Ninth Circuit Case Requires the Consideration of Terrorist Risks Under NEPA
 
July 25, 2006
 
Donald M. Clary- Los Angeles

On June 2, 2006, the United States Ninth Circuit Court of Appeals issued a decision that could potentially add to the NEPA burdens of project proponents in situations where their projects may be vulnerable to terrorist attacks. In San Luis Obispo Mothers v. NRC, the Ninth Circuit considered the question whether the likely environmental consequences of a potential terrorist attack on a nuclear facility must be considered in an environmental review required under the National Environmental Policy Act (NEPA).

Pacific Gas and Electric Company (PG&E) filed an application with the Nuclear Regulatory Commission (NRC) under 10 C.F.R. Part 72 for a license to construct and operate an Interim Spent Fuel Storage Installation (storage installation or ISFSI) at PG&E’s Diablo Canyon Power Plant (Diablo Canyon) in San Luis Obispo, California. The NRC granted the application.

The question presented on appeal was whether, in doing so, the NRC had complied with federal statutes [including the NEPA of 1969, 42 U.S.C. §§ 4321-4437, the Atomic Energy Act of 1954 (AEA), 42 U.S.C. §§ 2011-2297g, and the Administrative Procedure Act (APA), 5 U.S.C. §§ 551-706]. While dismissing the Petitioner’s AEA and APA arguments, the Ninth Circuit agreed that the NRC had failed to comply with NEPA.

NEPA imposes on federal agencies procedural requirements that force consideration of the environmental consequences of agency actions. At NEPA’s core is the requirement that federal agencies prepare an environmental impact statement (EIS), or: include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on – (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 enhancement 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. Dept. of Transp. v. Pub. Citizen, 541 U.S. 752, 757 (2004).

As an alternative to the EIS, an agency may prepare a more limited environmental assessment (EA) concluding in a “Finding of No Significant Impact” (FONSI), briefly presenting the reasons why the action will not have a significant impact on the human environment. If, however, the EA does not lead to the conclusion that a FONSI is warranted, the agency remains obligated to prepare an EIS. Id.

On December 21, 2001, PG&E applied to the NRC (pursuant to 10 C.F.R. Part 72) for a license to construct and operate a storage installation at Diablo Canyon. The storage installation was designed to permit the necessary and on-site storage of spent fuel, the byproduct of the two nuclear reactors at that site. PG&E expected to fill its existing spent fuel storage capacity at Diablo Canyon sometime in 2006. Therefore, unless additional spent fuel storage capacity was created, the Diablo Canyon reactors could not continue to function beyond 2006.

On July 19, 2002, the San Luis Obispo Mothers for Peace, a nonprofit corporation concerned with Diablo Canyon’s local impact; the Sierra Club, a nonprofit corporation concerned with national environmental policy; and Peg Pinard, an individual citizen, (collectively, the Petitioners) submitted a hearing request and a petition to intervene in the proceeding. Among the considerations raised by the Petitioners was PG&E’s alleged failure to address environmental impacts of terrorist or other acts of “malice or insanity.”

The Atomic Safety and Licensing Board rejected the Petitioner’s position on this issue. In a referral from the Board’s decision, the NRC also rejected the Petitioner’s contentions relating to terrorism.

In September of 2002, prior to the NRC’s decision on the initial petition, the Petitioners submitted a second petition, this time requesting suspension of the storage installation licensing proceeding pending comprehensive review of the adequacy of Diablo Canyon’s design and operation measures for protection against terrorist attack and other acts of malice or insanity. Unlike the July 19 petition, this one addressed security measures for the entire Diablo Canyon complex, not merely the storage installation.

In a memorandum and order, CLI-02-23, 56 NRC 230, the NRC denied the September 2002 petition. In rejecting the petition, the Commission reasoned that by not suspending operating licenses at installations and power plants following the September 11, 2001, terrorist attacks, it had demonstrated its implicit conclusion that the continued operation of these facilities neither posed an imminent risk to the public health, nor was inimical to the common defense. Further, the Commission concluded that because it had already initiated a thorough review of its safeguards and physical security program, there was no reason to suspend the Diablo Canyon licensing proceeding to address the terrorism-related concerns raised by the Petitioners.

The NRC stated that “[t]here certainly is no reason to believe that any danger to public health and safety would result from mere continuation of this adjudicatory proceeding,” given that the proceeding was in its initial stages, that construction was not scheduled to begin for several years, and that the Petitioners would be able to comment on any changes in the rules resulting from the Commission’s ongoing review of terrorism-related matters if and when they occur. In a subsequent memorandum and order, CLI-03-12, 58 NRC 185 (2003), the NRC denied the petitions for agency review of the Licensing Board’s decisions that “cumulatively, rejected challenges to [the PG&E] Installation application.”

In October of 2003, the Spent Fuel Project Office of the NRC’s Office of Material Safety and Safeguards released its Environmental Assessment Related to the Construction and Operation of the Diablo Canyon Independent Spent Fuel Storage Installation (EA). The 26-page EA contained the NRC’s conclusion “that the construction, operation, and decommissioning of the Diablo Canyon Installation will not result in significant impact to the environment,” and therefore that “an [EIS] is not warranted for the proposed action, and pursuant to 10 C.F.R. [§] 51.31, a Finding of No Significant Impact is appropriate.”

After the issuance of the EA, the NRC approved the ISFSI.

While dismissing Petitioner’s AEA and APA arguments, the Ninth Circuit agreed with the Petitioners that the NRC had, by issuing the EA, failed to comply with NEPA. With regard to the concerns that the Petitioners had expressed concerning terrorism, the NRC had justified its determination on the generic grounds that NEPA does not require consideration of the environmental effects of potential terrorist attacks. In making this determination, the NRC relied on a previous case, Private Fuel Storage, CLI-02-25, 56 NRC 340 (2002), where it “consider[ed] in some detail the legal question whether NEPA requires an inquiry into the threat of terrorism at nuclear facilities.” 56 NRC 340, 343 (2002).

In that case, the state of Utah (an intervenor) had contended that the September 11 terrorist attacks “had materially changed the circumstances under which the Board had rejected previously proffered terrorism contentions by showing that a terrorist attack is both more likely and potentially more dangerous than previously thought.” Id. at 345. The NRC concluded that even following the September 11 attacks, NEPA did not impose such a requirement, reasoning:

In our view, an EIS is not an appropriate format to address the challenges of terrorism. The purpose of an EIS is to inform the decisionmaking authority and the public of a broad range of environmental impacts that will result, with a fair degree of likelihood, from a proposed project, rather than to speculate about ‘worst-case’ scenarios and how to prevent them. Id. at 347.

The NRC determined that four grounds “cut against using the NEPA framework” to consider the environmental effects of a terrorist attack: (1) the possibility of a terrorist attack is far too removed from the natural or expected consequences of agency action; (2) because the risk of a terrorist attack cannot be determined, the analysis is likely to be meaningless; (3) NEPA does not require a “worst-case” analysis; and (4) NEPA’s public process is not an appropriate forum for sensitive security issues. Id. at 348.

The Ninth Circuit reviewed each of these four grounds for reasonableness, and concluded that they did not, either individually or collectively, support the NRC’s categorical refusal to consider the environmental effects of a terrorist attack in its NEPA analysis of the PG&E application.

With regard to the first criteria (the proximity of the agency action to the potential terrorist attack), the Court held that the NRC had been unreasonable in determining to “categorically dismiss” the possibility of a terrorist attack on the planned storage installation and the entire Diablo Canyon facility as too “remote and highly speculative” to warrant consideration under NEPA. In this regard, the Court noted that this position was inconsistent with the government’s own efforts and expenditures to combat this type of terrorist attack against nuclear facilities.

The Court also rejected the NRC’s second contention, that the risk of a terrorist attack cannot be adequately determined. In this regard, the Court noted that the NRC’s position that such risks are “unquantifiable” missed the point. The Court stated:

The numeric probability of a specific attack is not required in order to assess likely modes of attack, weapons, and vulnerabilities of a facility, and the possible impact of each of these on the physical environment, including the assessment of various release scenarios … If the risk of a terrorist attack is not insignificant, then NEPA obligates the NRC to take a “hard look” at the environmental consequences of that risk …

In this regard, the Court also noted that the NRC, while protesting the possibility of conducting a meaningful review, had stated that it had simultaneously conducted its own “top to bottom” terrorism review. The Court noted that this left the Commission in the tenuous position of insisting on the impossibility of a meaningful, quantifiable assessment of terrorist attacks, while claiming to have undertaken precisely such an assessment in other contexts. The Court therefore held that precise quantification of a risk is not necessary to trigger NEPA’s requirements.

The Court characterized the NRC’s third ground of denial, that it is not required to conduct a “worst-case” analysis of such an application as a “non sequitur.” The Court agreed with the NRC that it is not, under current law, required to conduct a “worst-case” analysis of each suggested risk. However, the Court indicated that, while this was the case, the Petitioners were still entitled to request an analysis of the range of environmental impacts that were likely to result in the event of a terrorist attack on the storage installation.

Finally, the Court indicated that the NRC’s reliance on the fourth factor, that it cannot comply with its NEPA mandate because this was a potentially confidential area that was subject to “security risks,” was also unreasonable. The Court expressed concern with the need to protect certain sensitive information. However, it determined that such security considerations could not result in a “NEPA waiver” precluding review, but that these concerns could support the modification of some of the NEPA procedures to preserve security.

For these reasons, the Court granted the petition (to the extent it raised NEPA issues) and remanded it for the agency to complete the NEPA review. However, the Court also did not attempt to preordain the outcome. It stated:

Our identification of the inadequacies in the agency’s NEPA analysis should not be construed as constraining the NRC’s consideration of the merits on remand, or circumscribing the procedures that the NRC must employ in conducting its analysis. There remain open to the agency a wide variety of actions it may take on remand, consistent with its statutory and regulatory requirements. We do not prejudge the merits of the inquiry. We hold only that the NRC’s stated reasons for categorically refusing to consider the possibility of terrorist attacks cannot withstand appellate review based on the record before us.

Accordingly, the Court held that that the EA prepared in reliance on the NRC’s determination was inadequate and did not comply with NEPA. This decision may have serious implications for any projects that could be vulnerable to terrorist attacks. Intervenors in such proceedings can be expected to raise these concerns. The additional steps necessitated by such a review may significantly add to the administrative burdens and time required to review such projects.

For more information, e-mail Donald M. Clary at donald.clary@hklaw.com or call toll free, 1-888-688-8500.