In authorizing the NRC to issue licenses for nuclear power plant operation, the AEA delegates to the Commission broad discretion to decide what information it requires in making the licensing decision.1 The Act provides that "the applicant shall state such technical specifications ... as the Commission may, by rule or regulation, deem necessary in order to enable it to find that the [applicant's activity] ... will provide adequate protection to the health and safety of the public." 42 U.S.C. Sec. 2232 (1976).

The Act itself establishes a two step licensing procedure. An applicant for a nuclear power plant operating license must first obtain a construction permit. Section 189(a) of the Act mandates a public hearing before a construction permit can be issued.2 After a permit is issued, the prospective operator must apply for a license. The Act requires a hearing before the license is issued only if requested by an interested party.

If a hearing is requested, the Commission, under its regulations, designates a licensing board to conduct the proceeding. The licensing board, however, determines only whether the issuance of a license is authorized; the Commission actually issues the license at a later date. 10 C.F.R. Secs. 2.760, 2.760a (1983). To authorize a license, the board must find that "there is reasonable assurance that the activities to be authorized by the operating license can be conducted without endangering the health and safety of the public ...." 10 C.F.R. Sec. 2.104 (1983). The scope of the board's hearing is determined by the specific issues material to that determination that are raised by the requesting party.

If the licensing board authorizes a license, prior to its issuance the NRC staff conducts preoperational testing to ensure that the operation of the completed plant comports with the expectations underlying the authorization. If in the course of this final review significant safety hazards are discovered, then additional hearings may be held at the Commission's discretion. See generally Pacific Gas & Electric Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), 14 NRC 950 (1981).

B. History of Emergency Preparedness Exercises

After the 1979 accident at Three Mile Island (TMI) the Commission, for the first time, required offsite emergency plans as a condition of a nuclear reactor operating license. Up to that time, state and local governments prepared such emergency plans on a voluntary basis, if at all. Following the TMI incident, the President's Commission on the Accident at Three Mile Island found that "the [emergency offsite] response was dominated by an atmosphere of almost total confusion." Report of the President's Commission on the Accident at Three Mile Island--The Need for Change: The Legacy of TMI 17 (1979). The President's Commission recommended that in the future before a utility was granted an operating license, offsite emergency response plans should be developed by state authorities, evaluated by the Federal Emergency Management Agency (FEMA), and the means for implementing them put in place.

The TMI episode also produced a shift in the NRC's attitude about offsite emergency planning. After the accident, the Commission announced that it now "view[ed] emergency planning as equivalent to ... siting and design in public protection." 44 Fed.Reg. 75169 (1979) (proposed rule on emergency response plans). In 1980, after rulemaking proceedings, the Commission published its first final rule addressing offsite emergency preparedness. This rule provides:

No operating license for a nuclear power reactor will be issued unless a finding is made by NRC that the state of onsite and offsite emergency preparedness provides reasonable assurance that adequate protective measures can and will be taken in the event of a radiological emergency.

10 C.F.R. Sec. 50.47(a)(1) (1983). Pursuant to the rule, FEMA is to make findings and determinations on whether offsite "emergency plans are adequate and whether there is reasonable assurance that they can be implemented." 10 C.F.R. 50.47(a)(2) (1983). The Commission in turn will base its findings on the state of emergency preparedness on FEMA's findings, which constitute a rebuttable presumption as to the adequacy and implementation capability of the emergency plans. Id.

The rule, however, expressly conditions licensing of plants on satisfaction of sixteen specific standards for emergency preparedness plans. One of those standards requires that

[p]eriodic exercises are (will be) conducted to evaluate major portions of emergency response capabilities, periodic drills are (will be) conducted to develop and maintain key skills, and deficiencies identified as a result of exercises are (will be) corrected.3

10 C.F.R. Sec. 50.47(b)(14) (1983). For new plants,

a full scale exercise which tests as much of the licensee, State and local [onsite and offsite] emergency plans as is reasonably achievable without mandatory public participation shall be conducted ... within one year before issuance of the first [full power] operating license.

10 C.F.R. Part 50, Appendix E, Section F1 (1983) (emphasis supplied). As originally promulgated, the rule said nothing specific either way about including the results of these compulsory exercises within the scope of the licensing authorization hearing.4

C. The Challenged Rule on Emergency Exercises

On July 13, 1982, the NRC issued an amendment to its rule on emergency preparedness, eliminating the emergency exercise as a prerequisite to authorization of a license. 10 C.F.R. Sec. 50.47(a)(2) (1983) [hereinafter referred to as the Amendment]. The Amendment added to the language of the original rule the following provision:

Emergency preparedness exercises ... are part of the operational inspection process and are not required for any initial licensing decision.

10 C.F.R. Sec. 50.47(a)(2) (1983). Despite this language, however, it left intact Appendix E's requirement for emergency preparedness plans that full scale exercises be held within one year before full power operation and the original rule's requirement that identified deficiencies be corrected. And, in response to comments by interested parties, the Commission reiterated that "exercise[s] will [still] be held before full power [operation], and all significant deficiencies will be properly addressed." 47 Fed.Reg. 30233 (1982). The Commission's rationale for the Amendment was that it would allow exercises to be held at a time closer to full power operation of a plant, thereby making them more meaningful. See 47 Fed.Reg. 30233 (1982); 48 Fed.Reg. 16693 (1983). It in no way contended in its explanation for the rule, nor does it do so on this appeal, that the exercises are no longer material to its licensing decision. It argues instead that, under the Amendment, "these exercises are treated as part of preoperational testing of nuclear plants, which as a matter of longstanding regulatory practice has been conducted in the post-adjudicatory phase of licensing." Brief for Respondent, Summary of Argument (emphasis supplied). Indeed, it concedes that its "evaluation of the exercise results ... [is] part of the administrative record for the licensing decision and thereby subject to judicial review." Id. (emphasis supplied). In short, the odd choice of language in the Amendment notwithstanding it seems clear from the NRC's accompanying explanation and from its contentions on this appeal that it interprets its own Amendment as retaining evaluation of the offsite emergency exercises as a licensing prerequisite, but as taking the exercises out of the licensing hearing, and making them instead part of the staff's preoperational testing.5

Prior to the promulgation of the Amendment, several interested parties expressed concern that the change would eliminate public participation in the review and assessment of exercises. The Commission responded that "such assessments are not necessary to make the kind of predictive finding on emergency planning called for by the regulations prior to license issuance."6 Id. at 30233. It further noted that an interested party may seek to reopen a concluded hearing or petition for rescission of a license, should the "actual conduct of an exercise identify fundamental defects in the way that an emergency plan is conceived." Id. The Commission distinguished such fundamental defects justifying reopening of a hearing from those "which only reflect the actual state of emergency preparedness on a particular day in question." Id.

Following promulgation of the Amendment, UCS petitioned the NRC to again amend the rule to provide specifically for a hearing on the results of the onsite and offsite exercises. The Commission denied UCS's petition, relying on the need for "the full-scale exercise [to] be held as close in time as possible to commercial operation of the facility." Denial of Petition for Rulemaking, 48 Fed.Reg. 16693 (1983). The Commission stated that "it is clearly impractical to hold the full-power proceeding record open solely for the purpose of litigating the results of the full-scale offsite exercises held at a time close to commercial operation." Id.

At the same time UCS filed its rulemaking petition, it petitioned this court to invalidate the Amendment, on the grounds that it violates Section 189(a) of the AEA, 42 U.S.C. Sec. 2239(a) (1976), by denying affected members of the public a hearing on issues of fact material to the NRC's licensing decision, and that the Commission's decision to adopt the Amendment was arbitrary and capricious. We find that the Amendment is invalid because it denies statutorily prescribed hearing rights.7

We address first the position of counsel for Intervenor, Arkansas Power & Light Company (Utility)--that evaluation of emergency preparedness exercises is part of the NRC's ongoing monitoring function of operating power plants rather than part of its initial licensing responsibilities.8 The Utility argues that the monitoring function encompasses "licensing requirements" that are evaluated in a staff inspection prior to issuance (but after authorization) of a license. Brief for Intervenor-Utility at 32. That argument is flawed, however, because the Commission itself says that it relies on its assessment of emergency exercises in deciding whether to issue a license.9 Clearly, then, those exercises cannot be viewed as falling outside of the licensing proceeding.

Our view tracks the language of section 189(a). That section does not differentiate between the "authorization" and the "issuance" of a license for purposes of guaranteeing a hearing on request. Since the NRC, by its own regulations, has made correction of deficiencies identified in emergency exercises a requirement of its ultimate licensing decision, it would seem to follow that results of these exercises must be subject to the section 189(a) hearing requirement.

We find support for a literal application of section 189(a)'s hearing requirement in two of our own court's recent cases. In Lorion v. NRC, 712 F.2d 1472, 1475 (D.C.Cir.1983), cert. granted, --- U.S. ----, 104 S. Ct. 1676, 80 L. Ed. 2d 152 (1984), we held that section 189(a) does not mandate a hearing when the NRC denies a request that it institute a license amendment proceeding.10 Lorion rejected the rationale of Natural Resources Defense Council, Inc. v. NRC, 606 F.2d 1261 (D.C.Cir.1979), which had held that NRC rejection or approval of such a request came under section 189(a) because it was a necessary first step to license amendment. Lorion, 712 F.2d at 1478; see id. at 1479 n. ** (noting full court approval of Lorion 's position as law of the circuit). In doing so, Lorion relied on section 189's specification of the NRC actions--grants, suspensions, revocations, or amendments of any license or construction permit--that require a hearing, citing language of the Seventh Circuit that "[a]t least on a literal reading of section ... den[ial of a] request ... to initiate a revocation proceeding was not an order final or otherwise, in a section [189(a) ] proceeding". Id. at 1476 (quoting Rockford League of Women Voters v. NRC, 679 F.2d 1218, 1220 (7th Cir.1982)).

This court again adopted a literalist approach toward section 189(a) in upholding the NRC's narrowly defined scope of a licensing amendment proceeding in Bellotti v. NRC, 725 F.2d 1380 (D.C.Cir.1983). In Bellotti, the NRC had found serious deficiencies in management of a nuclear plant in Massachusetts that posed threats to the safety of residents in the area surrounding the plant. The Commission ordered a license amendment which required the licensee to submit, within 30 days, a safety-related plan of action for NRC approval. The Attorney General of Massachusetts sought to intervene and requested a 189(a) hearing on, inter alia, the adequacy of the plan. This court held that, despite the State of Massachusett's obvious interest in the safe operation of the licensee's plant, it had no cognizable adverse interest in the license amendment proceeding which involved only the issue of the Commission's order to the utility to develop a safety plan. "[T]he development of the plan of action [took] place outside the proceeding" and was not part of the NRC's decision to amend the license. Bellotti, 725 F.2d at 1382. We sustained NRC's reading of section 189(a) to grant a hearing only as to the issues material to the Commission's licensing decision.

In arguing that the Amendment contravenes section 189(a), UCS does not object, as did the petitioner in Bellotti, to the Commission's restriction of the issues material to its licensing decision. The Commission, in this case, has defined as such an issue whether the preparedness plans provide adequate assurances of safety in case of a radiological emergency. It concedes that in making its ultimate finding on this issue it relies on emergency exercise evaluations. Thus, unlike in Bellotti, here the Commission has removed from the licensing hearing consideration of evidence that it considers relevant to a material issue in the section 189(a) proceeding as it has defined that issue. Not only is this different from the NRC position we condoned in Bellotti, in fact, it is in tension with Bellotti's conclusion, in the context of a license amendment, that "public participation is automatic with respect to all [section 189(a) ] Commission actions that are potentially harmful to the public health and welfare." Bellotti, 725 F.2d at 1383.

When NRC advocates successfully for a literal construction of 189(a)'s hearing requirement, it must take the bitter with the sweet: If section 189(a)'s precise language controls when intervenors attempt to obtain a hearing on a proposed amendment or to expand a proceeding to cover alternatives to the NRC's proposed amendment, it also controls when the NRC or an intervenor tries to limit the hearing requirement to less than the issues the NRC has itself defined as part of the "licensing proceeding" specified in 189(a). See, e.g., Brooks v. AEC, 476 F.2d 924 (D.C.Cir.1973) (petitioners entitled to a hearing before AEC extended construction permit completion dates); see also 100 Cong.Rec. 10686 (1954) (section 189(a) was amended to "clearly specify the types of Commission activities in which a hearing is to be required"). Just as we ruled in Lorion that until granted, a request for agency action specified in section 189(a) "is not a 'proceeding' where the requestor has any right to present evidence." 712 F.2d at 1478, so must we now rule the converse, i.e., that once a hearing on a licensing proceeding is begun, it must encompass all material factors bearing on the licensing decision raised by the requester. See Porter County Chapter of the Izaak Walton League v. NRC, 606 F.2d 1363, 1368 (D.C.Cir.1979) ("such proceedings as are begun shall be formal, public hearings").

The Commission and the Utility argue, alternatively, that the Amendment still allows enough opportunity for public participation in the assessment of the exercise results to satisfy section 189(a)'s hearing requirement. As stated above, the Commission invites petitioners to reopen the hearing if the exercise identifies fundamental defects in the emergency preparedness plans. The Utility points in particular to the Commission's willingness under the amended rule to reopen closed proceedings or institute new proceedings upon a request by an interested party alleging inadequate emergency preparedness. See Brief for Intervenor-Utility at 45 & n. 23, see also Brief for Respondent at 40 & n. 21 (pointing to willingness to reopen proceedings in cases where other safety deficiencies discovered).

We do not think the Commission's overture is broad enough to comply with section 189(a)'s requirement. We held in Lorion that a request to initiate license amendment proceedings under 10 C.F.R. Sec. 2.206 (1983) is not a section 189(a) proceeding. See 712 F.2d at 1478-79. Our rationale was that the Commission's recognized discretion to "make whatever unilateral inquiries [it] deems necessary" in deciding whether to grant a request for initiation of a proceeding could not be squared with the requirement for a fullfledged hearing in section 189(a) proceedings.11 Id. at 1475. We noted that "unless and until [the request is] granted it is not a 'proceeding' where the requester has any right to present evidence." Id. at 1476. The same regulation, 10 C.F.R. Sec. 2.206, that governs a request to initiate an amendment proceeding also governs the Commission's discretion in denying a request to reopen a closed proceeding. In short, we believe the core question in this case is whether the NRC, consistent with section 189(a), may eliminate a material public safety-related factor in its decision from the licensing hearing in the interest of making the process more efficient. We turn now to that question.

III. DISCRETION TO LIMIT THE SCOPE OF SECTION 189(a) HEARINGS

When a statute requires a "hearing" in an adjudicatory matter, such as licensing, the agency must generally provide an opportunity for submission and challenge of evidence as to any and all issues of material fact.12 See General Motors Corp. v. Federal Energy Regulatory Commission, 656 F.2d 791, 795 & n. 7 (D.C.Cir.1981); Public Service Co. v. Federal Energy Regulatory Commission, 600 F.2d 944, 955 (D.C.Cir.), cert. denied, 449 U.S. 990, 100 S. Ct. 520, 62 L. Ed. 2d 419 (1979); Independent Bankers Association of Georgia v. Board of Governors of the Federal Reserve System, 516 F.2d 1206, 1220 (D.C.Cir.1975); see also Siegel v. NRC, 400 F.2d 778, 784 (D.C.Cir.1968) ("the hearing granted by the [AEC] presumably must embrace all relevant matters"). It is undisputed that the Commission must make an ultimate finding in a licensing proceeding that "there is reasonable assurance that adequate protective measures can and will be taken in the event of radiological emergency." 10 C.F.R. 50.57(a)(1). Both the NRC and FEMA, which has been assigned the task of making a preliminary finding on the adequacy of offsite emergency preparation, require by rule an assessment of emergency exercises, which they then rely on in determining the adequacy of emergency plans to ensure the surrounding community's safety in the case of a radiological accident.13 See 10 C.F.R. Appendix E Sec. F 1.a. (1983); 44 C.F.R. Sec. 350.9 (1983). Although in any particular licensing proceeding, the exercise may not raise any material issues about the adequacy of the preparedness plans, the Commission cannot and does not argue that assessment of these exercises is immaterial to its licensing decision.14

The Commission argues instead that, although assessment of emergency exercises is generally material to the licensing decision, section 189(a) still leaves it discretion to evaluate the exercises outside the hearing procedure preparatory to making its ultimate finding on the adequacy of offsite preparation. Under its amended rule, the "exercises are treated as part of the preoperational testing of nuclear plants, which as a matter of longstanding regulatory practice has been conducted in the post-adjudicative phase of licensing." Brief for Respondents, Summary of Argument. It further claims that reading the AEA to require hearings on all issues relevant to licensing would place an unrealistic and unreasonable burden on the NRC's ability to achieve its "statutory objectives in a timely and efficient manner." Id.

A. The Balance Between Efficiency of Proceedings and the Public's Right to a Hearing

We have already acknowledged that the NRC has great discretion to decide what matters are relevant to its licensing decision, see Siegel, 400 F.2d at 783. We conclude, however, that its discretion to limit public participation in resolving the matters it deems relevant is more circumscribed as a result of section 189(a)'s hearing requirements. Administrators may not lightly sidestep procedures that involve the public in deciding important questions of public policy. Environmental Defense Fund, Inc. v. Ruckleshaus, 439 F.2d 584, 594 (D.C.Cir.1971). "[T]he Commission is entitled to great freedom in its efforts to structure its proceedings so as to maintain their integrity while assuring meaningful public participation, but one of its goals must be to assure that there is meaningful public participation." Bellotti, 725 F.2d at 1389 (Wright, J., dissenting) (emphasis in original).

In this case, we believe the Commission has upended the balance struck by Congress between efficiency and public participation. In 1961, the AEC requested that Congress relieve it of the burdens and delays caused by licensing hearings. Congress relieved the Commission of these burdens only to the extent of allowing licensing without a hearing in the absence of a request. Congress was influenced in that decision by the Staff Report of the Joint Committee on Atomic Energy,15 which stated:

[t]he gravity of the safety questions decided whenever a license is issued makes it important to provide an opportunity for interested members of the public to attend and to furnish an inducement to both applicant and staff to formulate their respective views in terms so susceptible to lay understanding as the subject permits. Moreover, in doing "the homework" for such a hearing, the applicant or the staff may view the problems they have been considering in a new perspective and may become aware of a new way to rethink or reexamine some facet of a problem.

JCAE Report, supra note 12, at 49.

The NRC again went to Congress in 1982 complaining about the delay that public hearings on licensing normally cause, exacerbated at that time by the logistical deployment of the NRC staff to handle the Three Mile Island situation. It asked for authority to grant interim licenses without a hearing. At about the same time, in response to this court's decision in Sholly v. NRC, 651 F.2d 792 (D.C.Cir.1981), vacated and remanded, --- U.S. ----, 103 S. Ct. 1170, 75 L. Ed. 2d 423 (1983), it asked for authority to issue license amendments without hearings if they involved "no significant hazards consideration." S.Rep. No. 113, 97th Cong., 1st Sess. 14 (1982), U.S.Code Cong. & Admin.News 1982, pp. 3592, 3598. Although Congress granted the Commission partial relief on both requests, see 42 U.S.C.A. Secs. 2239(a), 2242 (West Supp.1983), it stressed the importance of the section 189(a) hearing requirement by requiring the agency to hold hearings subsequent to the issuance of the temporary license or the license amendment.16 The House Report noted:

the hearing process serves a vital function as a forum for raising relevant issues regarding the design, construction and operation of a reactor, and for providing a means by which the applicant and the Commission staff can be held accountable for their actions regarding a particular facility.... [T]he hearing process is essential to obtaining public confidence in the licensing process which is needed if the nuclear option is to be preserved.

H.R.Rep. No. 22, Part 2, 97th Cong., 1st Sess. 11 (1982) (emphasis supplied).

The Commission points to one paragraph in the 1961 JCAE Report as showing that Congress contemplated reliance on staff, rather than a public hearing, to resolve issues of implementation left open after the licensing hearing.17 See Brief for Respondent at 30. That paragraph, however, was written in the context of a proposed procedure, not ultimately adopted, entailing a single public hearing prior to issuance of the construction permit with no subsequent hearing required before issuance of the operating license.18 See JCAE Report, supra note 12, at 72-73. Since that proposal envisioned no further hearings after the construction permit was issued to decide issues material to the licensing decision, absent a specific order of a future hearing by the licensing board, those decisions perforce had to be left to staff inspections and recommendations. Congress, of course, did not adopt the single hearing proposal; it opted instead for further public hearings before licensing upon request of any interested party. See Pub.L. No. 87-615, Sec. 2, 76 Stat. 409 (1962). In so doing, we believe Congress vested in the public, as well as the NRC staff, a role in assuring safe operation of nuclear power plants. In sum, we find no basis in the statute or legislative history for NRC's position that Congress granted it discretion to eliminate from the hearing material issues in its licensing decision.

Our decision that the hearing requirement of section 189(a) includes factual issues raised about the preparedness exercises is not overly restrictive. In its supporting statement for the Amendment, the Commission said that "[t]he conduct of full-scale exercises early enough in the licensing process to permit the outcome of the exercises to be fully litigated at the [licensing] hearing is premature." 47 Fed.Reg. 30233 (1982). If that is so, we see nothing to prevent the Commission from holding a special supplementary hearing solely on issues raised by the emergency exercises closer to the date of full power operation.19 And certainly the Commission can limit that hearing to issues--not already litigated--that it considers material to its decision.

So viewed, we find that section 189(a)'s hearing requirement does not unduly limit the Commission's wide discretion to structure its licensing hearings in the interests of speed and efficiency. For example, the Commission argues throughout its brief that the exercise is only relevant to its licensing decision to the extent it indicates that emergency preparedness plans are fundamentally flawed, and is not relevant as to minor or ad hoc problems occurring on the exercise day. Today, we in no way restrict the Commission's authority to adopt this as a substantive licensing standard.20 See Siegel, 400 F.2d at 783 ("broad responsibility ... reposed in [the NRC]" justified its decision that the security of a power plant from enemy takeover is not relevant to licensing); see also North Anna Environmental Coalition v. NRC, 533 F.2d 655, 689-90 (D.C.Cir.1976) (upholding decision in a particular licensing proceeding that siting of plant on geological fault was not unduly unsafe); Westinghouse Electric Corp. v. United States, 598 F.2d 759, 771-73 (3d Cir.1979) (NRC had broad discretion to impose moratorium on decisionmaking regarding recycling of nuclear fuel in light of uncertainty about efficacy of recycling). Under that standard, the NRC could summarily dismiss any claim that did not raise genuine issues of material fact about the fundamental nature of the emergency preparedness plans. See 10 C.F.R. Sec. 2.749 (1983). To avoid summary disposition, a party would have to identify and support specific facts upon which a reasonable inference could be drawn that the plan provided inadequate assurances of safety. See id.; BPI v. AEC, 502 F.2d 424, 428 (D.C.Cir.1974) (under section 189(a) "Commission [may] require that prospective intervenor first specify basis for a hearing"); see also National Souvenir Center, Inc. v. Historic Figures Inc., 728 F.2d 503 at 512-513 (D.C.Cir.1984) (stating test for genuine issue of material fact). If a party's claim survived summary disposition, the Commission might then use expedited procedures to shorten the period between the exercises and the date of license.21 However the Commission wishes to do it, the only central requirement is that there be an opportunity to dispute issues raised by the exercises under the relevant decisionmaking criteria.

B. Assessment of Exercises as Preoperational Testing

Finally, the NRC justifies removing exercise results from the licensing hearing because it believes they are more appropriately treated as part of the preoperational testing process, which has traditionally been exempted from the licensing hearing. Brief for Respondent at 26. The AEA does not explicitly except preoperational testing from section 189(a)'s hearing requirement, but the NRC argues that such an exception reflects the practical realities of the licensing duties which Congress imposed on it. The argument depends on two propositions: (1) that for certain NRC decisions public hearings serve little purpose and those decisions should be excepted from section 189(a) hearings, and (2) evaluations of emergency preparedness are such decisions.

Although the AEA includes no exceptions to section 189(a), there is something to be said for the first proposition: Obviously, Congress did not mean to require a hearing where a hearing serves no purpose. In determining the scope of such an exception we look to the APA, where Congress exempted from the formal hearing procedures adjudicatory "decisions [that] rest solely on inspections, tests, or elections," 5 U.S.C. Sec. 554(a)(3) (1982), "because those methods of determination do not lend themselves to the hearing process." S.Rep. No. 752, 79th Cong., 1st Sess. 16 (1945). The language of the APA exemption is circumscribed, and does not encompass all decisions which are based on evidence derived from tests or inspections. Were it not so circumscribed, an agency would have unfettered discretion to do away with hearings altogether and replace them with staff inspections as the sole method of developing evidence for its ultimate decision. For example, under such a broad reading, the NRC conceivably could remove safety review of nuclear reactor design from the license hearing by relying solely on tests and inspections to determine that the reactor operates safely. Obviously, the test exemption is not so broad.

In seeking to discern its limits, we look to the legislative history of the APA.22 There, although Congress did not elucidate its reasoning at length, it cited the Attorney General's report that analyzed the exemption as designed for on the spot decisions made by a qualified inspector who himself "saw ... tested ... or examined" the evidence material to the decision.23 There is no indication it was meant to apply to decisions that are made by weighing evidence tendered by third parties. Where, as with preparedness exercises, the decision involves a central decisionmaker's consideration and weighing of many others persons' observations and first hand experiences, questions of credibility, conflicts, and sufficiency surface and the ordinary reasons for requiring a hearing come into the picture.

In light of the scope of the APA's test exemption, we do not believe that evaluations of emergency preparedness exercises fall within the category of determinations that might be excepted from a section 189(a) hearing because they do not lend themselves to the hearing process. In evaluating the exercises, the Commission does more than just review on the scene reports by NRC staff observers. Rather, the Commission is called upon to consider and weigh evidence presented by FEMA, the licensee, and state and local officials as well as its staff in assessing whether the exercises demonstrate that adequate emergency preparedness plans can and will be implemented. In addition, the evaluation of exercises is itself just one, not the "sole," factor in the Commission's overall determination, required under the rule, that, in case of a radiological emergency, there is reasonable assurance that adequate measures can and will be taken to protect the health and safety of the population around a nuclear power plant. Thus, we conclude that evaluation of emergency exercises is not a determination resting solely on a test or inspection so as to qualify for a generic exemption from section 189(a)'s hearing requirement.24

The NRC also argues that Congress has acquiesced in the Commission's longstanding practice of conducting preoperational testing after the licensing hearing, and it now has the discretion to add emergency exercise evaluations to the list of such tests. It refers us to Power Reactor Development Co. v. International Union of Electrical Workers, 367 U.S. 396, 81 S. Ct. 1529, 6 L. Ed. 2d 924 (1961), which involved a challenge to an AEC finding of adequate assurance of safety in a construction permit proceeding. Power Reactor read Congress' failure specifically to require the AEC to make a definitive safety finding at the construction permit stage as acquiescence in the Commission's practice of deferring such a safety finding until the licensing stage. Id. at 408, 81 S.Ct. at 1535.

We find this acquiescence argument unconvincing for two reasons. First, it deals in the "shaky business [of] attribut[ing] significance to the inaction of Congress." Id. at 409, 81 S.Ct. at 1535. Usually, such significance attaches to inaction only where there is evidence that Congress was aware of a problem. Power Reactor, for example, involved an issue that had "time and again been brought to the attention of the Joint Committee" which has a special obligation to apprise Congress of the "state of the atomic energy industry." Id. at 408, 81 S.Ct. at 1535. Also, the Court noted that the regulation did not infringe on the statutory right to a definitive finding on safety at a subsequent hearing. Id. at 411, 81 S.Ct. at 1536. This case is different in both respects.25

Second, even if we were confident Congress had acquiesced in the Commission's practice of conducting posthearing preoperational testing, we would not conclude that its acquiescence covered evaluation of emergency exercises, an issue which has just arisen in the past year. Preoperational testing has traditionally involved testing of reactor systems to ensure that they meet established, objective "acceptance criteria." See, e.g., 10 C.F.R., Part 50, App.J. (Primary Reactor Containment Leakage Testing for Water-Cooled Power Reactors). The licensee conducts the tests and reports the results to the Commission. Id. (Section V. Inspection and Reporting of Tests). Assessing these test results falls squarely within the NRC staff's technical expertise. Emergency preparedness exercises, on the other hand, are not evaluated in terms of preestablished criteria; they are evaluated to ensure that they do not reveal any fundamental inadequacies in the nature or implementation capacity of emergency preparedness plans. See 10 C.F.R. Part 50, App. E (exercise to test "as much of the licensee, state, and local emergency plans as is reasonably achievable without mandatory public participation"). Exercise evaluations focus on the coordination of police, fire, medical and other service personnel who operate under the auspices of several independent entities--the licensee, utility, county, state and federal governments, even community volunteer agencies. Evaluation of such exercises, insofar as it involves the adequacy of community preparedness plans, will be as much within outside participants' expertise, or that of other federal agencies like FEMA, as within the expertise of the NRC staff. See, e.g., Metropolitan Edison Co., 14 NRC 1211, 1695 (TMI Unit 1 Restart) (team of federal observers from FEMA, EPA, DOE, NRC, FDA, Public Health Service, USDA and DOT reported exercise response deficiencies). We thus find exercise evaluations sufficiently different from traditional preoperational testing to render any inference of congressional acquiescence--even if it were justifiable as to traditional testing--entirely too speculative with respect to emergency preparedness exercises.

In order to facilitate licensing of nuclear power plants, and to ensure that emergency preparedness exercises are conducted near enough in time to full power operation to be meaningful, the NRC has ruled that the exercises need not be conducted before the licensing hearing; it still requires, however, that the exercises be conducted and demonstrate adequate assurance of safety before a license will issue. Thus, the NRC has removed from the hearing required by section 189(a) material issues relevant to its licensing decision. On the basis of the statutory language as well as a history of congressional reaction to prior attempts by the Commission to eliminate or significantly restrict the scope of section 189(a) hearings, we find that Congress did not grant the Commission discretion to remove so material an issue as the results of offsite emergency preparedness from required section 189(a) hearings. The adoption of such a rule was beyond NRC's statutory authority; accordingly we vacate the Amendment.

It is so ordered.

MacKINNON, Senior Circuit Judge (dissenting):

Section 189(a) of the Atomic Energy Act provides for hearings on the granting of licenses,1 but the Act delegates to the Nuclear Regulatory Commission (NRC) the responsibility to determine the substantive requirements for licenses. Thus, the scope of Section 189(a) hearings are necessarily determined by the substantive requirements that the Commission's regulations provide are to be considered in connection with any particular license.

Pursuant to Congress' delegation of licensing authority to the NRC, the Commission has by regulation required the preparation of emergency response plans, onsite and offsite, for nuclear power reactors. As petitioner and respondent are agreed, these plans will unquestionably be subject to the Section 189(a) hearing requirement. In my view, the majority errs, however, in going further, to require substantially broader hearings. Misapplying Section 189(a), the majority decision effectively expands the substantive scope of operating license hearings, by forcing inclusion of review of the emergency exercises that the NRC requires later on as part of the final testing process. The ultimate effect of this Court's decision is to intrude upon the Commission's exclusive authority to define the substantive requirements for an operating license.

Under the NRC's rules, prior to issuance of a full power operating license, emergency plans must be developed, subject on request to a public hearing, and emergency exercises must be conducted later in such a manner as to demonstrate the adequacy of both onsite and offsite emergency plans. The regulatory amendments here in question leave unchanged much of the Commission's basic approach to emergency preparedness. The instant rulemaking does, however, accomplish several changes. First, the rule significantly revises the substance of the basic finding that the NRC must make as to emergency preparedness. Under the new rule, the NRC's required finding is essentially predictive in nature:

[N]o operating license for a nuclear power reactor will be issued unless a finding is made by NRC that there is reasonable assurance that adequate protective measures can and will be taken in the event of a radiological emergency.

10 C.F.R. Sec. 50.47(a)(1) (1983); 47 Fed.Reg. 30232, 30235 (July 13, 1982) (emphasis added); see 47 Fed.Reg. at 30233 (NRC's discussion of final rule, describing "predictive finding").2 Second, the Commission provides that low power licenses require only adequate onsite emergency plans; no offsite showing is required for fuel loading and low power operation. See 10 C.F.R. Sec. 50.47(d); 47 Fed.Reg. at 30232-33.3 Finally, the regulation makes it clear that only the plans for onsite and offsite emergency responses are subject to Section 189(a) hearing requirements. See 10 C.F.R. Sec. 50.47(a)(2); 47 Fed.Reg. at 30233. Thus, just as for the final inspection and pre-operational testing of the plant, no initial hearing rights attach to review of the results of required emergency exercises. The initial formal hearings concerning licensing authorization will not embrace the exercise or final testing results, although the Commission may in its discretion allow for such an expansion of hearings after exercises have been conducted. Beyond this possibility, according to the NRC, a hearing may be held only upon a motion by a party to reopen a concluded licensing hearing, or in conjunction with a well-grounded petition under 10 C.F.R. Sec. 2.206 to modify, suspend, or revoke a license. See 47 Fed.Reg. at 30233.

I would uphold this rulemaking. The Commission's determination that the results of emergency exercises may not be injected into the Section 189(a) licensing hearings is entirely consistent with the predictive nature of the emergency preparedness finding that the NRC has bound itself to make, and does not conflict with the statutory hearing requirement. It is my view that in reviewing the NRC's rule, we should not apply an overly literal interpretation to Section 189(a), against the basic legislative intent expressed throughout the statute. A statute is to be read in its entirety, and as Judge Learned Hand once observed, "[t]here is no surer way to misread any document than to read it literally ...." Guiseppi v. Walling, 144 F.2d 608, 624 (2d Cir.1944) (L. Hand, J., concurring). And to this should be added that a sentence of an act should rarely be read literally against the intent that permeates the rest of an act. As we observed concerning the broad congressional intent expressed in the Atomic Energy Act:

Congress ... enact[ed] a regulatory scheme which is virtually unique in the degree to which broad responsibility is reposed in the administering agency, free of close prescription in its charter as to how it shall proceed in achieving the statutory objectives.

Siegel v. Atomic Energy Commission, 400 F.2d 778, 783 (D.C.Cir.1968) (citing Power Reactor Development Co. v. International Union of Electrical, Radio & Machine Workers, 367 U.S. 396, 81 S. Ct. 1529, 6 L. Ed. 2d 924 (1961)) (emphasis added). The specific language of Section 189(a) should not be applied contrary to the context of the Act to bring about more than is required by that section or by the statute as a whole.

Mindful of its tremendous safety responsibilities under the Atomic Energy Act, the Commission has been extremely vigilant in requiring and updating very substantial safety measures to deal with the potential of radiological emergencies. The NRC's existing emergency preparedness regulations are a good example. The Commission, in order to ensure that adequate plans exist to deal with emergencies, both onsite and offsite of nuclear plants, has promulgated sixteen specific standards that emergency response plans must meet.4 Some of these standards involve highly technical evaluations and require minute knowledge of the operation of nuclear power plants. There can be no doubt that the NRC, in promulgating these standards, has faithfully carried out its duty to ensure the safety of the public.

The questions before this Court, of course, do not involve all of these standards, but rather revolve around the singular (b)(14) requirement of emergency preparedness exercises. The nub of this case is whether review of the results of these exercises must be included within public hearings under Section 189(a). In essence, the Union of Concerned Scientists is attempting to compel the Commission to change its regulations so that the emergency exercises will be treated as part of a licensing proceeding that may be subjected to a hearing, rather than as part of the final pre-operational testing. Thus, petitioner seeks to inject the results of exercises into the formal hearing process. This effort is inconsistent with the Commission's substantive determination that the required finding as to emergency preparedness is predictive in nature.

In this rule, the NRC in the exercise of the judgment conferred upon it by the statute, has sought to treat compliance with these exercise requirements on the same basis as it does its pre-operational tests of the plant itself. The two are very similar in nature and go hand-in-hand. The Atomic Energy Act has never been interpreted to require hearings on the results of the final preoperational tests. This interpretation of an Act which was first adopted in 1946, and the subsequent agency practice in an area over which Congressional oversight has been at its zenith, should not be ignored. Hearings inevitably involve considerable delays, which can be extremely costly, especially as the plant nears complete readiness for full power operation, and as all employees necessary to start operations are employed and on duty. The NRC has concluded, quite sensibly in my view, that exercises conducted to test emergency plans, which are coordinated with public participation, would best be conducted close to the pre-operational testing of the plant itself.5 They both fit into the same regulatory scheme and require that plant operating personnel be on station.

The NRC's regulation does not exclude the interested public from participating in the process of developing emergency preparedness. Far from it--the overall procedures set forth by the Commission envision public participation at a number of different stages. First, the public has a role in actually formulating emergency plans, insofar as state and local governments must be involved in generating such plans, in coordination with the planning of the operator. Second, the basic plans for emergency responsiveness at any plant, concerning both onsite and offsite readiness, are subject to full hearings at the request of any interested person at the formal licensing stage. See supra. Third, when the plans are subsequently tested, the public participates in the exercises themselves. Fourth, the Federal Emergency Management Agency (FEMA) participates as an outside expert in the evaluation of the emergency exercises, and thereby has a role in guaranteeing that preparedness is adequate and that serious deficiencies will not be overlooked. See 10 C.F.R. Sec. 50.47(a)(2); 47 Fed.Reg. at 30235-36. Finally, in the event that such deficiencies develop through the results of the exercises, the Commission assures that a previously concluded hearing could be reopened at the request of a party. See 47 Fed.Reg. at 30233. Thus, a hearing is not foreclosed in a proper case.

That this final possibility for reopening of a public hearing poses a somewhat higher entry standard for would-be litigants is not disconcerting. A higher threshold is justified in view of the extensive prior consideration and evaluation of the actual exercises to which emergency plans will have been subjected. Minor complaints should not be encouraged, particularly at this late stage, because of the tremendous delay and the enormous cost that they can occasion--up to two years in cases where the Commission's decisions are appealed to courts.6 In practice, if petitioners prevail, it will be necessary--unless very substantial delay in the opening of full power operation is to result--to move up the emergency testing exercises, removing them further from the opening of plant operation. In such event, not only would the exercises themselves be less valuable, but this shift would also require preliminary employment of full operating personnel for a longer period, with an attendant substantial increase in the costs of bringing a plant into operation. These are very serious impracticalities, to which the NRC has given close attention in choosing an alternative course. The Commission has no mandate to construe its charter statute so as to maximize the delay in its administration. Accordingly, I must dissent from the Court's decision in this case.