BACKGROUND PAPER

Delays in Nuclear Reactor

Licensing and Construction:

The Possibilities for Reform

March 1979

Congress of the United States

Congressional Budget Office
DELAYS IN NUCLEAR REACTOR LICENSING AND CONSTRUCTION:

THE POSSIBILITIES FOR REFORM

Congressional Budget Office

United States Congress

February 1979

rir

PREFACE

During the past decade, the lead times required to plan, license, and

build a commercial nuclear power plant have increased from 6 or 7 years to

10 or 11. This added lead time creates costs for the consumer, and places

nuclear power at a disadvantage when compared to alternative forms of

electrical generation. To help correct this situation, the Administration

introduced the Nuclear Siting and Licensing Act in March 1978, and will

reintroduce it in the 96th Congress. This report analyzes recent delays in

reactor licensing and construction and examines the potential for legislative

reform of the reactor licensing and construction process.

Delays in Nuclear Reactor Licensing and Construction; The Possibilities of Reform was written by Everett M. Ehrlich of CBO's Natural

Resources and Commerce Division, under the general direction of Richard

D. Morgenstern and Raymond C. Scheppach. Marion F. Houstoun edited the

manuscript, which was typed for publication by Misi Lenci. Sarah Beth

Lambert provided research assistance. The report was prepared at the

request of the Energy and Environment Subcommittee of the House

Committee on Interior and Insular Affairs. In accordance with CBO's

mandate to provide objective and nonpartisan analysis, this paper contains

no recommendations.

Alice M. Rivlin

Director

February 1979

iii

CONTENTS

Page

SUMMMARY ix

CHAPTER I. INTRODUCTION 1

CHAPTER H. CURRENT NUCLEAR POLICY AND REACTOR

LICENSING AND CONSTRUCTION 3

CHANGES IN THE NUCLEAR INDUSTRY AND

IN FEDERAL NUCLEAR POLICY 3

THE NRC CRITICAL PATH 5

CHAPTER m. A METHODOLOGY FOR ANALYZING DELAYS

IN REACTOR LEAD TIMES 9

GENERAL METHODOLOGY 9

THE LICENSING AND CONSTRUCTION PHASE

SAMPLES 10

A TYPOLOGY OF DELAYS 11

CAVEATS CONCERNING THIS APPROACH . . 16

CHAPTER IV. RECENT DELAYS IN NUCLEAR REACTOR

LICENSING AND CONSTRUCTION 19

DELAYS IN THE LICENSING PHASE OF REACTORS 19

DELAYS IN THE CONSTRUCTION PHASE OF

REACTORS 23

THE FEDERAL ROLE IN EXPEDITING REACTOR

LEAD TIMES 27

THE COST OF DELAYS IN REACTOR LICENSING

AND CONSTRUCTION 28

•r
CONTENTS—Continued

Page

CHAPTER V. THE NUCLEAR SITING AND LICENSING ACT . 31

STANDARDIZATION OF REACTOR AND PLANT

DESIGN 31

EARLY SITE REVIEW (ESR) 34

HEARINGS AND INTERVENTIONS 36

ADVISORY COMMITTEE ON REACTOR SAFEGUARDS (ACRS) REVIEW 40

COORDINATION OF STATE AND FEDERAL

REVIEWS UNDER THE NATIONAL ENVIRONMENTAL POLICY ACT (NEPA) 41

CHANGES IN OPERATING LICENSE PRACTICES. 42

THE IMPACT AND SIGNIFICANCE OF THE NSLA. 44

CHAPTER VI. ALTERNATIVE APPROACHES TO REDUCING

REACTOR LEAD TIMES 49

IN-HOUSE NRC ACTION 49

THE "FULL PUSH" APPROACH 51

APPENDIX A. DURATION OF PHASES IN NUCLEAR REACTOR

LICENSING 57

APPENDIX B. CALCULATION OF COSTS OF DELAY IN REACTOR LEAD TIMES 59

APPENDIX C. REACTORS CITED IN REPORT 63

VI
TABLES

TABLE 1.

TABLE 2.

TABLE 3.

TABLE 4.

TABLE 5.

TABLE A-l.

TABLE B-l.

TABLE B-2.

AVERAGE REACTOR LICENSING AND

TOTAL LEAD TIMES, 1956 to 1977 . .

SOURCE OF DELAYS IN THE LICENSING PHASE

OF REACTOR PROJECTS ISSUED CONSTRUCTION PERMITS, JULY 1, 1975 - DECEMBER 31,

1977

AVERAGE AMOUNT AND SOURCES OF DELAYS

IN CONSTRUCTION PHASE OF REACTORS

CURRENTLY IN PROGRESS

AVERAGE AMOUNT OF DELAY IN CONSTRUCTION PHASE OF THREE GROUPS OF REACTORS

CURRENTLY AT DIFFERENT STAGES OF COMPLETION, BY SOURCE OF DELAY: IN MONTHS.

COSTS OF A MONTH'S DELAY IN LICENSING

AND CONSTRUCTION PHASES OF A 1,100

MEGAWATT REACTOR, ANTICIPATED ON LINE

IN 1987: IN THOUSANDS OF DOLLARS ... .

20

21

24

26

29

AVERAGE DURATION OF VARIOUS PROCEDURES

IN NUCLEAR REACTOR LICENSING, BY YEAR OF

NUCLEAR REGULATORY COMMISSION'S (NRC)

ACCEPTANCE OF CONSTRUCTION PERMIT APPLICATION: IN MONTHS 58

COSTS OF A MONTH'S DELAY IN LICENSING

AND CONSTRUCTION OF A 1,100 MEGAWATT

REACTOR, ANTICIPATED ON LINE IN 1987 . . 59

INCREMENTAL FUEL REPLACEMENT COSTS FOR

A ONE-MONTH DELAY IN CONSTRUCTION OF A

1,100MEGAWATT REACTOR 60

vn

"IT"

SUMMARY

Nuclear reactors, developed for commercial purposes in the 1950s,

are used by utilities to generate electrical power. A decade ago, the

planning, siting, licensing, and construction of a nuclear reactor took 6 to 7

years; today, that process takes 10 to 11 years.

Longer lead times for reactors present two problems. First,

increased time leads to higher reactor costs,which result in higher electricity rates for consumers. Secondly, high reactor costs subject nuclear

power to a disadvantage when compared with the cost of alternative sources

of energy. CBO estimates that the cost of a month's delay in the licensing

phase of a reactor—which dates from acceptance of a utility's construction

permit application by the Nuclear Regulatory Commission (NRC) to its

issuance of that permit—is $8.9 million. A month's delay in the construction

phase of reactor—which begins after NRC issuance of a construction

permit—is estimated to add $10.6 million to its final cost. An 18-month

delay in total reactor lead time can add about 7 percent to the ultimate cost

of nuclear-generated electricity.

Although expediting the licensing and construction of nuclear

reactors would reduce costs, it might do so at the expense of compromises

regarding the levels of safety and environmental protection. This issue—

determination of the appropriate balance between the economic and social

costs of nuclear energy—is an especially timely one, since the NRC

withdrawal of its support of the Reactor Safety Study (Rasmussen Report).

This report, accepted by the NRC in 1974 but then repudiated in January

1979, provided the NRC with estimates of the probability of nuclear

accidents. Now that its conclusions are no longer judged valid, the chances

of a potentially catastophic reactor accident must once more be regarded as

"uncertain." It is therefore unclear if current safety and environmental

standards should be relaxed until this uncertainty is resolved.

In order to assist the Congress in evaluating the series of licensing

reforms proposed by the Nuclear Siting and Licensing Act (NSLA), which

was introduced for the Administration in 1978 and will be reintroduced in

the 96th Congress, CBO conducted an analysis of recent delays in reactor

licensing and construction. This report assesses the degree to which delays

in reactor lead time can be ascribed to actions in the public sector and

hence ameliorated through legislative reform, estimates the impact of the

IX

41-047 O - 79 - 2

rr
NSLA on reactor lead times, and discusses two other approaches to licensing

reform.

The Source of Recent Delays in Licensing and Construction of Nuclear

Reactors

CBO's analysis suggests that any legislation redirecting the federal

licensing effort will have only a moderate effect in expediting the licensing

and construction of nuclear reactors. About two-thirds of all delaysdefined for the purposes of the analysis as the difference between actual

and targeted dates for licensing and construction—in reactor lead time

would be insensitive to reforms of the regulatory process. Delays attributable to changing NRC regulations, redundant reviews, and public participation in the licensing process could, however, be addressed through

legislation. Thus, although two-thirds of all delay in reactor licensing and

construction would probably not be affected by legislation, the remaining

one-third, which represents a delay in the licensing phase of 12 to 18 months

per reactor, is a realistic target for regulatory reform.

More specifically, CBO's analysis of recent delays in reactor lead

times found that:

o There are three major sources of delay: economic factors,

changing NRC regulations, and public participation in licensing.

o The longest delays occur because of unanticipated declines in the

demand for electrical power or difficulty in raising financing for

a reactor project. In recent years, both factors have increasingly led utilities to reconsider both proposed nuclear reactors

and reactors under construction. Together, these factors

resulted, on average, in delays of over a year for the sample used

for this study. Most of these delays occur after licensing and are

largely related to events outside the jurisdiction of the Nuclear

Regulatory Commission. Financial delays appear to be more

related to financial problems of electric utilities in general and

the "capital shortage" of several years ago than to uncertainties

created by the nuclear regulatory process;

o The second greatest source of delay is resolution of NRC

radiological safety and environmental issues during the licensing

process. The median value of delays caused by these issues is

about six months, but it can range from zero to two years;
The third greatest source of delay is public participation in

licensing procedures. Although some public participants have

been characterized as "obstructionist," many interventions have

been instrumental in publicizing important safety and environmental issues. A number of public interventions occur and

achieve resolution informally, hence the impact of public participation is often understated, both in terms of delay costs and

safety benefits. On average, reactor projects surveyed for this

report experienced delays of about six months as a result of both

formal and informal public interventions;

The sources of more minor delays are state/federal redundancy

in license review, management problems in construction, and

labor disputes. Taken together, these factors typically account

for only a few months delay in reactor lead time, but any one has

the potential of causing considerable delay in individual cases.

Analysis of the NSLA Proposals

The Nuclear Siting and Licensing Act proposes the following steps to

expedite the licensing process and reduce reactor lead times:

o Standardization of reactor and plant designs, which would allow

the NRC to issue reactor vendors, such as General Electric or

Westinghouse, a "license to manufacture" pre-approved reactors

or reactor parts for a period of five years;

o Early site review, which would allow the NRC to approve, before

issuance of a construction permit, proposed reactor sites for a

period of 10 years;

o The use of adversary public hearings in the licensing process

would be limited, but a pilot program for intervenor funding and

public participation in the planning stage of reactor projects

would be initiated;

o Mandatory review of individual construction permit applications

by the NRC's Advisory Committee on Reactor Safeguards

(ACRS) would be eliminated;

o State and federal reviews would be coordinated under NEPA;

that is, the NRC would be allowed to delegate environmental

reviews, as mandated by the National Environmental Policy Act,

to individual states;

XI
o The NRC would be allowed to issue operating licenses together

with construction permits, and to issue interim operating

licenses before operating license hearings are completed.

The two potentially most effective avenues of reform are standardization of reactor designs and early site review. Both of these reforms

address delays resulting from substantive issues of NRC regulation. CBO's

analysis indicates that standardization could shorten the NRC safety review

by 12 to 18 months, if rigorously implemented and accompanied by equivalent reductions in other concurrent review procedures. If a standardization

program is to be effective in reducing lead times, however, it must be

implemented fully, avoiding any government-mandated changes in reactors

already in place ("backfitting"). Thus, adoption of these legislative reforms

implies the view that reactor technology is now mature and its risks are

acceptable.

Early site review—a procedure that would precede the safety review

of a reactor project and could approve, for a 10-year period, a reactor site

that met certain environmental standards—would not shorten the licensing

period; instead, it would move the site portion of review to a time when the

costs of delay are far lower, thereby allowing the utility and the NRC to

concentrate on the reactor design. If early site review were coupled with

standardization, the licensing procedure would then consist of matching a

preapproved design to the parameters of a preapproved site, which could be

accomplished in 12 to 18 months. Early site review could reduce delays by

up to a year, but only if accompanied by standardization. The full benefits

of standardization and early site review would not, however, be realized

until the mid- to late 1980s.

Other proposals in the bill would save less time. Elimination of the

now-mandatory review by the ACRS would save two to three months,

without compromising safety standards. The bill's provision allowing the

NRC to approve and utilize the results of state environmental reviews would

somewhat expedite licensing in states with rigorous approval procedures.

Any alternative to such a system would involve federal preemption of states'

rights to review sites for nuclear plants, which is generally regarded as

undesirable.

Two changes are proposed in the granting of an operating license, the

NRC document certifying that a reactor has been completed as designed and

is safe to begin operation. First, the bill proposes that operating licenses be

granted when construction permits are issued (a "one-stop" licensing procedure). The bill also proposes that "interim" operating licenses be granted.

The reductions in lead times that would result from these two practices

appear to be negligible.

xn
The final area of regulatory reform concerns changes in the role of

the public in licensing. The bill proposes the following steps with regard to

this controversial matter:

o Interventions would be limited to issues on which there had been

"no prior opportunity" for resolution;

o Adjudicatory hearings (which include the rights to discovery and

cross examination) could be held only if factual differences

between the parties were discovered. Other disagreements

would be settled in legislative hearings, where the hearing

examiner would allow an adjudicatory format if, in his view, a

difference of fact emerges;

o The NRC could give priority to construction permit applications

that allowed the public to participate in planning reactor

designs; and

o Limited funding would be granted to intervenors, at the discretion of the hearing officer.

The use of the "no opportunity" rule and the limitation of adjudicatory hearings to matters of "factual difference" would expedite hearings

to some extent; however, these savings could fail to materialize if the way

in which these rules are applied were challenged and overturned in the

courts. Public participation in planning reactor designs could be a useful

innovation, because it could resolve contested issues at an early stage, and

hence eliminate time-consuming interventions at subsequent stages of the

licensing process. Consideration might therefore be given to making that

procedure mandatory, and its results binding. Finally, although some

anticipate that the availability of funding for intervenors would open the

door to frivolous challenges of reactor designs and licensing decisions, the

provision for funding would give hearing officers a quid pro quo in return for

the cooperation and improved specificity and competence of intervenors in

the licensing process. Nevertheless, the net effect of these reforms would

be minor, no more than a few months per reactor.

In the last analysis, any reform of the current nuclear reactor siting

and licensing process raises questions involving U.S. policy toward nuclear

power. Proponents of nuclear power claim that many of the delays that

reactors now experience are the product of poorly applied or unneccessarily

stringent reactor standards. Although CBO cannot evaluate the technical

merit of each NRC standard and regulation, in general, current nuclear

reactor regulations conform to a strategy of risk aversion, which reflects

continuing uncertainty about the chances of a catastrophic accident. In

Xlll
111.1

order to reduce increasing reactor lead times and costs, the Nuclear Siting

and Licensing Act would modify this strategy and move towards a view of

nuclear reactor technology as more stable and acceptable than previously

perceived.

Impact of the NSLA

In sum, the Nuclear Siting and Licensing Act would have only a

limited impact on reactor licensing and constructing times, primarily

because only a third of all delay in reactor lead times can be ameliorated

through legislation. By the early 1980s, the construction permit review

period could probably be reduced from a recent average of 30 months to 24

months, with the bulk of the reduction stemming from fewer ACRS reviews,

elimination of some state/federal redundancy, and some standardized parts.

By the mid- to late 1980s, however, a reduction of as much as 15 months in

licensing time could be saved, if early site review were coupled with

permanent standardization. Whether or not these reforms will come to pass

depends upon how the outcome of still unresolved safety issues affects the

acceptability of standarized designs, and whether or not early site review

would undermine the integrity of the licensing process by "grandfathering"

reactor projects. It is doubtful that changes in the procedures for public

participation, "one-stop" licensing, or interim operating licenses would

expedite reactor licensing and construction. Full implementation of the

bill's provisions would decrease the cost of a nuclear power plant by about 9

percent and the cost of nuclear-generated electricity would be reduced by 7

percent. Further, should the real price of oil rise by 2 percent a year or

more in the future, delayed reactors would also mean higher electricity

costs, as the oil- and coal-burning units they were to replace are extended

beyond their normal life.

Alternative Approaches to Licensing Reform

There are two alternatives to the NSLA: in-house reform of the

NRC's licensing procedures and a "full push" policy strategy analogous to

procedures used in Europe.

The NRC has extensively reviewed its licensing procedures, in a 1977

report entitled Nuclear Power Plant Licensing: Opportunities for Improvement, This report, known as the "Denton Report," urges greater use of

generic rule-making (setting criteria and making judgments applicable to all

reactors, as opposed to resolving issues on a case-by-case basis); more

standardization (which the NRC and the nuclear industry are promoting

now); issuance of more limited work authorizations (which permit utilities to

xiv
begin certain construction activities before the reactor safety review is

completed); and more NRC staff assistance to utilities in order to ensure

more adequate construction permit applications. NRC in-house reform

would accomplish many of the objectives of the NSLA, without new

legislation, and would shorten the licensing period by a year in the late

1980s.

The second alternative to the NSLA is termed a full push approach

because it explicitly views nuclear power as a mature and acceptable

technology; hence it would eliminate many of the licensing procedures that

are now part of the "risk averse" regulatory policy of the NRC. Under the

full push approach, licensing would be conducted by the Department of

Energy and the concerns of the NRC would be limited to radiological issues.

This approach would also call for one-stop licensing, full use of standardization, and elimination of public participation. It might also call for

legislation eliminating the currently mandated National Environmental

Policy Act (NEPA) review, which would make NRC's calculations of the

social costs of the reactor unnecessary. Under a full push approach,

licensing could be cut by 18 months and thus conducted in one year, a

slightly greater reduction than that effected by the NSLA.

xv

CHAPTER I. INTRODUCTION

Nuclear reactors, first developed for commercial purposes in the

1950s, are used by electrical utilities to generate steam that in turn

produces electric power. A decade ago, the planning, siting, licensing, and

construction of a reactor took 6 to 7 years. Today, the same process takes

10 to 11 years. This increase in "lead time" increases the utility's costs,

which are then passed on to the public in higher electric rates. Higher

reactor costs also influence a utility's decision to use nuclear power rather

then to depend upon coal to generate electricity.

By proposing a series of licensing reforms, the Nuclear Siting and

Licensing Act (NSLA), which was introduced for the Administration in

March of 1978 and will be reintroduced in the 96th Congress, has become

the focal point of the debate over ways of changing nuclear reactor

licensing procedures and reducing the lead time needed to build them.

Although increasing nuclear reactor costs could be cut by expediting

reactor licensing and construction lead time, that strategy might increase

their social costs, in terms of safety, environmental protection, and the

affected public's right to participate in the licensing process. Each of those

costs must be balanced against the desire to license and build nuclear

reactors as economically as possible.

The Congress' decision as to how to weigh the trade-off between

expediting reactor lead times and minimizing the social costs of doing so

will be based on an implicit judgment as to whether or not nuclear reactor

technology, and the accompanying technologies for waste disposal or reprocessing, are "mature" and "acceptable"—that is, predictable and as safe as

other activities occurring in the course of daily events.

These potential social costs are now the subject of attention because

the Nuclear Regulatory Commission (NRC) has withdrawn its support of the

Rasmussen Report, I/which it had used to calculate the probabilities of

serious nuclear accidents. In the absence of this report, the probability of a

major accident, a large component of social costs, must now be viewed as

uncertain.

\J U.S. Atomic Energy Commission, Reactor Safety Study, 1975.

41-047 O - 79 - 3
This paper analyzes the reasons for recent delays in reactor lead times

and discusses the advantages (in terms of reduced lead times and hence

lower reactor costs) and the disadvantages (in terms of possible safety

compromises or poor regulatory decisions) of reforms put forward in the

NSLA. Chapter II first briefly describes the development of the U.S.

nuclear industry and current nuclear policy, and then presents in more detail

current federal licensing procedures regulating the construction of nuclear

reactors. Chapter HI presents the methodology, and Chapter IV, the results,

of an analysis of delays in reactor lead times. The relative importance of

different kinds of delays are also assessed. Chapter V analyzes the major

components of the NSLA and assesses the costs and benefits of their

implementation. Chapter VI discusses alternative approaches to the issue of

licensing reform: one approach would require no new statutory authority for

the Nuclear Regulatory Commission the second is a "full push" approach,

reflecting procedures now used in Europe.
CHAPTER H. CURRENT NUCLEAR POLICY AND REACTOR

LICENSING AND CONSTRUCTION

As of November 30, 1978, 70 nuclear reactors were operating in the

United States, and, 90 were under construction (including 32 undergoing

final regulatory review before commercial operation). In addition, 34

reactors were undergoing construction permit reviews (including 4 with

authorizations to do basic site preparatory work); 9 had been ordered but

had not yet formally applied for a construction permit; and utilities had

announced plans to build 8 more. Despite these developments, the nuclear

industry now finds itself at a critical juncture: reactor orders have been

slowing and, in the eyes of reactor vendors, the licensing procedures now

regulating the construction of nuclear power plants has been a major

contributor to that decline. This chapter describes both the historical

development and the current regulatory process of the nuclear power

industry.

CHANGES IN THE NUCLEAR INDUSTRY AND IN FEDERAL NUCLEAR

POLICY

During the past 20 years, the nuclear industry has undergone an

expansion and decline aptly described by one observer as from "rags to

riches to rags." In the 1950s, the Atoms for Peace program and the newly

formed Atomic Energy Commission (AEC) promoted the industry in an

effort to develop nuclear energy as a cheap source of electrical generation.

Thus, during this early period, private utilities received government subsidies for nuclear power research and commercial demonstration. In the early

and middle 1960s, private firms (notably General Electric and Westinghouse)

began providing nuclear reactors to utilities on a "turnkey" or fixed-price

basis. In order to promote their product and to learn more efficient

techniques of construction and design, these suppliers (or vendors) incurred

substantial losses, in part because they underestimated the costs of reactor

construction and did not anticipate the entry of competing firms into the

nuclear energy market. By 1967, over 30 reactors a year were being

ordered, and 1,000 megawatts of generating capacity were already in place.

Although orders slipped in the late 1960s and in 1970, probably as a result of

macroeconomic trends, a level of 30 reactor orders a year was reached

again during the 1972-1974 period. In the past several years, however, the

"TT1T"
nuclear industry has experienced a sudden turnaround, with cancellations of

old reactor orders exceeding new orders in 1975 and 1976.

Why has the growth of nuclear power slowed so dramatically? First of

all, nuclear power has never fulfilled the initial vision that it would be "too

cheap to meter." The cost of nuclear power has steadily risen, for a variety

of reasons. Capital construction costs have risen, both because the size of

reactors has grown and because the nuclear regulatory process has increased

the complexity of their design. Fuel prices have also risen, as a result of the

introduction of OPEC prices into the energy market, the scarcity of uranium

fuel, and the alleged operations of a uranium fuel cartel. Thus, although

nuclear power was hailed as a potentially cheap source of energy, in many

parts of the country it is now roughly equivalent in kilowatt cost to coal.

The development of nuclear power has also been obstructed by the

problems that regulated utilities generally have in raising capital. In the

1960s, when energy prices were stable and the demand for electricity grew

at a predictable and sizable rate, utilities were considered a good investment. But changing conditions in the early 1970s gave rise to a continual

escalation of utilities' costs, which, when coupled with a lag in the

recalculation of their rates by public utilities commissions, created a profit

squeeze that made utilities a less desirable investment. Although their

financial outlook is more optimistic today than it was several years ago, it is

still clouded by uncertainty in projections of electricity demand, uncertainty

regarding future changes in NRC standards, and continuing questions

concerning the desirability of the commercial use of nuclear power.

In recent years, concern over the safety and environmental effects of

commercial nuclear reactors have led a growing number of community and

environmental groups to challenge nuclear plant construction and operating

plants in court and in regulatory proceedings. This, in turn, has made the

growth of nuclear power a political issue. Today, few public officials fully

endorse nuclear energy.

Thus, while national policy in the 1950s and 1960s seemed oriented

toward expansion of nuclear power, nuclear policy today has become ad hoc

and amorphous. On the one hand, the government's caution regarding

nuclear power is reflected by the NRC's use of stringent and continually

evolving safety standards for nuclear plants. These standards, which may be

best described as "as safe as practicable," reflect the NRC's essentially riskaverse approach to nuclear reactor construction. On the other hand,

however, the use of nuclear energy is viewed by some as inevitable, and the

government continues to assist the development of nuclear energy through

its funding of waste disposal site exploration, waste disposal technology,

safety research, and fuel reprocessing. At present, then, national policy

4
both endorses nuclear power and uses risk-averse licensing procedures that

inhibit its rapid development. Resolution of these conflicting trends is now

complicated by the NRC's recent withdrawal of support for the "Rasmussen

Report," upon which it had relied for estimates of the probabilities of

serious nuclear accidents.

THE NRG CRITICAL PATH

The two major phases of reactor lead time are licensing and construction. Together, they constitute what the NRC has defined as a reactor's

"critical path"—that is, the landmark federal licensing and private-sector

construction activities that lead to its commercial operation (see Figure 1).

Initial Planning

A utility considering building a nuclear reactor to help meet future

demands for electric power usually contracts with an architect/engineering

firm specializing in the area (leading firms include Bechtel, Sargent and

Lundy, and Stone and Webster) for estimates of the cost and potential power

of a reactor. (Some utilities have, however, integrated this function into

their operation.) If the utility decides to construct a. nuclear reactor, the

actual working reactor—the nuclear steam supply system (NSSS)—will be

supplied by one of several firms: Babcock and Wilcox, Combustion

Engineering, General Electric, or Westinghouse. Construction of the

balance of the reactor—the "balance of plant," which includes containment

and control systems as well as the actual edifice in which the reactor is

housed—will be supervised by the architect/engineering firm, by the utility,

or sometimes by a third firm. Selection of a reactor vendor, and perhaps of

a firm to construct the balance of the plant, as well as selection of a site

for the reactor, are thus key events occurring in the planning stage of a

reactor project. Preparation of the utility's application to the NRC for a

construction permit also takes place during this initial phase.

The Licensing Phase

The mandate of the NRC is to protect the health and welfare of the

public by setting standards for nuclear reactor safety. Once initial plans for

a reactor are completed, the utility applies for a construction permit from

this commission. The application, which must include a preliminary safety

analysis report, an environmental report, and anti-trust information, first

undergoes an NRC acceptance review, to determine whether it contains all

necessary information. Accepted applications are then docketed. The NRC

~mnr
Figure 1.

Critical Path and Average Lead Time of the Licensing and Construction

of a Nuclear Reactor, 1978.

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SOURCE: Derived from Licensing, Design, and Construction Problems: Priorities for Solution, Atomic Industrial Forum, January 1978.
staff next reviews the preliminary safety analysis report submitted by the

utility. This review requires two rounds of questions by NRC staff, who

generally ask several hundred questions. The NRC then issues its own safety

evaluation report, which is forwarded to the Advisory Committee on

Reactor Safeguards, an independent board of 15 nuclear experts, which holds

public meetings and reviews the report. I/ The outcome of these activities

is an official letter to NRC with the committee's view of the potential

safety of the reactor.

A similar review process simultaneously occurs regarding environmental issues. The utility's environmental report consists of data on the

environmental impact of the proposed reactor. On the basis of that report

and subsequent rounds of questioning, the NRC staff prepares a draft

environmental statement, which is reviewed by the Council on Environmental Quality. A proposed reactor must also satisfy the Environmental

Protection Agency (EPA) that its discharges will meet water quality

standards set by the 1972 amendments to the Water Pollution Control Act.

The NRC also evaluates both the utility's "need for power" (by

projecting its future reserve margins if the reactor is not built) and its

financial ability to finish the project (its access to financing). In addition,

the Attorney General must rule as to whether or not the construction of the

reactor would violate anti-trust statutes.

Public hearings concerning a reactor construction permit are held

before the three-member Atomic Safety and Licensing Board (ASLB). The

purpose of these hearings is to bring the community in which the reactor

will be built into the decision-making process, both to protect their interest

and allay their concerns. ASLB hearings are advertised in both the Federal

Register and in local newspapers of the affected community. Members of

the public who wish to testify or present statements may participate in the

hearings as interested parties or "intervenors." These hearings can have one

of several results. The ASLB can decide that the plant may be built and

issue a construction permit; it can decide against the plant and refuse to

\J NRC staff supplements to the safety evaluation report are also

reviewed by the Advisory Committee. These supplements are not an

uncommon occurence, owing to the practice of expediting NRC

issuance of these reports by allowing items requiring more timeconsuming analysis, such as radiological effects, to follow the balance

of the report and the Advisory Committee on Reactor Safeguards'

conclusions. It should also be noted that only 30 to 35 percent of a

reactor has been designed when it is reviewed for construction permit

issuance; the rest is designed and approved during construction itself.

• Tiir
.JJlli

grant a construction permit; or, at the request of the utility, it can review

only environmental matters, and issue a limited work authorization, which

permits the utility to begin preparatory work at the construction site, but

not construction of the actual reactor. A utility with limited work

authorization must, however, go back to the NRC to complete its safety

review so that the reactor can be built. Objections to ASLB decisions are

heard by the Atomic Licensing Appeal Board. Once the board reaches a

decision, it can only be overturned by the NRC Commissioners, who oversee

the process, or through judicial review.

Satisfying the NRC licensing requirements does not necessarily mean

that a reactor can be constructed. States are empowered to conduct all

aspects of review, except for radiological emissions, an area pre-empted by

the Supreme Court. Therefore, situations can arise in which the NRC has

completed its review, but state approval has not yet been issued.

The Construction Permit

The issuance of a construction permit ends the first, or "licensing,"

phase of a reactor's critical path. The second phase consists of the actual

construction of the reactor. One-third of the way into the construction

period, the reactor pressure vessel—the actual steam vessel in the reactoris set into its mounts. The construction of the basic housing of the reactor

has usually been completed by this point. Once the pressure vessel has been

set,its control system, its plumbing connection, and the reactor containment

(the concrete shield that encloses the entire reactor) can be built around it.

As construction of a nuclear plant nears completion, however, the utility

must apply to the NRC for an operating license, which certifies that the

reactor has been built in accordance to plan and is safe to operate. The

application for an operating license is accompanied by the utility's final

safety analysis report, which covers all safety issues in detail, and an

environmental report. Any safety or design changes in the reactor must also

be discussed by the utility. The ASLB grants operating licenses in the same

manner as it grants construction permits. An operating license hearing may

be held by the licensing board, if requested by an interested party.

Once granted an operating license, the utility loads the first fuel into

the reactor, and the reactor's first "criticality" is experienced. This "fuel

loading date" is the targeted completion of construction. After about six

months of initial testing, the reactor is brought into commercial operation.
CHAPTER m. A METHODOLOGY FOR ANALYZING DELAYS IN

REACTOR LEAD TIMES

Congress is now considering legislation aimed at shortening the

increasing lead times of nuclear reactors. In order to reform the reactor

licensing and construction process effectively, however, the reasons for its

elongation must be determined. This chapter develops a methodology for

analyzing increased lead times. Results of the ensuing analysis are

presented in the following chapter.

GENERAL METHODOLOGY

Although studies have been conducted to document increased reactor

lead times, they have focused solely on determining recent trends in

licensing and construction times. This analysis, however, attempts to

determine the extent to which the increase in lead times—defined here as

the difference between targeted and actual times for licensing and construction—can be ascribed to factors or events that originate in the public

sector, and hence can be affected by legislative reform.

Like any other product, a reactor is the result of a production process

that requires a stream of inputs. When one or more inputs is not available, a

production process becomes bottlenecked. Generally speaking, these inputs

can be categorized as labor, materials, management, and financing. In the

case of reactors, government approval through a licensing process must be

added to the list of inputs, for without it, construction cannot proceed. The

unavailability of government approval, like the unavailability of any other

input, can become a constraint on production, resulting in delays. The list

of inputs therefore becomes a list of possible "constraints" on reactor

production. Thus, one can determine the origin of reactor delays by

observing which input into reactor production is unavailable when it is

needed.

This analysis measures the delays in the licensing and construction of

reactors that have been recently reviewed by the NRC and classifies them

according to a typology of delays based on the list of inputs into reactor

construction. The extent to which reform of the reactor regulatory process

can expedite lead times can then be estimated by determining the extent to

which delays in current reactor lead times originate with public sector

41-047 O - 79 - 4

~7nnn
actions. Similarly, the types of regulatory reform that are most likely to be

effective can be estimated by observing the kinds of public sector actions

involved.

The usual two-part division of reactor lead time into licensing (the

period of time between a utility's application for and NRC issuance of a

construction permit) and construction (the period between the issuance of a

construction permit and reactor start-up) is helpful because of differences

in the relative importance of the different inputs. During licensing, the

most important input is usually public sector action. Labor and materials

input availability problems, on the other hand, are generally not experienced

until after a construction permit has been issued by the NRC, because

actual construction cannot take place until then.

THE LICENSING AND CONSTRUCTION PHASE SAMPLES

In order to classify recent delays, data that provide case-by-case

histories of reactor licensing and construction must be found. Such records

are maintained by the NRC. A 1977 NRC document entitled Reactor

Licensing Schedule Performance Critique provides the licensing history of

24 reactor projects—some involving 2 or 3 reactors, which were usually

licensed as a group—that received construction permits between July 1,

1974 and December 31, 1977. Hence, this document allows observation of

reactor licensing times that exceeded their NRC-determined target dates,

and determination of their duration and source.

Construction completion target dates are set by the utilities

themselves. When a utility receives a construction permit, it announces a

fuel loading date, based on its own estimation of how long it will take to

build the reactor in question. For the purposes of this analysis, it is assumed

that the utility's announced fuel loading date represents the minimum

feasible time necessary to complete construction. Any revision of this

target to a later data therefore constitutes an observable delay or slippage

in the construction process. Thus, once construction begins, with either a

construction permit or a limited work authorization, delays can be determined by announcements of slippages in a reactor's fuel loading date, which

is reported in the NRC's monthly Construction Status Report.

As of August 1977, 91 proposed reactors had been issued construction

permits according to that report. Five of those reactors had not yet

scheduled any construction (and hence could not have had any delays), and

two had cancelled their projects and therefore their construction permits.

Hence, the sample used in this report to determine the amount and causes of

delay in the construction phase comprises 84 reactors.

10
Although the data in both the NRC Critique and the Construction

Status Report have been the subject of varying interpretations by the NRC

and the nuclear industry, this analysis relies upon neither's interpretation of

any data. Delays reported in the Construction Status Report are only

briefly described, and when the information provided was judged insufficient

to classify a delay, phone calls were made to the utility or to NRC to obtain

additional information. The validity of the classifying judgments made for

this analysis was also checked through follow-up calls to utility representatives of two subsamples of reactor projects randomly drawn from the

licensing and construction phase samples.

A TYPOLOGY OF DELAYS

This section describes the types of delays that may occur in the

licensing and construction of nuclear reactors.

Types of Public Sector Delays

Constraints on the licensing and construction of nuclear reactors

originating in the public sector can be classified along the following lines:

o Delays that occur because of changing regulations, or because the

applicant and the NRC differ over how to bring a proposed

reactor into conformity with regulatory standards;

o Delays occurring because of redundancy or inefficiency in the

government's transaction of its regulatory responsibilities;

o Delays occurring because public participation requires the expenditure of additional time on the part of the NRC staff and ASLB

hearing officers, often in hearings.

These three types of public sector delays, described in more detail

below, occur primarily during the licensing phase. They can, however, also

occur during construction if part of the NRC's review of a reactor

component is designed after construction permit issuance, or if new

information forces a reconsideration of a previously approved design.

Substantive Issues. NRC safety and environmental standards have

evolved internally, as a result of experience, and the reactor licensing

process has also had to confront new issues. This has created what is

termed "moving standards" for reactor regulations; that is, reactor plans

that were acceptable in the past may not be acceptable now or in the

future.

11
NRC design standards have changed as each reactor brings with it

new lessons in design. An example of this increasing sophistication is the

new level of detail afforded reactor fire safety standards after a fire at the

Browns Ferry nuclear generating plant. Critics of the NRC, however, claim

that increased detail and attention in NRC reviews is more a product of

bureaucratic growth than a response to past lessons in reactor safety. They

argue that the NRC has become too involved in changing reactor design

plans that have already been approved (a process known as "ratcheting" a

design) or in mandating changes in reactors that have been built or are under

construction ("retrofitting" or "backfitting"). NRC policy approves such

changes as part of its mandate of ensuring that all reactors operate at the

greatest level of safety currently deemed practicable; nevertheless, in order

to prohibit trivial design changes, the NRC employs a standard requiring

that each backfitted design change bring about "substantial additional

protection." NRC reactor design standards can thus change over time. Fire

safety regulations and the requirement that every reactor have an emergency core cooling system (ECCS) are examples of such changes. In the

mid-1960s, all existing plants were retrofitted with ECCS. The Indian Point

plant, however, opted to close rather than implement the mandated changes.

Implementation of new fire safety rules resulting from the Browns Ferry

incident will cost approximately $1 million per reactor.

The scope of NRC has also broadened in recent years. The foremost

instance of an externally induced expansion of NRC issues is the inclusion of

cost-benefit calculations in reactor licensing, following the 1971 Calvert

Cliffs Coordinating Committee Inc. v. AEC reactor decision. This court

interpretation of the National Environmental Policy Act (NEPA) mandated

the NRC to weigh, on a cost-benefit basis, every proposed plant against a

group of theoretical alternatives that use different fuels at different sites.

Increasing sensitivity surrounding the issue of nuclear power has similarly

compelled the NRC to broaden its efforts concerning seismic effects,

population proximity, and land use. The growing size of reactors, as well as

their increasing sophistication, have also generated more complex safety

and related issues. Reactors completed in 1970 had an average rating of 604

megawatts; those of 1976 vintage, a rating of 901 megawatts; and reactors

due to be completed in 1983 will measure 1,105 megawatts.

Redundancy and Inefficiency. Redundancy in the licensing procedure,

or poor coordination between the different governmental entities with

regulatory responsibilities, can occur. States and muncipalities have the

legal right to examine issues included in the NRC review, particularly in the

areas of environmental impact and the need for a nuclear reactor. Hence,

utilities must sometimes provide—sequentially—the same material to a state

12
government, the NRC, and the EPA. J_/ Some states, notably New York,

Maryland, and Wisconsin, have more stringent and more time-consuming

environmental and demographic considerations than the NRC or the EPA.

Moreover, based on the same evidence, states may reach a different

judgment than the NRC, as was the case in the Seabrook project.

Redundancy between state and federal reviews is only the most

serious aspect of the general problem posed by having different federal and

state agencies conducting or participating in the licensing process. Licenses

can be held up if any one agency fails to provide data for another's review in

a timely fashion. Reactors at the Palo Verde and Skagit sites, for example,

were delayed during their construction permit review because of NRC

difficulty in obtaining final reports from the U.S. Geologic Survey.

Public Participation. A license can be delayed as a result of

contested hearings or public "interventions"; however, most of these delays

are for short periods of time. Public participation has always been a goal of

NRC, and its predecessor, the Atomic Energy Commission, traditionally

sought to educate the public regarding nuclear power through public

hearings. But nuclear vendors contend that the opportunity to intervene in

licensing procedures is currently being used to force major safety or

environmental changes in proposed reactors. And, in fact, interventions

have grown in subject matter as well as in number. Today, they include

critiques of national energy policy or discussion of the economic or

technical problems of nuclear power as well as site- and reactor-specific

issues. Hesitancy on the part of NRC hearings examiners to limit the

subject matter of interventions is often explained by the possibility that the

results of these hearings will be overturned in court.

Types of Private Sector Delays

With the exception of constraints originating in the regulatory role of

the public sector, it is assumed that a reactor can be delayed only if there is

a problem related to some input into the production process: labor,

materials, financing, or management. A description of how such delays,

which typically—but not invariably—occur after construction permit issuance, develop is presented below.

I/ See, for example, "Nuclear Power Plant Delays in New England"

(prepared by New England Federal Regional Council Energy Resource

Development Task Force Bulk Power Committee, Federal Energy

Administration, November 1976).

13
Labor. Reactor construction requires highly trained and specialized

workers, who may be in scarce supply and whose skill level increases their

bargaining power. Reactor projects have thus been subjected to strikes, as

occurred in the Ano, Diablo Canyon, and North Anna projects. Other

projects have reported poor labor productivity or shortages of skilled

workers.

Materials. Problems sometimes arise because of the poor quality or

the unavailability of materials or components. These problems are not

necessarily generated by the specialized nature of reactor parts and

components; for example, at the Diablo Canyon project, portions of the lowpressure turbine were delivered in unsatisfactory condition and required

reblading before they were installed. Delays of this type are attributable to

the vendor. Similarly, both the Zimmer and Watts Bar projects were

delayed by the unavailability of parts, such as bolts and rods. Like labor

delays, these typically occur during construction.

Financing. Utilities usually borrow large portions of their capital

needs in the money markets: aside from the traditional bias toward debt

financing found in the tax laws, regulated utilities theoretically cannot use

pricing techniques to adjust revenues to generate funds internally. Equity

funding is rarely employed. Moreover, borrowing entails a capital cost that

usually may not be incorporated into the rate base, although some states

will allow rate base calculations to include construction work in progress.

Finally, given the current conventional planning size of reactors (about

1,100 megawatts), the cost of a reactor is prohibitive without outside funds—

generally over $1.2 billion. Nor is borrowing easy, especially since investor

confidence in utility nuclear securities was dampened by Consolidated

Edison's failure to pay a quarterly dividend in 1974. Many investors are

wary of such projects. In their report of September 1976, Jesups and

Lament, a New York brokerage house, urged caution in the purchase of

nuclear securities because of waste storage, reprocessing, and safety

considerations.

This financing problem has expressed itself in a wave of reactor

delays, the great bulk of which occurred in late 1974. In September through

November of that year, at least 19 reactors at 11 different sites were

delayed because of financial consideration. Financial obstacles have also

been linked to slackening demand for electric power, because decreased

electric power demands may make it impossible to justify a reactor's cost,

as in the Limerick and Sumner projects. This differs from the problem of

tight capital markets, as occurred in the cyclical "capital shortage" of 1974-

1975, which delayed the Catawba and McGuire projects. One possible

recourse for a utility in a strapped financial position is an appeal to the

relevant state public utility commission; such assistance may, however, not

14
be forthcoming, as was the experience of the River Bend station before the

Louisiana Commission. Delays of this type can occur during licensing or

construction.

Management. Management delays can be classified as project or

demand delays. Project management delays occur within the framework of

a decision to build a nuclear plant, during its construction. These delays are

related to unanticipated problems in the design or performance of reactor

parts, or to incorrect estimates of the construction schedule 2J Similarly,

some utilities find that they must redesign components during construction.

3/ Delays of this kind must, of course, be distinguished from governmentordered design changes, as experienced at the Fermi project.

Project management delays also stem from the "doctor-patient"

relationship between either the architect/engineering firm or the reactor

manufacturers and the utility. Although some utilities are now doing their

own designing and engineering, many depend on a contractor for answers to

technical interrogatories by the NRC staff. This slows down the licensing

process. ERDA's Robert D. Thorne has noted that ". . . the utilities have

to deal with the NRC, not just use the builders as their technical arm.

They've got to show that they know what they're talking about. Until that

happens they will stay in a rather laborious regulatory process." 4/

Demand delays relate to a utility's decision to build the plant itself

and occur during both licensing and construction. A frequent source of

delay is changes in a utility's estimates of its "need for power." On the basis

of historical price and behavior trends, many reactors, either now under

construction or being planned, were thought necessary to meet future

demands for electrical power. These trends have now been altered by the

introduction of OPEC price levels into the energy market, leading to

demand cutbacks. When estimates for power are revised, a utility will

frequently delay its fuel loading date. Thus, reactor delays can occur

because of broad changes in national and international economies, such as

2J Late delivery of equipment, for example, held up projects at Hatch,

MacGuire, and Sequoyah.

3/ This was the case when the containment ice condensors at the Cook

project had to be redesigned by Westinghouse.

4/ Speaking to the Atomic Industrial Forum's Conference on Nuclear

Power Financial Consideration (July 1977).

15
higher energy prices or higher interest rates. Such reestimations of the

demand for electrical power have occurred regularly during the past four

years. 5/

CAVEATS CONCERNING THIS APPROACH

Analyzing reactor delays poses a number of methodological problems.

Assigning an observed delay to a specific cause often requires making

assumptions about the motives of the actors involved—both the NRC and the

applicant utility. For example, a delay of several months may occur during

the NRC staff's preparation of its final safety evaluation report because the

staff and the utility cannot agree on certain safety considerations.

Ascribing such a delay to "prolonged safety evaluation" requires an assumption that the utility sought to minimize this expenditure of time. In fact,

however, the utility could consider such a delay as inconsequential; for

example, it might be aware of a concurrent separate review or an

environmental proceeding conducted by a state government, or a financing

problem, which would hold up issuance of a construction permit even if the

safety concerns were resolved.

Similarly, the NRC could be taken off the "critical path" towards

licensing if the utility is taken to court by a state environmental agency.

The NRC would then find that it had extra time to conduct its review while

litigation was underway, and it would not be responsible for the resulting

delays in licensing. For example, in the licensing of Waterford Unit 3, NRC

has contended that an unresolved anti-trust issue led the utility to extend

the safety review process, in the hope that more favorable terms could be

reached with the NRC while the anti-trust issue was being litigated. In the

case of Catawba Units 1 and 2, the utility was forced to postpone the plant

because of financial difficulties; had it not done so, the NRC review of its

emergency core cooling system design would have produced delays.

Delays can also be interrelated. Financial delays, for example, may

be to some extent related to regulatory uncertainty. Similarly, materials

delays could be a product of the instability of design criteria produced by

regulation.

5/ The most notable delay of this type could be those associated with

the Harris project, a group of four reactors delayed an average of 54

months because of revised energy demand projects. Load reconsiderations have also played a role in delaying reactors at Catawba,

Limerick, and Susquehanna.

16
Uncertainties regarding ascriptions of delay were resolved to the

maximum extent possible in the analysis, using CBO's judgment. When

necessary, the relevant utility spokesperson and NRC staff member were

contacted to obtain enough detail regarding a particular event to make a

reliable judgment concerning the source of a delay.

17
.JUU
CHAPTER IV. RECENT DELAYS IN NUCLEAR REACTOR LICENSING

AND CONSTRUCTION

The licensing and construction process described in Chapter n now

requires approximately 10 years to complete (see Figure 1). To this must be

added at least one year for initial planning by the utility, devoted to

selecting a site, awarding a contract for the reactor vessel, and preparing

the construction permit application.

More precisely, during this decade, construction permit reviews by the

NRC have generally taken about three years, as compared with the one- to

two-year licensing period common in the last decade (see Table 1). The

NRC target for construction permit issuance is now about 20 months.

Similarly, the average construction lead time for reactors completed in the

early 1970s was approximately five years; reactors slated for completion in

the next several years will take about seven and one-half years to build.

Given the significant economic costs of increasing lead times, this

chapter seeks to analyze the source of recent delays in both the licensing

and construction phases of reactors, and to estimate their cost. Using the

methodology described in Chapter HI, the relative importance of different

delay-causing factors are also assessed.

DELAYS IN THE LICENSING PHASE OF REACTORS

The 24 reactor projects in the licensing sample analyzed in this report

experienced an average of 10 months delay beyond the 21-month target

period established by the NRC. Unfortunately, several delay-causing

factors may occur simultaneously, and the available data are not detailed

enough to permit derivation of the distribution of the total amount of delay

among them.

The sources of delay in the licensing of these reactor projects can,

however, be determined (see Table 2). Most delays were the result of

difficulties in the technical resolution of safety and site-specific environmental standards. These delays occur when the NRC staff questions the

claims or conclusions of the utility's preliminary safety report analysis or its

environmental report. More specifically, two issues dominated delays in the

NRC safety review: questions concerning the reactor design regulations

19
TABLE 1. AVERAGE REACTOR LICENSING AND TOTAL LEAD TIMES,

1956-1977

Number

of

Construction

Calendar Permits

Average

Construction Average

Permit Number of Total

Review Reactors Lead

Average Time a/ Completed Time b/

Year Issued Megawatts (in months) as

1956

1957

1958

1859

I960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

3

1

—1

7

—1

1

3

1

5

14

23

7

14

4

14

14

9

9

9

11

175

175

—22

45

—40

50

552

610

722

764

814

910

764

963

815

1,076

1,069

1,166

1,136

1,120

12

16

—9

12

1—9

5

10

14

7

10

14

18

20

21

35

34

31

26

25

39

of 10/77 (in months)

3

1

—1

7

—1

1

3

1

5

14

21

5

14

3

——

—

——

'"TM

78

49

—

44

48

—68

57

53

54

62

70

82

55

72

93

—

—

—

—

—_

SOURCE: Department of Energy, U.S. Central Station Nuclear Electric

Generating Units; Significant Milestones, March 1978.

a/ As measured from date of construction permit application to date of

construction permit issuance, a period which constitutes the licensing

phase of a reactor.

b/ As measured from date of construction permit application to date of

initial fuel loading.

20
TABLE 2. SOURCE OF DELAYS IN THE LICENSING PHASE OF

REACTOR PROJECTS ISSUED CONSTRUCTION PERMITS,

JULY 1, 1975 - DECEMBER 31, 1977

Number

of

Source of Delay Cases

Public Sector Delays

Substantive Issues

Safety

Basic reactor design changes a/ 8

Radiological containment 6

External accidents 2

Environmental

Geology/seismology 7

Meteor logy/hydro logy 3

Site characteristics 2

Other

Corporate financial/managerial capability 3

Ant i-trust 1

Redundancy/Inefficiency

Bureaucratic delay/data transmission 5

Other government organizations 3

Public Participation 6

Private Sector Delays

Reconsideration of Need for Power 1

Total Number of Reactor Projects 24

SOURCE: Derived from Nuclear Regulatory Commission, Reactor Licensing

Schedule Performance Critique (1977).

a/ Including ECCS (emergency core cooling system).

21

"mnr
LJllil

(usually regarding the reliability of the emergency core cooling system) and

radiological containment (the probability of escaping radiation). Leading

sources of delay in the NRC environmental review were geological and

seismic issues—that is, standards relating to the stability and suitability of

the reactor foundation—and meteorological and hydro logical regulations

concerning the possible interaction between the reactor and the weather or

the reactor and ground water. Less frequent substantive sources of delay

were issues arising out of site-specific accident studies, such as the ability

of the reactor to withstand an airplane impact, and the ability of the utility

to finance or manage the reactor project.

Nonsubstantive types of delays in licensing were found to occur less

often than substantive ones. While the bulk of delays in the licensing phase

of reactor lead time stemmed from safety or environmental issues, six

experienced delays because of public hearings or interventions that prolonged the NRC staff's safety or environmental reviews. Eight reactor

projects were delayed because of redundant state and federal reviews or

inefficiency on the part of the various federal agencies, outside of NRC,

involved in the licensing process. Nevertheless, resolution of substantive

issues was the most frequent source of delays in the licensing of the 24

reactor projects analyzed for this report, and, as discussed below, accounted

for the bulk of the delay they experienced.

Ascribing precise amounts of time to each of these sources of delay is

difficult because typically several delay-causing events occur simultaneously. Furthermore, as discussed in the previous chapter, one source of a

licensing delay may mask a second; extended safety reviews, for example,

may delay licensing of a reactor that would have been delayed for reasons

extraneous to the licensing process, such as unanticipated conservation.

Thus, any estimate of the average amount of time caused by a particular

type of delay during licensing depends to a great extent on judgment.

With this caveat in mind, the bulk of the ten months delay in the

average licensing lead time in the sample used for this analysis can be

ascribed to the resolution of substantive regulatory issues. Delays of this

type averaged about six months, give or take a month, although individual

cases varied from no delays to delays of two years or more. Delays

attributable to public participation also averaged about six months. There is

some degree of overlap, however, between these two categories, since

public participants can, by virtue of their presence, extend the NRC review

of a reactor's safety or environmental effects. These two categories of

delays, however, are roughly equal in impact on total lead time during the

licensing phase.

22
DELAYS IN THE CONSTRUCTION PHASE OF REACTORS

The longest delays in reactor lead time occur, however, after issuance

of a construction permit, when the reactor is under construction. In the

entire sample of 84 reactors under construction (16 of which reported no

delays), there was a total fuel loading date slippage of 2,189 months,

yielding an average delay of 26 months per reactor; that is, on average,

reactors in this sample will take at least two years longer to build than

originally planned (see Table 3). It should be pointed out, however, that, on

the one hand, the average of 26 months applies to reactors at all levels of

completion; thus, because reactors in the sample are on average 27 percent

complete, we can expect the average reactor now under construction, when

completed, to have delays in excess of 26 months. On the other hand, NRC

construction delay data were first collected in their present form in 1974;

thus, some older reactors (10 of the sample of 84) reported earlier delays

without providing an explanation. The aggregate unexplained slippage in the

early phases of these 10 older reactor projects is equal to 196 months of

delay, or about 9 percent of all slippages.

About 80 percent of the total amount of delay reported by reactors

under construction occurred because of events or decisions in the private

sector unrelated to the regulatory decisions of the NRC. More precisely,

reconsideration of future demand is the largest single source of construction

delays, which is not surprising, because reactor projects are held back until

there is sufficient demand for electricity to make the reactor economically

worthwhile. These demand reconsiderations, which accounted for more than

a quarter of all delay in the sample, have occurred frequently because of the

dramatic changes in energy pricing that have taken place in the past five

years.

Financial delays, which accounted for close to 20 percent of all delay,

have occurred because of the lower demand projections, which make

borrowing more difficult to justify, and because of the 1974-1975 capital

shortage, when utilities found themselves without prospective purchasers for

their securities. Delays originating in the public sector also accounted for

nearly 20 percent of all delay in construction, but only 40 percent of that

delay is attributable to NRC changes in designs during construction (socalled "backfitting") or other NRC actions. Longer public sector delays

occurred because of court decisions or state referendums. Typical of such a

non-NRC public sector delay is the case of Callaway Units 1 and 2. In 1976,

Missouri voters opted to forbid the costs of construction work in progress

from being included in the rate base of public utilities. As a result, the

Union Electric Company was forced to defer the Callaway reactors because

of the referendum's impact on financing of reactor construction. In short,

delays attributable to NRC in the sample of 84 reactors currently under

23

~Tnnn
TABLE 3. AVERAGE AMOUNT AND SOURCES OF DELAYS IN CONSTRUCTION PHASE OF REACTORS CURRENTLY IN

PROGRESS a/

Source

of

Delay

Average

Amount of

Delay

(in months)

Total

Amount of

Delay

(in months)

Source of

Delay as

Percent of

Total

Delay

Private Sector

Labor (strikes, low

productivity) 1.02

Materials (late or incorrect

delivery) .97

Financing (inability of capital

markets to generate

funds, or failure of

internal financing) 4.97

Management

Project delays

(problems encountered

during construction) 4.72

Demand delays

(reconsideration of entire

project in view of changing

demand projections) 7.11

Public Sector (NRC regulatory

delay, forced retrofits; court

and referenda decisions outside NRC) 4.95

Unknown (delay

occurred before data

84.42

81.66

417.50

396.67

597.42

415.75

3.86

3.73

19.07

18.12

27.29

18.99

collection commenced)

Total

2.33

26.06

196.00

2,189.42

8.95

100.01

SOURCE: Derived from Nuclear Regulatory Commission, Construction

Status Report, August 1977.

a/ These results are for the sample of all 84 reactors under active

construction as of August, 1977.

24
construction amounted to no more than 173 months in all, or two months per

reactor. The effects of the public sector in its entirety amounted to only

about 5 months per reactor—about 20 percent of all delay in the sample.

A quarter of all delay in the construction phase resulted from

problems that could beset any construction project—labor, materials, and

management delays related to construction scheduling. Delays classified as

related to project management were found to be unrelated to NRC actions.

Source of Construction Delays at Different Stages of Completion

Delays are different in nature, one would expect, for reactors at

different stages of completion. This is true not only because delays

naturally accrue as a reactor is being built, but also because of changes over

time in the public mood regarding nuclear power, as reflected in private and

public sector decisions. Simply put, we expect younger reactors to have less

labor, materials, and project management delays, which grow in importance

as a reactor is built, and more financial and demand-management delays,

because younger reactors were promoted in more recent times, when

economic uncertainty and public concern over nuclear power have grown.

To test for these effects, three groups of six reactors each were selected

from the sample of 84 reactors under construction—the six furthest from

completion, but at least 1 percent complete; the six closest to the mean of

27 percent completed; and the six closest to 100 percent completed. The

sources of delay were then tabulated for each group (see Table 4).

It should be pointed out first that the limited size of the subsamples

employed give rise to some spurious results; for example, zeroes in places

where some delays would have been expected, or vice versa. Still, labor,

materials, and project-management delays acrue with construction, as

expected. The government-related delay category presents somewhat

deceptive results: the average of 7.67 months of government-related delay

for young reactors stems from one reactor with a 46-month delay (the

product of a state referendum), and five with values of zero. This suggests

that, with regard to delays originating in the public sector, there is a chance

of encountering long delays, and hence great uncertainty on the part of

utilities regarding the licensing time of any particular reactor project. This

pattern—a low probability of experiencing a very long delay—was also found

to be the case for federal/state redundancy delays, and for delays resulting

from public participation. Finally, finance and demand-management delays

are significant for young reactors (20 months) and mean-age reactors (19.5

months), but small for older reactors (3.5 months). These two categories

probably serve as a historical measure: the finance category demonstrates

the effects of the 1974-1975 "capital shortage," and utilities' reconsi25

41-047 O - 79 - 5
IJ11L

TABLE 4. AVERAGE AMOUNT OF DELAY IN CONSTRUCTION

PHASE OF THREE GROUPS OF REACTORS

CURRENTLY AT DIFFERENT STAGES OF COMPLETION,

BY SOURCE OF DELAY: IN MONTHS

Source of Delay Young

Labor

Materials

Finance

Project Management

Demand Management

Public Sector

Unknown

Total

Average Percentage of

Reactor Completed

Number of Reactors

SOURCE: Nuclear Regulatory

Group

1.00

0.00

12.83

1.00

7.17

7.67

—

29.67

1.00

6

Mean Group

0.00

0.00

9.17

0.00

10.50

0.00

—

19.67

29.50

6

Commission, Construction

Older Group

5.18

3.79

1.50

13.40

1.92

4.71

14.50

45.00

96.50

6

Status Report,

August 1977.

26
deration of their need for nuclear power has been a major impediment to

reactor construction for young and mean-age reactors, owing to revised

electric load demands and uncertainty over uranium prices, public opinion,

and government policy during their development.

THE FEDERAL ROLE IN EXPEDITING REACTOR LEAD TIMES

These results indicate that government action to expedite reactor lead

times, if that is the government's goal, should be directed at the licensing

phase; once a construction permit has been granted, no change in government (NRC) regulatory behavior, short of revocations of the construction

permit, I/ will have a major effect. Delays in the construction phase of

nuclear reactors could be reduced through better planning of regional power

needs, easier access to financing, and through a stronger economy and

stronger capital markets.

The uncertainties surrounding nuclear regulation may, however, penalize nuclear utilities in the capital market, making "financing delays" a proxy

for uncertainty created by the government. 2/ But CBO has found that the

problems of securing adequate financing are more a product of macroeconomic trends and the decisions of state utility regulators than of the

nuclear licensing process. Investment analysts are divided today as to

whether or not to advise a utility to build a new nuclear unit. Those who are

nuclear proponents see no other alternative to significant additions of

nuclear-generating capacity, and remain optimistic that both the unresolved

"generic" safety aspects of nuclear power—those problems relating to all

reactors as such, for example, the disposal of nuclear waste—and the

uncertainties in the licensing process will "work themselves out." Analysts

who express caution in this regard cite problems such as waste disposal and

iy As occurred in the Seabrook case, where a construction permit was

revoked after a state court found Seabrook's environmental affects

unacceptable. This type of problem is discussed in the next section.

2J The question of how the securities issued by nuclear utilities are

regarded involves understanding the perceptions of investors and

securities analysts. The present analysis is based on a series of

informal interviews with financial analysts conducted by CBO. A

more formal analysis has been conducted by the New York State

Public Service Commission, and is available in prepared testimony by

Frank Herbert, in the matter of Case 26974, "Comparative Economics

of Nuclear and Fossil Fueled Generating Facilities," December 1977,

27

i : nitnr T
decommissioning costs as factors that could jeopardize an investment in

nuclear power, as well as the uncertainties of licensing. Proponents,

however, claim that the added costs and expenditure of time created by

nuclear licensing need not dissuade the nuclear investor, if state regulators

were to allow the incorporation of construction work in progress or an

allowance for funds used for construction and increased interest payments

into the utility's rate base. If these costs were recouped, such delays would

be cost-free to the utility.

A formal analysis of the treatment of nuclear utilities' securities was

conducted by the New York State Public Service Commission. The

commission found that a utility's use of either coal or nuclear fuel had no

effect on the price it offered investors for its securities. Instead, the ratio

of dividends paid to the book value of the utility, the attitude of the

relevant state regulatory commission, and the rate of return on equity were

all found to be important in determining the price of a utility's securities.

Thus, while reactor licensing does create some uncertainty, it is not enough

to dissuade significant numbers of investors from considering affected

utilities' bonds.

The "bunching" of financial delays, also suggests that they are cyclical

in nature. The great majority of financial delays for reactors now under

construction occurred in the "capital shortage" period of late 1974 and early

1975. Given prediction of a slowly recovering economy in the immediate

future, CBO sees financial delays receding as a contributor to longer lead

times. This should be contrasted to effects of downward demand forecast

revisions, which have occurred steadily between 1974 and the present. CBO

estimates that such demand revisions, stemming from lower demand growth

rates, will be increasingly important in the future, as conservation and the

use of alternative forms of power generation or energy provision (such as

passive solar) become more common.

THE COST OF DELAYS IN REACTOR LICENSING AND CONSTRUCTION

CBO has estimated that the cost of a month's delay in reactor lead

time is approximately $8.9 million for reactors undergoing licensing and

$10.6 million for reactors during the construction phase (see Table 5). These

costs were estimated for a. 1,100 megawatt reactor planned in 1976 for

service in 1987. Such a reactor would now be undergoing construction

permit review. These costs are of three types: the costs of replacement

energy, the inflated costs of construction after the delay, and the cost of

carrying charges on capital already expended on the project. The method of

calculating these costs is presented in Appendix B.

28
TABLE 5. COSTS OF A MONTH'S DELAY IN LICENSING AND CONSTRUCTION PHASES OF A 1,100 MEGAWATT REACTOR,

ANTICIPATED ON LINE IN 1987: IN THOUSANDS OF

DOLLARS

Type of Licensing Construction

Cost Phase Phase

Energy Replacement 2,518

Inflation 6,105

Interest 250

Total 8,873

29

CHAPTER V. THE NUCLEAR SITING AND LICENSING ACT

The objective of the Nuclear Siting and Licensing Act, first introduced

in March of 1978 and to be reintroduced in the 96th Congress, is to reduce

the total lead time of reactors from their current level of 10 years to 6.

The major changes proposed in the legislation are:

o Standardization of reactor and plant designs, which would allow

the NRC to issue reactor vendors, such as General Electric or

Westinghouse, a "license to manufacture" pre-approved reactors

or reactor parts for a period of five years;

o Early site review, which would allow the NRC to approve, before

issuance of a construction permit, proposed reactor sites for a

period of 10 years;

o The use of adversary public hearings in the licensing process

would be limited, but a pilot program for intervenor funding and

public participation the planning stage of reactor projects would

be initiated;

o Mandatory review of individual construction permit applications

by the NRC's Advisory Committee on Reactor Safeguards

(ACRS) would be eliminated;

o State and federal reviews would be coordinated under NEPA,

that is, the NRC would be allowed to delegate environmental

reviews, as mandated by the National Environmental Policy Act,

to individual states;

o The NRC would be allowed to issue operating licenses together

with construction permits, and to issue interim operating

licenses before operating license hearings are completed.

With the exception of changes in operating license practices, all of

these reforms are aimed at the licensing phase of reactor lead time.

STANDARDIZATION OF REACTOR AND PLANT DESIGN

The Nuclear Siting and Licensing Act would authorize the NRC to

issue preliminary and final design approvals to reactor vendors either

31

T mm.:
through rule-making or through the issuance of a "license to manufacture"

without application fees. These permits would be valid for five years with a

possible three-year renewal. Standard designs could, however, be revoked,

suspended, or amended by the NRC if "major new considerations" affecting

public health, safety, or national security were discovered.

In fact, standardization will probably be promoted by the nuclear

industry itself, in order to minimize the per unit costs associated with plant

planning and design. For example, a standard 1150 megawatt reactor

manufactured by Westinghouse, called SNUPPS (Standard Nuclear Power

Plant System), is now being incorporated into nuclear power plants by the

Union Electric Company (Callaway 1 and 2), Kansas Gas and Electric

Company (Wolf Creek), Northern States Power Company (Tyrone 1), and

Rochester Gas and Electric (Sterling 1).

In addition, there is some history of standardization in use. NRC has

issued a report on its experiences with standard reference designs for

nuclear steam supply systems. !_/ Three of those designs have been

employed by utilities—one design by Westinghouse, one by Combustion

Engineering, and one by General Electric. The NRC study demonstrated

that its average staff time for safety review was less for standard designs

than it was for custom-designed plants. Nevertheless, large amounts of

NRC staff time are required to investigate and approve the design of a

standard nuclear steam supply system: the NRC data imply that four or five

utilities must employ a standardized design in order to justify the staff time

expended on it. A number of nuclear vendors are now applying for

preliminary and final design approvals for standard designs, and as many as

12 standard designs for nuclear steam supply systems and the balance of

plant could be approved by the end of the 1970s. Some of these designs will

be used in tandem, but it is not clear that standardization will achieve real

savings of time in the NRC safety review, because, unless reactor orders

increase, utilities may not use the approved designs in sufficient number.

The SNUPPS case has, however, apparently reduced NRC staff time.

The use of one design for four power stations enabled the NRC to cut staff

time spent on safety review from an average of 10 to 2.5 man-years per

application. The replicate plant concept (in which a plant applies for a

construction permit using a design that the NRC has already approved for

another plant) is also now being employed by utilities—four utilities have

filed such applications. Time and staff savings are beginning to grow,

I/ Policy Statement on Standardization of Nuclear Power Plants (1977).

32
although initial savings are difficult to obtain, subsequent applications

replicating the same design appear to move more rapidly, as NRC staff

becomes familiar with that design.

The standardization program should help shorten the safety review

process; it could reduce the licensing process by a year, if other aspects of

licensing could also be expedited.

The drawback associated with this proposal is the necessary concommitant freezing of nuclear technology. The standardization of a design for

five or more years implies that no safety innovations can be ratcheted on to

that design. This raises a key issue that Congress must face: is reactor

technology mature enough to warrant significant freezing of design?

Regarding this issue, it should be pointed out that according to the

NRC, over 100 "unresolved issues" concerning the safety of nuclear reactors

remain. These include more than 30 issues for which resolutions could, in

the eyes of NRC, be applied to all affected reactors and "provide a

significant increase in assurance of the health and safety of the public."

Examples of these unresolved safety issues are the occurrence of "water

hammers" (slugs of water pushed through the reactor plumbing by steam,

damaging pipes and valves) and nozzle-cracking in feedwater heaters

(raising the possibility that vessels carrying radioactive water and vapor will

fracture). The absence of a permanent resolution of these issues has not,

however, halted the present licensing process. These issues are currently

resolved on a case-by-case basis. Nevertheless, they may be the target of

retrofits. Moreover, the NRC's reappraisal of the Rasmussen Report may

raise new issues regarding the safety of currently operating reactors

and the designs of forthcoming reactors.

The majority of the issues currently seen as capable of providing a

significant increase in the public's safety could be resolved by 1980. Some

of the resolutions reached by NRC staff will no doubt meet the standard of

"significant new information relevant to the design," which the bill defines

as the criterion for mandating changes in standardized designs. Thus, some

changes in standardized designs must be anticipated, which would undermine

some of the possible benefits of standardization. It should also be pointed

out that current NRC procedure prohibits backfits of designs (Rule 50.109)

unless it can be demonstrated that they provide "substantial additional

protection." It is difficult to imagine that the bill's criterion that changes in

standardized designs may be mandated only if they fail to "comply. . . with

regulations for the public health and safety" would be more stringent than

the current backfitting rule. It is therefore unclear that the bill's provisions

would eliminate more backfitting then now occurs.

33

••mnr
A meaningful standardization policy would eventually reduce paperwork and regulatory lead time, but it would also bring about further savings

in the construction period, if nuclear vendors felt confident enough in the

permanence of reactor design to develop an inventory of standardized parts.

Creation of such an inventory, which now, understandably, does not exist,

could reduce construction time by six months. But given the chance that

The NRC may require safety innovations in the next two years, the nuclear

industry may not receive the assurance that permanent design standardization has arrived. Thus, standardization will probably not reduce construction lead times.

EARLY SITE REVIEW (ESR)

The NSLA would allow site banking for future reactors, in the hope

that site-related environmental issues could be resolved before reactor

licensing. Under present policy, only individual site-specific issues can be

resolved, and an entire site cannot be approved before issuance of a

construction permit.

As proposed in the Nuclear Siting and Licensing Act, early site

review could operate as follows: A utility's application for an early site

review would respond to the demands of the NRC for environmental data,

and would include a rough indication of its future need for power. Final

proof of its need for nuclear generated power would not be requested until

the construction permit review of the reactor itself. The ESR application

would thus include rough specifications of the estimated level of radiological and other effluents, and the type of cooling system that would be

used—data necessary to conduct an adequate environmental review. An ESR

permit would be valid for any reactor built within those estimates and rough

specifications. The permit would be valid for 10 years and would allow the

applicant utility to prepare for construction and perform limited construction activities at its own risk.

Under current policy, a utility can apply for only a limited early site

review (LESR), which deals with a subset of ESR considerations. Like ESR,

LESR has the advantage of resolving, as far as the NRC is concerned,

important issues at an early stage of the licensing process. Without new

statutory authority, however, the NRC is unable to issue advance site

permits, and therefore cannot allow basic construction work, such as

assemblage of construction shacks, excavation, land clearing, access roads,

and so forth, to begin. Such activities now can be conducted in advance of

issuance of a construction permit only under a limited work authorization,

and the issuance of a limited work authorization requires clarification of a

broader set of issues than a single site review.

34
The advantages of early site review can be summarized: if successfully implemented, the procedure would allow early resolution of environmental questions before substantial resources are devoted to developing and

defending the reactor design itself before the NRC. ESR hearings would

also require public participation, if any, early in the licensing process, and,

if coupled with active enforcement of the proposed regulation prohibiting

issues with "prior opportunity," it would limit interventions to non-site

matters later in the construction permit application process. Licensing

times under ESR could be expedited by doing preparatory work before the

reactor is needed. In all, if ESRs are carried out before construction permit

review, environmental reviews could be shortened by a year.

These benefits, however, might not be realized, inasmuch as ESRapproved sites would have to be referred to states for their approval. State

requirements for environmental review can be more stringent and timeconsuming than NEPA standards, and they might require more data than the

NRC's early site review, particularly in nonenvironmental issues, such as the

utility's need for power, alternative sources of power plant specification,

and so forth. Thus, although the federal regulatory process could expeditiously approve a site under an ESR arrangement, a state could hold up site

approval under its own laws. (The problem of state/NRC coordination is

discussed below.)

Furthermore, although early site review would reduce the duration of

construction permit reviews, it could lengthen the planning time involved

before the nuclear steam supply system order and subsequent construction

permit application. The latter could occur because the preparation and

evaluation of the environmental data needed for an early site review would

precede development and review of the application for a construction

permit. Thus, ESR would not benefit utilities that do not have the luxury of

planning a reactor that is not immediately necessary. Rather, ESR moves

consideration of site-related issues to a point in time before the utility's

need for new power is felt. Moreover, the specifications of an ESR must

therefore be valid for a longer period of time than the site specifications

used in a construction review application. With respect to some site-related

issues—notably population density—planning horizons might be extended long

enough to make projections uncertain or meaningless. The advantages of

ESR would be eliminated and, in fact, the review process could become even

longer, if such crucial factors as population density change significantly

during the planning period for which the ESR is valid. Nor is an ESR without

cost to the utility. Not only does the site review require a thorough analysis

of meterological, seismic, population density, urbanization trends, and other

factors, but the basic design of the plant must itself be sufficiently known

to provide parameters for effluent levels and other design-related characteristics with which the site must be proved compatable. The cost of such

35
work can exceed $10 million. Thus, a further problem is the integration of

site and reactor design parameters. In practice, the suitability of a site is

not independent of a reactor design, and regulatory effort will have to be

expanded to coordinate the two effectively.

An additional drawback of ESR is the incentive it provides towards

"grandfathering," which could bias regulatory decisions. Grandfathering

occurs when a utility spends large sums of money on site preparation and

advance construction work, and then argues that denial of a license would

represent a severe economic loss. Such a process undermines the integrity

of the licensing process, particularly with respect to the decision as to

whether nuclear power is needed or whether a plant is needed at all. For

example, the cost-benefit analysis of a nuclear plant used in an environmental impact statement uses the cost of completing a nuclear facility in

its calculation as opposed to the entire cost of building it, which understates

the true costs of the plant. That methodology allows grandfathering to

circumvent the function of licensing. The NSLA states that costs incurred

prior to construction permit issuance are brought on at the utility's risk, but

such sunk costs have been treated deferentially, despite existing caveats not

to do so. ESR grandfathering would especially undermine the present NEPA

analysis, which weighs the costs and benefits of the proposed nuclear

facility against the costs and benefits of alternatives.

Nevertheless, ESR could have ameliorated some recent delays in the

licensing process. Clinton 1 and 2, North Anna 3, Diablo Canyon 1 and 2,

Pebble Springs 1 and 2, and Pilgrim 2 all experienced delays because of

geologic faults near their sites, with an average delay of over a year. In

most, if not all of these instances, an early site review might have resolved

the seismology issue far earlier in the licensing process. This would have

been extremely advantageous in the case of Diablo Canyon, where fuel

loading of a virtually completed reactor now awaits a second review of the

seismological character of the Hosgri fault, located two miles away.

Although the tests indicating the existence of the fault had not been run

when the construction permits were issued for the two Diablo Canyon units,

(these tests were performed by Shell Oil in the late 1960s), the chance of

avoiding a situation in which a completed reactor stands idle is worth

pursuing. In the other cases, a body of seismic data that could have been

applied to an early site review did exist.

HEARINGS AND INTERVENTIONS

The issue of hearings and interventions is a controversial one. On the

one hand, nuclear industry representatives and nuclear power proponents

often claim that public participation in NRC hearings is a major source of

36
delay and uncertainty in the licensing process, and that the goal of many

intervenors goes no. further than simple obstruction of nuclear power plant

siting. On the other hand, defenders of the intervention process consider it

a way of preserving the representation of affected communities in the siting

decision.

The Nuclear Siting and Licensing Act makes the following proposals

in relation to public participation:

o The subject matter of interventions would be limited to topics

for which there has been "no prior opportunity" to hold a hearing,

unless relevant new information can be proved to have been

discovered;

o The NRC may give priority to construction permit applications

of utilities that allow "advanced planning"; that is, allow the

NRC and the interested public to participate in the planning of

the reactor. This procedure would lead to an early identification

of issues that could become the subject of subsequent intervention. This, however, it would not be a mandatory procedure,

and could not be used to formally resolve issues at the planning

stage of the process, before actual review;

o A pilot program would be set up for the limited funding of some

intervention on the part of the public. Funding decisions would

be determined by the NRC, based on criteria including the

intervenor's interest, access to alternative funds, and the effectiveness and importance of the intervenor's contribution. Payment would not necessarily extend to total compensation;

o Legislative hearings would replace adjudicatory hearings concerning environmental matters, unless the hearings officer, who

may impose an adjudicatory hearing, finds a factual difference

between the parties.

Resolution of the question of interventions is a political matter.

When coupled with other provisions—in particular, coordination of federal

and state regulations and early site approval and standardization—

enactment of this proposal should make hearings go somewhat more quickly,

owing to the "no prior opportunity" criterion for admissable intervention.

For example, this test would rule out intervention on site-related environmental grounds, even if a site permit has been issued 10 years before the

construction permit application. This procedural rule places a great

premium on foresight, particularly when applied to early site review and

standardized design. Nevertheless, such foresight is necessary to avoid the

37
I

relitigations that would render early site reviews and standardized design

approvals ineffective in reducing lead times. Thus, the successful implementation of early site review and design standardization would to some

extent preclude public participation at the construction permit stage.

The NSLA provisions for advance planning would allow the NRC to

encourage public input into a utility's planning process before its formal

application for a construction permit. As noted earlier in this report, delays

early in the licensing process to accommodate the concerns of intervenors

have often served the purpose of avoiding longer delays in public hearings

later in the review process. Open advance planning could lead to an early

identification of issues, which could be resolved before a reactor design is

formalized and its application docketed—a procedure that would at once

protect public participation and expedite the licensing process. Under

NSLA, however, findings resulting from advance planning would not be

binding, which would reduce this effectiveness of the proposal.

The bill also substitutes legislative hearings for adjudicatory ones.

Adjudicatory hearings grant intervenors the right to cross-examination and

the right of discovery, the traditional tools of a participant in an adversary

proceeding. Under a legislative format, questioning is conducted by a

hearings examiner, who may, if he so chooses, use lists of questions

submitted by the parties. Should the transcript of a legislative hearing

reveal a difference between the parties concerning a matter of fact, an

adjudicatory procedure would be carried out. This "hybrid" form of hearing

reverses the past practice of waiving the right to an adjudicatory hearing

should both parties find no factual difference between them. Instead, an

adjudicatory hearing would require proof of a factual disagreement. 2]

The "no prior opportunity" rule would probably eliminate some

hearings issues, but it might present legal questions as to whether or not a

prior opportunity existed. Should such legal challenges develop, the time

Z/ It should be pointed out that NRC does have procedural rules for the

conduct of hearings, which deal with such matters as: the summary

disposition of issues without merit, the exclusion of issues for which

there exists an applicable precedent, or the identification of adjudicable issues. In their study "Nuclear Power Plant Licensing:

Opportunities for Improvement," 1977, the NRC Study Group concluded that "no data has been revealed by this study which suggests,

either that there is any deficiency in the available procedural tools, or

that they were not fully used. . . In any event, vigorous application of

these rules is one of the beneficial actions which can be taken under

existing laws. . ."

38
saved from the "opportunity" rule could be eradicated. Persistent intervenors might also force the courts to decide whether issues should have been

litigated by adjudicatory as opposed to legislative procedures.

There are grounds for believing that open advanced planning is a

useful innovation, and consideration might be given to making this

procedure mandatory. This is based on the assumption that as long as the

concerned public has access to the licensing process, its concerns and beliefs

should be accommodated earlier, as opposed to later, when the costs of

accommodation, in both time and money, are greater. Utilities are

understandably fearful of admitting intervenors into the planning process.

Yet groups perceived as adversaries are capable of finding areas of

agreement and compromise, if provided with the opportunity. A model for

such cooperation can be found in the National Coal Policy Project, sponsored by the Center for Strategic and International Studies of Georgetown

University. The Coal Project consisted of a panel of industrialists and

environmentalists who met throughout 1977 to formulate principles concerning coal production on which they could agree. This procedure for

finding "common ground" could be incorporated into the nuclear licensing

process.

The ultimate impact of the NSLA proposal to authorize limited

funding of intervenors is unclear. Insofar as the funding proposal falls far

short of a blanket funding of all intervenors, it may not have the presumed

effect of encouraging intervention—and hence delay—in the licensing

process. Subsidizing intervenors may also improve the specificity—and

hence the quality—of interventions, as well as make the process appear

fairer to intervenors who can be "out financed" by utilities.

Finally, despite allegations that the intention of intervenors in public

hearings is to obstruct the licensing process, they have made productive

contributions to the regulatory process. Several generic issues—that is,

those common xjo all reactors—were first raised by intervenors, for example,

the reliability of the emergency core cooling system, and fuel rod densification. In some instances, NRC staff actions on questions, such as

radiological emissions or seismic considerations, have vindicated the positions taken by intervenors. An expression of this view can be found in a

1974 decision of the Atomic Safety and Licensing Appeal Board, which

rejected a claim by Gulf States Utility Company that intervenors had, in

general, "nothing to contribute." The ALAB stated that:

Our own experience . . . teaches that the generalization has no

foundation in fact. Public participation in licensing proceedings not only 'can provide valuable assistance to the

adjudicatory process1, but on frequent occasions demonstratably has done so ... many of the substantial safety and

39
.IIL

environmental issues which have received the scrutiny of

licensing boards and appeal boards were raised in the first

instance by an intervenor.

This is not to say that every intervenor is equipped to

make a meaningful contribution . . . (but) • • • the

Commission's summary disposition rule provides an ample

safeguard against an applicant or the regulatory staff being

required to expend time and effort at a hearing on any

contention advanced by an intervenor which is manifestly

unworthy of exploration.

ADVISORY COMMITTEE ON REACTOR SAFEGUARDS (ACRS) REVIEW

In 1957, when ACRS was created, each new reactor design was

significantly different from the one preceding it. This is no longer the case.

Commercial reactor designs are now sufficiently homogeneous so as not to

warrant mandatory ACRS review of all nuclear reactor proposals. Elimination of mandatory ACRS review of every reactor proposal would save two to

three months per reactor license—the time now allocated to ACRS hearings.

Moreover, ACRS staff time savings resulting from this change could

be applied to ACRS review of standardized designs. As noted earlier,

standardization could reduce licensing time if approved designs are used

often enough to justify the time spent by NRC staff in approving them.

Allowing the ACRS to involve itself heavily in the process of approving

Preliminary and Final Design Analyses would make the requisite number of

applications needed to justify the effort expended to approve a standardized

design that much smaller. The ACRS would also be able to devote more

attention to early site reviews, if freed from its responsibilities regarding

each application for a construction permit.

This is not to argue that ACRS review is redundant or without effect.

In the Diablo Canyon case, the ACRS insisted that the utility and NRC

continually re-evaluate the former's assumptions concerning seismic activity

near the plant. Thus, ACRS can provide significant insight into problems

regarding a reactor, and the NSLA would allow the ACRS to become

involved in such cases as it sees fit.

40
COORDINATION OF STATE AND FEDERAL REVIEWS UNDER THE

NATIONAL ENVIRONMENTAL POLICY ACT (NEPA)

The Nuclear Siting and Licensing Act attempts to strike a balance

between the right of states to make their own decision concerning power

supply priorities while providing for a more predictable and expeditious

licensing process. The bill would authorize the NRC to approve programs

submitted by the individual states for making evaluations and determinations regarding environmental needs for power issues. If approved, a state

review process would replace the NRC review process, and state decisions

concerning environmental standards and needs for power would be binding at

the NRC level. The NRC would, however, retain its authority over

radiological issues. If a state's program is not approved by the NRC, states

could still transmit data to the NRC for its consideration, but without the

weight of a final finding.

The substance of state and federal reviews of environmental issues and

a utility's need for power is often the same, yet their hearings are often held

sequentially, thereby causing delay. Further, approval by one does not imply

approval by the other, thereby adding uncertainty as to outcome. The

matter is also complicated by the fact that some states pursue a strict

regulatory process for nuclear power, requiring environmental reviews of

two years of intense consideration of alternative sources of power. This

reflects the fact that different states have different attitudes towards

nuclear power. Preemption of states' review would deny these states their

existing right to view nuclear power as a least or less preferred alternative.

States' rights have been preempted, however, in the area of radiological

emissions by the Supreme Court, although the recent amendments to the

Clean Air Act have given states the right to review radiological emissions.

Although state regulation is an obstacle to the licensing of only a

subset of all reactors, delays of over a year have been experienced because

of replicated hearings, 3/ which this proposal could eliminate. The bill

would also allow NRC to retain control over environmental standards,

through its power to approve or disapprove state review procedures and its

authority to suspend funding and support if the approved procedures are not

carried out. Thus, this proposal could expedite licensing without compromising environmental standards, unless such a compromise were to become

part of an official policy of the NRC.

3/ See New England Federal Regional Council of Energy Resource

Development Task Force Bulk Power Committee, "A Report on

Nuclear Power Plant Delays in New England" (Nov. 1976).

41

HIT
Two particular areas of state reviews raise issues concerning the

efficacy of NSLA proposals regarding public intervention. The first is the

matter of substituting legislative for adjudicatory hearings; the second is

authorizing states to impose time limits on deliberation and hearings.

Although these proposals carry the promise of expeditious terminations of

lengthy proceedings, the final result may not be as intended. This is because

time limits provide utilities with an incentive to withhold information, if

faced with an adversary proceeding and intervention. Although such

potential stalling tactics would not extend hearings past their deadline, they

could result, not only in suboptimal decisions, but also in courts finding that

sufficient evidence had not been presented and that intervenors had

therefore been denied due process. Such an outcome could eliminate the

time savings gained by the imposition of hearings deadlines.

This legislation does not, however, preempt the right of states to place

more stringent licensing requirements on reactor projects than those of

NRC. Thus, while this proposal would expedite reviews by eliminating

duplication, it would not change the requirements of the more stringent

states.

This system of federal/state coordination could have played a constructive role in recent cases. The LaSalle project, for example, underwent

hearings before the state of Illinois Commerce Commission in 1971 concerning environmental questions raised by an intervening group of local farmers.

Many of the same issues were raised in 1973 hearings before the ASLB,

creating a six-month delay. In the case of the Jamesport reactor, a threeyear New York State review, requiring more material than the NRC review,

was conducted. Since New York State's hearings and review process is

among the nation's most diligent, formal approval of its findings by NRC

would facilitate reactor licensing.

CHANGES IN OPERATING LICENSE PRACTICES

The NSLA also proposes the use of "one-stop" licensing for reactors.

Under a one-stop licensing system, both a construction permit and an

operating license would be issued after the construction permit review. This

is not possible under current statutes.

Operating license reviews consist of checking to see if the design

submitted for the reactor has been properly carried out. Public hearings are

held on this issue or on any other issue that an NRC hearings officer will

allow. Operating license hearings are rarely a major source of delay in

getting reactors on line, except in cases where new and significant information has been discovered. Otherwise, operating license review is usually

timed to coincide with the completion of plant design and construction.

42
Nevertheless, the operating license review does represent another source of

uncertainty to the utility. The one-stop system, as proposed in the Nuclear

Siting and Licensing Act, would diminish some of this uncertainty, particularly by eliminating operating license hearings, except, as the Nuclear Siting

and Licensing Act states, when there is "prima facie" evidence that

"significant new information" or a "significant new issue" exists, or if the

terms of the construction permit/operating license have been violated.

Thus, a utility would be subjected to an operating license hearing and review

only if substantive new discoveries were made concerning the reactor.

This gain in certainty may, however, be achieved at the expense of a

possible loss of time. A problem with the one-stop system is the quantity

and specificity of information that the utility would have to provide the

NRC. The appropriateness of the information provided by utilities to the

NRC is a perennial issue, expressed in the "doctor-patient" hypothesis

concerning reactor delays, which states that utilities frequently lack the

technical capability to deal with the NRC directly. Several reactors in the

licensing sample investigated in Chapter IV were delayed because of poor

data transmission.

The NRC states that attempts to secure better quality information on

construction permit applications from utilities have met with some success,

yet much of the information that the NRC receives is still boilerplate

language that is available on computer tapes from architect/engineering firms

and reactor manufacturers. One-stop licensing would increase the requisite

amount of information needed to process an application. Under one-stop

licensing, most of the reactor would have to be designed by the time of

construction permit review, as opposed to the present 30 to 35 percent.

Insofar as on-site inspection of a reactor undergoing construction would be

the NRC's primary vehicle for making final safety determinations now made

in the operating license review, a far greater degree of specificity would be

required when docketing a one-stop license then at present with only a

construction permit. Moreover, the two rounds of questions issued by NRC

staff, and delays on the part of utilities in answering them, frequently delay

the construction permit review. This is not to argue that less information

should be required when docketing a construction permit application

(although an NRC review of required information for construction permit

application acceptance and further NRC cooperation with construction

permit applicants would be productive in reducing long licensing periods),

but that requiring more information could possibly eradicate any time

savings generated by eliminating many operating license reviews. Furthermore, utilities, fearing a rigorous adversary atmosphere, are loathe to put

forward more information than they believe necessary. Thus, the greater

amount of information required to process a construction permit/operating

license may elicit a reticent response from utilities wary of the regulatory

43

-nnr
The bill also allows for the issuance of interim operating license's

while operating license reviews are being conducted, which would allow a

reactor to operate if in response to an "urgent public need." This is likely to

speed reactor start-ups only when an unlicensed reactor was presumed safe

before formal hearings.

THE IMPACT AND SIGNIFICANCE OF THE NSLA

Impact of the NSLA on Lead Time

In estimating the reduction in lead time that would probably result

from enactment of the Nuclear Siting and Licensing Act, it should be

pointed out that the time savings generated by each reform proposed by the

act cannot be added to calculate "total savings." This is because many of

the delays that individual reforms address occur concurrently; therefore, in

order to reduce total lead time, several reforms must operate simultaneously. The total impact of the NSLA is judged by this analysis to reduce

total lead time by 18 to 24 months, if completely and effectively implemented. Creation of reactor component inventories by the nuclear industry

would be the only measurable effect of the NSLA on the construction phase

of lead time. If no inventory of parts were created, the savings in time

would occur only in the licensing phase, which would be reduced by 12 to 18

months. A full 18-month saving would reduce the capital cost of a reactor

by 9 percent, in turn reducing the cost of nuclear-generated

electricity by about 7 percent. These savings could not occur, however,

until the later 1980s.

The standardization section of the Nuclear Siting and Licensing Act is

not a significant new innovation when compared to procedures already being

developed within the NRC; however, this legislation would give standardization the support of the Congress. An effective standardization

program could reduce licensing times by a year. Furthermore, inventorying

of parts could reduce construction times by six months, if ratcheting of

standardized designs were discontinued. The latter seems unlikely, however,

given the large number of unresolved issues pending NRC attention.

Early site review could produce savings of six months to a year, in

cases in which the time is available to perform longer advance planning

activities regarding the site. These savings would occur because site

banking would reduce the review necessary to obtain an limited work

authorization, which generally takes 12 to 15 months and permits basic site

work. Combined ESR and standardization could reduce licensing and

construction times by two years, if standardization is sufficiently rigid to

44
promote enough industry confidence to merit its stockpiling of crucial

forgings and parts, and if utilities have the flexibility to move site reviews

forward from the construction permit review period to the advance planning

period.

The effect of steps taken to expedite public hearings are uncertain

because of the possibility of a new set of legal contentions concerning

implementation of the new procedures and the possible denial of due

process. More effective management of hearings by ASLB hearing officers,

using existing regulations governing the scope and conduct of interventions,

could prove as effective as the bill's proposed reform.

Delegation of some NEPA authority to the states could reduce lead

time by several months for reactors that undergo stringent state reviews,

insofar as redundancies with the NRC's NEPA review would be eliminated.

Savings resulting from elimination of mandatory ACRS review and elimination of operating license hearings through one-stop licensing would be

minimal.

In sum, if standardization were effectively implemented and if early

site reviews provided definitive approvals for sites, despite the possibility of

changing demographic parameters during the planning period, the licensing

process would consist of an analysis of site/design interface and NEPA

compliance, including the question of the utility's need for power. Viewed

optimistically, this procedure could take from 12 to 18 months, in the

absence of serious and legitimate contention by intervenors or NRC staff.

This would represent a savings of approximately one year, not counting

additional advance planning time.

Will New Obstacles Arise in the Future? It should also be pointed out

that new obstacles to the expeditious licensing and construction of reactors

may take place in the future, just as financial delays became frequent

several years ago, owing to capital shortage problems. Conservation and the

technological maturation of alternative technologies, as stressed in the

National Energy Plan, may force re-estimation of the need for power from

the central station delivery system. Similarly, waste disposal and decommissioning problems and costs may force economic reappraisals of the

nuclear option, making the "need for power" and the comparison of nuclear

with alternative sources of power more important licensing issues than they

have traditionally been. Nevertheless, nuclear power, with its high capital

costs and low operating costs, is an attractive proposition for regulated

utilities; thus, the need for nuclear power may overshadow safety and

radiological obstacles to quick licensing in the future, especially as NRC

resolves, for licensing purposes, generic safety issues. This would not affect

licensing time, but rather could force utilities to defer construction of

plants with approved construction permits until demand catches up with the

45

TTT1T
J1L lilevels of capacity that nuclear additions would represent. This

situation may indicate the delays of the 1980s, which could necessitate a

more rigorous and regionally oriented system of demand estimation for

electrical generating facilities than is provided by the Nuclear Siting and

Licensing Act.

The Significance of NSLA: The Issue of Maturity and Acceptability

The Nuclear Siting and Licensing Act represents a movement in the

direction of a full-scale endorsement of nuclear power as a mature

technology. The essence of a mature and acceptable technology is that its

risks to the public are known and are no greater than the risks the public

knowingly endures. At that level of risk, improvements would be legitimized in terms of their cost effectiveness, as opposed to a simple concern

for safety.

The question of the maturity of nuclear technology has, however,

recently been called into question as a result of the NRC's withdrawal of

support, for the Rasmussen Report. In the absence of this report, no official

estimate of the chances of a nuclear accident exist.

The current bill heads in the direction of an endorsement of nuclear

power as mature and acceptable by:

o Implementing formal procedures for licensing standardized

designs;

o Suggesting consideration of the "cost of additional safety requirements";

o Using interim operating licenses; and

o Eliminating adjudicatory hearings concerning the "need for

power" and standardized design components.

The licensing of standardized designs, given its implicit commitment

to minimization of future design change, represents a willingness to regard

the present state of the art in reactor radiological safety and environmental

acceptability as sufficiently developed so as to be predictable and acceptable. Although the bill clearly does not exclude the possibility of ratcheting

safety innovations onto standardized designs, compromises of this willingness would render standardization ineffective. Similarly, the bill's mention

of consideration of costs of additional safety requirements raises the issue

of the applicability of cost-benefit analysis to marginal safety improve46
ments. This leads to the question of whether or not implementation of a

potential safety innovation would be postponed if it were extremely costly,

or conversely, if the government would be willing to shut a plant down or

allow a plant to close if safety improvements were too costly. In 1974, the

Indian Point 1 reactor was closed because its parent utility did not want to

absorb the cost of installation of an Emergency Core Cooling System, an

important safety innovation. Willingness to impose such innovations,

regardless of the cost and consequences, can be seen as expression of a

judgment that nuclear technology was not mature, and hence warranted a

regulatory posture that minimized the chances of a catastrophic accident of

unknown probability. It is unclear whether or not the proposed programs of

standardization will, when confronted with new safety technology, maintain

the assumption of technological maturity upon which many of the regulatory

reforms proposed by the NSLA are based.

The proposed use of interim operating licenses represents another

small step towards an implied judgment of maturity. Operating license

review has traditionally served the function of a last check by the NRC to

ensure that all conditions outlined in the construction permit and its

subsequent amendments have been met. Allowing a reactor that has not had

a final review of its complete design to operate for a year, with possible

extensions, reflects the belief that a reactor not yet in compliance with

specified safety standards presents no new risk to the public.

The elimination of adjudicatory hearings on NEPA issues, particularly

the "need for power" issue, also reflects movement towards a judgment of

maturity. Previous policy has been to view nuclear power issues as so

sufficiently uncertain as to merit adversary proceedings; however, that

standard is not reflected in the elimination of direct cross-examination in

hearings concerning electricity demand and its provision, or other NEPA

issues. Nevertheless, the bill preserves most of the rights of participation

now found in the licensing process. Similarly, states would be permitted

under NSLA to make a need for power determination, but utilities would be

able to provide the data necessary for such a review as little as 60 days

before hearings on the subject, which may not allow enough time for a

thorough review.

In sum, the Nuclear Siting and Licensing Act could shorten the

licensing phase of reactor lead time by 12 to 18 months. The NSLA does

not, however, exhaust all approaches to licensing reform and reductions in

the lead times of nuclear reactors. In the next chapter, two other

approaches are described: one would require no new legislation; the other is

one in which the government endorses a "full-push" towards nuclear power.

47

"TTTF"
ilLU-1.
CHAPTER VI. ALTERNATIVE APPROACHES TO REDUCING REACTOR

LEAD TIMES

Reforms proposed by the NSLA do not exhaust all possible reforms or

approaches to the problem of increasing reactor lead times. This chapter

discusses reforms that could be internally implemented by the NRC and

coordinated with the NSLA; an alternative "full push" approach, in which

reactor lead time is reduced through a redefinition of the roles of relevant

government agencies and the concerned public, is then described.

IN-HOUSE NRC ACTION

Without new statutory authority, the NRC could take several actions

to reduce licensing times. Many of these proposals can be found in NRC's

"Denton Report." \J The NRC could make greater use of existing procedures to resolve generic issues, which are now usually litigated on a case-bycase basis; for example, uranium availability and the environmental effects

of uranium mining and processing, the environmental effects of alternatives

to nuclear power generation (coal), reactor decommissioning, and fuel

reprocessing. Moreover, insofar as nuclear power is now a contributing

source of electricity supply, issues such as the potential supply of uranium

and the treatment of long-term radioactive wastes could be resolved as a

matter of formal national policy. There are also issues that do vary on a

case-by-case basis and hence cannot be resolved generically (such as a

utility's financial capability or its alternatives to nuclear power). But these

could be resolved by using "generic methodology"—that is, by establishing a

methodology that can be used in each case to resolve an issue even though

any two cases may have different specific circumstances.

Generic resolution has several advantages. First, as is obvious, NRC

reviews would become shorter as more project-specific issues are defined

generically. Second, generic resolutions would limit intervention to issues

related to an individual reactor and site; when used to define a methodology,

it would limit intervention to the question of whether or not the methodology had been properly applied. Furthermore, it would add certainty to

\J Nuclear Power Plant Licensing; and Opportunities for Improvement

(June 1977).

49
JllliJ.

NRC decisions, and provide utilities with an a priori understanding of NRC's

position on salient issues. In cases of fact, generic resolutions of issues

could be reached through hearings; in cases of policy, generic rule-making

could be used to establish policy. For example, a rule establishing a dollar

value for radiation releases has been applied to a large number of cases.

The major disadvantage of rule-making is the possibility of subsequent

judicial review affecting a large number of completed applications. A single

court decision may have a profound effect on the licensing process. For

example, in July 1976, a federal court of appeals decision invalidated a

then-existing NRC rule for considering the environmental effects of the

nuclear fuel cycle in construction permit and operating license proceedings,

and the NRC was forced to suspend granting of limited work authorizations,

construction permits, and operating licenses for more than three months,

until a new rule was prepared. On balance, however, additional rule-making,

where appropriate, would probably be an effective innovation in the

licensing process, not only because of its ability to resolve generic issues,

but also because it would represent an important step towards defining a

national policy concerning nuclear energy. If rule-making is to be put into

wider use, however, guarantees would need to be provided for continued

public: input into rule-making proceedings, inasmuch as rule-making could

not substitute for hearings where factual questions are at issue.

The NRC could, without new statutory authority, continue to promote

the granting of limited work authorizations, which may be issued after the

environmental review of the proposed plant has been completed. Most such

authorizations allow the utility to do only basic site preparation work,

although a second type (an LWA-2) allows the installation of structural

foundations. The function served by limited work authorizations—giving

utilities a. head start on construction activities—could be furthered by a

policy of providing, on a case-by-case basis, a specific list of permissible

preparation and construction activities. The Nuclear Siting and Licensing

Act reiterates the authority of the NRC to initiate such a policy.

The quality and quantity of the information received by NRC is often

a crucial variable in determining reactor licensing times. Although two

rounds of NRC questions and applicant answers are the rule after docketing

of the applicant's preliminary safety analysis report (the safety component

of the construction permit application), the duration of those rounds varies

greatly. The NRC currently meets with applicants to help them prepare for

docketing, and issues a standard format guide for applicants to use in

preparing their applications. The NRC is considering both additional predocketing meetings and a reassessment of the format guide, including a

review of its need for currently solicited information. In CBO's view, both

of these reforms would reduce construction permit delays.

50
Similar changes could be made in NRC's acceptance review, which it

conducts to determine whether the utility's application, as submitted,

contains sufficient information to merit docketing. Present policy is to

docket an application if it contains at least 80 percent of the requisite

information. By expanding the acceptance review from its present 30 to 60

days, subsequent time spent soliciting information from utilities could

probably be reduced.

THE "FULL PUSH" APPROACH

Proponents of a full push to nuclear power argue that the present

institutional structure of the licensing process no longer conforms to the

realities of and the needs for nuclear power. These proponents point to the

licensing procedure used in Western Europe, where the interior ministries

and nationalized utilities cooperate in the licensing procedure, with limited

access on the part of the public. A "full push" example of reactor licensing

in the United States would operate as follows:

o The NRC would be confined to issues of radiological safety.

Licensing itself would be carried out by the Department of

Energy (DOE), where the Atomic Safety Licensing Board (ASLB)

of the Atomic Safety Licensing Appeals Board would be located;

o Only complete construction permit applications would be

docketed. Upon receipt of a complete application, the NRC

staff would hold public meetings with the utility, which would

replace the current two rounds of questions and answers. A

safety evaluation report would then be immediately released;

o NRC would refrain from analyzing need for power and selection

among alternative energy sites in its review, remanding these

issues to the states. Since the 1971 Calvert Cliffs Coordinating

Committee Inc. v. AEC 2/ decision, every proposed plant must

be weighed on a cost-benefit basis against a group of theoretical

alternatives using different fuels at different sites. Although

the utility's decision to build a nuclear reactor at a specific site

reflects such a weighing of alternatives, the review mandated by

the court's interpretation of NEPA includes the costs of environmental damage (through radiation, thermal discharge, and so

forth), and secondary benefits, such as tax receipts of local

government, new jobs created and ensuing multiplier effects, and

the like. This procedure would be eliminated through statutory

449 F. 2d 1109, D.C.C.A. 1971.

51

TTTiT
revision, and the judgment of state officials concerning need for

power and selection among energy alternatives would be final;

o Hearings before the ASLB, within DOE, would be held only at the

construction permit stage, as in the case of one-stop licensing

(discussed in Chapter IV). Contested hearings would be held only

if intervenors presented prima facie evidence of a factual

discrepancy with NRC staff reports. Questioning would be done

only by hearings offices, although intervenors could provide lists

of suggested questions to the officers involved. Final appeals

would be to the Office of the Secretary of Energy;

o Finally, and, in the eyes of the nuclear industry, perhaps most

importantly, the NRC would abandon the present moving standard of "as safe as practicable" in favor of an approach that

could be termed "as safe as economics permits." Using this

latter standard, the NRC would institute a set of standardized

designs that were deemed "safe" for both the nuclear steam

supply system and the balance of plant. These designs would

receive a final design approval and would be immediately available for reference for a period of five years. Any revision in

these designs would be approved only if their value in terms of

additional safety could be justified when weighed against their

costs, as is now the case in other industries.

Reforms of this kind could save up to a year in the licensing process.

Because of the standard two rounds of NRC staff questions and utility

responses, the period of time between docketing of a license for a

construction permit and issuance of a staff safety report is frequently

between 12 and 18 months. This time could be reduced to six months. Such

a procedure would, however, require the provision of more information to

the NRC by utilities. As discussed earlier in this chapter, although the

licensing process would be shortened by better information, the preparation

of more detailed applications would require more time and more money on

the part of the utility. Although utilities often believe that the more data

provided NRC, the longer the delays NRC will impose, through questions and

mandatory design changes, on balance, it is likely that tendering complete

applications would expedite the licensing process.

Further reforms of tlie hearing procedure would save several months.

Yet doing so would severely limit public participation, insofar as intervenors

generally do not often have sufficient resources to make prima facie factual

challenges; hence they usually rely on a matter of interpretation of existing

facts to force issues to a hearing. In addition, proponents of intervention
consider discussions of interpretation of effects as one of the basic reasons

for public participation—that is, the current role of the public is, in part, to

give their view of what the facts mean.

Proponents of the full push scenario, however, point out that public

participation was originally intended to educate the public more than to

allow public input. Partly as a response to the precipitous licensing of the

Fermi I reactor at Detroit in 1956, the AEC instituted mandatory hearings

soon thereafter. As public opposition to, and militancy concerning, nuclear

power grew, the hearing procedure became an adjucticatory battleground.

Full push proponents see the present hearing procedure as forcing intervenors to use issues regarding a particular plant to accomplish a divergent

end—questioning current U.S. nuclear energy policy. In such a situation,

they argue, hearings can have only a limited productive use.

The final resolution of this question is a political matter that rests

with the Congress and the President; ultimately, only they can define the

role of public participation in decisions regarding centralized technology and

concentrated economic power.

The nature of the National Environment Policy Act review poses a

different question. It is unclear that the all-inclusive analysis of costs and

benefits now conducted under the present interpretation of NEPA would be

carried out in its absence, and such a calculation is important in evaluating

a project of the size of a reactor project, and one with as many external

effects. On the other hand, however, an analysis of this kind does create

overlapping data requirements among agencies, and introduces redundancy

into the licensing process. Nevertheless, ways could be found to expedite

these calculations, within a context that will guarantee that an overview of

social costs and benefits would be conducted. A possible solution could lie

in the use of NRC approval of state review programs, as proposed in the

NSLA, or in a redefinition of the intent of NEPA by the Congress.

53

~rmr
.JIU_
APPENDIXES

APPENDIX A. DURATION OF PHASES IN NUCLEAR REACTOR

LICENSING

Table A-l presents historical statistics for various phases of the

licensing process. The columns of this table, from left to right, conform to

the usual sequence of events in the licensing phase of reactor lead times;

environmental reviews, which may, if approved, lead to limited work

authorization; safety reviews leading to construction permits; and the actual

start of construction (which often precedes the issuance of a construction

permit if a utility has requested work authorization). It should be noted that

the data for 1976 and 1977 are NRC projections, hence these target lead

times may be revised.

The data reveal a trend to longer lead times in most aspects of the

licensing process when compared with the one-year reviews of the 1960s. The

lead times for 1970 and 1971 are particularly long for two reasons; first, the

Calvert Cliffs Coordinating Committee Inc. vs. A.E.C. case was litigated

and a decision rendered in this period, and the decision forced a recalculation of the costs and benefits of reactors, the major component of

environmental review. The four reactors in the Harris project, which

announced major deferrals because of slackening electricity demand, are also

included in 1971. These deferrals led to a postponement of the reactors'

safety review, yielding the six-year review cited for the delayed group in

1971. After 1971, however, environmental reviews show considerable

stability.

Safety reviews have expanded, and so has the length of time between

safety review and construction permit issuance. The time between the two

reflects review by the Advisory Committee on Reactor Safeguards, public

hearings, delay in data transmission between the NRC and other agencies.

Longer safety reviews reflect difficulties in the resolution of regulating

issues, particularly core cooling systems and containments.

The data for the start of construction reveal that limited work

authorizations have been successful in advancing construction by allowing

site preparation before construction permit issuance. For each year

observed, the start of construction preceded actual permit issuance.

57
TABLE A-l. AVERAGE DURATION OF VARIOUS PHASES IN NUCLEAR REACTOR LICENSING, BY YEAR

OF NUCLEAR REGULATORY COMMISSION'S (NRC) ACCEPTANCE OF CONSTRUCTION

PERMIT APPLICATION: IN MONTHS a/

Calendar Year

Construction

Permit

Applications

Accepted by

NRC

Limited Construction

Environmental Work Safety Permit Start of

Review Authorization b/ Review Issuance Construction

1970 18 24.2 (18) 39.9 ( 1) 26.4 (18) 37.5 (18) 31.3 (18)

1971

Not Delayed

Delayed

1972

Not Delayed

Delayed

1973

Not Delayed

Delayed

Open

1974

Not Delayed

Delayed c/

Open

1975

Not Delayed c/

Delayed c/

Open

1976 c/

1977 c/

12

8

4

6

4

2

32

16

9

7

40

13

15

12

9

4

2

3

7

4

22.6 (12)

18.5 ( 8)

30.7 ( 4)

10.9 ( 6)

9.7 (4 )

13.3 ( 2)

13.9 (32)

11.9 (15)

15.7 (16)

( 1 )

13.9 (40)

9.4 (13)

17.3 (17)

(10)

14.6 ( 9)

14.7 ( 5)

14.3 ( 3)

( 1)

17.6 ( 7)

13.4 ( 4)

18.0 ( 4)

17.5 ( 2)

18.6 ( 2)

17.6 (22)

17.5 (16)

17.8 ( 6)

18.4 (19)

18.9 (10)

17.8 ( 9)

24.9 ( 4)

24.9 ( 4)

21.4 ( 5)

18.8 ( 4)

38.5 (12)

38.5 (12)

72.1 (4)

17.0 (6 )

18.0 ( 4)

14.8 ( 2)

23.9 (32)

23.0 (16)

25.0 (12)

( 5)

29.0 (40)

21.6 (13)

34.7 (17)

(10)

29.4 ( 9)

24.3 ( 4)

39.5 ( 2)

( 3 )

22.2 ( 7)

16.8 ( 4)

41.7 (12)

24.5 ( 8)

76.0 (4)

22.4 ( 6)

16.2 ( 4)

34.0 ( 2)

31.1 (32)

28.5 (16)

35.6 ( 9)

( 7 )

35.9 (40)

26.7 (13)

43.7 (15)

(12)

38.3 ( 9)

35.0 ( 4)

45.0 ( 2)

( 3 )

28.3 ( 7)

15.5 ( 4)

42.2 (12)

25.0 ( 8)

76.6 ( 4)

19.1 ( 6)

19.4 ( 4)

18.6 ( 2)

20.7 (32)

17.5 (16)

26.4 ( 9)

( 7)

27.9 (40)

19.0 (13)

35.6 (15)

(12)

32.8 ( 9)

24.9 ( 4)

48.6 ( 2)

( 3)

24.6 (7 )

18.8 ( 4)

SOURCE: Nuclear Regulatory Commission.

NOTES: Numbers in parenthesis refer to number of reactors for which averages were calculated.

Each year, utilities may inform the NRC that some reactors have been "delayed" or are "open."

"Delayed" nuclear plants are those postponed by a utility; "open" plants are those with open-ended

deferrals.

a/ As of January 31, 1978.

b/ Not all applicants pursue LWAs; hence annual total will be less than those of other categories.

£/ Includes projected data.

58
APPENDIX B. CALCULATION OF COSTS OF DELAY IN REACTOR

LEAD TIMES

CBO has estimated that the cost of a month's delay in reactor lead

time is $8.9 million before construction permit issuance, and $10.6 million

for reactors undergoing construction (see Table B-l). The way in which

these costs were calculated are described below:

TABLE B-l. COSTS OF A MONTH'S DELAY IN LICENSING AND CONSTRUCTION OF A 1,100 MEGAWATT REACTOR, ANTICIPATED ON LINE IN 1987: IN THOUSANDS OF DOLLARS

Before After

Construction Construction

Type of Cost Permit Permit

Energy Replacement 2,518 2,518

Inflation 6,105 2,677

Interest 250 5,393

Total 8,873 10,588

Energy Replacement

To calculate energy replacement costs, CBO assumed that in the

absence of a completed reactor, electricity is produced by extending the life

of oil-burning facilities beyond their anticipated use. Thus, the costs

incurred because of the need to provide replacement energy are the costs of

oil burned and the cost of operation and maintainance (O/M) of the old, oilburning unit. CBO also assumed that no capital charges are allocated to the

oil-burning facility, since it has already been employed for its anticipated

life and thus has already repaid its costs of construction. Such a facility

would, however, require greater than normal O/M costs because of its

advanced age. To obtain the incremental costs of providing replacement

energy, the costs of reactor operation must be subtracted from the costs of

59

HIT
JUIL

fuel oil, plus advance O/M costs of the oil-burning facility. Estimates of

reactor costs for this section were taken from Ebasco Services, Inc. _!/

The costs associated with oil-based replacement energy are twofold.

2/ Fuel costs are derived from the price of crude oil. Operation and

maintenance costs vary over the life cycle of an oil-fired boiler. Because

several different values could be assumed for the price of crude oil, and

several different assumptions for the level of O/M, these costs are assumed,

alternatively, to be two, three, or four times the normal level of those

costs. The price of crude oil is assumed to rise at a zero, 2, or 3.5 percent

rate of real increase. The assumptions yield different estimates of fuel

replacement costs (see Table B-2). Assuming the middle case for both—a

steady 2 percent real increase in the price of crude oil between now and

1987 (yielding a price of $28.18 a barrel in 1987) and a triple allowance for

O/M expenses—CBO estimates that the cost of energy replacement would be

about $2.5 million per month of delay for an 1,100 megawatt reactor

operating at 70 percent capacity (capacity now ranges between 60 and 65

percent). An equivalent figure is reached if replacement is assumed using

"wheeled in" electricity supplied by coal-fired plants.

TABLE B-2. INCREMENTAL FUEL REPLACEMENT COSTS FOR A

ONE-MONTH DELAY IN CONSTRUCTION OF A 1,100

MEGAWATT REACTOR: IN THOUSANDS OF DOLLARS

Assumed Rate of Real

Increase in Crude Oil

Prices, 1976-1987

Operating/Maintenance No 2.0 Percent 3.5 Percent

Costs of Oil-burning Unit Increase Increase Increase

Twice the Average Level

of Operating/Maintenance Costs

Three Times the Average Level

of Operating/Maintenance Costs

Four Times the Average Level

of Operating/Maintenance Costs

0

0

0

922

2,518

4,115

4,789

6,385

7,981

\J Ebasco Services, Inc., "Dramatic Changes in Nuclear and Fossil Costs"

(New York, May 1977).

2/ See ICF Inc., "The National Coal Model-Description and Documentation" (Washington D.C., October 1976).

60
Inflation

Inflation is a delay cost because it affects the additional cost of the

work that will be done after a delay is experienced. For example, if the

current capital cost of an 1,100 megawatt reactor is $1.2 million per

megawatt, and the project is 40 percent complete, then, if construction

were fully stopped, the cost of a year's delay would be $1.2 million per

megawatt times 1,100 megawatts, times 60 percent (the unfinished portion

of the project), times the rate of inflation. An inflation rate of 7 percent

was assumed. CBO estimated inflation costs as being $6.1 million per month

before, and $2.7 per month after, construction permit issuance., when

averaged. However, it should be noted that consumers will purchase

electricity that reflects these inflation costs with inflated dollars, so that

this need not represent a real resource loss.

Interest

Interest costs are the opposite of inflation costs, since they represent

costs already incurred because of a delay in construction. To calculate

interest costs, it is assumed that the utility borrows to meet cash expenditures as they occur over the life of the project. Using the example given

above for inflation costs, the interest costs of a year's delay would be $1.2

million per megawatt times 1,100 megawatts, times 40 percent, times the

rate of interest. Assuming a 9 percent rate of financing, interest costs are

estimated as being $250,000 per month before construction permit issuance

and $5.4 million per month during construction. Construction permit

issuance is assumed to occur when 30 percent of the project time has been

expended. (Estimates of the cash flow function for reactors were taken

from ERDA.)

The final incidence of these costs is uncertain, and depends on the

nature of utility regulation by the relevant state public utility commission.

If the commission allows construction work in progress and increased

interest payments in the rate base, then many of these costs will be

reimbursed through tax treatment. Interest paid out during delays is

deductable under present tax law, and each dollar spent in this category will

only "cost" the utility $.52. Inflation in construction costs is later recouped,

to some extent, through depreciation, but at a later point in time than tax

savings from interest deductions, which are realized the next year.

61

"HIT
MILL
APPENDIX C. REACTORS CITED IN REPORT

As of December 1978, there were Zll reactor projects in the United

States either completed, under construction, under construction permit

review, or at the planning stage.

Reactor

Ano

Browns Ferry

Call aw ay

Calvert Cliffs

Catawba

Clinton

Diablo Canyon

Fermi

Indian Point

LaSalle

McGuire

North Anna

Pebble Springs

Pilgrim

Palo Verde

Utility

Arkansas Power and Light

Tennessee Valley

Union Electric

Baltimore Gas and Electric

Duke Power

Illinois Power

Pacific Gas and Electric

Detroit Edison

Consolidated Edison

Commonwealth Edison

Duke Power

Virginia Electric Power

Portland General Electric

Boston Edison

Arizona Public Service

Location

Pope County, Ark.

Decatur, Ala.

Fulton, Mo.

Annapolis,Md.

Charlotte, S.C.

Hart Township, 111.

San Luis Obispo, Calif.

Detroit, Mich.

Peekskill, N.Y.

LaSalle, El.

Mecklenberg, N.C.

Louisa, Va.

Arlington, Oreg.

Boston, Mass.

Wintersburg, Ariz.

63

TTTir
River Bend

Seabrook

Skagit

Sterling

Tyrone

Waterford

Watts Barr

Wolf Creek

Zimmer

Gulf States Utilities

Public Service Company

of New Hampshire

Puget Sound Power & Light

Rochester Gas and Electric

Northern States Power

Louisana Power and Light

Tennessee Valley Authority

Kansas Gas & Electric

Cincinnati! Gas & Electric

W. Feline iana Parish, La.

Seabrook, N.H.

Sedro Wooley, Wash.

Cayuga, N.Y.

Dunn County, Wis.

Taft, La.

Spring City, Tenn.

Burlington, Kans.

Clermont, Ohio

64

o