ELR Citation: ELR 21564
No(s). 94-1562 (1st Cir. Jul 20, 1995)

The court holds that the U.S. Nuclear Regulatory Commission (NRC) violated the Atomic Energy Act (AEA) and the National Environmental Policy Act (NEPA) when it approved a licensee's proposal to complete 90 percent of the decommissioning activities at a Massachusetts nuclear power station before the NRC approved a decommissioning plan or performed an environmental assessment (EA) or an environmental impact statement (EIS). From 1988 to 1993, the NRC adhered to the position that its regulations allow a licensee to conduct certain, limited decommissioning activities before obtaining NRC approval, if such activities are permitted by the operating license or 10 C.F.R. §50.59. In 1993, the NRC circulated two internal staff memos substantially modifying this position and allowing a broader range of decommissioning activities before NRC approval of a decommissioning plan is required. Shortly thereafter, the Massachusetts licensee advised the NRC that it planned to begin the decommissioning activities—which would result in the permanent disposal of 90 percent of the nonfuel, residual radioactivity at the power station—in accordance with the new policy.

The court first holds that the NRC's new policy is arbitrary and capricious because the agency failed to show that the policy shift was rational. The original policy was developed through a lengthy notice-and-comment period, with substantial public participation, and the NRC adhered to this policy for almost five years, reiterating its position in at least two adjudicatory decisions. Then, rather suddenly, the NRC circulated two internal staff memos that completely reversed this settled policy, without any notice to the affected public. The court findsmost troublesome the fact that the NRC failed to provide in those memos, or anywhere else, any justification for the change. The court also holds that the NRC's actions are inconsistent with the plain terms of AEA §189(a), which provides that in any proceeding for the modification of rules and regulations dealing with licensee activities, the NRC shall grant a hearing at the request of any interested person. Although the NRC's policy shift involved an interpretation of a regulation, and not the regulation itself, it was an interpretive policy that provided substantive guidance on the regulation's ambiguous language, by specifically delineating the permissible activities of licensees. The court holds that the phrase "modification of rules and regulations" encompasses substantive interpretative policy changes like the one involved here, and that the NRC therefore cannot effect such modifications without complying with the AEA's notice and hearing provisions. The court further holds that the NRC's new policy is irrational on its face. By allowing licensees to conduct most, if not all, of the permanent removal and shipment of the major structures and radioactive components before submitting a decommissioning plan, the NRC seemingly renders regulatory oversight of the decommissioning process nugatory. The court therefore remands the issue of the NRC's change in decommissioning policy for further proceedings in accordance with the AEA's hearing requirements.

Next, the court holds that the NRC's action in allowing the licensee to complete 90 percent of the decommissioning activities before conducting an EA or an EIS was arbitrary and capricious and lacked any rational basis. The court rejects the NRC's argument that because the agency was exercising mere regulatory oversight, as opposed to active permission, the decommissioning activities do not constitute "major federal action" triggering NEPA compliance. The court holds that the NRC's approval of the release of set-aside funds to finance the licensee's decommissioning activities constitutes the agency's active permission. Moreover, it is undisputed that decommissioning is an action that requires NEPA compliance. The court also holds that because the NRC's new policy is arbitrary and capricious, the agency cannot rely on it as a basis for its decision that NEPA compliance was unnecessary.

The court next rejects petitioner citizen group's claim that the NRC's actions constitute a regulatory taking of its members' property in violation of the Fifth Amendment to the U.S. Constitution. The court holds that the group has not stated a cognizable takings claim. The group has not explained how its property interests have been "invaded" by radiation, nor does it offer any factual support for its claim. Also, the group does not seek compensation, but simply wants a hearing on the decommissioning activities. Given the sparsity of the group's allegations and the complete lack of argument or factual support for its bare assertion, the court deems the issue waived. The court also rejects the group's claim that the NRC violated its members' Fifth Amendment due process rights, because the claim is overbroad, vague, and unaccompanied by factual support or analysis.

The court next holds that the group was entitled to a hearing under §189(a) in connection with the NRC's decision to allow the licensee's decommissioning activities. The court rejects the NRC's claim that its abrupt policy change in 1993, to the extent that it substantially enlarged the authority of an extant licensee retroactively, nonetheless did not entitle the group to a §189(a) hearing. The licensee's original license did not authorize it to implement major component dismantling of the type undertaken. If §189(a) is to serve its intended purpose, it contemplates that parties in interest be afforded a meaningful opportunity to request a hearing before the NRC retroactively reinvents the terms of an extant license by voiding its implicit limitations on the licensee's conduct.

[A prior decision is published at 24 ELR 21602.]

Counsel for Petitioner
Jonathan M. Block, Robert L. Quinn
Egan, Flanagan & Cohen
67 Market St., P.O. Box 9035, Springfield MA 01102
(413) 737-0260

Counsel for Respondent
William B. Lazarus
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before TORRUELLA, Chief Judge, ALDRICH, Senior Cicuit Judge, and CYR, Circuit Judge.