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08/04/87 Union of Concerned v. U.S. Nuclear Regulatory

August 4, 1987

UNION OF CONCERNED SCIENTISTS, ET AL., PETITIONERS

v.

U.S. NUCLEAR REGULATORY COMMISSION AND THE UNITED STATES OF AMERICA, RESPONDENTS NUCLEAR UTILITY BACKFITTING AND REFORM

GROUP, INTERVENOR; UNION OF CONCERNED SCIENTISTS, ET AL., PETITIONERS

v.

U.S. NUCLEAR REGULATORY COMMISSION AND THE UNITED STATES OF AMERICA, RESPONDENTS NUCLEAR UTILITY



Before: MIKVA, EDWARDS and WILLIAMS, Circuit Judges.

UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

Backfitting and Reform Group, Intervenor 1987.CDC.340

Petitions for Review of Orders of the Nuclear Regulatory Commission.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MIKVA

Opinion for the Court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

This case involves recurring questions: whether and to what extent a regulatory agency may consider factors such as economic costs in carrying out "health-based" statutory provisions. Specifically, the instant petition requires us to determine the extent of the Nuclear Regulatory Commission's (NRC or Commission) authority to consider economic costs when deciding whether to order safety-enhancing modifications to previously licensed nuclear power plants. Appellant Unio of Concerned Scientists challenges a final rule promulgated by the NRC concerning the "backfitting" of nuclear reactors. The term "backfitting" refers generally to NRC actions that require modification of the design, equipment, or operating procedures of nuclear power reactors previously licensed for construction or operation. The UCS attacks the rule primarily on the ground that it violates the Atomic Energy Act (the Act), 42 U.S.C. § 2011 et seq., by requiring the NRC to take economic costs into account in deciding whether to impose a backfit. The UCS asserts that the Act forbids the NRC from every considering economic costs in the backfitting process. We disagree with the UCS's broad construction of the Act; we believe that the NRC may take costs into account in making certain backfit decisions. We conclude, however, that the rule at issue violates the Act by allowing the consideration of costs in circumstances in which the Act precludes it. We therefore vacate the NRC's backfitting rule. I. BACKGROUND

A. Relevant Statutory Provisions

Section 182(a) of the Act provides the primary statutory standard relating to the Commission's mandate to ensure the safe operation of nuclear power plants. That section requires the Commission to ensure that "the utilization or production of special nuclear material will. . . provide adequate protection to the health and safety of the public." 42 U.S.C. § 2232(a). In it rules and decisions, the Commission refers to this standard as either the "adequate protection" standard or the "undue risk" standard. See, e.g., Long Island Lighting Co., 18 N.R.C. 445, 464-65 (1983). Whatever the genesis of the latter term, the Commission uses it interchangeably with section 182(a)'s actual language.

Section 161 of the Act "authorizes" the Commission to take a variety of measures "[i]n the performance of its functions." 42 U.S.C. § 2201. Two subsections of this section empower the NRC to take steps relating to the protection of the public health and safety. Subsection (b) authorizes the Commission to "establish by rule, regulation, or order, such standards and instructions to govern the possession and use of special nuclear material, source material, and by-product material as the Commission may deem necessary or desirable . . . to protect health or to minimize danger to life or property." 42 U.S.C. § 2201 (b). Subsection (i) empowers the NRC to "prescribe such regulations or orders as it may deem necessary . . . to govern any activity authorized pursuant to this chapter, including standards and restrictions governing the design, location, and operation of facilities used in the conduct of such activity, in order to protect health and to minimize danger to life or property." 42 U.S.C. § 2201 (i).

B. Regulatory History

The NRC promulgated its first rule concerning the "backfitting" or safety-enhancement of nuclear reactors in 1970. In explaining the need for such a rule, the NRC noted that "rapid changes in technology in the field of atomic energy result in the continual development of new or improved features designed to improve the safety of production and utilization facilities." 35 Fed. Reg. 5,317 (March 31, 1970). The rule addressed these technological changes by setting forth a standard governing when the NRC could require a plant previously licensed for construction or operation to incorporate a new safety feature. The rule stated that "the Commission may . . . require the backfitting of a facility if it finds that such action will provide substantial, additional protection which is required for the public health and safety or the common defense and security." 10 C.F.R. § 50.109(a) (1971). The rule excepted from this standard any backfit that was necessary to bring a facility into compliance with its license or a Commission order, rule, or regulation. See id. at 50.109(b). A backfit of this kind was apparently always required.

By the end of the 1970s, the backfit rule had become the target of widespread criticism. Several governmental bodies charged that the rule allowed the Commission to ignore the need for backfitting outmoded plants. See, e.g., Report of the President's Commission on the Accident at Three Mile Island, The Need for Change; The Legacy of TMI 20 (October 1979) (stating that the rule had not forced the NRC to "systematically consider" the "need for improvement of older plants"). Other governmental groups charged that the rule allowed the Commission to impose backfits indiscriminately, without regard to their real necessity or cost. See, e.g., J. Tourtellotte, Chairman, Regulatory Reform Task Force, U.S. Nuclear Regulatory Commission, Report on Backfitting and Licensing Practices at the U.S. Nuclear Regulatory Commission 3 (March 11, 1985) ("he staff's prior backfitting practices which have cost consumers billions of dollars have made nuclear plants more difficult to operate and maintain, have injected uncertainty and paralyzing delay into the administrative process and in some instances may have reduced rather than enhanced public health and safety."); Surveys and Investigations Staff, House Committee on Appropriations, Report to the Committee on Appropriations, U.S. House of Representatives on the Nuclear Regulatory Commission 54 (March 1985). All commentators appeared to agree that the rule had failed to systematize or rationalize the Commission's backfitting process.

In response to the waxing criticism of the 1970 rule, the NRC published an advance notice of proposed rule-making on September 28, 1983. See 48 Fed. Reg. 44,217. The advance notice invited public comment on draft backfit rules proposed by the Commission's Regulatory Reform Task Force and the Atomic Industrial Forum, the trade association of the nuclear power industry. Fourteen months later, after having received and reviewed numerous comments, the Commission published a proposed version of the final rule. See 49 Fed. Reg. 47,034 (November 30, 1984). Interested parties commented on the rule, focusing especially on the authority of the Commission to consider economic costs when deciding whether to impose backfits. On September 20, 1985, the Commission published its final rule, which became effective on October 21, 1985. See 50 Fed.Reg. 38,097.

The heart of the final rule lies in the standard governing the circumstances in which the Commission will order a backfit under the authority of the rule. the standard incorporates the 1970 rule's requirement that the backfit substantially increase protection to health and safety, but adds an additional requirement that the benefits of the backfit justify its costs. Specifically, the rule provides:

The Commission shall require the backfitting of a facility only when it determines . . . that there is a substantial increase in the overall protection of the public health and safety or the common defense and security to be derived from the backfit and that the direct and indirect costs of implementation for that facility are justified in view of this increased protection.

10 C.F.R. § 50.109 (a)(3) (1986).

The rule sets forth in some detail the way in which the NRC is to make the determination of whether a proposed backfit meets the governing standard. The rule requires that the NRC prepare a "systematic and documented analysis" of each proposed backfit. Id. at § 50.109 (a)(2). In conducting this analysis, the NRC is to consider available information concerning nine factors:

(1) the specific objectives of the proposed backfit;

(2) the activity that would be required by the licensee to complete the backfit;

(3) the potential change in risk to the public resulting from the backfit;

(4) the potential impact of the backfit on the radio-logical exposure of the facility's employees;

(5) the costs of installation and maintenance associated with the backfit, including the cost of facility downtime or construction delay;

(6) the potential impact on safety of the changes in plant or operational complexity ...


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