, which has significar.t litigative risk, restart couio oe autherized by merely lifting the suspension imposed by the August 1982 order.
The order itself is not labeled a " suspension" or a
" modification" order, but it clearly has elements of both types of orders. Like other confirmatory orders, this order was intended to bind the licensee to its commitments - here, the commitments to undertake plant modifications and to extend the then existing plant outage until those modifications were made. 1/
Because authorization of restart now would elter the restrictions on operation imposed by the August 1982 order, the more conservative approach would be to handle the change to the order's original scheme through the amendment process under 10 CFR 5 50.91 and 6 50.92. The sdeff recognizes, however, that this approach may significantly delay actual plant restart because of the time required to com-plete' necessary legal proceedings if, as is not unlikely, a hearing were requested.
Under the conservative view, the August 1982 order would be construed as having modified the conditions of the San Onofre Unit I license by requiring the plant to stay shut down until the plant modifi-cations were completed and implicity by permitting operation only with those modifications in place.
By granting the licensee's request to resume opera-tion of the facility on terms less stringent than those specified in the August 1982 order, the staff weeld he euthorizing the licensee to de things it is not otherwise entitled to do under the present conditions of the order (i.e., license). In view of these circumstances, the Sholly case may be instructive.
In Sholly, the Court of Appeals rejected the Commis-sion's argument that the order which permitted the venting of the TMI-2 containment was not a " license amendment." The Commission had argued that the venting order had merely lifted the prior suspension of the authority to vent imposed by the Commission's Februa ry 11, 1980 order. The court did not construe the venting order as a simple reinstatement of pre-existing authority under the license, but found that:
jf Unlike mere - t -3rcenent orden . -% *
- 1982 orca r does not provide ex;ns_ , ter a relaxatic :i -
- of the orci ,
. j l
The Comissioners 6-l Secause the June 12 Ventino Order modi-fied the February 11 [1980) order, and granted the licensee authority to do some-Ining inat it otherwise couac not have '
done under the existing license authority, i the Venting Order was a license amend- !
ment within the scope of Section 189(a). !
i Sholly v. NRC, 651 F.2d 780, 791 (D.C. Cir. 1920),
ren. cenied, 651 F.2d 792 (D.C.' Cir.1981), judement vacateo, 51 U.S.L.W. 3610 (U.S. Feb. 22, 1983)
(No. 80-1640). Because the proposal to authorize l; restart of San Onofre Unit 1 is different from the conditions of the 1982 order, the more conservative approach to authorizing restart is to handle the licensee's request for relief from the 1982 order as an amendment of the license.
If viewed in the context of an application to amend the San Onofre operating license, the pivotal issue, in terms of when restart authority could be given, is whether a "no significant hazards consideration" finding can be made. 10 C.F.R. Il 50.91, 50.92. If such finding could be made, the amendment could be made effective upon issuance;-if the finding could not be made, effectiveness would be delayed until after the thirty-day period in which a hearing may be recuested or, if a hearing-is requested and granted, until after completion of the hearing process. '
The difficulty associated with making this finding becomes apparent when one looks to the relevant base-line for assessing.the relevant factors set forth in 10 C.F.R. ! 50.92(c). -If the Aucust 1982 orcer is viewed as having the effect of amending the license by reg'_* iring trodificatiens to the plant, the licenst as it now exists (which incluces the provisions of the order) requires that, prior to restart, all com- <
mitments made by the licensee in its letters of I June 15 and 24,.1982, be completed. At pr'esent, not all of the comnitments have been met. Thus, the restart at this time would entail a relaxation of the tems of the license or, stated in terms of the t "significant hazards consideration" criteria, a 1 reduction in a raargin of safety. Consequently, the '
"no significant hazards consideration" finding could q 1
1 I
l
{
~
The Com.issieners '
i I
not be made. 2/ For this reason, the staff would I publish a standard notice of consideration cf issuance i of an amendment in the Federal Recister which would provide an opportunity for nearing before the amendment could become effective. If a hearing were recuested, ,
and held, a delay of about a year could occur. 3/ This :
long a delay could result in the licensee decicing not .
to restart the plant at all.
If the Aucust 1982 order were not considered to have modified the license for San Onofre Unit 1, another way to approach the authorization of operation would be to treat the permission to restart as merely the {
lifting of the prior suspension of operation imposed l by the August 1982 order. In this regard, the Com.is- ~
sion could view the order as imposing essentially two things: (1) a suspension of operation and (2) a -
requirement to undertake certain plant modifications to ;
resolve the seismic hazard. Under this construction of 5 the order, the Commission could lift the suspension, .
without providing further notice and opportunity to be !
heard, on a finding that operation would not pose an j undue risk to public health and safety, and the 'i Commission could extend the ultimate completion date for the remaining plant modifications by an amendment 4/
cr merely under the terms of the lifting of the suspen!
sion imposed by the August 1982 order. As reflected in NRR's February 8,1984 safety evajuation, the staff does !
not believe that all of the plant modifications proposed
, by the licensee in June 1982 are necessary to ensure the public health and safety. The justification for 2/ For this reason, the provisions of 10 C.F.R. 6 50.91(a)(5) and (6) providing respectively for either dispensing with prior notice or
- i'.+g
- hcrt notice in cases Of emerger.cies or exigent circumstances are not applicable.
3/ There has been some past interest in the seismic capability of Unit 1.
In November 1981, the Director of NRR denied some 1560 petitions under 10 CFR 6 2.206, including one filed by Ralph Nader, which requested a shutdown of San Onofre Unit I based in part on seismic hazards. DD-81-19, 14 NRC 1041 and DD-81-20, 14 NRC 1052 (1981).
The Director provided each petitioner with a copy of the August 1982 4
order when it was issued. No requests for hearing were filed.
4/ Such an amendment would not involve a significant hazards consideration under this approach since the base line for this determination would be the license prior to t M issuance of the Aur:wt 1982 order.
~
f The Comissioners lifting the suspension would rest, then, largely on the licensee's substantial templiance with the order; i.e. ,
' the licensee has made extensive modifications which have made the plant safer and, for that reason, continued susper.sion is no longer mandated.
This approach to the order would not delay restart of the facility because it would not require the ggy;..-completion of any proceedings which might be necessary
' in connection with issuance of a "significant hazards" amendment under the more conservative approach as described above. Under existing precedent, the lifting of a suspension does not give rise to new hearing rights under section 189 of the Atomic Energy Act and, therefore, the Comission is not recuired to hold such hearings prior to the lifting of such a suspension. See Pacific Gas and Electric Comoany (Diablo Canyon Nuclear Power Plant, Unit 1) CLI-83-27, 18 NRC 1146, 1148 (1983); Save the Valley v. NRC, No. 82-3148, unpublished decision (6th Cir., June 7, c 1983), aff'c Public Service' Company of Indiana (Marble Hill Nuclear Generatino 5tation, Units 1 anc 2),
DD-81-22,14NRC1085(1981). If public health and safety no longer reouire the suspension of operation, it can be argued that an imediate lifting of the suspension is appropriate, and perhaps compelled, because the Comission is authorized to maintain a suspension only so long as it is 'necessery te protect public health and safety. See Metropolitan Edison Comcany (Three Mile Island huclear Station, unit 1),
CLI-51-34, 14 NRC 1097, 1098 (1981); Consumers Power Comoany (Midland Plant, Units 1 and 2), CLI-73-35, '
6 AEC 1082, 1083 (1983).
Terming the authorization to restart in this case as r4 rely a lifting of the prior suspension represents, however, an extension of the case law described in the i preceding paragraph and would thereby entail signifi- ;
cant litigative risk if a third party challenged the ,
Comission's determination to permit operation and extend the completion date for the plant modifications
)' without providing a prior opportunity to be heard. The '
denial of a hearing to third parties on the lifting of a suspension was sustained in Diablo Canyon and Marble Hill in circumstances in which the licensee had fully satisfied the terms of the original order (each of ,
which were clearly labelled suspension orders) before j the authorization to resume suspended activities had ;
!?tn civen. See altn 9 r.- nto Municipal L'H14tv j
,, , ~ ~
. 1 l
The Cornissioners 1 District (Rancho Seco Nuclear Generating Station)
CLI-79-7, 9 NRC 680 (1979), aff'd sub nom. Friends of the Earth v. NRC, 600 F.2d 753 (9tn cir. 1979). In the Sar. Uncire tese, the licensee will not have completec all of the activities originally centemplated under ~.
the order before the authorization to restart would be given. Again, it should be recalled that the Sholly court rejected the Commission's characterization of the TMI venting order as merely the lifting of a prior suspension because an earlier order had removed the authority to vent radioactive gas from the facility.
See Sholly, suora, 651 F.2d at 791.
Moreover, cases holding that the Commission is
. rec'uired to lif t a suspension which is no longer compelled by public health, safety and interest have been decided in the context of the lifting of an immediately effective suspension during an ongoing acjucicatory proceeding: i.e., a suspension which l had been imposed on a licensee without a prior cpportunity to be heard. In such cases, the lifting of the suspension is mandated because no compelling health and safety needs overrides the licensee's procedural due process rights to a prior opportunity to be heard. See Consumers Power Company, suora, 1 6 AEC at 1083. In contrast, the San Onofre case involves a situation in which the licensee has censented to the suspension imposed by the order and no ongoing proceeding exists in which the .
procriety of that suspension is being heard. In I view of these distinguishing factors in the case law, there is substantial litigative risk in treating the authorization to restart San Onofre '
Unit I as merely a lifting of a prior suspension, c 1
r 1
I L____________._____ a
. 1 The Comissioners . )
Recc =encation: The staff intends to proceed along the more conser- ,
vative course of action ard to handle the restart authorization as an amendment to the San Onofre Unit I ;
license unless otherwise directed by the Com,ission by September'7, 1954 l i
4 l
i William J. Dircks '
Executive Director for Operations cc: OGC SECY OPE 6
e r
w-- , - - - _ _ _ _ - - - . - . _ _ - - - . _ - _ _ _ _ _ _ _ , - _ _ _ _ - - - _ _ - - _ _ . _ _ . . - _ . _ _ - - - _ . - - - _ _ _ _ _ _ _ . - . _ . - - _ _ _ _ _ . _ . _ . _ _ _ - - - - _ - _ _ . _ _ - - _ _ -
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The Comissioners !
lif ting the suspension would rest, then, largely on the i licensee's substantial ' compliance with the order; i.e. , f the licensee has made extensive modifications which have i made the plant safer and, for that reason, continued i suspension is no longer mandated. . j This approach to the order would not delay restart of the facility because it would not require the completion of any proceedings which might be necessary in connection with issuance of a "significant hazards" ;
amendment under the more conservative approach as '
described above. Under existing precedent, the i lifting of.a suspension does not give rise to new hearing rights under section 189 of the Atomic Energy Act and, therefore, the Comission is not required to hold such hearings prior to the lifting of such -
a suspension. See Pacific Gas and Electric Comoany (Diablo Canyon Nuclear Power Plant, Unit 1) CLI-53-27, 18NRC1146,1148(1983); Save the Valley v. NRC, No. 82-3148, unpublished decision (6th Cir., June 7, 1983), aff'c Public Service' Company of Indiana (Marble Hill Nuclear Generatino Station, Units 1 ano 2),
DD-81-22,14NRC1085(1981). If public health and safety no longer require the suspension of operation, it can be argued that an imediate lifting of the i suspension is appropriate, and perhaps compelled, because the Comission is authorized to maintain a suspension only so long as it is 'necessery to protect public health and safety. See Metropolitan Edison Comoany (Three Mile Island huclear Station, Unit 1),
CLI-51-34, 14 NRC 1097, 1098 (1981); Consumers Power Comoany (Midland Plant, Units 1 and 2), CLI-73-35, 6 AEC 1082, 1083 (1983).
Teming the authorization to restart in this case as roerely a lifting of the prior suspension represents, however, an extension of the case law described in the preceding paragraph and would thereby entail signifi-cant litigative risk if a third party challenged the Comission's detemination to pemit operation and extend the completion date for the plant modifications without providing a prior opportunity to be heard. The denial of a hearing to third parties on the lifting of a suspension was sustained in Diablo Canyon and Marble Hill in circumstances in which the licensee had fully satisfied the tems of the original order (each of which were clearly labelled suspension orders) before '
the authorization to resume suspended activities had
!?tn civen. See alsn St ~2- ,tn Municipal Utility
The Comissioners .. I District (Rancho Seco Nuclear Generating Station)
CLI-79-7, 9 NRC 680 (1979), aff'd sub nom. Friends of the Earth v. NRC, 600 F.2d 753 (9th Cir.1979). In the 5an Oncire tese, the licensee will not have completeo all of the activities originally contemplated under the order before the authorization to restart would be given. Again, it should be recalled that the Sholly court rejected the Comission's characterization of the TMI venting order as merely the lifting of a prior
, suspension because an earlier order had removed the authority to vent radioactive gas from the facility. .
See Sholly, suora. 651 F.2d at 791. '
Moreover, cases holding that the Comission is
, rec'uired to lift a suspension which is no longer compelled by public health, safety and interest have been decided in the context of the lifting of an ;
_imediately effective suspension during an ongoing l ac,)ucicatory proceecing: 1.e., a suspension which had been imposed on a licensee without a prior opportunity to be heard. In such cases, the lifting '
of the suspension is mandated because no compelling i health and safety needs overrides the licensee's procedural due process rights to a prior opportunity to be heard. See _ Consumers power Company, suora, 6 AEC at 1083. In contrast, the San Onofre case involves a situation in which the licensee has consented to the suspension imposed by the order and no ongoing proceeding exists in which the propriety of that suspension is being heard. In view of these distinguishing factors in the case law, there is substantial litigative risk in !
treating the authorization to restart San Onofre Unit I as merely a lifting of a prior suspension. !
I
,. , 'l The Cenmissioners 1 Recemnencation: The staff intends to proceed along the more conser-vative course of action and to handle the restart authorization as an amendment to the San Onofre Unit I license unless otherwise directed by the Commission by September 7, 1984 William J. Dircks Executive Director for Operations cc: OGC SECY 0:E
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f
, . l The Commissioners ,
Revised Proocsal for Plant Restart
- In December 1983, licensee submitted a tentative proposal for returning San Onofre Unit I to operation without undertaking all of the modifications described :
in the letters which were incorporated in the August ,
l 1982 order. That plan described the scope of planned ;
structures and systems to be upgraded and evaluation ;
criteria for determining the scope of necessary modifi-cations to ensure safe shutdown cacability before l
resuming operation. The basic premise of the plan is that modifications will be completed to ensure that all i structures, systems and components whose failure could cause an accident and/or whose function is required to <
achieve and maintain a hot standby condition will be i available following a 0.679 earthquake. The evaluation
! criteria were developed to demonstrate that required equipment will survive the postulated earthquake and i remain functional.
On February 8,1984, NRR issued a safety evaluation report on the proposed criteria for restart. This SER concluded that the plan and criteria,' subject to 3
, the exceptions noted, would, when implemented, be ,
sufficient to demonstrate the capability to achieve a
- hot standby condition for a postulated safe shutdown '
, earthquake such that the staff would conclude plant restart should be allowed prior to the complete '
resolution of the SEP seismic issues for Unit 1. This l evaluation concluded that the remaining scope of the seismic reevaluation program should be addressed for long-term resolution and that all seismic issues should j
i be substantially, resolved prior to restart from the next refueling outage.
4 l The scope of structures, systems and components for i -
plant restart includes safety-related structures 4
(buildings), the reactor coolant pressure boundary, main j steam and main feedwater piping, auxiliary feedwater system j and the reactor coolant makeup charging system. The scope 3
also includes supporting equipment needed to operate the above systems. Upgrading of the major system piping i provides reasonable assurance that an accident will i not be induced as a result of an 0.679 earthquake. The i other systems provide a means for decay heat removal !
l such that a hot standby condition can be maintained.
t
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4 I The Co r:issioners . .
?
- The above measures, therefore, would minimize the l potential for an earthquake to initiate an accident and would provide a means for reaching and maintain-ing a safe shutdown conditlen following a postulated
- 0.67g earthquake. The remaining systems and com-l ponents encompassed by the initial scope of the
-l seismic reevaluation program are those which would i nomally be used to reach cold shutdown (such as '
i residual heat removal system and supporting systems) ;
and those used for accident mitigation (such as safety
! injection). As discussed above, the plant will have '
] the caoability to reach and maintain a hot standby condition for several days. At that tire, other I
sources of water could be obtained for longer tem cooling. Therefore, for an interim period until the
- seismic reevaluation program is complete, the proposed -
l scope of plant upgrading will provide reasonable ,
! assurance that safe shutdown can be attained such
- that operation of San Onofre Unit I would not pose an undue risk to public health and safety.
, The modifications to mechanical equipment and piping in i accident mitigating systems have not all been completed.
1 However, as discussed above, the reactor coolant pressure l boundary and large steam and feedwater piping have been i upgraded to withstand the 0.679 earthquake. Therefore, ;
the staff believes that the risk of a seismically-i' induced large accident which woult require use of the accident mitigating systems would be sufficiently low until a technical evaluation could be completed to define all plant modifications for the remainder of plant life.
4 The licensee has proposed to continue reevaluation of i these remaining systems and components and provide the
, results by the end of the present core cycle. The j implementation schedule for any identified modifications t
would then be defined by the relative safety significance i'
of the needed modifications. Staff review of the appro-priate schedule for long-term seismic resolution is t
continuing.
Lecal Aspects of Authorizing Restart t ,
The appropriate path toward determining whether to authorize restart depends on which of two views of
, the order is taken. A conservative reading of the
- order is that the order modified the San Onofre Unit 1 l licsise to incorporate conditions on operation which .
could only be altered or removed by further amendment of the license. Alterretivaly, the order might be l
a, ?
n primaril; t i.o -
- 1. order until e m 4n
' - - - - - - = - - - - -
The Comissioners -
4 i
actions were taken and, though the order limits [
operation of the plant, .the order did not " modify" !
the license. Under this latter theory, which has l significar.t litigative rist, restart cculo De ;
i autherized by merely lifting the suspension imposed !
by the August 1982 order. .
The order itself is not labeled a " suspension" or a
. " modification" order, but it clearly has elements of l both types of orders. Like other confirfnatory orders, ,
this order was intended to bind the licensee to its [
- comitments - here, the comitments to undertake plant {
! nodifications and .to extend the then existing plant ;
outage until those modifications were made. If -
Eecause authorization of restart now would alter the restrictions on operation imposed by the '
August 1982 order, the more conservative approach J would be to handle the change to the order's original scheme through the amendment process under 10 CFR l l 50.91 and i 50.92. The steff recognizes, however, '
that this approach may significantly delay actual <
plant restart because of the time required to com-plete necessary legal proceedings if, as is not j unlikely, a hearing were requested. '
t 1
Under the conservative view, the August 1982 order <
l wculd be corstrued as having modified the conditions i
of the San Onofre Unit I license by requiring the plant to stay shut down until the plant modifi-
! cations were completed and implicity by permitting i operation only with those modifications in place.
Ey granting the licensee's request to resume opera-
- tion of the facility on terms less stringent than those specified in the August 1982 order, the staff weeld he et'thorizirig the liceasee te de tHags it
, is not otherwise entitled to do under the present
! conditions of the order (i.e., license). In view of j these circumstances, the $ holly case may be instructive, i
In Shelly, the Court of Appeals rejected the Comis-
! sion's argument that the order which pemitted the ;
- venting of the,TMI-2 containment was not a " license
, amendment." The Comission had argued that the venting order had merely lifted the prior suspension 4 of the authority to vent imposed by the Comission's February 11, 1980 order. The court did not construe the venting order as a simple reinstatement of pre-existing authority under the license, but found that:
).
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I/ Unlike trere . ( rr:rment or k . W t 1982 orc." does not l provide ex; ." ,
':r a relaxatica ; ' - < of the orcu.
~
I I
The Commissioners .
I Because the June 12 Ventinc Orcer modi-fied the February .11 [1980) order, and j granted the licensee authority to do some- i
- tning ina it otherwise couac not have a
cone under the existing license authority, the Venting Order was a license amend-ment within the scope of Section 189(a).
Shelly v. NRC, 651 F.2d 780, 791 (D.C. Cir. 1980),
- ren. cenied, 651 F.2d 792 (D.C. Cir.1981), judement vacatea, 51 U.S.L.W. 3610 (U.S. Feb. 22, 1983)
(ho. 80-1640). Because the proposal to authorize restart of San Onofre Unit 1 is different from the conditions of the 1982 order, the more conservative approach to authorizing restart is to handle the licensee's request for relief from the 1982 order as i an amendment of the license, i
, If viewed in the context of an application to amend the San Onofre operating license, the pivotal issue, in tems of when restart authority could be given, is whether a "no significant hazards consideration" finding can be made. 10 C.F.R. Il 50.91, 50.92. If such finding could be made, the amendment could be mad; effective upon issuance; if the finding could not .
be made, effectiveness would be delayed until after the thirty-day period in which a hearing may be recuested or, if a hearing is requested and granted, until after r completion of the hearing process.
The difficulty associated with raking this finding
! becomes apparent when one looks to the relevant base-line for assessing the relevant factors set forth in 10 C.F.R. I 50.92(c). If the August 1982 order is viewed as having the effect of amending the license by req'.' iring 1rodificatiens te the plant, the licent:
as it now exists (which includes the provisions of the order) requires that, prior to restart, all com-mitments made by the licensee in its letters of June 15 and 24, 1982, be completed. At pr'esent, not all of the comritments have been met. Thus, the restart at this time would entail a relaxation of the tems of the license or, stated in terms of the "significant hazards consideration" criteria, a reduction in a margin of safety. Consequently, the 1 "no significant hazards consideration" finding could
The Co -issioners ..
I
- not be made. 2/ For this reason, the staff would publish a staiidard notice of consideration of issuance of an amendment in the Federal Recister which would provide an cpportunity for hearing Defore the amendment could become effective. If a hearing were recuested, ,
and held, a delay of about a year could occur 3/ This long a delay could result in the licensee decicing not to restart the plant at all.
If the August 1982 order were not considered to have imdified the license for San Onofre Unit 1, another way to approach the authorization of operation would be to treat the pemission to restart as merely the i lifting of the prior suspension of operation imposed
, by the August 1982 order. In this regard, the Comis-sion could view the order as imposing essentially two things: (1) a suspension of operation and (2) a requirement to undertake certain plant modifications to resolve the seismic hazard. Under this construction of the order, the Commission could lift the suspension, without providing further notice and opportunity to be heard, on a finding that operation would not pose an undue risk to public health and safety, and the Comission could extend the ultimate completion date i
for the remaining plant modifications by an amendment 4/
or merely under the terms of the lifting of the suspenT sien imposed by the August 1982 order. As reflected in NRR's February 8,1984 safety eva,luatien, the staff does not believe that all of the plant modifications proposed by the licensee in June 1982 are n(cessary to ensure
- the public health and safety. The justification for 1
2/ For this reason, the provisions of 10 C.F.R. I 50.91(a)(5) and (6) providing respectively for either dispensing with prior notice or
- 9.* ; chcrt notice in case
- cf cecrgencies or exigent circumstances
- are not applicable.
~
3/ There has been some past interest in the seismic capability of Unit 1.
In November 1981, the Director of NRR denied some 1560 petitions under 10 CFR i 2.206, including one filed by Ralph Nader, which
. requested a shutdown of San Onofre Unit 1 based in part on seismic hazards. DD-81-19,14NRC1041andDD-81-20,14NRC1052(1981).
The Director provided each petitioner with a copy of the August 1982 order when it was issued. No requests for hearing were filed.
~
4/ Such an amendment would not involve a significant hazards consideration under this approach since the base line for this detemination would be the license p'icr to t's issuance of the AucW : 1982 order.
The Com-issioners lifting the suspension would rest, then, largely on the licensee's substantial compliance with the order; i.e.,
the licensee has made extensive nodifications which have mace the plant safer and, for that reason, continued suspension is no longer mandated.
This approach to the order would not delay restart -
of the facility because it would not require the completion of any proceedings which might be necessary in connection with issuance of a "significant hazards" amendment under the more conservative approach as described above. Under existing precedent, the lifting of a suspension does not give rise to new hearing rights under section 189 of the Atomic Energy Act and, therefore, the Commission is not required
. to hold such hearings prior to the lifting of such a suspension. See Pacific Gas and Electric Comoany
~
(Diablo Canyon Nuclear Powe> Plant, Unit 1) CLI-83-27, 18 NRC 1146, 1148 (1983); Save the Valley v. NRC, Nc. 82-3148, unpublished decision (6th Cir., June 7 j 1983), aff'c Public Service' Company of Indiana (Marble Hill Nuclear Generatina Station, Units 1 anc 2),
! DD-8122,14NRC1085(1981). If public health and safety no longer recuire the suspension of operation, it can be a gued that an immediate lifting of the ,
suspension is appropriate, and perhaps compelled, because the Commission is authorized to maintain a suspension only so long as it is 'necessery te protect I public health and safety. See Metropolitan Edison Company (Three Mile Island huclear Station, Unit 1),
CL1-51-34, 14 NRC 1097, 1098 (1981); Consumers Power Company (Midland Plant, Units 1 and 2), CLI-73-35, 6 AEC 1082, 1083 (1983).
Terming the authorization to restart in this case as rierely a lifting of the prior suspension represents, however, an extension of the case law described in the preceding paragraph and would thereby entail signifi-cant litigative risk if a third party challenged the Commission's determination to permit operation and extend the completion date for the plant modifications withuut providing a prior opportunity to be heard. The denial of a hearing to third parties on the lifting of a suspension was sustained in Diablo Canyon and Marble Hill in circumstances in which the licensee had fully satisfied the terms of the original order (each of which were clearly labelled suspension orders) before tLe authorization to resume suspended activities had
!?tn given. See al;g 0; 2- ntn Municipal L'tility 9
, ., --r -
v-- - ,--
J
= .
l The Commissioners -
1 District (Rancho Seco Nuclear Generating Station)
CLI-79-7, 9 NRC 650 (1979), aff'd sub nom. Friends of the Earth v. NRC, 600 F.2d 753 (9tn Cir. 1979). In the 5an Onofre tese, the licensee will not have completec all of the activities originally contemplated under the order before the authorization to restart would be
- given. Again, it should be recalled that the Shelly court rejected the Commission's characterization of the TMI venting order as merely the lifting of a prior
, suspension because an earlier order had removed the authority to vent radioactive ges from the facility.
See Sholly, suora, 651 F.2d at 791.
Moreover, cases holding that the Commission is
.recuired to lift a suspension which is no longer compelled by public health, safety and interest have been decided in the context of the lifting of an
] inmediately effective suspension during an ongoing
,' aoJuc1catory proceecing: 1.e., a suspension which had been imposed on a licensee without a prior opportunity to be heard. In such cases, the lifting i
of the suspension is mandated because no compelling health and safety needs overrides the licensee's procedural due process rights to a prior opportunity to be heard. See Consumers Power Company, suora, 6 AEC at 1083. In contrast, the 5an Onofre case involves a situation in which the licensee has l consented to the suspension imposed by the order and no ongoing proceeding exists in which the propriety of that suspension is being heard. In view of these oistinguishing factors in the case law, there is substantial litigative risk in treating the authorization to restart San Onofre l Unit I as merely a lifting of a prior suspension.
i i
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1 i
..y Io .
The' Cerr.issioners
- .Reco rencation: The staff intends to proceed along the more conser- i vative course of action and to handle the restart I authorization as an amendment to the San Onofre Unit 1 l license unless otherwise directed by the Comission by September 7, 1984 i
William J. Dircks Executive Director for Operations cc: OGC SECY
" l 0FE l
N e
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.4 d
Hay 25, 1984
\
MEMORANDUM FOR: Harold R. Denton, Director,. NRR Richard C. DeYoung, Director, IE .
John G. Davis, Director, NMSS Guy Cunningham, Executive Legal Director:.
Thomas E. Murley, Regional Administrator, R-I James P. O'Re'111y, Regiona1' Administrator, R-II
- James G. Keppler,. Regional Ad=inistrator, R-III John T. Collins, Regional Administrator, R-IV Jchn B. Martin, Regional Administrator, R-V -
FROM: William J. Dircks-Executive Director for Operations
SUBJECT:
ACTIONS FOR Pl. ANTS WITH NEAR. TERM' LICENSING ACTIVITY
.- .%: q .; . . - .
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After reflecting on our discussions during the management meeting on May -17 and 18, I have decided upon the following course of action to ensure better
. coordination of our activities:
. An integrated schedule of all NRC activities (licensing, inspection,[
hearing and investigations) is to be developed by June 18 for thg following facilities:
s I Comanche Peak
Fermi 2 .
Vo1f Creek '
Diablo Canyon 2
, TMI (restart)
Byron 1 San Onofre 1 (restart)
Limerick 1 The integrated schedule should identify the expected completion dates for activities necessary to meet the projected fuel load or restart date and the organizations and personnel specifically responsible for completing the activities. Critical path items should be highlighted. In adjusting internally for resource allocation for developing and directing the schedules, you should ensure that operating reactors remain adequately covered. Anticipated requirements for supplements 1 resources, if necessary, should be clearly identified and contract personnel should be used where possible.
Harold Dentan is responsible for developing the integrated schedules and managing their implementation. The other Office Cirectors and Aegicnal Acministrators are re',pensible fer creviding comalete ard tirely input :
g
2-
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Harold Denton. Organizational units are responsible for conduct of their -
s normal functions as delineated in the NRC Manual in implementing the schedules, subject to coordination with and overall management of the
'l effort by NRR.
?
l 2. I desire to be briefed on the integrated schedule forbriefings The the eight plants should identified above initially, on a monthly basis.
i identify all potential problems in meeting the . schedules Although anditdescribe is probablythe proposed resolution for any identified problems.too late for developme informed at the briefings of any problems and proposed resolutions '
associated with the very near term plants such as Grand Gulf, Shoreham, etc.
Harold Denton is assigned responsibility for' arranging and conducting the briefings and I expect participation of the Office Directors (addressees) and apprepriate Regional Administrators in the ;
briefings. Integrated schedules should be provided to me at least 3 days '
prior to the briefing. The The first briefing Director OIshould is invited be scheduled to participate forinthe the week of June 18, 1984.
I I scheduled briefings for' those plants that h' ave ongoing or pending investi-gations. -
[
- 3. Regarding Comanche Peak, Tom Ippolito should proceed immediately to staff r the organization and implement the necessary actions to complete NRC In l 4
activities in the time frame necessary to support the Fuel Load date. )
staffing the organization, the following guidelines apply: .
I
[
(a) Inspection and Licensing Resources are not to be diverted (com 1 f Operating Power Reactors beyond a level acceptable to the Director, j IE, and Regional Administrators (inspection).and Director, NRR i (licensing).
Contracted resources should be used to the maximum extent possible "In i (b) -
t constituting the review team.
(c) Requests for personnel will be on a " functional" rather than a "name" '
- basis. Of fice Directors and Regional Administrators are expected to ,
provide fully qualified personnel for the requested functions to be [
performed. Requests should be coordinated with Jack Roe. <
I I expect the organization to be in place and functioning by June 4,1984 I
- 4. Regarding Wo1f Creek, Dick DeYoung, in coordination with John Collins, Jim i Xeppler and Harold Oonton should develop a recommendation regarding the ;
appropriate role of Region III* and Region IV in completing the inspection l program. I would like to receive the recommer.dation by May 31, 1934 j
4 Regarding other NT0Ls or problem f acilities, integrated schedules sh:uld be develo::ed and periodic E00 briefings conducted. At the initial l S.
l
' briefing (wee'<. cf June 13), please be prepared to dis:uss the tira f rue f r develoo e :t of an inte; rated 5:heduie (e.g.15 msn:hs ;cier to fuel I 1: 42) ted 19e fra;us-:y :f bHafir.gs (e.g.. : artnely at:1 than c:tt:Cy 6 m:n:hs arter to feel les:).
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[ ' there are any questions regarding this memorandum, please contact'me
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gro:ptly.
/s/ William J. Dircks William J. Dircks Executive Director for Operations cc: B. Hayes R. B. Minogue P. G. Norry '
L. Barry - -- - -
C. J. Heltames -
G. W.'Kerr.
T. Ippolito 4 -
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,,, UNITED STATES I~
'y a NUCLEAR REGULATORY COMMISSION M 0,
. ,E WASHINGTON. D. C. 2055$ $
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, % , , , , . 8, May 30, 1984 MEMORANDUM FOR: Richard C. DeYoung, Director, IE John G. Davis, Director, NMSS
. Guy Cunningham, Executive Legal Director Thonas E. Murley, Regional Administrtor, Reg. I' James P. O'Reilly, Regional Administrator, Reg. II James G. Keppler, Regional Administrator, Reg. III John T. Collins, Regional Administrator, Reg. IV John B. Martin, Regional Administrator, Reg. V FROM: Harold R. Denton, Director Office of Nuclear Reactor Regulation .
SUBJECT:
ACTIONS FOR PLANTS WITH NEAR TERf1 LICENSING ACTIVITY This is to infom you of actions NRR has taken in order to complete Step 1 and
\ 2 as identified in the May 25, 1984 memorandum from W. Dircks regarding near term' operating license activity. Recall thav Step 1 calls for the development cf an agency-wide integrated schedule by June 18, 1984.
In order to focus the appropriate management attention on the plants identified in Step 1, NRR has designated selected managers to accomplish the development of the integrated schedules. The designated managers are: .
Waterford D. Crutchfield Comanche Peak T. Ippolito Femi 2 W. Butler Wolf Creek K. Kniel Diablo Canyon 1/2 C. Grimes THI-1(Restart) J. Stolz Byron 1 W. Gamill -
SanOnofre1(Restart) C. Grimes '
Limerick 1 W. Regan These managers have been assigned full time to this effort until the completion of the development of the schedules. Coordination of this overall activity has been assigned to the Director, Division of Licensing.
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.I In order to ensure that this effort is completed in sufficient time for r'anagement to review the end products, I am requesting that you each begin to assemble a listing of all remaining NRC work activities under your cognizance. Your listing should not only identify the detailed work item, i but the time frame for completion of the activity, and should identify the NRC crganizational unit assigned to complete the task. The designated managers will visit appropriate NRC Regional Offices about June 5-7 for the purpose of receiving, reviewing, and discussing remaining NRC work activities reoufred for full power licensing of these facilities. Similarly, i the designated managers will be meeting with other Office representatives
! (IE, ELD, NMSS) during the week of June 4 in order to obtain a similar listing of activities under their cognizance.
We request that you each identify a management contact within your Region or Office for accomplishing this effort. NRR will be developing a standard format for use in summarizing all work activities. NRR will also coordinate the interface with OI for the plants identified in Step 1.
j Your prompt attention to this matter and your cooperation is appreciated. _
j / N r Harold R. Denton, Director -
j( , Office of Nuclear Reactor Regulation t -
cc: B. Hayes D. Eisenhut .
, T. Novak l D. Crutchfield -
- T. Ippolito I W. Butler I
K. Kniel f l C. Grimes v .
! J. Stolz J W. Gammill
- W. Regan
- W. Dircks l
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,Ip jt, UNITED STATES p
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NUCLEAR REGULATORY COMMISSION WASHING TON, D. C. 20555
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June 7, 1984 MEMORANDUM FOR: Harold R. Denton, Director Office of Nuclear Reactor Regulation FROM: Guy H. Cunningham, III Executive Legal Director
SUBJECT:
ACTIONS FOR PLANTS WITH NEAR TERM, LICENSING ACTIVITY This is in reply to your Memorandum of May 30, 1984 in which you requested that this office identify a management contact for each of the plants designated to have an integrated licensing schedule.
To insure unifomity in our treatment of the identified plants, Edward Christenbury has been designated as the overall coordinator within this office for the activities identified in Mr. Dircks' Memorandum of May 25, 1984; how- -
ever, on a day-to-day basis, your contacts and request for information should be directed to the following individuals:
Waterford Joe Scinto ,
(' Comanche Peak Joe Scinto Fermi 2 Joe Gray Wolf Creek Myron Kamah Diablo Canyon 2 Larry Chandler G1'E TMI-1(Restart) Joe Gray Byron 1 Rich Rawson/ Steve Lewis San Onofre 1 (Restart) Larry Chandler Limerick 1 Joe Rutberg This Memorandum will confirm the information telephonically provided to Mr. Eisenhut by Mr. Christenbury on May 30, 1984. ,
- -[
- Guy"H. Cunningham II Executive Legal Director cc: B. Hayes K.Kniel J D.Eisenhut ( L arJmes T.Novak J.Stolz D.Crutchfield W.Gamill T.Ippolito W.Regan W. Butler W.Dircks CONTACT:
E.Christenbury OELD 49-27201 d c tr i, 1 drh 4 il -
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f, UNITED STATES y g NUCLEAR REGULATORY COMMISSION er
- g .; WASHING TON, D. C. 20555
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- June 8, 1984 MEMORANDUM FOR: Harold R. Denton, Director Office of Nuclear Reactor Regulation FROM: Richard C. DeYoung, Director Office of Inspection and Enforcement
SUBJECT:
ACTIONS FOR PLANTS WITH NEAR TERM LICENSING ACTIVITY This refers to your memorandum of May 30, 1984 concerning integrat'd e schedules for eight named facilities. Nelson Grace, Director, Division of Quality Assurance, Safeguards, and Inspection Programs, has been assigned responsibility -
for overall IE coordination of this project. The designated managers for individual plants named in your memorandum should work with Robert Heishman, Chief, Reactor Construction Programs Branch, (ext. 29644) in developing work activities. IE inputs to the integrated schedules will be available by
, June 8. We request that IE be informed of plans for visiting Regional '
s Offices. .
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Richard C. oung, irector Office of I ection and Enforcement cc: B. Hayes D. Eisenhut T. Novak D. Crutchfield T. Ippolito W. Butler K. Kniel C. Grimes J. Stolz W. Gamill
- . W. Regan W. Dircir,s n
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. IU ACTIONS FOR PLANTS WITil Nf:AR-TERM LICENSING ACTIVITY (QUAI.ITY ASSURANCE BRANQ1 INPIIT),,_ #
i ENCLOSURE 3 L'
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, PInnt QA Roviews (l .c.. Section 3 7 of SRP) N sign Attevity i O t QA Review ITS vs. Sst Q-List IDI f " I
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- 1. traterford gej)-
C (see Enclosuro A) Seo note 1 C N/A
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- 2. Comanche Peak C See note 1 C N/A f.{
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- 3. Termi 2 C 'fr See note 1 C N/A NNH Ic.nl 4 tsot f Creek C
- See note I C N/A gy ,! ,
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- 5. Diablo Canyon 1/2 (sce 1.ncl. C) .- 7 C See note 1 C N/A NRM-Icod
- 6. THI-I (Restart) C See note 1 C N/A N/A 7 Byron I ,,
C See note I C IE-Lead N/A )
(see Encl. 8) ' '
'l 3 San Onofre 1 (Restart) C t
See note ! C N/A N/A
- 9. Limerick
- ! il C See note I and 2 4 ;*
C N/A IE-1. cad .
- t (see Encl. D) {4 n
, ' .f NOTES: 1. ,,
14tter. Grace to (see responslinilities Eisenhut. " Board Enclosure E).Notification 84-011 ..." 4/12/84, states NRR should inform NTOLs concerning C.L. 84-01 and their ' -
2.
q{cq xaf-Letter. Crace to Eisenhut. "QA Dranch Ingnet ..." 5/31/84 reiterates the position in* note 1 (see Enclosure F). ,
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Acronyms: ITs "toportant to safety" *
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SR " safety-related*'
Q-list - IIsting of SR systems, etc. 4 1
'f Ill! - Inter. rate.1 Besign Inspection :, -"
llW - trolegveulent Ikisign Vorificatloet Pmgram
l C - Cumitlete N/,A
- Not applicable '
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D JUN 151984
. NOTE TO:
FROM: C. Grimes
SUBJECT:
LICENSING SCHEDULE AND RESOURCE ESTIMATES - SAN ON0FRE 1 Attached is a compilation of the licensing schedules and resource estimates for San Onofre 1. This information is being used to generate a PERT network and resource schedule for all NRC activities. I would appreciate it if you would carefully review the schedule and resource estimates and identify corrections to make this information as realistic as possible. This informa-tion is organized as follows: -
- 1. Each action is identified with the organization responsible to complete the action. In some cases, activities are identified that may not necessarily need to be completed to support plant restart, but they either provide input to other actions or use resources requir<al for 7
other actions (designated in column AT [ action type] as ROUT [ routine]).
( If an action must be completed to support restart (either the restart SER or the readiness report), it should not Ife designated " routine."
- 2. The START and COMPLETE dates establish the period during which the action will be accomplished. If the action has already been started and is continuing, the start date should be 6/11/84 (the network initiat*on date); all of these schedules are forward-looking. PC in the START column is the number of the proposed change to the license.
- 3. Similarly, the resource estimates should only cover the time remaining to complete the action (PH is person-hours). The time estimates should indicate " series" time (for example, if two people will work 20 hours2.314815e-4 days <br />0.00556 hours <br />3.306878e-5 weeks <br />7.61e-6 months <br /> each in parallel, indicate 2x20PH).
- 4. The time estimates should include the time required to prepare reports and obtain concurrences (actual staff time, not time in concurrence).
If an interim report for a routine action is required to support another action, include the preparation time in the resource estimate, identify the supported action item number in the "AT" column, and indicated the report issuance date in the " ISSUE" column.
- 5. The " INPUT" column identifies utility submittal dates, allegation tracking system numbers, and Region Operating Plan references (for example, A1A is a.1.a on the plan).
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- 6. The " ISSUE" date is the point at which a document would be completed, ,
serving as an input to the next action. For routine actions, the ;
ISSUE date establishes the period over which the resources would be l used.
j 7. CS identifies a supporting contractor and the $K identifies the funding f allocated. If OK is indicated in the $K column, then contract support !
could be used, but no funds have been allocated. lt
- 8. The "AT" column identifies the next sequential action. The " CPM" l identifies the critical path model the action applies to.
I sincerely appreciate your assistance. If you have any questions, please do not hesitate to call me (FTS 492-7464).
Ed i Christopher I. Grimes, Acting Chief -
Systematic Evaluation Program Branch Division of Licensing 4
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SAN ONOFRE 1 ALLEGATIONS b l
ACTION SCHEDULED LEAD ALLEGATION STATUS COMPLETION BN ATS NUMBER OFFICE COMMENTS 4
- 1. Contamination Closed RS-83-A-0023 R5
- 2. Falsified Maintenance Closed RS-83-A-0027 R5
- 3. Incorrect Anchor Bolts Open 12/15/84 RS-83-A-0036 RS/01 August partial report
- 4. Contamination Closed RS-83-A-0037 R5
- 5. Worker terminated due Closed RS-83-A-0040 R5 to excessive exposure
- 6. Drugs Open 7/31/84 RS-83-A-0044 R5 1
- 7. . Improper access to Open 7/31/84 RS-83-A-0044 R5 training exams
- 8. Safety procedures not Open 7/1/84 RS-83-A-0051 R5 followed j
- 9. Inspection report Closed a RS-83-A-0065 R5 inaccurate
- 10. Improper guard security Closed R5-83-A-0076 R5 clearance
- 11. Falsified employee Open 8/15/84 RS-83-A-0078 R5 background records
- 12. Dosimeter inoperative Closed RS-84-A-0029 RS a
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