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Coalition for the Env't v. NRC

Citation: 17 ELR 20170
No. Nos. 84-1313, -1514, 795 F.2d 168/(D.C. Cir., 07/11/1986)

The court holds that regulations adopted by the Nuclear Regulatory Commission (NRC) that eliminate case-by-case review of the financial qualifications of electric utilities seeking operating licenses are authorized by the Atomic Energy Act (AEA) and are not arbitrary and capricious. The new rule makes a generic determination that electric utilities that either are regulated public utilities or are authorized to set their own rates are financially qualified to operate nuclear power plants. The court first holds that the regulations comport with Atomic Energy Act §182(a), which gives the NRC complete discretion to decide what financial qualifications are necessary. Further, the regulation adopted by the Atomic Energy Commission two years after passage of the AEA requiring individualized demonstrations of financial qualifications is not a contemporaneous construction of the statute entitled to great weight, but rather was an exercise of discretionary authority under the statute subject to later revision.

The court next holds that NRC's adoption of the rule was not arbitrary and capricious. NRC's decision to eliminate individualized financial review of electric utilities at the operating license stage while retaining review at the construction permit stage is not irrational. Applicants for construction permits must show a reasonable assurance of obtaining the funds necessary to meet construction costs, which may not be recoverable if construction is cancelled or deferred. Operating license applicants must show a reasonable assurance of obtaining the funds necessary to meet operating costs, which are generally recoverable through ratemaking. NRC could thus rationally decide to require further study on financial qualifications review for construction permits based on the recent cancellations of plants under construction. NRC's basis for the rule, that regulated utilities will be able to recover their costs through ratemaking, is also rational. NRC could reasonably assume that utilities will request the necessary funds and that they will receive the necessary funds from the state and federal regulatory commissions. Further, the possibility that a utility that receives the necessary funds will not spend them on safety is irrelevant to whether NRC properly determined that utilities will have reasonable assurance of receiving the necessary financing. Similarly, NRC's failure to consider an alternative to its regulation that would make financial qualifications review more stringent is irrelevant to NRC's decision.

The court next holds that NRC's issuance of an operating license to a public utility to operate a nuclear power plant in Missouri without first considering the issue of financial qualifications was permissible. The court declines to decide whether the NRC was precluded from applying a 1982 version of the financial qualifications rule that was held irrational by the court, since the court has now upheld NRC's new rule.

[A related case appears at 8 ELR 20707.]

Counsel for Petitioners
Lewis C. Green
Green, Hennings & Henry
Suite 1830 Marquette Bldg., 314 N. Broadway, St. Louis MO 63102
(314) 231-4181

Counsel for Respondents
Carole F. Kagan
Nuclear Regulatory Commission
1717 H St. NW, Washington DC 20006
(202) 492-7000

Before: MIKVA, GINSBURG and BORK, Circuit Judges.