[Federal Register Volume 68, Number 188 (Monday, September 29, 2003)]
[Proposed Rules]
[Pages 55905-55911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24474]


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NUCLEAR REGULATORY COMMISSION

10 CFR Part 52

[Docket No. PRM 52-2]


Nuclear Energy Institute; Denial of Petition for Rulemaking

AGENCY: Nuclear Regulatory Commission.

ACTION: Denial of petition for rulemaking.

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SUMMARY: The Nuclear Regulatory Commission (NRC or Commission) is 
denying a petition for rulemaking (PRM) submitted by the Nuclear Energy 
Institute (NEI or the petitioner) and docketed as PRM 52-2. The 
petitioner requested that the NRC amend its regulations to remove 
requirements that applicants and licensees analyze, and the NRC 
evaluate, alternative energy sources and the need for power with 
respect to the siting, construction, and operation of nuclear power 
plants. The NRC is denying the petition because the NRC must continue 
to consider alternative energy sources and the need for power to 
fulfill its responsibilities under the National Environmental Policy 
Act of 1969, as amended (NEPA).

ADDRESSES: Copies of the petition for rulemaking, the public comments 
received, and the NRC's letter of denial to the petitioner may be 
viewed electronically on public computers located at the NRC's Public 
Document Room (PDR) at One White Flint North, 11555 Rockville Pike 
(first floor), Rockville, Maryland. The PDR reproduction contractor 
will copy documents for a fee. These documents are also available on 
the NRC's rulemaking Web site at http://ruleforum.llnl.gov.

FOR FURTHER INFORMATION CONTACT: Nanette V. Gilles, Office of Nuclear 
Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 
20555-0001, telephone (301) 415-1180, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Background

    By letter dated July 18, 2001, NEI submitted a petition for 
rulemaking (ADAMS accession no. ML012060198) to modify Title 10, Part 
52, of the Code of Federal Regulations (10 CFR Part 52), Subpart A, 
``Early Site Permits.'' The petitioner requested that the NRC amend its 
regulations in 10 CFR part 52 to eliminate the requirement that an 
early site permit (ESP) applicant include, and the NRC review, 
alternatives to the site proposed in an ESP application. The petitioner 
further requested that the NRC initiate a rulemaking to remove 
requirements in 10 CFR parts 2, 50, and 51 that applicants and 
licensees analyze, and the NRC evaluate, alternative sites, alternative 
energy sources, and the need for power with respect to the siting, 
construction, and operation of nuclear power plants. The NRC docketed 
the petition as PRM 52-2.
    The regulations in 10 CFR part 52 govern the issuance of ESPs, 
standard design certifications, and combined licenses (COLs) for new 
nuclear power facilities licensed under section 103 or 104b of the 
Atomic Energy Act of 1954, as amended, and the Energy Reorganization 
Act of 1974. The provisions of 10 CFR part 52, subpart A, apply to 
applicants seeking an ESP. The regulations in 10 CFR part 52, subpart 
A, are designed to resolve site suitability

[[Page 55906]]

issues in a licensing proceeding as early as possible, before an 
applicant commits significant resources. The ESP process in subpart A 
allows an applicant to ``bank'' sites and is expected to improve the 
effectiveness of the nuclear power plant licensing process.
    The regulations in 10 CFR parts 2, 50, and 51 referenced by the 
petitioner relate to requirements for filing and acceptance of 
licensing applications, review of site suitability issues, 
environmental reports, and environmental impact statements (EISs).
    A notice of receipt of the petition was published in the Federal 
Register on September 24, 2001 (66 FR 48828). The comment period closed 
on November 8, 2001. The NRC received letters from 12 commenters, 9 of 
which favored the petition and 3 opposed it. Of the nine letters in 
favor, seven were from nuclear power plant owners and/or operators, one 
was from a nuclear steam supply system vendor, and one was from the 
petitioner. Of the three letters in opposition, two were from 
representatives of public advocacy groups and the other was from a 
private citizen. This notice presents a discussion of the comments 
received.
    In its petition, NEI requested that the NRC grant the petition as 
part of an ongoing NRC rulemaking to update 10 CFR part 52. This 
rulemaking activity addresses lessons learned during previous design 
certification reviews and discussions with stakeholders about the ESP, 
design certification, and COL review processes. As discussed below, the 
NRC decided to deny this petition. Therefore, further consideration of 
the petition during the 10 CFR part 52 rulemaking is not necessary.
    On December 18, 2002, NEI sent the NRC a letter (ADAMS Accession 
No. ML023570346) on the subject ``Petition for Rulemaking PRM 52-2, 
Supplemental Comments.'' In the letter, NEI stated that a number of 
developments had caused it to recommend a different approach for 
addressing alternative sites than that presented in its petition of 
July 18, 2001, where it had urged the NRC to eliminate consideration of 
alternative sites from the NRC nuclear power plant siting and licensing 
processes. NEI further indicated that, based upon a legal analysis 
attached to the letter, ``the modifications to 10 CFR part 52, subpart 
A, that were proposed in [its petition] should not be adopted.'' 
Supplemental Comments, p. 2. The letter stated that alternative sites 
should continue to be evaluated, but the NRC should limit its analysis 
of alternatives to those that are pertinent in the context of the 
license application before it, i.e., to sites that the applicant has 
identified as practicable alternatives. In the view of the petitioner, 
NRC review of the applicant's chosen alternative sites would be 
sufficient to satisfy NEPA's ``hard look'' requirement.\1\ In addition, 
NEI asserted that where a license applicant has ownership or control of 
only one site and, because of the nature of its business, has conducted 
no alternative site analysis, the NRC should only determine ``whether 
the proposed facility could be located on that site in compliance with 
all pertinent laws and NRC regulations.'' Id. NEI's legal analysis set 
forth several additional propositions. First, where an ESP or COL 
applicant's purpose is to build new units at existing nuclear sites, 
NEPA does not require consideration of locating those units at 
alternative sites that the applicant does not control. See ESP-18a: 
Alternative Site Reviews for Early Site Permit Applicants Using 
Existing Licensed Sites, dated November 19, 2002, attached to NEI's 
letter of December 18, 2002, pp. 7-8. Second, NEI asserted that non-
nuclear sites are unlikely to be obviously superior to an existing 
nuclear site that has already gone through the NEPA process. NEI 
believes that the most that NEPA would require is a comparison of a 
generic ``greenfield'' site and a generic industrial site to ``confirm 
the absence of any anomalous characteristics that might alter the 
presumption that no obviously superior site exists.'' Id., pp. 8-9.
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    \1\ NEPA requires any Federal agency considering a major action 
likely to significantly affect the quality of the human environment 
to take a ``hard look'' at the environmental impacts of the proposed 
action and all reasonable alternatives to it.
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    The Commission has decided to treat NEI's letter of December 18, 
2002, as a partial withdrawal of its petition with respect to the 
matter of alternative sites. Accordingly, this denial does not address 
either the petitioner's proposal on alternative sites as described in 
its petition of July 18, 2001, or the petitioner's specific 
propositions on alternative sites as set forth in the submission of 
December 18, 2002. However, the remainder of this notice more fully 
discusses some of the legal decisions cited in NEI's submission of 
December 18, 2002.\2\
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    \2\ Independent of NEI's petition for rulemaking, the NRC is 
considering a rulemaking to address the range of issues associated 
with the NRC's consideration of alternative sites in early site 
permit (ESP), construction permit (CP), and combined license (COL) 
proceedings. See 67 FR 79165 (December 27, 2002). On January 28, 
2003, the NRC held a public meeting to discuss these issues and to 
solicit stakeholder views on potential options that the NRC could 
pursue. See Transcript of Meeting: Criteria for Review of 
Alternative Sites (``Meeting Transcript,'' ADAMS Accession No. 
ML030570019). At this meeting, NEI presented its views which were 
consistent with the positions expressed in its December 18, 2002 
submission. See Meeting Transcript, pp. 60-63, 72-74, 78-80. 
Accordingly, the Commission will consider NEI's alternative siting 
proposal as described in its December 18, 2002 submission in 
considering whether to proceed with rulemaking addressing 
alternative sites.
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The Petition

    The petitioner requested that the Commission initiate a rulemaking 
to amend 10 CFR part 51 to remove requirements that applicants and 
licensees analyze, and the NRC evaluate, alternative energy sources and 
the need for power with respect to the siting, construction, and 
operation of nuclear power plants. The petitioner stated that the need 
for these changes is a direct outgrowth of the dramatic changes that 
have occurred in the electric power industry, most notably the passage 
of the Energy Policy Act of 1992 and the resultant actions by the 
Federal Energy Regulatory Commission (FERC) to impose open access 
transmission requirements on electricity transmission providers. The 
petitioner stated that these changes have fundamentally altered both 
the marketplace for electricity and the makeup of electricity 
generating companies, and that the regulatory framework that the NRC 
uses to implement its responsibilities under NEPA should be revised 
accordingly.

NEPA Requirements

    The petitioner argued that NEPA requires consideration of 
``alternatives'' to a proposed action but does not specifically require 
an analysis of alternative energy sources or the need for power. 
However, the NRC's implementing regulations in 10 CFR part 51 require 
that those matters be addressed. General guidance on the environmental 
reviews that are to be conducted is specified in Regulatory Guide 4.2, 
``Preparation of Environmental Reports for Nuclear Power Plants'' (July 
1976) and NUREG-1555, ``Environmental Standard Review Plan'' (March 
2000), which call for a review of alternative energy sources and the 
need for power. The petitioner believes that the NRC's regulations and 
implementing guidance reflect the structure of the 1970s electric 
utility industry. However, because the electric power industry has 
experienced dramatic changes since that time, the petitioner believes 
that the NRC needs to reconsider its implementation of its 
responsibilities under NEPA. The petitioner also believes that the NRC 
has the statutory authority to revise its regulations to eliminate NRC 
review of

[[Page 55907]]

alternative energy sources and the need for power. In addition, the 
petitioner believes that the NRC can, and should, conclude that its 
implementation of NEPA no longer requires these reviews because of the 
fundamental changes that have occurred in the electric utility 
industry. Moreover, the petitioner believes that doing so is important 
to ensure the efficiency and the safety focus of NRC reviews of new 
licensing applications.

Role of State and Local Governments

    The petitioner appeared to argue that the NRC's licensing process 
does not change the division of authority between the Federal 
Government and the States over the construction and operation of 
electric power generating facilities. According to the petitioner, an 
NRC license or permit constitutes approval of a site or plant only 
under the Federal statutes and regulations administered by the NRC, and 
not under other applicable laws. For example, individual State laws may 
require a State determination of the need for power and an evaluation 
of alternative energy sources, or may require the issuance of a 
certificate of public convenience and necessity, and various 
environmental permits.
    The petitioner argued that the NRC's evaluation of the 
environmental impacts of the proposed plant neither supplants nor 
interferes with the traditional responsibilities of States in 
evaluating the need for power and the suitability of alternative energy 
sources with respect to the potential use of that site. The NRC 
explicitly recognized the extent of its authority in the evaluations of 
alternatives in 10 CFR 51.71(e), Preliminary recommendation, Footnote 
4.\3\
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    \3\ ``The consideration of reasonable alternatives to a proposed 
action involving nuclear power reactors (e.g., alternative energy 
sources) is intended to assist the NRC in meeting its NEPA 
obligations and does not preclude any State authority from making 
separate determinations with respect to these alternatives and in no 
way preempts, displaces, or affects the authority of States or other 
Federal agencies to address these issues.''
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    Nonetheless, the petitioner noted that in the context of the 
license renewal rule (61 FR 28467; June 5, 1996) many States expressed 
concern that the NRC's findings, although not legally dispositive, 
would establish an official Federal position that the States believed 
would be difficult to rebut in State proceedings. Specifically, the 
States expressed concern regarding the NRC's consideration of the need 
for power and alternative energy sources in the generic environmental 
impact statement for license renewal (NUREG-1437, Chapters 8 and 9) and 
the associated proposed amendments to 10 CFR part 51 (56 FR 47016; 
September 17, 1991). The States were concerned that an NRC finding on 
those matters would infringe on State jurisdiction over economic 
regulation of utilities, including the generation, sale, and 
transmission of electric power produced by nuclear power plants. To 
address the States' concerns and the questions raised by the U.S. 
Environmental Protection Agency and the Council on Environmental 
Quality (CEQ), the NRC issued a supplement to its proposed License 
Renewal Rule (59 FR 37724; July 25, 1994) to address whether, under 
NEPA, the agency could and should eliminate consideration of issues 
over which States have primary jurisdiction.
    The petitioner argued that, in that supplement, the NRC thoroughly 
and thoughtfully evaluated its responsibility under NEPA in the context 
of the States' expressed concerns. First, the NRC clearly recognized 
the primacy of State regulatory decisions regarding future energy 
options. Second, the agency recognized that the electricity-generating 
company will also make the choice of energy options. Third, the NRC 
characterized its process as one that preserves the option of 
continuing to operate nuclear plants.
    The petitioner stated that, in the license renewal context, the NRC 
revised the definition of the purpose of the Federal action to reflect 
the applicant's goals in seeking NRC approval of the licensing action. 
According to the petitioner, the NRC's definition of the purpose of the 
Federal action in the license renewal context was ``to preserve the 
option of continued operation of the nuclear power plant for State 
regulators and utility officials in their future energy planning 
decisions'' (59 FR 37725; July 25, 1994).
    The petitioner stated that the NRC revised the definition of the 
proposed Federal action to more accurately reflect what is really to be 
accomplished: establishing a stable and predictable regulatory approach 
to determine whether the option of nuclear power as a source of 
generating capacity at that site could be considered in future State 
energy planning decisions. The petitioner argued that the proposed 
definition allows only two basic alternatives: renewing the license to 
preserve the nuclear option or not renewing the license (59 FR 37725; 
July 25, 1994).
    The petitioner believes that the license renewal example 
demonstrates that the NRC has the authority to determine which matters 
are pertinent to the agency's NEPA evaluation of an application to 
build new nuclear power plants. The petitioner did not mention that the 
NRC does, in fact, continue to consider alternative energy sources in 
its license renewal reviews. In addition, the petitioner did not 
mention that license renewal is a post-construction licensing activity.

Application of NEPA to the Construction and Operation of Nuclear Power 
Plants

    According to the petitioner, NEPA requires consideration of 
``alternatives,'' but does not require the NRC to evaluate the need for 
power or alternative energy sources. The petitioner argued that, 
although NEPA has never required these analyses, the electric utility 
structure in the 1970s was such that a typical environmental review for 
constructing and operating a nuclear power plant included an evaluation 
of the need for power and alternative energy sources. As a result, many 
licensing decisions and judicial determinations have been based on the 
NRC's interpretation of its responsibilities under NEPA and the 
corresponding NRC regulations and practices that the agency adopted 
accordingly. However, the petitioner believes that what may have been 
pertinent 30 years ago is no longer pertinent. The petitioner did not 
acknowledge that the ``utility'' regulatory structure that has been in 
place over the past 30 years remains in effect in a number of States 
and will remain in effect for the foreseeable future.
    The petitioner pointed out that, in the 1970s, the typical 
applicant for a nuclear power plant was an electric utility that was 
regulated by a State public utility commission. Additionally, as a 
regulated electric utility, the applicant had the legal authority to 
exercise the power of eminent domain to build generating facilities and 
any necessary supporting infrastructure. The petitioner believes that 
any new nuclear power plant today is likely to be constructed and 
operated by an unregulated merchant generator, which will operate in a 
competitive marketplace. The petitioner argued that a merchant 
generator will not build and operate a plant unless it believes there 
is a need for power or that the facility will generate electricity at a 
lower cost than the competing facilities. Additionally, the petitioner 
believes that a merchant generator will not build and operate a nuclear 
power plant if a superior alternative source of energy is available. In 
States where utilities are still subject to regulation, the petitioner 
argued that the situation described

[[Page 55908]]

relative to license renewal is directly applicable. For these reasons, 
the petitioner concluded that it is not reasonable to believe that a 
nuclear power plant will be built in today's environment absent a need 
for power or some other benefit.
    Furthermore, the petitioner stated that it is not reasonable to 
assume that the NRC will be able to identify an alternative energy 
source that is both feasible and preferable to the choices made by a 
merchant generator. Because the consideration of alternatives under 
NEPA is subject to a rule of reason, the petitioner believes that NEPA 
does not compel the NRC to consider these factors in today's 
environment. Even if other sources are available--perhaps even 
preferable in some respects to the applicant's proposal--the petitioner 
stated that the NRC lacks the authority to compel the applicant to use 
the alternative source. Therefore, the petitioner concluded that, 
because NRC consideration of alternative energy sources and the need 
for power is not required under NEPA, denial of a permit or license for 
reasons related to these matters is inappropriate.
    The petitioner argued that, in the context of an ESP, the proposed 
major Federal action is to grant a permit for a site for one or more 
nuclear power plants. To actually build and operate one or more nuclear 
plants, an applicant must also obtain a COL. In a COL proceeding, the 
proposed major Federal action is the approval to build and subsequently 
operate a particular nuclear plant at a specified site. If the COL 
references an ESP, the site approval is already established, and the 
site suitability issue is restricted to whether the proposed nuclear 
power plant(s) fit(s) within the ESP's siting envelope. If the COL 
applicant does not reference an ESP, the major Federal action with 
respect to approving the specified site is the same as for an ESP. The 
petitioner argued that in each case (ESP or COL, with or without a 
referenced ESP), the proposed action does not decide if there is a need 
for power or which of the various possible sources of electric power 
best meets the needs of the given State or region, provides the most 
economic electricity to ratepayers, or is environmentally the most 
benign.
    The petitioner stated that its proposal to eliminate the 
requirement for NRC consideration of alternative energy sources and the 
need for power is based on the fundamental NEPA principle that an 
agency need only consider alternatives that will accomplish the 
applicant's goal. The petitioner argued that, in the context of 10 CFR 
part 52, the ESP applicant's goal is to determine whether the proposed 
site satisfies statutory and NRC regulatory requirements as a suitable 
location for a nuclear power plant. Similarly, the petitioner stated 
that the goal of a COL applicant is to determine whether the proposed 
plant satisfies applicable safety and environmental requirements, 
including the criteria established in any referenced ESP.
    The petitioner further stated that each Federal agency must 
determine which alternatives are reasonable and should be considered 
under NEPA. Morever, the NRC must consider the no-action alternative 
and actions that could mitigate the environmental impact of the 
proposed action. According to the petitioner, in addition to the no-
action alternative, the NRC must consider only those alternatives that 
serve the purpose for which an applicant is seeking approval--and there 
are no alternatives. The petitioner believes that defining the proposed 
action in this manner reflects reality. Specifically, the NRC is not 
considering a proposal that would determine how or where electricity 
should be generated in the future. Rather, in either the ESP or COL 
proceeding, the NRC is considering only whether a specific application 
meets NRC regulations, not whether one or more nuclear facilities 
should, or will, be built.
    The petitioner argued that, given the specific goals of ESP and COL 
applicants, the NRC should consider, in addition to the no-action 
alternative, only actions that serve the applicant's specific goal to 
determine whether the application meets all applicable requirements. 
Thus, the petitioner argued, it is unnecessary and inappropriate for 
the NRC to require applicants to analyze alternatives that would not 
fulfill the goal of determining whether the proposed site and 
facilities meet NRC requirements. Similarly, the petitioner argued, it 
is unnecessary and inappropriate for the NRC to use its limited 
resources to evaluate possible alternative energy sources or the need 
for power. Thus, the petitioner concluded that the NRC, in its NEPA 
analysis, is not legally obligated and should not attempt to reach any 
conclusions regarding alternative energy sources or the need for power.

Public Comments on the Petition

    The NRC received 12 letters commenting on this petition. Nine 
commenters favored the petition. Seven of those letters were from 
nuclear power plant owners and/or operators, one was from a nuclear 
steam supply system vendor, and one was from the petitioner. Of the 
three letters opposed to the petition, two were from representatives of 
public advocacy groups and the other was from a private citizen.
    Comments: The commenters in favor of the petition summarized the 
arguments in the petition and stated their support for the petitioner's 
position. The commenters also expressed interest in including the 
petition in the ongoing 10 CFR part 52 rulemaking activity.
    Response: The comments received in favor of the petition provided 
no additional bases for the petition. Therefore, these comments are 
addressed by the NRC's reasons for denying the petition, as discussed 
below.
    Comment: A private citizen stated that, instead of further 
degrading the defense of the United States of America by the actions 
proposed in the petition, the NRC should additionally require 
applicants to evaluate the impact of ``deep undergrounding'' of nuclear 
power plants.
    Response: The NRC believes that the addition of requirements for 
applicants to evaluate the impact of ``deep undergrounding'' of nuclear 
power plants is outside of the scope of the petition. ``Deep 
undergrounding'' is a design matter rather than a siting matter.
    Comments: A commenter representing Public Citizen, a public 
advocacy group, stated that NEI is asking the NRC to consider less 
information and fewer factors before approving a site for a nuclear 
power plant at a time when the public is seeking assurances that 
potential threats to public safety are being analyzed with more 
thoroughness, not less. The commenter further stated that the effect of 
the dramatic structural and economic transformation in the electric 
power industry is evidence that the review of alternative sites and 
energy sources should be of heightened, rather than diminished, concern 
to regulators and the public. The commenter argued that there is little 
in the story of electric utility restructuring thus far to suggest that 
nuclear power would ever be subjected to the same competitive market 
forces that apply in varying degrees to other sectors of the economy. 
The commenter stated that failure of nuclear power thus far to 
seriously compete in the new ``competitive'' electricity generation 
environment makes it more, rather than less, crucial to consider all 
options and alternatives before the NRC approves an ESP. The commenter 
also stated that the earlier in the process those alternatives are 
introduced, the better, lest a potential licensee expend considerable

[[Page 55909]]

resources on a failed siting application and subsequently attempt to 
retrieve its investment from ratepayers.
    The commenter also argued that granting the petition would preclude 
consideration of alternative sites, alternative energy sources, and the 
need for power at any other point in the Federal regulatory process. 
The commenter stated that the NRC should use any discretion it has 
under NEPA to provide the most rigorous review possible in service of 
the greater public interest. Finally, the commenter stated that the NRC 
can best uphold the public's trust by denying NEI's petition.
    Another commenter representing Greenpeace, a public advocacy group, 
expressed the general view that the NRC should deny the petition 
because ``to do otherwise will only serve to undermine public 
confidence in the legitimacy of the NRC and any future reactor 
licensing process,'' but did not address any of the specific matters 
raised in the petition.
    Response: Although the NRC does not entirely agree with all of 
these commenters' arguments for denying the petition, the NRC agrees 
with their basic premise that the agency should deny the petition and 
continue to review the need for power and alternative energy sources in 
order to fulfill its obligations under NEPA. As discussed previously, 
the petitioner has withdrawn the proposal in its petition with respect 
to alternative sites; therefore, this Notice does not address the 
alternative site proposal from that petition.

Reasons for Denial

    The petitioner has not demonstrated that applicable law or practice 
in other Federal agencies has changed in a manner that would lead the 
Commission to conclude that the NRC should no longer consider the need 
for power and alternative energy sources as a part of its nuclear power 
plant licensing proceedings in order to fulfill the agency's 
obligations under NEPA.

Need for Power

    Section 102(2)(C) of NEPA requires that any recommendation for a 
major Federal action significantly affecting the quality of the human 
environment include a detailed statement addressing, among other 
things:
    (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. * * *

42 U.S.C. 4332(2)(C).
    As part of the NRC's NEPA analysis associated with nuclear power 
plant licensing,\4\ the agency must include a balancing of costs and 
benefits. United States Energy Research and Development Administration 
(Clinch River Breeder Reactor Plant), CLI-76-13, 4 NRC 67, 76 (1976) 
citing Calvert Cliffs Coordinating Committee, Inc. v. AEC, 449 F.2d 
1109 (D.C. Cir. 1971). Although NEPA does not explicitly mention cost-
benefit balancing, judicial interpretations of the statute have 
established that Federal agencies must balance environmental costs 
against the anticipated benefits of the action in the EIS. Louisiana 
Energy Services, L.P. (LES) (Claiborne Enrichment Center), CLI-98-3, 47 
NRC 77, 88 (1998) citing Idaho By and Through Idaho Public Utilities 
Commission v. ICC, 35 F.3d 585, 595 (D.C. Cir. 1994); Calvert Cliffs, 
449 F.2d 1109.
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    \4\ The act of granting a permit or license for a nuclear power 
plant qualifies as a major Federal action significantly affecting 
the quality of the human environment; therefore, NEPA applies to the 
NRC when it engages in such licensing activity.
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    The petitioner asserted that its proposal to eliminate NRC 
consideration of the need for power is based on the fundamental NEPA 
principle that an agency need only consider alternatives that will 
accomplish the applicant's goal (i.e., the purpose of the proposed 
project). The Commission agrees with the petitioner's general premise 
that the NRC may ``accord substantial weight to the preferences of the 
applicant and/or sponsor in the siting and design of the project.'' 
Hydro Resources, Inc., CLI-01-4, 53 NRC 31, 55 (2001), citing Citizens 
Against Burlington v. Busey, 938 F.2d 190, 197 (D.C. Cir.), cert. 
denied, 502 U.S. 994 (1991). However, ``an agency will not be permitted 
to narrow the objective of its action artificially and thereby 
circumvent the requirement that relevant alternatives be considered.'' 
City of New York v. Department of Transportation, 715 F.2d 732, 743 
(1983); see also, Citizens Against Burlington, 938 F.2d at 196. In 
addition, the Commission recognizes that a proposed project may have 
more than one purpose. The Commission will ordinarily give substantial 
weight to a properly-supported statement of purpose and need by an 
applicant and/or sponsor of a proposed project in determining the scope 
of alternatives to be considered by the NRC.
    The cost-benefit discussion also plays an important role in 
determining the appropriate scope of the NEPA analysis. In the past, 
the NRC equated the need for power with the benefits of the proposed 
action. `` `Need for power' is a shorthand expression for the `benefit' 
side of the cost-benefit balance, which NEPA mandates for a proceeding 
considering the licensing of a nuclear plant.'' Public Service Co. of 
Oklahoma (Black Fox Station, Units 1 and 2), ALAB-573, 10 NRC 775, 804 
(1979) (quoting Rochester Gas and Electric Corp. (Sterling Power 
Project, Nuclear Unit No. 1), ALAB-502, 8 NRC 383, 388 n. 11 (1978) 
quoting Public Service Co. of New Hampshire (Seabrook Station, Units 1 
and 2), ALAB-422, 6 NRC 33, 90 (1977); see also Kansas Gas and Electric 
Co. (Wolf Creek Generating Station, Unit 1), ALAB-462, 7 NRC 320, 327 
(1978).
    Recently, the Commission has recognized that there may be multiple 
benefits to a proposed project. In LES, the Commission held that the 
Licensing Board should consider multiple benefits of the proposed 
uranium enrichment facility--including enhanced competition from 
another market participant, furtherance of national policy goals, and 
the creation of an alternative, more energy-efficient technology--when 
performing the ultimate cost-benefit balancing under NEPA. LES, 47 NRC 
at 89-96. Similarly, the Commission acknowledges that the construction 
and operation of a nuclear power plant could have multiple benefits 
such as reducing greenhouse gases and other air pollutants and 
increasing energy efficiency by retiring older, less efficient sources 
of power. See also Niagara Mohawk, 1 NRC at 353 (noting that ``a 
Licensing Board may also take cognizance of the effect which a shortage 
of fossil fuel, or a need to divert that fuel to other uses, might have 
upon demand for non-fossil fueled generating sources''). Therefore, in 
preparing an EIS for any future nuclear power plant licensing 
proceeding, the Commission will consider all reasonably foreseeable 
benefits of the proposed plant.
    Consistent with the petitioner's claim, in considering the need for 
power as part of the NEPA process, the NRC does not supplant the 
States, which have traditionally been responsible for assessing the 
need for power generating facilities, their economic feasibility and 
for regulating rates and services. As the petitioner noted, the NRC has 
acknowledged the primacy of State regulatory decisions regarding future 
energy options. However, this acknowledgment does not relieve the NRC 
from the need to perform a reasonable assessment of the need for power. 
Moreover, in the non-regulated environment foreseen by the petitioner, 
NRC consideration of the need for power may become ``more, not less,

[[Page 55910]]

crucial'' (in the words of a commenter) because a State decisionmaker 
may no longer conduct need for power assessments. The Commission 
emphasizes, however, that while a discussion of need for power is 
required, the Commission is not looking for burdensome attempts by the 
applicant to precisely identify future market conditions and energy 
demand, or to develop detailed analyses of system generating assets, 
costs of production, capital replacement ratios, and the like in order 
to establish with certainty that the construction and operation of a 
nuclear power plant is the most economical alternative for generation 
of power. See LES, 47 NRC at 88, 94.
    With regard to the petitioner's discussion of the relevance of the 
NRC's actions under NEPA in nuclear power plant license renewal, the 
Commission notes that the significant environmental impacts associated 
with the siting and construction of a nuclear power plant have already 
occurred by the time a licensee is seeking a renewed license. The 
Commission has determined that it is not necessary to consider the need 
for power during post-construction licensing (issuing and renewing 
operating licenses). Also, in 10 CFR 51.95(c)(4), the Commission 
narrowed the NRC's determination for license renewal to ``whether or 
not the adverse environmental impacts of license renewal are so great 
that preserving the option of license renewal for energy planning 
decisionmakers would be unreasonable.'' By contrast, in the case of 
construction of a new nuclear power plant, the NRC must assess the need 
for power to accurately characterize the cost (i.e., environmental 
impact) and benefits associated with the proposed action. For these 
reasons, the license renewal example is not relevant to consideration 
of need for power issues in new reactor licensing processes.
    The petitioner contended that at the time the original licensing 
decisions and judicial interpretations of NEPA were being made and the 
NRC was developing a position on its responsibilities under NEPA, the 
typical applicant for a nuclear power plant was an electric utility 
regulated by a State public utility commission. By contrast, the 
petitioner argued that future nuclear power plants will, in all 
likelihood, be constructed and operated by an unregulated ``merchant 
generator,'' that will not build and operate a plant unless it believes 
that there is a need for power or that the facility will generate 
electricity at a lower cost than the competing facilities. Thus, it 
would not appear to be burdensome to state the need for the proposed 
facility. Further, even if this assertion is true, the Commission does 
not believe that the petitioner's prediction provides a judicially 
recognized basis for avoiding an agency-prepared determination of the 
benefits of a proposed action. The petitioner failed to cite any recent 
judicial decisions which interpret NEPA which hold (or otherwise 
suggest) that a Federal agency, acting on a project proposal presented 
by a private sponsor or applicant, need not conduct an independent 
review of the need for the project, but may simply accept the 
applicant's assertion with respect to need. In any event, there is no 
reason to believe that the traditional utility model will disappear. 
Thus, at most, the petitioner's argument would call for a supplement to 
the requirements of 10 CFR part 51 to address nuclear power plants 
built by unregulated, non-electric utility entities, rather than the 
wholesale elimination of NRC requirements to consider the need for 
power.
    The petitioner has also not shown that other Federal licensing 
agencies, acting on power generation projects sponsored by private 
entities, have changed their practices with respect to considering the 
need for power in preparing EISs supporting their approval decisions. 
The NRC is also not aware of any such change in agencies' practices.
    In conclusion, the petitioner has not demonstrated that 
consideration of the need for power is no longer a necessary part of 
the Commission's NEPA obligations for reactor licensing decisions.\5\ 
The need for power must be addressed in connection with new power plant 
construction so that the NRC may weigh the likely benefits (e.g., 
electrical power) against the environmental impacts of constructing and 
operating a nuclear power reactor. The Commission emphasizes, however, 
that such an assessment should not involve burdensome attempts to 
precisely identify future conditions. Rather, it should be sufficient 
to reasonably characterize the costs and benefits associated with 
proposed licensing actions.
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    \5\ The Commission notes that an applicant for an ESP need not 
include in its application ``an assessment of the benefits (for 
example, need for power) of the proposed action.'' 10 CFR 
52.17(a)(2). Instead, the assessment of benefits of constructing and 
operating a nuclear power reactor on the ESP site may be deferred to 
the time (if ever) that the ESP is referenced in an application for 
a part 52 COL or a part 50 CP.
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Alternative Energy Sources

    It is well established that once the purpose of and need for a 
proposed Federal action are understood, the agency is expected to 
follow a rule of reason in deciding which alternatives are 
``reasonable'' or ``feasible.'' See e.g., City of Angoon v. Hodel, 803 
F.2d 1016, 1022 (9th Cir. 1986) (per curiam); Druid Hills Civic Ass'n 
v. Federal Highway Admin., 772 F.2d 700, 713 (11th Cir. 1985). 
Moreover, ``[t]he goals of an action delimit the universe of the 
action's reasonable alternatives.'' Citizens Against Burlington, 938 
F.2d at 195.
    Similar to the proposal to eliminate NRC consideration of the need 
for power, the petitioner's proposal to eliminate NRC consideration of 
alternative energy sources is based on the proposition that, under 
NEPA, a Federal agency need only consider alternatives that will 
accomplish the applicant's goal. The Commission agrees with the 
petitioner's general proposition that a Federal agency, acting not as a 
proprietor but to approve a project sponsored by a private entity, 
should ordinarily ``accord substantial weight to the preferences of the 
applicant and/or sponsor in the siting and design of the project.'' 
Hydro Resources, Inc., CLI-01-4, 53 NRC 31, 55 (2001), citing Citizens 
Against Burlington, 938 F.2d at 197. Thus, the Commission need only 
consider alternatives that will bring about the ends of the proposed 
action, id., accord, City of Grapevine v. DOT, 17 F.3d 1502, 1506 (D.C. 
Cir.), cert. denied, 513 U.S. 1043 (1994)), and need not consider 
alternatives that do not achieve the purpose and need of the applicant. 
See City of Angoon, 803 F.2d at 1021 (``When the purpose is to 
accomplish one thing, it makes no sense to consider the alternative 
ways by which another thing might be achieved.''), cert. denied, 484 
U.S. 870 (1987). However, the petitioner failed to explain how the 
Commission could generically determine the purpose and need of all 
future applicants for CPs and COLs such that consideration of 
alternative energy sources would be unnecessary for all future 
applicants. In the absence of a basis for such rulemaking, the 
Commission concludes that it will continue the NRC's practice of 
determining the purpose and need on a case-specific basis. The 
Commission cautions that when describing the purpose of and need for 
its proposal, the applicant should not set forth an unreasonably narrow 
objective of its project, thereby artificially narrowing the scope of 
alternatives to be considered by the NRC. A Federal agency, acting as a 
sponsoring agency, would not be permitted to artificially narrow the 
objective of its action and

[[Page 55911]]

thereby circumvent the requirement to consider relevant alternatives. 
See Citizens Against Burlington, 938 F.2d at 196, City of New York v. 
Department of Transportation, 715 F.2d 732, 743 (1983). The Commission 
believes that this principle should also apply where a sponsoring 
entity or applicant seeks the NRC's approval. There may well be 
circumstances where an entity seeking a CP or COL may be able to 
establish, consistent with NEPA and current judicial precedents, a 
narrow statement of purpose and need for the project sufficient to 
justify excluding from the EIS a consideration of non-nuclear 
alternative energy sources.
    The NRC's current policy is to consider alternative energy sources 
at the CP stage because alternatives to the construction of a nuclear 
power plant must be considered before the environmental impacts of 
construction are realized. The Commission's practice was acknowledged 
in the statement of consideration for the final rule amending 10 CFR 
part 51 to bar the consideration of alternative energy source issues in 
operating license proceedings for nuclear power plants (47 FR 12940; 
March 26, 1982). The Commission stated that ``in accordance with the 
Commission's NEPA responsibilities, the need for power and alternative 
energy sources are resolved in the construction permit proceeding.'' 
The Commission added that ``[a]lternative energy source issues receive 
and will continue to receive extensive consideration at the CP stage'' 
(emphasis added). Thus, the Commission has committed itself to consider 
alternative energy sources and continues to believe that it should do 
so to fulfill its NEPA responsibilities. Under 10 CFR part 52, 
alternative energy sources may be considered at the ESP stage or 
deferred until the COL stage.
    The Commission's position on consideration of alternative energy 
sources is consistent with other Federal agencies' practices, which 
have consistently included alternative energy sources when preparing an 
EIS for a new power generation project. In addition, the NRC's position 
is consistent with case law. There are many cases involving the 
adequacy of an agency's alternative energy source review. See, e.g., 
Association of Public Agency Customers v. Bonneville Power 
Administration, 126 F.3d 1158, 1187 (9th Cir. 1997); Swinomish Tribal 
Community v. FERC, 627 F.2d 499, 514-16 (D.C. Cir. 1980); Hawaii County 
Green Party v. Clinton, 980 F. Supp. 1160, 1167 (D. Haw. 1997). The 
petitioner did not cite, and the NRC is not aware of, any judicial 
decision concluding that it is unnecessary for a Federal agency to 
consider alternative energy sources in licensing a new power generation 
project.
    The petitioner argued, as it did with respect to the need for 
power, that future ``merchant generators'' will not build and operate a 
nuclear power plant if there is a superior source of energy. However, 
the petitioner failed to cite any recent judicial decisions 
interpreting NEPA which hold that a Federal agency, acting on a project 
proposal presented by a private sponsor or applicant, need not conduct 
an independent review of alternatives but may limit its discussion to 
alternatives that the sponsor or applicant deems reasonable.
    The petitioner stated that it is not reasonable to assume that the 
NRC will be able to identify an alternative energy source that is both 
feasible and preferable to the choices made by the applicant, but 
provides no apparent basis for this assertion. The Commission does not 
agree with the petitioner's assertion. The NRC has extensive experience 
in identifying and evaluating the feasibility of alternative energy 
sources in a manner that is sufficient to meet the requirements of 
NEPA. Indeed, the NRC currently performs such analyses in connection 
with renewals of nuclear power plant operating licenses (including 
renewals for plants operated by non-utility entities).
    Finally, the petitioner argued that the NRC need not consider 
alternative energy sources because ``the NRC lacks the authority to 
compel the applicant to use the alternative * * * [energy] source.'' 
Petition, at 7. The Commission agrees with the petitioner that the NRC 
does not have the authority to require the applicant to use an 
alternative energy source even if there is an alternative with 
potentially fewer environmental impacts than those associated with 
operation of the proposed nuclear power plant. However, if the 
alternative energy source is a reasonable alternative, it should be 
identified and evaluated. See Dubois v. U.S. Dept. of Agriculture, 102 
F.3d 1273, 1286-87 (1st Cir. 1996), citing Roosevelt Campobello Int'l 
Park Committee v. United States EPA, 684 F.2d. 1041 (1st Cir. 1982).
    In summary, the petitioner has not shown that it is no longer a 
necessary part of the Commission's NEPA obligations for the NRC to 
consider alternative energy sources in rendering decisions regarding 
reactor licensing.\6\
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    \6\ As previously discussed in footnote [4], it is the 
Commission's view that Sec.  52.17(a)(2) currently allows the ESP 
applicant the flexibility to choose to defer consideration of 
benefits (for example, need for power) of the proposed facility to 
the time (if ever) that the ESP is referenced by a COL or CP 
application. In this same context, the ESP applicant need not 
include an assessment or discussion of alternative energy sources in 
its environmental report supporting an ESP application. Rather, the 
applicant may choose to defer consideration of alternative energy 
sources to the COL or CP application. The Commission's proposed 
revision to 10 CFR part 52 includes a provision to amend Sec.  
52.17(a)(2) to clarify that an ESP applicant has the flexibility of 
either addressing the matter of alternative energy sources in the 
environmental report supporting its ESP application or deferring the 
consideration of alternative energy sources to the time that the ESP 
is referenced in a licensing proceeding (68 FR 40028, July 3, 2003).
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Conclusion

    The petitioner has not shown any change in other Federal agencies' 
practices, judicial consideration of the NEPA obligations of Federal 
regulatory agencies responsible for licensing privately proposed 
actions, or other factors underlying the Commission's current policies 
for considering the need for power or alternative energy sources that 
would lead the Commission to conclude that consideration of these 
issues is no longer a necessary part of the Commission's NEPA 
obligations for reactor licensing decisions. For applications that 
could result in the commencement of construction (i.e., CP and COL 
applications), the NRC continues to believe that the agency should 
address alternative energy sources in the related EIS (unless, the CP 
or COL application references an ESP that considered alternative energy 
sources). The NRC also continues to believe that, for such construction 
approval applications, the agency should address the benefits 
assessment (e.g., need for power) in the related EIS.
    For the reasons cited in this document, the NRC denies the 
petition.

    Dated at Rockville, Maryland, this 23rd day of September, 2003.

    For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
 Secretary of the Commission.
[FR Doc. 03-24474 Filed 9-26-03; 8:45 am]
BILLING CODE 7590-01-P