ML20238C292

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Discusses DC Court of Appeals Decision That Struck Down Commission 1985 Backfit Rule.Court Held That Rule Invalid Because NRC Would Be Permitted to Take Costs in Account in Establishing Adequate Protection Safety Std
ML20238C292
Person / Time
Issue date: 08/06/1987
From: Briggs W
NRC OFFICE OF THE GENERAL COUNSEL (OGC)
To:
Shared Package
ML20235A657 List:
References
FOIA-87-517, TASK-AII, TASK-SE SECY-87-197, NUDOCS 8709100021
Download: ML20238C292 (22)


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SECY-87-197 198., ADJUDICATORY ISSUE I

August 6, (Information)

For:

The Commissioners l

From:

William H. Briggs, Jr.

l Solicitor

Subject:

LITIGATION REPORT 1987 - 16 q

Discussion:

UCS v.

NRC, No. 85-1757 (D.C. Cir.)

I.

Summary On August 4, 1987, the Court of Appeals for the District of Columbia Circuit struck down the Commission's 1985 backfit rule.

In an opinion 1

written by Judge Mikva, the court held that the

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rule was invalid because it permitted the NRC to

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take costs into account in establishing the i

" adequate protection" safety standard.

The court read certain language in the rule's Statement of Considerations as suggesting that the Commission intended to use the rule's cost-benefit approach not only on proposals for safety improvements beyond the basic ' adequate protection" standard, but also for establishing the " adequate protection' standard itself.

The court ruled that while NRC need not set the " adequate protection' standar6 at zero risk levels, that standard must be established on health and safety grounds alone, without reference to cost.

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The court did not take issue, however, with the principle -- central to the Commission's backfit rule -- that where a plant already meets the

' adequate protection' standard, the NRC can take the cost of safety improvements into account in deciding whether the plant should be made even safer.

The court thus rejected the Union of Concerned Scientists' principal substantive objection to the rule:

the claim that the Atomic Energy Act bars NRC from ever taking cost into account in making decisions on backfitting.

Contact:

Information in this record was deleted peter Crane, OGC, 41465 in accordance with the reedom of Information Act, exemptions _

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II.

The Court's opinion l

The court began its analysis by describing two key statutory provisions:

Section 182(a) of the Atomic Energy Act, which requires NRC to assure

" adequate protection to the health and safety of the public," and Section 161 of the Act, which includes provisions authorizing NRC to issue standards, rules, and-orders "to protect health or to minimize danger to life or property."

The court next reviewed the regulatory history, noting that a 1970 rule on backfitting had authorized safety improvements on a finding that they would provide " substantial, additional protection which is required for the public health-3 and safety or the common defense and security."

The court observed that the rule specifically did not. cover safety improvements designed to bring a plant into compliance with its license or Commission orders, rules, or regulations.

I The court then described the backfit rule which I

the Commission adopted in 1985 to meet the criticisms of its backfit process under the 1970 rule.

The court noted that the backfit rule recognized three exceptions in which a cost-benefit analysis would not be required:

.(1) where a safety improvement is needed to bring a facility into compliance with its license or with NRC rules and orders; (2) where immediate action is needed to assure that the facility poses no undue risk to (i.e., provides adequate protection of) public health and safety; and (3) where an improvement is needed to assure no undue risk to public health and safety.

For the last of these categories, the Statement of Considerations declared that costs could be taken into account only in the sense that the agency could consider the relative costs of i

different approaches for assuring no undue risk.

Taken as a whole, the court said, the rule states that the benefits of a backfit need not justify its costs if the backfit is intended to assure

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compliance with rules or licenses or to ensure a

adequate protection of public health and safety.

The court then cited passages to the same effect in the Statement of Considerations.

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As will be discussed below, it appears that if the Commission's rule had said this and no more, the court would have found the rule to be fully consistent with its own interpretation of the law and would have upheld it.

However, the court also noted that one sentence in the StatemeLt of Considerations stated that the backfit rule was intended to apply to "new or modified interpreta-tions of what constitutes no undue risk to the public health and safety."

This single sentence in the Commission's explanation of the rule is what ultimately caused the court to vacate and remand the rule.

The court went on to describe the circumstances by which the case came to court (UCS petitioned separately for review of the backfit rule and of the Manual Chapter implementing the rule, and the court consolidated the cases), and then reviewed the applicable law.

The court stated that the

" arbitrary and capricious' standard applied, and found that because Congress had spoken to the legal issue involved, no special deference to the NRC's interpretation of the Atomic Energy Act was appropriate.

Reviewing Section 182 of the AEA, the court found that its requirement that the NRC assure ' reasonable assurance" was a duty that precluded consideration of economic costs.

The court based its finding on the legislative history of the Atomic Energy Act and the Energy Reorganization Act, and on decisions of the Supreme Court, the Courts of Appeals, and the Commission itself.

The court contrasted Section 182 with Section 161, which in the court's view permits the NRC to impose safety precautions over and above the

' adequate protection" required by Section 182.

Since its power under Section 161 is discretion-ary, the court said, the NRC can consider economic costs or any other factor.

The court summed up the statutory scheme, explaining that the Atomic Energy Act creates a two-tiered structure, with Section 182 requiring adequate protection and Section 161 permitting safety improvements over and above the adequate protection threshold.

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t The court then applied the Commission's rule to the statutory structure it had just described and observed that the rule could be read as consistent i with it.

The court declined to do so, however, pointing to the single sentence in the Statement i

of Considerations in which the rule is declared to !

apply'to new or modified determinations of what constitutes adequate protection, and to the discussion of that point in the Commission's brief.

The court found that the assertion of authority to consider costs in determining stan-

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3 dards of adequate protection was contrary to Section 182, and that it required the rule to be j

vacated.

The court described the rule as "an exemplar of ambiguity and vagueness," adding that

'we suspect that the Commission designed the rule to achieve this very result."

The court therefore remanded the case to the Commission with instruc-tions to follow the statutory scheme more closely in any future rule.

Because it had decided to vacate the entire rule, the court said, it did not reach UCS's other challenges to the rule and the Manual Chapter.

III. Judge Williams's Concurrence In his concurring opinion, Judge Williams joined the court's decision to remand the rule to the NRC to clarify the relationship between the kinds of standards which must be set without reference to costs and those for which costs may be taken into account.

He declined to join the court's state-ments on the impropriety of taking costs into account in establishing ' adequate protection" under Section 182, since he found UCS and the Commission to be in agreement on that point:

thus there was no controversy needing resolution by the court.

He expressed concern ever the majority's declaration that costs could never be taken into account in determining, under Section 182(a), what constitutes " adequate protection."

Judge Williams i

described a hypothetical situation in which, in some future energy crisis, the imposition of a desirable safety requirement would have drastic economic consequences.

In such a situation, he suggested, economics should play a role in deter-mining what constitutes adequate protection.

Judge Williams also disagreed with the majority's legal conclusion that deference to the agency's interpretation of the Atomic Energy Act was inappropriate.

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Judge Williams described UCS's position that costs l can never be taken into account in backfitting decisions as " astonishing and perverse" in its logical consequences.

He gave as an example a hypothetical safety improvement which is cheap and cost-effective if built in during construction i of a plant, but expensive and non-cost-effective i

if made after the completion of construction.

In l

such a case, he said, the UCS argument would mean I

that the Commission would have to treat all plants alike, requiring this safety feature either on every plant, existing and future, or requiring it on none.

He described such an approach as a " straitjacket, agreeing with the majority that the Atomic Energy Act imposed no such requirement.

Finally, Judge Williams stated his agreement with the majority that the offending sentence in the Statement of Considerations appeared inconsistent 4

with other statements in which the Commission described the " adequate protection" standard as independent of costs.

As such, he said, the Commission was "wanting in ' reasoned decision-making'," and a remand was therefore required.

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William H. Br ggs, r

I Solicitor

Attachment:

Opinion DISTRIBUTION:

Commissioners GPA ACRS OGC (H Street)

Regional Offices ASLBP OI EDO ASLAP i

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OIA OGC (MNBB)

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Notice: This opinion la subject to formaal revision before publication in the Federal Reporter or U.S. App.D.C. Reporta. Users an regnested to notify the Clerk of any formal errors in order that cornetions anay be made before the bound volumes go to pmes.

l Itti!PD S'iniPB @Durt Df AppPals FOR THE D13'I13CT OF CoLVMBIA C1ACUIT No. 85-1757 UNION OF CONCERNED SCIENTISTS, et al., PETITIONERS v.

U.S. NUCLEAR REGULATORY COMMISSION and the UNTIED STATI3 0F AxERICA, RESPONDENTS NUCLEAR UTILTTY BACETrmNG AND REr0RM GROUP, INTERVENOR No. 86-1219 UNION OF CONCERNED SCIENUSTS, et al., PETm0NERS V.

U.S. NUCLEAR REcCLATORY COMMISSION and the UNTTED STATES OF AMERICA, RIEPONDENTS NUCLEAR Unur/BACKTITTING AND REr0RM GROUP, INTERVENOR Petitions for Review of Orders of the Nudear Regulatory Commission Argued February 6,1987 Decided August 4,1987 BL of costa must be n'ad within 24 days after entry of judgment. The oosrt looks with disfavor spon motions to & bh of costa est of tf.me.

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