Environmental Law & Policy Center v. United States Nuclear Regulatory Commission , 470 F.3d 676 ( 2006 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-1442
ENVIRONMENTAL LAW AND POLICY CENTER,
BLUE RIDGE ENVIRONMENTAL DEFENSE LEAGUE,
NUCLEAR ENERGY INFORMATION SERVICE,
NUCLEAR INFORMATION AND RESOURCE SERVICE,
and PUBLIC CITIZEN,
Petitioners,
v.
UNITED STATES NUCLEAR REGULATORY
COMMISSION and THE UNITED STATES OF AMERICA,
Respondents,
and
EXELON GENERATION COMPANY, LLC,
Intervening Respondent.
____________
Appeal from the United States Nuclear Regulatory Commission.
No. CLI-05-29
____________
ARGUED SEPTEMBER 29, 2006—DECIDED DECEMBER 5, 2006
____________
Before FLAUM, EVANS, and WILLIAMS, Circuit Judges.
FLAUM, Circuit Judge. In January 2004, the Environ-
mental Law and Policy Center, Blue Ridge Environmental
Defense League, Nuclear Energy Information Service,
Nuclear Information and Resource Service, and Public
2 No. 06-1442
Citizen (collectively “the Environmental Groups”) inter-
vened in Nuclear Regulatory Commission (“NRC”) proceed-
ings regarding an Early Site Permit (“ESP”) for new
nuclear power facilities in Clinton, Illinois. The Environ-
mental Groups contended, among other things, that the
ESP applicant and the NRC failed to consider various
alternative energy sources. After permitting one conten-
tion to proceed for further adjudication, the NRC’s Atomic
Safety Licensing Board (“Board”) determined that the
applicant’s consideration of alternative energy sources
satisfied the requirements of the National Environmental
Policy Act (“NEPA”) and granted summary disposition in
favor of the applicant. The NRC affirmed the Board’s
ruling and issued a dismissal order against the Environ-
mental Groups. For the reasons set forth below, we affirm
the decision of the NRC.
I. BACKGROUND
Federal Guidelines require any entity commencing
construction of a nuclear power plant to obtain a construc-
tion permit and an operating license. Permit applicants
must submit information related to the plant’s design, a
safety assessment of the site, and a report that assesses
the environmental impact of the plant’s construction and
operation. After reviewing a permit application, the NRC
prepares an Environmental Impact Statement (“EIS”) for
the construction permit. If an entity is not yet ready to
construct a nuclear power plant but desires to seek early
approval for a potential construction site, NRC regulations
permit the person to apply for an ESP. The ESP applica-
tion process resolves key site-related safety, environmen-
tal, and emergency preparedness issues before the NRC
authorizes (or declines to authorize) construction on that
site. If granted, the ESP allows an applicant to main-
tain a site for possible future construction of new nuclear
No. 06-1442 3
power facilities for up to twenty years. Moreover, an
applicant may renew the ESP for an additional twenty
year term. However, an ESP does not authorize the holder
to construct a nuclear plant. NRC regulations require
applicants to obtain additional permits before commenc-
ing such construction. Under 10 C.F.R. § 52.17 and § 52.18,
an ESP applicant must submit a complete environmental
report and the NRC must issue an EIS that addresses all
issues NEPA identifies regarding the construction and
operation of a nuclear power plant on the proposed site,
but a project’s benefits need not be discussed at the ESP
stage. If the benefits are not discussed, they must be
evaluated at later permit or licensing stages before
construction may begin.
Persons whose interests may be affected by an NRC
licensing proceeding may file a request for a hearing and
a petition to intervene. The petition must demonstrate
the petitioner’s standing and contain at least one ad-
missible “contention.” An admissible contention is one that
provides sufficient information to show that a genuine
dispute exists on a material issue of fact or law. 10 C.F.R.
§ 2.309(f)(1)(vi). Once the Board chooses to admit a
contention, however, 10 C.F.R. § 2.1205 and § 2.710
provide that any party may file a motion for summary
disposition of a contention, and a contention may be
dismissed if the Board finds that no genuine dispute of
material fact remains.
In this case, Exelon Generation Company (“Exelon”)
applied for an ESP, seeking approval for the construc-
tion of one or two new nuclear reactors on an existing
Clinton nuclear power station site. Exelon is a merchant
generator, which means that it sells power on the open
wholesale market. Unlike a traditional regulated utility,
Exelon is not required to supply the energy needs of any
particular area. In its ESP application, Exelon stated that
it sought to reserve the proposed site for future large-scale,
4 No. 06-1442
baseload nuclear energy generation; that is, the creation of
new energy intended to continuously produce electricity
at or near full capacity, with high availability. Exelon
intended to sell any new energy it generated on the open
wholesale market.
As part of its ESP application, Exelon submitted an
environmental report. Although the report did not address
the general need for power, it examined a number of
alternative energy sources that could generate baseload
power. Exelon evaluated alternative sources in terms of
their ability to produce a baseload power equivalent to the
amount of electricity that the proposed nuclear facility
would produce. In its initial report, Exelon evaluated
wind power coupled with energy storage mechanisms, solar
power coupled with energy storage mechanisms, fuel cells,
geothermal power, hydropower, burning wood water or
other biomass, burning municipal solid water, burning
energy crops, oil-fired plants, coal-fired plants, and natural
gas-fired plants. The report concluded that several of the
alternatives were not viable baseload energy alterna-
tives because, for example, they involved insufficiently
matured technology (fuel cells) or the state lacked suffi-
cient available fuel supplies (geothermal power, hydro-
power, woodwaste, and biomass). The report stated that
wind and solar power, by themselves, were not reasonable
baseload alternatives because they are intermittent
energy sources and therefore cannot maintain contin-
uous full rated capacity (the sun is not always shining, and
the wind is not always blowing). In addition, the report
concluded that power generated from natural gas and
coal had greater environmental impacts on air quality
than a nuclear plant.
After Exelon submitted its environmental report, the
Environmental Groups filed a contention alleging several
shortcomings in Exelon’s evaluation of energy alternatives.
In particular, the Environmental Groups alleged that
No. 06-1442 5
Exelon had failed to adequately consider energy efficiency1
or combinations of wind or solar power with fossil fueled
plants. The Environmental Groups also claimed that
Exelon used flawed information in its evaluation of wind
and solar power. The Board rejected the energy efficiency
claim, reasoning that energy efficiency is not an alter-
native generation method that independent power genera-
tors like Exelon typically employ. In addition, the Board
reasoned, an energy efficiency analysis would essentially
consider the need for power, an analysis that may be
postponed until Exelon requests an actual construction
permit. The Board acknowledged the Environmental
Groups’ contention that Exelon had failed to consider
combining wind or solar power with fossil fueled facilities
and had used potentially flawed and outdated informa-
tion regarding wind and solar power generation methods
(“Contention 3.1”).
After the Board recognized Contention 3.1, Exelon
provided a report evaluating facilities that combined wind
or solar power with fossil fuel. Exelon’s revised evaluation
concluded that coal-fired facilities, gas-fired facilities, or
facilities using a combination of these alternatives were
not environmentally preferable to the proposed nuclear
facility, because the combination would produce environ-
mental impacts greater than or equal to a new nuclear
facility.
After reviewing the submitted information, the NRC
issued a draft EIS, which evaluated a wide range of
reasonable alternatives to nuclear baseload energy. The
draft EIS reached conclusions similar to those reached
1
Energy efficiency was characterized by the Board as “demand
side management,” i.e., measures aimed at reducing energy
consumption. Exelon Generation Co., LLC, No. 52-007-ESP at
21 (Atomic Safety and Licensing Bd. Jul. 28, 2005).
6 No. 06-1442
by Exelon. Specifically, the draft EIS found that
individual wind and solar facilities were not sufficient on
their own to generate baseload power. The draft EIS also
concluded that, from an environmental standpoint, the
nuclear facility would be preferable or equivalent to a
combination facility using wind or solar power and fossil
fuel. The draft also concluded that a new nuclear unit
was preferable in terms of air resources, ecological re-
sources, water resources, and aesthetics.
After the NRC issued the draft EIS, Exelon submitted
a motion for summary disposition of Contention 3.1. In its
motion, Exelon asked the Board to find that Exelon’s
response to the request for additional information cured
its alleged failure to consider all reasonable alternatives.
After the Board permitted the Environmental Groups to
petition to amend Contention 3.1, it concluded that no
genuine disputes of material fact remained. As a result,
the board granted summary disposition of Contention 3.1
in favor of Exelon and terminated the contested portion of
the ESP proceeding. The Environmental Groups then
appealed the Board’s decision to the NRC. The NRC
affirmed the Board’s ruling, and the Environmental
Groups appealed.
II. DISCUSSION
We consider three issues on appeal: whether the dis-
missal of the Environmental Groups from NRC proceed-
ings constitutes a final order under 28 U.S.C. § 2342;
whether the Board properly dismissed the Environ-
mental Groups’ contention that Exelon failed to consider
energy efficiency alternatives; and whether the Board
properly granted summary disposition against the Envi-
ronmental Groups on Contention 3.1.
No. 06-1442 7
A. Jurisdiction
As a threshold matter, the NRC argues that this Court
should not consider the Environmental Groups’ claims
because the NRC’s decision to dismiss them from its
proceedings is not a final order for purposes of 28 U.S.C.
§ 2342(4). Under the Hobbs Act, this Court’s jurisdiction
is limited to review of final orders entered by the NRC in
a proceeding to grant any license or construction permit.
See id.; 42 U.S.C. § 2239. According to the NRC, it has not
yet issued the ESP to Exelon, and, as such, there is no
final order to appeal. In fact, the Board must independ-
ently review the final EIS (which was published on July
28, 2006), and the NRC must then consider it when
deciding whether to issue an ESP. The NRC further
states that the Environmental Groups will have addi-
tional opportunities to raise NEPA-related contentions
and obtain a hearing before the NRC’s final decision on
whether to issue the ESP. Therefore, the NRC asserts, this
lawsuit is premature.
The Environmental Groups, on the other hand, maintain
that the NRC’s ruling was final as it applies to them,
because it terminated their participation in the ESP
proceedings. The Environmental Groups liken the NRC’s
order to a denial of a motion to intervene, which is immedi-
ately appealable. See, e.g., Fla. Power & Light Co. v.
Lorion, 470 U.S. 729 (1985); In re UAL Corp., 408 F.3d
847, 849 (7th Cir. 2005) (holding that denial of motion to
intervene is appealable immediately because it finally
concludes the putative intervenor’s rights). The Environ-
mental Groups argue that they are entitled to chal-
lenge the NRC and Board orders now rather than at some
later time, because those orders deprived them of the right
to further participate in the proceedings. Additionally, they
argue that the agency’s review of alternatives is essentially
complete, because there is no reason to believe that the
8 No. 06-1442
NRC’s analysis will change between now and the issuance
of the ESP.
We agree with the Environmental Groups. Although the
Board initially permitted the Environmental Groups to
intervene, the order granting summary disposition in
favor of Exelon concluded the intervention. This Court has
noted that, in determining the finality of an order, the
relevant considerations include “whether the process of
administrative decisionmaking has reached a stage where
judicial review will not disrupt the orderly process of
adjudication and whether rights or obligations have
been determined or legal consequences will flow from the
agency action.” See Rosenthal & Co. v. Commodity Futures
Trading Comm’n, 614 F.2d 1121, 1127 (7th Cir. 1980)
(citing Port of Boston Marine Terminal Ass’n v.
Rederiaktiebolaget Transatlantic, 400 U.S. 62, 71 (1970)).
Although as of the date of oral arguments, the NRC had
not yet granted the ESP, the Board’s order terminated the
Environmental Groups’ involvement in the agency pro-
ceeding. Therefore, it is clear that the Board’s order
determined the Environmental Groups’ rights and legal
consequences flowed from that determination. Moreover,
since the final EIS already has been published, our re-
view will not disrupt the process of adjudication. Conse-
quently, the order is final and appealable under 28 U.S.C.
§ 2342.
B. Failure to Consider Energy Efficiency
Section 101 of NEPA declares a broad national commit-
ment to protecting and promoting environmental quality.
42 U.S.C. § 4331; Robertson v. Methow Valley Citizens
Council, 490 U.S. 332, 348 (1989). Section 102 of the act
seeks to further those goals by prescribing procedures that
federal agencies must follow when recommending or
reporting on major federal actions “significantly affecting
No. 06-1442 9
the quality of the human environment.” See 42 U.S.C.
§ 4332; Robertson, 490 U.S. at 348. The required report or
recommendation, commonly called an Environmental
Impact Statement (“EIP”), must address the following in
detail:
(i) the environmental impact of the proposed action,
(ii) any adverse environmental effects which cannot
be avoided should the proposal be implemented,
(iii) alternatives to the proposed action,
(iv) the relationship between local short-term uses of
man’s environment and the maintenance and enhance-
ment of long-term productivity, and
(v) any irreversible and irretrievable commitments of
resources which would be involved in the proposed
action should it be implemented.
See 42 U.S.C. § 4332; Robertson, 490 U.S. at 348. Although
NEPA requires detailed consideration of the environmental
consequences of federal projects, it does not mandate
particular results. Highway J Citizens Group v. Mineta,
349 F.3d 938, 953 (7th Cir. 2003). It simply prescribes the
necessary process. Id.This Court’s review of agency action under NEPA is
governed by the Administrative Procedure Act (“APA”).
Mineta, 349 F.3d at 952. The APA instructs courts to set
aside agency action only if it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with the
law.” 5 U.S.C. § 706(2)(A). Under this standard, although
a reviewing court’s inquiry is “searching and careful . . .
the ultimate standard of review is a narrow one.” Mineta,
349 F.3d at 952 (citations and quotations omitted). A
reviewing court must make two inquiries: 1) whether the
agency’s decision was based on a consideration of the
relevant factors; and 2) whether the agency has made a
10 No. 06-1442
clear error in judgment. Id. at 952-53. If an agency has
considered the proper factors and makes a factual determi-
nation regarding the significance of environmental im-
pacts, that determination implicates substantial agency
expertise and is entitled to deference. Id. at 953. This
Court cannot substitute its own judgment for that of the
agency as to the environmental consequences of its actions.
Id. In fact, in applying the arbitrary and capricious
standard, this Court’s only role is to ensure that the
agency has taken a hard look at environmental conse-
quences. Id.The Environmental Groups challenge two aspects of the
Board’s decision to decline consideration of energy effi-
ciency alternatives. First, they contend that the Board
unnecessarily excluded reasonable alternatives like
energy efficiency measures by adopting Exelon’s goal of
generating baseload energy. In any case, the Environmen-
tal Groups argue that the Board should have considered
energy efficiency alternatives in a “need for power”
analysis—an analysis that the Board refused to conduct
altogether.
The Environmental Groups claim that the Board’s
rejection of reasonable energy efficiency alternatives is
contrary to the “searching inquiry into alternatives”
required by NEPA. See Simmons v. U.S. Army Corps of
Eng’rs, 120 F.3d 664, 666 (7th Cir. 1997). We have held
that blindly adopting the applicant’s goals is “a losing
proposition” because it does not allow for the full con-
sideration of alternatives required by NEPA. Id. at 669.
NEPA requires an agency to “exercise a degree of skepti-
cism in dealing with self-serving statements from a prime
beneficiary of the project” and to look at the general goal
of the project rather than only those alternatives by which
a particular applicant can reach its own specific goals. Id.In Simmons, the City of Marion, Illinois sought to build
a new water reservoir to address its need for water. 120
No. 06-1442 11
F.3d at 666. Marion and the Army Corps of Engineers
defined the project’s purpose as “supplying two users . . .
from a single source—namely a new lake.” Id. at 667.
Accordingly, when the Corps prepared an EIS, it confined
its analysis of reasonable alternatives under NEPA to
single-source alternatives. Id. at 667-68. The Court
determined that the Corps and Marion had defined the
project’s purpose too narrowly. Id. The common problem
faced by Marion and a neighboring district was “a thirst
for water.” Id. at 667. As such, the goal of the project
was to quench that thirst, and it was error for the Corps
to look into only single -source alternatives. Id. Therefore,
we held, the procedures undertaken by the Corps did not
satisfy NEPA because the EIS did not examine the full
range of reasonable alternatives, i.e., multiple-source
alternatives. Id. The Environmental Groups argue that
the instant case is analogous to Simmons because the
Board “stacked the deck” against reasonable alterna-
tives by adopting Exelon’s limited business purpose of
generating baseload power. According to the Environmen-
tal Groups, this purpose favors Exelon’s proposed new
nuclear plant by rendering energy efficiency alternatives
inconsistent with the project’s goal.
Exelon and the NRC attempt to distinguish Simmons.
They claim Simmons stands for the simple proposition
that the purpose of a project cannot be so narrow as to
define reasonable alternatives out of existence. In any
case, they contend, Simmons does not require an agency
to disregard a private applicant’s purpose for a project
if that purpose is sufficiently broad to allow consideration
of reasonable alternatives. In affirming the Board’s
decision, the NRC held that it had not violated Simmons
because Exelon considered numerous alternatives to
meet the project’s general goals:
It would be as if in Simmons the Seventh Circuit
ordered the Army not only to consider alternate ways
12 No. 06-1442
to supply more water but also to examine whether
Marion and the water district could reduce their need
for water by prohibiting lawn-watering or requiring
low-flow toilets. Nothing in Simmons requires a NEPA
inquiry so far afield from the original proposal.
Exelon Generation Co., LLC, Nuclear Reg. Rep. 31,493,
2005 WL 4131570 at *4 (Dec. 12, 2005). In other words,
according to the NRC, just as Simmons did not require the
Army Corps to reconsider the town’s “need for water,” it
did not require the Board to consider alternatives to
generating new energy. The NRC found such an inquiry
particularly useless given that Exelon dealt only in the
sale of wholesale power and had neither the authority nor
the incentive to implement energy efficiency measures.
The Board’s decision relied on case law supporting the
proposition that a reviewing agency can take an applicant’s
goals for a project into account. For example, in Citizens
Against Burlington, Inc. v. Busey, the court noted that an
agency’s evaluation of reasonable alternatives is “shaped
by the application at issue.” 938 F.2d 190, 199 (D.C. Cir.
1991). The Board also noted that where a federal agency is
not the sponsor of a project, the “consideration of alterna-
tives may accord substantial weight to the preferences of
the applicant and/or sponsor in the siting and design of the
project.” City of Grapevine v. Dep’t of Transp., 17 F.3d
1502, 1506 (D.C. Cir. 1994).
We are persuaded by the Board’s analysis. Because
Exelon was a private company engaged in generating
energy for the wholesale market, the Board’s adoption of
baseload energy generation as the purpose behind the
ESP was not arbitrary, capricious, an abuse of discretion
or otherwise not in accordance with law. See APA
§ 706(2)(A). The adopted purpose was broad enough to
permit consideration of a host of energy generating
alternatives. Moreover, it was reasonable for the Board
No. 06-1442 13
to conclude that NEPA did not require consideration of
energy efficiency alternatives when Exelon was in no
position to implement such measures. The Environmental
Groups further contend that the Board should have
independently analyzed energy efficiency alternatives,
regardless of the project’s stated purpose because NEPA
requires consideration of the need for power as part of
any alternatives analysis. The NRC responds that the
Board equated analysis of energy efficiency alternatives to
a “need for power” analysis and that under NRC regula-
tions 10 C.F.R. §§ 52.17(a)(2) and 52.18, Exelon and the
NRC did not need to conduct a “need for power” analysis
at the ESP stage. Instead, the Board reasoned, it could
defer that analysis until a later combined licensing
proceeding.
Under NRC regulations, an applicant may defer an
analysis of the need for power until a combined license
application, when construction will be authorized. See 10
C.F.R. § 52.21. Because an ESP does not authorize con-
struction, the evaluations conducted at the ESP stage
are intended to provide early resolution to some—but not
all—of the environmental issues. 10 C.F.R. §§ 52.79(a)(1)
and 52.89 (stating that “any significant environmental
issue not considered” at the ESP stage must be ad-
dressed when the holder of an ESP applies to commence
construction). Although the Environmental Groups contend
that the NRC regulations violate NEPA, the agency
regulations at issue are not inconsistent with the environ-
mental law, because all relevant issues will eventually be
considered. Courts have permitted agencies to defer
certain issues in an EIS for a multistage project when
detailed useful information on a given topic is not “mean-
ingfully possible” to obtain, and the unavailable informa-
tion is not essential to determination at the earlier stage.
See, e.g., County of Suffolk v. Sec’y of the Interior, 562 F.2d
1368, 1378 (2d Cir. 1977). In this case, it is especially
14 No. 06-1442
reasonable to defer the “need for power” analysis to a later
stage considering that construction on the nuclear reactor
could begin as late as forty years from now. The need for
power could vary considerably over that time period, so
any analysis at this stage is speculative at best. The NRC,
in its broad discretion to implement procedural rules under
the APA, see, e.g., Vermont Yankee Nuclear Power Corps.
v. Natural Res. Def. Council, Inc., 435 U.S. 519, 543-44
(1978), deferred analysis that would be merely speculative
at such an early stage. That decision was not arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with the law. We therefore affirm the NRC’s
dismissal of the Environmental Groups’ energy efficiency
contention.
C. Summary Disposition of Contention 3.1
The final claim that the Environmental Groups advance
is that the Board should not have granted summary
disposition in favor of Exelon regarding Contention 3.1.
The Environmental Groups argue that the NRC should
have held a full evidentiary hearing in order to conduct
a rigorous exploration and objective evaluation of clean
energy alternatives and should have considered the
comparative costs of the nuclear plant and the clean
energy alternatives. They also claim that the NRC violated
NEPA by distorting the combinations of clean energy
alternatives.
It is true that NEPA requires an agency to “rigorously
explore and objectively evaluate all reasonable alterna-
tives,” 40 C.F.R. § 1502.14(a), and to take a “hard look” at
the environmental impacts of the proposed action and
its alternatives. Robertson, 490 U.S. at 350. However, as
this Court noted in Van Abbema v. Fornell, “it is not our
role to second-guess. We merely consider whether the
[agency] followed required procedures, evaluated relevant
No. 06-1442 15
factors and reached a reasoned decision.” 807 F.2d 633,
636 (7th Cir. 1986). The Environmental Groups’ claims
regarding Contention 3.1 go to the substantive judg-
ments made by the Board and the NRC—judgments this
Court will defer to as long as they satisfy NEPA proce-
dures and are not clearly wrong.
The Board’s 57-page memorandum and order granting
summary disposition in favor of Exelon demonstrates
that the board rigorously explored all reasonable alterna-
tives and took a hard look at the environmental impacts
of the proposed action. See Exelon Generation Co., LLC,
No. 52-007-ESP (Atomic Safety and Licensing Bd. Jul. 28,
2005). The Board addressed the Environmental Groups’
concerns point by point, carefully considering each issue
and providing reasons for each decision it made. It is
unnecessary to repeat the Board’s analysis here. Whether
or not this court would have made the same substantive
judgment is irrelevant so long as the decision is not
arbitrary. It is clear that the Board satisfied NEPA’s
procedural requirements and rendered a decision that
thoughtfully considered all reasonable alternatives. We
therefore affirm the decisions of the Board and the NRC.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the NRC and its
Board on all matters.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—12-5-06