ML20236H425

on Appeal from Decision of ASLBP Denying Petition to Waive Financial Qualification Regulations.* Appeal Should Be Dismissed & Decision of Licensing Board Should Be Affirmed. Certificate of Svc Encl

ML20236H425
Person / Time
Site:	Seabrook
Issue date:	10/26/1987
From:	Dignan T PUBLIC SERVICE CO. OF NEW HAMPSHIRE, ROPES & GRAY
To:	Atomic Safety and Licensing Board Panel
References
CON-#487-4707 OL-1, NUDOCS 8711040112
Download: ML20236H425 (13)

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UNITED STATES OF AMERICA W ET 3 A9 43 NUCLEAR REGULATORY COMMISSION before the OFFICE 0; ?ECat'M4 Y 00CKEllNG !, Sf,DVIC[

ATOMIC SAFETY AND LICENSING APPEAL BOARh ^"

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In the Matter of )

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PUBLIC SERVICE COMPANY ) Docket Nos. 50-443-OL-1 OF NEW HAMPSHIRE, ET AL. ) 50-444-OL-1

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(Seabrook Station, Units 1 ) (Onsite Emergency and 2) ) Planning and Safety )

) Issues)

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ON APPEAL FROM A DECISION OF THE ATOMIC SAFETY AND LICENSING l BOARD DENYING A PETITION TO WAIVE FINANCIAL QUALIFICATION REGULATIONS BRIEF OF APPLICANTS-APPELLEES STATEMENT OF PRIOR PROCEEDINGS AND FACTS This is an appeal from a decision of the Atomic Safety and Licensing Board herein (Licensing Board) in which it denied a petition under 10 CFR S 2.758 filed by Town of Hampton (TOH), New England Coalition on Nuclear Pollution (NECNP) and. Seacoast Anti-Pollution League (SAPL) to waive the provisions of 10 CFR 55 50.33(f), 50. 57 (a) (4 ) so as to require the Applicants to demonstrate financial qualifications to operate and decommission  ;

I Seabrook Station.1 1 MEMORANDUM AND ORDER (Denvina Petition to Waive .]

Regulations) (August 20, 1987), unpublished, (hereafter referred j to and cited as " Decision."). The petition did not seek the 1 I

waiver of 10 CFR S 2.104 (c) (4) which also bars consideration of B711040112 871026 3 ^

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i The petition was premised upon a so-called 8-K filed by Public Service Company of New Hampshire (PSNH). That document states that in the event that PSNH is not successful in its efforts, together with its investment bankers, in coming up with a financial plan within a relatively short time, "it will be difficult, if not impossible, for the Company to avoid proceedings under the Bankruptcy Code." The 8-K does not state that PSNH will fail in its efforts.

The Licensing Board rejected the petition on three separate grounds. The first of the grounds was procedural. Decision at 2

- 3. The Licensing Board held that TOH had no standing to bring the petition, and that SAPL and NECNP were not properly represented before the Board because no appearance had been filed on their behalf by the counsel filing the petition. See 10 CFR 5 2.713. The second ground was that the petition was fatally defective because of its failure to allege that, in the event of the issuance of a full power license, the regulator of PSNH would not allow recovery of the costs at issue and, therefore, the petition failed to set forth the sole allowable grounds for a waiver of these regulations. Decision at 8. Third, the Licensing Board held that, even if one were to assume that special circumstances would be shown if all of the fears expressed in the Petition came to pass, at this juncture,. they were all speculative and thus could not be the basis for the financial qualifications in an operating license case involving a regulated utility.

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1 prima facie showing required under 10 CFR S 2.758.

The petitioners thereafter took this appea).

ARGUMENT I. THE WELL REASONED DECISION OF THE SHOREHAM LICENSING BOARD CORRECTLY ANALYZED THE ISSUES RAISED BY THIS PETITION The petition at bar is not without precedent. In the Shoreham proceeding, the Licensing Board dealt with a similar petition. Lona Island Lichtina Co. (Shoreham Nuclear Power Station, Unit 1), LBP-84-30, 20 NRC 426, 430-36 (1984). Therein, the Licensing Board fully examined the history of the i Commission's Financial Qualifications rule and reached the conclusion on facts similar, if not congruent, to those at bar that no prima facie showing had been made. Inter alia, the Shoreham Licensing Board observed:

"In order to show that the regulations should be waived, Interveners would have to show that LILCO cannot recover its operating costs through rate regulation. Interveners have indicated that the New York Public Service Commission has instituted a prudency investigation and that its Staff has proposed to deny $1.8 billion in Shoreham related construction costs. Yet this proceeding has $

not been concluded and thus its outcome remains wholly speculative." 20 NRC at 433 (Emphases in original).2 1

2Per contra, a draft report issued by the consultant hired by PSNH's regulator, The New Hampshire Public Utilities ,

Commission, has tentatively concluded that approximately $333.5 j million of the total to date cost of Seabrook, $4.8 billion, (or j approximately seven per cent) was imprudently incurred. See New I Hampshire Public Utilities Commission, Executive Summary, Review l of the Reasonableness of the Costs and Management of the Seabrook {

Station, Touche Ross and The Nielsen-Wurster Group, July 1987, passim. While this does not, of course, mean that the NHPUC will agree fully with its consultants, it certainly places PSNH in a 3

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"Nor does this situation present issues of considerable safety significance for which a reasonable assurance now of the future outcome of the rate proceeding would be desireable. Interveners do not allege that any particular safety problems result from LILCO's " dire" financial situation; and apparently none exist. In fact, their only fear is that "the citizens of the State and Cpunty could be faced with an irradiated plant whose owner cannot afford to operate, shut it down, or clean it un safelv." [ Record Cite). Although possible, it is not probable that this fear will be realized. It is unlikely that LILCO would not be found financially qualified to operate Shoreham if and when it satisfies all applicable NRC prerequisites to operation. In addition, the New York State PUC is unlikely to deny LILCO reasonable operatina costs, if and when Shoreham commences commercial operation, since it has generally done so." Id. at 433-34 (footnote omitted, emphases added).

The above quoted language from the Shoreham decision highlights two faults in the Petition filed below. First, it was speculative as to whether or not the event which is a prerequisite to the Petition having had even surface validity (the seeking of protection under the Bankruptcy Code by PSNH) would, in fact, occur. Second, the petition misstated what the special circumstance are that would have to exist before a crima l facie showing could be made.

With respect to the latter matter, the Petition, after highlighting the portion of the Statement of Basis published by the Commission in 1984 when the current Financial Qualification better situation vis-a-vis its rate regulator than existed when the Shoreham petition was dealt with by the Licensing Board in that case.

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Rule was promulgated that emphasizes the Commission's power under 2.758 to waive the rule, see Petition at 7, went forward on the assumption that the Commission therein said something it did not say. The Commission did not say that Bankruptcy (or other financial problems of the operating utility) per oc could result in an exception or a waiver under 10 CFR 2.758. Rather the

" threshold showing" that had to be made was that: ,

"[T]he local public utility commission will not allow the total cost of operating the facility to be recovered through rates." 49 Fed. Reg. 35751 (Sept. 12, 1984).

In other words, it is the attitude of the relevant rate regulator that is crucial, not the question of whether the operator may go into reorganization. The Petition did not even begin to address the attitude of the New Hampshire Public Utility Commission towards allowing sufficient funds to be recovered to cover all operating costs of Seabrook.3 This was fatal. Again the words of the Shoreham Licensing Board are instructive:

"In the prescnt context of financial qualifications, there is no basis to speculate even if Interveners' most dire financial forecasts are realized, that the plant could not be operated in accordance with all safety requirements by either a restructured LILCO or by some other entity.

3Possibly in recognition of this deficiency, the Interveners spent a great deal of time discussing the so-called " anti-QUIP" laws in New Hampshire. Petition at 4-5. However, there is nothing unusual about Seabrook's situation. Any nuclear power plant which is denied a full power license will create a problem of the same nature as conjured up in the Petition for Seabrook.

A request for waiver cannot be premised upon an assumption that a full power license will be denied. See Lona Island Lichtina Co.

(Shoreham Nuclear Power Station, Unit 1), CLI-83-17, 17 NRC 1032 (1983).

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This would be subject to an NRC assessment of any significant change in the entity proposing to operate the Shoreham plant (e.g., LILCO in some form of bankruptcy or a different utility operator) if and when such >

a proposed change is necessitated by the outcome of the State rate proceedings or i other circumstances. Indeed, based on the PSC's general position [ cite to footnote following), it is more speculative to assume ,

that no entity would be permitted the rate relief to cover the costs of operation of ,

I Shoreham than it is to assume that there would be a variety of financial arrangements ,

which would permit some qualified entity to l do so. For example, an entity not saddled j with LILCO's present terms of debt service on I construction funds could need a lesser degree of rate relief than LILCO would to cover its d

costs." Id. at 433 n. 7 (first emphasis added).

Substitute "PSNH" for "LILCO" in the immediately above quoted statement, and it would be equally applicable, on all fours, and dispositive. It is respectfully submitted that this Appeal Board should adopt the reasoning of the Shoreham Licensing Board in disposing of this matter.

II. THE APPELLANTS ERR IN THEIR READING OF THE WORD " ASSURE" AS USED BY THE COMMISSION As we understand the thrust of the major argument made on appeal it is that the proper standard to be applied in deciding whether a waiver of the financial qualifications rules is to be allowed is for the cognizant tribunal to decide whether the petitioner has demonstrated that the regulator cannot " assure" that funds necessary to cover operating costs will be forthcoming; " assure" being defined as "To make certain and put beyond doubt." Annellants Brief at 5 & n.3. The Commission cannot be assumed to have been using such a definition when it 6

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I made its statement of basis for the 1984 financial qualifications rulemaking.4 Such a definition simply would not square with the facts of life. No ratemaking process can "make certain and put beyond doubt" that necessary funds will be forthcoming. What the existence of a ratemaking process can do is " assure" in the sense of another accepted definition of the word: "to give confidence."5 It is, in this sense, we submit, that the Commission used the word.

III. THERE IS NO MERIT TO THE ARGUMENT THAT ,

BECAUSE NEW HAMPSHIRE LAW FORBIDS THE l RECOVERY OF DECOMMISSIONING COSTS AND LOW POWER OPERATION COSTS THAT THIS MANDATES AN INOUIRY INTO FINANCIAL QUALIFICATIONS A second argument which is apparently being made by the Appellants is to the effect that, even if no crima facie showing f has been made that operating costs will not be recovered'if full i

power operation is authorized, New Hampshire law precludes recovery of low power operation costs and decommissioning costs in the event that full power (i.e., commercial) operation is never authorized. Thus, they say, there is a showing that unique l l

circumstances exist at Seabrook which dictate suspension of the financial qualification regulations at least in considering whether to allow low power operation, j To begin with, this flies in the face of the principle that speculation as to the outcome of the efforts to.obtain a full j 4 49 Fed. Reg. 35750 (Sept. 12, 1984) quoted Accellants' l Brief at 4.

5 Webster's Ninth'New Colleaiate Dictionary second sense definition of " assure."

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5 power license should not impact upon the decision to allow low power operation. E.a., Lona Island Lichtina Cat (Shoreham Nuclear Power Station), CLI-84-9, 19 NRC 1323, 1327 (1984); see also n.3, suora. More importantly in making this argument, the Appellants underline the fact that Seabrook is not unique. The anti-quip law in New Hampshire does not make New Hampshire unique. In all states a utility which never gets a license to operate above low power is going to have difficulty recovering ,

from the rate payers costs incurred during low power operation.

And that is true whether the test is one of " prudent investment" or "used and useful" or some other test. Thus if it were to be held that inquiry into financial qualifications for Seabrook to operate at low power was proper, that logic would be equally applicable to any other facility.

IV. THE LICENSING BOARD'S RULING AS TO THE SPECULATIVE NATURE OF THE PETITION WAS CORRECT The Appellants' Brief goes to great length excoriating the Licensing Board for its ruling as to the speculative nature of the petition. Appellants' Brief at 7 - 11. The Licensing Board '

was absolutely correct. The Board did not put some impossible l

burden on the Appellants in this proceeding. What it did do was articulate how many contingencies had to come to fruition-before the problem the Appellants were worrying about would be real.

Decision at 9 - 10. Assuming arauendo that some showing short of bankruptcy and no possibility of funds forthcoming from any source could have supplied the crima facie case for the 8

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1 Appellants, the fact remains that on the facts as they existed j I

when this petition was rejected, the Appellants were a long way from home.6 Had the Board found a prima facie case, and had the Commission then sent the matter to hearing, and a lot of time was  ;

i taken up on the question of whether or not PSNH would go into reorganization, if thereafter the other joint owners had pledged l

to pick up the costs otherwise chargeable to PSNH, the entire I hearing effort would have been in vain. It was this type of scenario that was avoided by the Licensing Board's ruling as to )

speculative-'ss. I V. The Licensina Board's Procedural Rulinas Were f Correct 1 i

The Licensing Board correctly held that the Petition could be properly denied on procedural grounds. The entire thrust of j the petition, as seen above, is to require a financial ]

t qualifications hearing before a low power license issues. TOH I was excluded from the low power phase of the case. Public Service Company of New Hampshire (Seabrook Station, Units 1 and l 2), LBP-86-24, 24 NRC 132, 135-36 (1986). TOH did not appeal that exclusion. The Board is also correct that no counsel may represent a party before NRC tribunals without first having filed an appearance on behalf of that party, and that no one can be an

" Authorized representative" of a party unless he or she is a 6The Appeal Board should be aware that since the petition was filed and the Licensing Board issued its decision, PSNH has skipped an interest payment on its outstanding debt.

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CONCLUSION.

4 The appeal should be dismissed and the decision of the Licensing Board should be affirmed.

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77 -.i homas G. 'Di1jiMitn, Jr.

George.H. Lewald Kathryn A. Selleck' Ropes lti Gray 225 I / ranklin Street-Boston, MA 02110 (617) 423-6100 Counselfor_[cJ2Eq$nts t :, ,,

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7With full understanding that there is Appeal Board precedent to the contrary, in order to preserve the point in any appeal to the commission herein, the Applicants resp'4ctfully assert that the Appeal Board has no jurisdiction to review any disposition of a 10 CFR S 2.758 petition bysa Licensing Board '

10 CFR SS 2.758(c), (d) & n.7. ,,  ;, /' /,

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DOCMETED USXRC 17 OCT 29 A9 43 CERTIFICATE OF SERVICE OFFICE GF SEcapi,w y 00CXETmt; a stity;c7'

.:, Thomas G. Dignan, Jr., one of the attorneys fBWLthe Applicants herein, hereby certify that on October 26, 1987, I made service of the within document by mailing copies thereof, postage prepaid to:

Alan S. Rosenthal, Chairman Howard A. Wilber Atomic Safety and Licensing Atomic Safety and Licensing Appeal Panel Appeal Panel U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, DC 20555 Washington, DC 20555 Atomic Safety and Licensing Mr. Ed Thomas Appeal Board FEMA, Region I U.S. Nuclear Regulatory 442 John W. McCormack Post Contmission Office and Court House Washington, DC 20555 Post Office Square Boston, MA 02109 Administrative Judge Sheldon J. Robert Carrigg, Chairman Wolfe, Esq., Chairman Board of Selectmen Atomic Safety and Licensing Town Office Board Panel Atlantic Avenue U.S. Nuclear Regulatory North Hampton, NH 03861 Commission Washington, DC 20555 Judge Emmeth A. Luebke Diane Curran, Esquire Atomic Safety and Licensing Andrea C. Ferster, Esquire Board Panel Harmon & Weiss )

5500 Friendship Boulevard Suite 430 l Apartment 1923N 2001 S Street, N.W. l Chevy Chase, MD 20815 Washington, DC 20009 l l

Dr. Jerry Harbour Stephen E. Merrill, Esquire Atomic Safety and Licensing Attorney General Board Panel George Dana Bisbee, Esquire ,

U.S. Nuclear Regulatory Assistant Attorney General (

Commission Office of the Attorney General Washington, DC 20555 25 Capitol Street Concord, NH 03301-6397 Atomic Safety and Licensing Sherwin E. Turk, Esquire Board Panel Office of the Executive Legal U.S. Nuclear Regulatory Director Commission U.S. Nuclear Regulatory Washington, DC 20555 Commission Washington, DC 20555

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R$bert A.

/ '\ (' Il Atomic Safety and L$c,nsing e Backus, Esquire

) Appeal Board Panel , ,'y Backus, Meyer & Solomon 3

s, U.S. Nuclear Regulatory' , ,, 116 Lowell Street y Commission ( P.O. Box 516 Washington,'DC' s20555 'i, Manchester, NH 03105

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Philip Ahrens, Esquire Mr. J. P. Nadeau Assistant Attorneyi General Selectmen's Office )

Department of the ' 7.ttorney 10 Central Road  !

g ~ Gen'eral ' Rye, NH 03870 Augusta, ME C 132 '

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I, Paul McEatitchnh Esquire Cpiol S. Sneider, Esquire Matthew Td Brock, Esquire AUnistant Attorney General .

/> Shaines b McEachern Department of the Attorney 25 Maplewedd Avenue General

, P.O. Box 360 .

One Ashburton Place, 19th Flr.

Boston, MA 02108

's Portsmouth, NH 03801 Mrs. Sandra Gavutis Mr. Calvin A. Canney Chairman, Board of Selectmen City Manager RFD 1 - Box 1154 City Hall ,

Kensington, NH 03827 126 Daniel Street Portsmouth, NH 03801 i

Senator Gordon J. Humphrey Mr. Angie Machiros ,

U.S. Senate Chai'rman of the  !

}- Washington, DC 20510 -'

Board of Selectmen '

(Attn: Tom Burack) Town of Newbury '

Newbury, MA 01950

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Senator Gordon J. Humphrey Mr. Peter S. Matthews 1 One Eagle Square, Suite 507 Mayor f- Concord, NH 03301 City Hall (Attn: Herb Boynton) Newburyport, MA 01950 Mr. Thomas F. Powers', III Mr.f William S. Lord Town Manager Board of Selectmen I Town of Exeter Town Hall - Friend Street 10 Front Street Amesbury, MA 01913 Exeter, NH 03833 J ,

i H. Joseph Flynn, Esquire Drentwood Board of Selectmen 1 Office of General Counsel RFD Dalton Road Federal Emergency Management Brentwood, NH 03833 Agency 500 C Street, S.W. j Washington,DC 20472 1 l

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s Gary W. Holmes, Esquire Richard A. Hampe, Esquire Holmes & Ells Hampe and McNicholas 47 Winnacunnet Road 35 Pleasant Street Hampton, NH 03841 Concord, NH 03301 Judith H. Mizner, Esquire Charles P. Graham, Esquire Silverglate', Gertner, Baker McKay, Murphy and Graham ,

Fine, Good & Mizner 100 Main Street '

88 Broad Street Amesbury,.MA 01913 Boston, MA 02110 Thomas G. Dhynliin, Jr.

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