2002-07-18 Numerous contentions against ISFSI proposal

Petition to NRC with many contentions regarding ISFSI storage proposal, from activist groups throughout the Central Coast.


In the matter of Pacific Gas and Electric Company Diablo Canyon Nuclear Power Plant Unit Nos. 1 and 2

Docket # 72-26

July 18













In accordance with the Nuclear Regulatory Commission’s (“NRC’s” or “Commission’s”) “Rules of Practice for Domestic Licensing Proceedings” in 10 CFR Part 2, and the Atomic Safety and Licensing Board’s (“ASLB’s) Initial Prehearing Conference Order of June 6, 2002, the San Luis Obispo Mothers for Peace (SLOMFP), Avila Valley Advisory Council (“AVAC”), Peg Pinard, Cambria Legal Defense Fund, Central Coast Peace And Environmental Council, Environmental Center Of San Luis Obispo, Nuclear Age Peace Foundation, San Luis Obispo Chapter of Grandmothers For Peace International, San Luis Obispo Cancer Action Now, Santa Lucia Chapter of the Sierra Club, and Ventura County Chapter of the Surfrider Foundation, hereby submit contentions challenging the adequacy of Pacific Gas & Electric Company’s (“PG&E’s”) December 21, 2001, application for a license for an independent spent fuel storage installation (ISFSI) at the Diablo Canyon Nuclear Power Plant. SLOMFP will act as a lead intervenor with respect to all of these contentions. As demonstrated below, the contentions satisfy the NRC’s admissibility requirements in 10 C.F.R. § 2.714(b).



TC-1 Inadequate Seismic Analysis

Contention: In Section 2.6 of the SAR, PG&E claims to satisfy Appendix A of 10 C.F.R. Part 100 and 10 C.F.R. § 72.102, which provide criteria for seismic design of nuclear facilities and ISFSIs. However, the seismic analysis presented by PG&E does not consider a number of significant seismic features in the area of the Diablo Canyon plant. As a result, the design basis earthquake for the proposed ISFSI cannot be considered reasonable or conservative for purposes of protecting public health and safety against the effects of earthquakes.

Basis: There are a number of serious shortcomings in the evaluation of seismic issues and design considerations that are presented in the Safety Analysis Report (SAR) and Environmental Report (ER) for the ISFSI at Diablo Canyon. The foremost problem with PG&E’s seismic analysis is its failure to consider the threat posed by large reverse or thrust fault earthquakes in the vicinity of the Diablo Canyon site. While PG&E correctly considers the Hosgri fault zone to constitute the constraining seismic source for the facility, PG&E incorrectly and nonconservatively assumes that it is a purely strike-slip fault (SAR p.2.6-33). The nonconservatism is increased by the fact that PG&E also assumes that the fault is a vertical fault (SAR p. 2.6-30), rather than east dipping. Finally, using this nonconservative fault geometry, PG&E places the fault in a nonconservative location.

Incorrect Assumption of strike-slip faulting. PG&E assumes the Hosgri fault is a strike-slip fault rather than an oblique-reverse or thrust fault (SAR p. 2.6-33). As a result, the ground motions calculated by PG&E are lower than they should be. To assume that only strike-slip faulting on a vertical Hosgri fault represents the most severe seismic threat to the Diablo Canyon site understates the hazard. One must also consider the oblique fault character, with thrust or reverse slip in combination with the right-slip.

The oblique fault character of the Hosgri fault zone is demonstrated by three decades or more of geological and seismological investigation in the vicinity of Diablo Canyon. A list of references that describe the fault character of the Hosgri fault and tectonic style of the region is listed at the end of the contention. This list is incomplete, providing only a sampling of the relevant investigations. These investigations have yielded ample data to show the character and locations of the major active fault systems that pose serious earthquake threats to the DCPP and ISFSI. PG&E provides much of this important data from its Long Term Seismic Program (LTSP; SAR Figs. 2.6-40, 41, 42). These data show that the south-central California coastal zone is an area dominated by oblique-shortening. A combination of right-slip, as expressed by the San Andreas fault system, in concert with northeast-directed compression, due to as yet poorly understood tectonic plate boundary processes, has controlled the earthquake and geologic deformation of the region for the past 3-6 Million years (Page, 1981; Nicholson and Crouch, 1989; Sorlien, 1994). This deformation is expressed in the regional geology by the widespread thrust and reverse faulting as well as the major geologic folding (Crouch and others, 1986; Namson and Davis, 1990; Clark and others, 1991; Nicholson and others, 1992). Most likely the parallel trends of faults and fold axes are directly related to the oblique character of this deformation, that is due to the combined interaction of the strike-slip associated with the Pacific-North America transform fault plate boundary and the northeast-directed compression. Geologists use the word transpression to describe this tectonic style.

The credibility of the proposed large oblique-reverse earthquake scenario is amply demonstrated in the existing geological and seismological data acquired over the past decades of research in the south-central California coastal region. First, the overall transpressional character (combination of strike-slip and compression) of the region has been described in numerous published and unpublished technical papers. The earthquake history and active seismicity show this character in the focal mechanisms and the broad distribution of microseismicity, without well-defined vertical fault planes over much of the region, are consistent with the complex patterns of faulting expected in such a transpressional environment (SAR Figs. 2.6-40,41). The seismic reflection data, including the high-quality, deep penetration, multichannel seismic profiles show this complexity, although the deeper structure (below about 3-4 km where large earthquakes initiate) is poorly imaged (Ewing and Talwani, 1991; Clark and others, 1991; McIntosh and others, 1991; Meltzer and Levander, 1991; Nicholson and others, 1992; Sorlien, 1994). The complexity of the geological structure is one of the main reasons why the data quality of the seismic reflection profiles deteriorates with depth in this and other active tectonic areas. Last, the geology as mapped at the surface on land, inferred from seismic profiles and well logs offshore, and inferred into the subsurface by geological methods is consistent with this overall structural and tectonic style (Page, 1981; Crouch and others, 1986; Namson and Davis, 1990; Guptil and others 1991; Sorlien, 1994). Consequently, PG&E must carefully re-evaluate the seismic hazard at the Diablo Canyon nuclear facilities to include the real potential for large oblique-reverse earthquake ruptures in close proximity to the subject site before the NRC can consider licensing the ISFSI.

Assumption of vertical faulting. An important effect of considering an oblique-reverse character for major earthquakes along the Hosgri fault zone is to realize that the fault is not vertical, but instead has an east to northeast dip. Seismic reflection profiles in the area, from the EDGE and PG&E multichannel seismic work (Ewing and Talwani, 1991; Clark and others, 1991; Meltzer and Levander, 1991; McIntosh and others, 1991; Trehu, 1991) as well as proprietary petroleum exploration industry data (Crouch and others, 1986; Namson and Davis, 1990) show numerous east-dipping reverse or thrust faults in the region, including faults within the mapped Hosgri fault zone. Some scientists suggested more than a decade ago that the Hosgri fault is listric in character, going from a steep fault at the surface into a shallow east-dipping thrust fault at depth and merging into a regional dcollement or detachment fault (Crouch and others, 1986; Namson and Davis, 1990). Such regional detachment fault systems have now been identified throughout the southern California region (e.g., Rivero and others, 2000), and shallow dipping blind faults that cut upwards into the shallow crust above these detachments are the source of recent damaging “blind thrust” earthquakes. California examples include the 1983 Coalinga, 1987 Whittier-Narrows, and 1994 Northridge earthquakes. An excellent example of a blind-thrust earthquake associated with a well-known right-slip (assumed vertical strike-slip) fault is the 1989 Loma Prieta earthquake along the Santa Cruz Mountains segment of the San Andreas fault. Thus, it is reasonable and prudent to consider such earthquake sources along the Hosgri fault zone in proximity to the Diablo Canyon site. With an east to north-east dip, the closest distance of the fault surface to the DCPP and ISFSI is significantly closer than (4.5 km SAR p. 2.6-32) used in the design ground motion evaluations, and the epicenter of such an earthquake could lie directly beneath the subject site (epicentral distance equals zero).

This is significant for the Diablo Canyon seismic analysis, because strong ground motion (shaking) from moderate to large reverse or thrust earthquakes tends to be greater at a specified source-to-site distance and source magnitude than for pure strike-slip earthquakes (Abrahamson and Silva, 1997; Boore and others, 1997). The recent 1999 Izmit earthquake in Turkey showed the relatively lower shaking amplitudes for a large (Magnitude=7.6) strike-slip earthquake (Anderson and others, 2001) compared to shaking values in the near source of the moderate (Magnitude=6.7) 1994 Northridge blind-thrust earthquake (Darragh and others, 1995). For an east to northeast-dipping, oblique-reverse, Hosgri fault earthquake source, reverse fault character creates an additional increase in expected ground motions because of the hanging wall effect—seismic energy trapped between the fault and ground surface (in the hanging wall), further amplifies the shaking levels. Failure to account for this realistic fault rupture scenario in the design and operation of the DCPP and ISFSI represents a serious shortcoming in the analyses presented by PG&E. This oversight, or selective ignorance, could result in a serious understatement of the seismic hazard at the subject site, and thus may represent a more serious threat to the public and the environment than the SAR and ER suggest.

Nonconservative assumption relocation of fault. PG&E exacerbates the nonconservatism of its analysis by locating the active fault plane used to determine the design ground motions along the western side of the 3-5 km (2-3 miles) wide zone recognized as the Hosgri fault zone in this area. (SAR Fig. 2.6-4; SAR p. 2.6-32). By using a vertical fault plane and placing this plane on the more distant side of the fault zone, PG&E maximizes the effective distance of the potential earthquake fault rupture source away from the subject site. As a result, PG&E underestimates the level of ground motion of potential large earthquakes.

Additional amplification factors due to site location in the near-source region of the active fault zone include focusing (directivity) and fling (SAR p. 2.6-33,34). These factors are considered in the SAR, but not for an east to northeast-dipping, oblique-reverse fault rupture scenario. Added to the hanging wall and reverse fault factors would further increase the expected ground motions at the site. That such earthquakes are not only possible, but likely in the region is well demonstrated by the data from the LTSP (SAR Fig. 2.6-42) which shows numerous reverse, thrust and oblique-reverse earthquake focal mechanisms in addition to the right-slip earthquakes typical of the San Andreas fault system. Indeed, the largest historical earthquake in the region, the 1927 Lompoc earthquake (Magnitude=7.3) had a reverse or thrust mechanism. PG&E consultants relocated the epicenter of that event as farther offshore (Helmberger and others, 1992) than other studies of this earthquake (Gawthrop, 1978; Hanks, 1979). Measured coastal strain in the area of Point Arguello and the observed tsunami demonstrate the dip-slip character of this important earthquake. To remove the largest historical event in the region from real consideration in the seismic hazard analysis of the Diable Canyon facility is nonconservative. Clearly, a reasonable and prudent evaluation of seismic hazard at Diablo Canyon would consider a similar earthquake located immediately adjacent to the site with the appropriate east to northeast fault dip. To ignore history will likely force us to relive such events, only with the potential for catastrophic consequences if unsafe nuclear materials facilities are located in harm’s way.

Because the design earthquake parameters, including fault rupture, character, magnitude and geometry, define all the other relevant seismic issues necessary for safe design and operation of the Diablo Canyon nuclear facilities, re-evaluation of the earthquake source with an oblique-reverse focal mechanism will require re-evaluation of all the subsequent secondary hazard issues, including earthquake-induced slope failure, liquefaction or lurching (surficial ground failures due to extreme shaking), tsunami, and possible secondary faulting in the hanging wall of the active fault surface beneath the coastline. The numerous minor bedrock faults observed crossing the Diablo Canyon site indeed may represent the geologic record of such secondary faulting occurrences during prehistoric large earthquakes on the coastal fault system. As pre-existing discontinuities in the surficial geologic structure, these minor faults certainly represent likely candidate locations for such secondary fault ruptures during large coastal earthquakes. Furthermore, tectonic strain or permanent ground deformation in the hanging wall of an east to northeast-dipping oblique-reverse fault earthquake under the Diablo Canyon site may occur. Such strain is likely responsible for the uplift of the coast observed geologically as the elevated Pleistocene marine terraces and possibly in the numerous folds crossing the site. Such permanent ground deformation has also been ignored in the PG&E SAR and ER.

TC-2. PG&E’s Financial Qualifications Not Demonstrated

Contention: PG&E has failed to demonstrate that it meets the financial qualifications requirements of 10 C.F.R. § 72.22(e).

Basis: Pursuant to 10 C.F.R. § 72.22(e), PG&E must submit, with its application:

Information sufficient to demonstrate to the Commission the financial qualifications of the applicant to carry out, in accordance with the regulations in this chapter, the activities for which the license is sought. The information must state the place at which the activity is to be performed, the general plan for carrying out the activity, and the period of time for which the license is requested. The information must show that the applicant either possesses the necessary funds, or that the applicant has reasonable assurance of obtaining the necessary funds, or that by a combination of the two, the applicant will have the necessary funds available to cover the following:

  1. Estimated construction costs;
  2. Estimated operating costs of the planned life of the ISFSI;
  3. Estimated decommissioning cots, and the necessary financial arrangements to provide reasonable assurance prior to licensing that decommissioning will be carried out after the removal of spent fuel and/or high-level radioactive waste from storage.

1. Overview

PG&E s claim that it has met the financial qualification requirement fails for five reasons. First, it is currently in a contested bankruptcy and may or may not emerge from that bankruptcy intact. Second, PG&E s claim that since it is a regulated utility its financial qualification is assured, is incorrect. Third, PG&E s claim that since it is a regulated utility the NRC should assume financial qualification is disingenuous, since the plan it has proposed in the bankruptcy proceeding has Diablo Canyon and the ISFSI owned and operated by other non-utility entities. Fourth, PG&E s current financial condition is dubious, with access to credit markets unreliable and very costly, as reported by PG&E itself and its auditors. And fifth the PG&E conglomerate is currently the target of multi-billion dollar litigation for fraud by the California Attorney General. This litigation may well have a substantial adverse impact on PG&E s aspiration to emerge from the bankruptcy as a financially viable entity.

PG&E is Bankrupt.

PG&E filed for bankruptcy on April 6, 2001, and it filed its reorganization plan on September 20, 2001. As of today, the utility is still enmeshed in the toils of an uncertain and highly contested proceeding. Whether PG&E itself will immerge as a viable entity and if so with what remaining resources is unknowable at this point.

The NRC has not directly addressed the implications of the ongoing bankruptcy of a license applicant in the context of an ISFSI. The Atomic Safety and Licensing Board has, however, considered the issue in the context of a non-utility power plant operating license in Gulf States Utilities Company, (River Bend Station, Unit 1), LBP-95-10, 41 NRC 460 (1995). At issue in Gulf States was an independent operating licensee (Entergy Operations) that was entirely dependent on payments from Gulf States, a company perilously close to bankruptcy due to then-pending litigation. In disputing the intervenors’ contention that this dependence was a textbook case for financial disqualification, Gulf States and the NRC staff contended that the bankruptcy courts would adequately protect the public interest, and require continued payments to Entergy, or at the very least, provide sufficient funds to safely shut down and decommission the plant. Id., 41 NRC at 471. The ASLB concluded in response that whether the bankruptcy courts would favor safe nuclear plant operations over other creditors was a factual question that could not be resolved by summary judgment. Id. at 472. The Board discounted Staff assurances that both Palo Verde and Seabrook “operated” through bankruptcy. Id. at 470-71.

Although the Part 72 financial qualifications requirements are apparently less rigorous than the analogous Part 50 provisions, the Commission has ruled that it will not "grant an [ISFSI construction and operation] license to an applicant of dubious financial qualifications." Private Fuel Storage Facility (Independent Spent Fuel Storage Facility), 52 NRC 23, 30 (NRC 2000).

PG&E’s Status as a Utility Does Not Establish Reasonable Assurance of Financial Qualification

In its license application, PG&E relies on its status as a regulated electric utility to demonstrate its financial qualifications. PG&E asserts that:

PG&E is an electric utility subject to rates established by the California Public Utilities Commission (CPUC). As long as PG&E remains the licensee, both capital expenditures and operation and maintenance costs will be covered by revenues derived from electric rates.

License Application at 5. While PG&E acknowledges that it is bankrupt, it does not address the question of how its bankruptcy might affect its financial qualifications to build and operate the ISFSI. Id. Apparently, PG&E believes that the fact that it is able to petition for recovery of its costs from the CPUC is sufficient to demonstrate its financial qualifications. Intervenors believe that PG&E is incorrect, in a number of significant respects.

First, in California, construction work in progress (“CWIP”) is not generally recoverable in rates. Under California’s Construction Work in Progress rate setting rules, PG&E is not entitled to recover ongoing construction costs from the rate base until operation is underway.

Second, PG&E’s ability to recover operating costs from the rate base is questionable. While the fact that PG&E is a regulated utility might normally constitute sufficient evidence of its financial qualifications to operate the proposed ISFSI, in this case there are substantial indications that PG&E will not have normal recourse to the ratemaking system, due to (a) its bankruptcy, and (b) pending litigation by the California Attorney General against PG&E’s parent, PG&E Corporation, charging that under PG&E Corporation’s direction, PG&E has made illegal and fraudulent use of the ratemaking system.

Third, as noted above, PG&E has become bankrupt because it has incurred costs in excess of what it has been able to recover from the rate base. PG&E must retire enormous debts from the bankruptcy. This raises the question of whether any rates recovered by PG&E will be high enough to make it whole again, sufficient to ensure that it operates safely and does not cut corners.

PG&E the Utility as Owner and Operator of the ISFSI?

PG&E claims that as a rate-regulated utility it is financially qualified to build and operate and decommission the ISFSI, since the funds to construct and operate the facility will come from “electric rates.” License Application at 4-5. This is disingenuous. In the next paragraph of its license application PG&E notes that:

Under the [bankruptcy] plan, PG&E’s generating assets, including Diablo Canyon and the proposed ISFSI, will be transferred to a new generating company named Electric Generation LLC (“Gen”). Gen will be a subsidiary of PG&E Corporation (presently PG&E’s parent corporation), and PG&E will be separated from PG&E Corporation.

License Application at 5. Thus, since it is the stated intention of PG&E not to be involved with ownership or operation of the power plant or the ISFSI, whether PG&E does or does not have access to regulated rates is besides the point.

PG&E's Finances Are In Shambles

PG&E has not demonstrated that it will be able to borrow sufficient funds to cover the costs of construction or that its income stream will be adequate to cover construction and operation. In fact, significant evidence exists that PG&E will not be able to borrow the funds necessary to build the ISFSI. For instance, in an independent auditor’s report prepared in connection with PG&E Corporation’s 2001 Annual Report, DeLoitte and Touche reported, inter alia, that:

Pacific Gas and Electric Company, a subsidiary of PG&E Corporation, has incurred power purchase costs substantially in excess of amounts charged to customers in rates. On April 6, 2001 Pacific Gas and Electric Company sought protection from its creditors by filing a voluntary petition under provisions of Chapter 11 of the US Bankruptcy Code. These matters raise substantial doubt about Pacific Gas and Electric Company's ability to continue as a going concern.

Id.at 127 (Emphasis added). Excerpts from the 2001 Annual Report are attached as Exhibit 3. PG&E’s most recent 10-Q filing, for the quarter ending March 31, 2002, adds more detailed information about PG&E’s poor credit rating:

The Utility [PG&E] is currently operating as a debtor-in-possession under Chapter 11 of the Bankruptcy Code. While certain pre-petition debts are stayed, the Utility does not have access to external funding from the capital markets. Additionally, the Utility is in defa ult under its credit facilities, commercial paper, floating rate notes, senior notes, pollution control reimbursement agreements, and medium-term notes resulting from its failure to pay certain of its obligations. The event of default under each security has been stayed in accordance with the bankruptcy proceedings. The Utility has been making the capital investment in its infrastructure out of cash on hand under supervision of the Bankruptcy Court. It is uncertain whether the Utility will be able to continue to make such necessary capital investment in the future.

10-Q Report at 43 (emphasis added). The report can be found on the web at investor.pgecorp.com.

PG&E’s current credit ratings indicate that, even were the company able to access the debt markets, it would face extremely high costs. See 2001 Annual Report at 13. In the Annual Report, PG&E conceded that it:

has a very limited ability to enter into forward contracts to hedge its exposure to commodity price fluctuations because of the reluctance of counterparties to extend credit.

2001 Annual Report at 52. It is also essential to note that the reason lenders are reluctant to loan is that they are skeptical about the adequacy of the borrower’s ability to generate income to repay the debt. It follows then that if PG&E has insufficient revenues to cover debt service on reasonable terms, it almost certainly has insufficient revenues to cover construction and operation on an ongoing basis. Thus, given the current and foreseeable difficult circumstances it faces, PG&E has failed to demonstrate that it has a reasonable prospect of raising the ongoing funds necessary to build and operate the proposed ISFSI.

The California Attorney General’s Lawsuit creates Grave Uncertainties for PG&E

In January 2002, Attorney General Lockyer sued PG&E’s parent, Pacific Gas & Electric Corporation (“PG&E Corp.”), for the return of up to $4 billion that he alleges have been fraudulently transferred by PG&E to PG&E Corp. and other subsidiaries before PG&E filed for bankruptcy. The Attorney General elaborated on the concern behind the lawsuit when he filed a second round of state agency claims against PG&E in Federal Bankruptcy Court on October 3, 2001: “PG&E owes the money to more than a dozen state agencies for such things as unpaid taxes and environmental cleanup costs.”

On June 14, 2002, the Bankruptcy Court ruled that the Attorney General’s claims regarding violations of state law could be tried in the state courts. See Memorandum and Decision. These claims include allegations that the corporation, in exchange for deregulation, promised the State that it would protect the utility’s financial health, but instead fraudulently stripped it of revenues and assets. Id. at 5. The Bankruptcy Court also decided that it would reserve for itself the resolution of claims by the California Attorney General that PG&E was using the bankruptcy process to circumvent state laws and regulations. Memorandum and Decision at 27.

On July 12, 2002, the Attorney General amended his complaint against PG&E Corp in the Bankruptcy Court, setting his state law claims out in more detail. A copy of the Amended Complaint is attached as Exhibit 4. As set forth in paragraphs 37-43 of the Amended Complaint, in 1995, the CPUC conditionally approved a corporate restructuring of PG&E and PG&E Corporation, based on assurances by PG&E, on behalf of itself and PG&E Corporation, that the reorganization would not jeopardize the public interest. The Amended Complaint charges that PG&E Corp. engaged in “unlawful, unfair and fraudulent business acts or practices,” including use of its ownership and control of PG&E to:

subordinate the interests of PG&E and PG&E’s ratepayers to the interests of PG&E Corporation and its other affiliates, by using ratepayer generated PG&E funds to: (1) subsidize its own operations and those of its other affiliates; and (ii) accomplish its overall objective of evading CPUC’s regulatory authority over its utility operations.

Id., pars. 103 and 103(b).

The Amended Complaint also contended that PG&E Corporation subordinated:

the interests of PG&E and PG&E’s ratepayers to the interests of PG&E Corporation and its affiliates, other than PG&E, by transferring ratepayer-funded assets, including revenues, from PG&E to PG&E Corporation, for the benefit of PG&E Corporation and its affiliates, other than PG&E, even when PG&E began to experience financial distress, and did so with no intent to infuse capital into PG&E when it needed capital to operate. . .

Id., par. 103(d). Unless and until the courts resolve issues relating to PG&E’s alleged defrauding of ratepayers on behalf of PG&E Corporation, it is not reasonable to anticipate that PG&E will have straightforward access to the ratemaking system.

In sum, PG&E has failed to demonstrate its financial qualification to build and operate the proposed ISFSI.

TC-3. PG&E May Not Apply for a License for a Third Party.

Contention: In its License Application, PG&E first asserts that it, as the applicant, is financially qualified. It then goes on to assert, however, that it has applied to transfer its Part 50 operating license to a yet-to-be-created limited liability company, Electric Generation LLC (“Gen”), which will then transfer it further to yet another yet-to-be-created entity, Diablo Canyon LLC. License Application at 5. “Gen” is a one of the proposed offsprings of a restructuring proposal being considered in the bankruptcy proceeding. See Application for Consent to License Transfers and Conforming License Amendments for Diablo Canyon Power Plant, Units 1 and 2 at 4 (November 30, 2001) (hereinafter “License Transfer Application”). The License Transfer Application and Enclosure 8 are attached as Exhibit 5. PG&E also asserts that revenue and income projections for Gen, “as well as the substantial assets of the company,” demonstrate Gen’s financial qualifications to construct and operate the Diablo Canyon ISFSI. Id.

As discussed in Contention TC-4 below, it is not at all clear whether Gen or some other entity will be the owner and licensee of the proposed ISFSI under PG&E’s reorganization plan, even if that reorganization plan is approved, which it may well not be.

The crux of the problem is that PG&E may not apply for a license for a third party that does not constitute the “applicant.” There is no corporate entity, other than PG&E, that has applied for a license to build and operate the proposed ISFSI. In the absence of an alternative applicant, PG&E’s attempt to demonstrate the financial qualifications of a third-party shell corporation that is a non-applicant must fail.

Basis: The basis for this contention is 10 C.F.R. § 72.22, which clearly requires that financial qualifications must be demonstrated by the “applicant.” The purpose of the financial qualification rules is to ensure that the actual builders and operators of dangerous facilities have the financial wherewithal to do so in a safe manner. While we understand PG&E’s desire not to have a recently created shell corporation make an application on its own behalf, Part 72 clearly requires it.

TC-4. Failure to Establish Financial Relationships Between Parties Involved in Construction and Operation of ISFSI.

Contention: Newly formed entities that seek ISFSI licenses must conform to the requirements of 10 C.F.R. § 72.22, and also follow the Commission’s guidance in 10 C.F.R. Part 50, including 10 C.F.R. § 50.33(f) and Appendix C. See Private Fuel Storage Facility (Independent Spent Fuel Storage Facility), LBP-98-7, 47 NRC 142, 187 (1998), citing Louisiana Energy Services, L.P. (Claiborne Enrichment Center), CLI-97-15, 46 NRC 294, 302 (1997). Assuming that PG&E lawfully can seek to demonstrate the financial qualifications of a third party that does not constitute the license applicant for an ISFSI (see Contention TC-3 above), PG&E has failed to satisfy these requirements, because it has not provided an adequate description of the financial relationships between the corporate entities that will own, operate, and lease the proposed ISFSI.

Basis: In its License Application, PG&E states the following:

On November 30, 2001, PG&E filed with the NRC a request for NRC consent to a transfer of the Part 50 operating license for DCPP to Gen. (In addition, the application requests approval of a transfer of ownership of the asset to a subsidiary of Gen, Diablo Canyon LLC).

License Application at 5. (The “asset” referred to in the second sentence would appear to be the Part 50 operating license, although this is somewhat unclear). PG&E also asserts that revenue and income projections for Gen, “as well as the substantial assets of the company,” demonstrate Gen’s financial qualifications to construct and operate the Diablo Canyon ISFSI. Id. These figures, however, are all entirely hypothetical, especially since Electric Generation LLC (Gen) has not been and will not be capitalized unless the bankruptcy court accepts PG&E’s reorganization plan. A paper statement of hypothetical and highly contingent assets derived from one among contending reorganization plans in history’s largest utility bankruptcy can hardly be taken as proof of financial qualification pursuant to Sec. 72.22.

Moreover, PG&E fails to demonstrate Gen’s financial relationship with other corporate entities that have an interest in the proposed ISFSI. For instance, it appears from the License Transfer application that Diablo Canyon LLC (“Nuclear”), Gen’s subsidiary, will own the “asset” of Diablo Canyon, and “will lease DCPP to Gen under a lease agreement that will require Gen to cover all the operating and capital costs of DCPP.” License Transfer Application at 8. It is not clear whether Nuclear will also own the ISFSI and lease it to Gen. Thus, the financial relationships between owner and lessee and owner and licensee are unclear. Diablo Canyon LLC also will be the owner of the spent fuel itself. License Transfer Application at 17. If there is an accident or some other problem involving the spent fuel, it is unclear which entity would be liable or financially responsible. Moreover, PG&E says that it “anticipates that Gen will become the initial ISFSI licensee.” Id. (emphasis added). This further suggests the contingent character of the licensee.

This structure, along with the identities of the players, is further complicated by the financing arrangements needed to lift PG&E out of bankruptcy. In one description of its bankruptcy reorganization plan, PG&E asserts that each new company will issue its own debt to cover allowed claims against the old PG&E Utility. See PG&E Form 8-K at page 5 (filed with SEC September 20, 2001). A copy of relevant pages is attached as Exhibit 6. It remains unknown, at this point, what claims will be made against the company that holds the ISFSI license, and whether that will interfere with the licensee’s ability to raise funds for construction and operation. None of this information is available in the License Transfer Application, and the financial information that is available in Enclosure 8 is composed of very sketchy, nominal, unsupported place-keeper figures. Two of the four tables are blank, including the table of assumptions, the sketchy income statement only provides figures for years 1-3 with 4-5 blank, and the balance sheet shows $1.2 billion in negative equity—hardly “substantial assets.” License Transfer Application, Enclosure 8 (see Exhibit 5). As evidence of the financial qualification of Electric Generation LLC (Gen) or Diablo Canyon LLC (Nuclear) this presentation is worthless.

Without this basic information on the identity of PG&E’s planned successors and their financial qualifications as licensees of the proposed ISFSI, it is impossible to make any meaningful evaluation of the corporate structure of the new entity or its relationship to its parents and affiliates, as required by 10 C.F.R. § 50.33(f) and Appendix C to 10 C.F.R. Part 50.

TC-5. Failure to Provide Sufficient Description of Construction and Operation Costs.

Contention: PG&E has failed to provide a sufficient description or breakdown of costs for construction, and operation, and therefore it does not satisfy 10 C.F.R. § 72.22.

Basis: NRC regulations at 10 C.F.R. Part 50, Appendix C, Section II, require the construction costs must be itemized by categories of sufficient detail to permit an evaluation of reasonableness. This guidance should apply here, because in the absence of detailed information, it is impossible to evaluate the applicant’s cost estimates. In the License Application, PG&E gives only a summary of the total estimated costs of building and operating the ISFSI. License Application at 4. In the absence of any detailed cost breakdown, there is simply no basis for evaluating the reasonableness of the estimate.

PG&E asserts at page 5 that there is financial data in the License Transfer Application for the first five years of operation includes information about the costs of the ISFSI during the first five years of operation. However, the information contained in Enclosure 8 of the License Transfer Application, “Financial Qualification Information” has a one-page income statement going out five years with years 4 and 5 blank. And no information at all is presented on the ISFSI specifically. See Exhibit 5.


Contention EC-1: Failure to Address Environmental Impacts of Destructive Acts of Malice or Insanity

Contention: The Environmental Report’s discussion of environmental impacts is inadequate because it does not include the consequences of destructive acts of malice or insanity against the proposed ISFSI.

Basis: The ER does not contain any discussion of the environmental impacts of destructive acts of malice or insanity. This omission is consistent with the NRC’s long- established policy, now under serious question, of refusing to examine the environmental impacts of destructive acts of malice or insanity. See Philadelphia Electric Co. (Limerick Generating Station, Units1 and 2), ALAB-819, 22 NRC 681, 697-701 (1985), aff’d on this ground and rev’d on other grounds, Limerick Ecology Action v. NRC, 869 F.2d 719, 743-44 (3rd Cir. 1989). The NRC’s basis for this policy was that it was unable to make a meaningful assessment of the risks of sabotage. Id. Recently, the NRC undertook to reconsider this policy, in response to terrorism-related NEPA contentions that were raised in several pending licensing proceedings following the events of September 11, 2001. See Dominion Nuclear Connecticut, Inc. (Millstone Nuclear Power Station, Unit 1), CLI-02-05, 55 NRC 161 (2002); Duke Cogema Stone & Webster (Savannah River Mixed Oxide Fuel Fabrication Facility), CLI-02-04, 55 NRC 158 (2002); Duke Energy Corp. (McGuire Nuclear Station, Units 1 and 2), Catawba Nuclear Station, Units 1 and 2), CLI-02-04, 55 NRC 164 (2002); Private Fuel Storage, L.L.C. (Independent Fuel Storage Installation), CLI-02-03, 55 NRC 155 (2002).

The Intervenors respectfully submit that this licensing proceeding constitutes yet another instance in which there is a demonstrable need to revisit the Commission’s policy of refusing to consider environmental impacts of destructive acts of malice or insanity against nuclear facilities. As of September 11, 2001, it is now clear that terrorists are both capable of and intent upon causing major damage to life and property in the United States. Terrorists have openly admitted that nuclear power stations are near the top of their lists as targets for attacks on civilians in the United States. Earlier this year, in his State of the Union Address, President Bush announced that diagrams of American nuclear plants had been found in Afghanistan. President Bush is also quoted in the San Luis Obispo newspaper, “The Tribune” (June 7, 2002) as follows: “…we now know that thousands of trained killers are plotting to attack us and this terrible knowledge requires us to act different[ly].” In a speech made on January 17, 2002, Dr. Richard A. Meserve, Chairman of the NRC, stated that, in regard to reactor containments, “which are extremely robust, typically being constructed with two to five feet of reinforced concrete with an interior steel lining… the design basis threat does not include an aircraft attack.” If the containment buildings are not designed to withstand an aircraft attack, then spent fuel storage facilities, which lack a containment, must be assumed to be at least as vulnerable as reactors. PG&E’s proposal of 140 unprotected casks installed on concrete pads provides an inviting terrorist target.

Terrorist events during recent years, which were previously discounted by the NRC as unworthy of consideration in its environmental reviews, must now be re-examined in light of the September 11 attack. Taken together, they highlight a number of significant factors: the vulnerability of U.S. facilities and institutions; the sophistication of the attackers; and the persistence of efforts to damage major U.S. facilities. These events include: the 1983 bombing of the Marine barracks in Beirut; the 1993 bombing of the World Trade Center; the February 1993 intrusion into the Three Mile Island site, in which the intruder crashed his station wagon through the security gate and rammed it under a partly opened door in the turbine building; the 1995 bombing of a federal building in Oklahoma City; the plot to bomb the United Nations Building, FBI offices in New York City, the Lincoln Tunnel, the Holland Tunnel, and the George Washington Bridge; the 1998 bombing of the U.S. embassies in Tanzania and Kenya; and the 2000 bombing of the U.S.S. Cole.

In fact, the Commission has already taken some steps towards recognizing the foreseeability of destructive acts of malice or insanity against nuclear facilities. In the 1994 vehicle bomb rulemaking, which was directly responsive to the World Trade Center bombing and the Three Mile Island vehicle intrusion incident, the Commission abandoned its previous position that the difficulty of quantifying the probability of such events means that they can be ignored. The rationale for the 1994 vehicle-bomb rule demonstrates that the NRC has the capacity and information necessary to perform a qualitative analysis of the potential for acts of malice or insanity. In that instance, the NRC performed a “conditional probabilistic risk analysis” to assess the vulnerability of a nuclear power plant to a vehicle bomb. See Final Rule, Protection Against Malevolent Use of Vehicles at Nuclear Power Plants, 59 Fed. Reg. 38,889, 38,891 (August 1, 1994). In using the findings of this analysis to develop the vehicle-bomb rule, the NRC took a qualitative approach to assessing the probability of a vehicle-bomb event.

In the preamble to the rule, the Commission explicitly recognized that even if the likelihood of terrorist or insane acts cannot be quantified, they may not be ignored:

Over the past several years, a number of National Intelligence Estimates have been produced addressing the likelihood of nuclear terrorism. The analyses and conclusions are not presented in terms of quantified probability but recognize the unpredictable nature of terrorist activity in terms of likelihood. The NRC continues to believe that, although in many cases considerations of probabilities can provide insight into the relative risk of an event, in some cases it is not possible, with current knowledge and methods, to usefully quantify the probability of a specific vulnerability threat.

The NRC notes that, although not quantified, its regulatory analysis recognizes the importance of the perception of the likelihood of an attempt to create radiological sabotage in assessing whether to redefine adequate protection. The NRC’s assessment that there is no indication of an actual vehicle threat against the domestic commercial nuclear industry was an important consideration in concluding that neither the Three Mile Island intrusion nor the World Trade Center bombing demonstrated a need to redefine adequate protection.

The NRC does not agree that quantifying the probability of an actual attack is necessary to a judgment of a substantial increase in overall protection of the public health and safety (a less stringent test of the justification of for a rule change). Inherent in the NRC's current regulations is a policy decision that the threat, although not quantified, is likely in a range that warrants protection against a violent external assault as a matter of prudence.

59 Fed. Reg. at 38,890-9. (emphasis added). The NRC further elaborated on what it meant by it use of the the term “likely,” by identifying several factors that make up the “domestic threat environment,” and noting the degree to which it had changed in recent years:

The vehicle bomb attack on the World Trade Center represented a significant change to the domestic threat environment that ... eroded [our prior] basis for concluding that vehicle bombs could be excluded from any consideration of the domestic threat environment. For the first time in the United States, a conspiracy with ties to Middle East extremists clearly demonstrated the capability and motivation to organize, plan and successfully conduct a major vehicle bomb attack. Regardless of the motivations or connections of the conspirators, it is significant that the bombing was organized within the United States and implemented with materials obtained on the open market in the United States. Accordingly, the Commission believes that the threat characterized in the final rule is appropriate.

Id., 59 Fed. Reg. at 38891. These same considerations continue to apply in the post-September 11 environment, and indeed are all the more persuasive of a sea change in the “domestic threat environment.” Thus, motive, capacity, and the pattern of past incidents are relevant to a qualitative analysis.

The vulnerability of the Diablo Canyon ISFSI to potential acts of malice or insanity is evident from the facility’s design parameters. These parameters encompass only comparatively minor threats to cask integrity, such as the impact of a tornado-driven automobile at 33 miles per hour, or the explosion of a vehicle fuel tank at a distance of 50 feet. See SAR, Section 3.4. Destructive acts of malice or insanity at this facility could employ much more powerful instruments, such as anti-tank ordnance or an impacting aircraft. A significant release of radioactive material could arise from the use of such instruments. This release could contaminate a large area of land, leading to substantial impacts to public health, the natural environment, and the regional economy.

The ER should provide a full discussion of the potential consequences of a range of credible events involving destructive acts of malice or insanity against the proposed ISFSI. It should also evaluate a range of reasonable alternatives to the proposed action, including dispersal of casks, protection of casks by berms or bunkers, and use of more robust storage casks than the Holtec HI-STORM 100 cask.

EC-2. Failure to Fully Describe Purposes of Proposed Action or to Evaluate All Reasonably Associated Environmental Impacts and Alternatives

Contention: NRC regulations at 10 C.F.R. § 51.45(b) require a license applicant to describe, among other things, a statement of the purposes of the proposed action. PG&E’s Environmental Report fails to meet this requirement because it does not completely disclose the purposes of the proposed ISFSI. In describing the need for the facility, the ER states that additional spent fuel storage capacity is needed at Diablo Canyon to accommodate the additional spent fuel that will be generated through the operating life of each unit. ER at 1.2-1. Yet, the capacity of the proposed ISFSI would be two or three times greater than what is needed to fulfill that purpose.

It appears that PG&E may have an additional, unstated purpose, i.e., to provide spent fuel storage capacity during a license renewal term. PG&E implies, in setting forth its financial qualifications in Section 1.5 of the License Application, that the proposed ISFSI could be used to accommodate spent fuel offloaded from the spent fuel pools after the present license terms of Diablo Canyon Units 1 and 2 have expired. However, if PG&E proceeds with its publicly stated plan to obtain license renewals for these units, the capacity of the proposed ISFSI would accommodate spent fuel generated during a substantial part of the license renewal term. Thus, the excess capacity of the proposed ISFSI – beyond that needed to accommodate the additional spent fuel that will be generated during the remaining license terms of the two Diablo Canyon units – could serve two different purposes. Neither purpose is discussed explicitly in the ER, and the License Application discusses only one of the purposes – namely, offloading the pools. Moreover, the discussion in the License Application is so oblique that PG&E’s true purpose cannot be divined. Accordingly, the ER must be revised to fully disclose the purposes of the proposed facility.

A revision of the statement of purpose for the proposed ISFSI would require significant changes to the ER. As the courts have recognized, the statement of purpose and need in an EIS determines the range of alternatives that must be considered. City of Carmel-by-the-Sea v. U.S. Department of Transportation, 123 F.3d 1142, 1155 (9th Cir. 1995); Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190, 195 (D.C. Cir. 1991); City of New York v. United States Department of Transportation, 715 F.2d 732, 743 (2nd Cir. 1983). As the Court observed in Ctizens Against Burlington, “an agency may not define the objectives of its action in terms so unreasonably narrow that only one alternative from among the environmentally benign ones in the agency’s power would accomplish the goals of the agency’s action, and the EIS would become a foreordained formality.” 938 F.2d at 196.

If, as it appears, the purposes of the proposed ISFSI could include providing for spent fuel storage during an extended or renewed license term, then it is appropriate to consider whether previous environmental analyses support renewed authorization to continue storing spent fuel at the Diablo Canyon site in the manner currently provided. In particular, the ER must “contain any new and significant information regarding the environmental impacts of license renewal of which the applicant is aware.” 10 C.F.R. § 51.53(c)(3)(iv). The Intervenors recognize that consideration of environmental impacts of spent fuel storage in a license renewal term is generally precluded in license renewal cases, because these environmental impacts were previously addressed in NUREG-1437, Generic Environmental Impact Statement for License Renewal of Nuclear Plants (1996). See, in particular, Section However, the NRC’s NEPA regulations create an exception to this prohibition, by requiring consideration of “new and significant information regarding the environmental impacts of license renewal of which the applicant is aware.” 10 C.F.R. § 51.53(c)(iv).

In this case, the ER should address new information showing that (a) previous NRC environmental analyses of the risks of high-density pool storage of spent fuel considerably underestimate the risk of a spent fuel pool fire; and (b) in light of the terrorist attacks of September 11, 2001, and other events, the adequacy of design for both pool storage and dry storage has been demonstrated to be inadequate to protect against the potentially catastrophic effects of destructive acts of malice or insanity. The ER should consider a range of alternatives for extended spent fuel storage that will avoid or mitigate these risks.

Basis: The Intervenors provide the following information in support of this contention:

ER understates ISFSI capacity. PG&E asserts in Section 1.2 of the ER that the purpose of the proposed ISFSI is to “allow DCPP to continue to generate electricity.” In the preceding “Background” section, the ER observes that the operating license expires in September 2021 for Unit 1 and April 2025 for Unit 2. According to PG&E, the pools at Diablo Canyon will be full, allowing for a full-core offload, in 2006. PG&E asserts that “[a]fter that time, an alternative means of spent fuel storage at DCPP must be provided unless the spent fuel can be shipped offsite.” Id., ER at 1.1-1. See also DIL-01-002, cover letter from Lawrence F. Womack to NRC Staff enclosing License Application (December 21, 2001). No mention is made, either in the ER or DIL-01-002, of license renewal or any other extension of the license term. Similarly, neither document mentions potential offloading of the pools after expiration of the present license terms.

The capacity of the proposed ISFSI is significantly greater than needed to fulfill the purpose of providing additional spent fuel storage until the end of the license terms of 2021 and 2025. Using information provided by PG&E in DIL-01-002 and the Environmental Report, one can determine that in fact, the capacity of the proposed ISFSI will be at least double, if not triple, the needed capacity. Once the spent fuel storage pools are filled in 2006, PG&E will need storage capacity for another 34 reactor-years for the two units (2007 through 2021 and 2007 through 2025). For a 21-month refueling cycle, there will be 20 refueling outages. For an 18-month refueling cycle, there will be 23 refueling outages. If, as PG&E asserts, 76 to 96 spent fuel assemblies are discharged in each refueling outage, then the total number of fuel assemblies for which more storage space is required will be between 1,520 and 1,920 for a 21-month refueling cycle, and between 1,748 and 2,208 for an 18-month refueling cycle. Yet, PG&E proposes to build a facility that will hold 4,400 fuel assemblies. License Application at 8. This is two to three times as many fuel assemblies as PG&E will generate if it operates the two Diablo Canyon units to the end of their license terms. The capacity of the proposed ISFSI will allow Diablo Canyon to continue to operate for another 34 to 66 reactor-years past the expiration of the license terms for Units 1 and 2, potentially representing 17 to 33 years of additional operation for each unit.

The most likely purpose for building an ISFSI that is twice as large as needed is to allow for spent fuel storage during a term of license renewal. While PG&E has not formally committed to seeking to renew its license, in a recent public meeting it did indicate that it plans on “50 more years” of operation after upcoming refueling outage 1R11. See viewgraph presented by PG&E at June 6, 2002, meeting between PG&E and Pismo Beach Independent Safety Committee. A copy of the viewgraph is attached as Exhibit 9.

Statement of purpose must be revised. If the purposes and potential uses of the proposed ISFSI include providing extra spent fuel storage capacity during the license renewal term, the ER needs to acknowledge this in a revised statement of purpose and need. Moreover, in order to avoid improper segmentation of the license renewal project with respect to spent fuel storage, PG&E should meet all regulatory requirements applicable to license renewal with respect to the spent fuel storage issue. These requirements include the consideration of “new and significant information regarding the environmental impacts of license renewal of which the applicant is aware.” 10 C.F.R. § 51.45(c)(3)(iv). In this case, new information shows that previous NRC environmental analyses of high-density spent fuel pool storage significantly underestimated the risks of severe accidents. New information also shows that both pool storage and dry storage facilities are vulnerable to destructive acts of malice or insanity.

New information shows that risks of spent fuel pool fires are higher than previously thought. The NRC has never performed an EIS that addresses the potential for, and impacts of, the onset of exothermic oxidation reactions in a spent fuel pool. Yet, in a report published in October 2000 and issued in January 2001, the NRC Staff has conceded that loss of water from a high-density spent fuel pool can lead to the onset of exothermic oxidation reactions for spent fuel of any age after discharge from a reactor, causing a release to the atmosphere of a substantial fraction of the radioactive isotopes in the spent fuel. See NUREG-1738, Technical Study of Spent Fuel Pool Accident Risk at Decommissioning Nuclear Power Plants (NRC: October 2000) (hereinafter “NUREG-1738”). Elsewhere, the NRC Staff has conceded that: (a) the onset of exothermic oxidation reactions can be assumed if the water level in a pool declines to the level of the top of the spent fuel racks; and (b) the onset of exothermic oxidation reactions in one pool is likely to lead to the onset of similar reactions in nearby pools. Affidavit of Gareth W. Parry, et al., paragraph 29 (November 20, 2000), submitted in license amendment proceeding for proposed expansion of spent fuel pool storage capacity at Shearon Harris nuclear power plant, Docket No. 50-400-LA, ASLBP No. 99-762-02-LA. An excerpt from the Parry Affidavit is attached as Exhibit 10.

The NRC has acknowledged the potential for sabotage-induced pool fires. The NRC Staff discussed the implications of NUREG-1738 with respect to protection against sabotage events in SECY-01-0100, re: Policy Issues Related to Safeguards, Insurance, and Emergency Preparedness Regulations at Decommissioning Nuclear Power Plants Storing Fuel in Spent Fuel Polls (WITS 200000126) (June 4, 2001). Among the conclusions reached in SECY-01-100 were the following:

NUREG-1738 also presented thermal hydraulic analyses of the stored spent fuel when SFP cooling is lost or the spent fuel is uncovered. The staff found that a generic decay heat level (and, therefore, decay time) beyond which a zirconium fire is physically impossible cannot be defined. This is because the geometry of the spent fuel assemblies, the associated air cooling flow paths, and the resultant heat transfer rates are not predictable following a major dynamic event (such as a very severe earthquake), which could rupture and rapidly drain the SFP. As a result, the study concluded that the possibility of a zirconium fire cannot be dismissed even many years after final reactor shutdown.

Id. at 2 (emphasis added). This represents a 180 degree turnaround from the Staff’s previous position. The report continues that the Staff’s previous position:

was based on demonstrating by thermal-hydraulic analysis that spent fuel stored in the SFP would air cool sufficiently and not reach the zirconium fire ignition temperature. The position did not consider blockage or obstructions to natural circulation air flow through the fuel assemblies since such sequences were considered strictly hypothetical. In NUREG-1738 the staff observed that it is not feasible, without numerous constraints, to define a generic decay heat level beyond which a zirconium fire is not physically possible. Stated in this manner, the zirconium fire cannot be considered strictly hypothetical.

Id. at 3 (emphasis added). In an attachment, entitiled Decommissioning Policy Issues and Options, the Staff reached the following additional conclusion that effectively concedes the credibility of a sabotage event initiating a spent fuel pool fire:

Until recently, the staff believed that the DBT [design basis threat] of radiological sabotage could not cause a zirconium fire. However, NUREG-1738 does not support the assertion of a lesser hazard to the public health and safety, given the possible consequences of sabotage-included uncovery of the fuel in the SFP when a zirconium-fire potential exists.

Id., attachment at 13. The staff went on to say that it is “conducting detailed analyses of the effects of the DBT of radiological sabotage on SFPs,” and that it will “use the results of these analyses to determine, on a plant-specific basis, whether radiological sabotage can result in conditions which could lead to zirconium fires at a decommissioning plant.” Id. Thus, by generally conceding the vulnerability of spent fuel pools to sabotage-included fires, and embarking on its own investigation, the Staff has effectively conceded that acts of malice against spent fuel are credible and worthy of consideration in the NRC’s NEPA decisionmaking process.

Previous environmental analyses are inadequate. The only EIS that has been prepared on the environmental impacts of spent fuel pool storage onsists of a Generic Environmental Impact Statement prepared in 1979, NUREG-0575, Handling and Storage of Spent Light Water Power Reactor Fuel (hereinafter “GEIS”). The GEIS did not mention the potential for a pool fire. As a result, the GEIS discounted the environmental impacts of atmospheric dispersion of radioactive contamination. The GEIS has not been updated since it was issued over 20 years ago.

In issuing the license renewal rule, the Commission claimed to have generically considered the environmental impacts of on-site spent fuel storage in the context of the NRC’s GEIS for license renewal. 61 Fed. Reg. 66,537, 66,538, Environmental Review for Renewal of Nuclear Power Plant Operating Licenses (December 18, 1996). The License Renewal GEIS, however, contains no analysis of the potential for spent fuel pool accidents. See NUREG-1437, Generic Environmental Impact Statement for License Renewal, § (May 1996) (hereinafter “License Renewal GEIS”). Instead, it vaguely states that “[c]urrent and potential environmental impacts from spent-fuel storage have been studied extensively and are well understood.” Id.

The only hint of any evaluation of spent fuel pool accident risks in the license renewal GEIS consists of a reference to a 1990 rulemaking notice in the Waste Confidence Rulemaking. See Final Rule, Review and Final Revision of Waste Confidence Decision 55 Fed. Reg. 38474, (September 18, 1990). In that rulemaking, the NRC examined the environmental impacts of storing spent fuel at reactor sites for an additional 30 years pending the opening of a final repository. In response to comments on the potential for spent fuel pool accidents, the Commission briefly reviewed the then-current literature on spent fuel pool risks, and concluded that these reports confirmed the NRC’s previous finding that high-density spent fuel storage poses no significant risks. 55 Fed. Reg. at 38,480-81. The technical studies reviewed by the NRC consisted of: NUREG/CR-4982, Severe Accidents in Spent Fuel Pools in Support of Generic Issue 82 (1987); NUREG/CR-5176, Seismic Failure and Cask Drop Analysis of the Spent Fuel Pools at Two Representative Nuclear Power Plants (1989); NUREG/CR-5281, Value/Impact Analysis of Accident Preventative and Mitigative Options for Spent Fuel Pools; NUREG-1353, Regulatory Analysis for the Resolution of Generic Issue 82, Beyond Design Basis Accidents in Spent Fuel Pools (1989). Each of these studies considered total and instantaneous pool drainage, without examining the potential for partial drainage, a more severe condition that occurs earlier in any accident sequence. Moreover, the rulemaking notice shows that the Commission’s conclusion that spent fuel pool storage would have no significant adverse impacts is based on the assumptions, which the NRC now concedes to be invalid, see NUREG-1738, that (a) only recently discharged fuel will burn, and (b) a total loss of pool water constitutes the most severe condition. See 55 Fed. Reg. at 38,481 (noting that a major loss of cooling water would have to occur within two years after operation of a pressurized water reactor or six months after operation of a boiling water reactor; and that even if a fire were to occur in fresh fuel, the fire could occur only with a “sudden and substantial” loss of coolant, great enough to uncover “all or most of the fuel.”

New information shows that both pools and casks are vulnerable to destructive acts of malice or insanity. As discussed in Contention EC-1, events during the past ten years, most significantly the terrorist attacks of September 11, 2001, show that the risks of deliberate and destructive acts of malice or insanity are higher than previously thought. Moreover, nuclear facilities are particularly vulnerable targets. This is true for both dry-storage ISFSI’s and spent fuel storage pools. The potential consequences of an attack on a pool are considerably more severe than the consequences of an attack on a dry storage facility. Neverthless, both could lead to significant offsite radiation releases. The design parameters of the proposed Diablo Canyon ISFSI encompass only comparatively minor threats to cask integrity, such as the impact of a tornado-driven automobile at 33 miles per hour or the explosion of a vehicle fuel tank at a distance of 50 feet. See SAR, Section 3.4. Destructive acts of malice or insanity at this facility could employ much more powerful instruments, such as anti-tank ordnance or an impacting aircraft. A significant release of radioactivity could arise from the use of such instruments. In the case of a spent fuel pool, the consequences of a fire could be many times more severe than the consequences of the Chernobyl accident, with massive releases of cesium-137 and long-term contamination of large areas of land.

Need to fully address impacts and alternatives. The ER should address the consequences of a range of credible events involving destructive acts of malice or insanity against the proposed ISFSI and the Diablo Canyon fuel pools. It should also address a reasonable range of alternatives that would avoid or mitigate those impacts. These alternatives should include substitution of low-density storage racks for high-density storage racks in the pools, and transfer of most of the pools’ inventory of spent fuel to dry storage. Alternatives considered should also include the use of casks that are more robust than the Holtec HI-STORM 100 cask, disperal of casks, and protection of casks by berms or bunkers.

EC-3. Failure to Evaluate Environmental Impacts of Transportation

Contention: In violation of NEPA, PG&E’s ER completely fails to evaluate the reasonably foreseeable environmental impacts of transporting spent fuel away from the Diablo Canyon ISFSI at the end of the license term of the ISFSI, either to a repository or another interim storage site. In failing to address these reasonably foreseeable impacts, PG&E violates the National Environmental Policy Act, and NRC implementing regulations at 10 C.F.R. § 51.45(b)(1) (requiring ER to address the impacts of the proposed action on the environment) and 10 C.F.R. § 72.108 (requiring the applicant to address the impacts of spent fuel transportation within the “region” of the proposed ISFSI).

Basis: The proposed ISFSI is to be licensed for a twenty-year period. At the end of that period, if the license is not renewed, spent fuel must be transported away from the ISFSI to a final repository, or to an alternative interim storage facility. The spent fuel would not be generated, and would not need to be transported, were it not for PG&E’s proposal to continue to generate spent fuel at Diablo Canyon and store it in the proposed ISFSI. Therefore, transportation-related environmental impacts are reasonably foreseeable elements of the proposed project, and must be considered in the ER. See 40 C.F.R. § 1502.22(b)(1) (requiring consideration of reasonably foreseeable impacts).

The ER, however, contains no discussion whatsoever of transportation-related environmental impacts. Instead, PG&E asserts in Section 5.2, entitled “Transportation Accidents Involving Radioactivity,” that this section “is considered to be non-applicable, as it is believed to apply to accidents associated with offsite transportation of spent fuel in accordance with 10 CFR 71, which is beyond the scope of this ER.”

While Part 71 eventually will govern the safety of transportation, future compliance with Part 71 does not relieve PG&E of discussing the foreseeable environmental impacts of spent fuel transportation in its ER. Limerick Ecology Action v. NRC, 869 F.2d 719, 729-30 (3rd Cir. 1989). The ER must provide a description of the means by which spent fuel will be transported away from the site to Yucca Mountain or some other facility. It must also address the environmental impacts of transportation, including normal conditions and accidents. Accidents considered must include both design-basis accidents and severe accidents that are reasonably foreseeable. The ER must also consider the environmental impacts of destructive acts of malice or insanity against transportation casks. Because they will be shipped on public rights-of-way according to established schedules, transportation casks are particularly vulnerable to sabotage or terrorist attacks. Finally, the ER must also address a reasonable array of alternatives for spent fuel transportation, including deferral of transportation.

If there is some generic EIS that PG&E believes to be sufficient to address some or all of these impacts and alternatives, the ER must identify the generic EIS and explain why and to what extent it applies in this situation.

PG&E has not even taken the first step towards satisfying NEPA in these respects.

Respectfully Submitted,

Diane Curran
Harmon, Curran, Spielberg, & Eisenberg, L.L.P.
1726 M Street N.W., Suite 600
Washington, D.C. 20036
FAX: 202/328-6918
e-mail: Dcurran@harmoncurran.com
Counsel to Intervenors

July 18, 2002

This contention is supported by the Declaration of Dr. Mark R. Legg, attached as Exhibit 1

This contention is supported by the Declaration of Michael F. Sheehan, Ph.D., in Support of Intervenors’ Financial Qualifcation Contention (July 18, 2002), which is attached as Exhibit 2.

The only reason the issue could come to light at all was that the operator of the River Bend facility, Entergy Operations, was not a regulated utility and therefore could not escape the exclusion provided for operating licensees in 10 C.F.R.  50.33(f).

See U.S. Bankruptcy Court, Memorandum and Decision on Motions to Remand at 5 (June 14, 2002) (“Memorandum and Decision”). A copy can be found at: http://www.canb.uscourts.gov/ .

Press Release, Office of the Attorney General: Attorney General Lockyer Files State Agency Claims in PG&E Bankruptcy (October 3, 2001). A copy of the press release can be found at: http://caag.state.ca.us/newsalerts/2001/01-097.htm .

This contention is supported by the Declaration of Michael F. Sheehan, Ph.D., in Support of Intervenors’ Financial Qualifcation Contention (July 18, 2002), which is attached as Exhibit 2.

This contention is supported by the Declaration of Michael F. Sheehan, Ph.D., in Support of Intervenors’ Financial Qualifcation Contention (July 18, 2002), which is attached as Exhibit 2.

This contention is supported by the Declaration of Michael F. Sheehan, Ph.D., in Support of Intervenors’ Financial Qualifcation Contention (July 18, 2002), which is attached as Exhibit 2.

This contention is supported by the Declaration of Dr. Gordon R. Thompson in Support of Intervenors’ Environmental Contentions (July 18, 2002), attached as Exhibit 7.

On October 30, 2001, for example, the Washington Post reported on an interview with a jailed disciple of Osama bin Laden who said there are “more important places, like atomic plants and reactors” that may have been more appropriate targets than the World Trade Center. William Branigan, In Afghan Jail, a Terrorist Who Won’t Surrender, Washington Post, October 30, 2001, at A13, attached as Exhibit 8.

See also Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 374 (1989), holding that where aspects of the proposed action are addressed by a previously prepared EIS, a new EIS must be issued if there remains “major federal action” to occur, and if there is new information showing that the remaining action will affect the quality of the human environment “in a significant manner or to a significant extent not already considered.” In this case, the remaining action would constitute renewed authorization to generate and store spent fuel at the Diablo Canyon site.

Once the existence of new information sufficient to require a new EIS is demonstrated, then the full panoply of NEPA requirements comes into play. For instance, if severe accident mitigation alternatives for spent fuel storage have not already been considered by the NRC Staff in an EIS, a related supplement, or an Environmental Assessment, consideration of severe accident mitigation alternatives must also be included. 10 C.F.R. § 51.53(c)(3)(ii)(L). See also 10 C.F.R. § 51.53(c)(iii), which requires consideration of alternatives for Category 2 issues in Appendix A to 10 C.F.R. Part 51.

This contention is supported by the Declaration of Dr. Gordon R. Thompson in Support of Intervenors’ Environmental Contentions (July 18, 2002), attached as Exhibit 7.

The calculation of a range of 34 to 66 reactor-years assumes a total ISFSI capacity of 4,400 assemblies, refueling cycles of 18 to 21 months, and discharge of 76 to 96 assemblies per outage.

Intervenors understand that NUREG-1738 has been removed from the NRC’s Public Document Room and ADAMS system, for security reasons. Therefore, we have not attached it here. Intervenors are prepared to provide copies of NUREG-1738 or relevant excerpts to the ASLB and parties if requested by the ASLB.

It should be noted that a “zirconium-induced fire potential” exists in virtually any high-density spent fuel pool that is filled, or even partially filled, as is the case at Diablo Canyon’s two pools.

This contention is supported by the Declaration of Dr. Gordon R. Thompson in Support of Intervenors’ Environmental Contentions (July 18, 2002), attached as Exhibit 7.


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