ML20237G970

Memorandum & Order (Denying Petition to Waive Regulations).* Petition to Waive Regulations 10CFR50.33(f) & 50.47(a)(4) to Require Util to Demonstrate Financial Ability to Operate & Decommission Plant Based on Speculation.Served on 870821

ML20237G970
Person / Time
Site:	Seabrook
Issue date:	08/20/1987
From:	Wolfe S Atomic Safety and Licensing Board Panel
To:	HAMPTON, NH, NEW ENGLAND COALITION ON NUCLEAR POLLUTION, SEACOAST ANTI-POLLUTION LEAGUE
References
CON-#387-4271 82-471-02-OL, 82-471-2-OL, OL-1, NUDOCS 8709030053
Download: ML20237G970 (11)

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' UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING BOARD 87 21 A9 :25 Before Administrative Judges: .rj Sheldon J. Wolfe, Chairman "

, Emeth A. Luebke Jerry Harbour 3

i Docket Nos. 50-443-OL-1 In the Matter of 50-444-OL-1 PUBLIC SERVICE COMPANY ) (On-Site Emergency Planning 0F NEW HAMPSHIRE, et al. ,

and Safety Issues)

) (ASLBP No. 82-471-02-OL)

(Seabrook Station, Units 1 and 2) )

) August 20, 1987 MEMORANDUM AND ORDER (Denying Petition To Waive Regulations)

MEMORANDUM I. Background On July 31, 1987, a petition was filed to waive regulations

$$50.33(f) and 50.57(a)(4) to the extent necessary to require Applicants to demonstrate financial qualification to operate and to decommission' Seabrook $tation. Two attorneys for the Town of Hampton (TH) signed the petition and one of the attorneys for TH signed as the authorized representative of N6w England Coalition On Nuclear Pollution (NECNP) and Seacoast Anti-Pollution League (SAPL). In a Memorandum issued August 4, 1987, the Appeal Board noted that, on March 25, 1987, this Licensing 870820 koo((0500o443 PDR y

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i Board had rendered a partial initial decision I deciding all on-site emergency planning and safety issues then before it,2 but that none of those issues had involved financial qualifications. Observing that I aheal d been taken and were currently under submission, the Appeal Board stated that, despite this consideration, it appeared that the waiver petition was correctly filed with the Licensing Board, and that there was no necessity to explore any jurisdictional question because it i

thought it desirable that the Licensirig Board entertain the waiver j petition in the first instance. I i

On August 7, 1987, Applicants filed an opposing response. The  !

Staff filed its opposing response on August 17, 1987.

I II. Discussion We deny the petition to waive regulations because, at the threshold, we find that TH has no standing to seek such a waiver and j that neither NECNP nor SAPL are properly represented before this Board. )

In our Memorandum and Order of July 25, 1986,3 we ruled that TH could i

not participate in the instant case involving on-site emergency planning and safety issues, which included Applicants' request of June 17, 1986 1 l

I LBP-87-10,;25 NRC .

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In LBP-87-10, having resolved the on-site emergency planning and '

safety issues before it, pursuant to 10 C.F.R. 95 50.57(c) and 50.47(d), this Board decided another issue before it and authorized j issuance of a license to operate Seabrook Unit I up to 5% of rated power, subject to certain conditions.

3 LBP-86-24, 24 NRC 132.

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for authorization to operate Seabrook, Unit I up to and including 5% of rated power. The instant petition arises out of and is specifically directed to Applicants' reguest for low power. TH did not appeal that ruling. Further, TH's attorney, who signed the petition as the authorized representative for NECNP and SAPL, failed to comply with

$2.713 of the Comission's Rules of Practice in ignoring both the requirement that he file a written notice of appearance and the requirement that he state the bases of his authority to act on behalf of those two parties. However, assuming arguendo that NECNP and SAPL are properly represented, as discussed below, we have proceeded to consider NECNP's and SAPL's petition for waiver.

NECNP's and SAPL's petition seeks a waiver, under 10 C.F.R. 62.758,4 of 10 C.F.R. %550.33(f) and 50.57(a)(4)5 to the extent 4

10 C.F.R. 62.758 provides in pertinent part:

(b) A party to an adjudicatory proceeding involving initial licensing subject to this subpart may petition l that the application of a specified Comission rule or regulation or any provis'on thereof, of the type described in paragraph (a) of this section, be waived or an; exception made for the particular proceeding.

The sole ground for petition for waiver or exception j shall be that special circumstances with respect to the subject matter of the particular proceeding are such that application of the rule or regulation (or provision thereof) would not serve the purposes for which the rule or regulation was adopted. The petition shall be accompanied by an affidavit that identifies the specific aspect or aspects of the (Footnote Continued)

necessary to require the Applicants to demonstrate, prior to low power operation, that they are financially qualified to operate and deconsnission the facility., The two petitioners attached to the petition an affidavit of Mr. Dale G. Bridenbaugh, President of MHB Technical Associates, a technical consulting firm specializing in nuclear power plant safety, licensing and regulatory matters.6 Mr. Bridenbaugh (FootnotbContinued) subject matter of the proceeding as to which application of the rule or regulation (or provision thereof) would not serve the purposes for which the rules or regulation was adopted, and shall set forth with particularity the special circumstances alleged to justify the waiver or exception requested. Any other party may file a response thereto, by counter-affidavit or otherwise.

(c) If, on the basis of the petition, affidavit and any response thereto provided for in paragraph (b) of this section, the presiding officer determines that the petitioning party has not made a prima facie showing that the application of the specific Commission rule or regulation or provision thereof to a particular aspect or aspects of the subject matter of the proceeding would not serve the purposes for which the rule or regulation was adopted and that application of the rule or regulation should be waived or ua exception granted, no evidence may be received on that matter and no discovery, cross-examination or argument directed to the matter will be permitted, and the presiding officer may not further consider the matter.

5 10 C.F.R. slSO.33(f) and 50.57(a)(4), in substance, exempt electric utility applicants for licenses to operate utilization facilities from the requirement to furnish information demonstrating financial 9 qualifications, and no finding of financial qualification is necessa ry.

6 The Bridenbaugh affidavit dated March 31, 1987, had been attached j

previously to the Commonwealth of Massachusetts' application of '

(Footnote Continued) 1

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attested that, in his opinion, there is no reason to conduct low power testing just for its sake alone because, standing alone, low power testing produces no net benefits and has several adverse effects, i.e.,

(1) environmental impacts (such as plant contamination with radioactive material), (2) the likely loss of the resale value of the fuel and other components once they become irradiated, (3) the cost of decontamination, decommissioning and disposal, (4) worker exposure, and (5) the potential I comitment of the site to lengthy radioactive waste storage use. He attested further that low power testing can be rationally justified only where there is no substantial doubt that the plant subsequently will i operate at higher power levels so that its benefits (i.e.. generation of electricity) will be available to offset the adverse effects and that j i

the optimum time for performing low-power testing is shortly before full-power operational approval is reliably anticipated to be obtained. i SAPL and NECNP also attached to the petition a Form 8-K submitted on July 22, 1987 by the Public Service Company of New Hampshire to the Securities and Exchange Comission. Sheet 2 of that report reflects the following:

(Footnote Contiliued)

April 6,1987 for a stay of the Licensing Board Order (LBP-87-10, 25 NRC ) authorizing issuance of operating license to conduct  !

low-power operation. In ALAB-865, 25 NRC (May 8, 1987), the Appeal Board denied # = e Mass. motion as weTTas other motions for ,

stay, after discussing, inter alia, the points raised in the l Bridenbaugh affidavit. ThF Appeal Board's reasoning in rejecting the matters raised in the Bridenbaugh affidavit is equally dispositive here and we will not discuss these matters again.

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The Company has instituted strict cash conservation measures that should allow it to meet its estimated cash requirements, including the refunds described above, through the end of 1987.

The Company is working jointly with the investment firms of Merrill Lynch Capital Markets and Drexel Burnham Lambert, Inc.

to develop alternate financial plans. Given the uncertainties surrounding the Company, its limited financial flexibility, the amount of debt service which the Company can reasonably expect to carry, the political, economic and competitive limits on rate increases in New Hampshire, and the regulatory approvals that will be required, it will be extremely difficult to develop and implement such a plan to improve significantly the Company's-circumstances within the limited time available. Should an adequate plan not be developed and placed into effect before the end of 1987, it will be difficult, if not impossible, for the Company to avoid proceedings under the Bankruptcy Code.

Drawing down from these two attachments, the two petitioners argue that, prior to low power operation, Applicants should be required to demonstrate that they possess, or have reasonable assurance of obtaining, the funds necessary to cover estimated costs for the period of the license, plus the costs to permanently shut down the facility and to maintain it in a safe condition. They urge that, were a low power operating license to be authorized , special circumstances would exist because of the likely bankruptcy of Public Service Company of New Hampshire, the lead owner, and that, in that event,- the adverse effects set forth in the Bridenbaugh affidavit would follow.

In the Statement of Consideration attached to the current rul6, the Commission stated that the sole objective of the financial qualification rule making process was to demonstrate generically that the rate process assures that funds needed for safe operation would be made available to regulated electric utilities. Having been so assured, the Commission concluded that, other than in exceptional cases, no case-by-case

litigation of the financial qualification of such applicants was 1 warranted. 49 Fed. Reg. 35747, 35750 (1984). The Commission proceeded to give an example of the special circumstances that must be shown j pursuant to 10 C.F.R. 62.758 - i.e., such an exception to permit financial qualification review for an operating license applicant might be appropriate where a threshold showing is made that, in a particular case, the local public utility commission will not allow the total cost of operating the facility to be recovered through rates. 49 Fed. Reg. 35747, 35751 (1984).

Clearly the purpose of the rule was to exempt operating license applicants from the financial qualification requirement because the rate process assured that funds needed for safe operation would be available.

The Commission did not implicitly or expressly contemplate or state that an operating license Applicant's financial distress and possible bankruptcy were special circumstances which could result in an exception or waiver under 10 C.F,.R. 92.758. Rather the Comission's example ,

reflects that it deems a special circumstance to be one where there is a threshold showing that a public utility commission will not allow an l electric utility to recover, to a sufficient degree, all or a portion of the costs of construction and sufficient costs of safe operation.

Footnotes 3 and 5 of the petition reflect that, pursuant to New Hampshire statutes, (a) revenues for a decommissioning cost fund will be obtained through charges against customers which shall be assessed and l

paid in the billing month which reflects the first full month of service of the facility, and (b) all costs of construction work in progress

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I should not be included in a utility's rate base nor be allowed as an expense for rate making purposes until the project is actually providing services to the consumers.,

The petitioners do not argue that, if full. power operation is comenced, the New Hampshire Public Utilities Comission will not authorize adequate funding for safe operation through the ratemaking ,

I process, will not pennit charges against customers for payment into the decommissioning cost fund,7 and will n'ot allow costs of construction l work in progress to be included in the Applicants' rate base.8 Thus, the petition fails to set forth the sole ground for waiver -- i.e., that special circumstances with respect to the subject matter of the

. ;icular proceeding are such that application of the rule or regulation (or provision thereof) would not serve the purposes for which the rule or regulation was adopted.

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As the Staff points out, while the Comission has adopted regulations governing the safe shutdown and post-operative maintenance of a facility (see, e.o., 10 C.F.R. 5550.82, 20.105, Part 70, and Part 73), Commission regulations do not now require a demonstration of financial qualifications to decommission a facility. 'In this regard, the Comission has promulgated a proposed rule change to address the costs and other aspects of decommissioning. See Proposed Rule, " Decommissioning Criteria for Nuclear Facilities 750 Fed. Reg. 5600 (Feb.11,1985).

O Petitioners barrenly speculate that, even in the unlikely event a full power license is granted, it remains " doubtful" that PSNH will l receive sufficiently prompt rate increases to avoid bankruptcy (Petition,n.7at8;emphasisadded). l

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Despite the fact that the petition is fatally deficient, we proceed to consider the petitioners' arguments (1) that Applicants' lead owner (PSNH) "is on the brink of, bankruptcy" (Petition at 2); (2) that "if a full power license is later denied", the Applicants will be unable to recover their costs through ratemaking proceedings, and PSNH's potential bankruptcy therefore presents " uncertainties" as to whether the Applicants will have the ability to operate the facility at low power, i

I shut it down permanently and maintain'it in a safe condition (M., at 4-6; emphasis added); (3) that the Applicants "may lack the tens of millions of dollars necessary 'to permanently shut down the facility and maintain it in a safe condition,' if a full power license is later denied"(M.,at4-5;emphasisadded);(4)that"thedirectionof l

Applicants' management may be radically altered M PSNH is superseded by a bankruptcy trustee" (Ld., at 6; emphasis added); (5) that if a trustee is appointed, it is " uncertain" whether he "may decline to pursue a full powerlicense"(M.,emphasisadded);and(6)thatsuchatrustee"may refuse to expend additional monies" on Seabrook, and "[a] Bankruptcy Court, rather than the Applicants, may ultimately determine if additional monies will be spent on Seabrook Station" (id.; emphasis added).9 9

In passing, we note petitioners' assertion that financial problems such as those facing PSNH are without precedent (Petition, at p.

6). This is incorrect. See Long Island Lighting Company (Shoreham Nuclear Power Station, Unit 1), LBP-84-30, 20 NRC 426 (1984).

Thus, in substance the petitioners urge that under these special circumstances it would be grossly irresponsible for the Applicants to be pennitted to proceed to operate Seabrook, even at low power, without clear evidence of their financial means to operate, and to decommission, safely (Petition, at 6, 8). Even assuming for the sake of argument that special circumstances have been shown, they are wholly speculative in nature and, therefore, the petitioners have failed to make a prima facie showing that the application of the two regulations to a particuler aspect or aspects of the subject matter of the proceeding would not serve the purposes for which they were adopted and that application of these regulations should be waived or an exception granted. In the first place, it is pure speculation that PSNH will file in bankruptcy or that it will be unable to secure funds necessary to operate at low power and to permanently shutdown and maintain the facility in a safe 1 condition. Second, even if PSNH does file in bankruptcy, there is no i

suggestion that other Applicant-members of the consortium are financially incapable of operating and safely maintaining the facility.

Moreover, it is a siatter of speculation as to whether a bankruptcy trustee would be appointed and whether he would discontinue efforts to secure a full power operating license. Further, no reason has been presented suggesting that any successor to PSNH (be it a reorganized company, or an acquiring company, or a trustee in bankruptcy) would not f

persevere in efforts to secure a full power operating license and to put the plant into commercial operation, and thereby recover the large investment through its inclusion in the rate base. Finally, as observed

I above, although barrenly speculating that it is unlikely.that a full power license will be granted, the petitioners apparently do.not deny that, if full power is commenced, the New Hampshire PVC will authorize adequate funding for safe operation through the rate making process, will permit charges against customers for payment into the decommissioning cost fund, and will allow costs of CWIP to be included in the rate base.

ORDER For the foregoing reasons, the petition to waive regulations is denied.

It is so ORDERED.

FOR THE ATOMIC SAFETY AND LICENSING BOARD h

SheldonJ.Wpfe, Ch&irman ADMINISTRATE M JUDGE Dated at Bethesda, Maryland this 20th day of August, 1987. I c

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