Facilitating the Nuclear Alternative: Administration Submits Licensing Reform Proposal

As promised in the National Energy Plan and after months of delay and indecision, the Carter Administration has finally submitted to Congress a bill designed to hasten the process of licensing nuclear power plants. Entitled the Nuclear Siting and Licensing Act of 1978 (NSLA),¹ the legislation proposes reforms in all stages of this process, from the earliest utility planning to the continuing jurisdiction of the Nuclear Regulatory Commission (NRC) over plant operations. The principal objective of the proposal is to revamp the NRC's trial-type permit and licensing proceedings, which have long been criticized as excessively prone to delay and duplicative of state proceedings, and, where possible, to remove them from the "critical path"² between plant conceptualization and generating capability. Significant portions of the bill are also directed at the encouragement of early site review and approval (site banking), and the development of standardized plant designs. Backers of the Administration proposal claim that it would reduce by up to 50 percent the 10 to 12 years now required to bring a new nuclear facility "on line."³

The bill is reported to be the culmination of 20 successive drafts, a reflection of deep division within the Administration on nuclear policy. Secretary of Energy James Schlesinger, considered a forcedul proponent of nuclear power, argued that the bill should eliminate the administrative and intervenor-induced delays he perceives to be largely responsible for the reluctance of many utilities to "go nuclear" when other alternatives are available, and the resultant decline in the industry's health.⁴ The Council on Environmental Quality, on the other hand, urged that all nuclear licensing be held in abeyance pending the development of credible proposals for dealing with the problem of nuclear waste storage.⁵ As it was finally submitted to Congress, the bill unmistakably bears Mr. Schlesinger's imprint.

Site Banking

A cornerstone of the Administration's proposal is the concept of site banking, or early site approval. Section 105⁶ would amend the Atomic Energy Act (AEA)⁷ to allow a utility to apply for and obtain final NRC approval of specific facility locations prior to the filing of an application for a construction permit and without either a state or federal determination of the local need for additional energy supplies. The purpose of this provision is to encourage the "earliest possible resolution of site-specific questions," thereby ventilating and resolving the objections of local groups and public interest intervenors before the "critical path" leading to plant completion. Once approved, a site permit would remain valid for ten years and may, upon application, be indefinitely renewed at the discretion of the Commission.

The site banking concept is an extension of a procedure currently authorized under the NRC's regulations⁸ which allows for limited site review. Advance review under the present regulations does not amount to final approval of a site, as it would under the Administration proposal, but merely encourages early identification and consideration of site-specific issues to facilitate formal resolution within final permit proceedings. The NRC's more limited review remains valid for only five years and is eligible for three-year extensions.

The initial reaction to this provision among environmental advocates has been skepticism that a thorough safety review is possible without considering the design specifics of each proposed facility. The more limited scope of the NRC's regulations may also indicate that the agency recognizes dangers in long-term blanket site approval. A more fundamental objection is that once a site has been approved under the proposed amendment, the substantial amounts of money and governmental review time which have been invested in that undertaking will make the nuclear option artificially attractive vis-a-vis other energy sources and will similarly bias later siting decisions toward preapproved locations. This result is conducive neither to balanced decision making nor to the development of alternative sources of energy.

Standardized Plant Design

Section 106 of the NSLA would amend the AEA to authorize NRC approval of standardized nuclear facility designs. If a utility were to propose to construct a facility using a standardized design, it would be relieved of the obligation of proving the environmental or technological acceptability of the design; such issues would be deemed to have been resolved at the earlier design approval proceeding. Filing fees would not be required for design proposals; [8 ELR 10088] the Commission is authorized to distribute the costs of processing such proposals among future applicants who utilize approved designs. Design permits would be valid for five years and subject to an unlimited number of three-year extensions. Proponents of this concept assert that it would achieve substantial savings in long-run design costs, avoid procedural delays, and permit a higher degree of reactor safety and reliability through the broad applicability of experience accumulated through the construction and operation of plants with standard designs.

Advance approval of standardized designs is permitted to a certain extent under the NRC's current regulations.⁹ Many plants now under construction utilize relatively standardized subsystems which have been reviwed by the Commission. The difference between the Administration's proposal and NRC's existing regulations is that the regulations do not suggest that a plant design be approved in a vacuum; early design review currently operates in the context of a regulatory scheme in which final approval may be awarded only aftar a full analysis has been made of the appropriateness of the design to the specific site. By eliminating the requirement that proposed designs be certified to be harmonious with the site's topographical, geological, hydrological, and other characteristics, this new formulation may entail the acceptance of a higher level of risk to health, safety, and the environment.

Secondly, the current NRC regulations are applied primarily to major plant subsystems rather than entire plants. Although the NSLA would permit approval of subsystem designs,¹⁰ its real purpose is clearly to expedite clearance for an entire facility. Current experience shows, however, that nuclear facilities are not designed by one contractor but are a complex set of subsystems built by independent bidders and require a lengthy process of coordination and review. To expect these competitors to form such alignments without knowledge of the potential for sale in a market characterized by uncertain and declining demand¹¹ may be overly optimistic. In addition, serious anti-trust implications might arise.

Combined Construction Permits and Operating Licenses

Section 102 would amend § 185 of the AEA to authorize the NRC to issue a combined construction permit and operating license (CPOL). The implicit rationale for this provision is that by combining the construction and licensing proceedings, which usually last up to two and-a-half years, perhaps half that time could be eliminated from the total process, depending on the increased complexity of the dual proceeding. Although the issuance of a CPOL prior to ground breaking would not amount to a blanket authorization to commence operations at an indefinite point five to ten years in the future,¹² it would allow an applicant to obtain resolution of plant operation questions in advance of construction to facilitate effective planning and a smooth transition between completion of construction and commencement of operations.

This abbreviated procedure, in concert with the site banking and standardized design provisions, is the crux of the Administration's proposal. The ultimate objective is a situation in which every utility would maintain a reserve of preapproved locations and would have access to a nationwide bank of preapproved standardized plant designs. Whenever it is determined that there is a need for additional power supplies, the utility could select a site and a plant and, using the streamlined CPOL and other procedures (described below), bring a new facility on line within six to seven years.

Interim Construction and Operating Authority

The NSLA also aims for large-scale modification of the critical path by giving the NRC authorityto allow an applicant to commence construction or operation of a facility prior to the holding of required hearings. As amended, § 185(c) of the AEA would provide that, in the case of any nuclear plant for which a CPOL is sought, the Commission may permit the applicant to "prepare the proposed facility site for construction and perform such limited construction activities" as the Commission shall prescribe by regulation before the CPOL is awarded.¹³ Although such construction is to be conducted at the risk of the applicant, it seems likely that if it were a close question whether a CPOL should be granted, an existing investment of up to $100 million of "public" funds would factor strongly in the final determination.¹⁴

Section 104 would amend the AEA to authorize the NRC to grant interim operating authority to either a license applicant or a current licensee where the full course of required procedures has not been completed and there is an immediate need for the plant's generating capability. Examples of situations in which this authority would be available include where commencement of operations has been delayed by extended operating license hearings or where a licensed and operating facility is unable, because of an accident or other reason, to meet the conditions in its operating license and would otherwise be required to cease operations. Interim operating authority may be granted to a new plant only in response to an "urgent public need" and after hearings on health, safety, and national security issues have been completed.Interim authority by way of amendment to an existing plant's operating license is subject to a lesser standard and may be granted if the NRC or "its designee" determines [8 ELR 10089] that except for the completion of any required hearings, the requirements of the National Environmental Policy Act (NEPA) and the AEA have been met. In each case, the Commission must provide 30-days public notice of its intent to grant such authority and hold hearings on the matter. The Commission is given very wide discretion to hold virtually any type of hearing, including informal rule making, and its choice as to the procedures adopted is exempted from judicial review. The bill also provides that in the case of a new facility, the hearing may be held prior to the expiration of the notice period.

This section is designed to address the situation in which a locality's need for power is deemed to outweigh the risks posed by noncompliance with technical procedural requirement. As such, it is perhaps most appropriate for full, if expedited public participation, and the provision may sweep broadly enough to invite due process challenges.

Hearings

The NSLA proposes a drastic reduction in the opportunity for public input into the licensing process, particularly with respect to issues arising under NEPA. Section 103 would replace § 189(a) of the AEA by making hearings mandatory only in the case of applications for early site approval, standardized design approval, or CPOLs. In all other cases, proceedings need not be held unless requested by an "affected person." It provides further that all issues arising under the AEA shall be considered in full adjudicatory hearings, but issues arising under NEPA shall be considered within rule-making proceedings or hybrids thereof.¹⁵

This reverses the established rule that the parties to a licensing proceeding are entitled to the full adjudicatory protections of § 554 of the Administrative Procedure Act (APA),¹⁶ and the potential impact upon the substantive consideration given to environmental issues looms large as a result. Under the APA parties to adjudicatory hearings are accorded the basic rights of trial participants, including discovery, the calling of witnesses, and the cross-examination of opposing witnesses. Intervenors in licensing proceedings rely heavily on factual data presented by and discovered from the well-documented applicants. They will frequently devote more attention to the cross-examination of the applicant's witnesses than to the presentation of their own. Moreover, adjudications under the APA must be decided with findings of fact and conclusions of law based solely upon the record, and the decision reached is subject to more rigorous review than rule-making determinations. By eliminating these safeguards, this bill would dramatically reduce the thoroughness of the attention given environmental issues.

What has proven to be an equally controversial aspect of the bill is the provision within § 103 which limits the issues that may be raised at any hearing to those for which there was no opportunity for a hearing in any prior proceeding. Thus, if any party to an early site approval hearing could have, but failed to question the geological stability of the proposed site, that issue could not be raised at the operating license proceeding, where the imposition of strict operating safeguards might be necessary to ensure complete safety. As the bill now stands, if a utility were to obtain early approval of a site and to decide 20 years later to construct a nuclear facility there, no party to the construction permit or operating license hearings would be permitted to raise any site-specific issues absent a prima facie showing of the importance of newly discovered information.

The key word in this provision is "opportunity." Evidently, earlier drafts of the bill had barred reconsideration of issues which had been affirmatively "considered" or definitively" resolved," but they were scrapped as being too lenient. The severity of the standard finally adopted raises substantial due process questions which, in addition to difficulties in defining "prior opportunity for a hearing," may foreshadow a litigation-strewn future for this provision should it be enacted.¹⁷

State Licensing Review

A systemic problem frequently cited by agency, industry, and utility representatives is the overlap between the federal and state roles in nuclear licensing. The typical legislative response to this problem in other major regulatory settings is to preempt the role of the state by enacting a comprehensive federal mechanism of review and oversight. Not so with the NSLA. Section 102 of Title I would amend § 185 of the AEA to prohibit the NRC from issuing a construction permit unless the state or political subdivision in which it is to be located certifies that there is a need for a new source of power at that location. The local agency is required under the bill to conduct hearings comparable to the NRC's NEPA compliance hearings and must accept responsibility for defending its determination in federal court. If, however, there is no state or municipal agency authorized to make such a determination, the requirement is waived.

[8 ELR 10090]

Section 202 of Title II¹⁸ provides that the governor of any state may submit to the NRC for approval a program for reviewing the "environmental acceptability" of any proposed nuclear development and for determining formally the need for the power to be produced. The Commission would be required to approve any state program which appears to have the capability to provide for thorough review and includes provisions ensuring compliance with NEPA, requiring consideration of alternative sources of energy, and providing for adequate public participation.

Once a state's program is approved, the Commission must refer all permit and license applications to the state, which will then have two options. It may elect to assume responsibility for making all of the environmental and need determinations necessary to the granting of the application, in which event the NRC may not issue a permit or license to the applicant without the state's concurrence. In making these determinations, the state must act in accordance with NEPA and will be subject to suit in federal court for noncompliance with the statute's requirements. The bill accomplishes this result by declaring that to obtain approval of its review program the state must consent to be sued in such cases and by completely exempting the NRC from any responsibility under the statute once the state has stepped in.¹⁹

The state may also elect to determine only a limited number of these questions, in which case the Commission is required only to consider the state's recommendation before acting. The incentive for the states to develop an approved program is thus almost irresistible and is made even more attractive by the availability of federal funding for that purpose.²⁰

The wisdom of this provision is subject to question from a policy perspective. The NRC has accumulated far more expertise with which to undertake environmental studies than the vast majority of states could hope to gather, and may thus be better suited to this role. In addition, the states are more prone to exhibit bias in these determinations. Whether this bias would favor increased energy supplies, commercial development, and fuller employment, or whether it would consist of an undue concern for environmental protection, it detracts from the hard and professional analysis that is essential to a balanced nuclear policy. Difficulties are also inevitable if the state must conduct full defenses of NEPA litigation. In contrast to the Department of Justice's seasoned cadre of NEPA litigators, the staffs of the states' attorneys general are experienced with and less qualified to handle these cases. The likely result, at least initially, would thus be more protracted lawsuits and fewer outcomes favoring the states.

Intervenor Funding

The question of federal reimbursement for the costs of intervenor participation in administrative proceedings has been a thorny issue for years,²¹ particularly at the NRC. The Commission is one of the few federal agencies to have considered the question and expressly declined to establish a program for the reimbursement of intervenors.²² The NSLA would add a new § 197 to the AEA authorizing but not directing the NRC to establish a pilot program for funding intervenors in selected licensing proceedings.

Subsection 3(b) would provide that any amount paid shall be based "upon the intervenor's contribution to the proceeding" and awarded according to criteria to be delineated by regulation, including: the intervenor's "interest" in the matter, the intervenor's access to alternative sources of funding and the effectiveness of its participation without such funding, the extent to which the intervention is likely to be duplicative of other available viewpoints, and "whether the presentation of such views can reasonably be expected to contribute substantially to a fair determination in the proceeding."

Absent a special showing of need for advance compensation, payments are to be made following the proceeding. In itself, this provision may be enough to reduce the program to little more than commendable sentiment, in view of the extreme length of typical NRC adjudications, the substantial costs necessarily involved, and the generally poor financial health of the organizations at which Title III is theoretically aimed. Subsection (d) adds the further limitation that persons who receive advance or subsequent payments under the Title shall be liable for repayment or forfeiture of all or part of such payments whenever the person "clearly has not provided the representation for which the payments were authorized," or "has acted toward any other participant or the Commission in such a way as to unjustifiably delay, mislead, or otherwise frustrate the objectives of the proceeding." To a party hoping to receive a lump sum of as much as $100,000 or more at the conclusion of a proceeding, or to a party which has succeeded in securing an advance payment, the Damoclean threat of the agency's withholding or requiring forfeiture of such sums pursuant to a finding of an "unjustified" delay will inevitably exert a chilling effect on the vigorous presentation of issues.

In the context of the bill as a whole, the significance of Title III's intervenor assistance program is very limited. As sketched out above, a key objective of the bill is to shift many of the Commission's proceedings to state forums, yet Title III applies only to hearings held before the Commission. A vague reference to intervenor funding in state hearings can be found in § 202(j) of Title II, which provides for federal assistance to states to establish approved licensing review programs, but the likelihood of a reasonable number of states following up on this suggestion seems relatively remote, at least until the expiration of the NRC pilot program and the completion of its report to Congress on the program's effectiveness.

Another shortcoming of the assistance program stems [8 ELR 10091] from the bill's objective or relegating consideration of environmental issues to rule-making hearings. Because Title III does not allow the Commission to provide funding for rule makings, those intervenors raising environmental concerns would be essentially excluded from the program.

The net effect of these limitations is to render Title III a mere shadow of what might be expected of a forward-looking program. It is viewed with bitterness by some environmentalists, who had been led to believe that the Administration would at least offer a bauble to mollify the inevitable opposition to the remainder of the bill. Some of its provisions, such as § 103's "prior opportunity for a hearing" analog to res judicata, have been justified on the ground that one simple, early hearing on an issue is adequate if its thoroughness is assured by increased intervenor access.Unfortunately, Title III lacks the substance to provide such assurance.

Conclusion

The Nuclear Siting and Licensing Act of 1978 is one answer to the clear need for reform in the nuclear licensing process. Nowhere is this need recognized more fully than in the camp of the environmentalists, who are generally of the view that despite the investment of large amounts of time and scarce resources, their pleas for a balanced concern for environmental values have fallen on deaf ears. On the other hand, industry supporters complain bitterly that in some instances intervenors with principled objections to nuclear power per se have used the complexities of the administrative process to further their political goals where other branches of government have proven unresponsive or unsympathetic.

In a statement before a congressional subcommittee considering the bill, Secretary Schlesinger called on Congress to isolate the nuclear licensing process from the larger debate over the merits of nuclear power.²³ He told the subcommittee that since Congress had already determined to experiment with nuclear energy as a "near to short term" alternative supply, the immediate task is to transform this proven technology into a viable alternative by sharply cutting back the 12-year lag which now cripples the nation's ability to respond to local power needs with new nuclear plants.

Ironically, the available evidence illustrates fairly convincingly that bureaucratic and intervenor-induced delays account for very little of the total delay experienced. Government studies conducted regularly since 1971 have uniformly concluded that as few as 15 percent of the delays in the nuclear licensing process are attributable to regulatory and licensing problems.²⁴ Other factors resulting in an equal or greater number of delays include labor strikes and shortages, equipment failures, late equipment deliveries, and financing difficulties.²⁵

The efficacy of the Administration's proposal is therefore subject to doubt, as is the claim of an anticipated reduction of the 12-year lead time by almost 50 percent. This will be particularly true if litigation ensues from some of the bill's more vague or onerous provisions. Since the benefits of the legislation are provided at the cost of reduced public participation and acceptance of an increased risk to public health and the environment, Congress should consider this bill very carefully before acting upon it.

1. S. 2775, H.R. 11704, 95th Cong., 2d Sess. (1978).

2. The term "critical path" as used here refers to those essential elements of the construction and licensing process which must be conducted in sequence. The Administration's proposal attempts to withdraw some components from the current sequential schedule and allow them to be conducted simultaneously with, prior to, or subsequent to the "critical" sequence, so that interruption of the non-critical stages will not necessarily delay project completion.

3. The usual estimate of a 10- to 12-year lead time can be broken down roughly as follows: approximately two years are required by the utilities for initial planning, which includes preparation of power demand forecasts, site selection, and environmental studies. Once and application for a construction permit has been filed, the NRC requires two or more years to complete its internal staff reports, prepare an environmental impact statement, and hold hearings. Plant construction follows issuance of the permit and takes about six years. Toward the latter half of the construction process, the Commission reviews the utility's application for an operating license. At this stage, the NRC examines the final design characteristics of the facility, ensures that it was constructed in accordance with the construction permit, and inserts into the license whatever special conditions are deemed necessary to ensure the public health and safety.

4. Hearings on H.R. 11704 before the House Committee on Interior and Insular Affairs, 95th Cong., 2d Sess. (Apr. 4, 1978) (statement of James R. Schlesinger).

5. See New York Times, Sept. 30, 1977, at A12, col. 1.

6. Adding a new § 193 to the Act.

7. 42 U.S.C. § 2011 et seq.

8. 10 C.F.R. pt. 50, app. Q (1978).

9. 10 C.F.R. pt. 50, app. O (1978).

10. Proposed § 194(b) of the AEA.

11. See generally, Christian Science Monitor, Feb. 15, 1978, at 14, col. 1.

12. The bill would still require that "[p]rior to the commencement of operation, the Commission shall find that the facility has been constructed and will operate in conformance with the combined permit and operating license, the provisions of this Act, and the rules and regulations of the Commission." S. 2775, 95th Cong., 2d Sess. § 102 (1978) (amending § 185(b) of the AEA).

13. This provision would give statutory support to a portion of the Commission's regulations under which it grants "limited work authorizations" as a matter of course. 10 C.F.R. § 50.10(e) (1977).

14. Another section of the bill might be read to authorize administrative consideration of the "economic momentum" of a project. In its opening declarations of policy, thr NSLA directs the NRC to take "into account that absolute safety is an unattainable goal for any energy source, [and] that the cost of additional safety requirements should be given consideration." S. 2775, 95th Cong., 2d. Sess. § 2(a)(9) (1978).

15. The term "hybrid" refers to any legislative-type hearing to which has been added one or more features of adjudicatory hearings. The United States Supreme Court has recently held that where the NRC's hearings are found to have complied with the minimum statutory requirements, a reviewing court may not demand that the agency utilize stricter procedures unless to do otherwise would constitute an abuse of discretion. Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 46 U.S.L.W. 4301, 8 ELR 20288 (1978).

16. Citizens for a Safe Environment v. Atomic Energy Commission, 489 F.2d 1018, 8 ELR 20091, 20224 (3d Cir. 1974).

17. Title II would also effect other noteworthy changes in existing law: Section 201 would amend § 182 of the AEA, 42 U.S.C. § 2232(b), which now requires review of each license application by the Advisory Council on Reactor Safeguards, to permit the Council to review only those applications referred to it by the Commission, and in most cases to dispense with any portion of any review that it deems unnecessary. Section 202 would add a new § 195(d) to the Act to provide that a state electing to conduct a full environmental review of an application may not conduct its own radiological health and safety analyses. These studies are to be conducted only by the NRC, and the findings of the Commission are binding on the states and otherwise judicially and administratively unreviewable. Proposed § 195(i) would allow the Commission to rely upon data, analyses, and conclusions submitted by a state that does not have an approved environmental and power demand review program. Because the state would not be subject to NEPA, such findings and conclusions would remain subject to review in an action against the NRC.

Sections 195(h) and (j) authorize federal assistance to states in the form of personnel loans and training, the use of national laboratories, and direct financial grants.

18. Adding a new § 195 to the AEA.

19. This provision is strongly reminiscent of a similar measure within the Housing and Community Development Act of 1974, 42 U.S.C. § 5301. See Comment, Controversial NEPA Implementation at HUD: Shifting Environmental Review Responsibilities to Local Grant Applicants, 4 ELR 10193 (1974).

20. NSLA § 202(j).

21. See generally, Comment, Agency Funding of Indigent Public Interest Intervenors in Administrative Proceedings, 6 ELR 10052 (1976).

22. See, Comment, NRC Declines to Fund Indigent Participants in Agency Proceedings, 7 ELR 10010 (1977).

23. Hearings on H.R. 11704 Before the House Committee on Interior and Insular Affairs, 95th Cong., 2d Sess. (Apr. 4, 1978) (statement of James R. Schlesinger).

24. Nuclear Powerplant Siting and Licensing, Hearings Before the Joint Committee on Atomic Energy, 93d Cong. 2d Sess., vol. II at 1147 (1972).

25. COMPTROLLER GENERAL OF THE UNITED STATES, REDUCING NUCLEAR POWERPLANT LEADTIMES: MANY OBSTACLES REMAIN, No. EMD-77-15 at iii (Mar. 2, 1977). See also Federal Power Commission, Report No. 19050 (Mar. 1974); Report No. 20194 (May 1974); Report No. 21817 (Oct. 1975); Report No. 22333 (May 1976).