ML20246F444
| ML20246F444 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 07/12/1989 |
| From: | Atomic Safety and Licensing Board Panel |
| To: | |
| References | |
| CON-#389-8905 ASLBP, OL, NUDOCS 8907130255 | |
| Download: ML20246F444 (105) | |
Text
___ __
i I
j i
UNITED STATES NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING APPEAL BOARD In the Matter of:
)
).
Docket Nos.
PUBLIC SERVICE COMPANY OF
)
50-443-OL NEW HAMPSHIRE, it;. al.,
)
50-444-OL
)
(Offsite Emergency (SEABROOK STATION, UNITS 1 AND 2)
)
Planning Issues)
ORAL ARGUMENT k
Pages:
1 through 103 Place:
Bethesda, Maryland Date:
July 12, 1989
==----===========m---======--===============_=============>
bl
\\
NY
,g ()w
~dW
'A-HERITAGE R.EPO ING CORPORATION ODuWReetm g(
p' f ttJgf' 1220 L Street, N.W., Suke 600 Wuhington, D.C. 20005 j
(202) 628-4888 g-(:$O7.1502G3 890712 PDR ADOCK 05000443 T
F DC.
____._______._______m_.__
1 UNITED. STATES NUCLEAR REGULATORY COMMISSION
[g.
ATOMIC SAFETY AND LICENSING APPEAL BOARD In the Matter of:
)
)
Docket Nos.
i PUBLIC SERVICE COMPANY OF
)
50-443-OL NEW HAMPSHIRE, at al.,
)
50-444-OL
)
(Offsite Emergency (SEABROOK STATION, UNITS _1 AND 2)
)
Planning Issues)
ORAL ARGUMENT Wednesday, July 12, 1989 U.S. Nuclear Regulatory Commission Fifth Floor Hearing Room 4350 East-West Highway Bethesda, Maryland The above-entitled matter came on for hearing,
.,m
(
pursuant to notice, at 10:00 a.m.
w BEFORE:
JUDGE ALAN S.
ROSENTHAL, Chairman Atomic Safety and Licensing Appeal Board U.S. Nuclear Regulatory Commission Washington, D.C.
20555 JUDGE THOMAS S. MOORE, Member Atomic Safety and Licensing Appeal Board U.S. Nuclear Regulatory Commission Washington, D.C.
20555 JUDGE HOWARD A.
WILBER, Member Atomic Safety and Licensing Appeal Board U.S. Nuclear Regulatory Commission Washington, D.C.
20555 Heritage Reporting Corporation (202) 628-4888
2 APPEARANCES:
For the Applicanti THOMAS G. DIGNAN, JR.
Ropes & Gray One International Place Boston, Massachusetts 02110-2624 for the NRC Staff:
~
GREGORY ALAN BERRY EDWIN REIS Office of the General Counsel United States Nuclear Regulatory Commission
~
Washington, D.C.
20555 For the Commonwealth of Massachusetts:
JOHN TRAFICONTE Commonwealth of Massachusetts One Ashburton Place, 19th Floor Boston, Massachusetts 02108 Also Present:
DIANE CURRAN New England Coalition on Nuclear Pollution Harman, Curran & Tousley 2001 S Street, N.W.
Washington, D.C.
20009 i
Heritage Reporting Corporation (202) 628-4888 i
l
'l 3
.C _Q E I E E I.E ORAL ARGUMENTS PAGE On behalf of the Intervenor 22
' The Commonwealth of Massachusetts by.Mr. Traficonte On behalf..of the Applicants 51 iJ by Mr. Dignan.
' On behalf of the Nrc Staff 69 by Mr. Berry REBUTTAL ARGUMENT On behalf'of the Intervenor
.84-The' Commonwealth of Massachusetts by.Mr. Traficonte
-f
\\
Heritage Reporting Corporation (202) 628-4888
-mm
__ _ _____m_____mm__-._m_
4 1
EBQCEED1HGE 2.
(10:00 a.m.)
3 JUDGE ROSENTHAL:
Good morning, ladies and 4
gentlemen.
We are hearing oral argument this morning on the 5
appeal of the Intervenor Attorney General of Massachusetts 6
from the Licensing Board's March 8, 1989, memorandum and 7
order in this operating license proceeding involving the 8
Seabrock nuclear facility.
~
9 In that issuance, the Board denied the motion of 10 that Intervenor that sought to pave the way for the 11 litigation of the financial qualifications of the Seabrook 12 owners to operate the facility at full power.
13 The March 8 memorandun. and order also denied the 14 motion of the Intervenor Seacoast Anti-Pollution League 15 seeking the same outcome but on a different theory.
SAPL 16 has taken an appeal but is not represented at this argument.
17 We have been recently advised by an official of that 18 organization that it intends to submit its appeal on the 19 brief that was filed in support of it.
20 The argument is governed by the terms of our June 21 7 order.
As indicated therein, each side has been allotted
~
22 50 minutes for the presentation of argument.
I might note 23 in connection to setting that allocation, the Board had 24 proceeded on the assumption that both the Attorney General 25 and SAPL would be participating in the argument.
While the Heritage Reporting Corporation (202) 628-4888
5 1
Board has not altered the time allocations, it wishes to 2
stress that it knows of no Constitutional requirement that 3
the parties use their full time.
'4 The June 7 order also indicated that counsel would 5
be' expected to address both the merits of the appeals and 6
the question raised by the NRC Staff, whether the March 8
' ~
7 order is interlocutory and, as such, not appealable at this 8
time.
The Staff has now advised us, by July 7 letter, 9
however, that it does not intend to argue orally the 10 appealability question that it had raised in an early 11 motion.
12 I will now ask counsel to identify themselves 13 formally for the record, and I'll start with Mr. Traficonte.
14 MR. TRAFICONTE:
John Traficonte, an assistant 15 attorney general with the Commonwealth of Massachusetts.
16 With me is Diane Curran, who represents NECNP, who 17 is not a party to the appeal.
I 18 JUDGE ROSENTHAL:
Thank you, Mr. Traficonte, l
19 Mr. Dignan?
)
20 MR. DIGNAN:
Mr. Chairman, Members of the Board, 21' my name is Thomas G. Dignan, Jr.
I'm a member of the firm 22 of Ropes & Gray, One International Place, Boston, j
l 23 Massachusetts.
I represent the Applicants.
)
24 JUDGE ROSENTHAL:
Thank you, Mr. Dignan.
25 Mr. Berry?
I i
f-w Heritage Reporting Corporation (202) 628-4888
6 1
MR. BERRY:
Good morning, Your Honors.
My name is 2
Gregory Berry.
I reprecent the NRC Staff.
With me today is 3
Edwin J.
Reis, deputy assistant general counsel.
4 JUDGE ROSENTHAL:
Mr. Berry, do you have with you 5
a copy of your July 7 letter?
If so, I would appreciate it 6
if you would come to the rostrum and bring that letter with 7
you.
8 MR. BERRY:
Yes, I do, Your Honor.
9 (Pause. )
10 JUDGE ROSENTHAL:
Mr. Berry, the Board was both 11 puzzled and, quite frankly, distressed upon its receipt of 12 this letter.
The letter opens up with the statement that 13 the Staff does not intend during the oral argument this 14 morning to press for a dismissal of the Interveners' appeal 15 of the March 8 order, on the ground that an appeal is 16 premature.
17 It goes on to say that the Staff advanced this 18 position initially in order to avoid unnecessary expenditure 19 of time and resources by the parties and the Appeal Board on 20 a matter in which the Intervenor sought interlocutory 21 review.
22 Now, for openers, I would like to ask you what you 23 had in mind by "the parties"?
What parties were you saving 24 or endeavoring to save resources for?
25 MR. BERRY:
All the parties, Your Honor.
Heritage Reporting Corporation (202) 628-4888 l
1 i
c
1 l
7 1
JUDGE ROSENTHAL:
All the parties.
Well, if
(
}
2 that's the case, let's review, if I might, with you the l
v 3
timing of your motion.
4 The notice of appeal of SAPL was filed on March 5
20.
The notice of appeal of the Massachusetts Attorney 6
General was filed on March 22.
Your motion was filed on 7
April 17.
On that date, when you filed that motion, the 8
SAPL brief was already on file; it had been filed on April 9
13.
The Attorney General's brief, in light of the fact that 10 its notice of appeal was filed on March 22, was due to be 11 filed -- and in fact was filed -- on April 21, namely, four 12 days after your motion was filed.
13 Will you explain to me how your motion, filed four 14 weeks or so after the notices of appeal were filed, could
,a 15 possibly have had the effect of saving the time or resources 16 of all of the parties?
More specifically, how could it 17 possibly have saved any time on the part of either SAPL or 18 the Massachusetts Attorney General?
19 MR. BERRY-:
Your Honor, I agree with the Appeal 20 Board -- or I agree with the position that it would have 21 been better for the Staff to have filed its motion to strike 22 or dismiss the appeals even earlier than it did.
23 JUDGE ROSENTHAL:
I'm not asking you whether it 24 would be better, Mr. Berry.
What I'm asking you is, how can 25 you represent -- as you say you have represented in this Heritage Reporting Corporation t
(202) 628-4888 O
r l
1' l
l 8
1 letter -- that the Staff's design was to save the resources 2
of all of the parties, when in point of fact, on the date 3
that the motion was filed, it could not conceivably have had 4
the effect of saving resources of either SAPL or the S
Massachusetts Attorney General?
l 6
MR. BERRY:
Your Honor, my recollection of the 7
sequence of events at that time was that the Interveners' 8
briefs were due, I believe, on April 23.
We have filed our
~
9 pleading a week in advance of that.
10 JUDGE ROSENTHAL:
Excuse me.
At the time you 11 filed the motion, the SAPL brief was already filed.
12 MR. BERRY:
It turned out that that turned out to l
13 be the case, Your Honor, but at the time the Staff filed the 14 motion to strike, we have not received SAPL's brief.
15 Apparently, they had crossed in the mail.
We were unaware 16 that --
17 JUDGE ROSENTHAL:
All right.
I accept that you 18 were unaware of it.
19 Now, how did you compute the time for the filing 20 of SAPL's brief?
The SAPL notice of appeal was filed on 21 March 20.
Under the rules, the SAPL brief was due 30 days 22 thereafter; am I correct about that?
23 MR. BERRY:
That's correct, Your Honor.
24 JUDGE ROSENTHAL:
All right.
What is 30 days from 25 March 207 Heritage Reporting Corporation (202) 628-4888 m
n z--
9 1
MR. BERRY:
It's roughly April 20,.give or V)
[
2 take --
3 JUDGE ROSENTHAL:
April 19.more specifically; am I 4.
correct?
5 MR. BERRY:
Yes, Your Honor.
6 JUDG3 ROSENTHAL:
How did you think-that a motion 7
filed on April 17, two days before the SAPL brief was due, 8
was going to possibly save SAPL's resources?
Obviously, two 9
days before the brief was due, the brief had to have been 10 written.
11 F.R. BERRY:
Your Honor, the Staff. won't disagree 12 that with respect to the Interveners, SAPL and the 13 Massachusetts Attorney General, any resources sought to be 14 conserved or that would have been conserved, had the motion p
15 been acted upon, would not benefit SAPL and the Attorney
(
16
. General as much as it would, say, the Applicants or the 17 Staff.
We'll concede that.
.18 JUDGE ROSENTHAL:
So, in fact, in your letter, 19 when you said that the design was to save the time and the 20 resources of the parties, you didn't mean that at all.
You 21 meant some parties, not all parties.
You meant simply the 22 Staff and the Applicants.
Is that correct?
23 MR. BERRY:
Yes.
I certainly mean to be 24.
understood as saying that the Staff would benefit more than 25 the Interveners, that the Applicants would benefit more than 1
e Heritage Reporting Corporation
[
(202) 628-4888 s
______________1_______
H )
10 1
the Interveners.
The Interveners would be benefited the 2
least of all the parties.
3 JUDGE ROSENTHAL:
Not at all, would it?
How would 4
the Interveners be benefited at all?
Their briefs would 5
have been already completed?
6 MR. BERRY:
The Interveners wouldn't have been 7
benefited at all, Your Honor.
8 JUDGE ROSENTHAL:
All right.
So that statement at 9
the outset that this was designed to benefit all the parties 10 it not accurate; is that true?
11 MR. BERRY:
It's not as accurate --
12 JUDGE ROSENTHAL:
Is it accurate at all?
13 MR. BERRY:
Your Honor, as I stated before -- and 14 this is the statement that I'd like
.o rest -- it benefits 15 the Staff the greatest, the Applicants the next greatest, 16 and the Interveners the least.
I don't know that the brief 17 was written at the time; it turns out SAPL's brief was.
18 JUDGE ROSENTHAL:
You didn't know whether the 19 brief was written, when it had to be filed two days after 26 your motion was filed?
Come on now, Mr. Berry.
21 Isn't it reasonable to assume that on April 17 a 22 brief which was due on April 19 had already been written.
23 MR. BERRY:
It's reasonable to assume that the 24 drafts would be done, Your Honor, that it would be in the 25 final stages, yes.
That's reasonable to assume.
l Heritage Reporting Corporation (202) 628-4888 l
1 l
1 1
11
/
1 JUDGE ROSENTHAL:
All right.
j i(
)
2 Let's move on, if we may, on your letter.
m 3
We're now told that the Staff does not retreat 4
from any of the legal arguments advanced in support of its 5
motion to strike the Interveners' appeal.
Now, I take it 6
from that sentence that the Staff still believes that this 7
is an impermissible interlocutory appeal.
In other words, 8
it's an appeal that is barred explicitly by Section 2.730 (f) 9 of the Commission's Rules of Practice.
10 Am I correct in that reading of your letter?
11 MR. BERRY:
Yes.
We believe that there is no 12 right to appeal --
13 JUDGE ROSENTHAL:
Wait a minute.
Do you believe 14 that the Commission's Rules of Practice preclude this r'%
k )
15 appeal?
16 MR. BERRY:
Yes.
We believe that there is no 17 right to an appeal here.
18 JUDGE ROSENTHAL:
All right.
19 In that circumstance, how do you justify the last 20 sentence of your letter, in which you ask the Appe.
Board 21 to go ahead and decide the appeal.
This leaves us, frankly, 22 Mr. Berry, with the impression that the Staff is willing and 23 able to preserve the sanctity of the Commission's Rules of 24 Practice where the Staff derives some benefit from it; but 25 if here the Staff derives no benefit from it -- it's already f'"
Heritage Reporting Corporation
(
(202) 628-4888 L
l 12 1
1 filed its brief, as it points out in the letter; no longer 2
are its resources being preserved -- then the sanctity of 3
the Rules simply disappears.
You ask us in the letter, 4
notwithstanding an express provision of 2.730 (f) of the 5
rules of practice, to go ahead and decide this appeal.
6 I would like to know, number 1, the theory on 7
which you advance that position, and I'd like to know, 2,
8 whether that position has the endorsement of your superiors 9
in the hearing division of the office of the general 10 counsel, and, 3,
if so, then I think we might want to get 11 some kind of written representation from your superiors, 12 because it comes as considerable surprise to me that the 13 Staff would be taking the position that we should go ahead 14 and decide an appeal which the Staff continues to believe is 15 interlocutory and, therefore, is impermissible under the 16 Commission's Rules of Practice.
17 I see your superior, Mr. Reis, has stood up.
Mr.
18 Reis, if you want to take over for Mr. Berry --
19 MR. REIS:
No, I just want to assure the Board 20 that we have taken this position from the point of view that 21 the matter was not jurisdictional.
Of course if the matter 22 was jurisdictional and completely jurisdictional, this Board 23 would have no authority.
24 We think the Board has the authority, as a matter 25 of discretion, to go off on that tack if it wishes to.
We Heritage Reporting Corporation (202) 628-4888
13 1
don't think that it has --
i I
2 JUDGE ROSENTHAL:
Mr. Reis, where do you find in L/
3
- 2. 730 (f), the Rule of Practice that deals with this, the 4
granting of discretion to entertain an interlocutory appeal?
5 I recognize that the Appeal Board has the authority to grant 6
directed certification and to conduct an interlocutory 7
review under the provision of -- I think it's 2.718 (i). I i
8 see nothing in this letter which suggests that we ought to 9
invoke that authority, let alone which sets forth what the 10 Staff believes is the justification for a directed 11 certification review.
As you well know, there are certain 12 standards that are established for that.
I don't find that i
13 here.
14 MR. BERRY:
That is true, Your Honor.
s
,(/)
15 JUDGE ROSENTHAL:
All I find here is the Staff s._
16 telling us, "Well, our resources are no longer subject to 17 being preserved.
We had advanced this impermissible-18 interlocutory-appeal argument in order to preserve our 19 resources.
They're no longer being preserved, so, Appeal 20 Board, just forget about the rules and go ahead and decide 21 this appeal."
Why isn't that a reasonable as well as an, in
~
22 my view, outrageous, construction of this letter?
23 MR. REIS:
Your Honor, first of all, as I said, it 24 was not jurisdictional.
25 Secondly, we feel we have a duty to preserve the l
rN Heritage Reporting Corporation
(
(202) 628-4888 N.
l l
1
_______________.___m___
14 1
resources of the United States and the Nuclear Regulatory 2
Commission and raise those matters when we think it impacts 3
on Staff resources.
We feel we have an absolute duty to do 4
so, not only a discretion to do so, but to preserve and --
5 JUDGE ROSENTHAL:
Nobody is complaining at this 6
juncture about the fact that you raised this issue.
It's 7
perfectly appropriate for you to raise it.
My complaint 8
there simply was that you waited four weeks to do it, and
~
9 now were representing -- although Mr. Berry has retracted 10 that representation -- all of the parties' resources were in 11 mind at the time it was raised.
12 MR. REIS:
I'm not saying -- if we didn't have 13 oral argument this morning we wouldn't have had an 14 expenditure of airfare by the state of Massachusetts; 15 certainly that's a substantial resource on their part, and 16 we could have put that over.
We would not have had the 17 resources of the Board sitting here this morning.
18 JUDGE ROSENTHAL:
Well, let's get to the question 19 as to why the Staff at this point is no longer pressing the 20 argument that this is an impermissible interlocutory appeal.
21 Isn't the Staff obligated to preserve the sanctity of these
~
22 Rules, and having once called our attention to its 23 belief -- which it retains -- that this appeal is barred by 24 the Rules of Practice, why isn't the Staff obligated at this 25 juncture to continue to press that point, whether or not a Heritage Reporting Corporation (202) 628-4888 l
1 lL_________
I 15 1
saving or resources is st'ill in the' picture?
.p]J 0
2 MR. BERRY:
I.would be happy to answer that, Your 3
Honor.
4 JUDGE ROSENTHAL:
One or the other.
5 MR. REIS:
I'll defer to Mr. Berry.
6 MR. BERRY:
Yes, Your Honor.
7 The Staff has'a number of obligations with respect 8'
to licensing proceedings.
One is to uphold the integrity of 9
the Commission's rules, also to see that justice is done.
10 To,be practical, Your Honor,.in these' circumstances, there's 11 no good reason to defer a ruling.
This issue has been fully 12 briefed.
We're here today with counsel for the Interveners, 13 counsel for the Applicants, who have flown down from 14
' Massachusetts this morning.
This is a legal issue.
It's i
15 not dependent on any further development of the record.
The N
16 matter is ripe for determination.
It's not related to any 17-other issues pending before any of the boards, and there's 18 no practical, sound reasons for deferring a decision on 19 this.
20 JUDGE ROSENTHAL:
Isn't the sound reason, perhaps, 21 Mr. Berry,_that there is a Rule of Practice which, according 22 to the Staff, comes into play here and prevents us from 23 deciding it?
24 MR. BERRY:
Yes, Your Honor.
25 JUDGE ROSENTHAL:
Where does that fit into the
<s Heritage Reporting Corporation (202) 628-4888
l 16 l
l 1
picture.
2 MR. BERRY:
I'll be happy to explain that, Your 3
Honor, and I think we also should not only look at the text 4
of the Rule to which you allude, but also the underlying 5
purpose of the rule.
6 One of the purposes of a rule barring 7
interlocutory appeals is to avoid the needless expenditure 8
of time and resources.
Well, those resources have been 9
expended.
The Massachusetts Attorney General and SAPL have 10 devoted the resources and they've written briefs.
They've 11 come down to argue it orally before you today.
-The 12 Applicants have done the same, and so has the Staff.
One of 13 the primary reasons behind the restriction on interlocutory 14 appeals, the avoidance of spending time and resources on 15 matters that may not affect the ultimate outcome of the 16 case, no longer obtains here.
Now we have a matter, a 17 matter that's fully ripe, ready to be decided, so there's no 18 reason to send these parties back to Massachusetts and tell 19 them to come back six months from now for a decision.
20 JUDGE ROSENTHAL:
So you're telling me that in 21 your view, at least,
- 2. 730 (f) no longer is in the picture.
22 Is that what you're telling me, that we can simply disregard 23 that rule because of the practical considerations that 1
24 you've set forth and go ahead and decide this appeal?
Is i
25 that what you're telling me?
]
i i
Heritage Reporting Corporation l
(202) 628-4888 l
1 l
l
7 I
17 l
l 1
MR. BERRY:
No, Your Honor.
What I'm saying is l
v.
(d) 2 that what the Staff argued in its motion to strike, what it 3
reiterated in its brief, is that there is no right to appeal the Licensing Board order in this case, as there would be 4
5 were it a final initial decision as specified in 2.762.
But 6
the fact there's not a right for them to take an appeal, the 7
fact that they're not entitled to an appeal, doesn't mean
~
8 there's not power in this Board to entertain the matter.
9 JUDGE ROSENTHAL:
Where do you find that?
I want 10 you to point out to me the provision in 2.730 (f) dealing 11 with interlocutory appeals that gives this Board the 12 discretionary authority to which you've just alluded.
13 MR. BERRY:
We don' t have to look at 2.730 (f).
14 You looked at 2.785; you looked at directed certification.
/
i (v/
15 JUDGE ROSENTHAL:
Well, now, there are certain 16 standards, are there not, for the invocation of directed 17 certification?
18 MR. BERRY:
Yes, Your Honor.
19 JUDGE ROSENTHAL:
All right.
Have these standards 20 been met here?
If so, why weren't we told that by you in 21 your letter?
22 MR. BERRY:
We argued in the mrtion to strike, and 23 we filed it in April, 24 JUDGE ROSENTHAL:
I'm not interested in your l
25 motion to strike.
f-'s Heritage Reporting Corporation
)
(202) 628-4888 (J
18 l
1 MR. BERRY:
We argued that those standards were 2
not met.
3 JUDGE ROSENTHAL:
That's correct.
You argued they 4
weren't met, and now you're telling me, in effect, they are 5
met, even though your letter says that you do not retreat 6
from any of the legal arguments advanced in support of your 7
motion to strike the Interveners' appeal.
8 MR. BERRY:
We retreat from that, Your Honor.
9 JUDGE ROSENTHAL:
But you just told me you didn't.
10 I tell you, Mr. Berry, quite frankly what troubles 11 ust we don't regard adjudication in this agency as a game, 12 and the impression that we are definitely getting from this 13 letter and, I would have to say, from what you have told us 14 this morning, is that the Staff regards it as a game.
The 15 Staff believes that paramount is the preservation of its 16 resources, that where the preservation of its resources is 17 involved, it is perfectly free to advance the dictates of 18 the Rules of Practice.
Once, however, as in this instance, 19 there is no longer a consideration of preservation of 20 resources, then the Rules of Practice are a "no, never 21 mind."
Now, that is the impression that this letter gives
~
22 us, and frankly, if this letter had the sanction of your 23 superiors, we're even more troubled.
24 MR. BERRY:
Well, first off, Your Honor --
25 MR. REIS:
It had the sancticn of the complete Heritage Reporting Corporation (202) 628-4888 I
r-_.
i 19 lL separated staff for_the legal --
2 JUDGE ROSENTHAL:
If that's the case, Mr. Reis,
)
3 I'm not going to pursue this any further, but what I want is l
a letter of explanation from whoever is the senior official 4-5 of the, as you put it, separated staff.
I want a letter of 6
explanation with respect to this, and I also want that 7
letter covering the matter of the sanctity which the Staff 8
attaches to the enforcement of this Commission's Rules of
.9 Practic-Because what we're hearing here is a game:
that 4
10 in this posture of the case, it's perfectly proper for the 11 Appeal Board to go ahead and decide this.
Clearly, it can't 12' decide it as an. interlocutory appeal, and the Staff 13 previously took the position -- which is now says it is
- 14 adhering to -- that the standards for directed certification 15 are not met.
16 I think, in that circumstance, we are perfectly 17 justified -- since this letter apparently, as you say, had 18 the endorsement of the highest _ levels of the separated staff 19
-- to call for an explanation as to precisely what the 20 highest levels of the separated staff believe to be the 21 Staff's responsibility to enforce the Rules of Practice of 22 the Commission.
23 I would like that letter within a week from today.
24 Mr. Berry, you may resume your seat.
25 I'm sorry that we have had to take this much time p
Heritage Reporting Corporation
(
(202) 628-4888
20 1
. with a preliminary matter, but we will now hear from Mr.
2 Traficonte.
3' MR. BERRY:
Before I sit down, Your Honor, I'd 4
like to say that certainly the Staff does not view these 5
proceedings as a game; the Staff has not acted based on that 6
ascumption.
If this letter was not as artfully phrased or 7
as carefully phrase as the Appeal Board would have 8
preferred, I hope you accept my apologies on behalf of
~
9 myself and the senior staff.
10 Finally, I would say that, as Mr. Reis pointed 11 out, all filings made in this proceeding going out under my l
12 signature are reviewed and agreed to, and represent the 13 position of the separated staff.
14 JUDGE ROSENTHAL:
I accept that.
That's why I 15 want to determine just precisely what the top levels of the 16 separated staff believe to the be the responsibility of the 17 Staff with regard to the enforcement of the Rules of 18 Practice.
19 All right.
20 Mr. Traficonte.
21 MR. TRAFICONTE:
Your Honor, should I indicate at 22 the outset how much time I'd like to reserve?
23 JUDGE ROSENTHAL:
Yes.
You may assume, Mr.
24 Traficonte, that we read the briefs, that we are familiar 25 with the positions of the respective parties, and therefore Heritage Reporting Corporation (202) 628-4888 i
21 t-1 there is no necessity to get'into any kind of lengthy 2
introduction.
You may get right to the heart of your
(
3 argument.
4 MR. TRAFICONTE:
I certainly don't believe I need 5
anywhere near 50 minutes.
6 Is the Board going to entertain argument on the 7
appealability issue?
~
8 JUDGE ROSENTHAL:
Absolutely.
The fact that the 9
Staff has chosen not to present argument on that question 10 does not mean that the question, having been raised,. drops 11 out of.the case.
12 HR. TRAFICONTE:
In those circumstances, I have 13-very little to offer directly on the matter of 14 appealability, but I do have something to say, so I should i
15 reserve, perhaps, 25 minutes on the merits and the 16 appealability issue, and reserve the rest.
My direct 17 presentation will be 25 minutes, and I will reserve 25 18 minutes.
19 JUDGE ROSENTRAL:
Well, bear in mind, Mr.
20 Traficonte, that rebuttal means precisely that.
It has to 21 be limited to a response to arguments that your adversaries 22 have put forward, so that division, an even division between 23 an opening and a rebuttal, seems to me to weigh rather 24 heavily on the reservation of time for rebuttal.
It's up to 25 you, but I just want to remind you that your rebuttal must Heritage Reporting Corporation (202) 628-4888
22 1
be confined to responses to matters that have been raised 2
during your adversaries' presentations.
3 MR. TRAFICONTE:
I have learned to take advice.
4 I'll move it to 35 minutes and then 15 minutes.
5 JUDGE ROSENTHAL:
Go ahead.
6 ORAL ARGUMENT ON BEHALF OF THE INTERVENOR 7
THE COMMONWEALTH OF MASSACHUSETTS 8
MR. TRAFICONTE:
Let me just address first the f
9 appealability matter.
I am going to be very brief on that l
10 point.
I should preface these remarks by admitting that l
11 when I read the Staff's letter, I stopped thinking about the l
12 issue terribly carefully.
But I can certainly answer the 13 questions that the Boaro set forth in its June 7 order.
14 The question was put to the parties whether the 15 consideration of a petition to waive a rule should be deemed 16 ancillary to a proceeding, if there is an ongoing 17 proceeding, as there is in this instance.
The corollary to 18 that is, assuming it is seen as ancillary, if in those 19 circumstances, when it's denied, does it have an independent 20 finality sufficient to permit what essentially would be 21 interlocutory.
~
22 The answer to the first question, in my view, is 23 that it should not be viewed as ancillary to an ongoing 24 proceeding for a variety of reasons.
The two most important 25 are that you don't need an ongoing proceeding to file a l
l Heritage Reporting Corporation (202) 628-4888
23 1
waiver of a rule, and it in many ways happens to be a 2
contingent fact in this case that there is an ongoing 3
proceeding to which there 'a a waiver of a rule being filed.
4 JUDGE ROSENTHAL:
If it isn't ancillary, how then
)
5 do you conclude that it has sufficient finality to warrant 6
an appeal at this time?
Clearly, it doesn't dispose of a 7
major segment of the case, does it?
8 MR. TRAFICONTE:
Wel?, that's exactly where I was 9
going to go next.
I think that it does dispose of a major 10 segment of the cese, because, in the event of a denial, as 11 we have here, it excludes or continues to exclude an entire 12 set of issues from the proceeding forever.
It should be 13 viewed in this light, I think, against the standard rule, 14 which is that you can't raise matters -- you can't attack a 15 regulation in a proceeding; that's why you have a waiver 16 rule.
If you file a waiver and it's denied, then the matter 17 that you're seeking to raise is forever barred from the 18 proceeding, according to the rule.
19 JUDGE ROSENTHAL:
Let me ask you this question.
20 Supposing that an Intervenor presents a contention on a 21 particularly significant matter and that contention is 22 rejected at the threshold, doesn't it follow in that 23 circumstance that, unless there is a reversal of that 24 ruling, a significant issue is barred from the proceeding; 25 yet it's settled law, is it not, that the denial at the Heritage Reporting Corporation 9
(202) 628-4888
24 1
threshold of a particular contention, no matter how sweeping 2
that contention might be, is not appealable until the end of 3
the case.
4 MR. TRAFICONTE:
It is settled law that the denial 5
of the admission of a contention is not immediately 6
appealable.
That seems to be the case.
7 JUDGE ROSENTHAL:
Isn't that, as a practical 6
matter, what's involved here?
It's a denial of an 9
opportunity to litigate the financial qualifications of 10 these Applicants to operate the plant safely at full power.
11 I don't see how you distinguish as a practical matter what 12 happened here from the action of a Licensing Board in 13 rejecting at the threshold an important contention.
14 MR. TRAFICONTE:
I think the exercise of power 15 that's involved on the part of the Licensing Board is 16 distinct.
This goes to the second point I was going to 17 make.
18 It has to do with, in many ways, the odd nature of 19 this rule.
The Licensing Board is not empowered to grant a 20 petition, thereby admitting these issues.
It could only
}
21 deny or certify up to the Commission or to the Appeal Board.
22 I think I may have misspoken.
I think that 23 actually the rule says it's to certify it to the Commission.
24 In my view, that means that the nature of the i
25 power that's at work, or the jurisdiction of the Licensing Heritage Reporting Corporation l
(202) 628-4888 l
25 1
Board to deal with these issues, is distinct.
It's a
(
2 different kind of power than it would have in the normal 3
course to admit or not admit a contention on an issue that 4
is permissible and within the scope of a proceeding.
I 5
think that's a meaningful distinction.
6 Now, you've hit on a very good example.
If you 7
had a contention presented to a Licensing Board among a lot 8
of other contentions, and that contention that's at issue 9
addresses only an issue that by another rule you could not 10 attack in a proceeding, the only basis for the exclusion of 11 that contention was the determination by that Licensing 12 Board not to grant a waiver.
Frankly, I think, to be 13 consistent -- and I don't think it's necessarily a hobgoblin 14 in this case -- I think that particular decision may well be rh
( )
15 appealable at that time, because the petitioner, or the 16 Intervenor who's filing contentions in that posture, would 17 have to take that contention and identify it as requiring a 18 waiver of a standing rule.
Absent a petition in which that 19 contention could be clothed, the Licensing Board could 20 certainly -- there would be no question the Licensing Board 21 could not admit that.
~
22 I grant you that you could have a circumstance 23 where in a group of contentions one is not admitted because 24 the petition that would be necessarily accompanying it would 25 be denied, but in that event, I think that particular Heritage Reporting Corporation 7ss
(
)
(202) 628-4888
%J
r --
i 26 I
i 1
decision, that one denial, would be immediately appealable j
2 as a denial of petition, not as the denial of the 3
admissibility of contention.
4 JUDGE ROSENTHAL:
So that basically is your i
5 position on this issue.
6 MR. TRAFICONTE:
That, in combination with my very 7
strong sense that there's a finality to this, because this 8
is the end of the matter.
The petition's been denied, and 9
that's the end of the matter.
That's the other argument I 10 would make on this point.
11 JUDGE ROSENTHAL:
Why don't you move on to the 12 merits.
13 MR. TRAFICONTE:
Yes.
14 The merits are in many ways deceptively simple.
I 15 have to say that at different times in preparation for this 16 argument, I find this either remarkably simple or remarkably 17 difficult, and I think, as will become clear, it really 18 comes all down to who has the burden, what is a prima facie 19 case, and what is it that the prima facie case in these very 20 peculiar circumstances is exactly at full power.
21 Just generally, I want to make these points.
~
22 First, to understand what the prima facie case for the 23 Interveners is, I think you have to understand, for the rule 24 that requires financial qualifications for an applicant, 25 what the purpose of that rule is.
And I think it's quite i
Heritage Reporting Corporation (202) 628-4888
f 27-7 1
clear from CLI-88-10 that the purpose of that rule is to
- p'g R{V-
. provide some additional assurance that after full power l
a 2
3 licensing,' there will be adequate funds for safe operation.
1 4
Of course, that's not the rule at issue' because 5
the requirement of the financial qualification examination L U..
6-is -- there's an exemption from that requirement for l
7 electric utilities, so we have to move on to the next 8
question, which is, "Well, what's the purpose and basis of 9
the exemption from the financial Q investigation?"
I think, 10 on that point, it's basically two-fold, and, again, I think 11 it's very clear from CLI-88-10 what it is.
In the first 12 instance, there's a notion, supported by rulemaking in ' 84, 13 that an electric utility, as defined by NRC regulation, will 14 have sufficient revenues.after full power for safe operation
(
15 because there is, if it's an electric utility, a rate-16 setting process in place, and the sufficient revenues will' 17 be flowing to the electric utility because the existing 18' rate-setting process is in place.
19 Now, just very briefly, I will add that the rate-20 setting process that I think the Commission has in minu 21 there has two parts.
I think these two parts are very 22 significant, and I think they play a major role in the issue 23 here.
The two parts of a rate-setting process are that 24 somebody sets that rates and permits, in setting that rate, 25 certainly, operating expenses; let's start with that.
I Heritage Reporting Corporation (202) 628-4888 1
28
(
1 can't think of a regulator on the face of the earth that's 2
not going to permit operating expenses.
3 Someone is setting the rate, but in addition to 4
somebody setting the rate, somebody who is setting the rate 5
is either directly or indirectly making sure that there is 6
revenue generation as a consequence of that rate.
It 7
doesn't do us any good if somebody's setting a rate and the 8
power can't find a market.
I think that, if you think 9
through what the basis for the exemption from the financial i
10 qualifications rule was, it's clear that the Commission --
11 and I think properly -- decided that as long as there's an 12 electric utility whose rates are set, meaning rates set and 13 revenues " secured" -- and I don't mean, necessarily, that 14 there's a captured market; I just mean that there's a rate-15 setter who is insuring that there is a revenue stream 16 adequate to provide operating expenses -- then we could go 17 ahead and exempt such an electric utility from the financial 18 qualifications rule.
19 JUDGE ROSENTHAL:
Mr. Traficonte, in this case, if 20 one were to assume -- this may be a large assumption -- that 21 the anti-CWIP law kicks out, is there any reason to assume 22 in a real world that the Seabrook owners would not have 23 sufficient revenues to, in the words of the Commission, 24 remove them from pressure to take some safety shortcuts.
25 I'm talking about in the real world.
Heritage Reporting Corporation (202) 628-4888 l
i
29 1
MR. TRAFICONTE:
Well, I want to be in the real s'/%
4 j.
2 world.
- \\_/
3 JUDGE ROSENTHAL:
What I'm really.getting at is, 4
does this really turn here on the operation of the anti-CWIP 5
law?
Does it really hinge upon the interpretation of that 6
law, the application of that law, when it would kick out?
j 7~
MR. TRAFICONTE:
I see.
8 Let me be absolutely clear that, in our view -- we 9
base our petition on the proposition that at full power 10 anti-CWIP is of no effect.
11-JUDGE MOORE:
You mean the moment this agency 12 grants a license permitting Seabrook to be operated at above 13 5 percent power with up to 100 percent power, there is no 14 interim period under the.--
(
15 MR. TRAFICONTE:
No.
16 JUDGE MOORE:
There's no requirement under anti-17 CWIP that it reach commercial status, thrt it be useful 18 power?
19 MR. TRAFICONTE:
Your Honor, my point was slightly 20 different.
There may well be; in fact, I believe there is.
21 There has to be, in fact, generation of electricity for 22 anti-CWIP to go away.
That wasn't the thrust of my point.
23 My point was, we filed a petition claiming that, 24 before a full power license issues, there should be an l
25 investigation into the financial qualifications of the s
Heritage Reporting Corporation (202) 628-4888
30 1
Applicants.
I indicated that that petition and the logic of 2
that petition assumes that at full-power operation, anti-3 CWIP will have no impact on the situation.
4 We are not basing our claim on a vestigial impact 5
of anti-CWIP.
6 JUDGE ROSENTHAL:
I don't really follow this.
7 Let's again assume hypothetically -- I don't know B
what is the case -- that the day that this facility went 1 9
percent above the 5 percent, went to 6 percent, under a 10 full power license, the anti-CWIP law disappears, and the 11 plant goes in the rate base --
12 MR. TRAFICONTE:
Whose rate base?
That's our 13 point, Your Honor.
Our point is:
whose rate base?
We're 14 dealing with a bankrupt utility whose Seabrook asset is 15 sitting out there and subject to two or three financial 16 forces.
It's receiving offers for all of its non-Seabrook 17 assets.
The offer that's in issue in the petition was the 18 only one I'll speak to; there's been a subsequent offer.
19 The offer that is discussed in the petition is, "We'll buy 20 all your non-Seabrook assets, and we'll basically let the 21 Seabrook assets spin out and be held by an otherwise asset-4 22 less company."
23 Now, the question is, as to that financial force 24 working on the Seabrook Applicants, whose rate base?
Anti-25 CWIP is a New Hampshire statute that runs to regulation of Heritage Reporting Corporation (202) 628-4888 l
l f
i
t..
T1
'l rates set by the New Hampshire public utility. commission.
fm
'(
2 JUDGE ROSENTHAL:
Is it reasonable to assume that
\\
- s 3-Lif there's no legal obstacles, such as the CWIP law, in the i
4 picture, that whoever has control over Seabrook from a rate 5
standpoint is not going to provide sufficient revenues to
.=
6 enable Seabrook to operate at whatever level of power it is 7
without having to cut corners.-
That's the Commission's 8
assumption all along.
9 I don't think, from that standpoint, it makes any 10-difference whether it's X, Y,
or'Z that would be determining 11 what Seabrook's rates are.
If there's no New Hampshire 12 legal impediment to providing them with rates which will 13 enable them to cover the cost of safe operation, it seems to 14 me that the Commission's rationale comes into play.
15' MR. TRAFICONTE:
Well, does it?
I think that's' 16 the issue.
I think the question you just put is precisely 17 the issue, and I'll try to explain why I don't think it does 18 come into play.
19 You vould have a situation -- Your Honor mentioned 20 "whoever owns it," and of course --
21 JUDGE ROSENTHAL:
Whoever sets the rates.
22 MR. TRAFICONTE:
Whoever owns the Public Service
- 23 New Hampshire share of the Seabrook asset.
24 Somebody is going to set the rate.
Tbv; would be the first p'oposition the other side might offer.
It seems 25 r
l l
f}
Heritage Reporting Corporation
(
j (202) 628-4888
f 1
32 j
1 to me we'd like to know at the threshold, before we issue a 2
full-power operating license, who exactly would it be.
3 Right now, there's uncertainty at who the rate payer would 4
be.
5 The second question:
In light of the uncertainty 6
as to who the owner would be -- and therefore who the rate-7 setter would be -- what kind of rates would they be?
Would 8
they be wholesale rates, retail rates, and would there be a
~
9 market for those rates?
10 JUDGE ROSENTHAL:
Do you know that in the case of 11 a non-bankrupt utility?
Let's take any of the utilities 12 which get operating licenses.
The Commission has said that 13 there will not be an exploration of financial qualification 14 for full power operation.
Now, the Commission has said that 15 with, I suppose, the same degree of uncertainty, isn't 16 there, as to --
17 MR. TRAFICONTE:
I would stipulate to that.
I 18 would agree that, probably, the Commission said that without 19 ever really asking itself, "Well, who would be setting those 20 rates, and what markets would those utilities have?"
21 JUDGE ROSENTHAL:
How can you rely on those 22 considerations if the Commission apparently regarded them as l
I 23 "no, never minds"?
j 24 MR. TRAFICONTE:
It's true they probably regarded 25 them as "no, never minds," and they weren't dealing with Heritage Reporting Corporation j
(202) 628-4888
33 1
bankrupt utilities, Your Honor.
The key to this petition is l {
[
2 the combination of two things.
You have a bankrupt utility.
l
'w d l
3 That is a special circumstance; there's no dispute about 4
that; CLI-88-10 said that.
You have a bankrupt utility with 5
incentives, perhaps, to cut corners.
That certainly flows 6
from the fact of its bankruptcy.
Tn?n you have the question 7
that now, subject to the bankruptcy and financial forces 8
that have impinged on it, you have uncertainty as to what is 9
going to happen to its share of the Seabrook project:
where 10 is going to spin off to?
11 JUDGE WILBER:
What difference does that make I
12 until it happens?
Right now you've got New Hampshire 13 Yankee, right?
Isn't that the one we should worry about?
f i
14 MR. TRAFICONTE:
Right now you have New Hampshire
( j) 15 Yankee, and you've heard the argument from Staff and m
16 Applicants that, once the license issues, anti-CWIP will go 17 away.
On the other hand, inside the bankruptcy proceeding, 18 New Hampshire Yankee is desperately attempting to get the 19 bankruptcy court to assert his jurisdiction over rates and 20 set aside New Hampshire regulation in toto.
Putting it on a 21 different plane:
putting at issue what the relevance of the 22 anti-CWIP or the end of the anti-CWIP regime is.
23 The key to the matter is that it's very likely 24 that the Commission did not concern itself about rates, 25 level of rates, and customer base.
It assumes, as long as Heritage Reporting Corporation f' sv)
(202) 628-4888
(
34 1
there's a rate-setter out there, we're probably going to be 2
fine.
3 The difference is, it wasn't making those 4
comfortable assumptions about a bankrupt, and now you do 5
have a bankrupt, and you have a bankrupt whose Seabrook 6
asset is, at least as it appears today, going likely to be 7
spun off and held by some separate set of owners.
8 JUDGE MOORE:
The separate owncre --
First, at 9
this point we have no idea whether there will be any other 10 owners.
Is that correct?
11 Secondly, do we have any non-utility owners?
12 MR. TRAFICONTE:
Let me answer the two questions i
13 in sequence.
14 If the first question is, does somebody other than 15 PSNH presently own that Seabrook asset, the answer is no.
16 And if the prima facie case we would have to show to get the 17 petition allowed was that fact, then we lose, becauce that 18 hasn't happened yet.
That's a fairly familiar argument, 19 that " bankruptcy hasn't happened yet; we've got to wait for 20 the bankruptcy," and then the bankruptcy occurs, and there's 21 a very serious possibility that the asset's going to be. spun 22 off to an otherwise asset-less company.
"Well, let's wait 23 till that happens."
We can always wait, until the absolute 24 financial catastrophe is on hand and Don Trump Power Company 25 owns the 36 percent of the Seabrook asset; we can wait until Heritage Reporting Corporation (202) 628-4888
35
'l then and say, " Oops.
Now I think you can make out financial f-~s. '
L!\\v) '
2!
Q," but in the meantime, we would have given out the full-i 3'
power license.
That's the first question.
4 The second question --
I'm sorry, Your Honor.
5 The second question was --?
6 JUDGE MOORE:
Will it be a non-utility?
7 MR. TRAFICONTE:
Non-utility.
8 We don't know.
We don't know who it will be.
9 Fill.t be a regulated entity?
I'm not sure the word 10 utility is a meaningful word; I'm not sure what the referent 11 is.
But let's just ask ourselves, will it be regulated?
12 Well --
13 JUDGE MOORE:
Will there be a rate-setter?
14.
MR. TRAFICONTE:
Will there be a rate-setter?
15 This'is my point --
16 JUDGE MOORE:
Whether it's a public utility 17 commission or a bankruptcy judge, it's still a rate-setter, 18 is it not?
19
-MR. TRAFICONTE:
Whether it's the federal 20 government through FERC, whether it's the bankruptcy judge, 21 whether it's a public utility, or some combination.
22 First, there's a question about that.
I believe 23 that's uncertain.
24 JUDGE MOORE:
Okay.
But aren't the assumptions on 25 which the Commission does not want to look at financial Heritage Reporting Corporation O
(202) 628-4888
l 36 l
1 qualifications at full power hold true as long as there is a 2
rate-setter?
3 MR. TRAFICONTE:
No.
Because the assumption is --
4 this is really the heart of the matter, in terms of the 5
burden here, and who's got the burden -- the assumption is 6
that as long as it's an electric utility -- and, I might 7
add, a non-bankrupt electric utility -- we can assume there 8
will be a rate-setter, the revenues from the rates will be 9
adequate, and there will be enough for safe operation.
10 JUDGE ROSENTHAL:
Why won't there be a rate-11 setter?
12 JUDGE MOORE:
Why does that change with a 13 bankrupt?
Is the rate-setter going to somehow or other make 14 a decision different as far as providing revenues for safe 15 operation because it's bankrupt?
16 MR. TRAFICONTE:
Not because it's bankrupt, but 17 because we don't know who the owner will be.
Therefore, we 18 have no idea whether there will be a market for the power, 19 whether the rates set -- whoever sets them -- will ever end 20 up in a revenue stream.
21 JUDGE ROSENTHAL:
What do you mean, "a market"?
I 22 was under the impression that there's a market for electric 23 power in New England.
Am I incorrect about that?
24 MR. TRAFICONTE:
Well, you're certainly correct 25 that there is a market for electric power.
People use Heritage Reporting Corporation (202) 628-4888 1
37 1
electricity.
,m 2
JUDGE ROSENTHAL:
What I don't follow is this:
3 You say, "We don't know who is going to own the plant."
{
4 That may be right, but whoever owns the plant, it seems to 5
me, at least if that owner is an electric utility, would l
6 come within the scope of the Commission's regulation i
7 because, presumably -- I would it's a virtually conclusive 8
presumption -- there's going to be somebody that's going to 9
be setting rates for the electricity generated by the 10 Seabrook plant, irrespective of who the owner is, and also 11 there's going to be a market for that power.
12 I don't follow why it is that you believe that 13 these uncertainties as to who might turn up to be the owner 14 comes into play here.
A
)
('v) 15 MR. TRAFICONTE:
The uncertainly comes in because 16 it depends on who the owner is, whether that owner will have Perhaps they'll have a rate-setter.
Maybe we can assume 17 18 that.
I don't think they can.
19 JUDGE ROSENTHAL:
Who wouldn't have?
Give me an 20 example of a potential owner of the Seabrook facility who is 21 interested, obviously, in generating and selling electricity 22 who would not have somebody setting the rates for the sale i
23 of that electricity.
24 I don't understand the point you're making.
25 MR. TRAFICONTE:
The point I'm making is that Heritage Reporting Corporation e-
[ )N
)
(202) 628-4888 K.
38 1
setting the rate is half the equation.
The other half of 2
the equation is having a market in which the revenues that 3
those rates are designed --
ll JUDGE MOORE:
Okay.
Take that half of your 5
equation.
6 MR. TRAFICONTE:
Yes.
7 JUDGE MOORE:
Doesn't the Commission's regulation
~
8 assume that it's not going to delve into the economics, 9
whether or not it's a bankrupt of a non-bankrupt power plant 10 owner?
11 MR. TRAFICONTE:
Yes.
I grant you that.
12 JUDGE MOORE:
Okay.
If that's true, what 13 difference does bankruptcy make?
14 MR. TRAFICONTE:
The incentive to cut costs.
15 That's the key difference.
When you have a bankrupt --
16 Let's take a couple of scenarios.
Let's imagine the 17 bankrupt PSNH continues to own its presently held share.
18 It's a bankrupt.
It may well have an incentive to cut 19 costs.
20 Let's take another scenario.
Let's imagine it's 21 spun off to the debt-holders, the unsecured creditors in the 22 bankruptcy proceeding.
Would those people have an incentive 23 to cut costs?
It depends on their financial posture.
They l
24 may well have an incentive to cut costs.
Would they be able l
25 to have a rate set?
Let's stipulate that they would have a Heritage Reporting Corporation (202) 628-4888 l
l
7 39
.)
1 frate set.
Would the rate be sufficient to allow us the l
/~
_- l 2-assumption that there would be no incentive to cut back on i
l 3
safety?- No.
Because if the asset is spun off to the
{
4 unsecureds, they have an enormous stake; they have a 5
whopping amount of money that they're looking to recover.
]
i 6
There'might be an incentive there.
1 7
JUDGE MOORE:
I see your argument.
8 May we switch gears a moment --
9 MR. TRAFICONTE:
Sure.
10 JUDGE MOORE:
-- to the anti-CWIP law.
11 Is there a period, either short or long, in which 12 the anti-CWIP statute prohibition of placing Seabrook in the 13 rate base for New Hampshire remains in effect, even after a 14 full-power license is granted by this agency?
(
15 MR. TRAFICONTE:
Assuming that the PSNH share of 16 Seabrook is retained by PSNH, for the sake of this question, 17 my understanding of the anti-CWIP statute -- and I'm sure 18 Mr. Dignan's going to correct me if I'm wrong -- is that 19 power is rateable when it's fed into a grid, when it reaches 20 consumers.
21 JUDGE MOORE:
There's no requirement that the 22 plant reach what is often referred to as commercial service 23 level?
24 MR. TRAFICONTE:
I think that is the requirement, 25 but at whatever point at which this particular plant -- and Heritage Reporting Corporation (202) 628-4888 m
i 40 f
1 I think it's a technical question -- is generating power 2
that feeds into a commercial grid, I believe the anti-CWIP 3
statute is no longer in play.
4 JUDGE MOORE:
So, in your view, the language of 5
that statute that said construction project is actually 6
providing service to consumers means and had been 7
interpreted by the appropriate officials of New Hampshire to 8
mean providing power to the grid?
9 MR. TRAFICONTE:
You're asking me to go too far, 10 because I'm not going to represent how this has been 11 authoritatively or otherwise interpreted by relevant 12 officials of New Hampshire.
I'm telling you that it's my 13 understanding of the way the anti-CWIP statute functions 14 that when the power reaches the grid, it becomes rateable; 15 it's put into the rate base.
16 I should add, Your Honor, that, as I indicated a 17 few minutes ago -- and perhaps I was puzzling everyone --
18 our theory of why this question is legitimate at this point, 19 on full power, does not hinge on the anti-CWIP analysis.
20 JUDGE MOORE:
I'm well aware of that.
21 MR. TRAFICONTE:
All right.
~
22 JUDGE MOORE:
Should there be a different 23 interpretation of the New Hampshire anti-CWIP law?
Does a 24 problem arise in which there is this period in which a full-25 power license has been granted, yet the plant is not placed l
Heritage Reporting Corporation (202) 628-4888
41-i 1
1 in the rate base, so that the-financial pressures on 1,'ublic n
}
'2 Service of New Hampshire go unabated?
3 MR. TRAFICONTE:
It seems to me to follow 3
.a
?:
logically that that would be the case.
It's an. empirical 4
5 question:
At what point is it rateable power, assuming that q
l6 the asset that we're dealing with here.is retained by Public 7
Service of-New Hampshire.
8 JUDGE MOORE:
How does the system work?
Does 9
Public Service of New Hampshire file a rate case before?
10 Have they already filed the rate case, for instance, or do 11 they wait for their full-power license?
Are they entitled 12 to collect a higher rate immediately, while the rate case is 13' pending?-
14 MR. TRAFICONTE:
My father told me.I should have-15 been a utilities lawyer, and I'm not, and I obviously should 16 have been.
I can't answer those very. precise questions.
I 17 don't know the answer, nor was I preparing to answer them, 18 because as I indicated, we're not hanging.our hat on that 19 hook, although it-seems quite clear to me that there's a 20 gap, and there's an interim period of operation without any-21 opportunity to pass those costs into the rate base.
22 JUDGE ROSENTHAL:
Wouldn't that make a difference 23 if that's the case, if there is that gap?
24 MR. TRAFICONTE:
Well, I know SAFL believes it 25 makes a difference.
Heritage Reporting Corporation (202) 628-4888
____.____________________.__.______-____.__._._m_
j i
42 l
l l
1 JUDGE ROSENTHAL:
Well, do you?
You have stressed 2
the fact that you're not relying upon the anti-CWIP statute.
3 I'm sort of curious as to whether, as a secondary or back-up 4
argument, you would rely on it if in fact the mere issuance i
5 of the full-power license would not kick the anti-CWIP 6
statute out.
7 MR. TRAFICONTE:
Certainly I would rely on it if I
I 8
it turns out to be a lengthy period of time or any i
9 significant period of time and there turned out to be 10 significant interim costs, and there's no possibility of I
11 rating those costs and collecting revenues to cover them.
I 12 Sure.
13 Again, our view of the matter is different, I 14 think, because we see the uncertainty -- we don't think that 15 it's very likely that Public Service of New Hampshire is 16 going to own this asset.
Even if they do own it, we think 17 it's very unlikely that it's going to be law of the State of 16 New Hampshire.
19 In our view, there seems to be an overemphasis on 20 the New Hampshire regulatory statutes, CWIP and anti-CWIP, 21 when we don't think that's the way it's going to --
22 JUDGE ROSENTHAL:
I thought that the Commission's 23 view was that it can be presumed that whoever is the rate-24 setter will provide sufficient revenues to enable the safe 25 operation of the plant, because it would be irresponsible Heritage Reporting Corporation (202) 628-4888 n
l, 1-L 43 1.
not to do so.
I don't:think they were' focusing on the. rate-
.r j
2
- setter being this or being that or being some third party.
3 They just said, whoever it is, we assume will provide the K
4.
requisite. revenue.
5 MR. TRAFICONTE:
Yes.
I believe'you're right.
6 JUDGE ROSENTHAL:
I still don't understand your
.7 argument.
8; MR. TRAFICONTE:
We're circling ~back on'that 9'
point; I think it's a crucial point.
10 The difference is, when they made those 11 comfortable assumptions -- which may be perfectly legitimate 12
. assumptions when you have a health utility with a rate-13 setter--- they were not thinking about a rate-setter setting 14 these rates for a bankrupt.
15 JUDGE ROSENTHAL:
What difference does it make?
16 MR. TRAFICONTE:
What difference does-it make?
17 The bankrupt has an incentive -- or if it isn't a bankrupt, 18 it's the outcome of the financial debacle of the bankrupt, 19 which is the unsecured creditors committee translating its 20 debt into ownership rights to the Seabrook asset if and 21 nothing else, literally a Seabrook shell.
Thirty-six 22 percent of Seabrook is owned by the --
.23 JUDGE ROSENTHAL:
You mean the rate-setter is not 24 in a position to assure that, when it sets rates, that the 25 revenues derived from those rates are used to operate the Heritage Reporting Corporation
)
(202) 628-4888 a___------_
.,-s-.---:.n----
-u-
44 1
plant safely?
It can't do that?
This is beyond the control 2
of the rate-setter?
I wouldn't think so, but I may be 3
wrong.
4 MR. TRAFICONTE:
Well, I think that's the heart of 5
the matter, frankly.
I think that if the rule has any 6
purpose at all, if this rule requiring financial 7
qualifications investigation when the exemption serves no 8
purpose -- that's frankly how I see f.t -- it would only 9
require this investigation when the exemption serves no 10 purpose, if the rule has any meaning at all, it's because
)
i 11 the NRC has decided in its wisdom not to leave that precise
)
12 issue to the state rate-setters.
13 So the answer to your question, Your Honor, is 14 frankly I don't think the NRC should give a damn whether the l
15 state regulators have power, authority, or otherwise to make 16 sure that the revenue stream they're providing to this 17 utility go to the right expenditures.
First of all, they 18 don't have the expertise.
Secondly, I'm not sure that's 19 their business.
Thirdly, that's the NRC's business.
20 Again, I go back to the point, if this rule has 21 any significance.
I puzzled this out.
The reason why the 22 rule is here is because the Commission wants some assurance, 23 some additional level of assurance.
It's made these 24 comfortable assumptions about rate-setting.
It's assumed 25 that, since it's regulating over here directly on safety, Heritage Reporting Corporation (202) 628-4888 l
0
45 l'
that all it really'needs is to make sure there's an adequate L' Q( '
2
' flow.of funds and its direct' safety regulation will cover j
l G
3' safe operation.
So it really doesn't need very much under 4
financial qualifications review.
5-However, when you've got a bankrupt, the flag 6
should go up telling the Commission that there should be an 7
additional concern about the revenue stream.
8 JUDGE MOORE:
Okay --
9 MR. TRAFICONTE:
To finish the thought:
that 10 direct safety regulation is not enough.
11 JUDGE MOORE:
But you said that the danger is, 12 because the entity that may take over the plant may be 13 predisposed to cutting corners because of its financial 14 condition, which directly implicates safety, obviously.
15 MR. TRAFICONTE:
Yes.
16 JUDGE MOORE:
Why, then, if that's the concern and 17 the crux of the matter as you see it --
18 MR. TRAFICONTE:
It is.
19 JUDGE MOORE:
-- shouldn't one wait until that 20 entity actually is in the picture before you look at a rule 21
- waiver, 1,
- and, 2, wouldn't such an entity in any event have 22 to undergo a license transfer and at that time is when the 23 rule waiver should be sought if this is a concern.
24 MR. TRAFICONTE:
Yes.
Let me deal with those two 25 questions.
I think they're both very, very good questions.
Heritage Reporting Corporation (202) 628-4888 o
46 1
i 1
JUDGE MOORE:
Let me just add:
the third point 2
is, if in fact it's a non-utility, then it must go through a 3
financial qualifications review automatically.
4 MR. TRAFICONTE:
Let me deal with the second one 5
first, because the Applicants put it in their brief, and I 6
puzzled over it.
Frankly, I have to say I was taken aback l
4 7
by the argument about a transfer.
f 8
That seems to me to be the cart before the horse.
9 You don't give out a full power license in the face of l
l 10 uncertainty about who's going to end up holding it and then 11 say, "Well, if it's necessary, and if it is an outcome of 12 the bankruptcy of PSNH that that 36 percent share of this 13 license end up in the hands of a non-utility, we'll address 14 that matter when a transfer of the full-power license is 15 requested.
16 Sitting here looking forward, prior to that 17 issuance of a full power license, we can see this might 18 happen.
It's on the horizon; it may very well be the likely 19 outcome, although I'm not going to argue that there's any 20 one particular likely outcome.
We can see this is down the 21 pike; it's on the horizon.
You have a financial 22 qualifications rule and an exemption to that rule prior to 23 full power licensing.
The notion that you can ignore what 24 you see coming in the financial future, ignore that, give 25 out the full power license and then solve whatever financial Heritage Reporting Corporation (202) 628-4888 A
47 1
problem arises later through a transfer proceeding, I just
,n,
(
)
2 think is putting the cart before the horse.
v 3
The other question, the timAng question, is, I 4
think, intimately connected.
Why not wait, in other words?
5 Why don't we wait until this unknown entity that's going te 6
end up holding this 36 percent share, why don't we wait to 7
see who it is, what its financial shape is, and then we can 8
decide whether we should have a financial cure.
9 JUDGE WILBER:
Excuse me.
10 If you don't wait, what are you going to litigate?
11 You don't know who it is, so how are you going to --
12 MR. TRAFICONTE:
It seems to us that we would want 13 to litigate what the possible options are.
Is there going 14 to end up to be --
(
')
15 JUDGE WILBER:
Doesn't that approach infinity?
(
j 16 MR. TRAFICONTE:
Not at all.
17 JUDGE WILBER:
Why not?
You could have entities 18 from Japan coming in, or Trump, you mentioned.
19 MR. TRAFICONTE:
I don't have any inside 20 information.
21 JUDGE WILBER:
Well, no.
I'm just saying I don't e
22 see how in the world you can litigate anything if you don't 23 know who these new owners are.
That's what you're telling 24 me --
25 MR. TRAFICONTE:
I think there are cognizable j'~s Heritage Reporting Corporation i,
)
(202) 628-4888 xJ I
l
48 1
issues that could be identified for the litigation.
2 JUDGE WILBER:
I further don't understand -- the 3
word " bankruptcy" keeps creeping in here, and it sounds to 4
me like you're getting rid of the bankrupt portion of this 5
group up here.
Aren't you saying that someone is going to 6
take over that portion that is under the cloud of 7
bankruptcy?
8 MR. TRAFICONTE:
Well, the cloud of bankruptcy is
~
9 pretty pervasive, and I think it catches all the assets of l
10 PSNH.
But the fact of the matter is that whoever, if it's 11 PSNH or if it's a replacement owner for the one-third share, 12 they are looking at debt, that they would have an incentive 13 to compromise safety for revenues.
That is the heart of the 14 problem.
15 JUDGE MOORE:
But you're assuming, also, that this 16 new entity is the operator.
17 MR. TRAFICONTE:
No, I'm not, Your Honor.
I think 10 CLI-88-10 answers that.
19 JUDGE MOORE:
It's the coincidence that the 20 bankrupt is the managing partner that brings all this to the 21 fore.
If this were another utility that was not the 22 managing partner and the operator, ultimate operator of the 23 plant, the problem would not take on the significance it 24 does, would it?
25 MR. TRAFICONTE:
Well, that's an interesting Heritage Reporting Corporation (202) 628-4888 L__________________________________
_____x---
49 1-
' question.. It leads me to the conclusion that, because we've 2
got a bankrupt managing partner,' and we're talking about 3
that portion of the PSNH operation being spun off, we have n
4' an intensified problem.
Sure.. The problem is worse.
i
~
5 JUDGE ROSENTHAL:
You've taken your 35 minutes.
6 MR. TRAFICONTE:
I'm sorry.
)
i 7
JUDGE ROSENTHAL:
That's all right.
You've'been j
u 8
answering questions.
But I just wondered if you wanted to 9
reserve 15 minutes for rebuttal.
10-MR. TRAFICONTE:
I.did.
l 11 JUDGE ROSENTHAL:
All right.
This is the time to 12 close out.
13 MR. TRAFICONTE:
All right.
l 14 I would just want to reemphasize at the conclusion 15 that the question is not just rate-setting.
It's rate-3 1
16 setting plus a revenue stream.
I think that was the
\\
L 17 assumption the Commission made in ' 84.
I think that's a 1
l i
18 reasonable assumption, and I think'that's what the present l
l l
19 circumstances raise uncertainty or present uncertainty 20 about.
It's a revenue stream issue as much as it's a rate-1 l
21 setting issue.
l 22 JUDGE MOORE:
Not to prolong --
)
23 MR. TRAFICONTE:
Can't close on that?
Okay.
24-JUDGE MOORE:
Not to prolong the agony, but:
by a
i 25 revenue stream, are you suggesting that if the rates are set Heritage Reporting Corporation (202) 628-4888
)
a_-_--________________-___-__-__
50 1
higher than the market will bear, the market share will, 2
essentially, collapse, and there's no place to sell the 3
power?
4 MR. TRAFICONTE:
I am suggesting that there's a 5
relationship between the bankruptcy of PSNH, the debt that 6
has been incurred to date, the high levels of investment and l
7 therefore debt that whoever is owning this 36 percent share 8
is going to be looking at, the need therefore for high rates 9
to recover that, and perhaps the incapacity of the market to 10 bear those rates, and therefore uncertainty about sufficient 11 revenue stream.
I grant you, they will always get operating 12 revenues.
That is not in dispute.
They will get operating 13 revenues.
The question is, what will they do with the 14 operating revenues?
15 Thenk you.
16 JUDGE ROSENTHAL:
Thank you.
17 (Pause.)
18 19 20 21 22 23 24 25 Heritage Reporting Corporation (202) 628-4888 I
I:
51 1
JUDGE ROSENTHAL:
Mt. Dignan, how have you and Mr.
p) i 2
Berry divided your time?
v 3
MR. DIGNAN:
Mr. Chairman, the time is to be 4
divided equally between us; 25 minutes at the most.
5 JUDGE ROSENTHAL:
We would like to hear from you 6
briefly on the appealability question even though the Staff 7
doesn't wish to address it.
8 ORAL ARGUMENT ON BEHALF OF THE APPLICANTS 9
MR. DIGNAN:
Yes, Your Honor.
10 I was specifically going to inquire of the Board 11 as to whether they wish me to have an opportunity, because I 12 admit, as the Board is aware, I stood silent on this matter.
13 JUDGE ROSENTHAL:
Do you have a view?
14 MR. DIGNAN:
I do have a view.
m I
\\
!,V/
IS MR. DIGNAN:
Mr. Dignan, you are one of the 16 leading authorities on the Commission's Rules of Practice.
17 We're always anxious to have your views to their 18 interpretation and application.
19 MR. DIGNAN:
May the record show that that 20 statement often comes just before the Appeal Board disagrees 21 with me on the Rules of Practice.
22 But in any event, with the understanding that I 23 admit I stood silent, and therefore to the extent I am 24 taking Mr. Traficonte by surprise I assume the Board will 25 indulge him with rebuttal.
,r"x Heritage Reporting Corporation
(
)
(202) 628-4888 wJ
52 i
1 I agree with the Staff for a simple reason: taking 2
the Board question as it was phrased in the question to the 3
parties before the Staff withdrew on the matter, is it 4
ancillary?
Is a 2.758 motion ancillary?
I think clearly it 5
is.
The only time you can use 2.758 is when you're in a 6
proceeding before a Licensing Board.
It can't be used 7
otherwise.
You cannot generate an exemption for your plant.
8 You use 50.12 or some other vehicle.
So it's clearly 9
ancillary.
10 Does it have finality?
No, I don't think it does.
11 And the analogy I would use is this: not only the rejection 12 of a contention, but as often happens in a Licensing Board 13 case an Intervenor will bring a contention in.
The argument 14 of the Applicant or the Staff or both will be, that is 15 seeking to challenge the regulations of the Commission, that 16 contention.
And the Licensing Board rules, yes, that's a 17 challenge to the regulations of the Commission and dismisses 18 the contention.
19 Clearly, in such a case there is no right of 20 appeal absent the party being dismissed entirely as a result 21 from the proceeding.
So I don't see how there can be an 22 appeal of right here.
23 on the question of whether -- if the Appeal Board 24 elected to take a look at it under 2.718 (i), I confess to t
25 not being fully prepared to answer that.
i Heritage Reporting Corporation (202) 628-4888 i
i l
I J
I
)
53 3
1 When I got the Staff's letter I assume, perhaps
-w 1
2
' improperly, that this was out of the picture, j
-3 JUDGE ROSENTHAL:
Not improperly, but as it turned 4
out incorrectly.
5 MR. DIGNAN:
Yes.
6 I would say that it sounds to me it is difficult 7
to meet the test.
It certainly is a harm that can be 8
mitigated on appeal.
9 And then the question is: does it have a pervasive 10 effect on the proceeding?
The answer to that is, no, it 11 can't; the proceeding is over.
It may have a pervasive 1:2 effect if the Appeal Board later finds a prima facie case, 13 sends it to the Commission and the Commission says, yes, we 14-grant the waiver.
But that pervasive effect won't be on C
(
15 this proceeding.
The proceeding for good or for ill is over 16 at this point before the Licensing Board.
17 So I think it's very difficult at this juncture to 18 meet that test.
19 JUDGE MOORE:
Mr. Dignan, the practical matt 5r in 20 the real world: does it make sense to leave a rule waiver to 21 the end?
22 MR. DIGNAN:
As a practical matter in the real 23 world in this particular case, no.
And that,'s why I stood 24 silent.
I confess I did not -- I join the Staff in one 25 respect completely in some of their -- you knov, 15 years Heritage Reporting Corporation (2n2) 628-4888 k.
_ 1
54 1
litigating before this Appeal Board usually my theory is 2
when the Chairman gets into it with the Staff, it's time to 3
get under the table.
4 But at risk of breaking that rule, I agree with 5
the Staff on one thing, it is not really jurisdictional in 6
this sense.
While it is true, I would argue to you that 7
2.718(i) tests as laid down by the Appeal Board are not met 8
here.
~
9 The fact of the matter is, 2.718(i) is a 10 discretionary rule.
Now, the Appeal Board has set certain 11 standards which they will follow in exercising that 12 discretion.
But the Appeal Board can take anything it war.ts 13 to under 2.718 (i).
14 JUDGE ROSENTHAL:
I didn't mean to suggest the 15 contrary.
16 MR. DIGNAN:
I didn't think anybody would.
17 So in that sense there is jurisdiction to take it 16 probably.
And as a practical matter I have no doubt I'm 19 going to face this argument.
20 JUDGE MOORE:
I'm opeaking in a different sense.
21 When a rule waiver petition is filed and denied in 22 early stages of the proceeding, and if one then postpones 23 review of it until the end of the proceeding upon appeal and 24 a license is issued.
In the real world, as a practical 25 matter, is there any chance that a rule waiver would ever be Heritage Reporting Corporation (202) 628-4888
I.
L 55 1
granted in that-circumstance?
2 Haven't you essentially precluded the operation of i.
l L
.3 the regulation?
4 To stop a' license?
L 5
MR. DIGNAN:
Well, to stop a license, obviously, 6
you have. precluded stopping a license. 'But I don't 7
necessarily see any bar to the rule waiver being granted.
8 Let's take it out of this case, because when 9
you're fighting your own case you intend to.
But let's 10 suppose a rule waiver was sought with a certain. plant on the
-11 ECCS rule.
Let's say the temperature at which core melt 12 should be done.. And somebody said it should be a lower 13 temperature than the rule allows.
It goes down and it's 14 never reviewed.
It gets up and finally the Appeal Board
,_((
15 says, we think a prima facie case was made anc they certify 16 that to the Commission.
And the plant is running and the 17 Commission could well say, all right, if the Appeal Board 18 thinks a prima facie case was made, we look at it and we 19 think so, too, we want that matter heard.
20 JUDGE MOORE:
The Commission in 88-10 said it has 21 to be safety significant.
So you're going to let a plant
~
22 run with an unresolved safety significant issue out there?
23 MR. DIGNAN:
I'm saying at that point the
'24 Commission has to bite the apple.
They have to either say 25 to the plant, we think it's so safety significant in this Heritage Reporting Corporation O(
(202) 628-4888
56
}
1 particular case that we're going to shut it down until it's 2
heard or they may let it run and go on.
3 There is plenty of room for that.
I mean, under 4
the two -- the number of cases where things have come up 5
afterwards there was always an examination made as to 6
whether the reversal also requires the revocation of the 7
license.
8 And I would imagine the Commission would go 9
through an analysis.
It would probably go through a 10 probability type analysis.
I would imagine the kind of data 11 that would come before the Commission in such a proceeding 12 would be the probability that assuming the rule is set too 13 high will there be a LOCA in so many days and it will take 14 so much to hear, and it will be resolved.
15 But I don't see any jurisprudential reason why it 16 could not be done.
If you're asking me in the real world 17 would the Commission perhaps be reluctant?
That you have to 18 address to the Commission.
19 JUDGE MOORE:
Mr. Dignan, getting to the merits, 20 can you tell me what the Commission meant in 88-10 when they 21 said that it must address safety significant matter?
22 MR. DIGNAN:
Yes.
23 I think what they meant was that -- if I heard 24 them correctly and would back that up -- is that they 25 thought a rule waiver matter, a rule waiver petition which l
Heritage Reporting Corporation (202) 628-4888
57-1 didn't bring to them what they considered safety significant 2
simply wasn't worthy of taking the time and Commission j
3 resources to be resolved.
I think it was that blunt.
,4 JUDGE MOORE:
How then does the prima facie 5
requirement of the regulation extend to the safety 6
significant add-on?
7 MR. DIGNAN:
I don't know.
And this is my 8
problem: I have never been able to resolve in my own mind in 9
reading CLI-88-10, was this for financial qualifications 10 only they were talking about or was it across-the-board?-
11 If it was across-the-board, then it's part of the 12 prima facie showing of safety significant matter.
If it was 13 only financial qualification, which doesn't make any 14 difference for purposes of our case because we're in 15 financial qualifications and it clearly applies to financial 16 qualifications.
17 JUDGE MOORE:
You say that a prima facie showing, 18 even though the language is that the petition and other 19 allowed papers indicate that a waiver is necessary to 20 address on the merits of a safety significant problem 21 related to the rules sought to be waived?
22 MR. DIGNAN:
Yes.
I thought what they were saying 23 in that case was that in their judgment the combination of 24 factors they had before them, correct, gave -- they agreed 25 the prima facie had been made.
They said, albeit for some Heritage Reporting Corporation (202) 628-4888 1
i I
58 I
i 1
different reasons than the Appeal Board theughc~
so.
They 2
agreed had been made, but they said there was no safety 3
significance to it in this setting in light of what they 4
were doing in terms of providing for more funds.
5 I read it that simply and perhaps too simply.
6 JUDGE ROSENTHAL:
If that's the case, their 7
conclusion that there was no safety significance was tied, 8
was it not, to the fact that low power operation was what 9
was at issue?
10 MR. DIGNAN:
No, I thought it was tied to the fact 11 that they had put additional -- well, I'm not saying that 12 had no part in it, but certainly, it also was tied to the 13 fact that they had put additional financial strictures on 14 the granting of license.
15 JUDGE ROSENTHAL:
Well, I don't know, they set 16 forth a number of reasons.
I don't know whether they're 17 collective.
The safety risks of low power testing are low.
18 The amount of money in question is relatively small.
Now 19 those two reasons were plainly tied to low-power operation.
20 MR. DIGNAN:
Correct; there is no question about 21 that.
~
22 JUDGE ROSENTHAL:
Now we're dealing with full-23 power operation.
24 MR. DIGNAN:
That's correct.
25 JUDGE ROSENTHAL:
And why isn't this a horse, as Heritage Reporting Corporation (202) 628-4088
}
59 l'
1
.the old saying goes, of a'different color?
)
Y 2
MR. DIGNAN:
Because you don't get there --
- 3 because you don't get the combination that you had below.
4 The anti-CWIP statute doesn't supply.the second half of the 5
equation.
6 JUDGE ROSENTHAL:
Why not?
7 MR. DIGNAN:
It's essentially conceded by the 8
Commonwealth that they aren't basing their position on the.
9 anti-CWIP statute.
10 JUDGE ROSENTHAL:
Well, Mr. Traficonte I think 11 said that he would use that as a backup, if he had to.
12 MR. DIGNAN:
Right.
13 But I think that it ought to be understood, as I 14 go into this argument, that I am not a rate lawyer nor 15 because of the way it had been argued am I here prepared on 16 the anti-CWIP statute.
17 But if the qu'estion is: will regulatory delay take 18 place of some nature?
It will.
At leant it's my 19 understanding that New Hampshire is nct so much different 20 than my home state that a rate case will have to be filed to 21 place the plant into rate base and so forth and so on.
22 JUDGE WILBER:
When does it have to be filed, on 23 the supposition that you reach a certain plateau or that you 24 have reached that plateau?
25 MR. DIGNAN:
This is what I was afraid of, we Heritage Reporting Corporation O,
(202) 628-4888
60 1
1 would get into details and I'm not prepared.
My guess is 2
they will go in as early as they can.
And when they can go h
3 in, I frankly don't know, Judge Wilber, because I'm just not 4
that familiar with New Hampshire law.
5 The one they will not be, however, which I think 6
should be understood is, Mr. Traficonte talked about a gap.
7 There will be no gap.
A rate case which goes in and is 8
allowed reaches back.
You recover the funds that were 9
expended in the period before the rate case was decided, so 10 there is no gap.
There is a delay.
11 JUDGE MOORE:
During the interim period there is a 12 lack, if you will, of funds that subsequently will be made 13 up.
14 MR. DIGNAN:
There is a regulatory delay as there 15 is in any rate case.
16 JUDGE MOORE:
So there's the potential for a 17 significant shortage, if you will, or there's a potential 18 for an incentive to cut corners during this delay.
19 MR. DIGNAN:
No.
20 See, there's where I really get off the track.
I 21 get off the track on the incentive for two reasons.
~
22 First of all, the one thing ' hat both this Board 23 and the Commission said, was that bankruptcy alone cannot 24 provide the prima facie case.
And I got a feeling it was 25 deja vu.
Heritage Reporting Corporation (202) 628-4888
61 i
Er
)1 You heard Mr. Traficonte argue that bankruptcy
.O
{
2
.alone:provided the' prima-facie case.
3
~ JUDGE-ROSENTHAL:
Well,-the-Commission says that 4
bankruptcy'is a special circumstance.
5 MR. DIGNAN:
It is a special circumstance, but 6
they didn't go so far as to say,-it made-it; they had to put-7 it in combination with anti-CWIP.
8 JUDGE MOORE:.They had somebody that didn't it.
9 Indeed,1we did and rather they corrected us.
10 MR. DIGNAN:
I don't think they corrected youJon 11 that point.
I really don't.
And I don't think'they 12
' disturbed that holding one bit and I said that in the brief
'13 and I still don't think they did.
14 They got there through a different route.
And
- t 15 that's why '- - as 1[ sat at my counsel table I said, I've 16 heard this.one before.
This is an argument that bankruptcy 17 alone should result in a prima facie case..That's what Mr.
L 10 Traficonte argued to you for 35 minutes here.
19 JUDGE ROSENTHAL:
I'll just tell you what'my 20 problem is: it seems to me that it is at least possible that 21 the point at which the anti-CWIP law bows out is of 22 significance.
'23 You're quite right, Mr. Traficonte --
24 MR. DIGNAN:
Oh, it bows out.
There is no 25 question when it bows out.
It bows out at the completion, Heritage Reporting Corporation (202) 628-4888 I.
l-L-
l
[
62 1
as I understand it, of the warranty run of the plant; it 2
bows out.
3 JUDGE ROSENTHAL:
Where do you get that?
4 FR. DIGNAN:
Because as I understand it -- and 5
again, I am very reluctant here because I didn't -- given l
6 the way this thing was argued I didn't bone up on it and I'm l
l 7
not a New Hampshire rate lawyer.
l 8
JUDGE ROSENTHAL:
Let me put it to you this way, l
9 Mr. Dignan, we're going to cure that situation because we're 1
10 going to ask you to file a supplemental memorandum which is 11 going to address the matter of how the anti-CWIP statute 12 operates with, if there have been some judicial decisions 13 interpreting it and referencing it.
14 Because Mr. Traficonte may be telling it right, 15 that it makes no difference one way or another.
But to our 16 way of thinking, at least tentatively, there may be some 17 significance.
18 MR. DIGNAN:
Well, I question whether you can make i
19 the prima facie case for the Commonwealth, Mr. Chairman.
l 20 The prima facie case stands or falls on the record 21 that was put before you.
22 JUDGE ROSENTHAL:
Wait a minute.
1 23 The question of when -- what we' re asking you to 24 address in a supplemental memorandum is a question of law.
25 MR. DIGNAN:
Yes.
But it's a question of law Heritage Reporting Corporation (202) 628-4888 i
63 1
1~
which the Commonwealth conceded.
-:n -
(vJ 2
And, please understand, I of course wi11' address.
3 it, Mr. Chairman.
4 JUDGE ROSENTHAL:
I'm not so sure that Mr. Backus 5
conceded it.
And bear in mind, we have his-appeal submitted 6
on the briefs.
7 MR. DIGNAN:
Well, his appeal, I don't see again, 8
how it can be in the briefs because.they have withdrawn in 9
the briefs.
10 JUDGE ROSENTHAL:
You can run the argument, if you 11' wish, that given the present posture of the case we cannot 12 appropriately look into that question.
But you will have to 13 at'least humor us from the standpoint of this supplemental 14 filing.
Because I'm not a utility lawyer either.
And O( )
15; fortunately, I can call upon you to provide the utility law 16 in the area.
17 MR. DIGNAN:
There is no question, though.
And 18 understand, I welcome the opportunity to brief it.
And I'll 19 probably have a New Hampshire lawyer brief it for you.
20 But the point is, Judge Moore's question is well 21 taken in one respect: I have no doubt there has to be some 22, regulatory delay.
I mean, there is no system that does not 23-have it.
24 In Massachusetts, for example, which I am somewhat 25 familiar with, a rate case is filed and usually what then Heritage Reporting Corporation
(
(202) 628-4888 s
l' I
l
64 1
happens is that the rate is suspended at that point for a 2
period of, I think it's six months.
And it's in that six 3
months we resolve it before the DPU.
And if, as and when 4
the rate or to the extent the rate is allowed, it then 5
relates back, as I understand it, to the prior filing.
6 So there is always regulatory delay in the rate-7 making process; and that's true whether you're being 8
regulated by the state or you're being regulated by FERC.
~
9 This case is somewhat further complicated because 10 Public Service just got another rate increase.
11 JUDGE MOORE:
Mr. Dignan, doesn't that fact take 12 on added significance in light of the analysis that I think 13 the Commission applied in 88-10.
They seem to be saying 14 that it was a "no, never mind" for low power because:
- one, 15 there was no incentives to cut cost at low power.
16 And two, there was no significant safety problem 17 at low power.
18 Now, both of those assumptions in the Commission's 19 analysis would seem to disappear once you go above low I
20 power.
There would seem to be every incentive, if you will, J
21 to cut corners and, too, there clearly are significant 22 safety issues at full power in the event of corner cut.
23 MR. DIGNAN:
All right.
24 But the problem is, I don't see how you can say on i
25 the record there has been a demonstration of incentive.
Heritage Reporting Corporation I
(202) 628-4888 j
l i
65-1 r
1 That's forgetting the Brown affidavit which is uncontested.
')
[ -s]
2 The Brown affidavit, I think, the Licensing Board properly x.-
3 relied on.
That affidavit made it clear, by not only
-i 4
generally in the industry is there no incentive.
But more 5
. importantly, here you have'a group running this plant on 6
which the Public Service' Company of New Hampshire has only 7
one vote of five.
There is simply no incentive for New 8
Hampshire Yankee to cut corners.
9 JUDGE MOORE:
Your same affidavit points out that 10 only Public Service of New Hampshire determines the 11 expenditures for safety matters, doesn't it.
12 JUDGE ROSENTHAL:
Also, Mr. Dignan, all three of 13 the reasons that the Commission assigned in 88-10 were in 14 the context of low power.
And they were talking about, the
.( }
/
j 15 only purpose of low power was such and such; and therefore, 16 there was every incentive to do the job well and no rational 17 incentive to cut corners.
l 1
18 Now the Commission at that point, I don't think, 19 was talking about disclosures in the record.
They were 20 coming forth with their own analysis.
And they said, okay,'
21 folks, we have special circumstances here brought about the
~
22 bankruptcy, et cetera, but for three reasons those special 23 circumstances do not translate themselves into a safety 24 problem.
Bang, bang, bang, low power, low power, low power.
25 Now I just say to you, we are now dealing with I
Heritage Reporting Corporation (202) 628-4888 l
I L_
66 1
full power and it looks to me unless one can say, well, the 2
anti-CWIP law, which is one of the things that provided the 3
special circumstances is out of the picture.
4 MR. DIGNAN:
It was the whole thing.
There was 5
nothing else.
That was the key to the Commission decision, 6
was the anti-CWIP law.
7 JUDGE ROSENTHAL:
Well, that's why we're very i
8 interested in knowing where the anti-CWIP law fits in now.
~
9 MR. DIGNAN:
But whether it fits in now or I'm 10 sure I'm going to be having to tell you, it's a delay, what 11 difference does it make.
Because that regulatory delay 12 operates in every utility.
And it still did not bar the 13 Commission from putting the rule in.
Regulatory delay l
}
14 always operates.
{
15 JUDGE MOORE:
But that's in the teeth, Mr. Dignan, 16 of their second reason that there is no incentive to cut 17 corners of low power even though bankrupt.
I 18 MR. DIGNAN:
Yes, but there is no. incentive to cut 19 corners on low power for anybody, is what they were saying.
j 1
20 And all I'm pointing out is the regulatory delay factor on j
21 the CWIP is no different with any other utility any time.
1 i
22 You don't get things in rate base unless you've got a pro-l 23 CWIP law, you don't get things in rate base until the plant 24 is finished and you bring a rate case somewhere.
Unless
{
l 25 you've got a pro-CWIP law.
)
l Heritage Reporting Corporation (202) 628-4888
)
i
67 1
As the Commission said, they thought anti-CWIP was
[
i.
2 not an ordinary thing.
\\~-
3 JUDGE ROSENTHAL:
Why did they stress the low 4
power aspects in this opinion?
5 MR. DIGNAN:
I assume they stressed the low power 6~
aspects in this opinion because the opinion was about low 7
power.
And it was a way of resolving the thing.
But I 8
' don't think per contra you can flip and say, well, because 9
they stressed low power they must have meant at full power 10 they should be --
11 JUDGE ROSENTHAL:
What I read the decision of a 12 tribunal which comes down heavily on the fact that this is 13 low power and these are the conclusions that flow from the 14 fact it's low power and have the emphasis, I might draw the t
(
15 inference that if you don't have low power you may, in the
.s 16 mind of the tribunal, have a --
17 MR. DIGNAN:
Mr. Chairman, you and I could read a 18 case and read it differently.
And if you read the cases 19 doing two things: doing that and plus reversing you on your 20 decision that prima facie isn't made by bankruptcy, then.you 21 should certify it up.
Because certainly this bankruptcy --
22 that's all that has been argued to you today -- that 23 bankruptcy alone is a prima facie case and you should send 24 it up, in your judgment.
l 25 But if you do, you're reading that case as Heritage Reporting Corporation (202) 628-4888 E-_____--_--__.--
i
1 68 1
reversing this panel on that question and I don't think it 2
did.
3 JUDGE ROSENTHAL:
The Commission never reverses 4
us.
5 (Laughter) 6 MR. DIGNAN:
That's what you have to do.
Because 7
every argument you heard from Mr. Traficonte from this 8
podium flow from one thing: bankruptcy alone.
Nothing he 9
told you came from anything but bankruptcy alone.
And that 10 means, you have to read that decision as having reversed the 11 very clear statement by this panel that prima facie case was 12 not made by bankruptcy alone.
13 And that's why the first note I had here in my 14 argument was deja vu.
I've heard this one before, I think.
15 And if it's successful this time around, so be it, but 16 that's it.
17 I do want to add one note that perhaps is 18 underlining a question by, I think it was Judge Wilber.
The 19 other argument, if there's any argument that isn't the 20 bankruptcy alone it's the so-called " uncertainty argument."
21 You know, we don't know who is going to own 35 percent of 22 this plant.
And there are two answers it seems to me in 23 that.
24 You don't know who is going to own 35 percent of 25 any plant when you give a license all through its future.
Heritage Reporting Corporation (202) 628-4888 i
i J
69 l
1 Now, granted there may be some more immediacy here one can s
i
(\\s) 2 argue, but the fact of the matter is, legally any plant can l
3 be transferred.
1 4
If there is one thing that is clear in the 5
regulations, as I think it's about to be demonstrated in 6
spades by my brothers over on the Shoreham side of the 7
world, is license transfers, as I understand it, are not 8
just cut and dried things.
I mean, there's rights to 9
hearings.
It's a license amendment.
It's this; it's that.
10 And that's the time you deal with that.
If it turns out 11 some non-utility somehow gets into a non-regulated business 12 of selling power out of Seabrook, and that's going to be the 13 trick of the month, but somebody does the Commission can 14 hold a financial qualifications hearing before allowing the (3}
15 transfer; and I think that's a simple answer.
/
16 I'm not sure that I have much more to say in light 17 of view that it was deja vu.
18 JUDGE ROSENTHAL:
All right.
Your 25 minutes has 19 about expired anyway.
20 Thank you, Mr. Dignan.
21 Mr. Berry?
22 ORAL ARGUMENT ON BEHALF OF THE NRC STAFF 23 MR. BERRY:
I appear before you on behalf of the 24 Staff.
I appear to urge you to affirm the Licensing Board's l
1 25 order.
l l
Heritage Reporting Corporation es I
f
)
(202) 628-4888 LJ
70 1
Your Honor, there will not be much more that the 2
Staff would add to the position expressed in its brief and 3
comments made by the Applicants.
4 Now, the Licensing Board's order is clearly 5
correct, Your Honor, it applied to guidance laid down by the 6
Commission in 88-10.
It's consistent with the regulations.
7 It reached the only conclusion that was proper in the 8
circumstances.
9 The Commission has stated in 88-10 that before a 10 waiver petition may be certified by a Licensing Board to the 11 Commission the Licensing Board must find that the petition 12 makes a prima facie showing.
That special circumstances 13 exist which undercut the rationale of the rule sought to be 14 waived.
15 And further, find that if a hearing is needed.
16 The waiver is granted so a hearing may be held to address 17 the significant safety issue on the merits.
18 Now, it's clearly --
19 JUDGE WILBER:
Mr. Berry, that significant safety, 20 the Commission was quite clear when they said there was not 21 one at five percent.
~
22 Can you tell me at what power level there is one?
23 MR. BERRY:
With respect to the financial 24 qualification waiver petition, I don't believe that we have 25 a significant safety problem.
I mean, I don't think it Heritage Reporting Corporation 1
(202) 628-4888 I
i
71 1
turns on.the power level.
I think it turns on the i
p 2
' circumstances, the special circumstances' alleged.
3 JUDGE ROSENTHAL:
The Commission, Mr. Berry, has a 4
third reason for deciding that there was no safety concern, 5:
was that these safety risks of low power testing are low.
6 MR. BERRY:
And the third reason.for low power.
7 JUDGE ROSENTHAL:
Mr. Wilber's question is: at 8
what level of operation do the safety risks become more than 9'
simply low?
10 MR. BERRY:
And the answer is: I don't know, the 11-Commission didn't say.
The third reason that you pointed 12 out in 88-10 was the Commission's third reason for finding 13 that low power operation didn't present a significant safety 14 question.
15 Would the Commission have made the same statement 16 had it been six percent or seven percent or 10 percent or 50 17 percent or 80 percent, I don't know.
But I do know that in 18 88-10 they found out with respect to five percent the safety 19 risks were low.
20 Mr. Dignan made the point that the Interveners - -
21 Mr. Traficonte's argument basically boils down to that 22 bankruptcy changes everything.
I agree with that.
23 Primarily that's what we have heard this morning is because 24 of the bankruptcy and the uncertainty that flows from that, 25 that somehow there's a prima facie case here.
Heritage Reporting Corporation (202) 628-4888
72 1
I'think the Commission laid that notion to rest in 2
88-10.
The Commission said; bankruptcy, although a special 3
circumstance is not enough to grant a waiver.
The 4
Commission found in 88-10 and it stated: that bankruptcy in 5
combination with the anti-CWIP undercuts the rationale of 6
the rule.
And why did it reach that, I think it's clear?
7 The anti-CWIP precluded the Applicants from 8
getting money from others, ratepayers.
And the bankruptcy 9
shows that they may not have the money themselves.
You put 10 those two together there was the showing the Commission 11 found that funds may not be available to operate the l
12 facility safely at low power.
13 You take the anti-CWIP and you're just left with 14 the bankruptcy.
One hand can't clap, Your Honor.
15 JUDGE MOORE:
Well, maybe one hand can't clap, but 16 I don't think you have accurately represented what the 17 Commission said, because they indicated that having held 18 that Public Service of New Hampshire bankruptcy anti-CWIP 19 statutes and delay are a cessation of project payments by 20 minority owners, all present special circumstances not 21 considered when the 84 rule was adopted.
And that these 22 circumstances at least considered together undercut the 23 rationale of the 84 rule.
24 That's significantly different, is it not, than 25 saying that they ruled out that anyone of those alone cannot l
Heritage Reporting Corporation (202) 628-4888
73 1
meet that standard?
2 MR. BERRY:
Well, I would just go back and see 3
what the Commission stated.
4 JUDGE MOORE:
I just read you what they stated, 5
Mr. Berry, and they stated, at least in combination.
6 MR. BERRY:
Again, the answer is: no, the 7
Commission did not hold -- and I don't read the Commission's 8
order to hold that, to leave open any possibility that 9
bankruptcy standing alone would be enough.
That anti-CWIP 10 standing alone would be enough.
That any of the other 11 circumstances presented to the Commission in 88-10 would be 12 enough.
I do not read the Commission to state that.
13 I read the Commission to state that, we think the 14 combination of these two circumstances: bankruptcy and the 15 anti-CWI? statute does undercut the rationale of the rule.
16 The Commission goes on to say that, it's less 17 clear whether the cessation of project payments undercuts 18 the logic of the rule.
The record does not clearly suggest 19 the reasons for cessation of payments.
But in view of the 20 discussion below, it is not critical to our decision to know 21 whether these delays or project payments undercut the logic
~
i 22 of the rule.
23 But we will assume for purposes that they do.
24 It's clear that the Commission assumes that it didn't hold 25 it, didn't rely on it.
But what it did rely upon was the Heritage Reporting Corporation (202) 628-4888
4 1
i l
i I
74 4
1 combination of the anti-CWIP statute and the bankruptcy.
I 2
think that's clear in the Commission's order and that's the 3
way the Staff reads it.
4 And applying that as the Licensing Board did to 5
the Attorney General's petition he found that the standards 6
had not been met.
That although there were the special 7
circumstance to bankruptcy, but it wasn't sufficient to 8
undercut the rationale of the rule.
9 And in combination with the other circumstances 10 relied upon by the Attorney General's petition, that they 11 weren't sufficient alone or in combination, in any 12 combination to undercut the rationale of the rule.
13 JUDGE MOORE:
Mr. Berry, I have a more generic 14 question.
Under your reading of 88-10, is it your view that 15 the Commission is essentially taking the position that 16 whatever happens in this bankruptcy proceeding that they 17 will not and cannot look at this problem as to whether what 18 comes out of this -- whether there is going to be a 19 financial viable entity running this plant?
20 MR. BERRY:
It's my view of what the Commission's 21 view is or concern is, I just take it from their order, from 22 88-10.
And it's clear to me that, in that order, they were 23 deciding the matter put before them.
24 JUDGE MOORE:
I have in mind the Part V under 25 additdonal comment where they took the Staff to task for Heritage Reporting Corporation (202) 628-4888
75-1 suggesting, not to worry because the Staff is going to be 2_
looking after this.
And if any problems crop up the Staff 3
is going to be eyeballing this and we'll take care of it.
4 And the Commission said, no, we're very sorry you can't have 5
it both ways.
6 Now, doesn't that suggest that you either got to 7
litigate it or it can't be looked at, because how else'can 8
the Commission look at it?
9 MR. BERRY:
Well, the Commission looked at it in 10 88-10.
And the one reason they looked at it, they directed 11 the Applicants to provide the financial assurance specified 12 therein'and asked the Staff to monitor it to make sure that 13 the reasonable assurance was met.
14 JUDGE MOORE:
Wsit a minute.
15 Did you just say that they are asking the Staff to 16 monitor this?
17 MR. BERRY:
I said they did.
In 88-10 when the 18 Applicant -- 88-10 itself states, that the Applicant shall 19 provide reasonable assurance that the funds in the amount of 20 72.1 million will be available; and asked the Staff to 21 report to the Commission when those arrangements --
22 JUDGE MOORE:
That was for the decommissioning l
23 part of the case.
24 MR. BERRY:
But the point of the decommission --
25 JUDGE MOORE:
Let's deal with the other part of l'
l Heritage Reporting Corporation (202) 628-4888 l
_____-_-____ 2
76 l
i 1
the case that dealt with financial qualification for low 2
power.
3 MR. BERRY:
But the whole point of the 4
decommissioning and the requirement to set aside funds was 5
to alleviate any concern that could arise out of the alleged 6
unavailability of funds to operate a plant safety.
I don't 7
think you should separate the two.
8 But beyond that in 88-10, as you put it, the 9
Commission took the Staff to task, I think what the 10 Commission was speaking to was, you know, the impression it 11 had apparently gotten that the Staff on the one hand was 12 saying that there was nothing to worry about; and therefore, 13 there is no need to inquire further.
No need to entertain 14 the Interveners' waiver petition.
While on the other hand 15 it was saying, well, we're looking into the situation.
16 We'll look at it, but it shouldn't be examined in a hearing.
17 That was the position, in fact, that the Staff --
18 incidentally, the Staff was stating, there's a big, big 19 difference.
There's a big difference between saying, well, 20 that issue should not be the subject of a hearing.
And 21 saying that, well, it will never be looked at or nobody will 22 ever follow it or monitor it or look at it.
I think that's l
23 just apples and oranges.
But apparently -- the Commission 24 singled the Staff out for that.
I would suspect that's the 25 reason they said what they said, although I will leave it to i
Heritage Reporting Corporation eI (202) 628-4888 i
m
1 1
77 l
l i
1 the Commission to be the final word on that.
l
(
)
2 But as far as what that has to do with this case,
%.-./
3 Your Honor, is very little.
The Commission stated the 4
circumstances of when a waiver petition should be referred 5
to it.
I mean, it's clear what those standards are.
And 6
it's what the Licensing Board found, and I believe correctly 7
so, the Interveners' waiver petition don't meet those 8
standards.
The Licensing Board denied the petition.
That 9
denial was correct.
10 The special circumstances which undercut the 11 rationale of the rule.
We had a special circumstance, we 12 didn't have undercutting of the rationale of the rule.
13 Under 2.758, under CLI-88-10 that conclusion, those 14 findings, require a denial of the petition.
,_ s
( )
15 We have not heard anything today.
I have not seen 16 anything in the Interveners' brief that alters that fact.
17 That demonstrates that the rationale of the rule was 18 undercut.
The rationale of the rule the Commission held 19 was that electric utility or regulated utilities will have 20 access --
21 JUDGE MOORE:
In your answer, I'm sorry, I missed 22 what I'm sure was your answer to my question.
23 But my question is simply: may the Staff look at 24 the financial qualifications of this Applicant for full-25 power operation outside of the hearing context?
Heritage Reporting Corporation t
(202) 628-4888
\\_
t_
I I
78 1
1 MR. BERRY:
May we look at it?
Yes.
It's been 2
done so in the past.
3 JUDGE ROSENTHAL:
How does it look at it?
4 Does it require the Applicants to come forth with 5
a demonstration satisfactory to the Staff that it has the 6
requisite financial qualification?
7 MR. BERRY:
In the past if the Staff had questions 8
or there were concerns or questions the Staff had, the Staff
~
9 would request information from the Applicants and the 10 Applicants would provide the information, the Staff would 11 review it and determine what action, if any, should be taken 32 next.
That's what we have done in the past.
13 JUDGE MOORE:
Mr. Berry, what did the Commission 14 mean by the statement on page 601 of 28 NRC when they said:
15 "Only by obtaining a waiver of the rule," which the Staff 16 has not sought here, "may Staff assert authority to deny or 17 condition the.',ow power testing license because of a concern 18 about financial qualifications."
19 MR. BERRY:
I think he's saying that the Staff 20 itself does not have the final authority or the authority to 21 deny a license.
22 JUDGE ROSENTHAL:
The final authority?
23 Well, where does it get this information from?
24 You just told me that --
25 MR. BERRY:
If you let me complete my answer, I Heritage Reporting Corporation (202) 628-4888 n
79 l'
'would be happy'to answer the question.
.p t
Y 2~
I think that.what the Commission is stating'is
%,)
3 that the Staff, although it may request information from the 4
Applicants to address its ccacerns, if any it has, does not 5
have the authority.to make the determination whether the 6
license should be issued or not on.that basis, but let's go 7
to the Commission on those concerns.
8 JUDGE MOORE:
If that's your answer, Mr. Berry, 9
what did they mean by the second sentence where they.said:
10
" Staff cannot have it both ways.
It cannot advise the 11 Commission that there are no grounds for a rule waiver and 12 at the same time conduct its informal licensing review as if 13
- r. waiver was, in fact, needed."
14 MR. BERRY:
I read the same words, Your Honor.
15 JUDGE MOORE:
Well, now we have established that 16 you and I can both read, what does it mean?
17 MR. BERRY:
Again, it would appear that what the 18 Commission is saying is that it cannot conduct an informal 19 license review as if a rule waiver was, in fact, needed.
20 JUDGE MOORE:
So I go back to my original 21 question, Mr. Berry, may the Staff look at the financial 22 qualifications of this Applicant in determining whether this 23 license should issue outside of the hearing context?
24 MR. BERRY:
The Staff may not conduct a financial 25 qualification review.
You can read the Commission's order Heritage Reporting Corporation (202) 628-4888 Y_______-__-__________.
h
80 l
t 1
to suggest that.
2 JUDGE MOORE:
So are you agreeing with me or not?
3 MR. BERRY:
i I'm agreeing that it says what you 4
said it says, yes.
5 JUDGE MOORE:
If that's the case, then, I'm left 6
with this terribly disquieting feeling that there is no way 7
under the present regulatory scheme to make sure that this 8
entity, utility entity, Public Service of New Hampshire is, l
9 in fact, financially qualified to operate this plant even 10 though they are bankrupt.
11 Are you left with that same feeling, Mr. Berry?
12 MR. BERRY:
No.
13 JUDGE ROSENTHAL:
Why not?
14 JUDGE MOORE:
Would you be so good as to tell me 15 why?
16 MR. BERRY:
Because, first off, the Commission has 17 held that the bankruptcy in itself does not satisfy the
)
f 18 waiver rules.
1 19 Secondly, 88-10 doesn't hold that you can't have a
)
l 20 waiver.
And I suspect that if something were to happen --
j l
21 even if you're reading of the Commission's order is correct, 22 and I'm inclined to agree, and say the Staff is completely 23 barred from looking at a financial qualification.
Even if 24 that's so, I suspect that if these were the facts, if 25 circumstances were to develop sufficient to undercut the l
l Heritage Reporting Corporation (202) 628-4888 n
81 g
LI li rationale of the rule, you're going to have a hearing.
2 There's going to be a review of the hearing.
3 JUDGE ROSENTHAL:
How do you know whether there's 4-such~ circumstances.if.you can't requent information-from the l
5 utility?
6 I take it now your answering the question I poned 7
to you a'while back differently.
Now you're telling me 8.
that, in fact, they cannot seek from the utility information 9;
going to the matter-of its financial qualifications to' 10 operate the plant safely; am I right about that?
11 The Staff cannot request that information; is that 12 true?
13 MR. BERRY:
According to that reading of -- that's 14 a proper reading of the --
(
15 JUDGE RO5ENTHAL:
I am asking you, you are up here 16
' representing the Staff.
You have read that opinion.
17 MR. BERRY:
That's my answer, Your Honor.
18 JUDGE ROSENTHAL:
You're not reyd. red to agree 19 with Mr. Moore's reading.
20 What I want to know is: whether or not you read 21 the Commission's decision in 88-10 as foreclosing the Staff 22 from seeking any kind of information with respect to the 23 financial qualifications of the particular utility to 24 operate the plant at full power safely?
25 I'm asking you.
You're the Staff representative.
Heritage Reporting Corporation gO (202) 628-4888
82 1
If you're not in position to speak for the Staff, then you 2
can f a supplemental memorandum after you have talked to 3
your superiors.
And I'm not trying to force you into taking 4
a position for the Staff if you are not able to do se at 5
this time.
But you make your choice: you can tell us now or 6
you can file a memorandum addressed to that.
7 MR. BERRY:
It's my understanding, Your Honor, 8
thLi the Staff -- the matter hasn't come up since 88-10 --
9 but the Staff has not requested any financial qualification.
10 JUDGE ROSENTHAL:
I'm not asking you whether they 11 requested it; I'm asking you whether they are empowered to 12 request it, how do they read 68-107 13 MR. BERRY:
Your Henor, perhaps it will be better 14 for the Staff to file with the Appeal Board a written 15 explanation on this questien.
16 JUDGE ROSENTRAL:
All right.
That sounds fino.
17 MR. BERRY:
But in further response to Judge 18 Moore's question.- The point is, one reason now these 19 matters -- they still would arise is because perhaps we 20 would have Interveners that would file another waiver 21 petition, alleging special facts End circumstances.
If they 22 undercut the rationale of the rule you're going to have --
23 and raise a significant safety question -
you're going to 24 have an inquary into the financial qualification of the 25 Applicant.
Heritage Reporting Corporation (202) 628-4888 i
I i
-83 l
1 So I don't think that in the real world there is o
2 much chance'that a blind eye vill be turned to the financial 3
circumstances of a bankrupt utility, Your Honor.
4 I.see my time is up, Your Honor.
I would only
.l 5
repeat'that the Licensing Board had an obligation to apply 6
the standard set down by the Commission in 88-10 and the 7
requirements of 2.758 of the Commission's regulations.
The 8
Licensing Board did that.
It found that the Massachusetts 9
Attorney General's petition did not make a prima facie 10 showing of special circumstances which undercut the 11 rationale of the rule sought to be waived..That petition 12 did not establish that a hearing was needed to address the 13 significant safety problem on the merits.
14 In these circumstances, the Licensing Board 15 properly could not certify that petition to the Commission.
(
16 And that determination was correct, the petition was denied.
17 It deserved to be denied.
And that decision deserves to be 18 affirmed.
19 Thank you.
20 JUDGE ROSENTHAL:
Thank you, Mr. Berry.
21 Mr. Traficonte, you have 15 minutes for rebuttal, 22 bearing in mind that it has to be rebuttal.
23 MR. TRAFICONTE:
Yes, and that I'm under no f
24 constitutional obligation to use it all up.
25 JUDGE ROSENTRAL:
That, too.
Heritage Reporting Corporation
[
(202) 628-4888 i
i 84 l
1 REBUTTAL ARGUMENT ON BEHALF OF THE INTERVENOR 2
THE COMMONWEALTH OF MASSACHUSETTS 3
MR. TRAFICONTE:
Just some brief introductory f
l 4
points in rebuttal.
For what it's worth, I will just make 5
the representation that'SALP reports which the Staff has 6
prepared for the Seabrook facility, certainly within the i
7 last year have a section, which I believe is labeled 8
something to the effect of financial qualifications loosely 9
termed where there is reporting in the SALP report on g
10 financial qualifications or financial issues as the Staff 11 believes that that prior reporting period reveals such 12 matters.
13 I think Judge Moore's inquiry as to what the Staff 14 has been doing, I don't think there is any question that the 15 Staff, at least within the last year, has been engaged in 16 some form of inquiry as to financial qualificatiora.
17 Second point.: nhe SAPL issue with regard to the 18 argument that perhaps has merit, and I underappreciated that 19 merit, with regard to the timing of the anti-CWIP and the 20 regulatory rate gap that may, in fact, exist.
Whether it's 21 a gap or a delay, but there still would be a period where 22 you would have full power license and no revenues.
i 23 I just want to repeat, if I was unclear, that our 24 brief on this matter filed on April 21 at page two adopts 25 the arguments made by SAPL in its pleadings.
If those Heritage Reporting Corporation (202) 628-4888
8S 1
ll arguments are sound I would certainly grab on to those coat 1
2 tails.
3-JUDGE ROSENTHAL:
And leaving nothing to change.
'4 MR. TRAFICONTE:
I certainly don't want to 5
indicate that silence is in some form of agreement with 6
Mr. Dignan that we have waived the argument.
.e.
j 7
My point was, and I think.it was clear on the S
record, I was stating how our petition is structured.
What 9
the nature of our petition is.
10 JUDGE ROSENTHAL:
How do you respond to Mr.
11 Dignan's asuertion that he has this feeling of deja vu, that 12 this all comes down once again to the fact that there has 13 been a bankruptcy and that the Commf.ssion has decided 14 standing alone isn't enough?
15 MR. TRAFICONTE:
That was my third point, 16 fortunately.
l 17 With all due respect I think the Commission in 18 CLI-88-10 rever0ed ALAB-895.
I think this Board approached 19 the issue at that time.
There was a comment in your opinion 20 where you note the visceral appeal of looking at a 21 bankruptcy as sufficient in and of itself.
22 You went on and said, although there is a visceral 23 appeal the real issue is, is there sufficient funds to 24 ope. rate safely at low power.
You foyhd we didn't make out 25 the prima facie showing that there was not sufficient funds, Heritego Reporting Corporation (202) 628-4888 s
I
86 i
1 ergo setting the MWEC issue aside, you didn't think there 2
was a sufficient showing.
1 3
The Commission, I believe, reversed -- and I grant 4
you there'were combined c4rcumstances in CLI-88-10.
But I 5
also noted the phrase about "at least in combination."
And 6
I think it certainly doesn't preclude the possibility that 7
bankruptcy alone is enough.
8 I think the Commission reversed on the basic logic 9
and they substituted a different question.
I don't think 10 the question any longer 1s: are there sufficient funds?
I 11 think the question is: is there a sufficient rate setting 12 process that will secure a sufficient revenue stream to 13 provide our comfortable assumption that we need not look any 14 further.
15 And that being the question, they answered that 16 question in the affirmative at low power, frankly, I think 17 based on anti-CWIP alone.
They looked at low power and 18 said, there is no rate setting process at all at low power.
19 Ergo, there is the showing prima facie.
They moved then to 20 the -- let's not kid oerselves, they found that the utility 21 was not financial qualified at low power That's a finding.
22 That's a holding, CLI-88-10.
23 They went then and said, well, does that mean 24 there should be a waiver.
Financially unqualified, though 25 it is, it doesn't matter there won't be significant safety l
Heritage Reporting Corporation i
(202) 628-4888 l
h p
L 87 l
1 issues because it's only low power.
lf'%
)
2 And frankly, I think Mr. Dignan is dead wrong in L/
3 not. acknowledging that it is entirely based on low power 4
considerations.
That was the whole logic of the 5
determination, there was no significant safety.
6 And, in fact, when you flip and you look at the 7
full power issue c11 those reasons go out the window and 8
their mirror images take their place.
9 Frankly, I think when you pose the question: is 10 there a sufficient assurance of an adequate revenue stream 11 at full power, just as that question was posed at low power, 12 the answer is, no, not on the record as it stands now.
'13 The reason is different, because then the reason 14 why was, anti-CWIP prevents any rate setting at low power rh
}
15 combined with a bankrupt, that's a serious matter.
16 Now it's the bankruptcy and the financial 17 implications of the bankruptcy and uncertainty surrounding 18 the rate setting and revenues that will attach to 36 percent 19 of this Seabrook project.
20 The way I'm thinking about this analytically is, 21 if you need a substitute at full power for the anti-CWIP 22 component of CLI-88-10 at low power, it is the fact of the 23 uncertainty that is present, existing now, as to the rate 24 setting and the rate revenues for this 36 percent share.
25 So I could not disagree with Mr. Dignan more when 7-s Heritage Reporting Corporation (202) 628-4888
l
\\
88 1
he says that bankruptcy -- and maybe it is deja vu, I didn't j
2 have the good fortune of being here in December of ' 67, but 3
if it is deja vu so be it -- I don't think it's just 4
bankruptcy, however.
I think it's bankruptcy plus.
Plus 5
what?
Plus the very natural financial consequences of a 6
bankruptcy.
7 Serious uncertainty as to who is going to own this
~
8 asset.
9 JUDGE ROSENTHAL:
I think that Mr. Dignan made the 10 point or maybe it was Mr. Berry or maybe it was both of 11 them, that you will always have uncertainty as to who down i
12 the line is going to own and operate a plant.
That 13 ownership of plants sometimes changes.
And, of course, in 14 order to affect the change there must be a license amendment 15 which can be subject to a hearing, which can bring to the 16 floor any issues that may be associated with that change in 17 ownership.
18 What makes this from that standpoint any 19 different?
20 MR. TRAFICONTE:
It's different because we have 21 the opportunity and the good fortune now of being able to 22 prevent the issuance of a low power license to a bankrupt in 23 the context of uncertainty, number one.
24 Number two, what if the bankrupt who is the 25 purported transferee is bankrupt?
What if the transferee in Heritage Reporting Corporation l
(202) 628-4888 1
L_-__-____.
89 1
the future is a bankrupt?
p i
2 JUDGE ROSENTHAL:
But there's a lot of "what ifs."
b 3
But the point is, as I understand Mr. Dignan, his 4
point is that you wait to see whether those "what ifs" 5
materialize and if they do, at that point you deal with 6
them.
7 We don't obtain assurance before we give an 8
operating license to the XYZ utility.
That that XYZ utility 1 9
is going to operate that plant for the life of the license.
10 It may or may not.
There may be changes.
And if there are 11 changes, that's what we have a license amendment procedure 12 to deal with, is it not?
11 3 MR. TRAFICONTE:
And if one of those changes 14 involved a transfer to a purported transferee that was a 15 bankrupt, you would inquire and you probably would not 16 permit the issuance of the transfer of the license to a 17 bankrupt.
And yet, you would entertain the issuance of a 18 license to a bankrupt in the first instance.
19 JUDGE WILBER:
But that would be at that time, 20 wouldn't it?
21 MR. TRAFICONTE:
Excuse me?
~
22 JUDGE WILBER:
That would be at that time?
23 MR. TRAFICONTE:
Sure, at the point of transfer.
l 24 We are now at the point of issuance in a license and we have 25 a bankrupt.
Heritage Reporting Corporation (202) 628-4888 R
90 1
JUDGE WILBER:
But you don't have any transfer.
2 MR. TRAFICONTE:
And we don't have any issuance 3
yet either.
4 JUDGE ROSENTRAL:
Again, you come back to the fact 5
that we're dealing here with a bankrupt.
6 MR. TRAFICONTE:
Yes.
7 JUDGE ROSENTHAL:
And that what Mr. Dignan 8
suggests is not enough.
Now maybe there's a matter of 9
interpretation of 88-10 as to what the Commission had to say 10 with respect to the significance per se of bankruptcy.
I 11 MR. TRAFICONTE:
I don't want my time to run out 12 without making one more substantive point that is slightly 13 different, but I do want to respond to the question.
14 And I think the response is: I don't want to 15 characterize the argument as just bankruptcy.
I think it's 16 bankruptcy plus the natural consequences of the bankruptcy.
17 Do I think CLI-88-10 held that that was enough?
18 No.
Do I think CLI-88-10 held out the possibility that that 19 was enough?
Very definitely.
Do I think the logic 20 undergirding CLI-88-10 would require a finding that 21 bankruptcy plus is enough?
Yes.
And that's exactly how we
.I 22 structured the petition.
23 But I do want to make this additional point.
The 24 additional point has to do with the safety significance t
25 aspect.
This is a very important point.
Mr. Dignan seems j
l l
l i
Heritage Reporting Corporation (202) 628-4888 1
1
(
J
91 o
l'
.to indicate that, well, even if you go all the way down that.
y!
2 road and you're at the point where you think they have made u
'3 the prima facie case, we've'got an. affidavit from.our 4
operating official who indicates that we're going to play it 5
by the books, don't worry.
We have no. incentive to do 6
anything crazy.
7 The problem with that is two-fold..First of all, 8.
that's' sort of obvious and the Commission must have known.
9 that when it adopted the financial Q exemption.
And it 10 really stands for the proposition that there should be no 11 waiver of that rule in any circumstance because that would 12 be-crazy to derate the plant.
And'yet, there is a waiver 13 possibility and there are circumstances when it would be 14 appropriate, so that can't be right.
15 The second argument is that that very point was 16 already rejected by the Commission in CLI-88-10.
Because 17 the very argument was made to the Commission that there's no.
18 incentive, that we are one of five joint owners.
That we 19 couldn't, even if we were. desperate for funds, we couldn't 20 cheat on safety.
That same argument was made, of course, in 21 the low power context and rejected because the concern the 22
' Commission has is apparently that 36 percent is a pretty 23 good healthy percentage.
It's the managing agent, and 24 that's a serious matter.
25 Frankly, and I'm not trying to cast aspersions on f
Heritage Reporting Corporation f
(202) 628-4888 L1_______ _ _ _ _ _ _ _ _
.i
92 1-anybody, but a self-serving affidavit that says, we're going 2
to do everything by the book, is really quite irrelevant.
l 3
And to the extent that the Licensing Board grabbed on te 4
that affidavit and said, we think there'is sufficient 5
evidence in the record that they will never cheat on safety, 6
they were basically finding that there could never be a 7
waiver of the financial qualification exception.
8 JUDGE MOORE:
Well, I would agree that it would be 9
an extraordinary utility that would step forward and say, 10 I'm going to violate your rules, Commission.
11 MR. TRAFICONTE:
It would be a bankrupt one and 12 one that is in bad shape.
13 JUDGE MOORE:
Well, that would step forward and 14 announce publicly that they were going to do it.
15 MR. TRAFICONTE:
Nobody is going to step forward, j
16-Your I!onor.
No one is going to step forward and say, we l
17 will violate your safety regulations.
i 18 Thank you very much.
19 (The Board confers.)
20 JUDGE ROSENTHAL:
Mr. Dignan, Mr. Moore has one 21 question for you.
22 JUDGE MOORE:
I recognize that you thought you 23 were through.
Do you have a response to my inquiries of Mr.
~
24 Berry as to what the Staff can do in light of 88-10 25 concerning obtaining assurances that your client is l
Heritage Reporting Corporation (202) 628-4888
93 1
financially qualified to perate?
-(
'2 MR. DIGNAN:
ave a response, but I don't think
'3 it's going to be satisfactory but I wi'11 give it-anyway.
4 I read the Commission's language exactly as you 5
do, Your Honor.
On the other hand, I cannot believe the 6
Commission would be upset that if the Staff was seriously 7
concerned and made the inquiry they would berate them for 8
it.
9 And secondly, as a practical matter if the Staff 10 made the inquiry, my client would answer it.
And I mean no 11 disrespect, long after we're through with the Judges we have 12 to deal with the Staff.
And when the Staff makes a request
-13 it gets answered.
14 JUDGE ROSENTHAL:
That's reality; that's not
(
15 disrespect.
16 MR. DIGNAN:
That's reality.
17 My only point is: I read that in fairness to the 18 Staff.
And I can read it exactly as you did.
But I also 19 read it that I thought what the Commission was upset about 20 was that they were being argued to one way and yet something 21 else was going on that was inconsistent with this argument.
22 I don't believe the Commission seriously is 23 telling the Staff: Staff, if you ask those Applicants about 24 financial qualifications, we're expecting them to send a 25 letter right back on the Ropes and Gray letterhead saying, Heritage Reporting Corporation (202) 628-4888 N
I i
94 1
take off, guys, it's without your jurisdiction, we'll back 2
them up on it.
I don't they were telling us that.
3 JUDGE MOORE:
So you read it as I read it?
4 MR. DIGNAN:
I read it as you read it.
As a 5
practical matter, I don't think that's what the Commission 6
meant.
I can't believe they meant it.
I cannot believe the s
7 Commission ever intends to restrict the Staff's inquiry into 8
the operations of a nuclear power plant.
~
9 JUDGE MOORE:
But isn't it telling them that if 10 they're going to do it in this context that the Staff ought 11 to be out front asking for the rule waiver.
And in this 12 instance, you ask for a rule waiver.
13 MR. DIGNAN:
Maybe that's what they're telling 14 them, I don't know.
I leave that between them and their 15 Staff.
16 I just cannot conceive that the Commission is ever 17 really restricting its Staff from making'what :lus Staff 18 honestly believes is a safety inquiry to an Applicant.
I 19 just can't conceive it.
20 JUDGE MOORE:
But procedurally --
21 MR. DIGNAN:
Procedurally, you're right.
22 The opinion writer gets "D"
for his choice of 23 words.
24 JUDGE MOORE:
But procedurally have not we painted 25 ourselves into a corner, that the Staff can't look unless Heritage Reporting Corporation (202) 628-4888 I
1
t 95 l'
1 Lthey seek a rule. waiver?
2 MR. DIGNAN:
No, I don't see why it has painted N.
3 you in a corner.
Because if it literally means that I 4-imagine the Staff would ask for a rule waiver and it would 5
be granted like that.
6 In other words, if seriously what happened --
.7 let's look at it practically.
Suppose the Staff tomorrow 8
really got concerned about financial matters.
Say something 9
happened up at the Bankruptcy Court and everybody went 10 bonkers, all right.
The Staff immediately is going to send 11 a letter, I know the Staff.
12 Now, one of two things is going to happen: we're 13 going to answer it and nobody is ever going to hear anything 14 about other than we answered it, which is what would really 15 happen.
i
.y 16 Well, let's suppose that the client got tough and 17 said, Dignan, write that Staff back a letter right along the 18 lines of Judge Moore and you tell them they have got no 19 right to send this.
Well, I imagine the next thing Mr. Reis
.20 and the boys would do is draw a nice-looking piece of paper ~
21 with a caption on it.
Probably try to get me disbarred from 22 practicing before the Commission.
But also, by the way, 23 asking for the rule waiver and it would be granted like 24 that.
25 All I'm saying, Judge, is -- and maybe this isn't Heritage Reporting Corporation O
(202) 628-4888
i 96 1
a good lawyer's argument -- I quite agree, a legal mind 2
would follow that language exactly as you do.
And I think 3
your reasoning is absolutely right.
I cannot firmly believe 4
the Commission meant that.
That they really are putting the 5
Staff through that hoop if they thought there was a safety 6
question.
It would be a first.
7 JUDGE ROSENTHAL:
Thank you, Mr. Dignan.
8 MR. DIGNAN:
I think it's ill-chosen language in
~
9 the opinion.
10 JUDGE MOORE:
You're not suggesting, though, that 11 the Commission isn't telling the Staff that in these 12 circumstances apply for a rule waiver?
13 MR. DIGNAN:
I guess in this particular case, if I 14 were -- and thank God I'm not -- if I were the Staff lawyer 15 who had to make that decision I would probably shoot a rule 16 waiver out along with a letter to my client.
17 JUDGE ROSENTHAL:
Mr. Reis?
1 l
18 MR. REIS:
Mr. Moore, on this question -- I know J
19 Mr. Berry argued -- I just want to point out the context in 1
20 which this is said.
]
l 21 And further, the sentence as read in the flat 22 words makes no sense.
You could never see -- the context 23 was that we were saying to the Commission, well, we'll take 24 care of it all, you don't have to be worried about it.
And 25 the Commission said, no, that's no good.
1 i
f Heritage Reporting Corporation I
(202) 628-4888 1_._,___.____________
L
97 1
But we always have to see whether -- there has to 2
be a preliminary inquiry even if we can do what they say we 3
can do.
4 So we have to get some information some place in 5
order to make that determination.
They said, come to us if 6
you think there should be a rule waiver.
Well, we have to 7
know whether we think so.
And that makes sense in its flat 8
words.
9 JUDGE MOORE:.,Except in the seco'd sentence they n
10 ended it by saying:
"And at the same time conduct its i
11 informal licensing review as if a waiver was, in fact, 12 needed."
13 MR. REIS:
Right.
"As if a waiver was, in fact, 14 needed."
But it doesn't mean that we can't see whether that 15 waiver is needed.
That is, of course, part of the licensing 16 process.
But we have to see whether that waiver is needed.
17 It may be that we can't do it.
No, we can't condition a 18 license; they are very clear about that.
You have to go to 19 the Commission and get the Commission to do that.
20 But we at least have to get some information that 21 we say to the Commission, hey, Commission, you have to look 22 at this area.
We're not supposed to deal with it out of the 23 top of our heads.
Some place or cther, we have to start.
24 And start is the basis of information.
25 Now, maybe the threshold of information that we Heritage Reporting Corporation G
(202) 628-4888
r 98 l
1 have to get is the threshold and the bottom, the depth of 2
information we have to get is cut off in both ways or short.
3 But we have to, in some way, get information.
And when you 4
go above, that indicates what they're talking about.
5 JUDGE MOORE:
Mr. Reis, the Commission cites you 6
to Union of Concerned Scientists versus NRC which held, I 7
believe, that if it is an issue material to a license you 8
cannot preclude it from the hearing process.
9 MR. REIS:
Right.
But we first have to know 10 whether it's material to license.
11 JUDGE MOORE:
If the issue of financial 12 qualification is material, it can't be precluded from the 13 hearing process.
So that's the context in which --
14 MR. REIS:
No, even in Union of Concerned 15 Scientists the court indicated that an issue to being 16 material has to have a certain threshold.
That it is not 17 anything that somebody says that falls within the context of 18 the regulations.
That there has to be a basis for it.
19 Even in setting their context in Union of 20 Concerned Scientists the court was very clear about the 21 Commission able to not expend resources on needless 22 inquiries.
23 JUDGE MOORE:
Well, the context was an emergency 24 planning exercise.
25 MR. REIS:
That's right.
I i
Heritage Reporting Corporation (202) 628-4888 l
l u
99 1"
JUDGE MOORE:
And the Commission on the one hand 2-
. said, it's<a "no, never mind."
But the court found that, 1
3:
point of fact, the Commission relied on that exercise in j
4 determining whether. ultimately to grant a license.
I
'S MR. REIS:
Right.
]
1 6
But the court also indicated, in so many words, j
7 that you could see whether proper contentions formulated on
'8 the emergency planning exercise.
You just can't say, the 9
emergency planning exercise was no good.
10 Here again, we're back to it: can we make a 11 preliminary inquiry to see whether there are grounds for a 12 rule waiver?
Yes, we can make that preliminary inquiry 13 otherwise it doesn't make any sense whatsoever to say that 14 the sentence is that flat.
(
15 JUDGE ROSENTHAL:
Thank you, Mr. Reis.
16 I.think, in that case, we.will not need a 17 supplemental memorandum from the Staff.
We'll take your 18 summary as being the official Staff position.
If it's
' 19 altered in any respect you will let us know.
20 Now, just to recapitulate, we will expect one week 21 from today a letter or memorandum under the signature of the 22 senior official of the so-called Separated Staff which is to 23 go into the question of the Staff's responsibility to 24 enforce the Rules of Practice of this Commission.
I would 25 want that response to be in the context of the last three Heritage Reporting Corporation (202) 628-4888
-u_
.__._.mm______.__._m___.____m__.._m________-_m__.mm___._-__m
100 1
sentences of the July 7 letter to the Board from the Staff.
2 The first of those three sentences is to the l
3 effect that the Staff does not retreat from any of the legal 4
arguments advanced in support of its motion to strike the 5
Interveners' appeal.
6 The second sentence was to the effect that however 7
the Staff's resources -- excuse me, the resources which the
~
8 Staff sought to conserve have now been expended.
9 And the third sentence was that in these 10 circumstances -- in other words, the Staff's resources 11 having been expended to public interest in the efficient and 12 expedition resolution of licensing proceeding will be served 13 where the Appeal Board to decide Interveners' appeal on the 14 merits.
15 So I want the response to be in the context of 16 those three sentences.
17 Now, the Applicants.
As indicated during Mr.
18 Dignan's argument the Appeal Board would appreciate getting 19 a supplemental memorandum from the Applicants on the matter 20 of the operation in the circumstances at hand of the anti-21 CWIP statute.
t 22 What we are particularly interested in is, at what 23 point would the anti-CWIP law kick out, so to speak, were 24 the full power license to issue.
You can turn to New 1
25 Hampshire counsel, if you wish, but in any event we would Heritage Reporting Corporation
)
(202) 628-4888 I
i I
a
101
'1 like a mr49randum on that subject with citations to any New 2
Hampshire decisions interpreting the anti-CWIP law -- I 3
don't know whether there are any -- that might have some 4
bearing upon that.
5 We would like that memorandum to be served and 6
filed by Friday the 28th of July, that's two weeks from this i
7 Friday.
8 Responses to the memorandum can be filed if other 9
parties so desire by the 9th of August.
That would be the 10 date for filing and service.
11 I might say with respect to those memoranda, it 12 will not be necessary to utilize Express Mail or its 13 equivalent.
The ordinary United States mail will suffice.
14 As I say, I'm relieving the Staff of their 15 obligation to file a memorandum on the matter of the Staff's 16 entitlement to inquire on its own and to financial 17 qualifications, although the Staff if it wishes to 18 supplement what Mr. Reis has said can do so in a memorandum 19 to be filed by one week from today.
20 If there is nothing further.
21 (The Board confers.)
22 JUDGE ROSENTEAL:
Mr. Wilber has an additional
~
23 comment.
24 JUDGE WILBER:
In relation to the anti-CWIP, when 25 it falls out, I think you mentioned that perhaps at the end Heritage Reporting Corporation e
(202) 628-4888 l_
102 l
1 of the warranty run or something like that, we would like to 2
know when this point occurs in the sequence of the program 3
to reach full power.
Is it at the end of the entire 4
program?
Is it somewhere in the middle of it or exactly 5
where is it?
6 MR. DIGNAN:
All right.
7 Could I make another inquiry in this memo, Mr.
8 Chairman?
9 JUDGE ROSENTHAL:
Yes.
i 10 MR. DIGNAN:
I may well, although I will stand 11 behind it because I will select a counsel whom I'm willing 12 to stand behind, I may well refer the CWIP question to New 13 Hampshire counsel and in essence file with you a covering 14 memo saying our response.
15 JUDGE ROSENTHAL:
That's fine.
16 MR. DIGNAN:
But what I wish to know is this, 17 especially in light of Judge Moore's questioning: do you 18 wish the memo to include experience'of New Hampshire 19 counsel's best judgments as to time factors?
Because what 20 Judge Moore and I really almost discussed was not so much 21 when it legally kicks in and out, but the regulatory delay 22 process, I understood, is to be required.
I 1
23 And we wish it to include an analysis by that 24 lawyer of how long it takes their Commission generally to 1
25 act and so forth.
l l
l Heritage Reporting Corporation (202) 628-4888 u
103 1
JUDGE ROSENTHAL:
We appreciate inclusion of that.
p 4 (
'2 JUDGE MOORE:
And what happens to the revenue s
< flow.
4 MR. DIGNAN:
That is generated -- excuse me, what 5
happens to revenues not captured in that period.
6-MR. TRAFICONTE:
Your Honor, I also would like to 3
7 make an off the record request, so that certainly doesn't 8
have to be done on the record, but of a different matter.
9 JUDGE ROSENTHAL:
All right.
10 We'll close the record formally with the 11 expression of the Board's appreciation to counsel and with 12 the notation that the appeals, actually both appeals:
13 Massachusetts and the SAPL appeal which has been submitted 14 on its brief are now submitted.
j'~%
(
. 15 We're off the record.
,v 16 (Whereupon, at 12:15 p.m. the oral argument was 17 concluded.)
18 19 20 21 3
~
22 e
23 24 25 g
Heritage Reporting Corporation (202) 628-4888
.(
1 CERTIFICATE
.p~
t 4
2 L'
f 3
This is to certify that the attached proceedings before the 4
United States Nuclear Regulatory Commission in the matter 5
of:
PUBLIC SERVICE OCMPMW OF NEW HAMPSHIRE (SEABROOK STATION UNITS 1 & 2) 7 8
Docket Number: 50-443-OL and 50-444-OL 9
Place:
Bethesda, Maryland 10 Late:
July 12, 1989 11 were held as herein appears, and that this is the original 12 transcript thereof for the file of the United States Nuclear 13 Regulatory Commission taken stenographically by me and, 14 thereafter reduced to typewriting by me or under the 15 direction of the court reporting company, and that the 16 transcript is a true and accurate record of the foregoing 17 proceedings.
18
/s/
14 19 (Signature typed) :
i 20 Official Reporter i
3-21 Heritage Reporting Corporation 22 i
e 23 24 25 Heritage Reporting Corporation k
(202) 628-4888 i
l