# United Stat es Court of Appeals For the First C ircuit

No. 04-1145 CITIZENS AWARENESS NETWORK, INC., Petitioner, and NATIONAL WHISTLEBLOWER CENTER ET AL.,

Intervenors,

v. UNITED STATES OF AMERICA AND UNITED STATES NUCLEAR REGULATORY COMMISSION,

Respondents, and NUCLEAR ENERGY INSTITUTE, INC.,

Intervenor.

_______________ No. 04-1359 PUBLIC CITIZEN CRITICAL MASS ENERGY AND ENVIRONMENT PROGRAM ET AL.,

Petitioners,

v. UNITED STATES OF AMERICA AND UNITED STATES NUCLEAR REGULATORY COMMISSION,

Respondents.PETITIONS FOR REVIEW OF A RULEMAKING OF THE NUCLEAR REGULATORY COMMISSION

Before Selya, Lipez and Howard, Circuit Judges .

Jonathan Mark Blockfor petitioner Citizens Awareness Network. Stephen M. Kohn on brief for in te rvenors National Whistleblower Center and Committee for Safety at Plant Zion. Michael T. Kirkpatrick , with whom Bonnie I. Robin-Vergeer and Scott L. Nelson were on brief, fo r peti tioners Public Citizen Critical Mass Energy and Environment Pr o gram and Nuclear Information and Resource Service. Thomas F. Reilly , Attorney General (Massachusetts), and Nora J. Chorover , Assistant Attorney General (Massachusetts), on brief for Massachusetts, California, Connecticut, New Hampshire, and New York, amici curiae. Steven F. Crockett , Special Counsel, United States Nu c lear RegulatoryCommission, with whom Thomas L. S anso netti , Assistant AttorneyGeneral, Greer S. Go ldman and Lisa E. Jones , Attorneys, Environment and Natural Resources Division, United States Department of Justice, Karen D. Cyr , General Counse l, Joh n F. Cordes, Jr. , Solicitor, E. Leo Slaggie , Deputy Solicitor, and ShellyD. Cole , Attorney, United States Nuclear Regulatory Commission, were on brief, for respondents. Ellen C. Ginsberg , with whom Robert W. Bishop and Michael A. Bauser were on brief, for intervenor Nuclear EnergyInstitute, Inc.

December 10, 20041 In the pages that follow, we use the modifiers "on the

rec ord" and "formal" interchangeably to refer to adjudicati on s conductedin accordance with sections 554, 556, and557 of the APA. -3- SELYA, Circu i t Judge . Disenchanted with its existing procedural framework for the conduct of adjudicatory hearings, the Nuclear Regulatory Commission (NRC or Commission) promulgated new rules designed to make its hearing processes more efficient. These

new rules greatly reduce the level of formality in reactor licensing proceedings but, at the same time, pla ce certain unaccustomedrestr icti ons upon the parties. The petitioners and petitioner-intervenors are public intere st g roups. Supported by the Attorneys General of five states (who have filed a helpful amicus brief), they claim that the new rules violate a statutory requirement that all reactor licensing hearings be conducted in accord ance with sections 554, 556, and 557 of the Administrative Procedure Act (APA), 5 U.S.C. §§ 554, 556 & 557. 1 In the alternative, they claim that the Commission has not put forth an ad equa te justification for so substantial a departure from prior practice and that, there fore, the new rules must be set aside as arbitraryand capricious. Fully cognizant of the gravity of our ta sk, we have studied the complex statutory and regulatory framework and scrutinized the plenitudinous administrative record. Af ter completing that perscrutation and grappling with an antecedent jurisdictional question, we find that the new procedures in fact comply with the relevant provisions of the APA and that the-4-

Commission has furnished an adequate explanation for the changes. Consequently, we deny the petitions for review. I. BACKGROUND

The NRC is the federal agency charged with regulating the

use of nuclear energy, including the licensing of reactors used for power generation. See 42 U.S.C. § 2201. The Atomic Energy Act requires the Commission to holda hearing "upon the request of any person whose interest may be affected," id. § 2239(a)(1)(A), before granting a new license, a license amendment, or a license renewal.

The NRC's predecessor agency, the Atomic Energy Commission (AEC), originally interpreted this provision as requiring on-the-record hearings in accordance with the APA. See Hearings Before the Subcommittee on Legislation, Joint Committee on Atomic Energy, 87th Cong. 60 (1962) (letter of AEC Commissioner Lo ren K. Olsen). These hearings closely resembled federal court trials, complete with a full panoply of discovery d evices and direct andcross-examination of witnesses by advocates for the parties. Such hearings proved to be very lengthy; some lasted as long as seven years.

In 1982, the NRC relaxed its approach for certain types of licensing proceedings. See , e.g. , In re Kerr-McGee Corp. , 15 N.R.C. 232, 235 (1982) (dete rminin g that formal hearings are not necessaryin materials licensing cases). Although the results were heartening, the Commission nevertheless retainedthe full range of-5-

trial-like procedures for reactor licensing cases. The passage of time brought further changes: faced with the prospect of hearings on many license renewal applications in the near future — a large number of reactors were initially licensed in the decade from 1960 to 1970 and the standard term for such licenses was forty years — the Commis sion b egan to reassess its adjudicatory processes, focusing particularly on the procedures used in reactor licensing

cases. The NRC's issuance, in 1998, of a policyon the conduct of adjudicatoryproceedings, 63 Fed. Reg. 41,872 (Aug. 5, 1998), markedthe inception of th is process. This policy statement reiteratedthe NRC ' s commitment to expeditious adjudication and urgedhearing officers to employ a variety of innovative casemanagement techniques in order to improve hearing efficiency.

While encouraging better utilization of existing procedures, the Commission also began pondering possible procedural revisions. In January of 1999, the NRC's general counsel drafted

a legal memorandum concluding that the Atomic Energy Act did not require reactor licensing hearings to be on the record and, accordingly, that the Commission had the option of replacing the existing format with a truncated regime. Later that year, the Commission held a widely attended workshop on hearing procedures. Building on this foundation, the Commission published a notice of proposedrulemaking on April 16, 2001, 66 Fed. Reg. 19,610, suggesting a major revision of its hearing procedures. In an2 Subpart G was amended by the new rules, but the changes to it

are not pertinent here. -6- a ccompanying statement, the Commission took the position tha t section 189 of the Atomic Energy Act, 42 U.S.C. § 2239, does not require reactor licensing proceedings to be on the record.

On January 14, 2004, the NRC published a final rule, along with a response to the comments that the proposed rule had generated. See 69 Fed. Reg. 2,182. With minor exceptions, the final rule r eplica ted the proposed rule. The statement of considerations for the final rule reiterated the Commission's view that reactor licensing hearings may be informal.

The new rules took effect on February 13, 2004. Although the yapply to all adjudications conducted by the NRC, the petitioners only challenge their application to reactor licensing proceedings. We therefore confine our ensuing discussion to that aspect of the new rules.

Under the old protocol, all reactor licensing hearings

were condu cted a ccording to the procedures outlined in 10 C.F.R. part 2, subpart G. The subpart G rules resemble those associated with judicial proceedings. 2 They include a complete armamentarium of tradi ti onal discovery devices (e.g., requests for document production, interrogatories, anddepositions). 10 C.F.R. § 2.705. The parties may make motions for summary disposition (although the hearing officer is not required to entertain them). Id. § 2.710.3 We say "for the most part" because there are exceptions. The

new rules still provide for the use of subpart G proce dures for, inter alia, reactor licensing hearings if the presiding officer finds that the "contestedmatter necessitates resolution of issues of material fact relating to the occurrence of a past activity, where the credibility of an eyewitness may reasonably be expected to be at issue, and/or issues of motive or intent of the party or eyewitness [are] ma teri al to the resolution of the contested matter." 10 C.F.R. § 2.310. -7- There is an evidenti ary hearing at which testimony is presented through direct and cross-examination of witnesses by the parties. Id. § 2.711.

Under the new rules, reactor licensing hearings are, for the most part, to be conducted according to a less elaborate set of procedures described in 10 C.F.R. pt. 2, subpart L. 3 The new subpart — which differs materially from the old subpart L — limns

a streamlined hearing procedure. Unlike subpart G, subpart L does not provide for traditional discovery. 10 C.F.R. § 2.1203. Instead, parties in hearings governed by subpart L are required to make certain mandatory disclosures (akin to "open file" discovery) anent expert witnesses, expert witness reports, relevant documents, data compilations, and claims of privilege. Id. § 2.336.

The hearings the mselves also differ. Under subpart L, the presumption is that all interrogation of witnesses will be undertaken by the hearing officer, not the litigants. Id. § 2.1207. Parties are all owe d to submit proposed questions in advance of the hearing, but the presiding officer is under no compulsion to pose them. Id. Parties are not allowed to submit-8-

proposedquestions during the hearing unless requested to do so by the presiding officer. Id. Cross-examination is not available as of right, although a party may request permission to conduct crossexamination that it deems "necessary to ensure the development of an adequate record for decision." Id. § 2.1204. A party seeking leave to conduct cross-examination must submit a cross-examination plan, which will be included in the record of the proceeding regardless of whether the request is allowed. Id.

The petitioners — we use that phrase broadly to include the petitioner-intervenors — took umbrage at the se changes and brought these petitions for judicial review. Their primary claim is that the Commission erred in its determination that reactor licensing proceedings do not have to be fully formal adjudications. In their view, the new rules do not comply with the APA's requirements for on-the-record adjudication and, therefore, cannot stand. As a fallback, the petitioners assert that even if the new rules are not ultra vires, they must be set aside as arbitrary and capricious. II. APPELLATE JURISDICTION

The parties have operated on the assumption that this court has first-instance jurisdiction to hear and determine their petitions for judicial review. We are not so sanguine — and we are cognizant that, as a court of limitedjurisdiction, subject-matter jurisdicti on wil l not accrete to us either by the parties'-9-

acquiescence or by their consent. Espin al-D ominguez v. Puerto Rico , 352 F.3d 490, 49 5 (1s t Cir. 2003). Consequently, we asked the parties to address what we perceived to be a thorny question relating to our authority to ent ert ain these petitions. Before proceeding to the merits of the petitioners' asseverational array, we must resolve that question.

The facts are as f ollows. The petitioners premise jurisdiction on the Administrative Orders Review Act, 28 U.S.C. §§ 2341-2351, better known as the Hobbs Act. In pertinent part, that statute confers original jurisdiction on the courts of appeals to hear petitions for judicial review of "all final orders of the [NRC] made reviewable by section 2239 of title 42." Id. at § 2342(4). In turn, 42 U.S.C. § 2239(b) makes reviewable, inter alia, "[a]ny final order entered in any proceeding of the kind specifiedin subsection (a) of this section." The proceedings enumeratedin that subsect ion include those for "the granting, suspending, revoking, or amendin g of any license or construction permit, or application to transfer control, and in any proceeding for the issuance or modification of rules and regulations dealing with the activities of licensees." Id. § 2239(a).

Readliterally, these interlocking statutes would not

seemto grant jurisdiction to this court. After all, the petitioners are challenging a rule, not an order. The APA, which is made applicable to the Commission by 42 U.S.C. § 2231, defines-10-

an order as "the whole or a part of a final disposition, whether affirmative, negative, inj unctive, or declaratory in form, of an ag ency in a matter other than rule making . . . ." 5 U.S.C. § 551(6) (emphasis supplied). Thu s, the act ion at issue here — a rulemaking — would appear to fall outside the scope of review provided by the Hobbs Act.

Even if one were tempted to suppose that Congress simply misspoke in limiti ng Hobbs Act jurisdiction to the review of orders, other sections of the Act would seem to militate against a judicial recon s truction of the term "order" to encompass rule making . The Act explicitly provides for initial court of appeals review of "all rules, regulations, or final orders" of the Secretary of Transportation, the Federal Maritime Commission, and the Surface Transportation Board. 42 U.S.C. §§ 2342(3), 2342(5). The principle is clear that Congress's use of differential language in various sections of the same statute is presumed to be intentional and deserves int erpretive weight. See Duncan v. Walker , 533 U.S. 167, 173 (2001); In re 229 Main St. Ltd. P'ship , 262 F.3d 1, 5-6 (1st Cir. 2001).

Were we writing on a pristine page, we would likely find this careful parsing persuasive and thus dismiss the case so that the petitioners could seek initial review in an appropriate dis tri ct court. The page, however, is cluttered, not pristine. There is a substantial body of precedent elaborating the scope of-11-

the Hobbs Act with respect to both the NRC and other agencies to which it applies.

The key case is Florida Power & Light Co. v. Lorion , 470 U.S. 729 (1985), in which the Supreme Court determined that Hobbs A ct jur isdiction existed in the courts of appeals for initial review of the NRC's denial of citizen petitions to suspend or

revo ke li censes. Id. at 746. In making this determination, the Court declared that the language of section 2239 was ambiguous as to whether it limited judicial rev iew to orders entered in proceedings under that sec tio n. Id. at 736. The Court then declaredthat the Hobbs Act should be interpreted broadly, so as to maximize the availability of initi al c ircuit court review of licensing proceedings. Id. at 745.

The Court laid out two grounds in support of this reasoning. First, it cited efficiency concerns. In this regard, the Court deemed initial circuit court review the better use of judicial resources, observed that such a course elimin ates one layer of review, and stressed that there is usually no need for the compilation of either a fresh or an augmented record in agency review proceedings. Id. at 744. Second, the Court harangued against the evils of piecemeal review. In this regard, it warned that when Congress clearly places initial re view of some agency actions in the courts of appeals, th e ju risdictional provision shouldnot be interpreted narrowly to shunt review of other agency-12-

actions to the district courts. Id. at 741-42. For these reasons, the Court admonished that "[a]bsent a firm indication that Congress intendedto locate initial APA review of agency action in the district courts, we will not presume that Congress intended to depart from the sound policy of placing initial APA review in the courts of appeals." Id. at 745.

Lorion has displayed remar kabl e vitality. The Seventh Circuit applied its teachi ngs in Commonwealth Edison Co. v. NRC , 830 F.2d 610 (7th Cir. 1987), finding jurisdiction to review the Commission's assessment of fees for the processing of a licensing application. Id. at 613. In the court's view, the assessment was sufficientlyrelated to a licensing proceeding to grou nd circuit court ju ris diction. Id. at 612-13. Pertinently for present purposes, the court, in the exercise of its discerned jurisdiction, reviewedthe underlying rules on which the Commission had based its assessment. Id. at 616.

Closer to home, this court has applied L ori on to find jurisdiction when a cont rary reading of the applicable statute would, for no apparent reason, have divided judicial review between the district courts and the courts of appeals. See City of Boston

v. HUD , 898 F.2d 828, 834-35 (1st Cir. 1990). The Third Circuit has gone even further, holding that Lorion creates a presumption of initial circuit court review "absent clear and convincing evidence-13-

of a contrary congressional intent." Conoco, Inc. v. Skinner , 970 F.2d 1206, 1214 (3d Cir. 1992).

Although the question is close, we conclude that appellate jurisdiction is proper in this case. In reaching this conclusion, we start with the premise that both the Hobbs Act and the Atomic Energy Act are am big uous as to their reach. Furthermore, while the term "order" has a clear meaning for APA purposes, its placement in section 2239 of the Atomic Energy Act suggests that Congress might not have used it with the same precision in connection with the intersection of the Hobbs Act and the Atomic Energy Act. Cf. Hanover Ins. Co. v. United States , 880 F.2d1503, 1504 (1st Cir. 1989) (noting that the same word may have different meanings in different statutorycontexts). That premise is bolstered by the fact that the Atomic Energy Act uses the terms "order" and "rule" inconsistently. For example, sec tion 2239(b) refers to "[a]nyfinal order entered in any proceeding of the kind specifiedin subsection (a)," but section 2239(a) includes proceedings "for the issuance or modification of r ules and regulations dealing with the act ivit ies of licensees." This disharmonyrenders the meaning of "order" in this context uncertain. Given these amphibolies, we believe that the polic i es announcedby the Supreme Court in Lo rion d eserve special weight. W e interpret Lorion as holding that original jurisdiction in th e-14-

courts of appeals is proper to review any NRC action that could be cognizable in a petition for review from a proceeding under section 2239. This interpretation is consistent wit h the Lorion Court's instruction that jurisdictional s tatutes should be construed so that agencyactions will always be subject to initial review in the

same court, regardless of the procedural package in which they are wrapped. Lorion , 470 U.S. at 742. By like token, an affirmation of jurisdiction in this case is consistent with the Lorion Court's conclusion that judicial efficiency is best served by limiting the layers of review. Id. at 744-45. On this basis, andin conformity with our earlier decision in City of Boston , we conclude that we have jurisdiction to entertain these petitions. III. THE MERITS

We divide our discussion of the merits into three segments, corresponding with the petitioners' most lively bruited points. A. Ultra Vires .

T he mainstay of the petitioners' challenge is th e proposition that the new rules exceed th e Co mmission's statutory authority. The petitioners start with the premise that 42 U.S.C. § 2239 requires the NRC to conduct licensing hearings on the record, that is, in strict accordance with the relevant provisions of the APA. See supra note 1. In their view, the new rules fail to satisfy that requirement and, therefore, must be pole-axed. In4 Notwithstanding this assum ptio n, we believe it prudent to

point out that Seacoast pr edat es the Supreme Court's watershed dec isio n in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837 (1984), and that Dantran merely followed Seacoast without assessing its vitality in the postC hevron e ra. It seems clear that while the type of hearing required by a statute turns on congressional intent, Chevron adds a ne w dimension, requiring that the agency's reasonab l e interpretation be accorded deference if there is any ambiguity as to that intent. See id. at 843. To what extent (if at all) this realityerodes Seacoast 's rationale is a question that we leave for another day. -15- the pages that follow, we examine both the petitioners' premise and their conclusion.

Section 2239 requires the Commission, "upon the request of any person whose interest may be affected" by certain agency actions, to hold"a hearing." It does not explicitly require that the hearing be on the record. We have held, however, that the degree of formality that a hearing must afford does not necessarily turn on the presence or absence of an explicit statutory directive. If, even absent such a directive, the nature of the h earing that Congress intended to grant is clear, then that intention governs. Dantran, Inc. v. Dep't of Labor , 246 F.3d 36, 46 (1st Cir. 2001); Seacoast Anti-Pollution League v. Costle , 572 F.2d872, 876 (1st Cir. 1978). We assume arguendo, favorably to the petitioners, that the Seacoast rule still obtains. 4

The petitioners advance several arguments for holding that Congr ess, i n enacting section 2239, purposed to require onthe-recordhearings in reactor licensing c ase s. In addition to-16-

canvassing the legislative history and c atalo ging the relevant amendments to the stat ute, t hey point out that for approximately fo ur decades the NRC and its predecessor agency, the AE C , inter pretedthe statute as requiring on-the-record hearings in reactor licensing proceedings. In response, the NRC highlights the ambiguity of the statute and attempts to situate the latest round of changes in a larger history of procedural experimentation. The Commission also notes that some courts have interpreted section 2239 to allow informal hearings in licensing proceed ings not involving reactors. See , e.g. , City of W. Chicago v. NRC , 701 F.2d 632, 645 (7th Cir. 1983) (licensing of nuclear materials). Last — but far from least — the Commission urges us to defer to its judgment that informal hearings are a suitable prophylactic for reactor licensing. Cf. Lattab v. Ashcroft , 384 F.3d8, 19-20 (1st Cir. 2004) (defe rri ng to the agency's judgment on the proper application of a procedural statute).

For years, the courts of appeals have avoided the question of whether s ect ion 2239 requires reactor licensing hearings to be on the record. See , e.g. , Kelleyv. Selin , 42 F.3d 1501, 1510-14 (6th Cir. 1995) (discussing, but not resolving, the issue while approving the use of informal hearings for m ateria ls storage issues); Nuclear Info. & Res. Serv. v. NRC , 969 F.2d1169, 1180 (D.C. Cir. 1992) (en banc) (deeming the issue forfeited and declining to decide it); Union of Concerned Scientists v. NRC , 920-17-

F.2d 50, 53 n.3 (D.C. Cir. 1990) (finding the procedural rules at issue to comply with the APA and declining to decide whether formal hearings are required); City of W. Chicago , 701 F.2d at 642-43 (distinguishing reactor licensing from materials licensing and addressing onlythe latter). We too decline to resolve this issue. Because the new rules adopted by the Commission meet the requirements of the APA it does not matter what type of hearing the NRC is required to conduct in reactor licensing cases.

Before elaborating our reasoning on this point, we must dispense with a procedural theory advocated by the petitioner Public Citizen. It is a bedrock principle that a court may only upholdan administrative action on a rationale advanced by the agencyin the administrative proceeding. SEC v. Chenery Corp. , 318 U.S. 80, 95 (1943). Embracing this princi ple, Public Citizen asserts that the Commission has waived the argument that the new rules satisfy the APA's requirements because, in promulgating the

new rules, it relied exclusively on its view that section 2239 does not mandate on-the-record hearings. Thus, it cannot now rely on a different rationale to defend the rules in court.

This assertion reads the record through rose-colored glasses. The Commission explicitly memorialized in the statement of considerations for the final rule the view that even if reactor licensing hearings were requiredto be on the record, the new rules wouldmeet that requirement. 69 Fed. Reg. at 2,192 ("[T]he5 The APA req uire s the presiding officer to be the agency, a

member of the agency, or an administrative law judge. 5 U.S.C. § 556(b). In NRC hearings, 42 U.S.C. § 2241 explicitly authorizes the Commission to empanel safety and licensing boards consisting of one person "qualified in the conduct of administrative proceedings" andtwo persons with "such technical or other qualifications as the Commission deems appropriate" to preside at hearings under section 2239. -18- Commi ssion believes that . . . the hearing procedures in each of these subparts meets [ sic] the requirements for an on-the-record hearing under the APA . . . ."). No more was exigible to preserve the point. Accordingly, we turn to the merits of this rationale.

We exercise plenary review over the Commission's compliance with the APA. See Dantran , 246 F.3d at 48 (stating that agen cies ' interpretations of statutes they do not administer are not entitled to particular deference). The APA lays out only the most skeletal framework for conducting agency adjudications, leavin g br oad discretion to the affected agencies in formulating detailedprocedural rules. See Am. Trucking Ass'ns, Inc. v. United States , 627 F.2d 1313, 1321 (D.C. Cir. 1980). In specific terms, the APA requi res only that the agency provide a hearing before a neutral decisionmaker and allow each party an opportunity "to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as maybe required for a full and t rue disc losure of the facts." 5 U.S.C. § 556(d). 5-19- The petitioners urge that the ma gnit ude of the risks involvedin reactor licensing proceedings warrant the imposition of a more elaborate set of safeguards. It is beyond cavil, however, that, short of constitutional constraints, a court may not impose procedural requirements in a dministrative cases above and beyond those mandated by statute (here, the APA). Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc. , 435 U.S. 519, 543- 44 (1978); Union of Concerned Scientists , 920 F.2d at 53. Accordingly, we are not at liberty to impress on the Commission (or anyother agency, for that matter) a procedural regime not mandated by Congress. The NRC's new rules will, therefore, succumb to the petitioners' first line of attack only if they fail to provide the minimal proced ural safeguards actually demanded by the APA. See Nat'l Classif. Comm. v. United States , 765 F.2d 1146, 1151 (D.C. Cir. 1985).

We turn now from the general to the particular. The rule making at issue here effected several changes in the Commission's procedures. The petitioners focus their challenge on two aspects of the newly minted process. First, they object to the Commission's decision to eliminate d isc overy. Second, they complain about the Commission's decision to ci rcumscribe the availabi lity of cross-examination. Because these are the only issues on which the petitioners have offered dev el oped argumentation, we confine our analysis to those portions of the new-20-

rules. Cf. United States v. Zannino , 895 F.2d 1, 17 (1st Cir. 1990) (holding that "a litigant has an obligation to spell out its arguments squarely and distinctly, or else forever holdits peace" (citations and internal quotation marks omitted)).

We begin with the question of whether the new rules fall below the APA's minimum requirements by eliminating discovery. The Commission points out, and the petitioners do not seriously contest, that the APA does not explicitly require the provision of anydiscovery devices in formal adjudications. See 5 U.S.C. § 556;

see also Kellyv. EPA , 203 F.3d 519, 523 (7th Cir. 2000); Frilette

v. Kimberlin , 508 F.2d 205, 208 (3d Cir. 1974). Thus, if the APA requires the Commission to provide any disc ove ry to satisfy the standards for formal adjudications, that discovery must be necessaryeither to effectuate some other procedural right guaranteedby the APA or to ensure an adequate record for judicial review. Cf. U.S. Lines, In c. v. Fed. Maritime Comm'n , 584 F.2d 519, 540 (D.C. Cir. 1978) (stating that an agency charged with hold ing a hearing to determine the public interest must provide adequate means of public participation); Seacoast , 572 F.2d at 876- 77 (no tin g that in some cases procedural requirements may be implied to ensure adequate judicial review).

T he petitioners suggest that discovery is necessar y t o realize the right of citizen-intervenors to present their case and submit an informed rebuttal. See 5 U.S.C. § 556. If discovery is-21-

unavailable, this thesis runs, citizen-intervenors will be unable to gather the evidence needed to support thei r c ontentions and, thus, w ill be shut out of meaningful participation in licensing hearings. This thesis is composed of more cry than wool. The petitioners argue as if the new rules have eliminated all access to information from opposing parties — but that is a gross distortion. The new rules provide meaningful access to information from adverse parties in the form of a system of mandatory disclosure. See 10 C.F.R. § 2.336. Although there might well be less information avai lable to citizen-intervenors under the new rules, the difference is one of degree. There is simp ly no prin cipled way that we can say that the difference occasioned by replacing traditional discovery methods w ith mandatory disclosure is such that citizen-intervenors are left with no means of adequately presenting their case.

Nor do we think that full-dress discovery is essential to

ensure a satisfactory record for judicial review. The Commission's final decision in any hearing must survive review based on the evidence adduced in the hearing. 5 U.S.C. § 556(e). The applicant bears the burden of proof in any licensing hearing, id. § 556(d), andit will have every incentive to proffer sufficient information to allow the agency to reach a reasoned decision . That same-22-

quantumof information should be adequate for a reviewing court to determine whether the agency's action is supportable.

To say more on this po int would be to paint the lily. There is simplyno discovery-linked conflict between the new rules andthe APA's on-the-record adjudication requirement. The petitioners' first line of argument is, therefore, a dead end.

Turning to cross-examination, the petitioners' contentions fare no better: the new rules meet the APA's requirements. To explain this conclusion, we first must strip away the rhetorical flourishes in which the petitioners shroud their reasoning. It is important to understand that, contrary to the petition ers' importunings, the new rules do not extirpate crossexamination. Rather, they restrict its use to situations in which it is "necessary to ensure an adequate record for de cisio n." 10 C.F.R. § 2.1204. The legitimacy of this restriction must be weighedin light of the fact that the APA does not provide an absolute right of cross-examination in on-the-record hearings. Seacoast , 57 2 F.2d a t 880. The APA affords a right only to such cross-examination as may be necessary for a f ull and fair adjudication of the facts. Id. Equally to the point, "[t]he party seeking to cro ss-exa mine bears the burden of showing that crossexamination is in fact necessary." Id. at 880 n.16.-23- The Commission represents that, despite the difference in language, it interprets the standardfor allowing cross-examination under the new rules to be equivalent to the APA standard. 69 Fed. Reg. at 2,195-96. When an agenc y p rovides a plausible interpretation of its own procedural rules and there is no record

or pattern of contrary conduct a court ha s no right either to slough off that interpretation or to deem it disingenuous. Cf. Albathani v. INS , 318 F.3d 365, 378-79 (1st Cir. 2003) (accepting the agenc y's good faith in carrying out its procedures, while acknowledging that evidence to the contrary might warrant judicial intervention). Given the Commission's stated interpretation, the new rules on cross-examination cannot be termed inconsistent with the dictates of the APA. Nor do we see how cross-examination that is not "necessary to ensure an adequate record for decision" could be necessary to ensure appropriate judicial review.

Because we find that the new rules meet the APA requirements for on-the-record a djud ications, we hold that their promulgation does not exceed the Commission's authority. Consequently, the petitioners' ultra vires argument founders. B. Arbitrary and Capricious . Our labors a re no t yet done. Even though we hold that the new rules are within the ambit of the NRC's authority, we still must consider whether its decision to discard the old in favor of the new was arbitrary and capricious. See 5 U.S.C. § 706.-24- An agency's rules, once adopted, are not frozen in place. The opposite is true: an agen cy may alter its rules in light of its accumulated experience in administering them. Rust v. Sullivan , 500 U.S. 173, 186-87 (1991). An agency must, however, offer a reasoned explanation for the change. If the agency fails to furnish such an exp lanation, or if the proffered explanation fa ils to demonstrate that the agency fully considered its new

course , the revi sed rules must be set aside. See Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 42 (1983) ("If Congress established a presumption from which judicial review should start, that presumption . . . is . .

. against changes in current policy that are not justified by the rulemaking record.").

The petitioners begin this branch of their assault with a global challenge to the rationality of departing from the NRC's forty-year-oldpr oce dural regime. They do not suggest that the Commission's goal of improving hearing efficiency is impermissible; rather, they maintain that the current procedures worked well enough and that the Commission has made no showing that they were the source of any past inefficiencies. The petitioner s f urther note evidence in the rulemaking record suggesting that efficiency gains could be brought about through less drastic measures, such as more aggressive case management.-25- To resolve this point, we first must d etermi ne what an agency must show to justify modifying its procedural rules. As a general principle, agencies have broad authority to formulate their own procedures — and the NRC's authority in this respect has been termedparticularly great. Union of ConcernedScientists , 920 F.2d at 54; BPI v. Atomic Energy Comm'n , 502 F.2d 424, 428 n.3 (D.C. Cir. 1974). A necessary corollary of this authority is the freedom to exp e riment with different procedural formats. Consequently, tinkering with rules is by no means a forbidden activity.

Of course, there are limits on this prerogative. An agencymay not act precipitously or in an irrational manner in revising its rules. But so long as these limits are observed, it is not the place of a reviewing court to second-guess the agency's decision as to when to make procedural changes. It is enough that the agency reaso nably determines that existing processes are unsatisfactoryand takes ste ps that are fairly targeted at improving the situation.

In t his ca se, the NRC has determined that its existing rules of practice lead to hearings that are cumbersome, unnecessarily prot racted, and wasteful of the resources of the parties and the Com mission. This determination warrants a high degree of deference. See Vt. Yankee , 435 U.S. at 543-44 (holding that agencies' evaluations of their procedural needs are entitled to great respect). Although the petition ers ma y disagree, we-26-

descry nothing in the record that would support setting aside the rule o n th e basis that the agency should have left well enough alone. It would unfairly handcuff administrators if agencies could not change their procedures simply because certain of their constituencies admired the status quo.

That leaves the howof the Commission's new rules; that is, the question whether the Commission acted arbitrarily in making

a specific set of changes in order to achieve its goal of improved hearing efficiency. To clear this hurdle, the Commission must show both that its new rules constitute a rational means for achieving its stated objective and tha t it s ensibly rejected other options consideredin the rulemaking proceeding (including the option of maintain ing t he status quo). See State Farm , 463 U.S. at 43-44. Th is cal culus must fairly account for any benefits lost by modifying existing rules, as well as any advantages expected to be gained through the adoption of updated rules. See id.

Here, too, we address only the NRC's decisions to replace traditional discovery with mandatory disclosure and to restrict the availabilityof conventional c ross-examination. With regard to discovery, the NRC explainedin its statement of considerations for the final rule that the proposed substitute "has the potential to significantly reduce delays and resources expended by all parties in discovery." 69 Fed. Reg. at 2,194 . The Commission also expressedthe view tha t repl acing traditional discovery with-27-

mandatorydisclosure would eliminate a substantial amount of motion practice rel ate d to discovery matters. Id. Finally, the Commission determined that any prejudice to citizen-intervenors fromeliminating traditional discovery would be offset by the mandatorydisclosure requirements and the general public availability of NRC documents. Id.

The petitioners renew their exhortation that discovery is necessaryfor citizen-intervenors to participate effectively in reactor licensing hearings. They speculate that without discovery theywill be without access to large amounts of detailed technical information (information that is available to the applicant and the Commission staff) and, thus, will be unable to respond adequately to technical and factual arguments.

We agree with the petitioners tha t the Commission's explanation for the change in discovery practice is thin. The Commission bal dly states its belief that eliminating traditional discoverywill shorten hearings and conserve resources , bu t it provides no empirical analysis of its experience with traditional discoveryfrom which an outside observer can determine what benefits the Commission might reasonably expect. In a substantive rule, this omission might be fatal. See , e.g. , Portland Cement Ass'n v. Ruckelhaus , 486 F.2d 375, 393 (D.C. Cir. 1973) ("It is not consonant with the purpose of a rulemaking proceeding to promulgate-28-

rules on the basis o f i nadequate data, or on data that, [in] critical degree, is known only to the agency.").

In the realm of procedure, however, agencies are presumed to have special competence and, accor dingly, are held to less exacting standards of explication. See Union of Con cerned Scientists , 920 F.2d at 54 (noting that procedural determinations "fall uniquely within the expertise of the a gency"). To add to this leeway, we are not willing to ignore matters that are common kno wledge to courts of law. Discovery, especially in complex matters, is both time-consuming and costly. We do not think it can reasonablybe questioned that the replacement of discovery with mandatorydisclosure will make reactor licensing h eari ngs faster and less expensive.

The Commissi on a lso has explained that it believes any harmto citizen-intervenors will be minima l. Although the petitioner s of fer some hypothetical examples of information that maybe unavailable under th e new rules, they have not made a persuasive case that mandatory disclosure will undercompensate for the loss of tradi tional discovery. We thus find no basis for setting aside the new rules on discovery-related grounds.

The new rules' outlook on cross-examination presents a closer questio n. The Commission reasons that restricting crossexamination will reduce the amount of testimony taken and make hearings more efficient. 69 Fed. Reg. at 2,196. The Comm issio n-29-

further observes that, in its experience, cross-examination is not always helpful to the resolution of scientific or technical issues. Id. The petitioners retort that cross-examination is a vital component of a citizen-intervenor's case. They note that citizenintervenors often lack the resources to presen t thei r own expert testimonyand must rely on cross-questioning of the adverse party'sexperts to make their case. They also stress the value of crossexamination as a means for bolster ing public confidence in licensing hearings. Tellingly, the Commission's own administrative judges agree that cross-examination is helpful for the resolution of issues raised in many licensing hearings. In a dditi on to the

reasons advanced by the petitioners, the administrative judges note that the prospect of cross-examination discourages exaggeration in direct testimony because witnesses are aware that they will have to defend their statements later.

Experi ence i n the courts has left no doubt that crossexamination can be a use ful tool. Had the new rules abolished cross-examination entirely, w e might well find the Commission's action insupportable. Importantly, however, the new rules do not completelydo away with cross-examination. Rather, theyleave its availabilityto the discretion of the hearing officer. Just as we will not ignore the fact that discovery is resource-consuming, we will no t presum e that all — or, perhaps, even most — cross--30-

examination is essential to the just resolution of issues. With this in mind, we find no fa ult with the Commission's decision to attempt to curtail unnecessary cross-examination. Cf. 5 U.S.C. § 556(d) ("[T]he agency as a matter of policy shall provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence."). Accordingly, we cannot say that it is arbitrary and capricious for the Commission to leave the determination of whether cross-examination will further th e truth-seeking process in a particular proceeding to the discretion of the individual hearing officer. We do, however, add a caveat. The APA does require that cross-examination be available when "required for a full and true disclosure of the facts." Id. If the new procedures are to comply in practice with the APA, cross-examination must be allowed in appropriate instances. Should the agency's administration of the

new rules contradict its present representations or otherwise flout this principle, nothing in this opinio n will inoculate the rules against future challenges. C. Constitutional Claims . One petitioner, Citizens Awareness Network (CAN), charges that the new rules are unconstitutional because they d epri ve citizen-intervenors of fundamental political rights and discriminate against them in violation of the Fifth Amendment. We explore these charges.-31- CAN's first cha rge implodes because there is no fundamental right to participate in administrative adjudications. Reactor licensing (unlike, say, voting) is not "preservative of other basic civil and political rights." Reynolds v. Sims , 377 U.S. 533, 562 (1964). Assuming, for argument's sake, that citizenintervenors have a pro tected liberty interest in the outcome of reactor licensing proc eedi ngs — a proposition that we consider extremelydubious, see City of W. Chicago , 701 F.2d at 645 — the quantumof process required before the government may deprive citizen-intervenors of that interest would depend on the three-part anal ysis a dumbrated in Mathews v. Eldridge , 424 U.S. 319, 335 (1976). CAN makes no effort to apply the Mathews rubric to the rule s at issue, and we will not do CAN's homework for it. The issue is, therefore, forfeit. See Zannino , 895 F.2d at 17.

As for equal protection, CAN claims that we should apply strict scrutiny b e cause citizen-intervenors are a "discrete and insular minority." This claim is meritless. The Supreme Court has made it crystal clear that the criteria for deeming a class suspect

are both rigorous and specific. Johnson v. Robison , 415 U.S. 361, 375 n.14 (1974); San Antonio Ind. Sch. Dist. v. Rodriguez , 411 U.S. 1, 28 (1973). As a class, citizen-intervenors cannot begin to meet those criteria. They are not "saddled with such disabilities, or sub jec tedto such a history of purposeful unequal treatment, or relegatedto such a position of political power lessness as to-32-

commandextraordinary protection from the majoritarian political process," Rodriguez , 411 U.S. at 28, nor do they share any "immutable characteristic determin ed so lely by the accident of birth," Johnson , 415 U.S. at 375 n.14.

Bela borin g this point would serve no useful purpose. Whatever legitimate grievances citizen-intervenors may have, it is absurdto equate discr imin ation against them with the historic discrimination against racial and other minorities that lies at the

core of suspectedness. The bottom line is that citizen-intervenors are not a suspect class. We so hold.

This holding means, of course, that rational basis review applies, not strict scrutiny. See Boivin v. Black , 225 F.3d 36, 42 (1st Cir. 2000). Thus, CAN bears the burden of demonstrating that

no plausible set of facts exists that could forge a rational rela tionship between the challenged rules and the government ' s legitimate goals. Id. at 44; Montalvo-Huertas v. Rivera-Cruz , 885 F.2d971, 978-79 (1st Cir. 1989). For the reasons set forth above,

see supra Part III(B), there can be no doubt that the Commission's action is ra tion ally related to a legitimate government purpose. It follows inexorably, as night follows day, that CAN's constitutional argument is meritless. IV. CONCLUSION

We need go no further. Procedural flexibility is one of the great hallmarks of the administrative process — and it is a-33-

feature that courts must be reluctant to curtail. Though the Commission's new rules may approach the outer bounds of what is permissible under the APA, we find the statute sufficiently broad to accommodate them. Similarly, the Commission's judgments as to when its procedures need fine-tuning and how they should be retooledare ones to which we accord great respect. We cannot say that the Commission's desire for more expeditious adjudications is unreasonable, nor can we say that the changes embodied in the new rules are an eccentric or a plainly inadequate means for achieving the Commission's goals. Accordingly, both of the instant petitions must be denied.

The petitions for judicial review are denied and dismissed .

— Concurring Opinion Follows —-34- LIPEZ, Circuit Judge . Although I concur fully in Judge Selya's thoughtful and comprehensive opinion, I write separately to describe some oddities about this case w hich s hould not go unnoticed. The basic proposition of Judge Selya's decision is indisputablycorrect: the new rules promul gate d by the Nuclear RegulatoryCommission (NRC) to re duc e the level of formality in reactor licensing proceedings comply with the "on-the-record" requirements of the Administrative Procedure Act (APA). Yet that legal proposition was largely an afterthought of the NRC in the effort to justify its new rules. Instead, the NRC principally arguedin the long run-up to this case that 42 U.S.C. § 2239, which simplyrequires the Commission to hold a hearing "upon the request of anyperson whose interest may be affected" before granting a new license, did not invoke the requirements for for mal adjudication (commonly referred to as "on-the-record" hearings) under the APA.

It is striking that so manysmart people at the NRC could be so wrong for so l on g about the requirements of the APA. Although this history does not affect the outcome of this case, it shouldbe noted as a cautionary tale about the power of analogy and the endurance of unexamined legal theories. This history also

serves to explain some of the legitimate frustrations of the petitioners, who felt that they were dealing with a moving target as the NRC tried to justify its new regulations. With so much at sta ke i n these nuclear reactor licensing proceedings, the-35-

rulemaking process s hou ld have followed a steadier course. For

reasons I shall explain, this was not the rulemaking process at its best. Terminology

The terminology for hearings under the APA can be imprecise and confusing. T he everyday meaning of terms like "formal" and "in fo rmal" sometimes creeps into the discussion, although those terms have specific, func tion al definitions under the APA. As Judge Selya notes, the terms "fo rmal" and "on-therecord" are generally used as shorthand for hearings that must be conductedpursuant to the requirements of 5 U.S.C. §§ 554, 556, and 557 of the APA. Other terms, too, are sometimes used to refer to such procedures -- "trial-type" and "quasi-judicial." These vague andindefinite terms are particularly mischiev ous b ecause they evoke images of courtroom trials, and they have contributed to the fals e impr ession that the APA's requirement of on-the-record hearings involves procedures more akin to civil trials than is actually the case.

To be specific, § 554 requires that, in cases of an “adjudication required by statute to be determin ed on the record after opport unity for an agency hearing,” the agency must follow the procedures outlinedin §§ 556 and 557. Although the statutory text at issue here is itself rather pithy, these procedures can be usefully condensed into the following ten points:-36-

1. The agency must give notice of legal aut hor ity and matters of fact and law asserted. § 554(b). 2. The oral evidentiary hearing must be presided over by an officer who can be disqualified for bias. § 556(b). 3. Presiding officer s cannot have ex parte communications. §§ 554(d), 557(d)(1). 4. Parties are entitled to be represented by attorneys. § 555(b). 5. The proponent of an order has the burden of proof. § 556(d). 6. A par ty is entitled to present oral or documentary evidence. § 556(d). 7. A party is entitled "to conduct such cross-examination as may be required for a full and true disclosure of the facts." § 556(d). 8. Orders can be issued only on consideration of the record of the hearing. § 556(d). 9. Th e tr anscript of testimony and exhibits is the exclusive record for decision and shall be made available to parties. § 556(e). 10. The decision must include "findings and conclusions, andthe reasons or basis therefor, on all th e material issues of fact, law, or discretion presented on the record." § 557(c)(3)(A). See Richard J. Pierce, Jr., Administrative Law Treatise § 8.1 (4th ed. 2002). Strikingly, there is no reference to discovery in these statutory provisions of the APA, and cross-examination is assured onlyif necessary "for a full and true disclosure of the fact s." 5 U.S.C. § 556(d). Most of these provisions relate to the conduct andresponsibilities of the presiding officer or the basis for agencyorders (on the record). Only a few relate to the conduct of-37-

the hearing itself. These APA requirements leave agencies with a g reat deal of flexibility in tailoring on-the-record h earin g procedures to suit their perceived needs.

If hearings are not required to be “on the record,” the procedures of §§ 556 and 557 are not triggered; the only section of the APA applicable to the proceedings is § 555, titled "Ancillary matters." Section 555(b) entitles a party to be represented by a lawyer, § 555(c) entitles people who have submitted data or evidence to retain copies of their submissions, and § 5 55(e) requires agencies to give prompt notice when they deny a petition made in connection with a proceeding, and to give a brief statement of the grounds for denial. Additionally, subsections (c) and (d) require that process, subpoenas, and other investigative demands must be made in accordance with law. Of course, these “informal” hearings must also comply with basic due process requirements.

Fromthe beg inning of its proposed rulemaking, the NRC repeatedlyreferred to the procedures outlined in the new reg ulations as "informal," as opposed to the outmoded form a l procedures of the past. The clear impl ication was that the new informal procedures would not meet the APA’s requirements for formal, on-the-r eco rd hearings. Thus, the NRC believed that it first had to establish that its authorizi ng statute, the Atomic EnergyAct (AEA), did not require it to hold on-the-record hearings for reactor licensing.6 On-the-recordhearings at most agencies must be presided over

bythe agency, one of the members of the body that comprises the agency, or an administrative law judge (ALJ). 5 U.S.C. § 556(b). Because of the highly technical nature of hearings before the NRC, however, Congress authorized the NRC "to establish one or more atomic safety and licensing boards, each comprised of three members, one of whom shall be qualified in the conduct of adm inistrative proceedings and two of whom shall have su c h technical or other qualificatio ns a s the Commission deems appropriate to the issues to be decided." 42 U.S.C. § 2241. These ASLBs now preside over the bulk of licensing hearings at the NRC.

7 Arequest for hearing or a petition for leave to intervene in a licensing hearing must set forth with particularity the contentions sought to be litigated in t he hearing. These -38- Background to Rulemaking Judge Selya outlines some of the important history of the rulemaking in this case. However, there is more to this c uriou s history that is worth telling. From the 1998 Policy Statement to the Notice of Proposed Rulemaking, the NRC barely contemplatedthe possibilitythat it could reform its hearing procedures to its liking and still comply with the APA after all. Indeed, at first, the NRC did not propose any dramatic changes to its hearing procedures. In its August 5, 1998 Policy Statement, the NRC stated that it hoped to enc ourag e a renewed vigor in the enforcement of already-existi ng hea ring procedures by the Atomic Safety and Licensing Boards (ASLBs). 6 To expedite hearings, the NRC advocated greater adherence to schedules, more rigorous enforcement of time limits for filing (for example, allowing extensions of time only in "unavoidable and extreme circumstances"), more rigorous enforcement of contention requi rem ents, 7 and tighter management of discovery.requirements were further tightened by the rulemaking. -39- It also announced that the NRC "may consider further changes to the Rules of Practice as appropriate to enable additional improvements to the adjudicatory process."

True to its wo rd, the NRC issued a Staff Requirements Memorandumto its Office of General Counsel (OGC) on July 22, 1999, directing it to develop a proposed rulemaking. At the same time, the Commission noted that it would also purs ue a legislative solution by lobbying Congr ess to confirm its authority to reform licensing hearings as it wished . Again, the Staff Requirements Memorandumnever suggestedthat the NRC could reduce the formality of its hearing procedures wh ile st aying within the strictures of the APA's requirements for on-the-record hearings. In stead, the NRC appa rently still believed that the more informal licensing procedures it sought would not comply with the APA, and that it had to establish its freedom from the APA's strictest requirements.

The Staff Requirements Memorandumalso directed the NRC's OGC to solicit the views of interested parties on the proposed rulemaking. Consequently, the general counsel held a two-day meeting in October 1999, called a "hearing process workshop," with representatives from the nuclear industry, citizens' groups (including the petitioners in this case), other federal agencies, academia, and the NR C's Atomic Safety Board and Licensing Panel. Although the OGC encouraged a wide-ranging conversation, no one8 Pub lic Citizen emphasizes this point in its reply brief,

stating: “T he r etention of Subpart G procedures for enrichment facilityhearings confirms that the NRC concluded in the rulemaking that only

Subpart G provided on-the-record hearing procedures.” -40- raised the possibility that the NRC licensing procedures could be more informal yet still comply with the APA.

In the Notice of Proposed Rulemaking itself, 66 Fed. Reg. 19,610 (April 16, 2001), which for the first time proposed specific changes to the NRC's hearing procedures, there was still no argument that the proposed procedures complied with the APA's requirements. Instead, the notice offeredpages of legal analysis

on the history of the AEA, all intended to justify the NRC's ability to promulgate new hearing procedures that are not subject to the APA's requirements for on-the-record hearings.

Other choices made by the NRC in its regulatory overhaul further emphasize the firmness of its conviction that the supposed ly “ informal” procedures it was proposing did not comply with the APA's requirements for on-the-record hearings. In the one instance where no one disputes that the NRC must hold on-the-record hearings -- the licensing of construction and operation of uranium enrichment facilities, s ee 42 U.S.C. § 2243(b) -- the Notice describedthis proce ss as "requiring formal trial-type hearing procedures to be used." 66 Fed. Reg. at 19,623. Consequently, the NRC believed that it could not use new subpart L for these hearings but had to resort to the more formal procedures of subpart G. 89 The APA has various provisions intendedto keep the presiding

officer independent of the parties and of the agency. See 5 U.S.C. §§ 554(d), 556(b), and 557(d)(1). ALJs' compensation is handled by the Office of Personnel Management, not the agency appointing them for adjudications. This arrangement is designed to keep them free of any undue influence from the agency. -41- Strikingly, in the entire record of this rulemaking prior to the promulgation of the Final Rule, I can find only one footnote hinting that anyo ne at the NRC thought that it could reduce the formality of its procedures while at the same time complying with the strictures of the APA. In a footnote in its January 1999 memo, the OGC acknowledged the possibility of eliminating the "elements of Subpart G that go beyond the Administrative Procedure Act's requirements for 'on-the-r ecor d' hearings. One immediate effect wouldbe to eliminate formal discovery in NRC adjudications." The

memo contains no further discussion of how far beyond the APA's requirements the OGC understood Subpart G to go.

Not until public ation of the Final Rule itself did the NRC assert for the first time that the new procedures comply with the APA's requirements for an on- the-record hearing -- and even here, the NRC devotes only a few sentences to the issues of crossexaminatio n, d iscovery, and the presiding officer. 9 Indeed, the NRC's few statements are easily reproduced in their entirety. In response to concerns about the reforms to cross-examin atio n, the NRC stated: "The Commission believes that this approach strikes an appropriate balance in the use of cross-examination, and is10 The Final Rule explains elsewhere some of this passage’s more

obscure terms. For hearings conducted under subpart J, the NRC and potential parties must disclose pertinent documents by participating in the "Licensing Support Network" (LSN) before an application is filed. In addition, under subparts G, L, andN the NRC staff is required to prepare, make available, andupdate a "hearing file" consisting of t he a pplication and any amendments, NRC safety and environmental reports relating to the application, and any co rres pondence between the NRC and the applicant that is relevant to the application. A parallel concept is provided in subpart J bythe requirement fo r the NRC staff to maintain an "electronic docket." 69 Fed. Reg. at 2189. -42- cons istent with the requirements of the Administrative Procedure Act (APA), which does not require cross-examination for on-therecordproceedings unless necessary for a 'fair andtrue disclosure of the facts.'" 69 Fed. Reg. 2182, 2188 (Jan. 14, 2004). A little later, the NRC states: " The Commission's consideration of crossexamination in the hearing process begins with the observation that parties have no fundamental right to cross-examination, even in the most formal hearing procedures provided in Subpart G." 69 Fed. Reg. at 2195-96.

As for concerns about the availability of discovery, the NRC stated: "Thus, the mandatorydisclosure requirement in subpart C, the hearing file provision in subparts G, L, and N[,] and the requirement for an LSN and 'electronic docket' in subpart J, go well beyond the 'discovery' prov ision s for full, on-the-record adjudicatoryhearings under the APA." 10 69 Fed. Reg. at 2189. As11 As Public Citi zen says , the NRC filled both the Notice of

ProposedRulemaking and the Final Rule with “page after page of argument” meant to establish this proposition. -43- for presiding officers, the NRC described how the new regulations provided for either an ALJ or a three-member ASLB to preside over the hearing, and then stated: "The Commission has taken this step to ensure that all of these proceedings meet the requirements with regardto a presiding of ficer for an on-the-record hearing under the APA." 69 Fed. Reg. at 2191. However, despite these few references in the Final Rule to meeting the APA’s requirements for on-the-recordhearings, the NRC's primary rationale for its new procedures remained its long-standing position that reactor licens ing he arings did not have to comply with the on-the-record requirements of the APA. 11

In considerable part, administrative agencies set the terms of the debate in the rulemaking process with the arguments theyadvance in support of their rulemakin g i nitiatives. If certain arguments are unmistakably primary, those ar gume nts will draw most of the attention during the administrative process, and during the judicial review that follows. Not surprisingly, opponents will believe that the primacy of the argument means that it is the most important argument to address. If, in the end, the dispositive issue on appeal is a d iffere nt issue, addressed only glancingly in the administrative process, there has been enormous wastedeffort, and the courts of appeal will be poorly served by12 However, the amici States did devote a section of their

brief, filed before the NRC's opposition, to arguing that the new procedures fai l to meet the APA's requirements for on-the-record hearings.

13 Public Citizen refers to § 189 of the AEA, now codified at 42 U.S.C. § 2239, which provides for hearings in lice nsin g decisions and judicial review. -44- appellate briefing that reflects the outdated emphases of the administrative process. That is precisely what happened here.

In their petition for review, petitioners ne ver e ven mentionedthe argument of the NRC that its new procedures complied with the APA's requirements for on-the-record hearings. Not one of the petitioners addressed the argument in their opening briefs. 12 Indeed, the NRC tried to exploit this omission by arguing that petitioners had thereby waived the issue. In response, Public Citizen stated that the NRC argued from the beginning of the rulemaking tha t its freedom from the APA's on-the-record requirements was essential to its ability to fashion informal procedures, and “[t]here would have been no need for page after page of argume nt that Section 189 does not require on-the-record hearing procedures in reactor licensing ca ses if the NRC had believ edtha t the new Subpart L procedures conformed to these requi rem ents.” 13 Public Citizen added that the few references to APA-compliance in the Final Rule were nothing more than "stray remarks" when weighed against the overwhelming number of statements to the contrary made by the NRC throughout the rulemaking. Public-45-

Citizen then tried to turn this lament into a legal argument based upon SEC v. Chenery Corp. , 318 U.S. 80 (1943). Although the lament is a fair one, the legal argument does not work. SEC v. Chenery In Chenery , the Supreme Court warned courts that they must not substitute their own policy judgments for those of the administrative agencies whose decisions they review. The Court explainedthat this rule did not disturb the settled rule that appel late courts can affirm trial court decisions that are rig h t for the wrong reasons: In confining our review to a judgment upon the validity of the grounds upon which the Commission itself based its action, we do not dis turb t he settled rule that, in reviewing the decision of a lowe r court, it must be af firm edif the result is correct although the lower court relied upon a wrong ground or gave a wrong reason. The reason for this rule is obvious. It would be wasteful to send a case back to a lower court to reinstate a decision which it had already made but which the appellate court concluded should properly be based on another groundwithin the power of the appellate court to formulate. But it is also familiar appellate procedure that where the correctness of the lower court's decision de pends upon a determination of fact which only a jur y couldmake but which has not been made , t he appellate court cannot take the place of the jury. Like considerations govern review of administrative orders. If an order is valid only as a determination of policy or judgment which the agency alone is authorized to make and which it has not made, a judicial judgment cannot be made to do service for an administrative judgmen t. For purposes of affirming no less than reversing its orders, an appellate court cannot intrude upon the domain which Congress has exclusively entrusted to an administrative agency.14 Citing broad equi tab le principles of fiduciary duty taken

fromcase law, the SEC had refused to approve a stock reorganization plan until it was amended to eliminate the effect of some suspect stock purchases by the company's management. The companyamended the plan accordingly and the SEC approved it. The Court found that the case law cited by the SEC, however, did not suppo rt its decision. Rather than deciding whether the SEC's decision could be sustai nedon a second basis -- that of the special authority given by Congress to the SEC to administer the securities laws -- the Court remanded the case to the a gency for further proceedings. If the SEC hadintended to invoke that second basis as an alternative ground, it had not done so with sufficient clarity to allow the Court to review its action.

-46- SEC v. Chenery Corp. , 318 U.S. 80, 88 (1943) (citation and internal quotation marks omitted) ( CheneryI). 14

The dispute in Chenerycame before the Court again in 1947, after the SEC had "reexamined the problem, recast its rationale and reachedthe same result." SEC v. Chenery Corp. , 332 U.S. 194, 196 (1947) ( CheneryII). Accepting the SEC's new decision as justified by an administrative determination that "is basedupon substantial evidence and is consistent wi th t he authoritygranted by Congress," id. at 207, the Court noted the "important corollary" to Chenery 's rule of judicial review of agency decisions: If the administrative action is to be tested by the basis upon which it purports to rest, that basis must be set forth with such clarity as to be understandable. It will not do for a court to be compelled to guess at the theory underlying t he a gency's action; nor can a court be expected to chisel that which must be precise from what the agency has left vague and indecis ive. In other words, 'We must kno w w hat a decision means before the duty becomes ours to say whether it is right or wrong.'-47-

Id. at 196 (quoting United States v. Chicago, M., St. P. & P. R.R. Co. , 294 U.S. 499, 511 (1935)). The Chenerydecisions have continuing vitality today. See , e.g. , NLRB v. K. River Cmty. Care, Inc. , 532 U.S. 706, 721 (2001); Nat'l Tower, LLC v. Plainville Zoning Bd. of Appeals , 297 F.3d 14, 21 (1st Cir. 2002); Rizek v. SEC , 215 F.3d 157, 161 (1st Cir. 2000) (citing the "well-established rule that agencies must sufficiently articulate the grounds of their decisions so that appellate courts are able to perform their function of judicial review meaningfully.")

Despite the NRC's disproportionate attention to its original premise that it could alter its procedures for the lice nsing of nuclear reactors free of the on-the-record requirements of the APA, and its scant attention to the APAcompliance argument that prevails here (found primarilyin several sentences placed in the Final Rule), I agree with Judge Selya that the NRC preserved the rationale that has become the basis for affirming its rulemaking initiative. However, if the Chenerycases have a spirit, the NRC came perilously close to violating it here, with the unfortunate consequences for efficient administrative process an d ef fective appellate review that I have already described. Although, to quote CheneryII, we did not have "to guess at the theory underlying the agency's action," 332 U.S. at 197, we had to find it with too little help from the parties because of the NRC's failure to understand the APA's flexibility.-48- Further History The N RC's belated recognition that the new licensing procedures might in fact comply with the on-the-record requirements of the APA is all the more surprising because sources contemporaneous with the APA's passage suggest that flexibility has al ways been a hallmark of the APA, and that agencies have al way s hadconsiderable discretion to structure on-the-record hearings to suit their particular needs. This flexibility is nowhere more evide nt than in determining the role of cross-examination in o n the-record hearings.

The Attorney General's Manual on the Administrative Procedure Act (1947) is a "key document" for interpreting the APA, Am. Min. Cong. v. Mine Safety & Health Admin. , 995 F.2d 1106, 1109 (D.C. Cir. 1993). We have described it as c ontaining the "most authoritative" account of the history of the Act's passage, Warder

v. Shalala , 149 F.3d 73, 79 (1st Cir. 1998). See also V. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc. , 435 U.S. 519, 546 (1978) (the Attorney General's Manu al i s "a contemporaneous interpretation previously given some deference by this Court because of the role played by the Department of Justice in drafting the legislation") . The Attorney General’s Manual offers a vision of cross-examination entirely consistent with that advanced by the NRC in this rulemaking.-49- The Manual begins by stressing the general importance of cross-examination in on-the-record hearings, cautioning that "it is clear that the 'right to present his case or defense by oral or documentaryevidence' does not extend to presenting evidence in affidavit or other written f orm so as to deprive the agency or opposing parties of opportunity for cr oss-examination." AG's Manual at 77. Technical evidence may be introduced in written form

as long as its admis sio n "would not prejudicially deprive other parties or the agency of opportunity for cross-examination. Thus, t echnical and statistical data may be introduced in conven ien t written formsubject to adequate opportunity for cross-examination and rebuttal." Id.

The AttorneyGener al's Manual goes on, however, to ack nowledge that the general opportunity to cross-examin e i s subject to restrictions which become more salient as the complexity of the hearing's subject matter increases. On this point, the Manual quotes from the Report of the House Committee on the Judiciaryon the APA. The Report cautions that the APA's provision for "such cross-examination as may be required for a full and true disclosure of the facts" does not confer a right of so-cal led 'unlimited ' cross-examination. Presiding officers will have to make the necessary initial determination whether the cross-examination is pressed to unreasonable lengths by a party or whether it is required for the 'full andtrue disclosure of the facts' stated in the provision. Nor is it the intention to eliminate the authority of agencies to confer sound discretion upon presiding officers in the-50-

matter of its extent . T he test is -- as the section states -- whether it is required 'for a full and true disc losure of the facts.' In many rule making proceedings where the subject matter and evide n ce are broadlyeconomic or statistical in ch aracter and the parties or witnesses numerous, the direct or reb u ttal evidence may be of such a nature that cross-examination adds nothing substantial to the recordand unnecessarily prolongs the hearings. H.R. Rep. No. 1980, 79th Cong., 2d Sess., 37.

The Attorney General’s Manual andthe House Report serve

as good indicators that Congress, when it pas sed the APA, understoodthat agencies needed a considerable amount of flexibilityin fashioning hearing procedures for on-the-record hearings. Despite the frequent use of terms like "trial-type" and "quasi-judicial" over the years to refer to on-the-record hearings, agencies have always been able to adapt their procedures for onthe-recordhearings under the APA. Today, this statute of general applicabilitygoverns the procedures for an enormous variety of hearings -- everything from relatively simple claims for workers' compensation, to enforcement proceedings under the National Labor Relations Act or the Occupational Health and Safety Act, to complex rate-setting hearings before the Federal Energy Regulatory Commission. See Manual for Administrative Law Judges (ALJ Manual), 49-51. This historical flexibility is confirmed by a modern-day guide to the conduct of on-the-record hearings, the Manual for Administrative Law Judges, which provides a thorough overv iew of15 See http://www.oalj.dol.gov/public/apa/refrnc/malj.pdf. The

current edition of the Manual is not an official government publication. Previous editions of this Manual, however, had been publishedby the Administrative Conference of the United States (ACUS), a government body. Prof. Morell E. Mullins of the Universityof Arkansas at Little Rock School of Law was the principal editor and revisor of the third edition in 1990. After Congress eliminated funding for the ACUS in the 19 90s , Prof. Mullins took it upon himself in 2001 to reproduce the Manual on the web in somewhat updated form. Recently, this 2001 "interim Internet edition," as he called it, was published in substantially un changedform in the journal of the National Association o f Administrative Law Judges, a nonprofit professional organization. Also, the website of the Office of Administrative Law Judges, U.S. Department of Labor, links to the Manual (while not guara nteeing its accuracy or expressing a view on its contents). -51- the current state of on-the-record proce dure s. 15 Although the Manual is primarily designed as a practical aid for ALJs, it also offers an analysis of the fundamental requirements of the APA, in cludin g a section on the special problems presented by complex hearings at both the agencyand ALJ levels. See ALJ Manual at 49- 70. Ultimately, if the ALJ Manual tells us anything about what a typical on-the-record hearing looks like, it is that there is no typical hearing.

In its section on complex hearings, the ALJManual begins bynoting that the term "quasi-judicial" is most often used to refer to "relatively simple cases." Id. at 50. "Typically, these quasi-judicial proceedings are near ly identical to a formal adjudication without a jury," with the full panoply of pleadings, pre-hearing discovery, and witnesses who testify orally on direct andcross-examination. Id. at 49. Complex cases, however, are16 O f c ourse, 5 U.S.C. § 556(d) provides that, in deciding

applications for initial licenses, all evidence may be submittedin written form only s o l ong as "a party will not be prejudiced thereby." -52- " another matter," bearing less resemblance to our traditiona l concept of a civil trial. Id. at 51. The AL J Manual cites the NRC's use of ASLBs as an "innovative approach to complex cases" with highly technical subject matter. Id. at 52. In general, the ALJManual emphasizes the use of written submissions of direct and rebuttal evidence: "Typically, much of the testimony is high ly technical and lengthy, and is submitted in written form prior to the hearing." Id. at 51. "Preparation and exchange of direct and rebuttal evidence is usually beneficial in complex cases." Id. at 56. 16 Like the Attorney Ge neral' s Manual, the ALJ Manual emphasizes the basic importance of the opportunity to cross-examine in on-the-record hearings, noting that "judges should be extremely cautious about denying parties a n opp ortunity to cross-examine witnesses." Id. at 55 n.149. In the end, however, and again like the Attorney General's Manual, the ALJ Manual also acknowledges the agencies' need to adapt hearing procedures to suit especially complex cases, obser ving that "[u]nless witness credibility is involved, cross-examination is frequently confined to clarifying the exhibits, determining the source of the material, and testing the basis for the witness's conclusions." Id. at 83. In fact, the17 Of course, it hardly needs repeating that "[n]aturally, the

Administrator's decision regarding the necessity of holding cross-examination will be subject to judicial review. 5 U.S.C. § 706(2)(A)." Seacoast , 572 F.2d at 880 n.18. -53- ALJManual even notes a proposal by one legal commentator that "the major rebuttal of expert opinion testimony should take place not by cross-examination but by submission, prior to the hearing, of rebuttal testimony prepared by the opponent's experts." Id.

These sources, both contemporaneous with the APA's passage and modern, show that procedures in on-the-record hearings, despite sometimes being described as "trial-type" procedures, can in fact stray considerably from t he pro cedures found in civil trials as the subjects of the administrative proceedings become more complex and more technical. This flexibility is inherent in the APA, and has been acknowledged by commentators and by courts. See Seacoast Anti-Pollution League v. Costl e , 572 F.2d 872, 880 (1st Cir. 1978) (finding no basis to petitioners' argument that the APArequired presiding officer to afford opportunity for crossexamination); Cellular Mobile Systems of Pa., Inc. v. FCC , 782 F.2d 182, 198 (D.C. Cir. 1985) ("Cross-examination is therefore not an automatic right conferred by the APA; instead, its necessity must be established under specific circumstances by the par ty s eeking it."). 17 With these abundant sources pointing the way, the NR C' s belatedrecognition that the APA c ould, in fact, accommodate its procedural reforms is all the more puzzling.-54- Conclusion For most of the history of th is rul emaking, the NRC arguedthat it did not have to comply with the APA's on-the-record requirements in refashioning its procedures for reactor licensing hearings. Belatedly, and then only sketchily, the NRC advanced the alternative argument that its pro p osed procedures complied with those on-the-record requirements. The staying power of old theories and flawed analogies (the repea ted references to trialtype proceedings) mayaccount for some of this delay. Whatever the reasons, the deleterious effect of this late insight on the rulemaking process and our review of it is undeniable. Countless hours were wasted during the administrative process fighting over the tired issue of whether 42 U.S.C. § 2239 requires reactor licensing hearings to be on the record. Thi s tir ed issue dogged judicial review as well. Although we have done what Chenery requires -- affirming on a basis advanced by the agency itself during the administrative process -- we got there with too little help from the parties. There is a victory here for the NRC, but it should be a cause for self-examination rather than jubilation.