Petition — WESTINGHOUSE ELECTRIC CORP. v. NATURAL RESOURCES DEFENSE COUNCIL, INC. (Nos. 76-769, 76-653, 762, 774)

DFC

MICHAEL RODAK, J., CLERK

1976

—

IN THE

Supreme Court of the United States

Octrosper Term—1976

178769

WESTINGHOUSE ELECTRIC CORPORATION,

Petitioner,

V.

NATURAL RESOURCES DEFENSE COUNCIL,

INC., ET AL.,

and

THE STATE OF NEW YORK

PETITION OF WESTINGHOUSE ELECTRIC

CORPORATION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

Murox WaxENFELD

Weisman, Cevier, Sprett, Mobtux,

WertHermmer & SCHLESINGER

425 Park Avenue

New York, New York 10022

Telephone: (212) 371-5400

Counsel for Westinghouse Electric

Corporation

December 1976.

—

TABLE OF CONTENTS

Oprxions Below

2

JURISDICTION 3

QuEsTION PRESENTED 3

Statutes INvoLvep 4

+

8

8

STATEMENT OF THE CasE

Reasons ror GRANTING THE Writ

1. National Importance of the Case

2. Conflict With This Court’s Recent Decision in

Kleppe 10

ConcLUSION 15

Aprenpix A—Nuclear Regulatory Commission’s In-

terim Policy Announcement published November

14, 1975 (40 F. R. 53056) as corrected December

24, 1975 (40 F. R. 59497) A-l

Apprenpix B—Second Circuit’s Opinion, May 26, 1976 A-34

Appenpix C—Second Circuit’s Supplemental Opinion

Denying Rehearing, September 8, 1978 4-74

Aprenprx D

Second Cireuit's Judgment, May 26, 1978 A-78

Second Cireuit’s Order Denying Rehearing In

Bane, September 8, 1976 A-80

Arr Exp E—Statutes Involved

42 U.S.C. 5 4332 (Section 102 of the National

Environmental Policy Act) A381

ii TABLE OF CONTENTS

PAGE

42 U.S.C. 4 2133 (Section 103 of the Atomic En-

ergy Act as amended) A-83

42 U.S.C. § 2201 (b) (Section 161b of the Atomic

Energy Act as amended) A-84

Citations

Cases:

Citizens for a Safe Environment v. AEC, 489 F. 2d

1018 (3rd Cir. 1974) 14

Ecology Action v. United States Atomic Energy

Comm., 492 F. 2d 998 (2nd Cir. 1974 14

Kleppe v. Sierra Club, 96 S.Ct. 2718 (1976) 10, 13, 14

Port of Boston Marine Terminal Ass’n. v. Rederiak-

tiebolaget, 400 U.S. 62 (1970) 14

STaTurss:

28 U.S.C. See. 1254(1) 3

28 U.S.C. See. 2342(4) 14

28 U.S.C. Sec. 2350(a) 3

42 U.S.C. Sec. 2133 (Section 103 of the Atomic En-

ergy Act as amended) 4

42 U.S.C. See. 2201(b) (Section 161b of the Atomic

Energy Act as amended) +

42 U.S.C. See. 2239(b) 3, 14

42 U.S.C. Sec. 4331(b)(6) . 7

42 U.S.C. See. 4332 (Section 102 of the National

Environmental Policy Act) 3,4

TABLE OF CONTENTS iii

PAGE

MISCELLANEOUS:

39 Fed. Reg. 5356 5

39 Fed. Reg. 30186 5

39 Fed. Red. 43101 5

40 Fed. Reg. 20142 5

40 Fed. Reg. 53056 as corrected in 40 Fed. Reg.

59497 2,6

40 Fed. Reg. 53061 7

40 Fed. Reg. 53062 6

AEC, Draft Generic Environmental Statement On

Mixed Oxide Fuel, Wash—i327 (August 1974) — 10

Petition of Allied-General Nuclear Services, Et Al.

for Writ of Certiorari (No. 76-653) 15

The Wall Street Journal, Nov. 11, 1976, page 1, col. 6 8

i

Ix THE

Supreme Court of the United States

Octrosper Term—1976

No. 76-

—

WESTINGHOUSE ELECTRIC CORPORATION,

Petitioner,

v.

NATURAL RESOURCES DEFENSE COUNCIL,

INC, ET AL.,

and

THE STATE OF NEW YORK

———

PETITION OF WESTINGHOUSE ELECTRIC

CORPORATION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

This petition for certiorari is occasioned by the Second

Circuit’s blanket injunction against the issuance by the

Nuclear Regulatory Commission (Commission) of any

individual commercial licenses for certain mixed oxide

fuel related activities during the interim period prior to

license to construct and operate a mixed oxide fuel fabri-

eating facility, a participant in the aforesaid rulemaking

proceeding, and an intervenor in the proceedings before

The subject of this proceeding is the Commission’s in-

terim policy announcement dated November 11, 1975, pub-

lished in the Federal Register on November 14, 1975 (40

F. R. 53056), as corrected in the Federal Register for De-

cember 24, 1975 (40 F. R. 59497). It is set forth in Ap

pendix A hereto.

The Second Circuit’s opinion (by District Judge Pierce;

concurred in by Associate Justice Clark and District

Jurisdiction

The Second Circuit’s judgment of May 26, 1976, re-

versing the Commission in part, is set forth in Appen-

dix D. Its erder of September 8, 1976, denying timely

petitions f rehearing, is incorporated in its supplemental

opinion of that date (Appendix C). Its orders of Septem-

ber 8, 1976, denying timely suggestions for rehearing in

bane, are set forth in Appendix D. This petition for cer-

tiorari is being filed within the prescribed period of 90

days after September 8, 1976. Jurisdiction is conferred on

this Court by 28 U.S.C. § 1254(1) and § 2350(a), and

42 U.S.C. § 2239(b).

Question Presented

Section 102 (2) (C) of the National Environmental

Policy Act of 1969 (NEPA) requires that all federal

agencies include an environmental impact statement (EIS)

“in every recommendation or report on proposals for legis-

lation or other major federal actions significantly affect-

ing the quality of the human environment”. Pursuant to

this requirement, the Atomic Energy Commission (AEC),

the predecessor of the Commission, commenced the prepa-

ration of a generic EIS prior to expanding present use

of mixed oxide fuel to wide-scale use in light-water cooled

nuclear power reactors (GESMO). The Commission there-

after announced that individual interim licenses could be

issued where warranted under certain specific conditions

based on the Commission’s assessment of the likely bene-

fits of allowing such interim licensing as well as the pos-

sible adverse impacts.

The Second Circuit restrained the Commission from

issuing any commercial licenses for certain mixed oxide

fuel related activities until after the Commission makes

The question presented is whether the Second Circuit’s

blanket injunction against such interim licensing was erro-

neous because it (1) failed to give due regard to the sub-

lar activity was before the Court and any interim license

which the Commission might grant thereon would be sub-

ject to court review on a full record.

Statutes Involved

The statutes involved are set forth in Appendix E

(beginning at p. A-81). They are:

42 U.S.C. 4 4332 (being Section 102 of the National

Environmental Policy Act) ;

42 U.S.C. § 2133 and 4 2201 (b) (being Section 103

and Section 161b of the Atomic Energy Act as

amended).

Statement of the Case

On February 12, 1974, the AEC publicly announced that

in accordance with NEPA and the Council on Environ-

mental Quality’s Guidelines of August 1, 1973, the AEC

had commenced the preparation of the draft GESMO and,

on the completion thereof, would, as appropriate, publish

for comment proposed rule changes governing recycle of

plutonium in light-water cooled nuclear power reactors

(39 Fed. Reg. 5356). The availability of the draft GESMO

was announced by the AEC on August 21, 1974 (39 Fed.

Reg. 30186). Subsequent thereto, on December 10, 1974,

the AEC announced that a public hearing would be held

on the GESMO (39 Fed. Reg. 43101).

On May 8, 1975, the Commission announced its pro-

visional view with respect to the possible deferral of fu-

ture licensing actions related to mixed oxide fuel, based

on its consideration of relevant factors and subject to

the consideration of public comments. (40 Fed. Reg.

20142). The Commission set forth the following guide-

lines to be observed in resolving the deferral issue in such

proceedings :

“1. there should be no additional licenses granted

to use of mixed oxide fuel in light water nuclear

power reactors except for experimental purposes;

and

2. with respect to light water nuclear power re-

actor fuel cycle activities (activities other than nu-

clear power reactor construction and operation)

which depend for their justification on wide-scale

use of mixed oxide fuel in light water nuclear power

reactors, there should be no additional licenses

granted which would foreclose future safeguards

option or result in an unnecessary ‘grandfathering’.

This would not preclude the granting of licenses

for experimental and/or technical feasibility pur-

poses.”

Over 200 comments from the general public, environ-

mental groups, utilities and the nuclear industry were filed

in response to the Commission’s invitation. Although the

environmental groups favored the licensing ban, the utili-

ties and the companies in the nuclear industry urged the

Commission to retrench from its provisional view because

of the staggering costs associated with a delay in the

orderly development of mixed oxide fuel technology, costs

which ultimately would have to be passed on to the rate-

paying public.’

After consideration of all the comments submitted, the

Commission reconsidered its prior proposed blanket ban

on licensing of mixed oxide fuel related activities, and in

its public policy announcement of November 14, 1975 (40

Fed. Reg. 53056) concluded that interim licenses could be

issued for fuel recycle related activities, the eligibility of

which would depend on criteria calling for the analysis

and balancing of specified factors. These criteria were

stated to be (40 Fed. Reg. at 53062):

“(1) Whether the activity can be justified from a

NEPA cost-benefit standpoint, without placing

primary reliance on an anticipated favorable

Commission decision on wide-scale use of mixed

oxide fuel;

(2) Whether the activity would give rise to an irre-

versible and irretrievable commitment of re-

sources that would unjustifiably foreclose for the

activity substantial safeguard alternatives that

may result from the decision on wide-scale use;

and

(3) The effect of delay in the conduct of the activity

on the overall public interest.”

The Commission also concluded that use of mixed oxide

fuel in light-water nuclear power reactors, which in any

Comments by many utilities and companies in the nuclear indus-

try, including Westinghouse, set forth evaluations and calculations

on the resultant cost increase in uranium ore requirements, enrichment

requirements, carrying charges on spent fuel inventories, and expan-

dived caatier 7 Camu Ga which would result from a

delay in plutonium recycle.

7

event could not become wide-scale use because of practical

constraints, may be continued in the interim.

The basis of the Commission’s general conclusion that

individual interim licenses may be issued where warranted,

and under the conditions disclosed in the notice, was

plainly set forth in the notice (40 Fed. Reg. at 53061):

“While the Commission is properly mindful that

certain licensing actions have the potential for fore-

closing subsequent alternatives, it cannot disregard

the equally hard reality that inaction or a blanket

prohibition on fuel recycle related actions could

also foreclose or substantially impede realization

of energy alternatives which may contribute signifi-

cantly to meeting national needs.” (Emphasis sup-

plied. )

Disagreeing with the Commission’s expert judgment in

a highly technical and specialized field, the Second Circuit,

in enjoining all interim commercial licensing, took the

position that the critical national need to develop new

sources of energy and to recycle dwindling uranium re-

“can eigh the far-reaching national concerns

t tock this position despite NEPA’s clearly enun-

ated policy that “it is the continuing responsibility of

the Federal Government to use all practicable means, con-

sistent with other essential considerations of national pol-

icy, to improve and coordinate Federal plans, functions,

programs and resources to the end that the Nation may

. . . enhance the quality of renewable resources and ap-

proach the maximum attainable recycling of depletable

resources.” (42 U.S.C. Sec. 4331 (b) (6)).

Reasons for Granting the Writ

1. National Importance of the Case.

It is no secret to this Court that the United States is

presently grappling with serious energy problems which,

unless appropriate action is taken thereon, can have po-

tentially disasterous economic consequences. Notwithstand-

ing the Arab oil embargo which occurred at the end of

1973, this country has been unable to mobilize the re-

sources and talent necessary to put together a long-term

program for energy self-sufficiency in order to forestall

disruption of the domestic economy by the whims of for-

eign forces.

Despite both Presidents Nixon and Ford hailing pro-

grams calling for energy self-sufficiency and independence,

it would be an overstatement to say that this country is

not in any better condition in this respect than it was im-

mediately prior to the Arab oil embargo. Indeed, a re-

cent Wall Street Journal article laid the situation out

quite frankly and unabasiiedly.* It noted that in the pass-

ing of the economic “pause” of recent months, the econ-

omy is beginning to show signs of increased growth which

will depend upon a larger supply of energy resources, par-

ticularly of petroleum. One of the major uses for such

petroleum is the burning of oil in power generating sta-

tions for the purpose of producing electricity. In dis-

cussing the upeoming meeting of the Organization of

Petroleum Exporting Countries (OPEC) scheduled for

December 15, 1976, at which price increases of 10% to 20%

are expected, the article stated:

“The OPEC members are closely watching the de-

mand for petroleum products in the oil-consuming

* The Wall Street Journal, November 11, 1976, p. 1, 6th Col.

markets of the U.S. and Western Europe for this

is the key factor determining the size of the price

increase. Of course, as demand rises at home, the

U.S. must import ever more of the costlier foreign

oil because domestic oil output has been declining

since reaching a peak in 1970. The U.S. currently

imports more than 40% of its oil, compared with

only 29% in 1973, the year of the oil embargo.”

(Emphasis added).

and further:

“A major reason for the increase in demand for

residual oil is the rapidly increasing use of oil by

US. electric utilities. The Edison Electric Institute

estimates that utilities will burn 597 million barrels

of oil this year, up from 507 million barrels in 1973.

This is despite an increase in the use of coal and

the starting up of nuclear power plants. Until the

oil embargo, electricity output was growing at the

rate of about 7% a year. But in 1974 there was no

growth in output, and last year it was up by only

4%. But this year’s growth is expected to be 6%.”

It is not necessary to recite in detail in this petition the

dislocating consequences that resulted from the Arab oil

embargo of 1973. To be recollected are the long lines at

the gasoline stations, the disruptions in orderly business

planning, the impacts on the contractual relationships be-

tween companies because of the triplefold or quadrafold

increase in prices for raw and unfinished materials, re-

sultant substantial increase in prices for finished goods,

and the abnormal increase in the number of bankruptcies

and insolvencies.

It is against this backdrop that a delay in the recycling

of plutonium, however brief, must be viewed. One of the

10

most significant aspects of plutonium recycle is the re-

sulting preservation of this country’s natural energy re-

source of uranium. Immediate recycle of plutonium re-

covered from spent fuel has been projected to save about

130,000 tons of uranium trioxide through the year 1995,

which savings is equivalent to 10 billion barrels of oil or

2 billion tons of coal.“ Clearly the decision of the Second

Cireuit to declare a moratorium on the granting of com-

mercial licenses for mixed oxide fuel recyele activities is

one of the utmost national importance that should be con-

sidered by this Court.

2. Conflict with This Court’s Recent Decision in Kleppe.

As will be shown hereafter, the Second Cireuit’s deci-

sion is squarely and directly contra to this Court’s deci-

sion on June 28, 1976, in No. 75-552, Kleppe v. Sierra

Club, 96 S. Ct. 2718.

In Kleppe, this Court was faced with the issue of

whether NEPA required the Department of the Interior

and other Federal agencies to prepare a comprehensive

environmental impact statement prior to allowing the fur-

ther development of coal reserves on federally owned or

controlled land in the Northern Great Plains region. This

Court held that NEPA did not require the preparation

of such a statement in the absence of an existing proposal

for region-wide action, and in view of the existence of

individual environmental impact statements for the four

mining plans in a particular geographical section of that

region, which plans had been submitted for approval by

the Secretary of the Interior.

The following views expressed by this Court in Kleppe

(96 S.Ct. at p. 2729), in reversing an injunction restrain-

I Draft GESMO, pp. S 8-10.

11

ing approval of the plans, clearly demonstrate the error

of the, Second Circuit in enjoining interim commercial

licensing herein:

“Assuming that the Court of Appeals’ theory about

‘contemplation’ of regional action would permit a

court to require preproposal preparation of an im-

pact statement, the court’s injunction against the

Secretary’s approval of the four mining plans in

the Powder River Basin nevertheless would have

been error. The District Court had found that re-

spondents would not have been entitled to an in-

junction against any individual projects even if

their claim of the need for a regional impact state-

ment had been valid, because they had shown no

irreparable harm that would result absent such an

injunction and the record disclosed that irreparable

harm would result to the intervenors who sought

to carry out their business ventures and to the pub-

lie who depended upon their operations. (Emphasis

by the Court) The Court of Appeals made no find-

ing as to the equities at the time it originally en-

tered the injunction; when it continued the injune-

tion following its decision on the merits, it stated

only that the ‘harm’ justifying an injunction ‘ma-

tured’ whenever an impact statement is due and not

filed. But on the Court of Appeals’ own terms

there was in fact no harm. First, the Court of

Appeals itself held that no regional impact state-

ment was due at that moment, and it was uncertain

whether one ever would be due. Second, there had

been filed a comprehensive impact statement on

the proposed Powder River Basin mining plans

themselves, and its adequacy had not been chal-

lenged either before the District Court or the Court

of Appeals in this case, or anywhere else. Thus, in

simple equitable terms there was no grownds for

12

the injunction: the District Court’s finding of irre-

parable injury to the intervenors and to the public

still stood, and there were—on the Court of Ap-

peals’ own terms—no countervailing equities.” (Em-

phasis added)

The Second Circuit’s injunction against the Commis-

sion’s announced policy of allowing individual interim li-

censing of mixed oxide fuel recycle activities was errone-

ous because it utterly lacked any factual foundation or

basis that would justify the grant of such drastic and ex-

traordinary relief. The record clearly established that a

delay in interim licensing would occasion substantial and

irreparable harm to the utilities, the nuclear industry and

the public who depend upon them for electricity gener-

ated to a large extent by nuclear energy.“ On the other

hand, the mere announcement by the Commission of its

interim licensing policy that certain activities may be li-

censed upon subsequent compliance with the Commission’s

licensing requirements could not in any fashion occasion

harm to the petitioners below or to the environment.

Quite to the contrary, harm, if any, could only mature,

at the earliest, if and when a license is issued and action

taken thereon, but not before then. By restraining the

Commission from proceeding with allowance of interim

licensing, the Second Cireuit effectively foreclosed any

person from even being able to demonstrate what harm,

5 At 539 F.2d 833, the Second Circuit noted: “Comments received

from i : nuclear power industry recommended generally that the

Commission proceed to interim licensing of certain restricted activi-

ties prior to the final decision on GESMO. Consumers Power Com-

pany, a licensee of two plants, stated that a delay of plutonium licens-

ing until 1978 would cost it six million dollars in additional outlays

for enriched uranium and would cost the entire nuclear industry some

thirty-five to fifty million dollars for spent fuel storage. (See Jnt.

App. at 209).”

13

if any, could result from the grant of a particular license,

applying the NEPA procedural requirements of the Com-

mission, including the analysis and balancing of the in-

terim licensing eligibility criteria enunciated in the Com-

mission’s policy announcement.

Moreover, in the posture of the case before the Second

Circuit, its determination that interim impact statements

for interim licenses would necessarily be inadequate under

NEPA (Supplemental Opinion Denying Rehearing, A-76)

was premature. As this Court emphasized in Kleppe:

“Even had the Court of Appeals determined that

a regional impact statement was due at that

moment, it still would have erred in enjoining

approval of the four mining plans unless it had

made a finding that the impact statement covering

them inadequately analyzed the environmental im-

pacts of, and the alternatives to, their approval.

So long as the statement covering them was ade-

quate, there would have been no reason to enjoin

their approval pending preparation of a broader

regional statement... (96 S.Ct. at 2729, Note 16)

* *

Nor is it necessary that petitioners always com-

plete a comprehensive impact statement on all pro-

posed actions in an appropriate region before ap-

proving any of the projects. [Approval of

one lease or mining plan does not commit the Secre-

tary to approval of any others.. Thus, an

agency could approve one pending project that is

fully covered by an impact statement, then take

into consideration the environmental effects of that

existing project when preparing the comprehensive

statement on the cumulative impact of the remain-

ing proposals.” (96 S.Ct. at 2733, Note 26)

14

In the instant case, no individual impact statements

with respect to any licensing actions were before the Sec-

ond Circuit. Therefore, the Second Circuit prematurely

judged that all such environmental impact statements at

whatever stage of preparation in connection with indi-

vidual licensing actions could never be adequate merely

because of the pendency of a broader, programmatic im-

pact statement on the wide-scale use of mixed oxide fuels.

Furthermore, until such time as an interim license is is-

sued supported by a final environmental impact statement,

the mere announcement by the Commission of the cireum-

stances under which interim licenses would be issued can-

not be deemed a “final order” within 42 U.S.C. 2239(b)

and 28 U.S.C. 2342(4), which is a requisite for the Second

Cireuit’s exercise of direct appellate jurisdiction herein.

See: Citizens for a Safe Environment v. AEC, 489 F. 2d

1018, 1021-22 (3rd Cir. 1974); Ecology Action v. United

States Atomic Energy Commission, 492 F. 2d. 998, 1001

(2nd Cir. 1974).

In Kleppe, this Court emphasized (96 S. Ct. at 2729, Note

15):

“. .. But the time at which a court enters the

process is when the report or recommendation on

the proposal is made, and someone protests either

the absence or adequacy of the final impact state-

ment. This is the point at which an agency’s ac-

tion has reached sufficient maturity to assure that

judicial intervention will not hazard unnecessary

disruption.” (Emphasis supplied)

See also: Port of Boston Marine Terminal Ass’n. v.

Rederiaktiebolaget, 400 U.S. 62, 71 (1970).

Respectfully submitted,

Murox WaxenreLp

Weisman, Cann, Srertr, Momax,

Wertnemer & ScHLesincer

425 Park Avenue

New York, New York 10022

Telephone: (212) 371-5400

Counsel for Westinghouse Electric

Corporation

December 1976.

APPENDIX

— Ss

A-l

APPENDIX A

Nuclear Regulatory Commission's Interim Policy Announce

ment Published November 14, 1975 (40 F.R. 53056) As

Corrected December 24, 1975 (40 F.R. 59497)

Nucl Recvutatory CoMMIssion

Mized Oxide Fuel

Scope, Procedures and Schedule for Generic Environmen-

tal Impact Statement and Criteria for Interim Licensing

Actions

In the May 8, 1975 Feperat Reoister (40 FR 20142), the

Nuclear Regulatory Commission requested public comment

on the subject of procedures for decisions relating to wide-

scale use of mixed oxide fuel in light water nuclear power

reactors. In order to focus attention on the major elements

of the decisions it would have to make, the Commission

stated its provisional views in that notice. The present

notice states the Commission’s conclusions, reached in

light of the extensive public comments received by the

Commission and the Commission’s further deliberations. In

particular, this notice:

Sets forth the Commission’s determination that the sub-

ject of wide-scale use of mixed oxide fuel in the light water

power reactor fuel cycle requires a full assessment of safe-

guards issues before the Commis sion's decision is made;

Specifies the procedures and schedule to be followed

for completion of the environmental impact statement on

wide-scale use of mixed oxide fuel and for the conduct of

the associated hearings; and

Sets forth criteria under which certain licensing actions

can proceed in the interim prior to the Commission’s deci-

sion on the wide-scale use of mixed oxide fuel.

Fuels containing both plutonium oxide and uranium oxide.

A-2

SuMMARY

After a careful review of all comments received on iis

May 8th provisional views, the Commission has determined

that the subject of wide-scale use of mixed oxide fuel in the

light water power reactor fuel cycle requires a full assess-

ment of safeguards issues before its decision is made. At

the same time, the Commission firmly believes that it is in

the national interest to expedite the decision-making proc-

ess to the extent consistent with sound and full examination

of the issues.

Safeguards measures are those measures employed to

prevent the theft or diversion of special nuclear materia's

and to prevent the sabotage of nuclear facilities. The Com-

mission has directed its Staff to prepare, on an accelerated

schedule, and then to circulate for written comment, a safe-

guard supplement to the draft environmental statement

which was issued by the Atomic Energy Commission Staff

in August, 1974. The supplement will include an analysis

of the costs and benefits of alternative safeguards pro-

grams, and a recommendation as to safeguards programs

associated with wide-scale use of mixed oxide fuel. The

Commission has also directed its Staff to expedite prepar-

ation of all aspects of the final environmental statement, in-

cluding safety and environmental matters as well as safe-

guards matters. Proposed rules reflecting the final state-

ment’s analysis of those matters will be published for publie

comment by the Commission.

In issuing its provisional views on May 8, the Commis-

sion contemplated that a final environmental statement

would not be completed until late 1976. It now appears

possible to complete the draft safeguards supplement in

early 1976, and to complete all aspects of the final environ-

mental statement in mid-1976.

The Commission has determined that, in the interest of

informed decisionmaking, publie hearings will be held on

A-3

the final statement and the proposed rules relating to wide-

scale use. The Commission regards a decision-making

process that is both sound and expeditious to be of crucial

importance, and believes that both considerations can be

compatibly accommodated in its public hearing procedures.

Such an accommodation will be fostered by a legislative-

type hearing using a mixture of written and oral presenta-

tions, in which participants can be examined by the presid-

ing board on relevant policy, factual and technica! issues.

The legislative-type hearings will begin as soon as that™

portion of the final statement dealing with health, safety,

and environmental matters is published. Legislative-type

hearings will also be held on safeguards matters when that

aspect of the final statement is completed. The Commis-

sion expects that these hearings will be concluded by the

end of 1976. The legislative-type hearings may be followed

by adjudicatory-type hearings on particular issues if need

for further hearings on such issues is demonstrated to the

Commission. If there is no demonstrated need for adjudi-

catory-type hearings, the Commission expects that its own

fina] decision will be rendered in early 1977. The Commis-

sion cannot say at this time whether adjudicatory-type

hearings will be in order, or how long they would take if

held—their actual duration being dependent on the number

and complexity of the issues found by the Commission to

need adjudicatory treatment.

The Commission has reappraised the guidelines it set

forth in its provisional views for determining what related

activities could be permitted pending its final decision. The

resulting Commission determinations are summarized be-

low.

Staff Review and Hearings. The Commission has de-

cided that Staff Reviews and hearings relating to fuel re-

eycle activities should continue up to the point of actual

licensing.

A-4

Interim Licensing of Fuel Cycle Facilities. On the mat-

ter of actual licensing, in addition to the eligibility ériteria

set forth below, a primary concern of the Commission is to

assure that any license granted in the interim prior to a

final Commission decision on wide-scale use of mixed oxide

fuel is (1) consistent with the Commission’s responsibilities

to protect the public health and safety and the common de-

fense and security, and (2) compatible with environmental!

values. Licenses for individual fuel cycle facilities will be

issued in the interim, where warranted, cons'stent with the

above, only after analysis and balancing of the fo''owing

factors:

Whether the activity can be justified from a cost-benefit

standpoint under the National Environmental Policy Act of

1969, without placing primary reliance on an anticipated

favorable decision on wide-scale use of mixed oxide fuel;

Whether the activity would give rise to an irreversible

and irretrievable commitment of resources that would un-

justifiably foreclose for the activity substantia! safeguards

alternatives that may resu't from the decision on wide-

scale use; and

The effect of delay in the conduct of the activity on the

overall public interest.

The individual impact statement or appraisal, as ap-

propriate, for each individual fuel reeycle related licensing

action subject to the foregoing eligibility criteria will de-

seribe the relationship between the licensing action at issue

and the environmental impact statement on wide-scale use,

and discuss the application of the criteria to the facts of the

case.

Interim Licensing for Use of Mixed Oxide Fuel in Re-

actors. With respect to interim licensing of mixed oxide

fuel in light water nuclear power reactors, the Commission

believes that use of such fuel could produce useful addi-

tional economic and technical data. Such use wou!d neither

A-5

constitute nor markedly contribute to ‘‘wide-scale use’’ be-

cause of the limited mixed oxide fuel fabrication capacity

that will be available. Such licensing will accordingly be

permitted.

Safeguards for Interim Licensing. With regard to exist-

ing licensed activities, while experience and continuing

study may indicate areas where revisions in its regulations

should be made, the Commission is confident that, in light

of the types and numbers of facilities and amounts of ma-

terials involved, the safeguards framework described below

is adequate to enable the Commission to carry out its re-

sponsibilities to protect the public hea'th and safety and the

common defense and security.

The Commission is of the same view as regards the in-

terim use of mixed oxide fuel in light water power reactors,

and the associated transportation of reactor fuel. The

Commission believes that those activities, so regulated, im-

pose little or no increase in current leve's of risk associated

with loss or diversion of plutonium, and that current safe-

guards will provide adequate protection for interim licens-

ing of its use. Interim licensing of initia’ process ng of

spent fuel to separate its uranium and plutonium constitu-

ents, of conversion of the uranium constituent to uranium

hexafloride, and associated transportation links, can also

proceed on the basis of current safeguards regulations.

With respect to interim licensing of other fuel cycle activi-

ties which may demonstrate eligibility (i.e. plutonium ni-

trate-to-ox'de conversion and mixed oxide fuel fabrication,

and associated transportation links), the Commission ex-

pects to publish proposed safeguards rules for the interim

in the Feperat Reorsrer at the same time as issuance of the

draft safeguards supplement in early 1976. Final safe-

guards rules for licensing such fuel cycle activities in the

interim will be adopted after public comment procedures,

at the time the Final Environmental Statement is issued

(mid-1976).

A-6

The Appendix to this Notice sets forth, in sequential

manner, the projected times for completion of the draft and

final environmental impact statements; for publication of

safeguards rules relating to interim licensing and rules re-

garding wide-scale use of mixed oxide fuel; for issuance of

notice of hearing; and for the final Commission decision on

wide-scale use.

Backcrounp

On February 12, 1974, the Atomic Energy Commission

(AEC) announced that a generic environmental impact

statement would be prepared prior to an AEC decision on

the wide-scale use of mixed oxide fuel (also referred to as

plutonium recycle fuel) in light water nuclear power re-

actors (39 FR 5356). On August 21, 1974, notice was pub-

lished in the Feverat Reeorster that a draft environmenta,

impact statement on this matter had been prepared, pur-

suant to the National Environmental Act of 1969 (NEPA),

by the AEC Staff (39 FR 30186).

The principal conclusion in the draft environmental im-

pact statement issued by the AEC Staff was that utilization

of plutonium resources as recycle fuel in light water nuclear

power reactors should be approved. The AEC Staff

reached favorable conclusions with respect to matters of

public health and safety, and the environment. The AEC

Staff found in this connection that the total environmental

impact from the nuclear fuel cycle, using mixed oxide

fuel, would be slightly reduced, and that the safety of

light water power reactor operations would not be ad-

versely affected. The draft statement further reflected

that uranium reserves would be extended, and that re-

quirements for uranium enrichment would be reduced. Al.

though the draft environmental impact statement did not

set forth a fully developed and detailed cost-benefit analysis

of alternative safeguards programs, it did review the then

current safeguards program, presented some cost estimates

A-7

for safeguards, and noted numerous measures that could

contribute to upgrading of that program. The Staff con-

cluded that the safeguards problems would be manageable

and that there did not appear to be any safeguards related

rationale sufficient to delay a decision to permit the use of

mixed oxide fuel for light water power reactors or associ-

ated production activities. .

The AKC Staff stated in the draft statement that indica-

tions at that time pointed to decisions on safeguards up-

grading within about one year after issuance of the final

environmental statement. At the time, the AEC Staff ex-

pected that this separate decision on the safeguards meas-

ures necessary for wide-scale use would be made by mid-

1976. However, this estimate did not include any time for

preparation and issuance of draft and final environmental

impact statements on the safeguards measures or any pub-

lie proceeding.

In a January 20, 1975 letter to the Nuclear Regulatory

Commission, the President's Council on Environmental

Quality expressed the view that, although the draf en-

vironmental statement was well done and reflected a hig’

quality effort, it was incomplete because it fa‘led to pre-

sent a detailed and comprehensive analysis of the environ-

mental impacts of potential diversion of special nuclear

materials and of alternative safeguards programs to pro-

tect the public from such a threat. The Council believed

that such a presentation should be made by the Nuclear

Regulatory Commission before its final decisions on plu-

tonium recycle. The Council also expressed the view that

the Nuclear Regulatory Commission should take care to

avoid actions which would foreclose safeguards alterna-

tives or which would result in unnecessary ‘‘grandfather-

ing dung the period in which the safeguards issue is

being resolved.

On May 8, 1975, following its consideration of the rele-

vant issues, the Commission published in the Fevenat Reo-

A-8

IsTER its provisional views regarding the decisional course

it would follow on wide-scale use of mixed oxide fuel (40

FR 20142). The Commission’s provisional views were

that, subject to consideration of comments to be received:

(1) A cost-benefit analysis of alternative safeguards

programs should be prepared and set forth in draft and

final environmental impact statements before a ('ommis-

sion decision is reached on wide-scale use of mixed oxide

fuels in light water nuclear power reactors.

(2) There should be no additional licenses granted for

use of mixed oxide fuel in light water nuclear power reac-

tors in the interim prior to the decision on wide-scale use

except for experimental purposes; and

(3) With respect to light water nuclear power reactor

fuel cycle activities (activities other than nuclear power

reactor construction and operation) which depend for their

justification on wide-scale use of mixed oxide fuel in light

water nuclear power reactors, there should be no additional

licenses granted in the interim which would foreclose fu-

ture safeguards options or result in unnecessary ‘‘grand-

fathering’’. This would not preclude the granting of li-

censes in the interim for experimental and/or technical

feasibility purposes.

The Commission indicated in the May 8th Notice that,

in developing its provisional position on these issues, it

took due account of the views of the President’s Council

on Environmental Quality, both in terms of the substance

of those views, and in recognition of the Council’s role in

reviewing Federal activities for consistency with the poli-

cies of NEPA and in formulating guidelines for the prepa-

ration of environmental impact statements.

In the May 8th Notice the Commission requested the

views of interested persons on these provisional views.

Comments were requested in particular on (1) the relative

merits of the Commission’s provisional approach to prepa-

A-9

ration of the generic environmental impact statement and

of the earlier approach adopted by the AEC Staff, or

other alternatives, from the standpoint of the relevant

policy, factual, and legal considerations; (2) whether the

question of deferring future licensing actions related to the

use of mixed oxide fuels should be left for resolution in

individual licensing proceedings, or addressed by the Com-

mission as a gencric matter; and (3) the appropriateness

of the Commission’s guidelines for resolving the individual

licensing actions set forth above. Comments were re-

quested by June 9, 1975.

On May 27, 1975, before the expiration of the original

comment period, the Commission held public meetings with

industry groups and other interested persons to respond

to questions seeking clarification of the May 8th Notice.

The comment period later was extended until July 24, 1975.

Over two hundred comments were received in response

to the May 8th Notice. These comments have been placed

in the Commission’s public document room and are avail-

able for review by the public.’ :

The comments focused to a major extent on four general

issues:

(1) The desirability of completing a cost-benefit anal-

ysis of alternative safeguards programs as a part of the

Commission decision on the wide-scale use of mixed oxide

fuel in light water nuclear power reactors;

(2) The desirability of permitting various related li-

censing actions to be taken pending a Commission decision

on wide-scale use ;

2 Three supplementary statements received in response to a Staff

request for additional information contained a request that certain

information submitted be withheld from public disclosure as pro-

prietary information. None of this information is included in this

Notice and none of this information has been relied on in reaching

any conclusions in this Notice.

A-10

(3) The adequacy of present Commission regulations

to protect against loss or diversion of plutonium associated

with related licensing actions in the interim period; and

(4) The procedures to be utilized by the Commission

in reaching a decision on wide-scale use of mixed oxide

fuel, including hearing procedures.

With respect to those comments which specifically ad-

dressed the first issue noted above, comments from five

utilities, nine environmental groups, four state or local

government agencies, two Senators, one Congressman, one

vendor, and two private law firms indicated that a cost-

benefit analysis of alternative safeguards programs should

be included as part of the Commission decision on wide-

scale use. Comments from. twenty-eight utilities, five ven-

dors, two industry/trade associations, one state govern-

ment agency, one federal agency, one engineering company,

one university department, and ten private citizens indi-

cated a belief that such a cost-benefit analysis was not

needed. Comments from five utilities contained a proposal

that the decision on wide-scale use include an analysis that

would place an upper limit on safeguards costs, but that

the detailed cost-benefit analysis be postponed until some

time subsequent to the decision on wide-scale use.

Of those comments specifically addressing the second

issue (the matter of interim licensing), eighteen utilities,

two vendors, one trade association, one state government

agency, and one engineering firm did not believe that any

restrictions on interim licensing were necessary. Thirty-

two utilities, six envirionmental groups, eight vendors,

three industry/trade associations, four state and local gov-

ernment agencies, two federal agencies, and five private

citizens indicated that some related licensing actions should

be taken in the interim, subject to certain restrictions and

limitations. Comments from eight private citizens, one

Congressman, one envirionmental group, and one county

A-ll

government urged that no related licensing action be taken

in the interim period.

Of those who specifically addressed the third issue (ade-

quacy of present safeguards requirements), thirty utilities,

fifteen vendors and processors, eight private citizens, two

federal agencies, and one state government agency believed

that present safeguards requirements were adequate for

interim licensing; while eight private citizens, one Con-

gressman, one envirionmental group and one county gov-

crnment believed that present regulations were inadequate

for this purpose in the absence of further analysis. On

the final issue (procedures for reaching the ultimate deei-

sion), while there was general agreement on the desira-

bility and feasibility of a prompt decision on the widescale

use of mixed oxide fuel, a wide variety of procedures were

suggested for accomplishing this objective.

The comments received contributed greatly to the Com-

mission's informed consideration of the issues involved.

Present Uses or Pivrowtum m ree Licnt Warn

Reactor Furt, Cy

Light water nuclear power reactors (LWRs) have char-

acteristically been fueled with slightly enriched uranium,

i.e., uranium in which the naturally occuring fissile isotope

uranium-235 has been concentrated from its natural abun-

dance of 0.7 percent to about 3 percent through a process

called isotopic enrichment. Essentially al! ef the other 97

percent of the uranium in the fuel is the isotope uranium-

238.

The heat energy produced during the operation of newly

fueled light water reactors comes almost entirely from the

fissioning of the uranium-235 atoms in the fuel. As the

reactor operates, atoms of plutonium are produced from

uranium-238 atoms. For each gram of uranium-235 con-

sumed in LWR fuel, as much as 0.9 grams of fissile plu-

tonium is formed within the fuel. Generally, more than

A-12

half of that plutonium subsequently fissions in place, thus

contributing about one-third of the energy produced in the

power plant. In fact, just before expended fuel is dix

charged from the reactor, more than half the fixsions oc

curing in that fuel are fissions of plutonium rather than

uranium. Thus, all operating uranium-fueled light water

power reactors generate plutonium, some of which ix con

sumed in the reactor without external recyele.

From the early days of the nuclear power industry in

this country, electric utilities planning to construct and

operate light water nuclear power reactors contemplated

that the used, or spent fuel discharged from the reactors

would be chemically reprocessed to recover the quantities

of plutonium and uranium that escaped fission in the re.

actor, and that the plutonium and uranium so recovered

would be recycled back into fresh reactor fuel. From 1957

until 1972 the AEC carried out an extensive program of

spent fuel recycle research and development at a total cost

of over one hundred million dollars. Direct support by

AEC of this research terminated in mid-1972, although in-

direct support by the AEC continued through cooperative

efforts with industry whereby AEC supplied plutonium at

reduced cost for demonstration of mixed oxide fuel use.

Industry plans are to carry out the spent fuel reevele

process in the following steps:

(1) Store the spent fuel to allow some decay of radio

activity ;

(2) Separate plutonium and uranium from fission

product wastes as nitrate solutions;

(3) Convert the uranium to uranium hexafluoride

which is then enriched to increase the concentration of the

fissile isotope uranium-235 ;

(4) Convert the uranium hexafluoride to uranium Ji

oxide ;

A-13

(5) Convert the plutonium nitrate to plutonium ox-

ide ;

(6) Manufacture fuel rods with pellets containing

mixed plutonium and uranium oxides ;

(7) Fabricate fuel elements containing fuel rods of

mixed oxide fuel;

(8) Convert the fission product wastes into forms suit-

able for long term storage ;

(9) Transport materials as required by the above

processing, production, or storage operations.

The spent fuel which is the starting point of the overall

recycle process produces highly penetrating radiation and

thus is very hazardous to anyone exposed to it. Accord-

ingly, the separations step, the second of the above steps,

must be carried out behind massive shielding and with the

use of remote operating technology. In the separations

processes the fuel elements are sheared and the fuel matc-

rials dissolved prior to the separation of the constituents.

After the plutonium and uranium nitrate solutions have

been separated from the fission products and purified, the

purified materials no longer contain the highly penetrating

radiation which is inherent to the fission products. Thus,

after the separations step, the plutonium and uranium

products are significantly less radioactive.

The conversion of recovered uranium to uranium hexa-

fluoride, subsequent isotopic enrichment and manufacture

of low enriched uranium oxide fuel would be carried out

in essentially the same type facilities and operations that

are utilized when starting from naturally occurring urani-

um. The basic technology for conversion of plutonium

nitrate to its oxide and for carrying out the manufacture

of mixed oxide fuel has been developed in both government

and industrial plutonium utilization programs. However,

the capacity of the facilities presently licensed for this use

and the quantities of material that have heen handled to

A-14

date are of a magnitude far below that which would be in

volved in wide-scale use.

The conversion of limited quantities of fission product

wastes into forms suitable for long term storage has been

performed by a variety of methods in research and devel

opment programs. However, only small quantities of

fission product wastes from commercial recycle of spent

fuel have been generated to date and no commercial seal.

facilities for the conversion of such wastes have been de

signed or licensed to date.

Mixed oxide fuel and the materials involved in the fabri

cation of the fuel are being transported today and consid

erable experience exists with the factors involved in these

transportation arrangements. Wide-scale use of mixe«|

oxide fuel in light water reactors will require transport of

larger amounts of commercial fuel materials in their vari-

ous forms than are being transported today, but no other

transportation factors of significance are introduced. To

date fission product wastes have not been shipped to facili-

ties for long term storage; thus, such shipment, while not

judged to be markedly different from the shipment of spent

fuel itself with regard to health and safety, environmental

and safeguards considerations, has not been performed by

industry.

At present, three light water nuclear power reactors

(Big Rock Point in Michigan, Quad-Cities 1, and Dresden

1 in Illinois) are licensed to operate with mixed oxide fucl

The number of mixed oxide fuel rods in these reactor

ranges from less than 0.1 percent in a commercial size

(800 megawatts of electricity) reactor, Quad-Cities 1, to

about eleven percent in a very small (70 megawatts of clec-

tricity) reactor, Big Rock Point.

There are in operation today no plants for reprocessing

of light water reactor spent fuel or mixed oxide fabrica

tion plants of the size contemplated for wide-scale use.

rr

A-15

Ilowever, the Nuclear Fuel Services reprocessing plant at

West Valley, New York, which is presently shut down,

operated between 1966 and 1971, during which period this

plant processed about 640 metric tons of spent fuel of which

about one-half was uranium oxide fuel. Also, there are a

number of small mixed oxide fuel fabrication plants in op-

eration licensed to produce limited quantities of mixed

oxide fuel. Their capacity is a small proportion of the

capacity required to produce mixed oxide fuel for commer-

cial reloads of the nation’s existing light water reactors.

The Commission has pending before it several related

licensing actions. One is Nuclear Fuel Services’ applica-

tion for a permit to construct alterations and expansions

(Docket No. 50-201) at their existing plant. Allied General

Nuclear Services’ proposed separations and uranium con-

version facilities in Barnwell, South Carolina, the construc-

tion of which began in 1970 and 1973, respectively, are near-

ing completion. The separations facility is the subject of

a pending licensing proceeding before the Commission

(Docket No. 50-332, together with a related matter, Docket

No. 70-1729). Allied-General Nuclear Services also has

filed an application for authority to construct and operate

at its Barnwell site a facility for conversion of plutonium

nitrate to plutonium oxide. In addition, an application by

Westinghouse Electric Corporation for a license for a pro-

posed mixed oxide fuel fabrication plant near Anderson,

South Carolina, has been received and is undergoing re-

view by the Commission’s Staff. Other firms have ex-

pressed an interest in various plutonium recycle related

activities, but have not filed any license applications.

GewveraL Pourcy Ossectives or THE COMMISSION

In considering and arriving at its various determina-

tions, the Commission was motivated by several basic pol-

iev objectives in carrying out its responsibilities under the

Atomie Energy Act and NEPA. In keeping with its gen-

A-16

eral approach to regulatory matters, it sought to structure

a decisional process which will assure thorough considera-

tion of all salient factors and achieve this as expeditiously

as practicable. It was the Commission’s companion objec-

tive that this decisional process result in determinations

that are sufficiently definitive and well-founded to allow

firm planning by the nuclear industry. Further, the Com-

mission was mindful of the need for sound guidelines to

provide for such interim licensing as is compatible with

the Commission’s decisional course and consistent with

the overall public interest.

TREATMENT Or SAFEGUARDS IN THE ENVIRONMENTAL STATE-

MENT AND Procepures ror Decision

In light of its review of comments received in response

to the May 8th Notice and its further deliberations, and

consistent with the foregoing policy objectives, the Com-

mission has concluded that a decision on wide-seale use of

mixed oxide fuel in light water nuclear power reactors

should be preceded by a full assessment of relevant safe-

guards issues. The Commission has also concluded that a

cost-benefit analysis of alternative safeguards programs

should be included as a part of the environmental impact

statement on wide-scale use of mixed oxide fuel. It has

directed its staff to prepare a cost-benefit analysis, includ-

ing a recommendation as to the preferred requirements, in

the form of a supplement to the draft statement previously

circulated for comment. This supplement should be com-

pleted in early 1976, and will be circulated for comment.

The comments on the non-safeguards portions of the

draft statement will be considered and that portion of

the final statement will then be prepared and issued in

early 1976. The remainder of the final environmental

impact statement, which should be completed in mid-1976,

will include a final safeguards cost-benefit analysis and an

overall cost-benefit balance.

Te

417

The public will continue to be afforded the opportunity to

participate in the Commission’s decision on wide-scale use,

not only by submission of written comments on the supple-

ment to the draft environmental statement, but also by the

opportunity for participation in public hearings which will

be held on both portions of the final environmental impact

statement. The Commission intends that these hearings

commence following issuance of the relevant portion of the

final impact statement.

The Commission regards a decision-making process which

is both sound and expeditious to be of crucial importance

and believes that both considerations can be compatibly

accommodated in its public hearing procedure. This ac-

commodation will be fostered by legislative-type hearings

on all relevant issues. The Commission will establish a

board to preside at those hearings. The hearing boerd will

be expected to establish reasonable time limits for the

conduct of the proceedings. All direct testimony for the

legislative-type hearings will be filed in advance. The board

will be expected to question witnesses, and participants

will be permitted to suggest questions to the board, but there

will not be direct cross-examination of participants by other

participants.

It may be that some factual issues cannot be resolved

adequately on the basis of a record developed in this

manner. Following completion of the legislative-type

hearings, participants will have the opportunity to identify

any such issues of fact for which direct cross-examination

by the participants is needed for a sound decision. The

participant requesting cross-examination on one or more

such issues will be expected to demonstrate why the legisla-

tive-type procedures have not proved adequate. After con-

sideration of any such requests and the views of the other

participants thereon, the Commission will determine wheth-

er there is any need for further hearings, with opportunity

for cross-examination, on specified issues. Following the

A-18

hearings, the board will certify the record to the Commis-

sion for use in its decision.

The procedures for hearing will be set forth in more

detail in a Notice of Hearing which will be issued by the

Commission in the near feature.

The Commission expects to publish proposed safeguards

rules governing interim licensing of plutonium conversion

and mixed oxide fuel fabrication activities when the supple-

ment to the draft statement is issued. A written comment

procedure will then be available. These interim require-

ments would be promulgated in final form when the last

portion of the generic impact statement is issued in mid-

1976.

In addition, the Commission intends to issue proposed

amendments to its rules and regulations relating to the

licensing of wide-scale use of mixed oxide fuels in notices

of proposed rulemaking to be published in the Froernat.

Reoister at about the time relevant portions of the impact

statement are completed. These proposed amendments will

address safety, environmental, and safeguards matters asso-

ciated with wide-scale use of mixed oxide fuel.

In addition to the usual opportunity for written public

comment on these rules, an opportunity will be afforded

for consideration of them during the hearing process. The

Commission intends to promulgate appropriate rules in final

form at the time of its final decision.

Inrenm™ Reviews

Only a few light water nuclear power reactors in the

United States use any mixed oxide fuel, domestic fuel

fabricators produce little mixed oxide fuel on a commercial

basis, and no domestic reprocessing of commercial light

water power reactor spent fuel oceurs at present. If the

applicant's schedule were met and the Commission author-

ized its operation, the fuel separations and uranium con-

A-19

version facilities at the Barnwell plant (with estimated

processing capacity of about 1500 metric tons of spent fuel

per year) could start up in late 1976 to early 1977. The

recovered uranium would then have to be chemically con-

verted, reenriched and fabricated into fuel before it could

be recycled back into light water power reactors. Allied-

General Nuclear Services has filed an application containing

preliminary design information for a plant at Barnwell in

which plutonium nitrate would be converted to plutonium

oxide. If authorization were granted by the Commission for

construction and operation of the plant, it is unlikely that

such conversion operations could commence any earlier than

mid-1979.* The proposed modified and expanded NFS re-

processing plant, including plutonium and uranium con-

version facilities (with estimated reprocessing capacity of

about 750 metric tons of spent fuel per year) is still under

design and, if authorized, is not expected to be in operation

before about 1982. No construction has commenced on the

proposed Westinghouse mixed oxide fabrication plant (200-

400 metric tons of mixed oxide fuel per year) and it is not

likely that the plant will, if authorized, be in operation

before 1980. Other plutonium recycle related plants may be

in the planning stage ; but license applications for activities

of this type have been filed only for the three plants noted

above.

Given these practical limitations on the availibility of

mixed oxide fuel in the United States before the early to

mid-1980’s—long after the Commission’s decision will have

been made—two limited questions are presented at this

time for Commission consideration: first, whether and, if

80, to what extent Staff reviews and publie-hearings re-

garding related license applications should be commenced

or continued prior to the Commission decision on the wide-

* Under 10 CFR § 71.42, after June 17, 1978, plutonium in ex-

cess of 20 curies per package must be shipped in a solid form (Le.,

plutonium oxide rather than nitrate solution).

A-20

seale use of mixed oxide fuel; and second, whether the

Commission should, in the exercise of its regulatory respon-

sibilities, issue licenses or other approvals for fuel recycle

activities in this interim period. These issues are treated

in turn.

Staff Reviews and Public Hearings. Staff reviews of the

various license applications described above are now in

process. The Commission believes that these reviews

should continue and that Staff reviews can also com-

mence and continue with respect to any future fuel recycle

related license applications that may be filed during the

interim prior to the Commission decision on the wide-scale

use of mixed oxide fuel. Any such applications must

show compliance with detailed and stringent health and

safety and environmental requirements, independent of

generic issues regarding safeguards for the wide-scale

use of mixed oxide fuel; and it would serve no useful

purpose to delay consideration of these factors until after

the ultimate decision. Continuation of Staff reviews in the

interim would also serve to facilitate early identification

of any significant problems, or areas in which plant design

might be improved or additional data should be obtained.

It is recognized, of course, that Staff Safety Evaluations

or Environmental Impact Statements may need to be sup-

plemented in light of the Commission's final decision

should that decision be favorable, but this is a matter

that can be determined once thai decision has been made.

The Commission also has carefully considered whether

public proceedings should be commenced or continued

short of license issuance for all related license applica-

tions in the interim period. The Commission has con-

eluded that the considerations discussed above also are

applicable to the initiation or continuation of formal public

proceedings. However, in recognition of the fact that such

proceedings entail commitments of resources by persons

A-21

other than the Commission’s Staff, the Commission has

decided that no rigid requirement for proceeding on all

issues should be adopted. Rather, the Commission believes

that any required formal public proceedings should be

initiated, but that the individual Atomic Safety and Li-

censing Boards should decide, within the framework of

the guidance set forth below, when evidentiary public

hearings should be held and partial decisions rendered on

specific issues. In making such decisions, the licensing

boards should consider: (1) the degree of likelihood that

any early findings on the issue(s) would retain their valid-

ity following the Commission’s final decision on wide-scale

use of mixed oxide fuel and implementing regulations; and

(2) the possible effect on the public interest and the liti-

gants in having an early, if not necessarily conclusive,

resolution of the issue(s).

I~trerm™ Licensixne

Aside from the issue of whether Staff reviews and public

hearings should be continued, the Commission also consid-

ered the question of whether, in the exercise of its regula-

tory responsibilities, it should issue licenses or other ap-

provals for limited fuel recycle activites in the interim pe-

riod.

The Commission has concluded that interim licenses may

be issued for fuel recycle related activities; eligibility for

consideration of such licensing will depend on criteria which

call for an analysis and balancing of specified factors. These

criteria, which will be explained more fully below, deal with

whether the activity can be justified from a NEPA cost-

benefit standpoint without placing primary reliance on an

anticipated favorable Commission decision on wide-scale use

of mixed oxide fuel, whether the activity would unjustifiably

foreclose substantial safeguards alternatives for the activ-

ity, and the effect of delay in the conduct of the activity on

the overall public interest. The Commission also has con-

A-22

cluded that use of mixed oxide fuel in light water nuclear

power reactors, which is in any event limited by practical

constraints, may be permitted in the interim. For interim

licensing of certain types of fuel cycle activities augmented

safeguards requirements may be imposed as discussed be-

low.

In reaching its general conclusion that individual interim

licenses may be issued where warranted, and under the

specific conditions discussed in this notice, the Commission

assessed the likely benefits of allowing such interim licens-

ing as well as the possible adverse impacts. Here, as in

other decisional areas, the need for careful balance was evi-

dent. While the Commission is properly mindful that cer-

tain licensing actions have the potential for foreclosing sub-

sequent alternatives, it cannot disregard the equally hard

reality that inaction or a blanket prohibition on fuel re-

eyele related licensing actions could also foreclose or sub-

stantially impede realization of energy alternatives which

may contribute significantly to meeting national needs.

Protection or THE Puste HU anv Sarety, tue Cou-

mon Derense anv Security anp THE ExvrroxMeENT

The Commission believes that any public health and

safety environmental issues associated with interim licens-

ing can be addressed adequately under the Commission’s

regulations within the context of the reviews of the individ-

ual license applications. The Commission is of the view

that interim licensing of a particular activity would not

foreclose for that activity significant health and safety or

environmental alternatives that may result from the final

decision on wide-seale use of mixed oxide fuel. This con-

fidence is based on the health and safety and environmental

conclusions in the August 21, 1974 draft environmental im-

pact statement, the Comments received thereon (including

the comments of the Counci] on Environmental Quality),

A-23

and the comments received on the Commission’s provisional

views of May 8, 1975.*

The Commission is also of the view that, for the reasons

given above and because of the limited number and type of

plants involved, interim licensing of particular projects

prior to completion of the generic environmental impact

statement would not result in the overlooking of any cumu-

lative health and safety or environmental impacts or in the

foreclosure of alternatives to other projects that could only

be addressed in the generic environmental statement.

For the same reasons the Commission believes that in-

terim licensing is not likely to result in such a substantial

further commitment of resources that the final decision on

the costs and benefits of the public health and safety and

environmental aspects of wide-scale use of mixed oxide

fuel would be significantly affected or that ge: ric determin-

ations on such aspects would be foreclosed. The matter of

foreclosure uf safeguards alternatives is addressed below.

Overall Public Interest. Broad public interest conisdera-

tions must be weighed in determining the appropriateness

of interim licensing. Whether the Commission decision on

wide-scale use of mixed oxide fuel is favorable or unfavor-

able, an absolute prohibition on the conduct of any related

activities in the interim could result in the disruption or

cessation of planning as well as the production of useful

data. Such a prohibition could result in potentially serious

delays in exploring alternatives which could contribute to

meeting the nation’s energy needs. This could impose future

economic penalties on the American public through in-

creased coats to electric utilities caused by delaying the use

of resources available in spent fuel and requiring additional

»The so-called plutonium bot particle matter, which is the

subject of a petition for rulemaking that is pending before the

Commission, is expected to be resolved in the near future. Docket

No. PRM 20-5.

A-24

spent fuel storage facilities that otherwise would not be

needed.

The Commission, therefore, has concluded that it will be

in the public interest to permit interim licensing under

interim licensing eligibility criteria which are set forth

below.

Foreclosure of Safeguards Alternatives. In view of the

limited number of fuel recycle related license applications,

the Commission believes that any interim licensing is highly

unlikely to result in such a substantial further commitment

of resources that the decision on the costs and benefits of

safeguards measures appropriate for widescale use of

mixed oxide fuel would be significantly affected or that

generic safeguards determinations would be foreclosed.

It is recognized that interim licensing of a particular

project could, depending on the circumstances, have a

tendency to foreclose the later adoption of safeguards al-

ternatives to the particular project. Of course, where sub-

stantial commitments of resources have already been made

to a particular project, additional commitments to the

project are far less likely to have this result. With respect

to the use of mixed oxide fuel in reactors, it is not likely

that significant design changes would be required to ac-

commodate loading of mixed oxide fuel, and the fuel ean

always be removed and the reactor refueled with uranium

fuel. Thus, authorization for use of mixed oxide fuel in

light water power reactors in the interim is not likely to

foreclose safeguards alternatives significantly. The interim

licensing criteria reflect these considerations as well.

Any related licenses that may be issued by the Commis-

sion in the interim prior to the final decision on the wide-

seale use of mixed oxide fuel must also include adequate

measures to protect against loss or diversion of the quan-

tities of plutonium that may be involved. These interim

safeguards requirements are discussed later in this notice.

Dependency on Wide-Scale Use. Potentially significant

benefits associated with interim licensing include the pro-

A-25

duction of useful additional economic and technical data

regarding the operation of reprocessing facilities and other

fuel cycle plants and the operation of reactors with mixed

oxide, the value of the fuel that could be recovered in re-

processing and recycled into fresh reactor fuel, and amelio-

ration of a possible shortage of spent fuel storage capacity.

Major Commission actions, such as licensing the opera-

tion of commercial fuel reprocessing facilities or operation

of fuel element fabrication plants, require preparation of

an environmental impact statement under NEPA. Such an

impact statement would set forth a conclusion whether the

environmental costs that are associated with the project are

justified in light of the benefits. The benefits described

above could, depending on the circumstances of the case, be

cufficient under NEPA to offset the environmental costs of

a particular project. However, it is possible that some

projects may be so integrally related to the wide-scale use

of mixed oxide fuel that the environmental costs associated

with the project could only be justified by assuming that

wide-scale use of mixed oxide fuel will take place. In the

Commission’s view, the degree of dependency of a parti-

cular project on a favorable decision on the wide-scale use

of mixed oxide fuel should be assessed along with other

relevant considerations, in determining whether any in-

terim license for the projects should be issued.

Iwrerm Licenstno Exiorsriry Crarreria

The Commission has determined that whether specific

fuel recycle related activities (as defined below) should be

authorized in the interim will be determined within the

context of the individual licensing proceedings on the basis

of consideration and balancing of the following factors:

(1) Whether the activity can be justified, from a NEPA

cost-benefit standpoint, without placing primary reliance on

A-26

an anticipated favorable Commission decision on wide-scale

use of mixed oxide fuel;

(2) Whether the activity would give rise to an irrever-

sible and irretrievable commitment of resources that would

unjustifiably foreclose for the activity substantial safe-

guards alternatives that may result from the decision on

wide-scale use; and

(3) The effect of delay in the conduct of the activity on

overall public interest.

These criteria will be applied to all applications for li-

censes or permits or amendments thereto for fuel recycle

related activities (other than reactor construction and op-

eration), such as commercial nuclear fuel reprocessing and

mixed oxide fuel fabrication, and all regular actions that

would have the effect of permitting commencement of con-

struction of any such light water nuclear power fuel cycle

plants.“

Operating licenses and amendments to operating licenses

may be issued authorizing use of mixed oxide fuel in light

water nuclear power reactors without case-by-case applica-

tion of the eligibility criteria for fuel cycle activities de-

scribed above. The Commission believes that this use of

mixed oxide fuel in the interim could produce useful addi-

tional economic and technical data. This concept was re-

Under the Commission's regulations, applicants for licenses to

conduct activities involving use of nuclear materials subject to

section 102(2)(C) of NEPA (such as plutonium fuel fabrication)

may commence construction of the plant within which the activities

are to be conducted upon issuance of the final Staff environmental

impact statement and Commission approval of the design bases and

quality assurance program for principal structures, systems, and

components of the plant. (10 CFR § 70.23(a)(7) and 70.23(b)).

The Commission believes that commencement of construction of any

such related plants should be subject to the same interim licensing

eligibility criteria as apply to those fuel cycle facilities which re-

quire issuance of construction permits.

A-27

flected in the Commission’s provisional views as set forth in

the May 8th Notice, which favored permitting continued

use of mixed oxide fuel in reactors for experimental pur-

poses. Significant design changes in light water reactors

will not be required for likely uses of mixed oxide fuel ele-

ments, which can readily be replaced with uranium fuel

should circumstances require. As noted previously, all

operating uranium-fueled light water power reactors gen-

crate plutonium, some of which is consumed in the reactor

without external recycle. In the interest of obtaining a

broader data base, no limits will be placed on the number of

light water reactors for which such authorizations may be

granted. The Commission is mindful, however, that the use

of mixed oxide fuel in reactors during the interim will

necessarily fall far short of wide-scale use, because of the

limited mixed oxide fue) fabrication capacity that will be

available. The Commission expects to make its decision on

wide-scale use well before this situation could significantly

change.

Applications for export or import of mixed oxide fuels,

or for import of plutonium for domestic or re-export use

in mixed oxide fuels, will be similarly constrained during

the interim period by the absence of facilities here or

abroad capable of processing and fabricating mixed oxide

fuels at levels approaching wide-scale use. Accordingly,

here too, no special measures are now required.

Iyterm Licensine Sarecuarps

As is the case with all licenses issued by the Commission,

any interim license that may be issued for nuclear power

reactor fuel cycle activities will be subject (by regulation

or order) to possible additional safeguards requirements.

All interim activities that may be authorized pursuant to

the above eligibility criteria will be conducted at the risk

of the applicant, and be expressly subject to amendment,

suspension, or revocation in light of the Commission deci-

sion on wide-scale use of mixed oxide fuel.

A-28

The Commission’s program for safeguarding nuclear fa-

cilities and materials involves continual review and regula-

tory improvements. Current safeguards regulations are set

forth in 10 CFR Parts 70 and 73. The regulations in Part

70 provide for material accounting and control require-

ments with respect to facility organization, material con-

trol arrangements, accountability measurements, statistical

controls, inventory methods, shipping and receiving pro-

cedures, material storage practices, records and reports,

and management control.

The Commission’s current regulations in 10 CFR Part 73

provide requirements for the physical security and protec-

tion of fixed sites and transportation involving strategic

quantities of nuclear materials. Physical security reqnire-

ments for protecting fixed sites include the establishment

and training of a security organization (including armed

guards), provision of physical barriers, establishment of

access controls, use of intrusion alarms, arrangements for

communication with response forces, and establishment of

response plans.

The Commission has also published a notice in the Frp-

ERAL Reoister that it is considering strengthening its regu-

lations in 10 CFR Part 70 by providing for explicit limits

for material balance uncertainty and by setting forth re-

quirements for prompt action when an excessive material

balance uncertainty occurs (40 FR 30133). The Commis-

sion has further proposed amendments to its regulations in

10 CFR Part 73 which would provide for an increased level

of physical protection for shipments by licensees of special

nuclear material of high strategic value (39 FR 40036),

would identify particular measures to be taken for the pro-

tection of nuclear power reactors against industrial sabo-

tage (39 FR 40038), and would require advance notice to

the Commission of shipments involving certain quantities of

special nuclear material and notification of arrival of such

shipments at their final destinations (40 FR 15098).

A-29

The next major milestones in this process of review and

improvement in safeguards are expected to be the comple-

tion of the Federal Security Agengy Study mandated by

section 204(b)(2)(C) of the Energy Reorganization Act of

1974, the completion of the Nuclear Energy Center Site

Survey mandated by section 207 of the same Act, and the

issuance of the draft safeguards supplement to the environ-

mental impact statement.

The Commission’s regulations in 10 CFR Parts 70 and 73

described briefly above arc applied in the reviews of indi-

vidual license and permit applications. License conditions

then are developed and imposed which translate the regu-

lations into specific requirements and limitations which are

tailored to fit the particular type of plant or facility in-

volved.

With regard to exisiing licensed activities, while experi-

ence and continuing study may indicate areas where revi-

sions in its regulations should be made, the Commission is

confident that, in light of the types and numbers of facilities

and amounts of materials involved, the above-described

safeguards framework is adequate to enable the Commis-

sion to cary out its responsibilities to protect the public

health and safety and the common defense and security.

The Commission is of the same view as regards the in-

terim use of mixed oxide fuel in light water power reactors,

and the associated transportation of reactor fuel. The

Commission believes that those activities, so regulated, im-

pose little or no increase in current levels of risk associated

with loss or diversion of plutonium. Once irradiation has

begun in the reactor, mixed oxide fuel elements present no

considerations different from uranium elements—which, as

already indicated, immediately begin to generate and use

plutonium once loaded in the reactor core. Before that

point, the plutonium in the fresh fuel element is highly

dilute and dispersed, and encased within meta] fuel rods.

Shipments are made in heavy assemblies, and recovery of

A-30

the plutonium would involve a complex and multi-stage

chemical process.

The Commission is confident that the safeguards frame-

work of existing and proposed regulations provides an ade-

quate basis for interim licensing of initial processing of

spent fuel to separate its uranium and plutonium constitu-

ents, of conversion of the uranium constituent to uranium

hexafluoride, and of the transportation links associated with

these activities. The nuclear materials in a separation

plant, until the very final processing stages, are in a chemi-

eal and physical form, and behind a containment, which

make theft or diversion both difficult and personally hazard-

ous, since they remain highly radioactive at these stages.

Even at the final stages of the process, the fissile compon-

ents are not in a form suitable for fabrication of nuclear ex-

plosives. Moreover, current regulations provide adequate

bases for security of these types of plants. Reprocessing

plants are designed and constructed with heavy barriers

which limit access to special nuclear material and thus it is

unlikely that major adjustments in protection for such

plants will be required following the Commission’s decision

on wide-scale use. Finelly, while material control and ac-

counting problems will be introduced with regard to the

plutonium inventory in the separation plants, acceptable

levels of accountability can be accomplished under present

regulations by strengthening plant-specific material balance

controls.

The Commission is of the further view that licensing of

applications for plutonium conversion and mixed oxide fuel

fabrication, and the associated transportation links, should

await requirements which can best be established in light of

the comprehensive evaluation of safeguards in the supple-

ment to the environmental impact statement. While it ap-

pears, on the basis of experience to date and information

—derived from the ongoing safeguards studies, that reason-

able and adequate safeguards measures can be developed

A-31

for the interim licensing of these activities, the Commission

has decided that the particular safeguards regulations for

such activities should await completion of the additional

studies. The regulations thereafter established, in the man-

ner set forth below, will serve as the basis for licensing

reviews and for such licensing decisions on facilities of this

type as may take place during the interim period.

The particular safeguards regulations for the foregoing

will be the subject of detailed discussion in a notice that will

be published in the Feperat Recrsrer at about the same time

as issuance of the draft safeguards supplement to the en-

vironmental impact statement (early 1976).

Promulgation of any additional regulations for interim

use will take place only after public procedure in accordance

with section 553 of title 5 of the United States Code, and

receipt and analysis of comments on the draft supplement.

The final determination on such regulations will be made by

the Commission at about the same time (mid-1976) as is-

suance of the final portion of the environmental impact

statement, which will include the final cost-benefit analysis.

These particular safeguards regulations for licensing of

plutonium conversion and mixed oxide fuel fabrication

would be interim in nature, would apply only to reviews of

and decisions on applications for licenses for such facilities

during the limited time preceeding a Commission decision

on wide-scale use and the requirements appropriate thereto,

and would be subject to modification in light of the final

Commission decision on those matters. As reflected by the

earlier-recited status of facility applications before NRC,

any licensing that may be authorized prior to the final

Commission decision would be limited, as a practical mat-

ter to a few plants. The interim licensing eligibility criteria

are designed to assure consideration of both the justifica-

tion for such licensing, and whether the activity under

review would unjustifiably foreclose for the activity sub-

A-32

stantial safeguards alternatives that may result from the

Commission’s final decision on widescale use of mixed oxide

fuel.

These eligibility criteria and safeguards limitations are

in addition to any other applicable Commission licensing

irements set forth in the Commission’s regulations. In

particular, the Commission expects that individual environ-

mental impact statements or appraisals, as appropriate,

would be prepared for fuel recycle related licensing actions

subject to the eligibility criteria. The individua! impact

statement or appraisa! would describe the relationship be-

tween the licensing action at issue and the environmental!

impact statement on wide-scale use, and discuss the applica-

tion of the criteria to the facts of the case.

The Commission believes that the determinations herein

are responsive to the need for sound and timely regulatory

decisions. The comments received in response to the May

8th Feoerat Reowrer notice served to provide a construc-

tive focus on the complex issues requiring resolution and

contributed greatly to the Commission's informed consid-

eration of those issues.

Dated at Washington, D.C. this 11th day of November,

1975.

For the Nuclear Regulatory Commission.

Samus. J. CMX.

Secretary of the Commission.

A-33

APPENDIX

Prosyecrep Scueputz or Everts Leaprsc to Commission

Decision on Wine-Scatze Use or Mrxep Ox Font.

Late 1975—Notice of hearing on issues associated with

health and safety, safeguards, and environmental matiers

arising from wide-scale use of mixed oxide fuel in light

water reactors.

Early 1976—Publish proposed environmental and health

and safety rules regarding wide-scale use;

Issue draft cost-benefit analysis of alternative safeguards

programs as a supplement to the Generic Environmental

Statement on Mixed Oxide Fuel;

Publish proposed safeguards rules for interim licensing

of plutonium conversion and mixed oxide fuel fabrication

activities;

Issue portion of final environmental statement dealing

with health and safety and environmental matters.

Mid-1976—Issue final safeguards rules for interim li-

censing of plutonium conversion and mixed oxide fuel

fabrication ;

Issue final safeguards supplement and overall cost-benefit

analysis to complete the final environmental statement;

Publish proposed safeguards rules regarding wide-scale

use of mixed oxide fuel.

Early 1977—Earliest possible decision on wide-scale use

and publication of final rules for wide-scale use of mixed

oxide fuel.“

of recycled plutonium could be reached by early 1977. The Com-

mission cannot say at this time whether adjudicatorytype bear-

actual duration being dependent on the number and complexity of

the issues determined by the Commission as needing adjudicatory

treatment.

A-34

APPENDIX B

UNITED STATES COURT OF APPEALS,

SECOND CIRCUTT.

Nos. 963, 1051, Dockets 75-4276, 75-4278.

Naturat Resources Derense Councn., Inc., eT L.,

Petitioners,

v.

Tue Unsrrep States Nuciear Recvutatory Commission and

Tur Unrrep Srates or America, Respondents,

Aund Generar Nucrear Services, et AL., /ntervenors.

Argued April 12, 1976.

Decided May 26, 1976.

As Amended Aug. 12, 1976.

Anthony Z. Roisman, Washington, D. C. (Roisman, Kes-

ler & Cashdan, Washington, D. C., of counsel), and J. Gus-

tave Speth, Washington, D. C., for petitioners Natural Re-

sources Defense Council, Inc., and others.

Louis J. Lefkowitz, Atty. Gen. of the State of New York,

New York City (Samuel A. Hirshowitz, First Asst. Atty.

Gen., Philip Weinberg, John F. Shea, III, and Richard G.

Berger, Asst. Attys. Gen., New York City, of counsel), for

petitioner the State of New York.

Peter L. Strauss, Gen. Counsel, Nuclear Regulatory

Commission, Washington, D. C. (Stephen F. Eilperin,

Asst. Gen. Counsel, Steven P. Goldberg, Atty., Nuclear

Regulatory Commission, and Peter R. Taft, Asst. Atty.

Gen., and Edmund B. Clark, Atty., U. S. Dept. of Justice,

Washington, D. C.), for respondents.

Bennett Boskey, Volpe, Boskey & Lyons, Washington,

D. C., for intervenors Allied-General Nuclear Services, and

others.

A-35

George C. Freeman, Jr., Donald P. Irwin, and James N.

Christman, Richmond, Va. (Hunton, Williams, Gay & Gib-

son, Richmond, Va., and Alvin G. Kalmanson, New York

City, of counsel), Henry V. Nickel, Michael B. Barr, Wash-

ington, D. C. (LeBoeuf, Lamb, Leiby & MacRae, and Arvin

E. Upton, Washington, D. C., of counsel), for intervenors

Baltimore Gas & Electr o,, and others, Commonwealth

Edison Co., and others, and The Babeock and Wilcox Co.

Robert Lowenstein, Washington, D. C. (Lowenstein,

Newman, Reis & Axelrad, Maurice Axelrad, Michael A.

Bauser and Linda L. Hodge, Washington, D. C., of coun-

sel), for intervenor Nuclear Fuel Services, Inc.

Milton Waxenfeld, New York City (Weisman, Celler,

Spett, Modlin, Wertheimer & Schlesinger, New York City,

and Elliot S. Katz, Pittsburgh, Pa., of counsel), for inter-

venor Westinghouse Electric Corp.

Before Crank, Associate Justice, and Prernce and Owe,

District Judges.“

Prerce, District Judge:

Petitioners Natural Resources Defense Council, Inc., five

other environmental groups, and the State of New York

seek review of an order of the respondent, the United

States Nuclear Regulatory Commission, dated November

11, 1975 and published at 40 Fed.Reg. 53056 on November

14, 1975. The order below sets forth procedures and sched-

ules which the Commission will follow for the completion

of its generic environmental impact statement on uranium

and plutonium mixed oxide fuel (‘‘GESMO”’’) and for the

conduct of associated hearings. The order also sets forth

eriteria under which the Commission will proceed to grant

interim licenses for commercial utilization of mixed oxide

* Tom C. Clark, Associate Justice, United States Supreme Court,

Retired, Lawrence W. Pierce, and Richard Owen United States

District Judges for the Southern District of New York, sitting by

1 a ti

A-36

fuel related activities during the period prior to the com-

pletion of the GESMO study and the Commission’s final

decision on wide-scale use of mixed oxide fuel in light water

nuclear power reactors." The November 11, 1975 order is

the result of comments solicited by the Commission in re-

sponse to a prior Notice on the subject of mixed oxide fucl,

published at 40 Fed. Reg. 20142 (May 8, 1975). Petitioners

seek review in this Court pursuant to 28 U.S.C. § 2342(4)

and 42 U.S.C. § 2239.

See 40 Fed Reg. at 53056-57. ‘“‘GESMO”’ is the Commission s

acronym for its generic environmental statement on mixed oxide

fuel. GESMO differs from a standard environmental impact state-

ment in that it addresses the generic or overall considerations of

the undertaking rather than analyzing only the isolated impact of

the undertaking on one given area. As used herein, “‘Draft

GESMO! is the preliminary report issued August 21, 1974, *‘ Final

GESMO"’ is the completed version of that report to be issued in

1976, and the GESMO supplement or the “‘safeguards supple-

ment is a complementary study of questions relating to possible

sabotage, theft and diversion of plutonium, undertaken by the

Commission in response to the request of the Council on Environ-

mental Quality. Neither the Final GESMO nor the GESMO sup-

plement have yet been issued.

28 U.S.C. § 2342 provides in part as follows:

_ court of appeals has exclusive jurisdiction to enjoin, set

validity of —

> > >. > 7 *

(4) all final orders of the Atomie Energy Commission made

reviewable by section 2239 of title 2

(a4) In any proceeding under this chapter, for the granting,

suspending, revoking, or amending of any license or construc-

tion permit, or application to transfer control, and in any

proceeding for the issnance or modification of rules and regu-

lations dealing with the activities of licensees, and in any pro-

A-37

Petitioners ask this Court to set aside the Commission’s

November 11, 1975 order on the ground that the decision

study, and prior to a final decision thereon, is in violation

of the National Environmental Policy Act of 1969

(‘‘NEPA’’), 42 U.S.C. §§ 4321 et se.,“ the Atomic Energy

shall admit any such person as a party to such ing.

The Commission shall hold a hearing after thirty days’ notice

and publication once in the Federal Register, on each applica-

tion under section 2133 or 2134(b) of this title for a construc-

tion permit for a facility, and on any application under

ing facility. In cases where such a construction permit has

been issued following the holding of such a hearing, the Com-

whose interest may be affected, issue an operating license or

amendment to a construction permit or an amendment to

operating license without a hearing, but upon thirty days’

notice and publication once in the Federal Register of

intent to do so. The Commission may dispense with

thirty days’ notice and publication with respect to any

cation for an amendment to a construction permit or

ment to an operating license upon a determination by the

Commission that the amendment involves no significant haz-

kind

ards consideration.

(b Any final order entered in any proceeding of the ki

specified in subsection (a) of this section shall be subject to

judicial review in the manner prescribed in the Act

cember 29, 1950, as amended, and to the provisions of section

10 of the Administrative Procedure Act, as amended.”’

* 42 U.S.C. § 4332 provides in part as follows:

The Congress authorizes and directs that, to the fullest ex.

accordance with the policies set forth in this chapter, and

(2) all agencies of the Federal Government shall

meking which may have an impact on man's environment;

(B) identify and develop methods and procedures, in con-

sultation with the Council on Environmental Quality estab-

A-38

Act, 42 U.S.C. §§ 2201 et seq. and the Energy Reorganiza-

tion Act of 1974, 42 U.S.C. §§ 5841 et seq. Petitioners also

claim that the order violates NEPA by bifureating the on-

going environmental review, by providing that the final

impact statement will be issued in two parts at different

times, and by setting forth procedures whereby the en-

vironmental issues will be addressed in hearings which are

lished by subchapter II of this chapter, which will insure that

presently unquantified environmental amenities and values

may be given appropriate consideration in decisionmaking

along with economic and technical considerations ;

(C) inelude in every recommendation or report on pro-

posals for legislation and other major Federal actions signifi-

cantly affecting the quality of the human environment; a de-

tailed statement by the responsible official on—

(i) the environmental impact of the proposed action,

(ii) any adverse environmental effects which cannot be

avoided should the proposal be implemented,

(iii) alternatives to the proposed action,

(ir) the relationship between local short-term uses of man’s

environment and the maintenance and enhancement of long-

term productivity, and

(v) any irreversible and irretrievable commitments of re-

sources which would be involved in the proposed action should

it be implemented.

Prior to making any detailed statement, the responsible Fed-

eral official shall consult with and obtain the comments of any

Federal agency which has jurisdiction by law or special exper-

tise with respect to any environmental — involved. Copies

of such statement and the comments views of the appro-

priate Federal, State, and local agencies, which are authorized

to develop and enforce environmental standards shall be made

available to the President, the Council on Environmental

Quality and to the public as provided by section 552 of Title 5,

and shall accompany the proposal through the existing agency

review processes ;

* * * — *

(E) study, develop, and describe appropriate alternatives to

recommended courses of action in any proposal which involves

unresolved conflicts concerning alternative uses of available

resources ;"’

A-39

to be primarily legislative rather than adjudicatory in

character. The Commission urges that the order under

review is not a final order“ within the meaning of 28

U.S.C. § 2342 and 42 U.S.C. § 2239, that the decision to

allow interim licensing does not violate NEPA or the en-

ergy acts, and that its pronouncements concerning proce-

dures and schedules are matters within its discretion. The

intervenors, representatives of the nuclear power industry,

similarly argue that the order is not ‘*final’’ and that it

does not violate NEPA.

We agree with petitioners that the order below is final

and reviewable in this Court. We agree with the Commis-

sion that the procedures and schedules set forth in the

order are matters within its discretion. However, we find

that the portion of the order which allows the Commission

to proceed to grant interim commercial licenses for the

use of mixed oxide fuel and related activities prior to the

completion of the GESMO study and the final decision on

wide-scale use would allow the commencement of major

federal action without the benefit of an adequate environ-

mental impact statement. Accordingly, we conclude that

the decision to proceed to interim licensing is in violation

of the NEPA, and that portion of the order is reversed

and remanded.

I. The Plutonium Recycle

The vast majority of nuclear power plants presently in

operation in this Nation are fueled by fissionable uranium.

These reactors start with uranium-235, and through the

fission process, release large amounts of energy which is

used to generate electrical power. The uranium fission

process produces large quantities of radioactive waste

material, or spent fuel“. Because of the growing quan-

tity of nuclear wastes and because of the fact that natural

resources of uranium are limited, the federal government,

in conjunction with private industry, has since 1957 inves-

tigated the potential of recycling spent fuel in order to

A-40

produce a new source of nuclear energy. The Commission

estimates that the cost of this research to the government

alone has been in excess of 100 million dollars.

As a light water nuclear reactor operates, heat is gener-

ated from the fissioning of uranium-235 atoms in the fuel.

»The fission process also creates atoms of plutonium from

uranium-238 atoms. For each gram of U-235 fuel con-

sumed in the reactor, as much as 0.9 grams of fissile plu-

tonium is formed within the fuel. Generally, more than

half of the plutonium so produced is consumed in the re-

actor process without any external recycle, before the dis-

charge of the spent fuel. Accordingly, all present light

water nuclear reactors to some extent generate and use

plutonium as fuel.

The spent fuel which remains after the completion of the

fission process contains elements of uranium and plutonium

which, if properly separated from the waste, reprocessed,

and fabricated into new nuclear fuel, would constitute a

significant new source of energy. Cognizant of the na-

tion’s pressing need for new sources of energy, as well as

of NEPA’s mandate that natural resources be recycled so

as to preserve depletable sources of energy, see 42 U.S.C.

4331 (b) (6), the Commission has undertaken a broad-scale

inquiry into the commercial feasibility of plutonium re-

eyele. According to the Commission, the nuclear power

industry plans to carry out the spent fuel recycle process

in a series of nine steps.“

Ind plans are to carry out the spent fuel ree cle process

in the following steps: N

(1) Store the spent fuel to allow some decay of radioactivity ;

(2) Separate plutonium and uranium from fission product

wastes as nitrate solutions;

(3) Convert the uranium to uranium hexafloride which is then

enriched to increase the concentration of the fissile isotope

uranium-235 ;

(4) Convert the uranium hexafloride to uranium dioxide ;

(5) Convert the plutonium nitrate to plutonium oxide;

441

The first step in the recycle is to store the spent fuel to

allow for some decay of radioactivity. Certain existing

nuclear plants have facilities for such storage, but the

Commission reports that developing forms suitable for

long-term storage of fuel wastes are presently only experi-

mental.

Once some radioactive decay has been accomplished, the

plutonium and uranium elements of the spent fuel are sepa-

rated out as nitrate solutions. This step of the recycle

chain must be carried out through the use of remote oper-

ating technology behind massive protective shielding.

However, once the separation has been accomplished, the

purified materials no longer contain the highly penetrating

radiation which is present in fission products. Following

separation, the uranium nitrate is converted into uranium

hexafloride which is in turn enriched to increase the con-

centration of uranium-235. The enriched uranium hexa-

floride is then converted to uranium dioxide. Similarly,

the plutonium nitrate is converted to plutonium oxide. The

resulting materials are fabricated into fuel rods containing

mixed plutonium and uranium oxides; hence the term

‘*mixed oxide fuel“.

The mixed oxide fuel rods then are fabricated into fuel

elements for insertion into light water nuclear reactors

converted from use of uranium to use of mixed oxide fuel.

The fission wastes remaining after the separation and re-

processing must be converted to a form suitable for long-

(6) Manufacture fuel rods with pellets containing mixed plu-

tonium and uranium oxides;

(7) Fabricate fuel elements containing fuel rods of mixed

oxide fuel ;

(8) Convert the fission product wastes into forms suitable for

long term storage;

(9) Transport materials as required by the above processing,

production, or storage operations

(40 Fed. Reg. at 53059)

A-42

term storage. The various steps of the recycle must be

achieved through transportation of the nuclear materials

from light water reactors to separation and conversion

facilities, to fabrication plants and back to the converted

light water readtors.®

Three light water nuclear power reactors are presently

licensed to operate with limited amounts of mixed oxide

fuel. The amount of mixed oxide fuel employed ranges

from less than 0.1 percent of the total fuel core in the com-

mercial scale reactor at Quad-Cities 1, Illinois, to approxi-

mately eleven percent in the very small reactor at Big Rock

Point in Michigan. Between 1966 and 1971, the Nuclear

Fuel Services plant at West Valley, New York, performed

separation and reprocessing of spent fuel, processing ap-

proximately 640 metric tons of spent fuel. However, that

plant is presently shut down. A few presently operating

plants produce very limited amounts of mixed oxide fuel;

the quantity involved is but a small proportion of that

which would be utilized through wide-scale use.

Presently pending before the Commission are a number

of applications to undertake different steps of the plutoni-

um recycle process. Nuclear Fuel Services has applied for

permission to alter and expand its existing plant; Allied-

General Nuclear Services seeks licensing of proposed sepa-

rations and uranium conversion facilities presently under

construction at Barnwell, South Carolina; and Westing-

house Electric Corporation has applied for a license to

undertake mixed oxide fuel fabrication at a proposed plant

near Anderson, South Carolina.“ Other firms have ex-

The Energy Reorganization Act of 1974 requires, inter alia,

that the Commission evaluate and compare the respective environ-

mental impact of separate versus grouped siting of nucle: fuel

recycle facilities; see 42 U.S.C. § 5847. However, even if such

facilities were grouped, transportation of plutonium would be

required to converted facilities and for storage purposes.

See Nuclear Regulatory Commission Docket Nos. 50-201,

50-332, and 70-1729; 40 Fed. Reg. at 53059.

A-43

pressed interest in undertaking plutonium related activi-

ties.

II. Prior Proceedings

As the nuclear power industry proceeds with plans for

the implementation of the plutonium recycle, environ-

mental concerns are properly addressed by the licensing

agency. Cognizant of its responsibilities, the Commission’s

predecessor, the Atomic Energy Commission, announced

on February 12, 1974, that a generic environmental impact

statement (GESMO) would be prepared prior to a Com-

mission decision on the wide-scale use of mixed oxide fuel;

see 39 Fed.Reg. 5356.

GESM0O is intended to be a comprehensive NEPA evalu-

ation of mixed oxide fuel examining such essential issues as

nation-wide environmental impact, adverse environmental

effects, safeguards against adverse effects and alternatives

to the proposed recycle activities. On August 21, 1974,

GESMO was issued in draft form, and the draft circulated

among the various interested agencies of the federal gov-

ernment. Draft GESMO concluded that the Commission

should proceed to license wide-scale use of mixed oxide

fuel, that environmental considerations would not be ad-

versely effected, and that the use of plutonium recycle

would serve not only to lessen the demand on limited re-

serves of uranium but would also present a partial solution

to the problems of radioactive wastes. Draft GESMO,

issued in four volumes and in excess of six hundred pages,

ean be described as a massive scientific inquiry into the

question of plutonium recycle. Draft GESMO analyzes

the background of scientific experience with plutonium and

projects a wide-scale plutonium recycle industry by the

year 1990. The study analyzes the expected environmental

impact of the use of mixed oxide fuel in light water

reactors, of the fabrication of mixed oxide fuel, of repro-

cessing facilities and of the supporting uranium fuel cycle.

A-44

A significant section is devoted to the transportation of

radioactive materials and to the problems of radioactive

waste management and storage of plutonium. Draft

GESMO also undertook to evaluate the effects of radiation

on public health and to describe possible fuel and plant pro-

tection. Two chapters of the study are devoted to probable

adverse environmental effects which cannot be avoided and

to methods to limit such effects. Draft GESMO investigated

alternative dispositions of plutonium, including storage,

immediate use, and a permanent ban on use, presenting a

cost-benefit analysis of each alternative disposition.

Despite this hereulean undertaking, it is immediately

apparent that Draft GESMO did not fully address alter-

natives to the plutonium reeycle industry. There is no

significant discussion of any methods of energy production

other than nuclear. Further, Draft GESMO did not reach

any final conclusions on the question of safeguards, At

the time of Draft GESMO’s release, the Commission

planned to issue a supplemental statement on safeguards."

On January 20, 1975, the President's Council on Environ—

mental Quality (‘‘CEQ’’), by letter, informed the Com-

mission that in its opinion Draft GESMO was inadequate,

particularly since it failed to address adequately the spe-

cial dangers of sabotage and theft posed by large-scale

transportation of plutonium materials. The CEQ recom.

mended that these special problems be addressed before

any final decision on wide-scale use. Further, the CEQ

directed the Commission to avoid taking any licensing

steps in the interim period which could result in the fore.

closure of alternative safeguards or which could result in

unnecessary ‘‘grandfathering’’ of existing facilitics’ safe-

guards systems.

Looking toward compliance, the Commission on May 8,

1975 announced provisional decisions on certain procedures

See 40 Fed. Reg. at 53058,

A-45

which it would employ in the ongoing inquiry into pluto-

nium related activities. The Commission invited public

comment on its provisional decisions regarding licensing

policy, which were as follows:

‘*(1) A cost-benefit analysis of alternative safeguards

programs should be prepared and set forth in draft

and final environmental statements before a Commis-

sion decision is reached on wide-scale use of mixed

oxide fucls in light water nuclear power reactors.

‘*(2) There should be no additional licenses granted

for use of mixed orie fuel in light water nuclear

power reactors in the interim prior to the decision on

wide-scale use except for experimental purposes; and

‘*(3) With respect to light water nuclear power reactor

fuel cycle activities (activities other than nuclear

power reactor construction and operation) which de-

pend for their justification on wide-scale use of mixed

oxide fuel in light water nuclear reactors, there should

be no additional licenses granted in the interim which

would foreclose future safeguards options or result in

unnecessary ‘grandfathering’. This would not pre-

clude the granting of licenses in the interim for experi-

mental and-or technical feasibility purposes.“ (40

Fed. Reg. at 20142, as quoted at 40 Fed. Reg. at 53058)

(Emphasis supplied.)

In response to its invitation in this May 8, 1975 Notice,

the Commission received in excess of two hundred com-

ments and inquiries from government agencies, public

officials, environmental groups, industry spokesmen, and

private individuals. By letter, the Environmental Protec-

tion Agency supported the proposed total ban on commer-

cial licensing until after a final decision implementing an

adequate safeguards program. (See Int. App. at 237).

The Federal Energy Administration recommended that the

A-46

Commission license only facilities for ‘‘commercial demon-

stration purposes in the interim period, or that the Com-

mission bar only fuel fabrication and plant use. (See 1d.

at 182.)

Comments received from the nuclear power industry

recommended generally that the Commission proceed to

interim licensing of certain restricted activities prior to

the final decision on GESMO. Consumers Power Company,

a licensee of two plants, stated that a delay of plutonium

licensing until 1978 would cost it six million dollars in

additional outlays for enriched uranium and would cost the

entire nuclear industry some thirty-five to fifty million

dollars for spent fuel storage. (See Jnt.App. at 20.)

Despite the industry's apparent desire to proceed with

plutonium activities, a number of firms expressed concern

over the problems of plutonium transportation. For

example, Northeast Nuclear Energy Co. urged that military

guards be provided for the recycle process and particular-

ly for the transportation step. (See Jnt.App. at 207.)

General Atomic Company stated that ‘‘transportation is

the weakest link of any safeguards chain“ and set forth

reasons why the transportation of plutonium posed greater

hazards than the transportation of highly enriched ura-

nium. (See Jnt. App. at 219.)

Ill. The November 11, 1975 Decision

Following receipt of comments and limited hearings held

during the comments period, the Commission i§sned the

November 11, 1975 order which is now under review. In

essence, through that decision the Commission reversed its

earlier position of May 8, 1975 and concluded that certain

interim commercial licensing should be allowed. The order

also set forth procedures for hearings on the final version

of the GESMO study to be issued in 1976 and for hearings

on the safeguards supplement to GESMO also presently

being prepared.

447

The procedures set forth were geared to the Commis-

sion’s estimate that it would issue Final GESMO in “‘early

1976“ and the safeguards supplement in ‘‘mid-1976.’’ The

Commission had also estimated that it could conclude the

GESMO hearings by the end of 1976. However, at argu-

ment, counsel for the Commission stated that there had

been some slippage in this time schedule.

The November 11, 1975 order provides that the Commis-

sion will proceed to hold hearings on the GESMO study in

the following manner once each segment of the study is

released in its final form:

The Commission will establish a board to preside at

those hearings. The hearing board will be expected to

establish reasonable time limits for the conduct of the

proceedings. All direct testimony for the legislative-

type hearings will be filed in advance. The board will

be expected to question witnesses and participants will

be permitted to suggest questions to the board, but

there will not be direct cross-examination of partici-

pants by other participants.

It may be that some factual issues cannot be resolved

adequately on the basis of a record developed in this

manner. [After the legislative-type hearings,] par-

ticipants will have the opportunity to identify any such

issues of fact for which direct cross-examination by the

participants is needed for a sound decision. [The par-

tieipant] will be expected to demonstrate why the

legislative-type procedures have not proved adequate.

(40 Fed.Reg. at 53060.)

The November 11, 1975, order also addressed the ques-

tion of the extent to which the Commission should under-

take review of individual license applications prior to the

GESMO hearings and the final decision on mixed oxide

fuel. The Commission determined that its staff should con-

A-48

tinue to review applications but that the staff should

analyze only those questions not being addressed in

GESMO. The staff reviews will be ¢ nted there-

after following the final decision on wide-scale use.

Public hearings on pending license applications will be

conducted only in the Commission’s discretion, upon a con-

sideration of the following factors:

(I) the degree of likelihood that any early findings

on the issue(s) would retain their validity following

the Commission’s final decision on wide-scale use of

mixed oxide fuel and implementing regulations; and

**(2) the possible effect upon the public interest and

the litigants in having an early, if not necessarily con-

elusive, resolution of the issue(s).’’ (40 Fed Reg. at

53061.)

Such hearings, if held, would be adjudicatory in charac-

ter as are the Commission's licensing proceedings in most

own local environmental impact statement; however, the

40 Fed Reg. at 53060-63. This position was set forth

clearly by the Commission's decision In the Matter of Consumers

Power Company (Big Rock Point Nuclear Plant) Docket No.

50-155, NRCI-75/8, CLI-75-10, p. 188. The scope of the NEPA

,

EF

f

.

1

g

i

=

A-49

In the words of the agency’s order, The Commission

has concluded that interim licensing may be issued for fuel

recycle related activities

While the Commission is properly mindful that cer-

tain licensing actions have the potential for foreclos-

ing subsequent alternatives, it cannot disregard the

equally hard reality that inaction or a blanket prohibi-

tion on fuel recycle related licensing actions could also

foreclose or substantially impede realization of energy

alternatives which may contribute significantly to meet-

ing national needs. (40 Fed.Reg. at 53061.)

As bases for this reversal of its position of May 8, 1975,

the Commission set forth its belief that any environmental

or health aspects of interim activity can be adequately

addressed through interim reviews and that interim licens-

ing will not foreclose any significant health, safety or en-

vironmental alternatives.

It is important to note what is encompassed by “in term

interim activity’’. The Commission will allow separa-

tion of plutonium and uranium from fuel wastes; it will

allow reprocessing of the fuel into forms suitable for use;

it will allow fabrication of mixed oxide fuel; it will permit

use of mixed oxide fuel in presently existing light water

reactors; it will license plant construction to achieve the

foregoing steps; and it will permit the transportation, in-

eluding international transportation, of mixed oxide fuel

in its various processing stages. All of the foregoing ac-

tivities will be allowed on a commercial-scale level. The

order expressly states that no limits will be placed on

the number of light water reactors for which . . . authori-

zation [to convert from use of uranium to plutonium) may

be granted. (40 Fed.Reg. at 53062.) In addition, the

order does not state that there will be any limits on the

other recycle activities allowed in the period prior to the

final decision on GESMO.

ae —tipeom- § 4

:

450

Certain of the above interim activities will be permitted

upon the application of special interim eligibility criteria.

The special criteria will not be applied to the use of mixed

oxide fuel in presently existing power plants or to the

transportation of plutonium materials. The Commission

concluded that conversion of light water reactors to mixed

oxide fuel need not be subject to special standards because

such conversion does not require significant design changes

and because such conversion is reversible in the event that

the final decision is adverse to the wide-scale use of mixed

oxide fuel. The transportation of plutonium will be allowed

without application of special standards in light of the

Commission's view that such transportation would hu con-

strained by practical limitations and in light of the Com-

mission's belief that such limited transportation would not

present factors which are not already present in the exist-

ing transportation of enriched uranium.

Accordingly, the interim eligibility criteria will apply

only to individual applications for interim licenses for

commercial fuel reprocessing and mixed oxide fuel fabri-

cation. The interim standards are as follows:

**(1) Whether the activity can be justified, from a

NEPA cost-benefit standpoint, without placing primary

reliance on an anticipated favorable Commission deci-

sion on wide-scale use of mixed oxide fuel;

**(2) Whether the activity would give rise to an irre-

versible and irretrievable commitment of resources

that would unjustifiably foreclose for the activity sub-

stantial safeguard alternatives that may result from

the decision on wide-scale use; and

3) The effect of delay in the conduct of the activity

on the overall public interest. (40 Fed Reg. at 53062.)

451

These criteria, combined with consideration of Draft

(;ESMO, led the Commission to conclude that interim

licensing

„is not likely to result in such a substantial further

commitment of resources that the final decision on the

costs and benefits of the public health and safety and

environmental aspects of wide-scale use of mixed oxide

fuel would be significantly affected or that generic

determinations on such aspects would be foreclosed.’’

(40 Fed.Reg. at 53061.)

Finally, the Commission also concluded that a refusal to

allow interim commercial activity would result in ‘‘the dis-

ruption or cessation of planning as well as the production

of useful data, and might result in ‘‘economic penalties

on the American public through increased costs to elec-

trical utilities caused by delaying the use of resources avail-

able in spent fuel (Id.)

The order of the Commission also addressed safeguards

which will be required in the interim period. In essence,

only those safeguards presently required by law will be im-

posed (See 10 C. F. R. Parts 70 and 73), although the Com-

mission has stated that it is considering certain new and

additional safeguards. According to the order, final re-

quirements for safeguards in the interim period will be

announced at the same time as the issuance of Final

GESMO.

IV. Reviewability

The first question which must be addressed is whether

the November 11, 1975 decision of the Commission is a final

order reviewable in this court. Petitioners urge that jur-

isdiction to review is present pursuant to 28 U.S.C.

§ 2342(4), which grants to this court exclusive jurisdiction

to enjoin, set aside, suspend in whole or in part, or to de-

A-52

termine the validity of all final orders of the Nuclear Regu-

latory Commission made reviewable by section 2239 of

Title 42. Petitioners state that the order below is a final

order entered in a Commission proceeding for the issu-

ance or modification of rules and regulations dealing with

the activities of nuclear power licensees; see 42 U.S.C.

§ 2239(a) and (b).“ Petitioners also argue that this court

has jurisdiction to review a decision of an agency imple-

menting NEPA or refusing to refrain from licensing until

the filing of an impact statement. See Scientists’ Institute

for Public Information, Inc. v. Atomic Energy Commission,

156 U.S. App. D.C. 395, 481 F.2d 1079, 1094 (1972). Fur-

ther, it is urged that we may properly review agency cri-

teria for upcoming licensing proceedings; see Coalition for

Safe Nuclear Power v. Atomic Energy Commission. 150

U.S. App. D. C. 118, 463 F.2d 954 (1972) (per curiam).

Respondents argue that the November 11, 1975 order is

not reviewable, since it grants no licenses and simply sets

forth licensing criteria for future proceedings; see Citizens

for a Safe Environment v. Atomic Enetgy Commission,

489 F.2d 1018, 1021 (3d Cir. 1973). Respondents also

cite the rule that an agency's procedural or evidentiary

rulings made in the course of a licensing proceeding are not

reviewable except in extraordinary circumstances not pres-

ent here; see Ecology Action v. Atomic Energy Commis-

sion, 492 F. 2d 998, 1001 (2d Cir. 1974).

The cases relied upon by respondent for the proposition

that the order below is not reviewable relate primarily to

refusals to review agency rulings made in the course of an

individual licensing proceeding; see Ecology Action,

supra; Citizens for a Safe Environment, supra; Thermal

Ecology Must be Preserved v. Atomic Energy Commission,

139 U.S. App. U. C. 366, 433 F.2d 524, 525-26 (1970) (per

curiam). These cases are not dispositive here for two rea-

See note 2, supra.

A-53

sons. First, this court has on occasion reviewed essentially

‘‘interlocutory’’ rulings made by an agency in a NEPA

proceeding; see Greene County Planning Board v. Federal

Power Commission (Greene 1), 455 F.2d 412, 425 (2d Cir.),

cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90 (1972).

More fundamentally, petitioners here do not seek review

from an order entered in the course of an individual licens-

ing proceeding ; rather, the regulations challenged here will

apply to all interim licensing proceedings, as well as to

the GESMO hearings; see Harlem Valley Transportation

Association v. Stafford, 500 F.2d 328, 334-35 (2d Cir. 1974).

Initially, we note that no distinction exists for review

purposes between agency adjudications and other pro-

nouncements, such as rulemaking; see Pacific Gas d Elec-

tric v. Federal Power Commission, 164 U. S. App. D. C. 371,

506 F. 2d 33, 48 (1974); Gage v. Atomic Energy Commis-

sion, 156 U.S.App.D.C. 231, 479 F.2d 1214 (1973). It is

clear that the decision below is essentially an exercise in

rulemaking.

To determine finality, the appropriate inquiry is whether

the process of administrative decision-making has reached

a stage where judicial review will not be disruptive of the

agency process and whether legal consequences will flow

from the action taken; see Port of Boston Marine Terminal

Association v. Rederiaktiebolaget Transatlantic, 400 U.S.

62, 71, 91 S.Ct. 203, 27 L.Ed.2d 203 (1970). This test is

satisfied here since the Commission has made a final deci-

sion, after months of consideration, to the effect that it may

proceed to interim licensing of mixed oxide fuel related

activities without awaiting the release of Final GESMO or

a final decision on wide-seale use. Further, it is clear that

NEPA legal consequences flow from that decision since the

order below sets forth rules concerning how the agency will

comply with the environmental laws. Review at such a

stage is proper; see Harlem Valley, supra; Calvert Cliffs’

A-54

Coordinating Committee, Inc. v. Atomic Energy Commis-

sion, 146 .S. App. D.C. 33, 449 F.2d 1109 (1971). Review

at this juncture will not disrupt agency proceedings :

Here there is no specific proceeding to disrupt since

we are concerned with a rule that is applied to all

[Commission] proceedings, and the [Commission] has

determined, as it views them, its obligations under

NEPA.“ (Harlem Valley, supra, at 334.)

In this case the agency has issued proposed rules, in-

vited and received comments, and issued finalized rules.

Review by this court is proper, even though no licénses

have been granted or denied and even though the rules

relate only to licensing standards; see United States v.

Storer Broadcasting Co., 351 U.S. 192, 198, 76 S.Ct. 763,

100 L.Ed. 1081 (1956). Agency decisions are ripe for this

court’s consideration when the issues and the record are

suitable for review and the agency decision has an imme-

diate and significant impact; sce Pacific Gas & Electric,

supra. This test is satisfied since the court is presented

with an administrative record of more than fifteen hundred

pages, as well as the Draft GESMO, and the May 8, 1975

and November 11, 1975 decisions of the Commission; the

NEPA issues are clear and the decision to proceed to com-

mercial interim licensing has an immediate and significant

impact on the Commission’s future course of action.

In urging that the controversy herein is not ripe for

judicial review respondents rely upon cases which deal with

review pursuant to the Administrative Procedure Ket, 5

U.S.C. § 701 et seq.;“ however, it appears that APA stand-

ards are not applicable in a proceeding such as this one

where judicial review is sought in this court directly from

A proceeding made reviewable by 42 U.S.C. § 2239, see note 2

supra, may be reviewed in this court under 28 USC. § 2342 or in

the district court under 5 U.S.C. 8 702; see 42 U.S.C. § 2239/(b).

—

A-55

the agency decision, rather than initially in the district

court; see Greene County Planning Board v. Federal Power

Commission (Greene III), 528 F.2d 38, 46 (2d Cir. 1975).

But even if the APA standards for ripeness are applied,

the procedural issues are ripe for review since the sub-

stantive NEPA questions are suitable for judicial consid-

eration and since the hardship to all parties would be con-

siderable if review were denied at this time and it was

later determined that the Commission’s guidelines led to

fundamental flaws in the environmental inquiry. The Su-

preme Court has indicated that the analysis of whether

agency action is ripe for review should be a flexible one;

see Toilet Goods Association, Inc. v. Gardner, 387 U.S. 158,

162, 87 S.Ct. 1520, 18 L.Ed.2d 697 (1967); Abbott Labora-

tories v. Gardner, 387 U.S. 136, 148-50, 87 S.Ct. 1507, 18

L.Ed.2d 681 (1967), and in the past this court has noted

the problems which could result were we to take an inflex-

ible approach to review; see Greene I, supra; see also Citi-

zens for a Safe Environment, supra.

The impact of the Commission’s decision is highly sig-

nificant, for it sets the course for the commercial introduc-

tion of a new nuclear technology. Upon consideration of

all the foregoing principles, we conclude that the November

11, 1975 order is a final order which issues regulations in a

proceeding under 42 U.S.C. § 2239(a) and (b) and that this

court has jurisdiction pursuant to 28 U.S.C. § 2342(4).

V. Procedures for the GESMO and related hearings

Petitioners ask this court to declare the procedural guide-

lines set forth in the November 11, 1975 notice violative of

NEPA’s direction that federal agencies

‘‘utilize a systematic, interdisciplinary approach which

will insure the integrated use of the natural and social

sciences and the environmental design arts in planning

and in decision-making which may have an impact on

man’s environment. (42 U.S.C. § 4332(2)(A).)

A .

A-56

The essence of petitioners’ objection to the procedural

guidelines is that the Commission, by separating the

GESMO hearings into two parts and by separating local

from generic issues, has so fragmented the environmental

inquiry that the study will not be sufficiently integrated or

interdiseiplinary. Further, petitioners claim that the deci-

sion to proceed through primarily legislative-type hearings

on GESMO and through staff reviews on individual appli-

cations, allowing hearings of an adjudicatory nature only

in limited circumstances, is contrary to NEPA and to 42

U.S.C. § 2239(a), which deals with Commission licensing

hearings.

It is a long established principle that a federal agency

has discretion whether to proceed by rulemaking or by ad-

judication; see Securities and Exchange Commission vy.

Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 91 L. Ed.

1995 (1947); Morningside Renewal Council, Inc. v. Atomic

Energy Commission, 482 F.2d 234 (2d Cir. 1973), cert. de-

nied, 417 U.S. 951, 94 S.Ct. 3080, 41 L.Ed.2d 672 (1974).

An agency has broad latitude to determine in what order, in

what forum, and by what procedures it will tackle a complex

subject matter. The courts cannot direct the Commission

to decide its cases in a particular order, see Federal Com-

munications Commission v. WJR, 337 U.S. 265, 272, 69 S.Ct.

1097, 93 L. Ed. 1353 (1949) ; only Congress could confer such

a priority; see Federal Communications Commission v.

Pottsville Broadcasting Co., 309 U.S. 134, 145, 60 S.Ct. 437,

84 L.Ed. 656 (1940). There is no dispute that the GESMO

inquiry presents difficult and complex questions. As stated

by the Supreme Court, [wie can see no justification for

denying the Commission reasonable latitude to decide where

it will resolve these complex issues, in addition to how it

will resolve them. American Commercial Lines v. Louis-

ville & Nashville R. R., 392 U.S. 571, 592, 88 S.Ct. 2105, 2116,

20 L.Ed.2d 1289 (1968). This reasonable latitude extends

to the methods which the agency employs and to the scope

of proceedings which the agency will undertake ; id; see also

A-57

The Permian Basin Area Rate Cases, 390 U.S. 747, 776, 88

S.Ct. 1344, 20 L.Ed.2d 312 (1968).

NEPA does not require extensive administrative proceed-

ings; neither the Administrative Procedure Act nor the

environménal laws compel an agency to appoimt an ex-

aminer and conduct hearings ; see National Helium Corp. v.

Morton, 455 F.2d 650, 656-57 (10th Cir. 1971). Indeed, the

text of NEPA does not require agency hearings, see 42

U.S.C. §§ 4321-4347, and courts have refused to read such

a requirement into the statute ; see Lathan v. Brinegar, 506

F. 2d 677, 689 (9th Cir. 1974) ; Jicarilla Apache Tribe of In

dians v. Morton, 471 F.2d 1275, 1286 (9th Cir. 1973).

It is true that certain decisions have expressed a con-

cern that issues of great importance be accompanied by

expanded procedural rights, and that limited cross-exam-

ination be afforded on crucial issues raised in the agency

proceeding; see Appalachian Power Co. v. Environmental

Protection Agency, 477 F.2d 495, 503 (4th Cir. 1973);

O’Donnell v. Shaffer, 160 U.S.App.D.C. 266, 491 F.2d 59,

62 (1974); Greene I, supra, 455 F.2d at 422. The phi-

losophy of these cases is applicable herein in light of the

magnitude and the gravity of the Commission’s inquiry.

„The choice is not between a full trial-type hearing and

no public proceeding at all. The goal is rather to insure

that administrators provide a ‘framework for principled

decision-making’—a framework that is appropriate for the

the issue at hand“. (O’Donnell v. Shaffer, supra, 491 F. 2d

at 62, quoting Environmental Defense Fund, Inc. v. Ruckel-

shaus, 142 U.S.App.D.C. 74, 439 F.2d 584, 598 (1971).)

In its rulemaking order below, the Commission has

determined that the GESMO hearings will be primarily

legislative in character and that adjudicatory hearings will

be held if a need for such proceedings is demonstrated.

While direct cross-examination will not be allowed in the

legislative phase, the participants will be permitted to sub-

A-58

mit questions for the witnesses through the hearing board.

Direct cross-examination will be permitted in the adjudi-

catory hearings, if any, which follow. We believe that

these procedures are reasonable, and note that nearly

identical guidelines were upheld as adequate in /ntvrna-

tional Harvester Co. v. Ruckelshaus, 155 U.S. App. D.C. 411,

478 F. 2d 615 (1973). In that decision the Court of Appeals

for the District of Columbia Circuit observed that ‘‘in a

situation where ‘general policy’ is the focal question, a

legislative-type hearing is appropriate.’’ Id. at 630. The

court assessed the procedural limitations imposed by the

Environmental Protection Agency in terms equally appli-

cable to this case:

In context, we consider that the technique, adopted

by EPA, of pre-screening written questions submitted

in advance is reasonable and comports with basic

fairness as the general procedure. This approach

permits screening by the hearing officer so as to avoid

irrelevance and repetition, permits a reasonable esti-

mate of the time required for the questioning, and

aids scheduling and allocation of available time among

various participants and interests, . . [A] right of

eross- examination, consistent with time limitations,

might well extend to particular cases of need, on

critical points where the general procedure proved

inadequate to probe ‘soft’ and sensitive subjects and

witnesses.’’ (Id. at 631.)

We interpret the Commission’s rules to provide for just

such a procedure. We would expect that an opportunity

for cross-examination will be afforded upon a threshold

showing that the legislative procedures have been in-

adequate. While the Commission need not allow the

GESMO hearings to become a forum for the individual

environmental philosophies of every participant, we would

expect that it will endeavor to allow meaningful participa-

tion by the public interest groups whose limited resources

A-59

often relegate them to the role of contesting the studies and

conclusions of industry participants. Cross-examination

has been described as the most effective method through

which to locate factual truth; we expect that this powerful

procedural device will be appropriately utilized in a study

as important as the GESMO.

Decisions regarding these matters of procedure repose

in the sonnd discretion of the Commission. Similarly, we

believe that the Commission’s decision to bifurcate the

hearings between GESMO and the individual licensing

proceedings is well within its reasonable latitude to control

its docket. So long as each final decision on any major

federal action, individual or generic, comports within the

requirements of NEPA and the other regulations required

by the energy acts, it matters not whether certain issues

are addressed in the broadscale inquiry and others in

limited individual proceedings; see Scientists’ Institute,

supra, 481 F.2d at 1092-93. Because we conclude herein

that no commercial licensing will be allowed in the interim

period before the completion of the GESMO inquiry, the

Commission’s fragmentation of the environmental inquiry

will not destroy the integrated and interdisciplinary

approach envisioned by NEPA; rather, it will probably

result in considerable administrative efficiency and avoid

needless duplication. If the Commissioners have before

them all relevant considerations including GESMO and all

individual site factors when they decide whether to grant

or deny a license, NEPA’s procedures are satisfied and a

court should find itself provided with an adequate record

on appeal should there be judicial review.

Petitioners’ final dispute with the Commission over pro-

cedure is addressed to the bifurcation of the GESMO study

itself, and the decision to hold the GESMO hearings in two

phases. Petitioner Natural Resources Defense Council

argues that the safeguards issues to be considered by the

GESMO supplement should not be separated from the

A-60

by the rest of GESMO.

The principles of agency discretion discussed above lead

us to the conclusion that the Commission should not be

required to withhold Final GESMO until such time as the

safeguards supplement is completed. Such a moratorium

on consideration of the mixed oxide fuel issue by the Com-

mission and the public could indeed cause needless delay

and inaction. For the same reasons, we find no error in

the Commission’s decision to proceed with hearings on

Final GESMO before the issuance of the safeguards sup-

plement.

The argument that a bifurcated impact statement vio-

lates NEPA is foreclosed by the recent decision of this

court in Vatwral Resources Defense Council, Inc. v. Calla-

way, 524 F.2d 79 (2d Cir. 1975). In that case Judge Mans-

field, for the court, considered an impact statement which

had been supplemented and concluded that

the use of supplemental data and statements is per-

missible te bolster an otherwise deficient EIS or to

amend an EIS to consider changes in the proposed

federal action when the ‘supplemental’ adequately

remedies the deficiency or analyses the impact of the

proposed change and is properly circulated among the

appropriate agencies before a final decision has been

reached. (Id. at 91-92.)

Other decisions have invited or required supplements to

impact statements, and we are aware of no decision which

all in one piece all at one time; see Indian Lookout Alli-

ance v. Volpe, 484 F.2d 11, 20 (8th Cir. 1973); Jicerilla

Apache Tribe of Indians v. Morton, 471 F.2d 1275, 1280-81

(9th Cir. 1973); Natural Resources Defense Cowncil, Inc.

v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 837 (1972).

A4l

The court assumes that the implementation of these rules

will occur in a manner which will strike a proper balance

between administrative efficiency and the need for a full

public discussion of the complex and far-reaching question

of commereial implementation of the uranium and pluteni-

threat is so grave that it could determine the accepta-

bility of plutonium recycle as a viable component of

this Nation’s nuclear electric power system. Thus, we

i the Con-

A-62

to make sound and reasoned decisions on plutonium

recycle was not available for governmental and public

consideration in the draft GESMO. Because of this,

the Council believes that the draft environmental im-

pact statement does not meet the requirements of the

National Environmental Policy Act. (Attachment C

to NRDC brief.)

Despite the foregoing opinion of the CEQ, the Commis-

sion has determined that Draft GESMO is an adequate

statement to support its decision to license what it has re-

ferred to as interim activity. Petitioners urge that,

despite its breadth of inquiry, Draft GESMO is as inade-

quate a basis for the activity envisioned as it would be for

a decision on wide-scale use.

The requirements of the NEPA apply to the develop-

ment of a new technology as forcefully as they apply to the

construction of a single nn ar power plant. It cannot be

doubted that the Congress, in enacting NEPA, intended

that agencies apply its standards to the decision to intro-

duce a new technology as well as to the decision to license

related activity; see 42 U.S.C. § 4331(a) (1970); S. Rep.

No. 91-296, 9ist Cong., Ist Sess., 20 (1969)." The fact that

the environmental effects of such a decision about a new

technology will not emerge for years does not mean that

the program does not affect the environment or that an

impact statement is unnecessary; see Scientists Institute,

be legislative history of the Act indicates that the term

actions’ refers not only to construction of particular facilities. but

imeludes ‘project proposals, proposals for new legislation. regula-

tions, policy statements, or expansion or revision of ongoing pro-

grams... Scientists’ Institute, supra, 481 F 2d at 1088, quat-

ing S.Rep. No. 91-296, 9ist Cong. Ist Seam, 20 (1969), US Code

Cong. & Admin. News 1969, p. 2751.

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A-64

F.2d 11 (8th Cir. 1973). Such broad-scale impact state-

ments may be required for a series of major federal actions,

even though individual impact statements are to be pre-

pared for each isolated project; see Sierra Club, supra, at

871; Scientists’ Institute, supra. Otherwise, agencies

could take an approach akin to equating an appraisal of

each tree to one of the forest. Jones v. Lynn, 477 F.2d

885, 891 (ist Cir. 1973).

In both Sierra Club and Scientists’ Institute, supra, the

Court of Appeals for the District of Columbia Circuit em-

ployed a four-prong test to determine whether the action

under review required a broad-scale impact statement.

That test is as follows:

I] How likely is the program to come to fruition,

and how soon will that occur?

2 To what extent is meaningful information pre-

sently available on the effects of implementation of

the program, and of alternatives and their effects?

3] To what extent are irretrievable commitments

being made and options precluded as refinement of

the proposal progresses?

4] How severe will be the environmental effects if

the proposal is implemented? (Sierra Club, supra,

at 880.)

Under these guidelines, the Commission’s decision to

initiate the GESMO study was a decision clearly man-

dated by NEPA. The growth of plutonium-related ac-

tivities in recent years makes it clear that the nuclear

power industry as a whole is steadily progressing to-

wards the launching of a new era of commercial nuclear

technology. Important environmental questions are in-

volved in the utilization of plutonium recycle. These ques-

tions are common to the industry and transcend issues

relative to the local impact of any one nuclear power plant.

A-65

The existence of Draft GESMO and the preparation of

the snpplement demonstrate that meaningful information

on the effects of implementation is available. The

GESMO’s limited consideration of alternatives (use

plutonium now; use plutonium later; never use plutonium)

demonstrates that refinement of the proposal may have

already precluded other options. Finally, the record is

replete with assesaments of the possible adverse environ-

mental effecta, as well as the clearly hazardous conse-

—

quences of theft, diversion or sabotage of plutonium.

Thus, NEPA clearly required the GESMO study; the

principal question on this appeal is whether NEPA re-

quires the agency to refrain from commercial implementa-

tion until thet study is complete and o Snel agenay decision

is made.

Many of the underlying questions in this inquiry are

easily resolved. It is apparent that draft GESMO did not

fully address alternatives to plutonium recycle or the spe-

cial problems of theft, diversion and sabotage. Thus, a

totally neutral application of the literal language of NEPA,

specifically § 4332 (C) (ii) & (iii) and § 4332(E), lead to the

inescapable conclusion that Draft GESMO is a legally in-

sufficient environmental impact statement. Previous deci-

sions support this conclusion ; the consideration of alterna-

tives and of special hazards to the public health, safety and

welfare are vital to any impact statement, and numerous

statements have been overturned for their failure to ad-

dress these questions. See, e.g., Natural Resources De-

fense Council v. Callaway, 524 F.2d 79, 92-94 (2d Cir. 1975);

Natural Resources Defense Council, Inc. v. Morton, 148

U.S.App.D.C. 5, 458 F. 2d 827, 833-34 (1972). In fact, this

court has held that a consideration of alternatives is re-

quired under NEPA whenever the agency action has an

environmental! impact, even if no formal impact statement

is filed; see Trinity Episcopal School Corp. v. Romney,

A-66

523 F.2d 88, 93 (2d Cir. 1975) (requiring compliance with

NEPA for federal funding of urban renewal).

The Commission has conceded that draft GESMO is not

an adequate impact statement for wide-scale use. At the

very least, the discussion of safeguards must be completed.

However, the Commission proposes to proceed to commer-

cial-seale licensing without the benefit of the safeguards

t. The Commission has concluded thdt Draft

GESMO, and the individual impact statements which will

address issues other than those being covered by GESMO,

combined with a consideration of its special eligibility eri-

teria, will form an adequate NEPA basis for licensing

decisions.

First, we note that the interim criteria’’ will not be

applied to the use of mixed oxide fuel or to its transporta-

tion. Thus, the Commission will allow the nuclear power

industry to create a market for mixed oxide fuel which is

as large as the industry desires. Further, transportation

will be unrestricted and therefore the widest possible num-

ber of persons will be exposed to the possibility of a nuclear

incident before the release of the supplement on safeguards.

Because the impact statements which will accompany fuel

use and transportation will not consider GESMO issues,

those statements cannot be adequate under NEPA.

The interim criteria which will be applied to mixed oxide

as to whether the activity will place primary reliance on a

favorable final decision in GESMO, whether the activity

would foreclose safeguards alternatives by committing re-

sources, and whether delay in the conduct of the activity

would adversely effect the overall public interest We

find these criteria at best vague and at worst disingenuous.

An activity need not place primary reliance on a favorable

decision on wide-scale use for the activity to severely pre}-

udice the ultimate decision. Second, we are unable to un-

derstand how the Commission wil! be able to determine that

A-67

*

a given activity will not foreclose safeguards when those

safeguards have not yet been designed or finalized. Finally,

the ‘‘delay’’ criteria injects consideration of non-environ-

mental public interest factors which could have the effect

of foreclosing the outcome of the test’s application. In

A-68

activity which would be presently possible had the Com-

mission allowed immediate commencement of ‘‘ wide-scale

use

Prior decisions have halted interim“ agency licensing

activity pending the completion of a generic or regional en-

vironmental impact statement. In Sterra Club v. Morton,

the Court of Appeals for the District of Columbia Circuit

entered an order restraining most federal licensing of strip

mining in a four-state area until a regional impact study

was completed, despite the agency’s protestation that there

was in fact no broad-scale plan for the development of the

entire region. More recently, in Natural Resources De-

fense Council, Inc. v. Callaway, supra, this court restrained

federal dumping in the Long Island Sound until the impact

statement was supplemented to address alternatives and

other planned dumping projects.

In the above cases, the ‘‘interim’’ activity was restrained

because such activity involved irretrievable commitments of

resources which would serve to tip the balance away from

environmental concerns and prejudice the final agency de-

cision. Ia Conservation Society I, supra, this court warned

that we must consider the possibility that there are ‘‘op-

tions often imperceptibly foreclosed by fragmented

growth.“ 508 F. ad at 936, and that the commitments of re-

sources already being made would curtail subsequent

broad-seale assessment of alternatives. Id. at 935. In

Natural Resources Defense Council, Inc. v. Callaway, supra,

this court observed that it is the ‘‘cumulative environmental

impact which must be evaluated as a whole. 524 F.2d at

89.

The granting of licenses to private industry is a familiar

and well established example of major federal action: see

Sierra Club v. Morton, supra, 514 F.2d at 875: Davis v.

Morton, 469 F.2d 593 (10th Cir. 1972); Greene I, supra;

Scenic Hudson Preservation Conference v. Federal Power

Commission, 453 F.2d 463 (2d Cir. 1971); Calvert Cliff's’

A-69

supra. Plutonium technology has never been generally

licensed for commereial use; the order below gives a green

light for the industry to commence planning and implemen-

tation of a second generation of atomic fuel technology.

In this factual context, the recent decision of the Supreme

Court in Aberdeen d Rockfish R. R. v. SCRAP, 422 US.

289, 95 S.Ct. 2336, 45 L.Ed.2d 191 (1975) is clearly distin-

guishable. In that case, the Court allowed the Interstate

Commerce Commission to proceed to grant interim“ rail-

road freight rate increases pending its completion of a

NEPA study of the ICC’s entire rate structure on the ques-

tion of whether the rate structure discriminated against

shipment of recyclables. The Supreme Court noted that the

interim increase was ‘‘entirely nonfinal’’ and that it was

facially neutral in its own environmental impact; see Id. at

322-26, 95 S.Ct. 2336. SCRAP therefore involved no irre-

versible commitment of resources; in fact a rate increase

involves almost no commitments of resources; see Conser-

vation Society of Southern Vermont, Inc. v. Secretary of

Transportation (Conservation Society II), 531 F.2d 637,

638, 639.40 (2d Cir. 1976) (per curiam).

This is not a case where the proposed activity has inde-

pendent utility; see Id.; Friends of the Earth v. Coleman,

513 F.2d 295, 299-300 (9th Cir. 1975), or where the proposed

interim activity is ‘‘substantially independent’’ of the issue

of wide-scale use; see Trout Unlimited v. Morton, 509 F.2d

1276, 1285 (9th Cir. 1974). Rather, the interim activity is

clearly tied to the anticipated wide-scale use and would com-

mit substantial resource“ to the mixed oxide fuel technol-

ogy. Here the activity which will be permitted involves

construction of nuclear separation and reprocessing facili-

ties, conversion of light water nuclear reactors to use of

mixed oxide fuel, and the implementation of interim“

safeguards for the transportation of a deadly and highly

radio-toxie nuclear material. Each of these steps will tip

the scale towards a favorable final decision on wide-scale

A-70

use. Each of these steps will move the nation towards the

use of a hazardous nuclear fuel the implications of which

are not fully understood. We accordingly conclude that

the order below constitutes major federal action which has

not been accompanied by an adequate NEPA analysis.

Taking such action before the completion of the environ-

mental impact analysis has been branded as making a

**mockery’’ of the procedural mandates of NEPA; see Nat-

ural Resources Defense Council, Inc. v. Callaway, supra, 524

F.2d at 92. As the court stated in Scientists’ Institute,

supra,

‘*by the time commercial feasibility of the technology

is conclusively demonstrated, and the effects of applica-

tion of the technology certain, the purposes of NEPA

will already have been thwarted. Substantial invest-

ments will have been made in development of the tech-

nology and options will have been precluded without

consideration of environmental factors.’’ (481 F.2d at

1093-94).

We conclude that the interim licensing envisioned by the

Commission’s decision would indeed result in such a sub-

stantial further commitment of resources that the final de-

cision on the costs and benefits of the public health and

safety and environmental aspects of wide-scale use of mixed

oxide fuel would be significantly affected and that generic

determinations of these issues, and particularly of safe-

guards alternatives, could be effectively foreclosed. The

Commission’s conclusion to the contrary is clearly er-

roneous and is not supported by the record.

Decisions dealing with nuclear power plants have empha-

sized that the crucial juncture for the NEPA decision is the

pre-operating license stage where construction is allowed

to proceed with its attendant massive investment of capital

and manpower. It is clear that plutonium technology is at

A-71

that juncture and we are convinced that if the Commission

is allowed to proceed in the manner set forth above, the cru-

cial decision will have been made without compliance with

NEPA. Whether or not the final decision favors wide-scale

use of plutonium, the Commission’s decision to allow in-

terim commercial activities with ‘‘interim’’ safeguards

standards is very likely to result in ‘‘grandfathering’’ of

the existing facilities due to the expense involved in back-

fitting plants to add safeguards yet to be designed.

In the language of NEPA, there is likely to be an

‘irreversible and irretrievable commitment of re-

sources,’ which will inevitably restrict the Commis-

sion’s options. Either the licensee will have to under-

go a major expense in making alterations in a com-

pleted facility or the environmental harm will have to

be tolerated. It is all too probable that the latter re-

sult would come to pass.’’ (Calvert Cliffs’, supra, 449

F. ad at 1128.)

We conclude that the November 11, 1975 order, insofar as

it allows the Commission to grant licenses for interim com-

mercial activity, is in violation of the NEPA. The Com-

mission has chosen to address generic issues in a broad-

scale inquiry in order to comply with the NEPA. How-

ever, by so doing, it cannot be allowed to circumvent the

mandates of NEPA by granting interim licenses on the

basis of records which exclude the generic aspects. While

the Commission may of course grant licenses for experi-

mental and feasibility purposes in the interim period, it

must refrain from unlimited commercial licensing until

after it has made a final decision on all questions presented

by GESMO.

„Although an EIS may be supplemented, the critical

agency decision must, of course, be made after the sup-

plement has been circulated, considered and discussed

in the light of the alternatives, not before. Otherwise

A-72

the process becomes a useless ritual, defeating the

purpose of NEPA, and rather making a mockery of

it.. (Natural Resources Defense Council, Inc. v. Cal-

laway, supra, 524 F.2d at 92.)

It is undisputable that the motives of the Commission, to

develop new sources of energy and to recycle dwindling

uranium reserves, are highly commendable; however, those

national needs cannot outweigh the far-reaching national

concerns embodied in NEPA. ‘‘Considerations of adminis-

trative difficulty, delay or economic cost will not suffice to

strip [NEPA] of its fundamental importance.“ Culvert

Cliffs’, supra, 449 F.2d at 1115.

We express no opinion on the merits of the question of

wide-scale use of mixed oxide fuel. That decision is one for

the Commission initially, and is not before the court. We

do not vonclude that the Commission must refrain from all

action until the final decision on GESMO; rather, the

Commission can process license applications, rule on the

scope of hearings and applications for intervention, and

even proceed to hold individual hearings to gather relevant

data on individual site factors. All this may be undertaken

before the final decision on wide-scale use, and the Commis-

sion may fully employ the bifurcated procedures which we

have considered above. However, the Commission may not

grant or deny applications for commercial licenses to con-

struct or operate plutonium-related separation or reproces-

sing facilities, nor may it license commercial scale trans-

portation or use of plutonium and uranium mixed oxide

fuel, until the GESMO and the GESMO supplement have

been issued in final form and until the Commission has made

its final decision on wide-scale use of mixed oxide fuel.

Petitioners also argue that the order is ir violation of the

Atomic Energy Act, 42 U.S.C. § 2201 et seq., and the Energy

Reorganization Act of 1974, 42 U.S.C. § 5841 et seq. While

these contentions lend some weight to petitioners’ NEPA

A-73

arguments, we find that, as presented, they fail to establish

independent bases to sv<tain an attack on the Commission’s

decision."*

The decision of the Nuclear Regulatory Commission

dated November 11, 1975 is affirmed insofar as it specifies

guidelines and procedures for the completion of the

GESMO hearings and insofar as it establishes the scope of

and the procedures for individual licensing hearings. The

November 11, 1975 order, insofar as it allows the granting.

of interim commereial licenses for mixed oxide fuel related

activities, is reversed and remanded to the Commission.

Remanded for proceedings consistent with this opinion.

14 Petitioner the State of New York argues that the order violates

the requirement set forth in 42 U.S.C. § 5647 that fuel reeyele s-

tivities be aceompanied by appropriate site surveys; see note 5,

supra. Petitioner notes that such surveys have not been completed

and states that the grant of licenses prior to the surveys’ comple-

L

:

A-74

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Nos. 963, 1051—September Term, 1975

Docket Nos. 75-4276, 75-4278

Decided: September 8, 1976

Appeal Decided: April 12, 1976

Naturat Resources Derense Councit, IN c., ET AL.,

AND

Tue Strate or New Yoru, Petitioners,

v.

Unrrep States Nuciear RZOULIATORY Com Mission

AND

Tue Unrrep Srares or Amenica, Respondents,

Alm GeneraL Nuciear Services, et AL., Intervenors.

Before Ciark, Associate Justice.

Prerce and Owen, District Judges.

On Petition for Rehearing

Per Curiam:

Respondents, the United States Nuclear Regulatory

Commission and the United States, and certain Inter-

venors, petition for a rehearing of the court’s decision in

these cases dated May 26, 1976. In its petition, the

Commission has pointed out certain factual errors in the

opinion which have been corrected by separate order.

Since respondents and intervenors advance no argument

A-75

which would require a different result in the disposition

of these cases, the petitions for rehearing are denied.

Respondents seek to reargue the court’s conclusion that

the controversy was reviewable and its decision that the

Commission must refrain from commercial licensing of

mixed oxide fuel related activities pending the completion

of the GESMO inquiry and a final Commission decision

thereon.

The court adheres to its decision on reviewability.

Respondents’ arguments are but a recasting of those ad-

vanced on the original appeal and are no more persuasive

in their

This text is long and has been trimmed here. Open the source document for the complete record.