ML20115J550

Response Opposing Aslab 850405 Memorandum & Order Re Dismissal of OL Applications.Urges Board to Permit OL Applications to Continue in Suspension Until Applicant Affirmatively Resolves Disposition

ML20115J550
Person / Time
Site:	Midland
Issue date:	04/19/1985
From:	Charnoff G BECHTEL GROUP, INC., SHAW, PITTMAN, POTTS & TROWBRIDGE
To:	NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
Shared Package
ML20115J539	List: ML20115J537 ML20115J546 ML20115J550
References
OL, OM, NUDOCS 8504230609
Download: ML20115J550 (14)

Text

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'tW#a UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

$5hhi22g;n0 BEFORE THE - ATOMIC SAFETY AND LICENSING APPEAL BOARDE OF SECRETAny '

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In the Matter of )

) o CONSUMERS POWER COMPANY ) Docket Nos. 50-329 OL&OM

) 330 OL&OM '

~(Midland Plant, Units 1 & 2) )

BECHTEL SUBMITTAL IN RESPONSE TO APPEAL BOARD'S MEMORANDUM AND ORDER OF APRIL 5, 1985 On' April 5, 1985, the Appeal Board issued a Memorandum and Order which requests supplemental responses from the applicant and the NRC Staff on the issue of involuntary dismissal of the Midland Plant license applications. As a requesting amicus curiae participant, Bechtel Power Corporation and Bechtel Asso-ciates Professional Corporation (collectively "Bechtel") hereby -

submit their response to the Appeal Board's Memorandum and Order. 'Bechtel urges the Appeal Board to refrain from di-recting dismissal of the Midland Plant operating license appli-

[ cations at this time.

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In seeking comments on the dismissal question, the Appeal Board identified two subsidiary issues on which it requested additional views. Those issues are: (1) whether in de- i r

termining the appropriate disposition of a license application,

-an NRC adjudicatory board should take into account the economic impact that a particular disposition might have upon the appli-i l

cant, its shareholders, and its ratepayers; and (2) whether 8504230609 850419

PDR ADOCK 05000329

4 0 PDR ,

considerations of the evenhanded treatment of all parties to NRC adjudications mandate the dismissal of an operating license application for the failure to pursue it. Bechtel will address each of these fundamental questions.

1. Economic Impact of Adjudicatory Actions.

Bechtel believes that an NRC adjudicatory board can and should take into consideration the economic impact of its dis-position of a license application as long as, in so doing, the board is not adversely affecting the public health and safety it is otherwise required to protect. This conclusion flows both from the agency's statutory mandate, and from pragmatic considerations.

A review of the Congressional mandate given to the NRC es-tablishes the agency's primary, but not exclusive, focus on matters of public health and safety. The Atomic Energy Act of 1954, 42 U.S.C. S 2011 et seq., encourages private sector in-volvement in the development and use of commercial atomic ener-gy, which previously had been the subject of a federal monopo-ly. See H.R. Rep. No. 2181, 83d Cong., 2d Sess. 1-11 (1954),

cited in Pacific Gas and Electric Co. v. State Energy Resources

( conservation & Development Commission, 103 S. Ct. 1713, 1723 (1983) ("PG&E").b! The 1954 Act implemented the new federal 1/ The 1954 Act provided for "a program to encourage wide-l spread participation in the development and utilization of atomic energy for peaceful purposes to the maximum extent con-l sistent with the common defense and security and with the i health and safety of the public." 42 U.S.C. S 2013(d). In the (Continued next page) l

policy by providing for the licensing of private construction, ownership, and operation of commercial nuclear power reactors, and granting to the Atomic Energy Commission exclusive ju-risdiction to license the use of nuclear materials. 42 U.S.C.

SS 2014(e), (z), (aa), 2061-2064, 2071-78, 2091-99, 2111-14; see PG&E, supra, 103 S. Ct. at 1723-24; Duke Power Co. v.

Carolina Environmental Study Group, Inc., 438 U.S. 59, 63 (1978).

In 1974, the promotional and safety responsibilities of the Atomic Energy Commission were divided between the Energy Research and Development Administration ("ERDA") ! and the Nu-clear Regulatory Commission. This division did not effect an abandonment of the prior federal policy to promote atomic ener-gy. PG&E, supra, 103 S. Ct. at 1731; see also Murphy &

(Continued) 1954 Act, Congress declared the following policy of the United States:

4 [T]he development, use, and control of atomic energy shall be directed so as to make the maximum contribution to the gener-al welfare, subject at all times to the paramount objective of making the maximum

! contribution to the common defense and se-curity; and the development, use, and con-trol of atomic energy shall be directed so as to promote world peace, improve the gen-eral welfare, increase the standard of liv-ing, and strengthen free competition in 4

private enterprise.

42 U.S.C. S 2011; see H.R. Rep. No. 2181, 83d Cong., 2d Sess. 9 (1954); S. Rep. No. 1699, 83d Cong., 2d Sess. 1-4, 9 (1954);

see generally PG&E, supra, 103 S. Ct. at 1731.

2/ In 1977, ERDA's functions were transferred to the Depart-ment of Energy. 42 U.S.C. 5 7151(a).

LaPierre, Nuclear " Moratorium" Legislation in the States and the Supremacy Clause: A Case of Express Preemption, 76 Colum.

L. Rev. 392, 409 (1976). 3/ Rather, the Energy Reorganization I

Act, which was enacted during the energy crisis, reflected a principal Congressional intent to create a single agency to promote all domestic energy sources. 42 U.S.C. S 5801; see  ;

H.R. Rep. 'No. 707, 93d Cong., 1st Sess. 3 (1973); S. Rep. No.

980, 93d Cong., 1st Cong. 1-6 (1974). The Nuclear Regulatory i

Commission was created to expedite licensing by permitting the agency to concentrate exclusively on regulatory issues. See H.R. Rep. No. 707, 93d Cong. 1st Sess. 4-5 (1973); S. Rep. No.

980, 93d Cong., 1st Sess. 2 (1974); see also Energy Reorganization Act of 1973: Hearings on H.R. 1510 Before a Subcommittee of the House Committee on Government Operations, 93d Cong., 1st Sess. 158 (1973) (statement of Dixy Lee Ray, Chairman, AEC); Department of Energy and Natural Resources and Energy Research and Development Administration (Part 1):

Hearings on H.R. 9090 Before a Subcommittee of the House Committee on Government Operations, 93d Cong., 1st Sess. 182 (1973) (statement of L.M. Muntzing, Director of Regulation, AEC). ERDA assumed all energy promotional responsibilities, so as to " prevent safety from being compromised by promotional concerns." PGEE, supra, 103 S. Ct. at 1731 (emphasis added).

3/ In PG&E, the Supreme Court specifically noted that lan-guage in the Senate bill which would have prevented ERDA from giving " unwarranted priority" to nuclear power was not included in the bill that was reported by the conference committee and subsequently enacted. 103 S. Ct. at 1731 n.32.

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1 It is the NRC's responsibility to regulate the nuclear in-dustry so as to protect the public health and safety. This l does not mean that economic factors cannot be given any consid-eration. They simply cannot take precedence over matters of safety.1/ This rule is fully consistent with the two cases re-ferred to by the Appeal Board in its April 5 Memorandum and Order. See Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit No. 2), ALAB-470, 7 N.R.C. 473, 476 (1978); Houston Lighting and Power Co. (Allens Creek Nuclear Generating Sta-tion, Unit 1), ALAB-582, 11 N.R.C. 239, 242 (1980). In these cases the Appeal Board focused on the agency's responsibility to protect the public health and safety, rather than the eco-nomic interests of nuclear power plant owners and ratepayers.

Clearly, the agency's responsibility is protection of the pub-lic health and safety. Sometimes, however, there are no such concerns; yet a choice of action is required. The question presented here is whether, in making such a decision, the agen-cy must or should ignore economic impacts.

One of the express goals of the Energy Reorganization Act itself -- the reduction of the time-scale for nuclear construc-tion and licensing without sacrificing safety and environmental 4/ As the Supreme Court stated, "There is little doubt that a primary purpose of the Atomic Energy Act was, and continues to be, the promotion of nuclear power. . . . The Court of Ap-peals' suggestion that legislation since 1974 has indicated a

' change in congressional outlook' is unconvincing. . . . The Court of Appeals is right, however, that the promotion of nu-clear power is not to be accomplished 'at all costs.' The elaborate licensing and safety provisions and the continued preservation of state regulation in traditional areas belie that." PG&E, supra, 103 S. Ct. at 1731.

considerations -- suggests the appropriateness of economic fac-tors influencing agency decisionmaking. See H.R. Rep. No. 707, 93d Cong. 1st Sess. 4-5 (1973). Implicit in the statute is the public interest in minimizing delays in licensing -- which oth-erwise would have an adverse economic impact on licensees.

The public interest in the efficiency of the NRC process is similarly reflected in the statutory requirement that the Commission report to Congress its efforts to carry out its li-censing and regulatory duties and to improve the management of its resources. See H.R. Rep. No. 1093, 96th Cong., 2d Sess.

146-147 (1980).5/ It is also apparent in the Commission's Statement of Policy on Conduct of Licensing Proceedings, CLI-81-3, 13 N.R.C. 452 (1981), which recognizes the need for efficient hearings and recommends a number of procedural de-vices to expedite hearings and reduce licensing delays. Fur-thermore, even the NRC's safety goals are not absolute; they are qualified by considerations of practical -- which often means economic -- reasonableness. See, e.g., 10 C.F.R. S 20.l(c) (use of cost-benefit analysis in determination of ALARA); 10 C.F.R. 5 50.57(a)(3) (" reasonable assurance" stan-dard); 48 Fed. Reg. 44173, 44217 (1983) (use of cost-benefit analysis in NRC backfitting policy); 48 Fed. Reg. 10772 (1983)

(use of cost-benefit guidelines in Safety Goal Development 5/ The House Committee on Appropriations has " direct [ed] the Commission to carry out the Congressionally approved policy that mandates the continued and expeditious development of nu-clear energy." H.R. Rep. No. 1093, 96th Cong., 2d Sess. 147 (1980).

Program); 10 C.F.R. Part 50, Appendix I and Rulemaking Hearing:

Numerical Guides for Design Objectives and Limiting Conditions for Operation to Meet the Criterion "As Low As Practicable" for Radioactive Material in Light-Water-Cooled Nuclear Power Reactor Effluents, CLI-75-5, 1 N.R.C. 277 (1975) (economic and

~ technical feasibility considerations in Appendix I).

In short, various procedural and substantive NRC rules and policies include within them the requirement for the agency to consider the economic impact of its actions in its deci-sionmaking process. These rules and policies reflect Congres-sional and-agency recognition that the health and safety deci-sions which the NRC makes cannot and do not take place in a vacuum. Rather, they are decisions which have direct and indi-rect economic consequences. Although these economic conse-quences ought not and, by statute, cannot dictate agency action with unsatisfactory health and safety consequences, they can and should affect the outcome of decisions when this is not the case. As the House Report accompanying H.R. 1510 indicates, in reorganizing the government's energy activities, Congress in-tended the NRC to " cut down . . . the time-scale for construc-tion and licensing [of nuclear power plants] without sacrificing safety and environmental considerations." This goal cannot be achieved without consideration by the agency of the practical impact of its regulatory activities. The issue of involuntary dismissal represents one such instance where economic considerations can and should play a part in the Ap-peal Board's decisionmaking.

In the present instance, there are no safety considera-tions compelling involuntary dismissal of the operating license applications; however, there are extraordinary economic disincentives for such action. The agency alone has expended significant resources on this application, all of which will be wasted if the application is dismissed. As long as a real poz-sibility exists that the Midland Plant licenses may be used --

whether by the present applicant or by another potential appli-cant -- the agency's interest in the efficient use of its own resources suggests that the matter remain in hiatus.5! Obvi-ously, as the applicant has made clear, an involuntary dismiss-al would result in extraordinary economic and other losses (e.g., the viability of a sale) to Consumers Power Company, its owners and ratepayers, with essentially no offsetting public safety or other advantages to such a decision. See Memorandum of Consumers Power Company, April 1, 1985, at 2-6.

Furthermore, a decision to involuntarily dismiss the Mid-land Plant license applications could serve as precedent for similar action in other dockets where construction activity may have significantly, but perhaps temporarily, slowed or stopped.

See Donaldson, Lufkin & Jenrette, Current Status Report:

Nuclear Power Plant Construction (Jan. 1985), at 6, 32, 40, 58, 68, 70, 78 (discussion of potentially significant delays in 1/ Very little continued NRC resources are required if the application is held in abeyance, particularly in contrast to the extent of agency personnel, time and dollars that already have been allocated to the project or the expense that would be necessary to start all over again with a new application.

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construction at numerous sites, including Commonwealth Edison's Braidwood 2 plant, Mississippi Power & Light Company's Grand Gulf 2, Philadelphia Electric Company's Limerick 2, Cleveland Electric Company's Perry 2, Houston Lighting & Power Company's South Texas plants, and Washington Public Power Supply System's WNP-3.) This scenario would be disastrous to the viability of the industry. It also seems particularly inappropriat6 in an industry where construction must begin many years in anticipa-tion of'a forecasted need for the energy to be produced and, consequently, for many reasons, e.g., reductions in demand growth rates,or difficulty in financing, the likelihood of sig-nificant delays in construction is very real. This should not result in abandonment of work initiated in connection with op-erating license reviews. Where no public health or safety con-sequence attaches to such delays, they ought not be the subject of perhaps the most egregious penalty available to the agency

-- involuntary dismissal of the license application.

In summary, the primary focus of the NRC on matters of nu-clear safety does not constitute a bar to consideration of non-safety issues in required agency decisionmaking. In this case, the Appeal Board has sua sponte raised the question of dismissal of the Midland Plant license applications. In resolving this matter, the economic impact of the applicant, and the precedent the decision could establish for other plants, should be considered and should result in a decision not to direct dismissal at this time.

2. Even-handed Treatment of Proceeding Participants.

Bechtel believes that fairness dictates continued suspen-sion of the Midland Plant operating lice"se applications and not their involuntary dismissal. Although the applicant, the NRC Staff and the intervenors are all parties to this consoli-dated proceeding, they are not all similarly situated and, in this instance, there are compelling reasons why the same rules ought not apply to all parties.

The applicant precipitates the agency's involvement in its activities by seeking an operating license for a proposed nu-

, clear power plant. Obviously, the applicant is a necessary I

. party to a proceeding on a license application. The NRC Staff's role is to review and approve or disapprove an applica-

. tion and to participate in an adjudicatory proceeding as a pub-lic advocate, utilizing the technical capabilities of the regu-latory staff to support or challenge the merits of the application. 10 C.F.R. 5 2.102; Vermont Yankee Nuclear Power Corp. (Vermont Yankee Nuclear Power Station, Commission Order, 4 A.E.C. 429, 431-32 (NRC Staff has an affirmative responsibil-ity to assure that a hearing record is sufficiently developed on the matters specified for consideration to permit a sound agency decision); South Carolina Electric and Gas Company (Virgil C. Sumner Nuclear Station, Unit 1), ALAB-663, 14 N.R.C.

1140, 1156 (1981) (as a representative of the public interest, the NRC Staff has a dominant role in assessing the radiological health and safety aspects of nuclear facilities). In such cir-cumstances, the failure of the NRC Staff to timely pursue its

b review function would not result in dismissal of the Staff as a penalty. In short, its role requires it to be treated differ-ently than third party intervenors.

Third parties who have a particularized interest in the application have the opportunity to intervene and challenge the application's merit. 10 C.F.R. 5 2.714. The goal of such a challenge may be modification of particular aspects of the ap-plication, or it may be prevention of receipt of a license.

While an intervenor may play a very significant role in the ap-plication review process -- e.g., precipitating an operating license proceeding -- its role is supplemental to the process, which is designed to function in the public interest effec-tively even in the absence of any interventions. 10 C.F.R. SS 2.105(e)(1), 2.106, 2.760a, 50.57; see South Carolina Electric and Gas Company, supra, 14 N.R.C. at 1156 n.31. An intervenor who obtains admission to a proceeding but who fails to uphold its responsibilities -- for example, to actively participate on contentions it has proferred -- is subject to dismissal from the proceeding. See Northern States Power (Prairie Island Nu-clear Generating Plant, Units 1 and 2), ALAB-288, 2 N.R.C. 390, 393 (1975) (intervenor forfeited entitlement to party status by its failure to participate); Long Island Lighting Company (Jamesport Nuclear Power Station, Units 1 and 2, unpublished Licensing Board decision (July 23, 1976) (party can be held in default for failing to carry out its responsibilities by picking and choosing parts of the proceeding in which it par-ticipates and thereby unilaterally disrupting the process);

accord, Boston Edison Company (Pilgrim Nuclear Generating Sta-tion, Unit No. 2), LBP-76-7, 3 N.R.C. 156, 157 (1976). The reason for this recourse is because the contention represents the intervenor's challenge to the application. As such, its resolution is a necessary predicate to resolution of the appli-cation's merits. If an intervenor is not subject to dismissal for failure to prosecute its contention, " deep freezing" the contention effectively blocks a license application. In short, the intervenor could win its case simply by failing to prose-cute its contention.

In contrast, an applicant's only route to attainment of its goal -- a license -- is through affirmative prosecution of its application. An applicant's self-suspension does not achieve this end; to the contrary, it accomplishes, at least temporarily, the goal of the intervenor -- nonreceipt of the license. Upon revival of the application -- if it occurs --

the intervenor may no longer be situated so as to be adversely affected by the application, e.g., the individual may have moved. See Gulf States Utilities Company (River Bend Station, Units 1 and 2), ALAB-358, 4 N.R.C. 558, 560 (1976) (no useful purpose served by allowance of intervention to continue where resident has moved away from plant area and has failed to as-sume a significant participational role in the proceeding).

i Alternatively, the intervenor may retain the same interest in resuming its role in the process if it is reactivated. In ei-ther case, the delay wc.'d not have adversely affected his po-l sition or his interest, which is avoidance or modification of plant operation as requested by the applicant.

1 An applicant's failure to pursue its application patently would not be motivated by litigative strategy; nor would it 2

normally adversely affect the interests of other parties.1/ It therefore has none of the negative repercussions of the compa-rable action taken by an intervenor. In fact, the applicant's suspension of its activity in support of its application is an action inconsistent with its desire to attain a license on a timely basis; it would therefore be taken only for compelling reasons. To penalize such a choice by applicants would serve no public purpose.

In these circumstances, the " failure to prosecute" by an applicant, an intervenor, or the NRC Staff necessarily allows for distinctive treatment of each. Such distinctive treatment would reflect the unique roles of these parties, not uneven-handedness.

3. Summary Bechtel respectfully submits that it would be entirely ap-propriate for the Appeal Board to consider the economic impact of. dismissal of an operating license application in deciding whether to direct such action. We suggest that the precedent such an action would establish for similarly situated plants should also deter such a decision. The dismissal of an 7/ This situation is distinguishable from a deliberate fail-ure by the applicant to fulfill a responsibility which it finds not to its liking. Obviously, the applicant may be subject to default for such an action, which disrupts the NRC's adjudica-tory process; the proper remedy depends upon what action is just under the circumstances. See 10 C.F.R. 5 2.707.

o application because of delays in its prosecution by an appli-cant for reasons of reduced rate of growth in demand or finan-cial constraints would be inappropriate, and is not compelled by principles of fairness to other parties to the proceeding.

Bechtel therefore urges the Appeal Board to permit the Midland Plant operating license applications to continue in suspension until the applicant can affirmatively resolve their disposi-tion.

Respectfully submitted, 6w%Aik GMrald Charnoff " ' CJ Deborah B. Bauser SHAW, PITTMAN, POTTS & TROWBRIDGE 1800 M Street, N.W.

Washington, D.C. 20036 (202) 822-1000 Counsel for Bechtel Dated: April 19, 1985 i

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