ML19344A219

Intervenors' Brief in Support of Exceptions to ASLB 770923 Decision Refusing to Suspend Cp,Pending Completion of Remanded Hearings.Cost Should Not Interfere W/Regulatory Process.Urges Suspension of Cp.Ca Bartelman 770916 Ltr Encl

ML19344A219
Person / Time
Site:	Midland
Issue date:	10/31/1977
From:	Cherry M, Flynn P CHERRY, M.M./CHERRY, FLYNN & KANTER
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ML19344A220	List: ML19344A219 ML19344A221
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Download: ML19344A219 (55)

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B/;stl b UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THL ATOMIC SAFETY AND LICENSING APPEAL BOARD In the Matter of )

) Docket Nos. 50-239 l CONSUMERS POWER COMPANY ) 50-330 l

)

(Midland Plant, Units 1 and 2) )

INTERVENORS' BRIEF IN SUPPORT OF EXCEPTIONS TO LICENSING BOARD DECISION OF SEPTEMBER 23, 1977 MYRON.M. CHERRY PETER A.' FLYNN One IBM Plaza, Suite 4501 Chicago, Illinois 60611 (312) 565-1177 Counsel for All-Intervenors Other Than Dow Chemical Company 8.0'08060 5 7 3 6 . .

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TABLE OF CONTENTS PAGE TABLE-OF' AUTHORITIES...................................... i-iii r

I I. .AS A' MATTER OF LAW, -

-THE LICENSING BOARD- -

ERRED IN REFUSING TO SUSPEND CONSTRUCTION

, ON THE GROUND OF CONSUMERS' " SUNK COSTS"......................... 2 I II. AS~A MATTER OF LAW, SUSPENSION ~IS REQUIRED IN THIS CASE ON THE BASIS'OF THE BOARD'S t-OWN FINDINGS.................................... 13 j A. The Facts. Require Suspension................ 13 B. .The Law Requires Suspension.................. 19

.C. Suspension Is Required As A <

Matter Of Law In Th.'.3 Case, By Virtue Of The Cotutt Of Appeals' Decision Alone..................... 23 i

III. THE LICENSING BOARD )

ERRED IN. NUMEROUS OTHER '-4 IMPORTANT RESPECTS............................. 26 A.. The-Fuel Cycle Errors...................... 26-B.- The "Need-For Power" Errors................ '29

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C. The " Cost-Of Delay" Errors................. 34 -

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D.. The' Errors In Discu.eaing Alternatives 1To The-Midland Project............................ 39 E. The ACRS-And QA-QC Errors.................. -45 ,

F. Other Matte.s.............................. 49 4 -

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i. CONCLUSION............................................... 50~

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0 TABLE OF AUTHORITIES PAGE 4

. Cases Aeschliman v. NRC, 547 F.2dL622 ( D . C . Cir . 19 7 6 ) . . . . . . . . . . 1,2,3, 7,28 ,

Benson Hotel Corp. v.' Woods, 168 F.2d 694 (8th Cir. 19497................................. 20-21 Calvert Cliffs' Coord. Comm., Inc. v. AEC, i 449 F.2d 1109 ( D . C . Cir . 19 71) . . . . . . . . . . . . . . . . . '. 23,35, 36,47 Coalition for Safe Nuclear-Power v..AEC,

, 463 F.2d 954 (D.C..Cir. 1972)................... 6,7, 11,35

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Consolidated Edison Co., et al. (Indian Point, 4

Units 1, 2, and 3), ALAB-436, l 15 NRC -(Oct. 12, 1977)....................... .46 l Consumers' Power Co. (Midland Plant, Units 1 & 2) ,

- CLI-7 4 -15 , 7 AEC 311 (19 7 4 ) . . . . . . . . . . . . . . . . . . . . . 49

. Consumers Power Co. (Midland Plant, Units 1 & 2) ,

ALAB-106, 6 AEC 182 (1973)...................... 48 -

4 l Consumers Power'Co. (Midland Plant, Units 1.& 2),

4 ALAB-395, 5 NRC 772'(1977)......................; 5,11,16, 26, 36-37,46 '

[ Consumers Power'Co.: ~(Midland Plant, Units 1 & 2), ~

ALAB-396, 5 NRC'1141 (1977)............,........ 28 4

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Duques'ne Light Co. . (Beaver Valley Power Station, .

Unit 1) , ALAB-408, 5 NRC 1383 (1977)............- 48

. _- Environmental Defense Fund v. TVA, 336 F.Supp.

806 - (E.D. Tenn. 197 2) , af f 'd , 4 6 8 F.2d 1164-(6th~Cir. 1972), stay-denied',  !

414:U.S. 1036 (1973)............................ 22 Florida Power & Light Co'. ' (S t. Lucie, Unit 2),

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ALAB-435, 5 NRC -(Oct. 7, 1977)..............

13'14, 37

~ Hamilton Watch Co..v.' Benrus Watch Co.,

206=F.2d 738 (2d Cir. 1953).....................

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Public Service Co. of New Hampshire (Seabrook Station, Units 1 & 2) , 7 - 8 ,.

CLI-77-8, 5 NRC 503 (1977)...................... 9,10,12, 23,24 Renegotiation Board v. Bannercraft, 415 U.S. 1-(1974)................................... 36 Tennessee Valley Au'thority (Hartsville Nuclear Plant) , LBP-77-28, 5 NRC 1081'(1977)..................................... 46-47 Union of Concerned Scientists v. AEC 499 F.2d 1069 (D.C. Cir. 1974).................. 6-7,35, 47 United States v. Ingersoll-Rand Co., 320 F.2d 509 ( 3 d C ir . 19 6 3 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Vermont Yankee Nuclear Power Corp., ALAB-124, 6 AEC 358 (1973)................................ 48 Stat ge; And Regulations Energy Policy and Conservation Act, 42 U.S.C.

S 6341ff. ...................................... 32 National Envircnmental Policy Act, 42 U.S.C.

S 4321 et seq. ................................. . passim 10 C.F.R. 5 2 .10 4 (b ) ( 1) ( iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 10 C.F.R. S 2.764......................................... 3

. Other Materials AEC. Doc. No. WASH-1240 (1973)............................. 48 L " Remarks of the President on Nuclear Power Policy," The White House, April 17, 1977........ 27 l l .

The National Energy Plan,~ Executive' Office of l the President, Energv Policy and j t Planning (1977)................................. 34 q

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. UNITED STATES OF AMERICA S NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING APPEAL BOARD

.In.the Matter of -)~ .

)

-CONSUMERS POWER COMPANY. .) Docket Nos. 50-239

. ) 50-330 (Midland-Plant, . Units 1 and 2) ).

INTERVENORS' BRIEF IN SUPPORT DOF EXCEPTIONS TO LICENSING BOARD DECISION OF SEPTEMBER 23, 1977' On October 1, '1977,' the Intervenors in these dockets (other than Dow Chemical Company) filed Exceptions to the September 23, 1977 decision of the Licensing Board.

In that decision, the Licensing Board--although finding in- <

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-favor of'Intervenors on virtually every contested issue--

nevertheless refused - to suspend construction .of the Midland plant pending - complution of the. rema:.ded hearings , and.

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restriking of. the cost-benefit analysis, as ordered by the

. Court of Appeals in Aeschliman v. NRC, 547 F.2d.622 (D . C .'

Cir. 1976). This Brief is submitted in support of Intervenors' Exceptions.*

.Although'the Licensing Board's September ~23, 1977 decidion errsJin numerous respects,.its most glaring error- ' .)

and the focalj point of this Brief--is its - total reliance on 1

" sunk-costs"Das.a justification for refusing suspension. In l effect, the Licensing Board ' held that- regardless of the evidence, This Brieff Juayf also be considered. as further support of .our

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t Consumers has spent so much on the Midland plant that the Board is now' powerless to stop it from spending more. Worse yet, the Board reached that remarkable conclusion in total

disregard not only of the Court of Appeals' specific rulings-in Aeschliman but also in defiance of the Board's own' findings that the Midland plant is very likely a S2 billion white elephant.

Because it is central to the Licensing Board's decision, ' we deal first with the " sunk costs" issue in this

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Brief, and combine under one heading all of the exceptions (and portions :of the Board's decision) relating to that issue. We show that, once " sunk costs" are removed from the equation, suspension is required here as a' matter of-law.

l Thereafter, we take up the Board's errors in other areas--

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the cost of delay, 'the alleged need for power, the assess-f L ment of alternatives to the Midland plant, the ACRS issue, l-l and the other matters touched on by the Board.

I.

i AS A MATTER-OF LAW, THE LICENGING BOARD ERRED IN REFUSING TO SUSPEND

. CONSTRUCTION ON THE GROUND OF CONSUMERS ' ~ " SUNK COSTS . "

• Three basic facts, all well known and-indisputable,

.deminate any discussion of " sunk costs." First, we all know l

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• - lIn this part of this Brief, we deal with Intervenors' Exceptions Nos. 2, 3, 5-7, 21, 22,.35-37, 48, 50-52, 59,  ;

69, and 70. Those Exceptions ~ concern paragraphs 7, 9-11, 'l 27,141-66 (especially 41, 59, 62, andL64-66), 71, and 72 .l

-of the Board's. September 23, 1977 decision. Each of the -I Exceptions attacks the Board's reliance upon " sunk costs"

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incits decision--and specifically in_the paragraphs of tjue _ decision just- cited and referred ' to in the Exceptions.

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.that construction license applicants typically spend large '

sums of money'on their proposed nuclear project even before

' filing their application,.and spend still more money while the application is. pending before the- Commission. Second, we also.know that construction permit grants. are immediately effective, 10~C.F.R. S 2.764, so that on the day the permit is granted the applicant can (and usually does) upgrade its spending enormously and proceed as. rapidly as possible with plant construction. Third, we know that review of a con-f struction permit grant--by the Appeal Board, possibly by the Commission itself, and by the courts--is an inevitably lengthy process. 'In this case, that process . consumed three and a half years; even if the Court of Appeals had not chosen to reserve

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its decision in Aeschliman pending decision of the " fuel .;

cycle" case,-at least two years would have been required, q

because the Licensing Board's initial decision was handed down in' December 1972 and the case was not argued orally in the Court of Appeals until November 1974.

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Given those three facts, simple common sense tells us that if." sunk costs" are'to be considered in arriving at a NEPA cost-benefit analysis, NEPA can be ignored at will. '

-However inadequate (or even nonexistent) the original, pre-license. NEPA' review may have been, as a practical matter two-1 years'or more'are likely to elapse before hearings to correct h ' inadequacy'are.even scheduled--let'alone~ completed, and

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a new cost-benefit. analysis' struck. During all that time, _ .-j of; course', the utility proceeds.with construction of the t

plant,: hoping--as consumers admittedly- hoped here--that by.

the . time ,a' proper cost-benefit analysis is undertaken',. so much money =will have been spent ~that the entire cost-benefit analysis is merely a futile-academic exerciso. .In fact, Consumers'explibitly and brazenly adopted precisely-that tactic here. -With unnerving _ frankness, Consumers told Dow on 'several occasions th'at "the more of the plant that is -

. built the less likely.,it becomes that it will be stopped,"-

and that "as long as construction continues, consumers has a lever." Midland.Intervenors' Exhibit 3 ( Dov's notes of a July ~15, 1975 Consumers-Dow meeting); Midland Intervenors' Exhibit 25- (Dow's notes of a September 21, 1976 meeting). [

To consider " sunk costs", then, is'to encourage, and in fact to reward, deliberate violations of NEPA. Itfis to te11 utilities that if they can only' spend fast:enough and drag the r6 view, process out for long enough, they can

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prevent application of NEPA~by producing.a fait accompli.

In-short, to take sunk costs-into account when recalculating the NEPA cost-benefit analysis under circumstances like those-in;thisicase allows. applicants to "have their cake and eat it too," for:the:same' reasons earlier articulated by the. Appeal-Board '.in' this l very.: case:

...the' basic issue which isEbeforenthe Licensing

• Boardlon the merits--whether 'to reauthorize the -

construction of 'the Midland facility in the f ace

- of- claims ! thatSthe : project . as presently. structured

' cannot. survive a proper NEPA cost-benefit 1 analysis--

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. 1 can be prejud ced byfa continuing. commitment- 1 '

ofiresources to the project.' The. more that is -

expended, the less . likely it is J that,f on . account

.of. environmental considerations, either'the cost-

- benefit balance 1will .1xe , tipped against the plant

or potentialialternatives will remain' feasible.

In essence:(Consumers]'is seeking to defer .

decision. on the wisdom of completing the f acility

.w hile continuing /the constructionLactivity that-could-tilt the decision-making. process in its

-favor._'There is a saying.for this--having'your cake and eating it too."

Consumers Power Co. (Midland Plant, ' Units 1 & - 2) , ALAB-395,.5 NRC' 772, c 779 (1977) . . Forceful under any circumstances, that reasoning is doubly cogent here, where to consider sunk ~cos'ts would be to reward Consumers' own, self-confessed, cynical

. tactic of spending as much money.as possible on construction in order to bootstrap itself out of a. fair restriking of=the-I cost-benefit. analysis.. Quite apart from the settled legal

. principles [concerning sunk costs,- it' .is shocking that the 4 Licensing. Board.would'look with sympathy on-Consumers' J l

crocodile tears.over the amount of-money it has spent so far

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'on the Midland plant, when Consumers knowingly and deliberately.

, spent'the mcney for the sole-purpose'of being able to shed those veryjcrocodile tears.- C Thus >both common sense 'and the facts of this case.

1 show that thel Licensing i Board's~ reliance'on sunk costsLcannot:

stand.  : The Licensing Board's LOrder not only . underwrites and rewards 1 Consumers' cynical and hypocritical attemptito nullify i~ -

L NEPA 'and. frustrate :the ' Court of . Appeals ' deciNion, but alson ]

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e offers anynother~ utility so minded a roadmap for circum-

. venting ~NEPA's requirements.

Given those consequences, it is-not surprising to find . daat the : Licensing Board's approach is also directly contrary to settled law. Fully five years ago--in fact, even:before the Licensing Board's initial decision in'this case--the Coart . of Appeals noted that "each additiorel increment to the amount of money invested in the project tilts the. balance'away'from the side of environmental concerns," and therefore squarely' held:-

"...a construction perraittee, particularly after'Calvert Cliffs, proceeds at its own financial risk with respect to any. investment made prior to the completion of judicial review of an' operating license supported'by an appropriate NEPA. environmental impact statement."- [ Emphasis added.']

. Coalition for Safe: Nuclear Power v. AEC, 463 F.2d 954, 956

& n. 1 (D.C. Cir. 1972). Two years later, the Court of LAppeals reaffirmed its position:

"An: alternative to be considered is complete abandonment of the project,7just.as it was at both the' construction.and full-power operating license stages.... As at those stages, sunk costs'are not. appropriately considered costs of abandonment, although replacement costs.may be 33 construction of a substitute f acility could~ reasonably be expected.as a consequence of abandonment. " [ Emphasis added.]

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Union or Concerned Scientists v. AEC, 499 F.2-d 1069, 1084 .

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n. 37 (1974) .

• And'in its Aeschliman decision, 547 F.2d at 632 n. 20, the Court of Appeals pointedly quoted the Union of Concerned Scientists . holding set forth in the text above.

There is, then, no room for doubt as to whether sunk costs may be considered in this proceeding. Common sense, the facts of this case, the long-standing holdings of the Court of Appeals, and the Court of Appeals' ruling in this very case all demonstrate that sunk costs may not be considered. Yet the Licensing Board ignored all of those things, in favor of the curious argument that the Commission's Merch 1977 ruling in Public Service Co. of New Hampshire (Seabrook It will be noted that the quoted language, and the prohibition against considering sunk costs, arose in the context of possible deracing of a plant which had already been subjected '

to a thorough, and valid, NEPA review. A fortiori, sunk costs canaot-be considered here, where the very essence of the Court of Appeals' ruling is that no valid NEPA review has been had.

Nor does the quoted language concerning " replacement costs" alter this conclusion. That language simply recognizes the obvious--that a substitute facility, if needed, cannot be _

built for nothing--and thus points out that excluding sunk costs does not necessarily mean that.the cost of abandonment till always be zero. In the context of dais case, for example, it is appropriate to consider the cost of Dow constructing its own Tacilities, as a part of the cost-benefit analysis. But it.is not appropriate to add to tha cost of separate Dow faci-lities the " sunk costs" Consumers - has so busily incurred on the Midland project; rather, the " substitute facility" to

'which the Court of Appeals refers must be considered on its

own merits and without regard to any such-sunk costs. Other-swise, ' the -amounts spent _ by a construction permittee prior to a valid NEPA~ analysis _ would not be spent "at its own risk" (as the Court of . Appeals held in Coalition for Safe Nuclear Power v. AEC, supra), but rather at the expense of the environment. .It is precisely that situation which the Court of: Appeals' " sunk costs" rule. seeks.to avoid--but with which -

the Licensing. Board's' decision nevertheless confronts us.

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Station, Uni .s 1 & 2) , - CLI-77-8, 5 NRC 503 (1977), somehow i .

L authorized the Licensing Board f to do precisely what the Court i

l of App,.ls had forbidden.

But Seabrook cannot be interpreted in that way t

without the unseemly -and intolerable result of placing the

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Commission squarely at loggerheads with the Court. That is l

not'necessary. To begin with, Seabrook was concerned with l

f site seJ action, a matter significantly different and. much narrower than the broad issues we. f ace here (where the entire cost-benefit analysis must be restruck, because issue going.

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to "the very heart of the project were not considered the first. time around).- Indeed, in Seabrook the Commission went out of its way to emphasize that the site selection context involved i. that case normai.y does not present significant L

" sunk' costs" difficulties, because the amounts spent are ,

1-i not particularly large in -and of themselves, and because in any event much of the expense would concern " planning and

(- equipment that could be used at an alterna'te site as well."

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5 NRC'at 532 n. 32.

LMost significantly, however, in Seabrook the i~

commission emphasized that its conclusion (authorizing a l

~ consideration of limited " sunk costs" under certain narrow l

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. circumstances) "substantially depends on the integrity of the NEPA process which- leads up to the point of hearing."

5 NRC at 533. Here, by contrast, both the Licensing Board and the Court of Appeals found. the original NEPA process l- . =

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. r to'be fatally flawed. As che Licensing Board put it (September 23, 1977' decision, 1 70):

"As we have endeavored'to show, there are

. substantial equities favoring- the -Intervenors '

case _fw- rnspension. 'They have timely demon-strated in the construction permit proceeding the weakness of' the original NEPA review and the weakness of the original ACRS letter. The defects in that proceeding were significant enough that the Court of Appeals remanded 3

the matter to'the Commission."*

Thus Seabrook teaches only that " sunk costs" need not be completely-ignored where:- (i) the original NEPA review was-proper; (ii) the costs involved are unlikely to be of major significance; and (iii) the need for further NEPA review does not arise frca defects in the original NEPA analysis.

On the face of it, not one of those conditions is met in this case.. Rather, in this case we deal with': (i) an original NEPA analysis which was fatally flawed; (ii) " sunk ,

costs" which the Licensing Board felt to be so large that on that ground alone it held that all alternatives to the project had been foreclosed .so that thee remanded hearings required by the Court of Appeals are a u.=eless exercise); and' (iii) a situation in which there has never been a valid NEPA cost-The Licensing Board's finding that Intervenors_were timely-in presenting their objections, during the original con-struction permit proceedings, is of particular significance. 1 As the Licensing Board explained. (Decision, ,1 27) , "A timely raising offissues must mean. something more than that the

.Intervenors'are not. penalized iy they are not late." ButLif sunk costs are to be considered-in a case like this one, and

,~ 'if . (as happened- here) they can effectively override all of the " substantial equitie~s favoring. . . suspension," then the timeliness.with which objections were originally raised becomes irrelevant. No matter how prcmptly the. objections. .

were raised, 'the utility can simply spend . its way through

~the unavoidably lengthy review process and thereby deprive the objections--however timely--of any meaning.

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i I- benefit' analysis of.the project.- According to the Licensing Board, there will never be a' valid NEPA cost-benefit - analysis ,  !

because the sunk costs deliberately incurred by consumers have made-that entire. process futile.

,i LSeabrook, of course, does not countenance any such

~t hing. To ' the contrary, even in the-limited context with

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which Seabrook'was. concerned,'the Commission made it very.

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clear;that conside' ration of sunk costs could not be used to.

~ reward an applicant's evasion of NEPA. "In such circumstances, '

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a NEPA cost-benefit snalysis based on existing conditions would' allow the applicant to profit by its wrong-doing." 5'NRC at ,

533. That, of course, is precisely the situation we have here.*

However, the problem is approached, then, the. Licensing 1

Board's repeated, explicit', and total reliance on " sunk costs"

] as. a basis for denying suspension cannot be justified., It improperly rewards Consumers' deliberate and cynical. tactics, ,

which is both unfair-and in direct' contravention of Seabrook.

It flies in the facef of the long-standing rule of the Court of

• In paragriph 11 of its decision, the Licensing' Board here

1. decided <tlst it would not'be fair to ignore sunk costs

' purely. ins order'to punish Consumers' deliberate attempts

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to suppress information and hoodwink the Board. But that Tmisses the point.- .What the . Commission sought to foreclose in Seabrook was ' considering sunk costs--or " existing condi- .

tions," in;the Commission's words--where a utility-had' deliberatelyLattemptedito distort those very conditions. ,

We :do not think Seabrook: provides any specific answer ;to

.thenquestion of.what sanctions should be: imposed upon j- . Consumers ' attempts :to suppress evidence. At the moment, L however,"weiareEnoticoncerned1withithat question. ~

Rather,. -

we sare l concerned with whether Consumers' deliberate attempts

.to gerrymander "existingiconditions" by spending as much as

.possible on.the Midland project--and-the'reby to frustrate .

.both NEPA'and ,the' Court of Appeals' decision--should'be

-rewarded. 'Seabrook does' answer that. question--with a resounding;No.

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ppeals,- a ' rule the ' Court ~ specifically invoked in this case.

It threatens to. gut NEPA, by making NEPA violations effectively unreviewable and unredressable. And it flies in the face of Lthe' Appeal Board's admonition-in ALAB-395 against allowing Consumers to "have its cake and eat it too."

Tease things are even more egregious in light of.

the purpose cf the suspension hearings. -The hearings were not intended to arrive at a final determination as to whether the Midland plant should or should not be built. That determina-tion must await completion of the full remanded hearings on the merits, as well as preparation of a completely revised and updated- environmental impact statement--a f act which even Consumers concedes. Rather, the purpose of the suspension hearings was to determine whether it would be worthwhile to preserve matters in statu quo- pending completion of the remanded hearings, so as not improperly to prejudice the outcome of the remanded hearings. In terms of this case, that determination is virtually a foregone conclusion. As the Court of Appeals recognized in Coalition for Safe Nuclear Power v. AEC,'463 F.2d .i 954, 956 (D.C. Cir. 1972) , as the Appeal Board recognized in this-case, Consumers Power Co. (Midland Plant, Units 1 & 2) ,

ALAB-395, 5 NRC'772, 779-(1977), and as even the Licensing Board admits (Decision, 1 72), "each. . . increment to the amount. . .

Investedfin'the. project tilts the balance.away from the side of_ environmental' concerns" and tends increasingly to foreclose

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c otherwise feasible' alternatives to the project. Under those.

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circumstances,. and given 'the f act that the remanded hearings

-will' provide dae- only genuinely valid environmental scrutiny and NEPA cost-benefit analysis to which the - Midland. project

' has ever' been: subjected, it is essential that construction be halted' if that analysis is to be a fair one.

Yet the Licensing Board refused to halt construc '

tion--on -the ground . that, because of sunk costs, any possible i

alternatives to the Midland project had already been fore-

, closed (which of course means that the remanded hearings themselves are futile):

" Based on .the evidence presented at the suspension hearing and the Commission's decision in-Seabrook relative to sunk costs and their relation to suspension, the Board. concludes that no alternative to Midland will be foreclosedEdue to continued construction because all other J alternatives have now been foreclosed."

[ Emphasis added.]

September. 23, 1977 . Decision, 1 66.  !

.That was clear' error.

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Under the circumstances of this case, including the Board's persistent refusal to entertain Intervenors ' motions for l

immediate su'spension in order to avoid precisely the situa - i tion-the Board has now-found to exist, the Board's conduct l

amounts to deliberately leaving the barn door open while the'

. horse'is_being stolen. In fact, cit-is: worse than that. Th'e Board's present order?is nothing less than approval of the .

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~ theft of the horse. If NEPA means.anything at all--if, as R

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lthe Appeal Board-held in Florida-Power & Light Co. (S t.

Lucie, Unit 2) , ALAB-435,'5 NRC (October 7,1977) , slip .

i - oo. at 6,-compliance with NEPA must be treated as a "prereq-uisite to," ratner than "a hurdle in the path of," the l .

issuance of a' construction license--what happened here must not b'e permitted.

II.

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AS A MATTER OF LAW, SUSPENSION IS REQUIRED IN THIS CASE ON THE BASIS OF THE BOARD'S OWN FINDINGS.*

A. . The Facts Require Suspension.

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Both the gravity of the Board's " sunk costs" error and the importance and urgency of suspending construction of I l l the Midland plant pending the' full remanded hearings required by the Court of Appeals are starkly manifest from the Board's y

non " sunk. costs" findings. The list is lengthy, and refutes L every genuine argument against suspension 'other than the discredited " sunk costs": argument previously discussed in -

this Brief. The Licensing Board found:

• In this portion of this Brief, we deal with Intervenors' Exceptions 61.'through.68, 71, and 72. All of those Exceptions attack the correctness of~the Board's refusal to suspend construction'of the-Midland plant (the first L sentence of paragraph 72 of~its Decision), in light of 1

. numerous: specific findings . contained elsewhere in the decision and identified in the Exceptions.- The specific findings.to which the~ Exceptions point'in-attacking the "no suspension" conclusion comprise all or part of para-graphs 8, 10, 23-26, 31-33, 35,136, 41, 44,.62,o64, 67, 170,.and 72 ofJthe-Licensing Board's decision. j

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-- That Consumers'has'tried to suppress p evidence, and~in-effect lied to the ,

Board,;concerning a vital issue ,

c.

(Consumers disastrously deteriorated i

-relations. with Dow) , . and that although Intervenors'had succeeded in: exposing- ,

'that instance of. deceit,*_"there remains the suspicion, raised-by the disclosure

! ^ of these instances, that-there may have *

.been-similar ploys which were success-c ful." (Decision,-1 10.)

-- 1That Dow does not-necessarily!need steam

-from the Midland-plant, "and whether Dow .;

< will ever buy steam from that olant is, on tne> record, speculative"-and'ubat.this makes the entire. project extremely.diffi-cult to; justify-in its present form: "In tMe event that Dow fails to-buy steam from

, Consumers, the circumstance will be one of a plant at a site- for which only very i T. limited alternatives were-cxplored,

• As the Board put it ~ (Decision,1 10) : " Aggressive Inter-venors did appear and.the Dow-Consumers matter was aired." ,

That it was'Intervenors,.not the-Staff, who exposed ,

i , Consumers' deceit is disturbing, particularly in view of Consumers'Lapparentaconfidence that if Intervenors did .

not appear,-the Staff'would never unearth the suppressed j information on its own-initiative. See Midland Intervenors' '

Exhibit 25.- These Jthings call-forcefully toimind the~ Appeal '

e ' Board's-recent comment:in Florida Power'& Light Co.- (St.

, .Lucie , . Unit 2) ~,' ALAB-435, r 5 NRC - (October 7, 1977), slip -t o . .at:5-6:

"We' regret- the ; necessity of._having to state

tuat the recordiof this case does not instill confidence-in,us/that'the' Staff always acts with that degree

of care nich'would demonstrate its commitment to the-vigorous 1 en'forcementcof NEPA's commands'...." Under the circum-l stances" in' this: case -(including the Staff's almost .totalu sreliance;on':information provided~by-Consumers--the very (party,;; as the . Board :found, which. had . attempted to- lie

~

'its :way through ;the- proceedings--rather than on any

. genuinely Lindependent- inquiry) , . f ew -if any, of the S taff 's positions can be.giveh~much weight. "...[A]-Staff con-

-' -clusion~that?an applicant's! Proposal passes muster is~

~~ ,~

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. valuable.onlyJto the extent it represents the'results of vigorous probing'for possible shortcomings.'" Florida.

j  : iPower'&'~ Light Co.,-supra, slip o j .~at'6.

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'desicned in' substantial oart for a ourpo'se which will not be fulfilled. The effect on the values that NEPA-protects could be 1 serious." (Decision, 11 23-24.)

That "the-failure to consider energy-con-

, uservation is a NEPA violation," and a serious one, since "substantially less demand could 1: ' result in the construction of a plant not now needed." (Da dsion,.1 25. Since the Decision does not'even mention energy son-servation save in that paragraph, the soard's language. amounts to a finding that.it is

'not now in a position to predict the out-come of- hearings with- regard to an extremely -

important issue, Land one of the issues specifically identified by the Court of L Appeals.)

That . "we are easily able to conclude that

[Intervenors]-acted promptly" in raising the . issues remanded by the Court of Appeals-- ,

a " troublesome factor," since "a timely raising of issues must mean something more than that the Intervenors are not penalized 4

if-they are not late." (Decision, 11 26-27.)

~

That the increase in~ plant costs which might result from a suspension is not- major, - since of the approximately S246 million of increased -

costs predicted by Consumers, $120 million >

(attributable to. AFUDC, or allowance for funds used during construction) must be ignored, and since a' suspension of construc-tion will produce a savings to.ratepayers ofias'much as $140 million which must also ~

be' offset against Consumers' estimate of' 4-increased costs. Thus the size'of any real increase in capital-. costs as a result of suspension is'at best'" uncertain." Further-more,'even if such.an increase exists its effect'on--the' suspension-decision can only 1

be conjectural, since we have no way of p knowing'hcw:the. Michigan Public Service

Commission'would handle that question.

.(Dec ision , 11 3 3.') .

-. That-according-to'the-Staff's own assumption,

.a suspension will not impair' Consumers' ability to-serve its customers, since "there

- would be ' internal: fossil-fuel capacity to make,up the loss 1of Midland,":and'that ,

Consumers-has not borne its. burden of proof c -

with regard to-replacement power costs, but rather has c overstatcd them. . (Decision, 35-3 6. )

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'That we can'have no confidence in'either Consumers' present, cost estimates for.the

, Midland project - (which have " increased ~ -'

tremendously"-since original licensing).or in its ' target dates for completion of the~

hidland_ plant. (Decision,. 11 41,.44.)*

That Intervenors' suggested alternative to the Midland project :is cheaper than the Midland project, when sunk costs are -(as they must be). excluded from-the-comparison.  !

'(Decision, 11 62, 64, 65.)

That even now, efter two separate.'clarifi- "

, cations," we still do not know whether the.

ACRS Report -rejected by the Court of Appeals has been adequately fleshed out to assure the-proper and full raising of all outstanding

safety' issues, an .important and still open question, as the Appeal Board commented in Consumers-Power Co. (Midland Plant, Units 1 -

& 2), ALAB-395, 5 NRC 772, 779 n'. 24 (1977) . **

(Decision, 1 67.)

- LIn f act, . the Midland cost estimates relied on by the Board i in 1 41 of the Decision--approximately $1.67-billion when the cost' of completion estimate is added to the sunk costs--

is. seriously' understated. The record shows that the ' true _ _

L cost of the Midland project is likely to exceed $2. billion .

! by the time it is completed - (Tr. 2808-09, 3880-81), a fact i which makes'a' coal-fired' alternative economically preferable .

1. even on Consumers' own estimates of the cost of that alter-native,~ set.forth in 1 41 of the Decision. It must also be borne in mind _that an significant_ cost increase--let-alone the approximate 1y'S million which the record shows'is

~likely to occur--will almost certainly cause Dow to withdraw --

support from the Midland project.

• • In fact, the Board _ completely omitted fram its.de 1sion two points of major significance. The first is that- .r; letter of; January 28,-1977, the Board'itself specifically advised

the ACRS~that the purported " clarification" of the.'ACRS.

i' Report which_the Board had earlier: requested was not satis-factory.- -(Thereaf ter, the ACRS refused to respond Turther.)

The1 second :is the rf act . that ' Staf f witness Crocker repeatedly

' admitted- on cross-examination that he did not know what the LACRS. Report meant by giving "due consideration" to the r un-- 1 explained "other: problems". mentioned'in'its report, that he

, did;not know whether or not the "other problems" should (or '

even .could) ~ be resolved- during construction, that he did not have any idea:how much11t would cost to resolve (or. give -

"due' consideration"1to) .the "other problemsi" and that because- .

? of the Ltotally unexplained -cost issue, ' the opaque ACRS Report prevented aniaccurate NEPA cost-benefit-analysis for the Midland project,<as wellias: preventing.the proper raising.

Jand1 exploration 1ofJunresolved' safety. issues. See Tr. 4217-21, j 4 2 5 9-~61 c 4 2 6 5 -6 6. --

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-. -That."there are substantial equities favor-

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ing the Intervenors' case for suspension," .

that continuing construction will increasingly LS prejudice a fair cost-benefit analysis and foreclose alternatives to - the Midland project,

- and . that, to the extent that predicting .the i r - outcome of the remanded hearings' is relevant -

to the suspension decision, it must be assumed

, that Intervenors have "a substantial chance l of success" - at-the remanded-hearings. (Decision, ,

it 8,.70, 72.)-

In light of'that damning array of facts, it is plain- l both that '" sunk ' costs" form.the only basis for refusing to i

L suspend construction in this case and that, ence the Licensin;g

~

Board's fundamental legal error-is corrected by removing " sunk costs" from consideration, a suspension' is compelled here as a matter of-law. In no instance did the Board actually ~ find in favor of. consumers' position. To the extent that it con -

~

l  :

sidered them at all, the Board treated each of the issues 1 l

i remanded by the Court of Appeals either as unresolved and a o_

l.

l subject to further discussion (as with the ACRS and " energy I

conservation" issues) or as a strong argument in favor of suspension.-- -.

That is .particularly' true with regard to the' Dow Eissue, iIt is, and .always has. been, undeniable that th'e Dow interest in.the Midland project-is an absolute prerequisite

.to its. success.. The Final Environmental Statement flatly

- states.- (at- XI-3) that- without' Dow, one unit cf tie Midland Ll - project

"would be canceled and consideration would be given

~

tcF transferring the 'other ~ unit to a dif ferent site."

f

. Consumers'itself admitted, l'n'its: April 1,'1973. Answers to ,

_17 a * *~ wn b ~y a#w w - - w am v- -

-ae-,--ss, s. ***<eh- ,

1 A

Interrogatories - (No. 173 ' at p. 173-1) , that the Midland project'.would be completely uneconomical without Dow parti- 1 cipation; ' that fact has become even more true now that the' cost of'the Midland project has escalated some sevenfold.

'Not-cnly dif the Staff's~ testimony show that Consumers needs

'"significant and timely rate increases" in order to finance construction (Meltz,- fol. Tr. 5065), but Consumers itself has told its stockholders that its bond credit ratings are " low" (1976 Annual Report, Midla Ki Intervenors' Exhibit 57, pp.

1-2) ' and .its earnings "ina 'e quate" (Id. ) . In fact, Consumers has recently demanded that Iow loan Consumers, interest free, S400 million to finance conlletion of the Midland project.

The President of Dow U.S.A. did not hesitate to characterize Consumers' demand as "ex*artion;" but there is good reason to believe that the lean is essential to Consumers' ability to finance the project. Tr. 2427-30, 2710-12, 2720-21, 2723-24.

In view of Dow's stated unwillingness to make that loan, and in view of the Board's own finding that any con-tinued Dow participation in the Midland' project is " speculative " ,

there is at best-extreme doubt as to whether the Board could-even-make the " financially' qualified" finding required by 10 C.F.R. S 2.104 (b) (1) (iii) .

• And the Board itself has admitted

~

This. appears ~true even with Dow part'icipation. Consumers' internal' memoranda (e.g. , Midland -Intervenors Exhibit 27

))

and statements to Dow (see Midland Intervenors' show-'that to finance Midland, Consumers needs to~ sell aExhibit 67)._

sizeable. portion of-Midland-capacity to.certain municipali- .

-ties and cooperatives--sales not only speculative', but presently' barred in( the Dow-contracts. See Tr. 1664-66, 1782-84,11788, Exhibits 14-16. 1799-1800,:1809,J1848-49; Midland Intervenors'

~

(' Decision, 1-24) that if Dow does not continue to support the Midland project, * "the eff ect on the values that NEPA ,,

protects could be' serious unless plant design can be modi-fied to accommodate the changed conditions." Yet as the Board also admits _(1 72) , each day of continued construction renders increasingly less feasible that very modification of ,

plant design. Under those circumstances, it is absurd to allow continued construction of a plant the fulfillment of whose primary purpose the Board itself terms " speculative."

B. The Law Requires Suspension.

In,short, on this record and in light of the appli-cable legal principles suspension cannot be avoided. As to each of the remanded issues, the~ Board has found' either that the evidence is strongly in favor of-Intervenors' position, or that, at best, the issue must be considered an. open one, on'which Intervenors have "a substantial chance of success." ,

1 Even' if Intervenors bore the burden of proof in this proceed- j ing (which they do not, as both Consumers and the Board have

- recognized . throughout) , they- would be entitled to suspension upon the kind of record made here. As Judge Jerome Frank held -

in Hamilton Watch Co..v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 1953): . ,

I The Board seems to have (quite properly)' rejected Consumers' claim that we must,'in the teeth of the facts, blindly assume.

that Dow will' support or NEPA should approve the Midland proj-ect-solely because Dow has a contract with Consumers. Dow considers abandonment of that contract (on'the ground of its-economic burdensomeness.and. Consumers' breaches) a " realistic option." Tr. 2432, 2516, 2522, 2524, 2730. We also note that even if Dow-feels unable to withdraw because of its contract, the economic dubiety of the Midland project--and its effect on the cost-benefit' analysis--will not change. That analysis must.

~ determine where the true econcmies or diseconomies (and thus the

• true.public interest) lie, independent of private contractual

. coercion. From the_NEPA' standpoint, the most Draconian contract

' imaginable 1cannot-justify NEPA approving the project. If that were.true, the -existence of tany. contract would nullifyLNEPA entirelp r ,. _ . _ . _- . . _. _ ._

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. . .it will ordinarily . be enough that the

- plaintif f has . raised questions going to the

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1 merits so serious, substantial.-difficult

.and doubtful, as;to make them a: fair ground for litigation .and thus .for more. deliberate '

investigation."

t-

e. ' AtJa bare minimum, Intervenors?have made that showing here;

, indeed,j a careful reading of the Board's decision compels the conclusion that the Board itself would have suspended-con- ,

struction in this case, but for its erroneous belief that 5

f

" sunk costs" override.all of-the evidence presented. And in-view of the' admission by all concerned that continued con- '

struction tends to foreclose . precisely the kind of design '

modifications

• the' Board (in 1 24) suggested may be necessary

in this case, prompt' suspension of construction here is also mandated by the other classic reason for granting' interim

• relief --preservation of the status quo. As the Eighth ,

Circuit held in Benson Hotel'Coro. v... Woods,' 168 F.2d 694,-

} 696 (8 th Cir.1948) ,' a preliminary ~ injunction -(or in this' case a tamporary halt to.-continued construction):

ht C

• As well:as1 foreclosing. adequate resolution of safetyLissues.

.Theclonger construction continues'without resoluti'en of-the still-pending4ACRS issue (and without proper exploration of J

the serious and increasing-QA-QC violations to which the Midlend plantLis' outrageously prone), _the more likely it sis that. Consumers -will simply not have the ~ money to correct

. safety and QA-QC-problems when theyjare eventually explored

,' and. corrective. action is mandated.. Consumers itself has

' Eso; admitted 'iSee Tr. 1054-56;. Midland Intervenors'. Exhibit

-3 ("very; adverse > economic effect" . of QA-QC compliance, and

" big, potential ~. cost exposure") '.

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. . .does not involve a : final determination on the merits; in. fact, [its] purpose...is not to o determine any controverted right, but to pre-vent...any further perpetration of injury, or t.ne doing -of any act pending the final deter-mination of the action whereby rights may be thesatened or endangered, and to maintain ' things in the condition in which they are .in at the time. . .until the issues can be determined af ter a full hearing."

In this case we know from the-findings of the Board itself that continued construction will " threaten or en danger r ih g ts, and that suspension is the only way to " maintain things 'in the condition in which they are in at the time" pending the-t full remanded hearings on the merits. We huow that to allcw centinued construction on-this record, in the teeth of all of the findings of the Board set forth above, simply allows l Consumers to make a bad situation worse, and to continue with '

l l its-own'self-confessed tactic of deliberately preventing ,

meaningful 1 consideration of issues the Board's own findings reveal to '- of the utmost gravity. We know that important I questions of the public interest are involved here;- as the Board-itself hos to2d us, this case risks potentially " serious" t i I damage to "the-values that NEPA protects," and the risk worsens  :

i every day that construction continues. (Decision, Vt 24, 72.)

In such a situation, it is settled NEPA law' thac i

,the environmentally. challenged . conduct--in this case, con-l struction of a' plant " designed in substantial part for a -

- purpose which" .very likely "will not be fulfilled" - (Decision, l l

l 1

1 24)--should be stopped, in order to allow precisely the "more: deliberate investigation" of the costs and benefits

.which NEPA requires and wh ci h the Court of Appeals specif- ..

ically directed the Commission to undertake. See, e.a.,

Environmental' Defense Fund v. TVA, 336 F.Supp. 806 (E.D. Tenn.

1972) , . af f 'd, 468 F.2d 1164 (6 th Cir. 1972) , s_tay denied, 414 U.S. 1036 (1973); see also United States v. Ingersoll-Rand Co., 320 F.2d 509, 523-24 (3rd Cir. 1963). To return for a moment to our analogy of the stolen horse and the barn 4

door: a refusal to suspend construction in tnis case, cnd on this record, would not only ratify the miscreants' attempts to steal the horse but encourageL them to burn the barn down as well. It is inconceivable =that a project: (i) at which the Court of Appeals expressly directed the Commission to take

~

the "hard look" required by NEPA and the Commission's safety 2 obligations; (ii) which-even on a preliminary examination is so shaky the,t whether its primary purpose -will ever be fulfilled is sheer " speculation;" and (ifi) which is sponscred by a utility _

which has to resort to suppression of evidence in order to

~

paper over its disastrous flaws--should nevertheless proceed apace while tdum very question of whether it should have been authorized in the first place is being debated. It is intolerable that that- should happen where--as is the case here--allowing continued-construction simply rewards and adopts the utility's deliberate tactic of trying to prevent the project's flaws frem ever being fairly-analyzed or resolved. ,

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. . ,m. --s lC. ' Suspension Is Required ..

As A Matter-Of Law In This Case, By . Virtue Of-

'The Court.Of Appeals' Decision.Alone.-

From what we have'already said, there can be no doubt that construction of the Midland plant should have been suspended-as a result of'the Court of Appeals' decision alone.

.That;de' cision squarely held that the NEPA- review of the Midland project, undertaken by the Commission only . grudgingly

-and under the compulsion of Calvert Cliffs' Coord. Comm., Inc.

v. AEC, 449 F.2d 1109 (D.C. Cir. 1971) , was f atally- flawed.

Thus the " integrity" in'the NEPA process, according to Seabrook a prerequisite for tolerating sunk l costs, was completely lacking. Since everyone admits that continued construction tends to impair the cost-benefit' analysis required by the ,

Court of Appeals, and- to foreclose' alternatives to the Midland ~ ,

project in its present-form, a halt to continued construction pending 2 restriking of' the cost-benefit analysis is therefore required.- Otherwise the. Court of Appeals' direction to restrike the cost-benefit i analysis becomes nothing but a useless' verbal formula. Obviously the Court of Appeals did j

~

Enot' intend:any such. result.

LWe realize,'of course,jthat:thri Appeal Board and'

.the Commission haveEpreviously'~ rejected Intervenors' repeated q

~

a

. requests 1that construction be haltedcon purely legal. grounds. U

.We(do; nots expect the Appeal Board J(or. the Commission) to-

~

c . confess error. -BatLthe point. requires emphasis, for two

~ .

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a 4 s .x~. L.R ~ >2 . _ .- .,.-.: . - .

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> reasons.' First, part of the theory o* which'Intervenors' requests for immediate suspension were rejected was that factual hearings on the suspension issue were pending. .The facts are now=in. They show that, apart from the completely L inappropriate question of sunk costs, there is no factual basis'.whatever for refusing to suspend construction. When that is put together with the compelling argument in favor of suspension as a matter of law, the conclusion is inescap-l able: construction of the Midland plant must be halted, and it must be halted now.

-The secon'd reason we stress our long-standing i

contention that suspension is required'here as a matter of law is one of fairness. As we just. pointed out, suspension l was rejected on the ground that factual inquiries were in progress. That was error. But if the fruits of the factual j inquiry were really used in arriving at a suspension decision, I i

i j the error would at least be. understandable. Here,-however, j i .

H what the ; Licensing Board has told us is that the entire r -

[ factual- inquiry was a pointless -(if expensive) waste of time. The' Licensing Board has-said that regardless of the facts,' Consumers' sunk costs require a contie.uation of con-struction. ,

I The Board could have said that last November.

At d the very latest,:. the ' Board couldc have announced its "the f acts i

1 e

eeaw ' A h-' "* #

+. ._

• p .--

are irrelevant" ruling in March 1977, when Seabrook was decided by the' Commission.* As-a result w..sumers has been given substantial-additional time (half a year, at the very least) within which to pursue its admitted tactics of piling up : sunk costs, and Intervenors have been put to enormous expense,_'all for the sake of presenting and arguing issues which we are now told were irrelevant to begin with. That -

is shocking. It amounts to holding that, whether intentionally 1

or not, Intervenors were euchred into good-faith participation  !

in a process the sole result of which has been to let Consumers add several million dollars more to its sunk costs.

Elementary fairness forbids that sort of thing.

s If for no other reason than that, the Appeal Board should not'only summarily reverse the Licensing Board's Decision.

1 here, but in the event that the Appeal Board decides more -

time is needed to: ponder its ruling, it should forthwith -

suspend further construction of the Midland plant pending that~ decision. Otherwise Consumers will continue to reap -,

the fruits of the extraordinarily unfair tactics to which Intervenors have been subjected. Throughout this case, and despite the Appeal Board's admonition to the contrary in

~

• As.we.have previously pointed out,.Seabicok affords no support.at all for the Licensing Board's-rul. g. However, we' note the date of the Seabrook decision'here in order to

show that,^even1on the Licensing Board's own theory'of reliance-on~a misinterpretation of that decision, the Licensing: Board could have announced its result fully six ~

months before it actually did.

s'

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O. ' '

ALAB-395,. Consumers has "had its. cake and eaten it too" with  !

a' vengeance.

It is high time--in fact, it is 'more than a year past time--to put a stop to Consumers' gourmandise.

III.

THE LICENSING BOARD ERRED IN NUMEROUS GTHER IMPORTANT RESPECTS.

We have dealt above ac length with the two most glaring and pervasive flaws in the Licensing Board's September 23, 1977 decision:

its reliance on " sunk costs" as a justi-fication (in fact, the justification) for refusing -to halt construction .of the Midland plant pending the remanded hearings, and its failure to recognize that its own findings on the central issues compel a halt to construction. Those -

issues are in one sense the most important ones presented by Intervenors' Exceptions and by this appeal, since in and of thamselves they require Lamediate halt to continued construc-tion even withou regard to the Licensing Board's other errors. -

But those other errors are far from insignificant, and must be reached if tdun Appeal Board rejects the points made in 3

Parts I and II of this Brief. We turn now to those other errors.

A. The Fuel * '

Cycle-Errors,

Intervenors'-Exceptions 8, 9,-and'10, all dealing S ,

with paragraph 13 of'the~ Licensing Board's September 23, 1977 g , e+. '

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Edecision, . point 'out' that the Licensing Board's cavalier treat-ment of ..the} fuel. cyclelissues in this ~ case cannot be justified. 9

.The most serious flaw -in the Board's itreatment of those issues is-its apparent conclusion that, since the Commission's promul-gation of the.-interim fuel cycle rule suggested that application-of..the rule micht not have major consequences in any given case, the Board could simply treat the. Commission as having held that ~the interin rule has no significance in this case.

To state that proposition, of. course, is to refute it. ' What is needed here, at the very least, is an application of the interim rule to thisicase--an application which cannot be fobbed off as'"de minimis," in view of the statements of Dow witness' Joseph Temple that any significant increase in

. fuel cycle-related costs might well lead 'Dow to abandon the Midland project ~ outright (Tr. 2419-22) and the statement of ,

the Staff (in U 57 of its Proposed-Findings) to the same effect. o In addition,'the interim fuel cycle rule.itself

~H poses serious problems. "For example, the rule rests upon the assumption that-plutonium recycling will be available,

-even-though it is now common knowledge that the Administration l

.has officially espoused a contrary position.* Application See " Remarks-of'the President on Nuclear Power Policy"

' (The : White' House , April ' 17,11977). The President said:

"JW}e will'-def er indefinitely the commercial reprocessing ,

-and recycling'ofzthe plutonium produced in U.S'. nuclear i

_poweriprograms.".

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6 of the interim rule would thus appear little more than an exercise- in f antasy--and certainly not the kind. of " appropriate

~

consideration of... unaddressed. fuel cycle issues"'specifically required by,the Court of Appeals in Aeschliman, 547 F.2d at 632.

I

- .-_ Equally serious, we submit, is-the fact that the Board's invocation of the 'nterim rule in this case was not

only mistaken but also wholly ex parte. None of the parties have been heard concerning that issue, because.the Appeal Board's Order authorizing consideration of fuel cycle issues

j. in this case, Consumers Power Co. (Midland Plant, Units 1 &

2 ) , ALAB-3 9 6, 5 NRC 1141 (1977), was not handed'down until the suspensient hearings -were all but concluded. By no

. stretch of the imagination can an ex parte, one-paragraph -

1 dismissal of the fuel cycle issue as " insignificant" be t,

l said to comply with the Court of Appeals' mandate. Accord-f-

!' ingly, the Board's conclusions concerning the fuel cycle _.

! issue must be. disregarded. That issue necessarily remains

~

an open'one--and, as we have explained, an important one.

Finally, no one has'had a chance to argue these

~

matters.. In. fact it was not until after the' Decision that the Licensing Board decided certain proprietary questions, and.Intervenors still.do not have the basic information with l which to prepare. See Consumers Powe Co..Mem. & Order, l ALAB-438, -NRC , October. 19,~1977. ,

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j _.. . ._ , _

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i B. .The "Need.For e Power"' Errors.

i Intervenors'. Exceptions 20, 32 through 34,-and 36

-challenge'the Board's treatment of the alleged.need for the

. power. to be produced by the Midland project, chiefly in paragraphs 25 and=29 of'its. September 23, 1977 decision.

The points are simple.

To begin with, the Board seriously misstated Inter-venors' position. Contrary' to the Board's claim (Decision, i I

1 39), Intervenors do not concede that there is.a need for the power to be produced by the Midland plant. To the con- ,

1

trary, Intervenors believe--as the Board itself found--that

=the Dow component of the asserted need for tne Midland plant can be filled by Dow from sources other than the . Midland

. . l project- (Decision, 1 23), and that energy conservation--a l I

subject almost completely ignored by the Board's decision-- '

has-alreTdy had, and will' continue to have, a dramatic down-ward effect on Consumers' electrical generation aeeds.  ;

Consumers' own testimony.during the suspension hearings estab-lished that large components of Consumers' demand--for example, residential space heating demand--actually declined during 197.4 ! and: 1975. - Tr. 1896-97. On September 16, 1977,-in fact,

- Consumers ' revised its demand projection downuard yet again,*

and substantially:- Consumers has concluded, for example, 4

• - 'For the' Appeal Board's convenience, a copy of Consumera

letter'to.the Licensing Board is attached hereto as -

Appendix A.

4

.] _ m e.

F

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1 that the 1979 demand projections it' offered at the hearings were overstated by fully 38.5%.

Furthermore,- testimony at the hearings completely destroyed any rational basis for Consumers' " official" 5.2%

long range growth forecast. That forecast was based on a curious concept, never-used before by Consumers, called "proba-bility encoding." In essence, that consists of simply asking Consumers' personnel how much they think demand will grow, and collating the estimates. The technique is "more or less based on entirely subjective considerations," Tr. 1920, and even Staff witness Dr. Sidney Feld agreed that "the methodology and the assumptions n:at go into {the probability encoding technique]

defy any kind of validation on the-part of anyone who wants to make a determination of how reasonable it is." Tr. 4471.* ,

In fact, evsn the group of Consumers employees who produced the " probability encoding"-long range forecast were somewhat less than enthusiastic about.its results. They concluded that _

Dr.-Feld concluded that "the probability encoding methodology, in my opinion, is not one that'I would have much confidence in;" lue also testified -that despite the extreme duniety of

~ Consumers' method, the Staff had made no evaluation of the spread of numbers generated by Consumers' method and could not say whether Consumers' identification of 5.2% growth as the "most~ probable" estimate was correct. Tr. 4472-73. In the face ofithis, the Staff support on the "need" issue is a farce.

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the:likelihoodithat the 5.2%~ prediction is correct is only.33%,. t thatlthere-is only;aiSO%. likelihood that Consumers' annual growth rate.will even equal 5%,-and that "we have more to do...in

~

perfecting our: techniques." Midland Intervenors' Group. Exhibit-ll'.

In short', a forecast based "more or less... entirely" 4

2 on subjective considerations (Tr. 1920)'which Consumers witnesses

' could not even identify (Tr. 3293-94, 3299, 3363), can hardly be said to satisfy' Consumers' burden of proving that the Midland plant is needed during any suspension period. Even worse,

'however, the " probability encoding" forecast did not expressly 1 consider either price elasticity (notwithstanding its dramatic effect onLConsumers'-demand) or any of the enargy conservation possibilities identified at pp. 17-18, 50 (b) -50 (c) , and 53 of~

the testimony.of_Intervenors' witness Dr. Timm. Tr. 3262-63, 3326.

In fact, the forecast did not'even use'the price elasticity data ~available within Consumers (Tr. 1913-16, 3279-80) , and p many of the datalinputs to the forecast are either out of'date (Tr. 1907-09, 1918, 1997,:3398) or, as regards energy conserva- -p 1

R l

tion' the~ product of sheer. subjective " judgment" (Tr . 1911, 19 9 4 ) . * '

~!

~

U x Nor'is the 5.2%~ figure yielded by the forecast supported by l 4

other studies.- - According to 2he prepared-testimony '>f-Staff ,

witness Dr. Feld: .(fol'.f Tr. '437 5) at 10, '15-16, ' 19-21, one independent lscudy projects growth'on the. combined cons'umers- ~

Detroit; Edison systen:of onlyJ 4.59% annually, without " vigorous conservation: measures;"~that' figure drops to 3.4% if Michigan

causal'va'riables are assumed to-" move at the'same rate fore-

' cast for"the nation." :ALsecond' study:also' yields a projected

, 4.65% annual; sales growth rate-for the combined' system (4.79% ,

I for; Consumers': system =alone). _-And the remaining. study, which generally approved Consumers predictions, dates from 1974 and

-is described'by the StaffLas " overly' optimistic on growth."

.Tr.f4415-16. .

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If we look at facts, as opposed to subjective .<ess-work, we also find little or no support for Consumers' 5.2%

forecast. . Consumers' senior executive economist projects a decline ~in real personal income over.the next'five years (Tr. 2015; Midland-Intervenors' Exhibit 22), and both he and the Michigan Department of Management and Budget foresee no net increase

[ in Michigan population or industrial growth in the foreseeable l

future. Midland Intervenors'. Exhibit 22; Midland Intervenors' Exhibit 36. .Throughout'its forecasting, Consumers ignored L

completely the impact of the Energy Policy and Conservation Act, l

43 U.S.C. S6341ff., and-the Federal Energy Administration's i

, industrial energy conservation program. Tr. 1990. Similarly, l

l the;important General Motors component of Consumers' industrial forecast ignores the potcatial impact of price increases on l GM energy consumption (Tr. 2007) even though GM regards itself <

as price-responsive'in that area (Midland Intervenors' Exhibit 21);' predicts a 14.66% greater energy consumption per vehicle in 1984 than in 1976, even though a greater percentage of total _.

vehici 7 duction will be automobiles, which require less L energy t. tan trucks (Tr. 1979, 1981, 1983-84) and even though r

Consumers' witness Mr. Mosely expects no increase in per-vehicle consumption (Tr. 3322-23); and completely' fails to.take into account: (1) GM's ' specific statement to Consumers that Gli i

expects to reduce.its energy consumption (Midland Intervenors' Exhibit 21--a' document.with which Co'nsumers' Mr. Bickel was not familiar, even though he was in large part responsible for .

E r.:

'9 r..

Consumers' f oreca'sts) ; (ii) the transportation industry commit-ment to the~FEA to reduce energy consumption per vehicle by 16% for 1980 (Tr. 1991) ; and. (iii) ~ the conclusion _ of Consumers' own senior economist that GM energy _ consumption will lessen, both 'overall and per vehicle, as " proportionately more cars and' trucks [tre] assembled in other daan GM's home plants

. [which] are located outside Michigan" and thus outside Consumers' l

service area. Midland'Intervenors' Exhibit 22; Tr. 2001-2006.

The weakness'of-Consumers' growth forecast is a

! serious problem:indeed. Even a slight change in the-assumptions

~

used'to generate the forecast, or in its result, can produce a substantial . change . in the ~ peak demand estimates on which- Con-sumers bases ~ its claim that the power from the Midland facility is needed during1the period of any possible suspension. For ,

example,'a 1977-1983 drop in compound annual load growth'~from L

5% to 4% . results in a decrease in 1983 sales of sors than: 7%

and an equal decrease in 1983 projected peak load (because Consumers' forecasting assumes equal growth-in sales and peak demand: Feld' Testimony,.fol. Tr. 4375, at-22). Given Consumers' historical loverestimation of load growth,* that compels - the l_ conclusion that. Consumers utterly failed to meet its burden I

l l

• For_ example, 'in 1974_ Consumers dropped entirely plans to -

construct.~another nuclear, plant,-on the. ground that-its demand projections had been grossly overstated "because of energy conservation." Consumers Power Co. (Quanicassee Units ln and 2) ,: Dkts. 50-475, 50-476, Applicant's Pe'.ition to Withdraw' Notice of Hearing (May.9, 1974) 2-5.

~

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n

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of proof on tneL"need for power" issue. Particularly given the almost total failure. of: Consumers' forecasting to consider  !

energy conservation (a. subject also addressed only in passing by _the Board) , ~ and given the position of energy conservation as "the cornerstone of the National ~ Energy Policy," The National Energy Plan, Executive Office of the President, Energy Policy

-and_ Planning-(1977), 28,- there.is no basis whatsoever for the Board's blithe ~and unexamined assumption that a need exists for the' power to be produced by the Midland plant during any suspension. As the Board _ admitted (Decision, T 36) , even the' Staff was content to assume "that there would be little or no growth on Consumers' system and that there would be internal fossil' fuel capacity to make up the loss of Midland." No other assumption is even remotely justified by the record.

i Moreover, there is no finding (and no evidence) that the plant as-designed is needed. That, after all, is the single most important reason why the matter was remanded. So to con-clude that construction must continue to foreclose alternatives, without analysis of the' myriad issues,concerning need, energy l conservation and the implications.of the environmental impact i and of the "end use" of any electricity or steam produced (all of which arguments we continue to press and all of which the Licensing Board ignored and failed to address), then all of our arguments are decided against us without our day in court. -

C. The " Cost Of Delav" Errors Intervenors' Exceptions 24 through 31 and 60 point out that the Board's " cost of delay" discussion is both irrele-vant as a matter of law and inaccurate as a matter of fact.

It is irrelevant because to refuse an otherwise warranted suspension on the sole ground of its cost

• amounts-to putting a price tag.on compliance with NEPA, which is I

. We have already shown that there is no proved need for power

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on this record. Moreover,. assuming a need, Consumers (just asithe Staff. posited) can generate or buy-any'necessary "re-placement" power during 'any period .need is asserted. .Thus, there.isino warrant-for holding that the " lights will go out."

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clearly: impermissible. We have already pointed out at length -;

that~it' is settled NEPA-law that " sunk costs" may not be' considered in undertaking; environmental analyses. .The principle is that ' costs incurred without complying with NEPA (or as . a necessary result of~NEPA's requirements) cannot be taken into l account, because - to' do 'otherwise would permit . wholesale evasion-of NELA requirements in a' manner quite similar to what Consumers hoped to accomplish here.- Coalition for Safe Nuclear Power v.

i

. MDC , 463 F.2d 954, 956 (D.C. Cir. 1972) ; Union : of Concerned l

Scientists v. AEC,. 449 F.2d 1069, 1084 n. 37 (D.C. Cir. 1974);  ;

see also Calvert Cliffs' Coord. Comm., Inc. v. AEC,.449 F.2d

. 1109, 1118-19 (D.C.1Cir. 1971), pointing out-that no.considera-tions of " administrative; difficulty," " delay," or " economic l cost" Jean justify a failure to fully comply with NEPA require-

-J ments.

That-is as true of the asserted " costs of delay" attributablef to a . suspension as it is to " sunk costs" in. their purest forr.. (Indeed, significant amounts of the " delay costs" - -

put forward by' Consumers- are " sunk costs" of precisely the sort, repeatedly. rejected'by the Court of Appeals. See Tr.

3730-31.) 'Everyone agrees,'for example, that the costs to a

utility of.the added' time in the licensing process which is e

required ~in'orderLto conduct the-review and cost-benefit analysis ~ mandated by NEPA cannot properly be taken into

i account?in performing-the cost-benefit analysis. Those are

. preciselyfthe kinds of " economic costs" rejected outright by_

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the Court of Appeals'in Calvert Cliffs, supra. Yet the costs .

of a suspension-in'this case--one which everyone agrees is necessary, other things being. equal, in order to avoid improperly-

_ prejudicing the NEPA , cost-benefit analysis mandated by the 1 Court of Appeals--are' precisely equivalent to those irrelevant costs. LHere just.as in the classic situation, the costs are

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attributable'to a delay caused by the added hearings required to comply with NEPA. To say that in the very.act of complying with'NEPA, we frustrate-its goals would be sheer illogic. Yet that_is exactly what Consumers' " delay cost" argument (adopted by the Board).does. It1says_that because the delay in con-tinued construction necessary to ensure the integrity of the NEPA' cost-benefit' analysis will result in some incremental ~

cost-additions, those cost additions may be used to defeat that very " delay"and thus impair the' integrity of the -cost- h

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benefit analysis. That sort of thing cannot e permitted. It implies that full and fair consideration of etvironmental

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matters may.be short-circuited if it proves inconvenient or .

expensive-to do what.the law requires.

In addition,.the " delay costs" to which Consumers (and the Board). point are essentially mere " costs of litiga-tion," which_ traditionally fail to rise to the dignity of i

irreparable injury. - " Mere litigation expense, even substantial and unrecoupable cost, does not constitute irreparable injury."

Renegotiation Board v. Bannercraft, 415 U.S. 1, 24 (1974), j quoted in-Consumers" Power Co.- (Midland Plant, Units 1 & 2) , ,

t:

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-x ,

I ALAB-395,~.5 NRC-772, 779 (3977).. Quite simply, delaying the issuance of a construction permit until NEPA has been' complied' with has never been thought to give risu to claims of injury through " delay costs." Delaying continued construction while environmental issues are determined stands on exactly the same footing.

Furthermore, the Board's analysis of delay c'osts cannot-be defended on its own factual' merits. To the' extent

.that' it relies on'the Staff's support of Consumers' position ,

.(see Decision, 1 32), the Board is of course on extremely shaky ground in view of the Staff's complete failure-to under-take the kind of aggressive probing of the issues mandated by the Appeal Board in Florida Power & Light Co., supra.

Also, the Board seems deliberately to have opted for whichever s

view of the situation would most seriously increase the alleged delay costs.-'Thus it refused even to' consider.the possibility that the remanded hearings will last for nine months or less (as opposed'to one and a quarter years), notwithstanding-the ~

substantial. record which has already been developed and not-withstanding Consumersown belief (evident from its September 30,.197.7' submission to the: Board) that the remanded hearings can'be concluded'in substantially less than nine months.

Similarly, the Board's' concern that delays attribu-

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table to suspension would have an adverse effect on Dow

'ignor as - both. Dow's ' stated willingness to wait until 1984--

one ' and ia half years ' longer than would be needed' even with a

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3;- .

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,m --

L l '15-month suspension--for completion of the Midland plant ~

l (Tr. 2515, 2546, 2672, 2718), and the fact that Dow~ is willing to wait until roughly two years from now-(or twice as long as l: .the parties estimate will be needed to complete the remanded

hearings) before irrevocably committing itself to either Midland l

l: or a Dow alternate. Tr. 2323. (Nor, Dow tells us,_will the I

delay prejudice its choice

the cost of its alternate plant l is-not-likely'to rise significantly in the interim.- Tr. 2405-06,- H 2732, 2737-39.) And the Board's conclusion that a suspension l would result in an increase in overall plant costs (Decision, 1 31) ignores the fact--which we have previously pointed out, see page 15, supra--that the Board's own 11 32 and 33 show l

l that_any genuine increase in plant cost as a result of suspen-

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sion will be minimal. -

l In addition, the Board's' conclusion that there is 1 i

4 r

"no reason.to dispute"-Consumers' projected increares in the ~

)

cost of nuclear fuel unaccountably overlooks the fact that' l ~

the Board itself found (Decision, 4 43) that the Staff dis-putes those.very-costs. The Board's reference to loss of jobs as a " delay _ cost" -(Decision, 1 37) omits to mention that i-Consumers' witness on that subject admitted during cross-examination (by the: Board.as well as by Intervenors) that he I

'was indulging in sheer guesswork. Tr. 3746-48, 3913-19, l

3739-40). And the Board's entire discussion of delay costs is fatally flawed'by its consistent assumption that the only possible outcome of the' remanded hearings will be a decision j

. , ,-e ,

to go ahead with the Midland project in its present form.

The Board'itself pointed out, however (Decision, 1 24) , . that substantial design. modifications may have to be undertaken i

in order to avoid serious damage to "the values that NEPA protects." But to the extent that turns out to be true--i.e. ,

to the extent that the upshot of the remanded hearings is a decision either'not to build the Midland plant at all, or to build it in.some modified form--a suspension of construction in the interim will'save money, by avoiding expenditures on construction which will ultimately have to be scrapped or modified. To the~ extent that " delay. costs" are relevant at

)

.all, that potential saving, as well as possible costs, must s be considered in reaching a-suspension decision. Otherwise, we deal only with one side of the coin--even thougn the Board explicitly. concluded (Decision, 1 8) that the remanded hearings are a proceeding-in which "any party," including Intervenors; "has a substantial chance of success."

D. The Errors In Discussing Alternatives To The Midland Project.

h

)

1 Intervenors' Exceptions 36, 38 through 47, 49, and j l

70 deal with the. Board's discussion of possible alternatives g 1

to .tdua Midland project, contained primarily in paragraphs 41 through 66:of-its September 23, 1977 Decision. In addition, Intervenors' Exceptions 14 through 19, though they deal with certain factual inaccuracies in the Board's discussion of .

"ll the Dow-Consumers dispute,'should also be considered here,

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because both the feasibilityLof:the Midland project in its .

present formcand:the er.nsideration of alternatives.to itsis

'. inevitably 'affected by t.Te Dow dispute. .After all, if Dow

- decides to go it alone or'NEPA requires that'it do so--possi--

f bilities;which, as the.Poard found,:are.very much ali7e on the-basis'of;the:present record--alternatives to.the'Midl.tnd project will become-unavoidable for practical purposes.

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Accordingly, we begin with Exceptions 14 thro'2gh-

19. They simply point out'that the Board's Findings-of Fact

'concerning the;Dow-Consumera relationship are at best overly optimistic.- 'For, example, it is not accurate-to say that-the

" economic' advantage" of the Midland project to Dow is a significant, or indeed ang,. factor in Dow's present-thinking; to-the contrary, that economic advantage has now completely.

- disappeared. Dow's own projections (Midland Intervenors' i

- Exhibit 26) and_the testimony _of'Dow Witnesses (Tr. 2285-91,- )

2322, 2707)- show'that at the 15%' rate of return which Dow regards as: reasonable (Tr. 2408), and in. light of the presently .

available' facts concerning-the projected cost of the Midland H

project,-s-itLis more advantageous for Dow to build its own

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i steam and electricity facilities than to continue support Lof the Midland; project--particularly if,.as Consumers has demanded (see p. 18,x supra), that support necessarily includes.  !

an' interest free :$400 'million loan, or ifinuclear fuel cost

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cincreases are' considered. See Tr. 2405-2411, 2417-22, i

. 2456-57,i2492,.2553-55. It is extremely important to bear- 1 l

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. c .s Ein mind that Dow's reluctant and pro forma " official" support-

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for the Midland project'is dictated not by any economic .

advantage of the Midland project, but rather primarily (if not. solely) by Consumers' threats of multi-million dollar. ,

i litigation if Dow should-. withdraw from the project--threats described by~Dow's counsel as " pretty damn'close to blackmail."

i Tr. 2311, 2494,'2699, 2707-09, 2714-16; Midland Intervenors'  !

Exhibit 25.

Similarly, the Board's discusr _a of the Dow situation should have included the facts that Dow's " support" for the Midland project is-so tenuous that even the Staff concluded l 4

that 'it might disappear entirely when Dow takes present nuclear l fuel cost estimates into account- (Staff Proposed Findings, 1 57),

and that both Dow witnesses agreed that Dow would refuse to sign the Dow-Consumers' contracts, based on its unhacov exnerience,

-if it were able to do so.*~ Tr. 405-06, 2288-89, 2311-12, 2322, 2707. .The analysis on which that position rests has not been i

. questioned by the Operating Board of Dow U.S.A. Tr. 409-10, 460, 2299-2301, 2309, 2311-12, 2494-95, 2699, 2707-09. It is hardly-surprising, then, either that Dow is " keeping its options open" (as the Board admits: Decision, 1 22) or that (as the Board f ailed to mention) one of those " options," which 4

Dow regards as. thoroughly " realistic," is the option of with-

. drawing completely from the Midland project and suing Consumers for breach of contract. Tr. 2432, 2516, 2522, 2524, 2730.

• - Itis that fact--not the mere existence-of the contracts, .

• - however: uneconomic they may be--which is controlling for NEPA purposes. .See p. 19n., supra.

. n -

Furthermore, the Board's analysis completely' fails' -a to mention the-extraordinary;"no win" position into which Consumers has maneuvered itself in.its dealings with Dow.

In its ongoing. negotiations.with Consumers, Dow has demanded

- a' number of revisions in the Dow-Consumers. contracts, with-out the granting.of which'the Midland project will become even more economically disadvantageous to Dow (and the like-

- - -lihood of Dow's continued participation in the project will

. become correspondingly even more tenuous). Temple Testimony, p.:7; Tr. 2695-96, 2356-57,.2384; Licens#ng Board Order of June 15, 1977, and 3xhibits thereto. On che other hand,

, . Consumers has recognized-that if it accedes to Dow's demands the effect will be to seriously worsen the overall cost-e benefit balance for the Midland project. .Tr. 439-444, 2413-14,

. 2456-59, 2466,.2718-19.- In short, whether the contract revisions demanded by Dow are accepted or not, there will be

-a negative impact.on the'already shaky cost-benefit posture of the. Midland project. -

-All of these things mean that continued Dow partici-pation in the Midland project must be regarded not only as-

" speculative".but as downright unlikely unless, at a minimum, Consumers agrees to the contract changes Dow has demanded. But if those. changes.are accepted, the viability of the Midland project.will' suffer, just as it will if they are rejected.

However we.look ac it, then, we cannot avoid the conclusion t

ee be m - < w + c v ra man u ,m-~

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-that1possible. alternatives to the Midland project.must be_

explored very. seriously._indeed. :Under the circumstances, it is'not onlylpossible;but probable that the. continuously 1

developing ~ events?will confront us with a choice between one of those alternatives onithe one hand, and a $2 billion white elephant on the other-hand.

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. When we turn: to the Board's discussion of alterna-tives, then,;we.must keep!those facts in mind. We must also, of course, begin by freeing the discussion of alternatives from-the incubus of " sunk costs" the Board inflicted upon it,-

a matter which has already been dealt with 'in Part:I of this Brief. But when sunk ' costs are removed from the discussion,-

we immediately find that at least two of the possible alter-native. -that suggested by Dow, and that proposed by Intervenors--

are in fact-cheaper than the Midland. project in its present form, on the basis of Dow's own studies-(Midland Intervenors'-

Exhibit 26) and the Board's own~ findings . (Decision, 11 62-65).

That fact 1becomes even more striking when we consider that -

l the Board's entire discussion of alternatives was based on the incorrect and unproven assumption that there is a need for the a 1

full' amount of power the Midland - plant is expected to pro-l duce--an _ assumption undercut'not only_ by Consumers ' own

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~ repasted downward-revisions of its demand figures (see Appendix- l

.1 A h4reto, noting' inter alia a 38.5% drop-in projected 1979 l demand),~but:also-by.a similar downward revision of Dow's l

. projected' demand:figuresocontained in Dow's Revised Answers -

to IntervenorsSecond Set of-Interrogatories (received by l 1

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.us"on_ october 17, 1977). If.there are cheaper alternatives T I' .to the' Midland' project even on7 t he assumption that the ehtire

. steam and electrical output of the project must be; replaced',

then a fortiori-tho'se alternatives are preferable when.we p 2take into account the fact, discussed at-pp. 29-34 , supra, that Consumers' power needs are at best significantly over-stated.

When we add to these points the fact that the Board's analysis of alternatives significantly understated _the

. probable cost of the. Midland project (see page 16n., supra) and significantly' overstated coal costs-in-analyzing coal-fired alternatives to the Midland project,* the conclusion

^

is inescapable that on this record, any economic advantage, l -- the Midland project may once have had has long:since been l -

l~ swallowed up'by.the huge and continuing cost increases for-tdue project.

Most startling of'all, however, is the_ fact that

[ -even onfthe basis of-the figures used by the Board, and even ~

considering " sunk costs," the-cost differences between the

!.

• The Board seems.to:have adoptedIConsumers' and/or the Staff's l coal. cost figures. See Decision, 11'54,57. But those

!? figures 'areL not.only substantially higher than those l selected by Dow on the basis of its-lengthyz experience.with coal-fired plants-(and after. reviewing Consumers' figures andJconcluding that they were' overstated), see:Tr.'2293-95,

-they are-fully 1twice'as high as the average of low-sulphur

,  : coal cost estimates in recent studies identified by Inter-venors' witness Dr. Timm. See Tr. 6130-6131and 1 32.of Dr..,Timm's Rebuttal-Affidavit.- ThefStaff itself-presented I itestimony concerningitwo; Federal Government studies which -

project a-drop-in real coal" costs between 1975 and 1980,

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and' suggested that factors

favoring a-' cost increase and those-Lf avoring -~a ? cost decrease "would balance each other out."

sTr. ~ 4538.:

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nn. _ -44 , . . .

, . , . . . _, ,,, . . _ m.__... .J,c , , . . _ . . . _ . , , , _ _ , _ . - ,,

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9 Midland project.and its alternatives range-from somewhat .;

less than 75% (Decision, .1 41,10th sentence) . to a maximum

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of approximately 16% (1 49, last two. sentences). Those cost

- differences, of course, are inflated and unduly ' favor the Midland project, for the reasons discussed in.this Brief.

1 i

But even taking them as they stand, on'the basis of this record it cannot be concluded that cost differences.of that magnitude ~are so great as-to require us to. throw up our u i

I f hands in' despair and' abandon our scrutiny of the Midland '

project.. Yet that is what the Board would have us do, by l concluding (1.66) that "all other-alternatives-have now been i-

! foreclosed" because of the sunk costs' Consumers has incurred.

E.- The ACRS And- l QA-QC Errors. .

e l

l Paragraphs 53. through 57 of Intervenors' Exceptions l'

deal with the Board's discussion (in 11'67 through 69 of its  ;

Decision) of the ACRS-and QA-QC issues in this case.- We have l

! . -i previously pointed out that the Board's ACRS discussion omits to note that on January 28, 1977, the Board itself advised the l 1

! ACRS that its purported " clarification" of the fatally obscure l . .

L Midland Report. rejected by-the Court of. Appeals was woefully

.short of the mark. In: view of that fact,-and the ACRS' subse-quent: refusal . to ' submit any further explanation of the

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f l- original Report,t it'is absolutely clear that as'oftnc,,, Lhe ACRS has not complied with the Court.of Appeals'

. ruling.

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JWe have also:previously shown that'the Commission 2

? Staff has^ admitted its total ignorance of-the meaning of the ACRS Report,;and'its complete-inability even to estimate how-much it will cost to give "due considerat'on" i to the "other problems" opaquely referred to in-the ACRS Report.

Tr. 4217-21,-4259-61, 4265-66.. That means that the ambiguity and opacity'of the Report not only prevents' full exploration of safetyfissues (as the Appeal Board suggested in Consumers Power Co. (Midland Plant,, Units 1 & 2) , ALAB-395, 5 NRC 772, 779 n.-24 (1977)), but also prevents a proper NEPA cost-benefit analysis by - depriving - us of the means wherewith- to assess the potentially significant cost impact of resolving the unidentified "other problems." Certainly we cannot rely, as the Board did (Decision,1 67) on a Staff claim that the problems are insignificant. Quite apart from the improbability y of the Staff's position on its face, see Tennessee valley 1

Authority l(H 2rtsville Nuclear Plant), LBP-77-28, 5 NRC 1081, 1119  !

(1977), the Appeal Board has recently noted the difficulty .

of taking Staff conclusions seriously when the Staff admits it'does not understand the subject matter. Consolidited Edison Co.,

et al. (Indian' Point, Units 1,:2, and .3) , ALAB-436, 5 NRC (Oct. 12,fl977),. slip op. at 59.

In lig_t of those facts, it will not do to postpone the entire ACRS question until the' operating license stage,

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which-is what the Board undertakes to do-(Decision, 1 68).

-Such a practice not only is completely unsatisfactory in terms ,

of'the' Commission's regulatory responsibilities, Tennessee Vallev-Authorit'y (Hartsville Nuclear Plant), LBP-77 28, 5 NRC

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e 1081, 1118 (1977), but~also isJdirectly contrary _to the ruling

~

of-the Court'of Appeals. The Court of Appeals did not authorize'the Commission to ignore the ACRS issue until the operating license stage. To the contrary, it directed the l 1

Commission to obtain clarification of the ACRS Report now, and as a-part of the remanded construction permit hearings required by its ruling. -That is only logical, since the Court of Appeals is well aware that " deferring" problems until the operating license stage is tantamount to sweeping them under the rug completely. See Calvert Cliffs' Coord. Comm.,

Inc. v. AEC, 449 F.2d 1109, 1128 (D.C. Cir. 1971) ; Union of Concerned Scientists 1. AEC, 499 F.2d 1069, 1078 (D.C. Cir.

1974).

Furthermore, the Board's attempted deferral of the ACRS issue makes no sense. In effect, the Board asserts

~

l that it does not wish to obtain clarification of the'ACRS j letter now unless it finds "some indication of a problem that

-will createEserious safety concerns." (Decision, 1 68'.) l

-1 But the,only way to find out whether such.a problem exists is to obtain clarification'of the ACRS Report. Thus the Board

. proceeds ~in a circle: .it is willing to seek clarification of.

the Report, but only if-the. Report is somehow clarified beforehand (so that " serious safety concerns" can bc located).

That cannot be. If serious safety concerns do exist (and even the Board.is unwilling to say outright that they do not--a reticence compelled by the-admitted and uncorrected obscurity

_47_

... - - . . . -- =.

.3 x

'm - = .,s of:the ACRS Report), it is our obligation to search them out _

and correct them now. 1But we cannot tell whether such problems

- t exist unlessl we look for them--which the Board refuses to do.

We intend no disrespect t'o the ' Board; but we are compelled to 'r point out that its' reasoning all too closely resembles Catch-22.*

The' Board's' flat refusal to face up to the serious -

- QA-QC problems demonstrated on this record (see IE' Inspection Report Nos. 050 '329/76-05 (Aug . 10, .197 6) ; 050-329/76-04 (July 2, 1976) ; 050-329/76-08 (Oct. ' 18, .197 6) ; 050-330/77-32 l

1 through 06; 050-329/77-03; Region III letter to Consumers, j April 29, 1977) is equally unjustifiable . It is elementary j that-QA-QC requirements are the Commission's primary line of defense against safety problems (see AEC Doc. No. WASH-1240 i

(1973), at pages 2-lff., 3-19), and that full compliance with all-QA-QC regulations is essenc.al. Vermont Yankee Nuclear Power Corp., ALAB-124, 6 AEC 358, 362 (1973). In this very case, . .

the Appeal Board has already had occasion to reject a Licensing

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Board's refusal to face up to Consumers' lamentable QA-QC record.

Consumers Power Co. (Midland Plant,. Units 1 & 2) , ALAB-106, 6 AEC-182, 184-85 (1973). Quite recently, another Appeal Board has reaffirmed the obligation of each~ Licensing Board to deal

-wi thJQA-QC problems as they occur. Duquesne Light Co. (Beaver Valley Power Station, Unit 1) , ' ALAB-408, 5 NRC 1383, 1386-87 -(1977).

"There was only one. catch and that was Catch-22, which specified that a concern for one's own-safety in the face of dangers-that were real and immediate was the process of a rational mind. Orr

.was crazy and cculd be grounded. -All he had to do was ask; and' as?soon as he did, he would no: longer be crazy and would~have to fly more. missions.: Orr would be crazy to fly more missions and sane" if he - didn' t, J but if_ he was sane he- had to fly them.

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If he flew.them he_was crazy and.didn't have to; but if he didn't want lto he vas isane and had to.=" J. HELLER, CATCH-22 (Dell-

. Books ed. 1961), .47.

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. ,, , s y In'this. case,/ Consumers' QA-QC. problems'are not--only .

matters.of: extreme importance-from a safety point of view,

- but.also--and.by Consumers' own~ admission--have'a very. serious

' effect on-the cost of the Midland project and-thus on the

- NEPA' cost-benefit analysis. JSee Midland Intervenors' Exhibit 3; Tr.:-10541 56,'1066-68, ll38. Under those circumstances, the i

Board's cavalier refusal even to. discuss the QA-QC issues is '

completely unjustifiable.  !

.i F. Other Matters. l l

10 few points remain; while they-do not require ex- l o

+

tended discussion, we do not. waive them. They include Intervenors' R 1

Exceptions.1 and 13, both pointing out that the. Board in--

accurately described parts of the Court of Appeals' ruling; Intervenors' Exception 4, noting.that the Board omitted to 3 i

mention the' undisputed fact : (discussed previously in this 1'

1 Brief) . that Consumers had deliberately raced ahead with con-j i

struction in an attempt to bury the remanded-hearings under _,

. an avalanche of " sunk costs;"-Intervenors' Exception-11, noting. '

that Dow witnesses agreed'on cross-examination that Consumers  ;

had'drafteditheirrtestimony in a dishonest and misleading -

fashio'n (see Tr. 2307, 2379-82);- Intervenors' Exception 12,  !

correcting the Boards inaccurate characterization of the-Commission's April 11,-1974 ex parteLorder'in this. case i l

f(Consumers Power Co. [ Midland Plant,tinits'l & 2] , CLI-74-15, . ]

~ 7JAEC 3111(1974)); and Intervenors' Exception 23,-pointing out I

.I -

that underethe'circumstancesLof'this case (discussed else-  !

l

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.where'in this Brief) it'is totally inaccurate to claim that o

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continued construction will not have adverse environmental effects. These points do not require ~ discussion in1 addition

. to what we have already said elsewhere in this Brief.

CONCLUSION The facts of this case painfully demonstrate what

~

happens when NEPA is ignored. We have here a project doubtful

, to begin with, whose cost has skyrocketed seven-fold since it was first.(albeit improperly) authorized, whose primary purpose will, in all probability, never be fulfilled, whose viability in the eyes of its chief " beneficiary" (Dow Chemical i Company) exists solely because of' threatened litigation--which nevertheless lurches on, snowballing costs as it goes, to the point- at which the Licensing Board felt unable to c. .ll .

even a temporary halt.

The picture-would almost be laughable if the circum-stances were not so tragic. We cannot believe, and we do not think the Appeal Board will accept the~ conclusion, that the-Commission is powerless to exercise its regulatory mandate simply because Consumers has spent itself into a fait accompli.

That conclusion is particularly intolerable when the central premise upon'which it rests-(that " sunk costs" can override evidence and substitute for common sense) was flatly and specifically rejected by the Court of Appeals in this very case.

L

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. Construction of the Midland plant must be: halted

. 'immediately, -if~the Commission's. regulatory powers.are to be -

i- treated by utilities as anything'other than a joke. Construc-tion.should have been haltet long ago, as a matter of law.

Both in the context of our motion for an immediate stay

. pending-the--Appeal-Board's decision here and in the context i

of-the serious errors in the Licensing Board's decision, we urge the Appeal Board promptly.to halt construction, and'

after considering.;the points made in this Brief to extend f-thatihalt.until the conclusion of the remanded hcarings.*

1 A propergregard for the. Commission's preservation of its own 'l authority over nuclear projects--let alone the commands of i

NEPA.and th_ uling-of the Court of-Appeals--requires no less.

Respectfully submitted, p.

( i B

-/

N /

/, s N(

'- Li g ( c - , it N Counsel for All Intervenors Other- ,

4 Tnan Dow" Chemical Company.

) .

MYRON-M.. CHERRY

. PETER A. FLYNN:

One-IBM Pla:a, Suite 4501 j -

Chicago,' Illinois 60611

-(312)'565-1177 a

-* We also ask the Appeal Board to consider, along with the

record,:our detailed Proposed Findings of Fact tendered 4

- to;the Licensing Board.under.date of. July 1, 1977.:

4 51- -

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