San Luis Obispo Mothers for Peace v. United States Nuclear Regulatory Commission

No. 86-7297 (799 F.2d 1268, 804 F.2d 523) (9th Cir. September 11, 1986)

The court holds that the Nuclear Regulatory Commission (NRC) violated its regulations by denying petitioners a public hearing before it authorized Pacific Gas and Electric's (PG & E's) Diablo Canyon power plant license amendments to redesign radioactive fuel rod configurations and expand storage pools. The court notes that Atomic Energy Act § 189, as amended, requires a prior hearing upon request of any interested party in any license-amending proceeding, unless the NRC determines that the license amendment involves no significant hazards. The court holds that the NRC violated its regulations specifying when the Commission may find that an amendment poses no significant hazards. Citing legislative history weighing against a finding of no significant hazards in borderline cases, the court holds that these regulations require the NRC to hold a hearing whenever a license amendment creates the possibility of a new or different type of accident. The court then holds that the Diablo Canyon license amendments create the possibility of such an accident. The proposed freestanding fuel rod racks would create an increased risk of a nuclear reaction in the event of an earthquake. The plant is located in an active seismic area and the original license did not consider the effect of an earthquake on the new fuel rod rack design. Further, the NRC's decision that a hearing is justified after the license amendments take effect tacitly acknowledges that the amendments create a possibility of a new or different type of accident. Finding that NRC violated its own regulations, the court refuses to reach petitioners' other Atomic Energy Act, Nuclear Waste Policy Act, and National Environmental Policy Act (NEPA) claims. Nonetheless, the court suggests that NRC's site-specific environmental assessment may not be adequate under NEPA.

A dissenting judge would sustain the NRC's decision to grant a hearing after PG & E's license amendments take effect. The dissent notes that only the NRC has statutory authority to determine whether a proposed license amendment involves a significant hazard, and a court may not overturn that decision unless it was arbitrary and capricious.

Counsel for Petitioners
Edwin F. Lowry, Dian M. Grueneich
Grueneich & Lowry
345 Franklin St., San Francisco CA 94102
(415) 861-6930

Counsel for Respondents
Richard K. Willard
Civil Division
Department of Justice, Washington DC 20530
(202) 633-3333

Counsel for Intervenor
Bruce Norton
Norton, Berry, French & Perkins
2002 E. Osborn Rd., P.O. Box 10569, Phoenix AZ 85064
(602) 955-2446

Before Merrill and Wiggins, JJ.

WIGGINS, Circuit Judge, will file his views separately.

[17 ELR 20012]

Nelson:

San Luis Obispo Mothers for Peace and the Sierra Club (petitioners) challenge an order of the Nuclear Regulatory Commission (NRC) granting operating license amendments for Units 1 and 2 of the Diablo Canyon Nuclear Power Plant (Diablo Canyon). The license amendments permit Pacific Gas & Electric Company (PG&E) to expand the capacity of the onsite radioactive spent fuel storage pools at Diablo Canyon. The NRC found that the license amendments involved "no significant hazards consideration" and made them immediately effective without prior public hearings. Because the NRC violated its own regulations in finding no significant hazards consideration with respect to the Diablo Canyon amendments, we reverse this finding and remand to the NRC for the public hearings contemplated by the Atomic Energy Act.

BACKGROUND

Nuclear reactors are operated with fuel contained in rods that are placed in the core of the reactor. As the reactor is operated, radioactive byproducts gradually accumulate in the fuel rods. Eventually, the rods must be removed from the reactor and replaced. The exhausted fuel rods, known as "spent" fuel rods, are placed in pools of water near the reactor. After a period of storage near the reactor, the rods are removed for some other form of permanent waste disposal. See generally Lower Alloways Creek Township v. United States Nuclear Regulatory Commission, 481 F. Supp. 443, 445 (D.N.J. 1979).

Under PG&E's original licenses for Diablo Canyon, spent nuclear fuel rods were to be stored on stationary racks secured to the bottom of two pools filled with water, one pool for each of the units at the plant. Each pool contained racks with 270 spent fuel assembly spaces. PG&E's amended license allows the storage of the spent fuel rods in free-standing racks not anchored to the base of the pools that contain 1324 spent fuel assembly spaces in each pool. The change in the configuration of the racks in the pools os referred to as "reracking."

In October 1985, PG&E requested license amendments to permit reracking of the pools. The need for increased storage capacity seems to have been caused by the realization that federal storage facilities for spent nuclear fuel rods would not be available until at least 1998. Under the old configuration of the pools. Diablo Canyon's storage capacity would be exhausted by 1990.

In January 1986, the NRC published a notice of these proposed amendments to the Diablo Canyon licenses. This notice included a proposed no significant hazards consideration determination. Petitioners timely intervened and requested a hearing. On May 30, 1986, prior to any hearings and based on a staff finding of no significant hazards consideration, the NRC approved the proposed license amendments and made them immediately effective. PG&E began reracking the pool for Unit 1 the next day.

Petitioner then sought stays from both the NRC and this court. On July 2, this court enjoined the reracking of Unit 2 and permitted PG&E to proceed with the reracking on Unit 1 at its own risk. The court further ordered that PG&E not use the pool for the storage of radioactive nuclear waste pending further order of the court.

On July 22, the NRC modified its May 30 order in response to petitioners' stay request. The NRC order now permits reracking of the spent fuel pools prior to the hearing petitioners have requested, but prohibits PG&E from storing more spent fuel in the pools than authorized by the original licenses until the conclusion of the hearing. On August 5, 1986, petitioners amended their petition for review to include the NRC's latest order.

ANALYSIS

Section 189a of the Atomic Energy Act, 42 U.S.C.§ 2239(a) (1) (1982), sets forth the hearing framework for the amendment of licenses for nuclear power plants. The Act provides that "[i]n any proceeding . . . for the granting, suspending, revoking, or amending of any license . . ., the Commission shall grant a hearing upon the request of any person whose interest may be affected by the proceeding, and shall admit any such person as a party to such proceeding." Id. (emphasis added). The hearing shall be held after thirty days' notice and publication in the Federal Register. The NRC "may dispense with such thirty days' notice and publication . . . upon a determination by the Commission that the amendment involves no significant hazards consideration." Id.

Prior to 1980, if the NRC staff found that a license amendment presented no significant hazards consideration, the staff issued the amendment without notice or an opportunity for a prior hearing. 42 U.S.C. § 2239(a)(1) (1962) (amended 1982). In Sholly v. Nuclear Regulatory Commission, 651 F.2d 780 (D.C. Cir. 1980), vacated to consider mootness, 459 U.S. 1194 (1983), the District of Columbia Circuit held that the NRC could not make an amendment immediately effective in this manner if there was an outstanding request for a hearing. This decision prompted an amendment to Section 189a, enacted in 1982, known as the "Sholly" amendment. This amendment provides, in pertinent part, that:

[17 ELR 20013]

The Commission may issue and make immediately effective any amendment to an operating license, upon a determination by the Commission that such amendment involves no significant hazards consideration, notwithstanding the pendency before the Commission of a request for a hearing from any person. Such amendment may be issued and made immediately effective in advance of the holding and completion of any required hearing. In determining under this section whether such amendment involves no significant hazards consideration, the Commission shall consult with the State in which the facility involved is located. In all other respects such amendment shall meet the requirements of this chapter.

42 U.S.C. § 2239(a)(2)(A) (1982). The amendment also provides that the NRC shall promulgate detailed regulations for making a no significant hazards consideration determination. 42 U.S.C. § 2239(a)(2)(C) (1982).

Under the NRC's regulations, the NRC may make a license amendment immediately effective only if the amendment does not:

(1) Involve a significant increase in the probability or consequences of an accident previously evaluated; or

(2) Create the possibility of a new or different kind of accident from any accident previously evaluated; or

(3) Involve a significant reduction in a margin of safety.

10 C.F.R. § 50.92. Although the NRC did consider these amendments in accordance with the form of the regulations set forth above, its analysis of the second standard is contradictory and in direct contravention of Congressional intent in enacting the Sholly amendment.

The Conference Committee Report accompanying the Sholly amendment, which is entitled to great weight in analyzing Congressional intent, see American Jewish Congress v. Kreps, 574 F.2d 624, 629 n.36 (D.C. Cir. 1978), expressly states that the implementing regulations "should ensure that the NRC staff does not resolve doubtful or borderline cases with a finding of no significant hazards consideration." House Conference Report No. 97-884, at p. 37, reprinted in 1982 U.S. Code Cong. & Ad. News 3607. The Conference Committee Report further states that the standards "should not require the NRC staff to prejudge the merits of the issues raised by a proposed license amendment." Id. The regulations thus appropriately require a hearing before the proposed license amendment becomes effective whenever the amendment creates the possibility of a new or different kind of accident. Petitioners have identified such an accident and they should have been granted a prior hearing.

The change from racks bolted to the floor of the pools to free-standing racks creates the possibility that, in the event of an earthquake, the racks will collide with the walls of the pools or with each other, enhancing the risk of a nuclear reaction occurring in the pools. Diablo Canyon is located in an active seismic zone and the original Diablo Canyon licenses did not analyze the effect of an earthquake on this new rack design. The license amendments thus would seem to create the possibility of a new or different kind of accident.

The NRC does not deny that the specific kinds of accidents petitioners identify — racks colliding with each other and with the walls of the pools — were not analyzed in connection with the original licenses. The NRC also admits that petitioners' claims are sufficiently serious to justify a later hearing. At the same time, however, the NRC seeks to support its finding of no significant hazards consideration by a technical analysis of why petitioners' claims lack merit. See NRC Memorandum and Order dated July 22, 1986, at 12-15. The NRC attacks certain of the assumptions underlying petitioners' contentions and concludes that the new racks "have been designed to meet the seismic force requirements previously applied to the originally intended bolted racks." Id. at 13. The NRC's arguments amount to an assertion that, because the possibility of a nuclear reaction occurring in the pools in the event of an earthquake was analyzed in connection with the original operating licenses, and because the NRC staff is satisfied that the new racks will not increase the possibility of a nuclear reaction occurring in the pools in the event of an earthquake, no new or different kind of accident is implicated by the amendments.

The very process by which the NRC attempts to rebut petitioners' contentions constitutes a tacit admission that the amendments do create the possibility of a new or different kind of accident. The claims are at least serious enough to warrant a later hearing. The NRC's own regulations require that a hearing be held before the amendments are made effective when there is a possibility of a new or different kind of accident. These regulations are in accordance with the Congressional directive that doubts be resolved in favor of a prior hearing and that the NRC staff not prejudge the merits of a proposed license amendment. A prior hearing is required in this case.

Because we find the NRC's action to have been impermissible under its own regulations, we need not reach petitioners' additional arguments concerning the Atomic Energy Act, the Nuclear Waste Policy Act, and the National Environmental Protection Act (NEPA). With respect to petitioners' NEPA claims, however, we note that the site specific environmental assessment was based on a seven year old generic environmental assessment and that no worst case analysis, 40 C.F.R. § 1502.22, appears to have been conducted. We strongly suggest that any doubt concerning the need to supplement the NEPA documents be resolved in favor of additional documentation.

CONCLUSION

The NRC failed to comply with its own regulations in denying petitioners a hearing prior to making the Diablo Canyon reracking license amendments effective. Accordingly, the existing stay of those amendments is continued. PG&E shall not deposit any spent fuel rods in the pool for Unit 1 and shall not rerack the pool for Unit 2 until hearings have been held in compliance with the requirements of the Atomic Energy Act.¹

REVERSED AND REMANDED.

1. PG&E may, of course, elect to return the racks to the original configuration in accordance with its existing operating licenses and may then use the spent fuel pools prior to completion of the hearings.

[17 ELR 20014]

WIGGINS, Circuit Judge, dissenting:

Presuming it has a better grasp of nuclear engineering than the NRC, the majority substitutes its judgment in this narrow technical area committed by Congress to the NRC's discretion.

When reviewing the Commission's order, this court is bound by the strictures of the Administrative Procedure Act (APA) that a reviewing court shall not set aside agency actions unless "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A) (1982). Congress has entrusted the NRC with broad authority to regulate the nuclear power industry. It is not the court's role to diminish that authority absent a clear abuse of discretion.

Nuclear energy may some day the a cheap, safe source of power, or it may not. But Congress has made a choice to at least try nuclear energy, establishing a reasonable review process in which courts are to play only a limited role. The fundamental policy questions appropriately resolved in Congress and in the state legislatures are not subject to reexamination in the federal courts under the guise of judicial review of agency action.

Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 557-558 (1978). Our role is to balance, within the confines of the APA, the efficient implementation of the Commission's mandate with the right of interested parties to be heard and to contribute to the decision-making process.

The narrow question in this case is when, not whether, the NRC is obligated to provide San Luis Obispo Mothers for Peace and the Sierra Club with a public hearing on PG&E's license amendments that allow reracking.¹ On the surface this looks like a simple procedural issue — traditionally an area of high judicial competence. On closer examination, however, it is clear that the outcome is controlled by substantive technical questions applied to a procedural standard.

The NRC was authorized to set that standard by the Sholly amendment, 42 U.S.C. § 2239(a)(2)(A) (1982), one of a series of measures Congress passed to help expedite the licensing of nuclear power plants. It was necessitated in part by Court of Appeals ruling that all licensing amendments required preamendment hearings on request. See Sholly v. NRC, 651 F.2d 780 (D.C. Cir. 1980), vacated to consider mootness, 459 U.S. 1194 (1983). The NRC requested relief from unnecessary disruptions or delays of nuclear power plant operation, and unnecessary regulatory burdens not related to significant safety benefits. See R. Rep. No. 113, 97th Cong., 1st Sess. 14 (1981) reprinted in 1982 U.S. Code Cong. & Ad. News 3592, 3598. The statute, quoted in the majority opinion at 6, allows a licensing amendment to take immediate effect "upon a determination by the Commission that such amendment involved no significant hazards consideration." 42 U.S.C. § 2239(a)(2)(A) (emphasis added). Congress thus created a system that requires pre-amendment hearings on request only for those changes entailing "significant hazards." When Congress delegated to the NRC the power to make no significant hazards determinations, it did not mean that the courts rather than the NRC should determine what is a significant hazard.

Petitioners hypothesize the collisions between the racks or between the racks and walls during a seismic event could result in the release of nuclear materials and could create a criticality accident, i.e., an accident that would set in motion a nuclear chain reaction. The NRC, however, evaluated the seismic sufficiency of the racks and pools and the possibility of a criticality accident. The racks and pools were designed to seismic Category I requirements, creating "no significant change in the consequences resulting from a postulated seismic event from those previously determined." NRC, Safety Evaluation by The Office of Nuclear Reactor Regulation Relating to the Reracking of the Spent Fuel Pools at the Diablo Canyon Nuclear Power Plant, 28 (May 30, 1986) [hereinafter cited as Safety Evaluation]. Moreover, the NRC had previously evaluated the potential of a criticality accident in connection with a licensing proceeding. The NRC Atomic Safety and Licensing Appeal Board affirmed the conclusion that "[a]s long as the fuel elements are in racks, no critical mass can be formed. Should the storage racks collapse or the fuel elements be dislodged and fall into precisely that geometrical arrangement necessary to criticality, the borated pool water would preclude its occurrence. "In re Pacific Gas and Electric Co., 3 NRC 809, 820 n.26 (1976) (emphasis added).

The majority does not pretend to evaluate the technical adequacy of NRC's safety analysis, nor does it find that petitioners met their burden by showing that the NRC's determination was arbitrary and capricious. Instead, it seizes on the language "[c]reate[s] the possibility of a new or different kind of accident from any accident previously evaluated," 10 C.F.R. § 50.92(2), and applies that to the potential of rack-wall collisions. There its analysis stops. The potential of such an "accident" becomes a per se violation of the NRC's standard. The NRC evaluated the consequences of seismic rack-wall collisions, and determined that no significant hazard existed. Safety Evaluation, supra 3, at 11-14, 28, and App. A at 43-48.² The simple possibility of a rack-wall collision should not be sufficient to overturn an NRC order. The NRC and petitioners are concerned with the possibility of nuclear accidents and radiation leakage; it is to these consequences that the NRC directed the thrust of its technical evaluations.³

To bolster its argument that the NRC failed to follow its own standards, the majority implies that the NRC's no significant hazards determination is inconsistent with its decision to hold later hearings. Maj. op. at 8. That interpretation is [17 ELR 20015] incorrect. Congress anticipated that requested hearings would follow a no significant hazards determination. To suggest otherwise is not only bad interpretation, it is bad public policy. It places the NRC in the position of either holding a pre-amendment hearing whenever a contention warrants a hearing, or denying the contentions that qualify a post-amendment hearing in order to justify its no significant hazards determination. Neither result is desirable. The court should recognize that the Commission acted responsibly in applying its threshold screening criteria to qualify contentions for a hearing, and that process does not cast doubt on its no significant hazards determinations.

In overturning the Commission's order, the majority dubiously applies its intuition to a complex technical matter. The practical and economic consequences of this decision are not trivial. The reconfiguration of the spent fuel pools will now be done "wet" after an initial load of spent fuel rods have been placed in the pool. Thus, PG&E workers will be required to work underwater in a radioactive environment. The current dry, unirradiated environment of Diablo Canyon's pools will be irretrievably lost.

1. In its Memorandum and Order of July 22, 1986, the Commission, though not persuaded that its staff erred in its determination of no significant hazards for the entire reracking process, granted petitioner's request for a stay of the amendment authorizing an increase in the total spent fuel capacity of each pool. Thue, the only question before this court is the immediately effective amendment allowing installation of free-standing spent fuel racks rather than the currently authorized anchored racks. See NRC Memorandum and Order CLI-86-12 at 18 (July 22, 1986).

2. The NRC notes that free-standing spent fuel racks are not new to the nuclear industry, and increasingly replace anchored fuel racks. See Memorandum and Order CLI-86-12 at 13 (July 22, 1986). PG&E characterizes the free-standing racks as the product of advanced technology that, by allowing sliding movement, reduces seismic stresses that can occur on racks restrained by anchor bolts.

3. I confess to being confused about the majority's actual rationale. It asserts that the amendment "creates the possibility that, in the event of an earthquake, the racks will collide with the walls of the pools or with each other, enhancing the risk of a nuclear reaction occurring in the pools." Maj. op. at 8 (emphasis added). Thus it creates the possibility of a new or different kind of accident. Id. At the same time, the majority concedes that the NRC analyzed the possibility of an earthquake related nuclear reaction in the pools in connection with the original license, and that the NRC is satisfied that the new racks will not increase that possibility; but this does not mean that no new or different kind of accident is involved. Id. Does the majority mean that the NRC is technically wrong on the nuclear reaction issue? If so, it has preempted the NRC's role, and accorded it no deference at all.