ML20071P765

Suppl to 830318 Motion to Admit New Contention on Util Financial Qualifications.Adequate Grounds for Waiver of Rule of Financial Qualifications Review Established & Good Cause Shown for Late Filing

ML20071P765
Person / Time
Site:	South Texas
Issue date:	05/30/1983
From:	Sinkin L Citizens Concerned About Nuclear Power, INC.
To:	Atomic Safety and Licensing Board Panel
Shared Package
ML20071P753	List: ML20071P745 ML20071P765
References
NUDOCS 8306080155
Download: ML20071P765 (12)

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UNITED-STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

'83 #1 -6 A11 :36 EEERSE IbE SIQUlg S6EEIY 6ND LICEU518@ BQ6BD

'In the Matter of ., .

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HOUSTON LIGHTING AND POWER ( Docket Nos. 50-498 OL COMPANY, ET BLi. ) 50-499 OL

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(S6uth' Texas Project, )

Units 1 and .:2) ( ,

CITIZENS' CONCERNED ABOUT1 NUCLEAR POWER (CCANP)

SUPPLEMENT TO MARCH 18, 1983 MOTION EOS UEW GQUIEUI1OU'

'"I.' INTRODUCTION' On March'18, 1983, ; CC ANP ' f il'ed its' motion seeking'edmission of' 'anew contenti on 'concerning Houston Lighting and Power Company's' lack of' financial qualifications to saf ely construct and- operate"I the South ' Texas Nuclear Proj ect. The motion also sought 'a waiver of 10 C . F .- R . Section 50.33(4), exempting regul' ated ' ' electric ~ ut i l i t'i e's 'from financial qual i f i cati ons

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' On~ May "11,' 1.983,the Atomic Safety and' Licensing Board issued: its ' Memorandum and-Ceder permitting CCANP to respond to

.the Applicant's'and NRC Staff's opposition to the ' motion. This supplement is pursuant to that Memorandum'and Order.

'CCANP wishes-to make clear-in the record that CCANP objects to 'the rule itself. CCANP fully expects the federal courts to strike' down' the ' rule in Ugw England ggglitign gn Ngclegt

'E91LWti90 V1 UUCleEC Be991E19CY ggmmigsign, No. 82-1581 (D.C.

Cir. 1982). Should the rule be struck down, there would be no need forEa waiver under 10 C.F.R. Section 2.758; the contention would be admissible as it stands. CCANP realizes that 'this 8306080155 830602 PDR ADOCK 05000498 1 O PDR

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proceeding is not the appropriate forum to challenge the rule, ,

Therefore, CCANP argues, as 1E the rule were valid, that special circumstances- :exi st which warrant admitting the March 18, 1983 '

contention ~on financial qualifications to this proceeding.

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II. DISCUSSION -

The o'b'jections to CCANP's motion for a-new contention fall

, . -into e thr'ee 'categori'es:: alleged failure to -show special circumstances . warranting an -exception to the rule; alleged w

failure Lto" meet- the 'five part balancing test f or- late cr contentions; and failure- to file-the affidavit required by 10 ,

C.F.R. Section.2.758.

A. Grounds for Waiver of the Rule-

'The -NRC-Staff claims that CCANP must demonstrate a' factual link:between-HL&P's-financial qualifications and decreased safety at> STNP- injorder to show'special circumstances warranting an.

cxception to 'the -current _ -financi al -qualifications rul e. Staff.at'

-8. . Thi's claim is based on an erroneous interpretation of the

'bacis 'for'the rule change.

i The' Commission did:not repudiate -the' position that_there could'be a link between. safety and f i nanci al H cbility,- 'as'the Staff seems to-think. _ Staff at 7. Instead, the Commission .found' that the existing financial qualifications l review did.not help identify health and safety, concerns regarding

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utility operated nuclear power plants because prudently managed, regulated utilities are almost guaranteed sufficient revenues to enable them to meet their financi al needs; in other words, the question of a link between safety and financial difficulty would never come up-because the utility wou(d never be in f i nanci al difficulty. 46-Fed. Reg. 41788.

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The- Commi ssi on - noted. that. most utilities . responded to

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. financial :dif ficulties? by cancelling or postponing their. plants - 2 k " actions. not' inimical to public he.alth or safety."'47 Fede Reg.

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213751~. A utility that persistedLin the. construction of a nucleer plant. even when 4he ; cancellation -of, the . plant .is call ed- f or - by the- economic .J.condi ti ons . f acing the utility would be acting outside- .the-normelnboundsz the Commission ~ enpected to be . observed -

by .such utilities. CCANP contends'thatLcurrent conditions. call for the cancellation ofcSTNP, but. Houston Lighting and Power-is determined 'to . continue: ther proj ects for'ressons of its own. y s Furthermore, if - the Commission. hed .f ound that; there . was ho link between. financial qualifications and saf ety, it kould have

-eliminated the7 review.'for all applicants. Instead, the Commission retained :thelreview ',f or non-utility applicants having neither "a c.

. regulated'l status ;nor". authority- to set their -own rates. for i

nel ectric , servi ce. ". 46 Fed. ! Reg. : 41788. -

There! isi -also the lengthy discussion: of, the Commission's reasons forYpressuring;el~ectric^ utilities to be able tor, finance

[their. activities. 461 Fed.-Reg. 41788. -

Finally,. even while adopting the rule, the Commission made

~it-  : clear. that under cer.tain circumstances, financial

! quali f i c ati ons review would be appropriate, either under the general power of the Commission to compel additional information or through a 10 C.F.R. Section 2. 758 waiver of the new rule.

Such an exception to.the rule is appropriate when the

. general. . presumption underlying the rule is no longer correct or t

the . rule should not- be applied . in e pgrticul ar case because in the- particular . case- the- rule- does not s'er ve its intended

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-CCANP contends' that.the ability of Houston Lignting ann Power.. t o. . i r ai s e. the' necessary funds to safely complete and

"~. operate:STNP is now in question. HLLP will have to seek money in j

'c[n finvestment ! community which no longer f avors inve.stment in F .nucleabi. cower plants.- The imminent default at WPPSS. the j

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,cance11ati on; of' nuclear power plants throughout the nation. the 3 poor: . operating; record .of. nuclear plants,. and numerous other factors :have combined to create a perception in the. investment e community . .that-nuclear. plants represent an unacceptable risk as e

. Jan<vinvestment. g The investment climate is deteri orating steadily 2

s and i s"Joon:the vergerof,a_ crisis which threatens HL&P's ability'to s

teisei-the.. capital;to safely complete and operate STNP.- CCANP

contends thatithe. deterioration creates conditions which did not i.

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cpply at. th'e tim _e the. rule was adopted, 'that the . f i nanci al adver, sit 9,Yfacing nucl' ear utilities in the. national marketplace forsecubitiesLis. qualitatively different from the; difficulties existing Lati thektime./the cCommission adopted _.the rule for which J

- CCANP, seeks.a-waiver.

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CCANP;.further contends that;the consequences..of the recent

!. . i Public' Utility Commission's sanctions f or mismanagement,and the b City. of . Austin suit-for e refund of its investment in STNF and

- 5.'other-remedies will make it almost impossible f or HL&P to finance

- Ethe-construction and operation of STNP. CCANP Motion 3-10.

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1. At the most recent stockholder meeting of Houston Industries,

'th,e1 . parent : comp any of HL6F, a stockholder with 1,000- shares

, ;i n' trod uc ed s' resolution calling for STNP to be shut down while

. . ,n user ouc independent . revi ews were cgnducted. The resolution received appr'o::imately 3 million votes representing almost 7% of

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. The Applicants -argue that the PUC ' actioris anc the Austin lawsuit do not constitute-special circumstances warrenting a Y

waivet of the rule because the Commission "enplicitly . addressed" _

HLLP's financial circumstances i rs the cohdents to the ' rule change. App. at 5. The - Commi csi on's commentp, ,however, were made almost a year before either-the FUC-rulinp or the 1sw- suitt the comments cannot' possibly be viewec as enco.npassir.g the potenti al effects of'these two new events.

'In addition, the Commi ssi on 's presumption that its inspection and enforcement efforts will be sufficient to-protect the public health and saf ety i s not warranted i n thi s case.

First of all, the essumption mekes no sense. A proceeding on the application for an operating license is predictive. One of the best predicting i n qui ri es is the enforcement history of ar.

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, -applicant- (assuming for the moment a competer,t and honest NFsC cnforcement effort). While NRC enforcement efforts might qatch and correct safety violations resulting from financisi pressures, the : ASLB' certainl y; should look closel y at such vi ol ati ons ar.d t he linkage- to financing revealed by such'- violati ons and determi ne whether the : viol ations and . financi al outicok for the. opplicant indicate- a likelihood-that.similar viol ations will occur- during

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the operating phase. The presence of an ef f ective NRC inspecti on cnd enforcement effort is irrelevant to deciding what should be

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the -votes cast. -Since 13% of the shares voti ng abstained, management received only 80% of the vote Mor their/ position in opposi ti on . to the resolution. Given the usual ab i l i.ty of corporate management to control 95% or more of the votes on a r esoluti on such as this one, the vote g at the Houston Industries meeting reflects a remarkably high lack of confidence in FTNP among Houston Industries-stockholders.

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. considered fn i an . operati ng license proceeding.

This particul ar assumption reveals part of the problem the

.NRC : created f or itsel f with this rule. Logics 11y, the NRC coula argue' there- -is- no need to i nqui re into the technical

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an: applicant or into'the character of an applicant because -if technical competence or character ar e

lacking, I&E will catchethe violations ~which result. With this reasoning,- -there' would be precious little for an ASLB to

. consider, ' except' perhaos ~the question of whether the NRC inspection effortLwas' adequate.

Putting =the rational'ity of- .the assumption aside, the assumption: cannot be made in this~ proceedina, Bcth the Applicants and'-the Staf f ' ' cite' the~'Commi ssi on's comments with respect to inspection ' efforts at' South' Texas as' supporting

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that' inspection and enforcement-efforts will be adequate. App.lat

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• 61, Staff'at 1 10.

'on CC'ANP' canonly conclude.that the occasion of tne Cbmmissi on's 1 ' comments, the-NRC Staff did'not adequately ~ inform

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.the- Commission. or deliberatel y misl ed the Commission' as tc/ -the

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effectiveness ='of the'NRC inspectio'n and enforcem'ent effort at CEU,'

STNP.' Withodt the pressure brought'on'the'NRC by CCANP'and both- on their own andfin cooperation with national media and the

FBI, the Director ~of, Inspection and Enforcement would never have c

-ordered a -special investigation to be conducted primarily by

~ inspectors- f rom outside Region IV, a'special investigation which

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resulted in the Order to Show'Cause of April 1980.

One need~ lock no further than Staft Exhibit 32 in Phase I of

'this proceeding wherein the conclusion is reached that the 6

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. Appl i c ant s , er e n successf ul'l y preventing, acts of intimidation cired I atLOC inspectors.' - Eteff Ex. 32 st.7 (numbered 3). Item 1. This  !

investigation took place in September 1979,.two' months before the

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continuing outside . ,invesjidation :found extensive . evidence of I

jy intimidation.of GC inspectors. ,

if the.-Poard- so-l desires.- -

CCANP can produce extensive .

evidence .regardi ng the r comoromi-sed gi nvestigati on of the -Hayward ' .!

Tyler.: Pump., Company.:-which has: already led to a number 'of  ;,

Conpr.essional h e ar i n g s'. .an d . a call'for disciplinar.ycaction to ,be 1taken , against: top personnel at the' Region IV NRC, office. CCANP ncan ..al so.. Jprovide , the. . Board wi th - extensi ve. . documentati on of incompetence-.b' ordering.on corruption!'in the: NRC investigations

% . a surrcunding .the Comanche. Peak pr oj ect , another Region IV responsiblity. . [Rather t-t han burden.J t'hi s supplement with hundreds u ,' of;hagesof exhibits, however,'CCANP merely' argues thet there is

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fat (cleast :a ;;tti_me ,-iaci_e : case; f rom , what the Boerd already knows to .

1 conclude that . Region ,IV may not , on el1, occasions - be .the most ,

ef.fective of. watchdogs. . _

. CCA!JP. contends that financial ~ pressure will increase HL&P?s

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- propensity .f or. ' f ailing to - ccnf orm lto NRC rul es and regulations. ~-l 1 If f the,,ASLB agrees, the ultimete; deci sion on .li censing might ;well- ,

.be effected. .iessuming atguendo._that the Board has not alresdy decided on flicense: . denial based on the _ record in Fnese I). ,

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Financial qualifications - review . i s necessery in order to  ;

' determine whether such . violation will, be likely to occur, , so that

-appropriate _ action. includina.deniel of the operating license.

meysbe teken to3 protect public health agd safety. A waiver should be granted under the existing circumstances.  ;

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O Jo f B. (Factors . Favoring Admiscion rf ,the Ccnt ent i en

,' Both- the Applicants and the Staff argue.the o.- contention

'should..not;be admitted because CCANP har not met the'five factor balancing ~ test'of 101: C. F . R. .5ection 2.71Afe)(1). CCANP. contends

,however t .that' the balancing of the t ive f ectors weighs in f avor

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, of. admitting the.new. contention.

- . i .:: The contention was filed on time,  ;

Bothithe-Sta*f.snd:the Applicants argue that the information l upon which the contention ,is based is not new inf ormation. .First.

they- ~ argue that.the general economic conditions for the nuclear industry heve.beens known.for some time.

Second, they ergue that -

~ CCANP - should. heve attempted. or has at teopted to raise - t he variouc .

- elements supporting the contention bef ore.

CCANP! contends-that while the general economic conditio.ns

'4cr nuclear investment deteriorated over the last five yearc,pthe detericration- is accelerating .and a ccisis is imminents a; Furthermore, ;the evidence supports a prediction-that the general economic" climate - for: nuclear investment will continue to

' deteriorate. As.arqued above, CCANP contends these conditions are Equalitatively_-different from those considered by the Commission.

.They. are al so qualitatively. di f f erent from anythino the nuclesr i i

industry and their captive utilities have ever e>:perienced. lhis

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qual i tati ve difference constitutes part of the speciel circumstances which: led to the filing of the new contention.

The, NRC; Staff makes the rather disingenuous argument. that t-  :- ,

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!. because CCANP knew in November 1981 that the City of Austin had

-hired lawyers to prepare litigation agqinst HLSP. CCANP should i

I. '.have raised the litigation / financial qualifications issue at that

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• time. Sta4f at 3. note 3. But. of coursa, hi- Ing a lewyer core not guarantee a su2t wall be filec and until the suit is filen there can be only the neost speculative attempt to assess thc-remedy the pl ai nti f f will seek or the pctential damage to the defendant. Had CCANP tried to r&ise the potential law suit as impacting the financi al qualifications of HL&P in November 19Ei, the NRC.Steff would surely have argued prematurity and a failure to show adecuate reason f or wai ver of the rule.

Similarly the NRC Staf f would - hold- CCANP responsible f or not rai si ng the PUC heering as an issue when it commenced, as opposed te when a decision was reached. Staff at 3. note 3. The NRC Staff would hol d CCANP responsible for not raising the hearing examiner's report rather than- wai ti ng for a final PUC ruling. 16 The NRC Staff would hold CCANP renponsible for not speculating in August of 1982. prior.to any PUC-ruling on who would pay the cost, -as- to..what the financial impact of cancelling the 611 ens Creek Nuclear Proj ect woul d. bo. Its Finally, the NRC Etaff taker the posi ti on tnat the Commission's questioning of HLhP's character and competence snould have triggered a motion f or e new contention on. financial qualifications. Idz CCANP trusts. the Board perceives these NRC arguments as frivolous, contrary to law and logic, and make weignt.

As- to. prior attempts to introduce the PUC actions into the record,- CCANP did attempt to reopen the record of Phase I to introduce the. Pbv rulings as evidence of the character and competence of HLbP. The motion for a new contention brinas together synergistically the forces of the national nuclear economy, the PUC order, the Austin Icwsuit, and HL&P's financi al 9

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o condition as creating a financial situation threetening the public health and safety. That one el ement amona these forces was offered in an entirely different context is irrelevent _

to the timing question raised by the motion for a new contention.

The motion was filed on time, pcrticularly once h consideration is given to the time needed to research the ni st ory of the rule in order to argue for a waiver.

2. No other means exists to protect CCANP's interests.

i The Staff mischeracterizes CCANP's " central concern" as the "f i nanci al health (or asserted lack thereof) of HL6P" and argues that. CCANP should bring this matter before the Public Uti l i ty Commission of Texas. Staff at 7. The PUC does not nave jurisdiction over the safety of the South Texas Nucleer Project.

This jurisdiction is vested in the NFC. Only the NRC has the power to deny HL&P an operating license. Protecti ng the public health and safety is CCANP's " central concern," rather than HL&P's financial condition. For that reason, CCANP has come to the ASLB to seek license denial.

The Applicants argue that CCANP's concerns relate to HL&P's ebility to finance construction of STNP and that they are therefore not proper in an operating license oroceeding, i.e.

there is no interest to be protected.

CCANP's moti on , is act limited to concerns in the construction phase alone. The construction and operation phases are not independent of each other and their interaction makes the Applicants' position inappropriate. This project is only one third complete. If financial pressuresglead the Applicants to do less than ex cel l ent work in completing the project, the 10

likelihood of poor per4crmance of the p]+nt during oper etirn 2e created.

Fi n anci al l y, the FUC,'s re e usal to incluce substantial costr of construction in the rate bese would put financial pressure on HLLP throughout the operating period-. Possib] y resultina in i ne plant not being shut down for necessery ano even crucial repaire, as a recent NRC investigation concluded took clece at Three hile 2

Island prior to the Merch 1979 accident.

Since no other party has raised these concerns and since the concerns ere of relevance to the operating license decision. this factor weighs in favor of admission of the new cont ent i on.

3. CCANP will assist in the devel opment of a sound record.

The Applicants and Staff argue that CCANP h +.3 5 not demonstrcted that it has any special knowlecge that will b e-useful in devel oping the record. Apo. at 9: Staff at 4. This Ecard rejected a s_milar argument as i rrel evant when CCANP first applied for intervenor status. Houston Li.ghtttg and Podet Co.

(South Texas Proj ect , Uni ts 1 and 2). LBP-79-10, 9 NRC 452, 459 (1979).

CCANP contends that based on its prior participation and the

2. CCANP does not yet have a reference on this i nvesti g at i on whose results were announced durina the past ten days. As the story was r'elayed by the media, an NRC investigator concluded that data on overheating in the Three Mile Is]and plant was falsified with the knowledge of management in order to avoid the expense of shutting down the plant to make repairs. Enculd this report be accurate, then the event st ands as proof of the need for financial qualifications review generally f or electric utilities and as support f or the argument that the NRC inspectior.

effort cannot detect violations caused by financial pressures.

When combi ned with the inf ormati on flowing f rom the Zimmer plant about the cut backs on Duality Assurance made by the utility in response to financial pressures, the news from Three Mile Island confirms the error of the rul e and the need for each ASLB to be prepared to waive the rule when circumstances call for doing so.

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I ii in4 or meti on al resay suppl i ed i r. 9upport of the motion f o- t h. ". c o. -

contention. the Boerd can have conf i dence that CC4!3 w i J .1 contribute to the develcoment of e sound record. _

Thi s f actor fsvors admissio- ef thn new contention.

4. See CCANF Motion at 16.

5. Stjef CCANP Motion at 17.

The five factors of 10 C.F.F. 2. 71 a ( a) (1 ) all wt:i c h ir. 4 0 mr of admission of the c on t r-n t i on .

1II. Concl_tsien Having demonstrated adequate crounos for a waiver of the rule on .4 i r,anci al qualificati ons review and bcino f a voreci Ev i.b e balancing test for 1 ate fi1ed contentions. CCANP 2s entit1ec to have its motion for a new contention granted.

ResUnct? ul 1 y EUbrni tted ,

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Lanny 41an Sinkin Count,el for Intervenor Cit 1rens Concerned enout Nuclear Power. Inc.

2207 D Nueces f,u st i n . Texas 78705 (512) 478-3240 Datec: May 30, 1983 12

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