ML20247K833
| ML20247K833 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 05/30/1989 |
| From: | Berry G NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| To: | NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP) |
| References | |
| CON-#289-8697 CLI-88-10, LBP-89-10, OL, NUDOCS 8906020035 | |
| Download: ML20247K833 (28) | |
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l gtd7 E X EE T E r; u .c;.: r UNITED STATES OF AMERICA ,
NUCLEAR REGULATORY COMMISSION '89 MY 31 PS :23 l BEFORE'THE ATOMIC SAFETY AND LICFNSING APPEALuP0ARD
,~ : .
In the Matter of Docket Nos. 50-443 OL
,# 50-444 OL
.PUBl.IC SERVICE COMPANY OF NEW HAMPSHIRE, et a_1. Off-site Emergency Planning (Seabrook Station, Units 1 and 2) )
'NRC STAFF BRIEF IN SUPPORT OF LBP-89-10 l
- Gregory Alan Berry Counsel for NRC Staff May 30, Ic89 8906020035 890530 PDR ADOCK 05000443 g PDR
, 6
i 1 , UNITED STATES OF' AMERICA NUCLEAR. REGULATORY' COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING' APPEAL BOARD
- In the Matter of .
f Docket Nos.50-443 OL PUBLIC SERVICE COMPANY OF 50-444 OL NEW HAMPSHIRE, et d . .) Off-site Emergency Planning e .
)-
(Seabrook Station, Units 1 and 2)- )-
l NRC STAFF BRIEF IN SUPPORT OF LBP-89-10 l
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~- Gregory Alan Berry Counsel for NRC Staff May 30, 1989 l
l' t
TABLE OF CONTENTSL PAGE INTRODUCTION ......................... 1
. BACKGROUND .-.......................... .
2
= ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .
- -5 I. .The' Appeal Should Be Dismissed Because LBP-89-10 Is Not A Final Order '
5 II. Legal Standards Governing Waiver. Petitions .................... 5 LIII. The Massachusetts Attorney General's-Petition Properly Was Denied . . . . . . , . . . . . . . . . . . . . . . . - 9-A. "Special Circumstances" .............. -9
- 1. PSNH's Reorganization Plan .......... 10
- 2. Proposal To Create New Hampshire Energy Authority . ............... .
11
- 3. Proposal To Purchase PSNH And Spin Off Seabrook . . . . . . . . . . . . . 12
-B. The Licensing Board Correctly Concluded That-The Massachusetts Attorney General's Waiver Petition Presented No Special Circumstances
- i. Which Undercut The Rationale Of
.The Portions Of The Rules To Be Waived ....................... 14 C. A Waiver Is Not Needed To Address A Significant Safety Problem On The Merits . . . . . . . . . . . . . . . . 18 CONCLUSION .......................... 20
[.-- - - -----_.---__.-------,-----_-_-------a_------.___a-__. - - - . _ - - - , - - - - _ _ - , --,,,,_.__a , _ , , _ , , _ _ , _ _ _ _
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TARLE OF AUTHORITIES l' .PAGE
. JUDICIAL DECISIONS .
Bluefield Water Works and Improvement
- -Company v. Public Service Commission of.
West Virginia, 269 U.S. 679 (1923) ............. 13 Duquesne Light Company v. Barasch, 3.. .U.S, _ , 109 5.Ct 609 (1989) , ............. 13 FPC v. Hope Natural Gas Company, 72U U.S. 591 (1944) -. . . . . . . . . . . . . . . . ... . . 13,17 Petition of Public Service Company of New Hampshire, 130 N.H. 265, 539A.2d263(1988) .................... 13,15 ADMINISTRATIVE DECISIONS Commission .
Northern States Power Company (Monticello Nuclear Generating Plant.
Unit 1),CLI-72-31,5AEC25(1972) ............ 6 Public Service Company of New Hampshire (Seabrook Station Units 1 and 2),
CLI-89-08, 29 NRC (May18,1989)' ............ 8 Public Service Company of New Hampshire (Seabrcok Station, Units 1 cnd 2),
CLI-89-03, 29 NRC (March 7, 1989) . . . . . . . . . . . . 6 Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2),
~CLI-88-10, 28 NRC 573 (1988) . . . . . . . . . . . . . . . . . passim Appeal Board
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Pacific Gas and Electric Company IDiablo Canyon Plant, Units 1 and 2), ALAB-653, 16 NRC 55 (1981) ............... 6 Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2),
ALAB-904,28NRC509(1988) ................ 5 l
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PAGE l
Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2),
LALAB-895,28NRC7(1988) .................. 6 Licensing Board
. Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2),
-LBP-89-10, 29 NRC (March 8, 1989) . . . . . . . . . . . . -passim-
_ REGULATIONS 10 C.F.R. 66 2.4(s) . . . . . . . . . . . . . . . . . . . . . 12 10 C.F.R. $ 2.104(c)(4) . . . . . . . . . . . . . . . . . . . 12 10 C.F.R. 6 2.732 ..................... 6
' 1'OC.F.R.6'2.758(a) ..................... 5 10 C.F.R. 6 2.758(b) .,,.................. 5,6.
10C.F.R.62.758(c) ..................... 6,7 10 C.F.R. 6 2.758(d) .................... 7,8 10 C.F.R. 6 50.2 ...................... 17 10C.F.R.650.33(f) .................... .
12 10 C.F.R. 6 50.57(a)(4) . . . . . . . . . . . . . . . . . . . 12 MISCELLANEOUS 49 Fed. Reg. 13044 ..................... 13 49 Fed. Reg. 35747 ..................... 11,13,14,15 l
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I UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING APPEAL BOARD In the Matter of
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Docket Nos. 50-443 OL PUBLIC SERVICE COMPANY OF 50-444 OL NEW HAMPSHIRE, e_t al_. Off-site Emergency Planning (Seabrook Station, Units 1 and 2) )
NRC STAFF RDf EF IN SUPPORT OF LBP-89-10 INTRODUCTION On April 13 and 21,1989, respectively, the Seacoast Anti-Pollution League (SAPL) and the Masse husetts Massachusetts A;wrney General filed briefs in support of their appeal of the offsite Licensing Board's decision in Public u Service Company of New Hampshire (Seabrook Station, Units 1 and 2), LBP-89-10, 29 NRC (March 8, 1989). In LBP-89-10, the Licensing Board denied SAPL's motion to admit a late-filed contention which alleges that Applicants lack the financial qualification to operate the Seabrook Station safely at full power. See LBP-89-10, slip op. at 3-5, 15. The Licensing Board denied certification to the Commission of the Massachusetts Attorney General's petition for a waiver of those
, portions of 10 C.F.R. 662.104(c)(4), 50.33(f), and 50.57(a)(4) which 4 exclude electric utilities from the class of applicants required to
. demonstrate their financial qualification to operate a facility safely at full power. Id. at 5-14, 15.
On appeal, the Massachusetts Attorney General asserts the Licensing Board erred in concluding that his petition failed to satisfy the standards set forth in 10 C.F.R. 5 2.758(b) which govern petitions for
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waivers of Commission regulations. See Brief Of The Massachusetts 1 Massachusetts Attorney General In Support Of His Appeal Of The Denial Of His Petition For A Waiver Of The Financial Qualification Rules For Full Power Operation (LBP-89-10) at 2-7 (April 21, 1989) (hereinafter
- " Massachusetts Attorney General Brief"). For its part, SAPL has abandoned its challenge to the Board's rejection of SAPL's late-filed contention and
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instead seeks only to support the Massachusetts Attorney General's appeal.
See Brief On Behalf Of Seacoast Anti-Pollution League On Appeal Of Licensing Board Memorandum And Order Denying Financial Qualification i Review For Seabrook Joint Owners at 7 (April 13,1989) (hereinafter "SAPL Brief").
The instant appeals should be denied and LBP-E9-10 affirmed. As explained in this brief, the Licensing Board correctly concluded that the Massachusetts Attorney General failed to carry his t.urden of making a prima facie showing that special circumstances exist which undercut the rationale of the portions of the rules sought to be waived imposed upon him by 10 C.F.R. 9 2.758(b) and the Commission's decision in Public Service Company of New Hampshire (Seabrook Statica Units 1 and 2),
CLI-88-10, 28 NRC 573, 595-600 (1988).
BACKGROUND !
'. In CLI-88-10, the Commission, inter alia, denied a petition filed by
, the Massachusetts Massachusetts Attorney General for a waiver of the Commission's financial qualification rules in order to litigate in a hearing Applicants' financial qualification to operate the Seabrook Station prior to the start of low power operations. See Seabrook, supra, CLI-88-10, 28 NRC at 579-80, 595-600. Although the Commission agreed that
1 the bankruptcy petition filed by the Public Service Company of New Hampshire '(PSNH) and the- New Hampshire " anti-CWIP" statute should be regarded as "special circumstances" (as that phrase is used in 10 C.F.R..
I 2.758(b)) whic "um: ecut the rationale" underlying the exclusion of electric utilities. from the class of applicants required to make an affirmative showing - of their financial qualification to operate the
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facility in question, M. at 597-98, the Commission denied the Massachusetts Attorney General's petitions for waiver on the ground that a waiver of the rules in question was not needed "to address a significant safety problem on its merits." M. at 601. The Commission reached this conclusion on the strength of its finding that so far as low power operations are concerned, Applicants' lack of financial qualification did not pose a significant safety problem because (1) Applicants have little incentive to " cut corners" regarding plant safety during low power operations; (2)in light of the relatively small amount of money in-question ($3.5 million),- Applicants should not be expected to risk the potential denial of a full power license "merely to save a few hundred thousand or even a few million dollars needed for safe low-power testing";
and-(3) the public health and safety " risks of low-power testing are low."
J_d.at600.
'. Shortly thereafter, the Massachusetts Attorney General filed with the I
. offsite Licensing Board a new waiver petition which is si:nilar to the one previously denied by the. Commission in all materia? respects except that
5 it seeks to litigate Applicants' financial qualification to operate the--
facility safely at full, as opposed to low, power.1/
The- Staff opposed the Massachusetts Attorney General's petition on the principle ground that none of the circumstances alleged to be "special" recited in the petition " undercut the rationale" of the rules sought to be waived, which, under the Commission's decision in CLI-88-10,
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is an essential element of a petition for waiver filed pursuant to 10 C.F.R. 6 2.758(b). See NRC Staff Response To Massachusetts Massachusetts Attorney General's Petition For A Waiver Of Or An Exception To The Financial Qualification Rules For Full Power Operation at 7, 12-16 (February 21,1989).
On March 8, 1989, the offsite Licensing Board issued a decision
.i denying the Massachusetts Attorney General's request to certify his waiver petition to the Consnission. The Board found that the petition did not make a prima facie showing that the special circumstanns pleaded by the Massachusetts Attorney General " undercut the rationale for which rule was enacted." LBP-89-10, slip op. at 9, 11-12. As explained in the following sections of this brief, the Board's determination was correct and should be affirmed.
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-1/ See Massachusetts Attorney General's Petition For A Waiser Of Or An Exception i To The Financial Qualification Rules For Full Power Operation at 1-2 (February 1,1989) (" Attorney General Petition").
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i ARGUMENT-I. The' Appeal'Should Be Dismissed Because LBP-89-10 Is Not A' Final l Order
, In a motion filed with the Appeal Board on April 17, 1989, the Staff moved to dismiss the notices of the instant appeals on the ground'that the
' order sought to be appealed .- LBP-89-10 -- was not a final order. See NRC Staff Motion To Strike Notices Of Appeal Of LBP-89-10 (April 17, 1989); see also NRC Staff Memorandum In Response To Appeal Board Order Of April 24,1989 (April 28,1989). The Staff continues to adhere to this-position but, mindful of the Appeal Board's admonition in Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2), ALAB-904, 28 NRC 509, 511 (1988) 2/, does not repeat here the arguments previously advanced in support of this position.
II. Legal Standards Governing Waiver Petitions Regulations promulgated by the Commission may not be challenged in an adjudicatory proceeding. See10C.F.R.62.758(a). A party, however, may .
petition for a waiver of the application of the regulation (s), or portions of the regulation (s), in question. See 10 C.F.R. 6 2.758(b). As is apparent from the text of section 2.758(b), the application of a duly
. promulgated regulation will not be waived lightly:-
The sole ground for petition for waiver or exception shall be that special circumstances with respect to the subject matter of theregulation or particular p(roceeding are thereof) or provision such that would application not serve of thethe rule purposes for which the rule or regulation was adopted.
2/ Where a party has fully briefed its position on an issue in a previous filing in the case, there is "no need for it to brief anew its position on the question." ALAB-904, 28 NRC at 511.
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-10 C.F.R. . 62.758(b); see N_orthern States Power Company (Monticello Nuclear Generating Plant, Unit 1), CLI-72-31, 5 AEC 25, 26 (1972) (waiver petitions .to be granted only in " unusual' or. compelling circumstances");
accord Public Service Company of New Hampshire (Seabrook Station, Units l'
- and 2), CLI-89-03, 29 NRC , slip op. at . 6 (March 7, '1989). Indeed, adjudicatory tribunals have no warrant to waive a Commission regulation.
Rather, section 2.758(d) provides that if a waiver petition makes a prima facie case that application of-the regulation would not serve its intended.
purpose, the presiding officer is to refer the matter directly to the Connission for a determination as to whether a waiver should be granted.
10 C.F.R. 92.758(d); Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2), ALAB-895, 28 NRC 7,11 (1988). On the other-hand, if the petition fails to set forth a prima facie case, the petition must be dismissed. 10 C.F.R. 9 2.758(c).
While section 2.758 itself does not specify the quantum of _ proof necessary for the proponent of the petition to carry his burden E of establishing a prima facie case, Commission case law establishes that it "must be legally sufficient to establish a fact or case unless disproved."
Seabrook, supra, ALAB-895, 28 NRC at 22, quoting Pacific Gas and Electric Company (Diablo Canyon Plant Units 1 and 2), ALAB-6b3,16 NRC 55, 72
'.' (1981). Further, this standard must be applied in conjunction with the
. provisions of section 2.758(c), which commands the presiding officer to 3/
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There can be no serious dispute that the proponent must shoulder the burden of meeting the requirements applicable to waiver petitions.
See 10 C.F.R. 5 2.732; 10 C.F.R. 5 2.758(b). See Public Service Edipany of New Hampshire, ALAB-895, 28 NRC at 22-2!I-~
1 consider not only the waiver petition itself, but also responses, affidavits, and other information submitted in opposition to the petition.
See 10 C.F.R. 6 2.758(c). A waiver petition must be dismissed unless it is sufficient, when considered in light of any response, affidavit, or 1
- other information submitted in opposition, to estaolish that application '
of the regulation in question would not serve the purpose for which it was adopted.
Not every circumstance is a "special circumstance" as that term is used in 10 C.F.R. Q 2.758(b). In CLI-88-10, the Commission ruled that "special circumstances" are limited to " facts, not common to a large class l of applicants or facilities, that were not considered either explicitly or by necessary implication in the proceeding leading to the rule sought to be waived." CLI-88-10, 28 NRC at 597.
In order for such circumstances to be "such that application of the rule . . . would not serve the purposes for which the rule or regulation j was adopted," as is required under section 2.758(b), the Commission has stated "that this means, at a minimum, that the special circumstances must be such as to undercut the rationale for the rule sought to be waived."
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It should be observed at this juncture that a party is not entitled i
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. to a waiver as of right simply because its petition makes a prima facie
. showing that special circumstances exist which undercut the rationale of the portions of the rules sought to be waived. In pertinent part, section 2.758(d) provides that in considering a petition for waiver:
The Commission may, among other things, on the basis of the petition, affidavits, and any response, determine whether the application of the specified rule or regulation (or provision thereof) should be waived or an exception be made, or the
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Commission may - direct such - further proceedings - as it deems :
appropriate to aid its determination.
10 C.F.R. 6 2.758(d). There would be no ne'ed for the quoted portion of section 2.858(d) if the Comission has no ~ alternative but to grant any waiver petition that makes the prima facie showing required by paragraph (b) of 10 C.F.R. 6 2.758. In CLI-89-08, the Comission made this ' point
. clear by announcing that the decision to waive the application of a duly promulgated regulation is a matter comitted to the sour.d discretion of the Comission. Seabrook, supra, CLI-89-08, 29 NRC , slip op. at 17 (May 18, 1989). In CLI-88-10, the Commission expressed its strong disinclination to grant a waiver where such waiver is not necessary to address a "significant safety problem on its merits." 29 NRC at 597. The Commission went on to explain why a licensing board should not refer to it a waiver petition that complies with 10 C.F.R. 6 2.758(b) but does not demonstrate that a waiver is needed to address a significant safety l problem on the merits: j The Commission's agenda is crowded with significant regulatory -l matters, including. new rules on nuclear plant maintenance, :
fitness for duty, and high level waste repository licensing, and l safety oversight of the over 100 nuclear power plants with 3 operating licenses. It would not be consistent with the l Commission's statutorily mandated responsibilities to spend time i and resources on matters that are of no substantive regulatory ;
significance.
Id.
To summarize, before a waiver petition may be certified to the I
' 1 Commission, the presiding officer must find that the petition makes out a l prima facie showing that "special circumstances" exist which " undercut the l
l rationale" of the rule sought to be waived and that a waiver "is needed to address a significant safety problem on the merits." Ld. As explained l
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below, the Massachusetts Attorney General's waiver petition failed to satisfy these requirements. Under applicable case law, the Licensing Board was constrained to deny certification of the - petition to the Comission. The Appeal Board should uphold this determination.
l III. The Massachusetts Attorney General's Petition Properly Was Denied A. "Special Circumstances" In considering the waiver petitions filed by interveners seeking permission to litigate Applicants' financial qualification to operate the Seabrook Station safely at low power, the Commission found that "the bankruptcy of PSNH does present a special circumstance within the meaning of 5 2.758." CLI-88-10, 28 NRC at 597-98. The Comission reached a similar conclusion regarding the New Hampshire statute (anti-CWIP) which precludes recovery of the costs of construction projects in progress until the project involved is providing service to customers. Id. These circumstances were considered special in nature because they are not common to a large class of applicants or facilities and were not considered in connection with the 1984 financial qualification rulemaking proceeding. Id. Since the only material difference between the instant waiver petition and the one proffered by the Massachusetts Attorney General initially is the former challenges Applicants' financial l ". qualification to operate the facility safely at full power while the
. latter challenged Applicants' financial qualification to operate the facility safely at low power, the Staff agreed, and the Licensing Board
found, that PSNH's bankruptcy was a "special circumstance" within the meaning of section 2.758(b). LBP-89-10, slip op at 9. O In his petition, the Massachusetts Attorney General also cited other circumstances which he contended were "special" as that term is used in section 2.758(b). See Attachments A, C, D to Massachusetts Attorney General Petition. The Licensing Board agreed with the Staff that none of these circumstances was special, stating:
[T]he remaining assertions in the Massachusetts Attorney General's pleading are merely conjectural statements that do nothing more than highlight the current uncertainty surrounding the future ownership of Seabrook Station. As we explain in detail below, we do not find that this uncertainty in itself calls into question the ability of whoever ultimately becomes the owner of the Seabrook Station to operate the plant in a safe condition.
LBP-89-10, slip op. at 9. As explained below, the Licensing Board's conclusion plainly was correct and should be upheld.
- 1. PSNH's Reorganization Plan Under a reorganization plan filed on December 27, 1988 with the Bankruptcy Court, PSNH proposed to reorganize itself so that jurisdiction over its operations would be vested in the Federal Energy Regulatory 4/
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The Commission held in CLI-88-10 that the bankruptcy of PSNH was a "special circumstance" within the meaning of 10 C.F.R. 62.758(b) l -
since it is a fact "not common to a large class of applicants or l
facilities" and was "not considered either explicitly or by necessary
. implication in the proceeding leading to the rule sought to be
- waived." CLI-88-10, 28 NRC at 597. The Commission reached the same conclusion with respect to the New Hamsphire anti-CWIP statute which prohibits the inclusion in the rate base of any asset that is not s Id. at 598. As the Commission providing[w]ervice stated, " to ratepayers.e do not believe that antT CWIP statutes presen as opposed to case specific issues" and "there is no indication in j the 1984 financial qualifications rulemaking that anti-CWIP statutes '
! were considered." Id.
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Commission (FERC). See Massachusetts Attorney General Petition, Attachment A. The Licensing Board correctly refused to regard this proposal as a special circumstance within the meaning of 10 C.F.R. 5 2.758(b). Electric utilities whose rates are subject to approval by
- FERC were not uncommon and the Commission was aware that a utility's rates may be regulated by federal, as well as state, authority when it adopted the 1984 amendments to the financial qualification rules. See 49 Fed.
Reg. 35747, 35749. PSNH's reorganizations plan, therefore, does not fall within the definition of "special circumstances" established by the Commission in CLI-89-10 because the possibility that a utility may come under the jurisdiction of a #ederal ratesetting agency was within the Comission's contemplation when it adopted the 1984 amendments to the financial qualification rules.
- 2. Proposal To Create New Hampshire Energy Authority On January 12, 1989, a bill was introduced in the New Hampshire legislature which creates a public energy authority empowered to take "the properties of financial distressed electric utilities when necessary to protect the public interest." Massachusetts Attorney General Petition, Attachment C. Contrary to the Massachusetts Attorney General's assertion, this circumstance was not "special" under the standard enunciated by the
'. Comission in CLI-88-10. When the Comission adopted the current financial qualification rule in September 1984 it was aware that many utilities were publicly owned and possessed the authority to set rates sufficient "to recover costs of operation, including the costs of meeting NRC safety requirements." 49 Fed. Reg. 35747, 35750. In fact, the Comission included such publicly owned utilities in the definition of an
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" electric utility" and exempted such entities from the financial )
qualification review to which other applicant for an operating license '
were subjected. Compare 10 C.F.R. 96 2.4(s) and 50.2, with,10 C.F.R.
El2.104(c), 50.33(f), 50.57(a)(4). Thus, the possibility that the 1
/ Seabrook Station (or any other facility) may be owned and operated by a public entity is not a special circumstance because it is not an uncommon circumstance and was considered by the Commission in the 1984 financial qualification rulemaking proceeding. The Licensing Board ruling on this issue was correct and should be upheld.
- 3. Proposal To Purchase PSNH And Spin Off Seabrook In LBP-89-10, the Licensing Board rejected the Massachusetts Attorney General's assertion that a proposal made on January 12, 1989, by Northeast Utilities ("NU"), the parent company of one of the Seabrook co-owners, to purchase PSNH for $2 billion constituted a special circumstance which warranted a waiver of the Commission's financial qualification rules.
LBP-89-10, slip op. at 10. Under NU's plan, "PSNH's 35.6 percent share of the Seabrook nuclear power plant would be spun off into a separate company I owned by PSNH's existing unsecured creditors and security holders and any l power generated by the Seabrook Station would be purchased by NU's New Hampshire subsidiary. See Massachusetts Attorney General Petition,
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Attachment D.
. Since no full power license has been issued for the Seabrook Station, it is correct to say that under NU's plan, the largest share of the Seabrook Station would be owned by a company which at present has no revenue generating assets or other income. However, the Massachusetts Attorney General's petition did not assert, much less make a prims facie
showing, that the rates to be charged by the new owners of the Seabrook Station for the electricity genarated at the facility would not be subject to state or federal regulation. This is a significant omission since as the Commission has observed, it is well settled law that rates set by I public ratemaking authorities must reflect and include prudently incurred costs of safe operation. See 49 Fed. Reg. 13044, 13045; 49 Fed. Reg. 35747, 35748, citing FPC v. Hope Natural Gas Company, 320 U.S. 591, 605 (1944) and Bluefield Water Works and Improvement Company v. Public Service Commission of West Virginia, 269 U.S. 679 (1923); see also Duquesne Light Company v. Barasch, U.S. ,109 S.Ct 609, 615-17 (1989). El For these reasons, the Licensing Board did not err in ruling that the Massachusetts Attorney General's petition did not make a prima facie showing that the NU proposal to purchase PSNH and divest it of its interest in the Seabrook Station was a special circumstance as that term isusedin10C.F.R.52.758(b).5/
'-5/ The New Hampshire Supreme Court recently had occasion to reaffirm the applicability of this principle to that state's ratesetting agencies.
See Petition of Public Service Company of New Hampshire, 130 N.H.
7 6 , 539 A.2d 263 (1988).
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The Massachusetts Attorney General also asserted in his waiver petition that if none of the facts recited therein was sufficient in itself to constitute a special circumstance, taken in the aggregate they create enough uncertainty as to the financial qualification of PSNH to warrant a rule waiver. Massachusetts Attorney General Petition at 5. The Licensing Board properly rejected this argument.
See LBP-89-10, slip op. at 12. The " uncertainty" relied upon by the Massachusetts Attorney General derived not from the various proposals by others to purchase the Seabrook Station but by virtue of PSNH's bankruptcy, a circumstance which the Commission and the Board acknowledged was special, but not sufficient in itself to waive the financial qualification regulation. See CLI-88-10, 28 NRC at 597-98; LBP-89-10, slip op. at 9.
B. The Licensing Board Correctly Concluded That The Massachusetts Attorney General's Waiver Petiton Presented No Special Circumstances Which Undercut The Rationale Of The Portions Of The Rules To Be Waived In contrast to low power operations, PSNH's bankruptcy, the New Hampshire anti-CWIP statute, and the financial difficulties currently being experienced by other co-owners of the Seabrook Station do not, alone l or in any combination, undercut the Commission's rationale for excluding electric utilities from the class of applicants required te make an affirmative demonstration of their financial qualification to operate a facility safely at low power. According to the Commission, the " essential rationale" for this exclusion is that:
case-by-case review of financial qualifications for all electric utilities at the operating license stage is unnecessary due to the ability of such utilities to recover, to a sufficient degree, all or a portion of the costs of construction and sufficient costs of safe operation through the ratemaking process.
CLI-88-10 at 30, quoting 49 Fed. Reg. at 35748.
In CLI-88-10 the Commission found that the bankruptcy of PSNH and the anti-CWIP statute, "in combination, undercut this rationale" with respect to low power operations. M.at598(emphasisadded). The anti-CWIP law precluded Applicants from recovering through the rate:naking process "any portion of the costs of low power testing" and PSNH's bankruptcy raised
- the possibility that Applicants may not have the funds necessary to !
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. conduct low power operations. See Id.
Where full power operations are concerned, the anti-CWIP statute is inapplicable. This is because in the event Applicants receive a full power operating license, they will be entitled to recoup and earn a return on their Seabrook construction costs, and to recover their costs of
l operating the facility. The New Hamsphire Supreme Court has so held.
Petition Of Public Service Company of New Hampshire, 130 N.H. 265, 539 A.?d 263 (1988). Thus, the Licensing Board properly held that. the anti-CWIP law does not undercut the rationale of the rules to be waived I with respect to full power operations.
Similarly, the Licensing Board did not err in rejecting the argument that PSNH's bankruptcy, in combination with the financial difficulties of other co-owners holding relatively minor shares in the Seabrook Station are special circumstances which undercut the rationale of the rules which must be waived to permit litigation of Applicants' financial qualification to operate the Seabrook Station safely at full power. LBP-89-10, slip op, at 13. For this to be the case, there must be a showing that PSNH's bankruptcy or the financial difficulties of the other co-owners precludes the New Hampshire Public Utilities Connission from permitting Applicants to recover the costs of safe full power operation of the facility through the ratemaking process. U The Massachusetts Attorney General's petition did not even attempt to make this showing.
-7/ When the Counission amended its regulations to exclude electric utilities from the class of applicants required to demonstrate their financial qualification to operate the facility, it provided that
- those regulations -- as are all Commission regulations -- might be
- subject to a waiver or exception pursuant to I? C.F.R. 9 2.758. See 49 Fed. Reg. at 35751. The Commission gave an example of the type 7
- showing which must be made before an electric utility applicant would be required to demonstrate its financial qualification:
[A]n exception . . . might be appropriate where a threshold showing is made that, in a particular case, the local public utility commission will not allow the total cost of operating the facility to be recovered through rates.
(FOOTNOTECONTINUEDONNEXTPAGE)
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For similar reasons, the Massachusetts Attorney General's petition did not demonstrate that the " essential rationale" of the rules sought to i
be waived was undercut by PSNH's reorganization plan, by the legislative '
proposal to create a state energy authority or by NU's offer to purchase j j
l PSNH. In the first place, none of these actions had been approved; the l l
Bankruptcy Court did not approve PSNH's reorganization plan, the bill creating the New Hampshire energy authority had not been enacted into law, and NU's offer had not been accepted by PSNH or approved by the Bankruptcy Court.
More importantly, however, is that the Massachusetts Attorney General's petition did not demonstrate that were any of the proposed actions to come to pass, funds will not be available to operate the Seabrook Station in the event a fuil power license is issued. In fact, the opposite appeared to be the case regarding the legislative proposal.
That legislation provides, inter alia, that "[t]he authority shall establish and maintain in effect at all times rates and charges sufficient in its judgment for the prudent construction, operation, and maintenance of its systems [.]" Massachusetts Attorney General Petition, Attachment C at 21. This legislative language is consistent with the Commission's (FOOTNOTE CONTINUED FROM PREVIOUS PAGE Id. (emphasis added). Such a showing might be sufficient under 10 C F.R. 9 2.758 because it is the kind of circumstance which indicates that the purpose of the financial qualification exemption for regulated utility operating license applicants -- the assumption that the ratemaking process assures that funds needed for safe operation will be made available -- wculd not be served if the rule were applied.
understanding and is one of the reasons the Commission included publicly owned utilities in the definition of " electric utility," see 10 C.F.R. 6 50.2, and exempted them from class of applicants required to make an affirmative demonstration of their financial qualification to operate the
.' facility in question.
The same principles apply to the reorganization plan which Applicants filed with the Bankruptcy Court. As noted earlier, under this plan l
jurisdiction over PSNH's operations would be vested in FERC. The rationale for the Commission's financial qualification rules is not undercut in this circumstance because FERC, a public agency with ratemaking powers, woulo be required to set rates at a level which enable PSNH "to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risk assumed [.]"
FPC v. Hope, supra, 320 U.S. at 605. Nothing in the Massachusetts Attorney General's petition indicates that FERC would not adhere to this principle in setting PSNH's rates. The Licensing Board did not err in finding that PSNH's reorganization did not undercut the rationale of the rules sought to be waived.
Finally, with respect to NU's proposal to purchase PSNH and divest it of its interest in the Seabrook Station, the Massachusetts Attorney ,
1 General's petition provided no basis upon which the Board could conclude that NU's proposal would have the effect of depriving the owners of the Seabrook Station of' the funds needed for safe operation. Significant in this regard was the absence of any indication that the rates charged by the new owners of Seabrook would not be subject to approval by state or federal ratesetting authorities. At bottom, the Massachusetts Attorney i
l l General's claim that the NU purchase proposal presented a special l
circumstance was premised upon nothing more than uninformed speculation as to the future owners of the facility. The Licensing Board did not err in refusing to exalt the Massachusetts Attorney General's speculations into a i prima facie showing of special circumstances which undercut the rationale of the Commission's financial qualification rules. That determination should be upheld.
In view of the foregoing, the Appeal Board should affirm the Licensing Board's determination that the Massachusetts Attorney General's petition did not make a prima facie showing that special circumstances exist in this proceeding which undercut the rationale of the rules which must be waived to litigate Applicants' financial qualification to operate the facility safely at full power.
C. A Waiver Is Not Needed To Address A Significant Safety problem On The Merits As stated earlier, a licening board is not to refer a waiver petition to the Commission unless it makes a prima facie showing that special circumstances exist which undercut the rationale of the rule to be waived, and a licensing board determines that a waiver "is necessary to address, on the merits, a significant safety problem related to the rule sought to
. be waived." CLI-88-10, 28 NRC at 597. As demonstrated in the preceding sections of this brief, che Licensing Board ruled correctly that Massachusetts Attorney General's petition did not make a primafacp showing of special circumstances which undercut the Commission's rationale l l
in excluding electric utilities from the class of applicants required to demonstrate their financial qualification to operate the facility involved i safely at full power. Since this failure was sufficient reason in itself .
1
to deny his petition, the Licensing Board correctly found it unnecessary to determine whether a waiver was needed to address a significant safety problem on the merits.
On appeal and before the Licensing Board, SAPL and the Massachusetts
.' Attorney General imply that the Commission held in CLI-88-10 that the
, financial difficulties occasioned by PSNH's bankruptcy present a "significant safety problem." See e.g. Attorney General Brief at 2, n.3; SAPL Brief at 6. There is no merit to this suggestion. The only issue relating to a waiver of the Commission's financial qualification rules decided in CLI-88-10 was whether interveners' petitions which sought to litigate Applicants' financial qualification to operate the Seabrook l
Station safely at low power should be granted. See 28 NRC at 579 ("The Commission also has before it petitions to waive the Commission's 1984 financial qualifications rule so as to require a financial qualifications review and finding before low power."); jd. at 592 (the effect of granting the waiver petitions pending before the Commission "would be to require review and permit litigation of Applicants' ' ability to pay the ordinary costs of low-power testing"). While CLI-88-10 may contain speculation that an applicant's financial difficulties may present a more serious concern at full power than at low power, see 28 NRC at 600, there is nothing in that decision which could be characterized as " dicta," let alone a " holding" to that effect. In short, CLI-88-10 has, as the Licensing Board put it, "no bearing, as a legal precedent, on the financial aspects of Seabrook's full power operation." LBP-89-10, slip l op. at 5.
Further, assuming arguendo that CLI-88-10 can be read to suggest that a significant sa fety problem could conceivably be presented by the
possibility an applicant taking shortcuts during full power operation, the evidence presented by Applicants in opposition to the Massachusetts l
Attorney General's waiver petition demonstrates that any such concern is {a unwarranted in this case. See Affidavit of Edward A. Brown, attached to l Applicants' Response. Neither SAPL nor the Massachusetts Attorney General has presented any evidence controverting these facts. In view of the
~
above, the Licensing Board had no basis upon which to conclude that a waiver was needed to address a significant safety problem on the merits.
The Licensing Board properly refused to refer the Massachusetts Attorney General's waiver petition to the Comission.
CONCLUSION For the reasons stated in this response, the appeals should be denied and LBP-89-10 affirmed.
R$ etfully submitted, q l
A regory$anB ry Counsel Q NR Staff Dated at Rockville, Maryland this 30th day of May 1989 e
9 e
. . - _ - _ . - _ _ . _ _ . _ _ . _ _...____.._.___.____n. _ - _ - _ _ . - . . -
=
FCC Hir?
u er
! UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSI@) MAY 31 P5 :23 BEFORE THE ATOMIC SAFETY AND LICENSING APPEAL BOARD In the Matter of ) " Ma .
) Docket Nos. 50-443 OL ,
PUBLIC SERVICE COMPANY OF ) 50-444 OL '
NEW HAMPSHIRE, et al. ) Off-site Emergency Planning
/ )
(Seabrook Station, Units 1 and 2 )
CERTIFICATE OF SERVICE I hereby certify that copies of "NRC STAFF BRIEF IN SUPPORT OF LBP-89-10" in the above captioned proceeding have been served on the following by deposit in the United States mail, first class or, as indicated by an asterisk, by deposit in the Nuclear Regulatory Commission's internal mail system, as indicated by <
double asterisks, by express mail, this 30th day of May 1989:
Ivan W. Smith, Chairman (2)* H. J. Flynn, Esq.
Administrative Judge Assistant General Counsel Atomic Safety and Licensing Board Federal Emergency Management U.S. Nuclear Regulatory Commission Agency Washington, DC 20555 500 C Street SW Washington, DC 20472 Richard F. Cole
- Administrative Judge Calvin A. Canney Atomic Safety and Licensing Board City Hall U.S. Nuclear Regulatory Commission 126 Daniel Street Washington, DC 20555 Portsmouth, NH 03801 Kenneth A. McCollom John Traficonte, Esq.**
Administrative Judge Assistant Attorney General 1107 West Knapp Street Office of the Attorney General Stillwater, OK 74075 One Ashburton Place,19th Floor Boston, MA 02108 Diane Curran, Esq.** ,
Harmon, Curran & Tousley Geoffrey Huntington, Esq.
. 2001 S Street, NW Assistant Attorney General
. Suite 430 Office of the Attorney General Washington, DC 20009 25 Capitol Street a Concord, NH 03301
- Philip Ahrens, Esq.
Assistant Attorney General Office of the Attorney General State House Station Augusta, ME 04333
- Robert A. Backus, Esq.** ' ' Peter J. Matthews, Mayor-Backus, Meyer & Solomon City Hall "116 Lowell-Street Newburyport, MA 01950' e ' Manchester, NH 03106 l: Mrs. Anne E. Goodman, Chaitinan b< Paul McEachern,'Esq. Board of Selectmen Shaines & McEachern 13-15 Newmarket Road ti 25 Maplewood Avenue Durham, NH 03824'-
P.O. Box 360' Portsmouth, NH 038U1 Hon. Gordon J. Humphrey i United States Senate Charles P. Graham, Esq. 531 Hart Senate Office Building McKay, Murphy & Graham Washington, DC 20510
-100 Main Street Amesbury, MA 01913- Barbara J. Saint Andre, Esq.-
Kopelman & Paige, P.C.
Sandra Gavutis, Chairman 77 Franklin Street Board of. Selectmen Boston,_MA 02110 RFD #1, Box 1154 Kensington, NH 03827 Michael Santosuosso, Chairman
. Board of Selectmen William S. Lord: South Hampton, NH 03827
-Board of Selectmen Town Hall - Friend Street.' Ar, hod N. Amirian, Esq.
Amesbury, MA 01913 Town Counsel for Merrimac 145 South Main Street R. Scott Hill-Whilton, Esq._ P.O. Box 38 Lagoulis, Clark, Hill-Whilton 'Bradford, MA 01835
& McGuire 79 Stdte Street. Richard R. Donovan Newburyport. MA 01950 Federal Regional Center Federal Emergency Management Agency-
- Allen Lamps: .130 228th Street, C.W.
Civil Defense Director Bothell, Washington 98021-9796 Town of Brentwood 20 Franklin Robert R. Pierce, Esq.*
Exeter,'NH 03833 Atomic Safety and Licensing Board Panel-
- e. William Armstrong U.S. Nuclear Regulatory Comission
.- Civil Defense Director Washir,gton, D.C. 20555 Town of Exeter
- - 10 Front Street Thomas G. Dignan, Jr. , Esq.**
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Exeter, NH 03833 Robert K. Gad, III, Esq.
Ropes & Gray Gary W. Holmes, Esq. One International Place Holmes & Ellis _
Boston, MA 02110 47 Winnacunnet Road Hampton, NH 03842
. J. P. Nadeau Ms. Suzanne Breiseth Board of Selectmen Board of Selectmen 10 Central Street Town of Hampton Falls Rye. NH 03870 Drinkwater Road 4 Hampton Falls, NH_ 03844 Judith H. Mizner, Esq.
79 State Street Atomic Safety and Licensing Newburyport, MA 01950 Board (1)*
l U.S. Nuclear Regulatory Commission
. Robert Carrigg Washington, DC 20555
- Board of Selectmen ll 7 Town Office Atomic Safety and Licensing t Atlantic Avenue Appeal Panel (8)*
North Hampton, NH 03862 U.S. Nuclear Regulatory Commission Washington, DC 20555 Ms. Elizabeth Weinhold 3 Godfrey Avenue Docketing and Service Section*
Hampton, NH 03842 Office of the Secretary U.S. Nuclear Regulatory Commission 2055 Yplashington,DCC&Wf Tregory Alp Betty Councel fcw NRC %taff 1
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