Vermont Yankee Revisited: High Court Upholds NRC's S-3 Table for Second Time

Frances L. McChesney

Editors' Summary: In June, the Supreme Court handed down the third nuclear energy ruling of the Term. Justice O'Connor, writing or a unanimous court in Baltimore Gas & Electric Co. v. Natural Resources Defense Council, Inc. (Vermont Yankee IV), upheld the NRC's Table S-3 Rule — a generic rule dictating how licensing boards are to consider the environmental impacts associated with the nuclear fuel cycle. This was the second time the Supreme Court had reversed a D.C. Circuit decision invalidating the rule. Judge Bazelon of the D.C. Circuit faulted the NRC for failing to allow for the consideration of uncertainties surrounding long-term storage as required by NEPA. But Justice O'Connor ruled that the NRC had disclosed these uncertainties and reasonably concluded that they were insignificant given the limited purposes of the table. The decision is troubling because it appears to leave the NRC free to give only summary treatment of environmental uncertainties of admittedly substantial magnitude in licensing decisions. However, the Supreme Court, in deferring to the agency's expertise probably had no other choice without interfering with the substance of the agency's decision.

[13 ELR 10239]

The National Environmental Policy Act (NEPA) requires federal agencies to consider scientific uncertainty when making decisions that could significantly affect the environment. Two separate questions have arisen about this duty: How must the agencies disclose the uncertainties to the public, and how must they deal with them in the decisionmaking process? The first question is answered in part by the Council on Environmental Quality's (CEQ's) NEPA regulations which require a "worst case" analysis if significant uncertainty exists.¹ And the case law makes clear that agencies must disclose uncertainties in environmental impact statements (EISs).² The second question is far from resolved, but two recent decisions — one by the D.C. Circuit last year and the other the Supreme Court's reversal of that decision — shed some light on the question.

The Supreme Court's decision in Baltimore Gas & Electric Co. v. Natural Resources Defense Council, Inc. (Vermont Yankee IV),³ represents the culmination of "perhaps the most celebrated administrative litigation of our time,"⁴ involving over 10 years of agency rulemaking and litigation. The Vermont Yankee litigation concerned the validity of a Nuclear Regulatory Commission (NRC) rule, the "Table S-3 Rule," dictating how nuclear reactor licensing boards are to consider the environmental impacts associated with all stages of the nuclear fuel cycle, including the long-term handling and storage of highlevel nuclear wastes. Twice the D.C. Circuit invalidated the rule and twice the Supreme Court reversed.

In the first round of litigation, the D.C. Circuit invalidated portions of the rule because of perceived inadequaties in the rulemaking procedures.⁵ The Supreme Court, in Vermont Yankee II, a unanimous decision that was widely criticized and had a substantial impact on judicial review of agency decisionmaking, reversed the court of appeals' decision.⁶ The Court ruled that courts generally lack the authority to impose "hybrid" procedures greater than those contemplated by the federal statutes.⁷ But it remanded for a determination whether the rule was adequately [13 ELR 10240] supported by the administrative record. On remand, the D.C. Circuit reached the heart of the issue. In three lengthy opinions, two members of the three-member panel agreed that the NRC had failed to consider adequately the uncertainties of long-term storage of nuclear wastes.⁸ In Vermont Yankee IV the Supreme Court again reversed, finding that the NRC had disclosed the uncertainties as required by NEPA and had reasonably assumed that uncertainties surrounding long-term storage were not significant enough to be considered in individual licensing decisions.

Vermont Yankee IV is noteworthy because it continues the Supreme Court's pattern of deference to NRC decisionmaking.⁹ In doing so, it closes off a potential avenue for litigation where the Table S-3 Rule has been a factor in obtaining licenses and removes a legal cloud over some 90 operating licenses and construction permits issued since 1974. However, the opinion may prove troubling to some because it appears to leave agencies free to give summary treatment to uncertain environmental impacts despite the NEPA requirement of full consideration.

The Table S-3 Rule

The Vermont Yankee litigation centers on the validity of the NRC's Table S-3 Rule, a generic rulemaking consisting of a table of numerical values representing the incremental environmental effects associated with the uranium fuel cycle, both front-end and back-end effects,¹⁰ of a single light-water power reactor.¹¹ It includes a column of numbers that represent such items as land committed per plant, water used, and radiological effluents released. The second column indicates, where appropriate, the magnitude of the impact of those items. The table is intended for use in arriving at an overall cost-benefit balance in the licensing of plants. Licensing boards are to include it in the environmental impact statement for each proposed plant and thereby substitute it for repeated individual consideration of the environmental impact of the fuel cycle activities needed to support each plant.

The D.C. Circuit, on remand from the Supreme Court in Vermont Yankee II, focused on one line in the table. That entry indicated that 11 million curies of high-level and transuranic radioactive wastes would be produced for each plant per year. However, the table also indicated that these wastes would be buried in a permanent repository, and the radiation would remain wholly contained within the repository once sealed. The waste would therefore have no significant environmental impact. Since the risks quantified in the table need not be reevaluated in plant EISs, the NRC in effect decided that the risks of long-term storage would not affect the decision whether to license a particular nuclear power plant.¹²

Table S-3 Invalidated

The NRC's so-called "zero-release" assumption incorporated into the Table S-3 has been variously characterized as merely "a single figure in an entire Table, which [is] expressly designed as a risk-averse estimate of the environmental impact of the fuel cycle"¹³ and as "innocent sounding language" that "must be read as meaning no impact at all on the human race in its turbulent occupancy of this biosphere for a minimum period of 250,000 years."¹⁴ The petitioner in the court of appeals decision, Natural Resources Defense Council, Inc. (NRDC), criticized the rule for the failure of the numerical values to reveal either the uncertainties underlying the zero-release assumption, or the health, cumulative, or socioeconomic effects of waste management and disposal.¹⁵ The NRC rejected the claims and refused to modify the rule.

The D.C. Circuit's task in Vermont Yankee III, was to determine whether the rule violated NEPA or whether it was "arbitrary and capricious" under the Administrative Procedure Act's (APA's) standard of judicial review. The decision included three lengthy opinions. Senior Judge Bazelon invalidated the portions of the Table S-3 Rule dealing with the environmental effects of the uranium fuel cycle, but sustained the NRC's finding that construction and operation of waste management facilities is economically feasible. Chief Judge Edwards from the Sixth Circuit, concurred with Judge Bazelon in invalidating the back-end portions of the rule, but disagreed with him on the question of the economic feasibility of fuel cycle facilities.¹⁶ Judge Wilkey dissented from Judge Bazelon's invalidation of the back-end portion of the Table S-3 Rule, but concurred in his finding of economic feasibility. Judge Bazelon's opinion was therefore the ruling for the court.

Judge Bazelon concluded that the Table S-3 Rule violated NEPA because it failed to allow for consideration [13 ELR 10241] of uncertainties underlying the zero-release assumption. He analyzed the rule in two ways. First, reading the zero-release assumption as a factual finding, he concluded that it represents a "clear error of judgment."¹⁷ NEPA requires agencies to consider under § 102(2)(C) the significant environmental risks of a proposed action. But, Judge Bazelon found, the record included scientific studies, with which the NRC agreed, that indicated that substantial uncertainties existed over the likelihood that a permanent repository could be developed and that it would perform as expected. A finding of zero release despite these apparent uncertainties, Judge Bazelon reasoned, "represents a self-evident error in judgment" and is therefore arbitrary and capricious under the APA.¹⁸

Judge Bazelon then reviewed the assumption as a "decisionmaking device." As such, the rule allocates to the NRC the responsibility for considering the risks of long-term storage and precludes licensing boards from considering such risks in individual licensing decisions. He did not dispute that the NRC could consider waste storage in a generic rulemaking, but he explained:

In the course of such a generic rulemaking, … the agency must consider and disclose the actual environmental effects it has assessed in a manner that will ensure that the overall process, including both the generic rulemaking and the individual proceedings, brings those effects to bear on decisions to take particular actions that significantly affect the environment.¹⁹

However, the Table S-3 Rule excluded from consideration two environmental costs — the risk that wastes stored in a faulty repository will damage the environment and the risk that waste must be stored on site pending construction of a repository. As a result, the NRC violated NEPA's requirement that environmental costs be considered in the ultimate licensing decision. In other words, the NRC cannot find the "environmental costs represented by the uncertainties to be zero unless their cost is, in fact, zero."²⁰ And while it can assess generic costs in a generic rulemaking, it must factor such costs into the final decision.²¹

NRDC had also argued that the first two versions of the rule failed to allow proper consideration or disclosure of the actual environmental impacts of the fuel cycle. Table S-3 lists only resources used and pollutants released, but it does not reveal the actual human health effects, for instance, by indicating the number of cancer deaths to be expected, or the socioeconomic or cumulative effects. Judge Bazelon agreed, but found that despite various ambiguities in related decisions and NRC actions, the final rule was valid because it allows licensing boards to consider the health, socioeconomic, and cumulative impacts in individual licensing decisions.

Judge Wilkey, dissenting in Vermont Yankee III, sharply attacked the majority opinion: "If there ever was a doubt prior to today, it is now clear that this court is committed to an assumed role as high public protector of all that is good from perceived evils of the nuclear age."²² He criticized Judge Bazelon for ignoring the Supreme Court's "unequivocal mandate" in Vermont Yankee II to determine only whether the NRC's rule was arbitrary and capricious under the APA. In his view, Judge Bazelon went too far and imposed his own substantive conclusion. Judge Wilkey would uphold the rule under the APA standard. The NRC acted within the scope of its authority by considering the long-term storage issue generically. In addition, the NRC was not arbitrary and capricious in making the zero-release assumption. The Commission took a "hard look" as required by NEPA. It revealed the uncertainties and, given the limited purpose of the Table S-3 Rule, it reasonably concluded that the probabilities favor the zero release assumption. In short, Judge Wilkey believed that the court failed to accord the Commission the proper deference.

Supreme Court Reverses Again

Once again the Supreme Court in a unanimous decision reversed the D.C. Circuit, this time with Justice O'Connor writing for the Court. In upholding the NRC rule she found fault not only with Judge Bazelon's NEPA ruling, but as the Court did in Vermont Yankee II, found that the lower court had gone beyond its authority under the APA in reviewing agency decisionmaking under NEPA:

Administrative decisions should be set aside in this context, as in every other, only for substantial procedural or substantive reasons as mandated by statute … not simply because the court is unhappy with the result reached.²³

The Court addressed two issues. First, did the NRC comply with the "twin aims" of NEPA to consider every significant environmental impact and to disclose environmental concerns to the public? Second, was the NRC's generic rulemaking appropriate under the APA? In promulgating its Table S-3 Rule, explained Justice O'Conner, the NRC had determined that the probabilities favor the zero-release assumption and therefore concluded that uncertainties concerning the development of nuclear waste storage facilities are insignificant and would not affect the outcome of individual licensing decisions. The Court ruled that in making this determination, the Commission had complied with NEPA. Justice O'Connor, finding the "sheer volume of proceedings before the Commission" impressive,²⁴ ruled that the NRC had disclosed [13 ELR 10242] all substantial risks and uncertainties to the public.²⁵ And, she pointed out, while NEPA requires an agency to take a "hard look" and to factor all significant risks into its decision, NEPA does not require "any particular internal desicionmaking structure."²⁶ The generic method chosen by the NRC complied with this "hard look" requirement. Not only are environmental effects of much of the fuel cycle not plant-specific, but a generic determination of those effects furthers administrative efficiency and consistency.

The Court also disagreed with the D.C. Circuit's conclusion that the NRC violated NEPA by failing to factor uncertainty into Table S-3 and by precluding individual licensing boards from considering it. NRC's zero-release assumption would violate NEPA only if the NRC's decision that the uncertainty was insufficient to affect any individual licensing was arbitrary and capricious. It was not, ruled the Court. Three factors favored the NRC's conclusion. First, Table S-3 was made for only a limited purpose; it was not meant to be used to evaluate waste storage comprehensively or to select the most effective long-term waste disposal technology. Second, the zero-release assumption is but a single figure in an entire table, which the Commission expressly designed as a "conservative (i.e., inflated) statement of environmental costs."²⁷ Third, the Court emphasized that a court reviewing agency action "within its area of special expertise, at the frontiers of science," must be "at its most deferential."²⁸

In sum, the Court ruled that the zero-release asumption, within the context of Table S-3, was not arbitrary and capricious. NRC statements and staff reports accompanying the table revealed and discussed uncertainties. Moreover, while certain commissioners were dissatisfied with the assumption, they nevertheless emphasized its limited purpose and the fact that other NRC proceedings would thoroughly evaluate long-term storage.

Finally, the Court sharply criticized the D.C. Circuit's ruling that the earlier versions of the rule precluded the consideration of health, socioeconomic, and cumulative impacts in the licensing process. While admitting that the rules were ambiguous, the Court admonished the D.C. Circuit for casting doubt on licensing proceedings when there was no evidence that parties had ever been precluded from raising health, socioeconomic, or cumulative issues.

Discussion

Vermont Yankee has been described as "one of the most important cases to be decided by the United States courts in this century,"²⁹ because of the nature and the magnitude of the environmental risks involved. The Supreme Court, in its remand to the D.C. Circuit in Vermont Yankee II, referred to the NRC's statement that the wastes referred to in the rule "posit the most severe potential health hazard."³⁰ But despite the potentially catastrophic environmental problems posed, the two latest Vermont Yankee decisions ultimately involved a narrow legal issue. Although the court of appeals and the Supreme Court reached opposite conclusions, the conclusions they reached were not surprising. That Judge Bazelon would find the zero-release assumption arbitrary and capricious is understandable, considering his view that the NRC had ignored uncertainties surrounding a problem of such magnitude. But Justice O'Connor's conclusion is equally understandable. In the field of environmental law, which is often particularly complex scientifically, nuclear licensing is probably the most arcane area. Thus, it was not surprising that Justice O'Connor, who was impressed by the "sheer volume" of the record, would reaffirm the old tenet that the more difficult the scientific issues, the greater the deference to the agency.

Because of the nature of the issue, the decision by the D.C. Circuit raised the expectation that the Supreme Court would provide some guidance on how agencies are to consider scientific uncertainties in the decisionmaking process. But that was not the case. Both courts reiterated the established NEPA case law that agencies must disclose uncertainties to the public and must consider them in their rulemaking, but came to different conclusions about whether the NRC had met these requirements. Judge Bazelon, after completing a confusing analysis of the zero release assumption as a "finding of fact' and as a "decisionmaking device," concluded that the NRC had not adequately considered the uncertainties underlying its assumption. By setting at zero a value the scientific experts appeared to agree was not really zero, the court ruled that the agency had not allowed for the consideration of the uncertainties in the NEPA process. The Supreme Court, on the other hand, concluded that the agency had disclosed the uncertainties surrounding the assumption and had considered them. The difference was that the Supreme Court was willing to defer to the NRC's conclusion that the uncertainties were insufficient to affect any individual licensing decisions.

What some people might find troubling about the Court's deference, and what troubled Judge Bazelon, was that the NRC appears to ignore significant uncertainties about the environmental impacts of long-term radioactive waste storage. NEPA requires agencies to consider uncertainties in making decisions that will affect the environment, but the NRC had given only summary treatment to the uncertainties surrounding long-term storage. Under the Table S-3 Rule, licensing boards are not to consider uncertainties that all parties agreed include such basic considerations as whether a repository will be developed and whether it can contain the radioactive waste accumulating from dozens of power plants for the 250,000 years needed for detoxification. If the NRC can sweep uncertainties of such magnitude under the rug, is there anything they cannot do? But the Supreme Court and Judge Wilkey did not accept the premise that the NRC had ignored the uncertainties. They found a reasonable basis for concluding that the Commission had disclosed and considered them. The bottom line appears to be that [13 ELR 10243] the Table S-3 Rule was developed for the limited purpose of the cost-benefit analysis for individual power plants; the environmental impacts of long-term storage will be more fully considered in the process of licensing repositories and in other proceedings before the NRC.³¹

Two other aspects of Justice O'Connor's opinion, which are raised in a footnote,³² merit brief comment. The first question is to what extent can an EIS incorporate documents by reference rather than address the issues raised in those documents directly. Both courts expressed concern that the Table S-3 Rule insufficiently discloses environmental impacts. Except by reference to other documents, the rule gives only brief descriptions of the environmental effects it raises. However, both courts declined to strike the rule on this ground; the likely conclusion in most NEPA cases raising the issue.

The second question that the note raised could have a more significant impact on NEPA litigation. The question is whether the CEQ NEPA regulations are binding on independent agencies. The NRC and other independent agencies often involved in NEPA litigation have consistently stated that the NEPA regulations do not apply to them. Although litigation over the regulations is not common, some of the rules, particularly the "worst case analysis" rule,"³³ may be quite significant when applied to NRC decisionmaking since they may impose requirements other than those in NEPA case law. For example, the NRC recently decided that in EISs for new power plants it would discuss the environmental impacts of a meltdown. A meltdown is one of the best examples of an action that would require a worst case analysis. But the NRC may be able to avoid discussing the "worst case," if the CEQ rules do not apply.

Conclusion

The different results reached by the D.C. Circuit and the Supreme Court in Vermont Yankee III and IV were based on similar views of what NEPA requires. Both courts agreed that NEPA requires disclosure and consideration of uncertainties. The difference was in how each court perceived the agency's compliance with those requirements. Judge Bazelon's perception raises difficult issues concerning how agencies should consider uncertainties and what weight they should be given in the decisionmaking process. But neither Judge Bazelon or NEPA provides any standards to guide agencies. Thus, while the Supreme Court's deference to the NRC may be difficult for some to accept given the issues involved, Judge Bazelon's conclusion runs awfully close to interfering with the agency's substantive decision. NEPA does not allow for such interference, but leaves agencies with considerable discretion on the weight to be given to the environmental factors, especially where they involve complex issues not easily understood even by the experts. If one were to rewrite NEPA, it might be appropriate to require agencies to disclose and consider uncertainties in a way that parallels the magnitude of the risk involved. However, as NEPA stands now, it is hard to fault the Court's decision.

1. See Sierra Club v. Sigler, 695 F.2d 957, 13 ELR 20210 (5th Cir. 1983); Comment, CEQ's "Worst Case Analysis" Rule for EISs: "Reasonable" Speculation or Crystal Ball Inquiry?, 13 ELR 10069 (Mar. 1983).

2. See, e.g., Weinberger v. Catholic Action of Hawaii, 454 U.S. 139, 12 ELR 20098 (1981).

3. 13 ELR 20544 (U.S. June 6, 1983).

4. Natural Resources Defense Council, Inc. v. NRC (Vermont Yankee III), 685 F.2d 459, 517, 12 ELR 20465, 20498 (D.C. Cir. 1982).

5. Natural Resources Defense Council, Inc. v. NRC (Vermont Yankee I), 547 F.2d 633, 6 ELR 20615 (D.C. Cir. 1976).

6. Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc. (Vermont Yankee II), 435 U.S. 519, 8 ELR 20288 (1978).

7. See Comment, Vermont Yankee: Supreme Court Sets New Limits on Judicial Review of Agency Rule Making, 8 ELR 10103 (1978).

8. Vermont Yankee III, 685 F.2d 633, 12 ELR 20465 (D.C. Cir. 1982).

9. See Tarlock, California Need Not Go Nuclear: The Supreme Court Holds That California's Moratorium on New Nuclear Plants Is Not Preempted by Federal Law, 13 ELR 10216 (July 1983). Vermont Yankee IV also represents the second time this term that the Supreme Court has unanimously overruled a D.C. Circuit nuclear energy NEPA decision written by Judge Bazelon, and adopted the reasoning of Judge Wilkey. The first time was Metropolitan Edison Co. v. People Against Nuclear Energy (PANE), 13 ELR 20515(U.S. Apr. 19, 1983), rev'g, PANE v. NRC, 678 F.2d 222, 12 ELR 20546 (D.C. Cir. 1982), which involved the consideration of psychological stress under NEPA. See Dougherty, The Application of NEPA to Agency Actions Affecting Human Health, 13 ELR 10179 (June 1983).

10. The table contains entries for the environmental effects of the uranium fuel cycle, including effects from activities involved in producing fuel, such as uranium mining and milling and the production of uranium hexafluoride — the front-end, and the effects of reprocessing, storing, and disposing of spent fuel and other wastes — the back-end. See Vermont Yankee III, 685 F.2d 459, 12 ELR 20465 (D.C. Cir. 1982) for a more complete description. The table's references to the back-end of the fuel cycle are at issue in this case.

11. There are actually three rules, the original Rule, the interim Rule, and the final Rule. See Vermont Yankee III, 685 F.2d 459, 12 ELR 20465 (D.C. Cir. 1982), for a discussion of the procedural history of the Rule.

12. See Statemet of Consideration, 44 Fed. Reg. 45369 (1979).

13. Vermont Yankee IV, 13 ELR at 20548.

14. Vermont Yankee III, 685 F.2d at 500-501, 12 ELR at 20487 (emphasis omitted).

15. The State of New York and intervenor the State of Wisconsin also argued that the Rule was invalid because the effluent-release values listed in Table S-3 assume the use of technology that is economically infeasible, even if it is technology feasible. Judges Bazelon and Wilkey rejected these arguments, but Judge Edwards would have invalidated the Rule on that basis also. The Supreme Court did not hear arguments on that issue.

16. See Vermont Yankee III, 685 F.2d at 494-516, 12 ELR at 20487-97, for Judge Edwards' opinion, which is not discussed in this comment.

17. 685 F.2d at 478, 12 ELR at 20475.

18. Id. at 481, 12 ELR at 20476.

19. Id. at 482, 12 ELR at 20477.

20. Id. at 484, 12 ELR at 20478.

21. Id.

22. Id. at 517, 12 ELR at 20497. Throughout his opinion, Judge Wilkey sharply faulted Judge Bazelon:

The decision and the stated rationale on which the [majority opinion] is based, taken in conjunction with the recent action of this court in halting all operation at undamaged Three Mile Island Unit I on the basis of another completely novel theory, [a reference to Judge Bazelon's opinion in People Against Nuclear Energy (PANE) v. NRC, 678 F.2d 222, 12 ELR 20546 (D.C. Cir. 1982), rev'd sub nom. Metropolitan Edison Co. v. PANE, 13 ELR 20515 (Apr. 19, 1983)] signal that this court has effectively taken over control of the nuclear industry.

685 F.2d at 545, 12 ELR at 20515.

23. Vermont Yankee IV, 13 ELR at 20546 (quoting Vermont Yankee II, 435 U.S. 519, 558, 8 ELR 20288, 20297 (1978)).

24. 13 ELR at 20546 n.11.

25. See id. at 20547 n.12, where the Court questions whether the NRC has complied with the NEPA regulations concerning incorporation by reference.See text accompanying notes 32-33.

26. 13 ELR at 20547.

27. Id. at 20548.

28. Id.

29. Vermont Yankee III, 685 F.2d at 494, 12 ELR at 20484.

30. Vermont Yankee II, 435 U.S. at 539, 8 ELR at 20292.

31. E.g., in the "waste confidence" proceeding and as required by the recently enacted Nuclear Water Policy Act, 42 U.S.C. §§ 10101-10226, ELR STAT. 41971. See Vermont Yankee IV, 13 ELR at 20547 n.14.

32. Id. at 20549 n.12.

33. See Comment, supra note 1.