ML20217J397
| ML20217J397 | |
| Person / Time | |
|---|---|
| Site: | Claiborne |
| Issue date: | 08/08/1997 |
| From: | Curran D, Walker N CITIZENS AGAINST NUCLEAR TRASH, HARMON, CURRAN, SPIELBERG & EISENBERG, LLP., SIERRA CLUB LEGAL DEFENSE FUND, INC. |
| To: | NRC COMMISSION (OCM) |
| References | |
| CON-#397-18435 ML, NUDOCS 9708140205 | |
| Download: ML20217J397 (8) | |
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4 UNITED STATES OF Ah1 ERICA D
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I BEFORE THE COhthilSSION O
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MW Louisiana Energy Services Docket No. 70-3070-.-
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August 8,1997 ML-(Claiborne Enrichment Center)
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CITIZENS AGAINST NUCLEAR TRASIt'S SUPPLEMENTAL BRIEF IN RESPONSE TO COMMISSION ORDER OF JULY 8.1997 Introduction As provided by the Commission's Order of July 8,1997, Citizens Against Nuclear Trash (" CANT") hereby files this Supplemental Brief in response to the Applicant's Response to the Commission Order of July 8,1997 (Aug"st 1,1997) (hereinafter " Applicant's Response"). The Applicant's Response addresses the significance of Graystone Corporation's
("Graystone's") request to withdraw from the Louisiana Energy Services ("LES") partnership, with respect to the financial qualifications issues now before the Commission on appeal of LBP-96-25,44 NRC 331 (1996), it also asserts that Graystone's subsidiary, Le Paz, is presumed to seek withdrawal if Graystone's withdrawal is accepted. Applicant's Response at 2 note 2.
As discussed below, Graystone's and Le Paz's withdrawal from the LES partnership would not affect LES' financial qualifications under the correct standard applied by the Licens-ing Board in LBP 96-25, because LES has no financial qualifications which the withdrawal could diminish. Even assuming argitenda that the incorrect standard advocated by LES applies, the likely withdrawal of Graystone and Le Paz further buttresses the Licensing Board's determination that LES lacks any reasonable prospect of obtaining financing for the CEC project. The Commission need not reopen the record to consider this new evidence, however, because the existing record is fully sufficient to support the Board's conclusion.
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SIGNIFICANCE OF WITHDRAWAL UNDER CORRECT LEGAL STANDARD l
APPLIED BY THE LICENSING BOARD IN LBP 96-25 in its response to the Commission, LES continues to rely on its erroneous interpretation l
of the NRC's financial qualifications standard, Lt., that financial qualifications can be l
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demonstrated by presenting a " reasonable financial plan" and a reasonable assurance of being able to obtain construction funding sometime in the future.1 Applicant's Brief in Support of Its Petition for Review of LDP 96 25 at 23 24 (March 13,1997). LES fails entirely to address -
the significance of Graystone's and Le Paz's withdrawal under the correct financial qualifica-tions standard applied by the Licensing Board in LBP 96 25. Under this standard, a newly formed entity like LES must "specifically identify" source (s) of funding, and demonstrate the financial capability of any corporate affiliate relied on to " meet its commitments." 44 NRC at 395, quoting Appendix C to 10 C.F.R. Part 50.
LES' silence on the significance of Graystone's and Le Paz's withdrawal with respect to the Licensing Board's decision undoubtedly stems from the fact that Graystone's and Le Paz's prospective withdrawal from LES has no significance under the NRC's financial qualifications standard as correctly applied by the Licensing Board. See LBP 96-25,44 NRC at 396-404. The Board properly rejected LES' financial qualifications because LES failed to show the existence of any equity in the partnership, financial commitments from the partners' parent corporations, or financial commitments by lenders, to fund construction of the Claiborne Enrichment Center (" CEC"). M. at 398. Removing Graystone's and Le Paz's par-ticipation from LES' inadequate plan is equivalent to subtracting nothing from nothing.
As the Board recognized, neither Graystone nor Le Paz is a corporation of worth M.
Although LES' Financial Plan contemplates that the limited partners, including Le Paz, will I
As discussed extensively in CANT's opposition brief on appeal of LBP 96-25, LES' interpretation of the regulations is legally unsu? portable. Sgg Opposition Brief of Intervenor, Citizens Against Nuclear Trash, on App)al of LBP-96-25 at 22-49 (April 30,1997)
(hereinafter " CANT's Opposition Briet
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3 make equity contributions of 30 to 40% of construction costs, none of the limited panners has the wherewithal to make these contributions.2 M. at 396. Moreover, neither Graystone's and Le Paz's ultimate parent, Northern States Power Corporation ("NSP"), nor any other of the limited partners' top tier parents, has the slightest obligation to fund the participation of their
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i subsidiaries.3 M. at 399. Thus, just as Graystone's and Le Paz's participation in the LES partnership provided no assurance of funding for the CEC project, so their withdrawal from the pannership would have no effect on the nonexistent financial qualifications of LES, 1
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2 LES' assertion that ec ulty "could continue to be available so long as the existing part-ners, or new partners, cons der the investment worthwhile" is misleadmg on several levels.
Applicant's Response at 3. First, LES implies that the panners have invested some equity in the CEC project. However, the only equity that exists is the investment of the limited partners in the venture phase of the CEC project. The partners have no equity whatsoever in the con-struction phase, Second, whether or not the are not capable of contributing "new equity,y consider it " worthwhile," the " existing partn because they are worthless paper corporations with no assets to invest. Nor do they have any commitments from their parent corporations to invest in the project.- Finally, although LES has been speculating about the advent of "new aartners" since 1995, no such partners have materialized, and thus the reference is merely
,llusory. Sn LBP-96-25,44 NRC at 401 note 28.
3 The Commission should relect as irrelevant LES' assertion that lenders "will look to the collective caaability of the part r.rs and their parents in assessing the partnership's qualinca-tions," and 11at "each of the existing partners, together with its respective parent, has consider-able nnancial resources." Applicant's Response at 3. Under the Commission's regulations, a newly formed entity may not rely on the predicted behavior of investors in order to show its Snancial qualifications, but rather must demonstrate that it has obtained actual funding and/or commitments for funding. LDP-96-25,44 NRC at 395, ouoting Appendix C to 10 C.F.R.
Part 50. Here, LES has failed to identify a single source of funding or obtain any commit-ments from its corporate afHliates, none of which is a pany to the LES Partnership Agree-ment.
Moreover, LES' assertion that the existing partners have " considerable resources" when viewed together with their parent corporations is about as meaningful as saying that a pau r is wealthy by virtue of standing next to a rich person. As the Beard recognized in LBP 96-5
"[t]he nnancial capability of a corporate afnliate to contribute construction funding without a coneomitant commitment to provide the funds, is no more useful in objectively judging the financial qualifications of a LES general or limited partner than a commitment to provide the funds from a cor 44 NRC at 402. porate affiliate financially incapable of contributing the construction funding."
4 II.
SIGNIFICANCE OF WITIIDRAWAL UNDER INCORRECT STANDARD ADVOCATED BY LES AND Tile NRC STAFF Assuming arguendo that the erroneous standard advocated by LES is applicable, Graystone's and Le Paz's prospective withdrawal from the LES partnership does not detruct in any way from the Licensing Board's fully.opported conclusion that LES has failed to demonstrate a reasonable prospect of obtaining funding for construction of the CEC.4 To the contrary, these anticipated withdrawals reinforce the Board's decision by showing a lack of conndence in the Snancial health of the CEC project. Nevertheless, because the 1995 hearing record fully supports the Licensing Board's conclusion that LES has failed to demonstrate a 1
reasonable likelihood of financing the CEC project, there is no need to consider this additional new evidence of LES' lack of Snancial quali0 cations.
In the event that the Commission decides to adopt LES' interpretation of the financial qualincations regulations and concludes that the 1995 hearing record supports a Snding that LES is Snancially qualified, the question arises as to how the new information provided by LES regarding Graystone's and Le Paz's withdrawal should be treated. CANT submits that these prospective withdrawals would provide signincant new evidence of LES' lack of capabil-ity to provide equity or or obtain financing. As the Board observed in LDP 96 25, Loulslana Power & Light ("LP&L") and Duke Power Company have already stated their intention to end or drastically reduce their subsidiaries' participation following the venture phase of the CEC project. Id. at 400 note 28. If the subsidiaries of LP&L, Duke Power, and NSP depart, only the subsidiaries of Urenco and Fluor Daniel would remain. Thus, Graystone's and Le Paz's withdrawal from the partnership would raise signincant questions about the financial viability of the CEC project: Lt. whether the remaining LES partners will be able to contribute suffi-cient equity to the project, and whether LES can attract investors' capital on terms favorable to 4
Sec CANT's Opposition Brief at 49-51, giling LBP 96-25 at 403 note 33 and other record evidence of LES' poor financial prospects.
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the fulfillment of LFS' Financial Plan. Therefore, it "could yield a materially different result in the outenme of the proceeding," warranting the reopening of the record. Sn 10 C.F.R. 6 2.734.
Moreover, if the Commission accepts LES' financial qualifications under the standard proposed by LES, and decides to consider the effect of Graystone's and Le Paz's withdrawal on those qualifications, it may not rely on unsupported testimony by LES' attorneys regarding such issues as the reasons for Graystone's and Le Paz's withdrawal (se Applicant's Response at 6),5 the effects of the withdrawal on LES' prospects for attracting investors (seg hL at 3),
the likelihood that existing partners or new partners would pick up Graystone's and Le Paz's l
shares (agg kl. at 4), and the effects of the withdrawal on the management of the project (act kl. at 4 note 5). Before they may be relied upon, such assertions must be supported and sub.
jected to discovery and cross-examination, as has all other evidence in this hearing.
Conclusion For the foregoing reasons, the prospective withdrawal of Graystone and Le Paz from the LES partnership has no effect on the continuing validity of the Licensing Board's decision to reject LES' financial qualifications.
5 The Commission should reject out of hand LES' self-serving and utterly unsupported claim that Graystone is withdrawing because of " delay and uncertainty" caused by the Licens-ing Board. Applicant's Response at 6. LES itself sowed the seeds of delay when it failed to obtain even the most minimal equity contribution or financial commitment for the construction of the CEC, and instead opted to advocate an unsupportable and irrational financial qualifica-tions standard. The Licensing Board cannot be faulted for doing a careful and thorough job of applying regulations that LES chose to ignore. Moreover, LES did not transmit the news of Graystone s intended withdrawal from the partnership until over a month after the Licensing Board had issued its final decision. Thus, it is sim drew out of frustration with the Licensing Board. ply illogical to argue that Graystone with-
6-spectfully submitted, Diane Curran liarmon, Curran, and Spielberg 2001 "S" Street N.W., Suite 430 Washinh8 3500 ton, D.C. 20009 (202) 3 41 & P. U fbC tL athalle M, Walker Earthjustice Legal Defense Fund 400 Magazine Street, Suite 401 New Orleans, LA 70130 l
(504) 522 1394 August 8,1997
CERTIFICATE OF EERVICE 1, Diane Curran, certify that on August 8,1997, copies of the foregoing CITIZENS AGAINST NUCLEAR TRASll'S OPPOSITION TO APPLICANT'S MOTION FOR LEAVE TO EXCEED PAGE LIMITATIONS and CITIZENS AGAINST NUCLEAR TRASH'S SUP-PLEMENTAL BRIEF IN RESPONSE TO COMMISSION ORDER OF JULY 8,1997 were served by by first-class mail on the following parties:
Thomas S. Moore, Chairman Off. of Appellate Adjudication Atomic Safety and Licensing Board U.S. Nuclear Regulatory Comm.
U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.L. 20555 Richard F. Cole Peter O. LeRoy Atomic Safety and Licensing Board Duke EnJineennp U.S. Nuclear Regulatory Commission 230 Souti Tron Street Washington, D.C. 20555 P.O. Box 1004 Charlotte, NC 28201-1004 Frederick J. Shon Atomic Safety and Licensing Board W.H. Arnold, President U.S. Nuclear Regulatory Commission LES, L.P.
Washington, D.C. 20555 2600 Virginia Ave. N.W.,
Suite 608
- Docketing and Service Washington, D.C. 20037 Office of the Secretary U.S. Nuclear Regulatory Cor.1 mission Nathalle M. Walker, Esq.
Washington, D.C. 20555 EJLDF 400 Magazine St., Suite 401 New Orleans, LA 70130
' Richard G. Bachmann, Esq.
Office of General Counsel Marcus A. Rowden, Esq.
U.S. Nuclear Regulatory Commission Fried, Frank. Harris, etc.
Washington, D.C. 20555 1101 Pennsylvania Av. N.W.,
Suite 900S Washington, D.C. 20004
'J. Michael McGarry, Ill, Esq.
David S. Bailey, Esq.
Robert L. Draper, Esq.
Thomas J. Henderson, Esq.
Winston & Strawn Lawyers' Committee for Civil 14J0 L Street N.W.
Righte. Under Law Washington, D.C. 20005 3502 1450 0 Street N.W., Suite 400 Washington, D.C.
Ronald Wascom, Deputy Asst. Secretary Office of Air Qurdity & Radiation Protection Department of Environmental Quality P.O. Box 82135 Baton Rouge, LA 70884
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- Shirley Ann Jackson, Chairman i
U.S. Nuclear Regulatory Commission i
Washington, D.C. 20$55 l
- Kenneth C. Rogers, Commissioner U.S. Nuclear Regulatory Commission Washington, D.C. 20555 l
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.* Greta J. Dieus, Commissioner -
U.S. Nuclear Re ulato Commission Washington, D.
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- Nils J. Diaz, Commissioner
- U.S. Nuclear Regulatory Commission Washington, D.C. 20555 -
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- Edward McGaffigan, Jr., Commissioner i
U.S. Nuclear Regulatory Commission Washington, D.C. 20555 1
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- Also by FAX Diane Curran d
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