ML18054B040
| ML18054B040 | |
| Person / Time | |
|---|---|
| Site: | Palisades  |
| Issue date: | 10/11/1989 |
| From: | Charnoff G CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), PALISADES GENERATING CO., SHAW, PITTMAN, POTTS & TROWBRIDGE |
| To: | Rutberg J NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| References | |
| A, NUDOCS 8910200136 | |
| Download: ML18054B040 (7) | |
Text
SHAW, PITTMAN, POTTS & TROWBRIDGE 2300 N STREET, N. W.
TELrX/CADLr 99*Zt593 (SHAWL.AW WSH)
WASHINGTON, D. C. 20037 Vl.. GINIA 0.... IClt l50t.. A-CREDIT D"IVE MCLEAN, VIRGINIA 22102
('703) 790*7900 TELEPHONE C202) 663*9032 GERALC> CHARNOFF, P.C.
Joseph Rutberg, Esq.
October 11, 1989 Deputy Assistant General Counsel Nuclear Regulatory Commission 11555 Rockville Pike, Room 15Bl8 Rockville, Maryland 20852
Dear Mr. Rutberg:
TltLltCOPtEA C202) 223*3760 " 223*3761 This letter is Consumers Power Company's (*consumers*) and Palisades Generating Company's (*PGc*) response to the Septem-ber 27, 1989 letter written on behalf of Consumers' municipal and rural electric cooperative customers (*customers*) regarding the appropriateness of an antitrust review in connection with the proposed transfer of ownership of the Palisades nuclear generating plant from Consumers to PGC.
As this letter explains, antitrust review in this case is not only inappropriate, it is not permitted by law.
The Atomic Energy Act (*AEA* or *Act*) does not permit an antitrust review in the present circumstances.
Under Section 102(b) of the Act (42 u.s.c. S 2i32(b)), a plant originally licensed under Section 104(b) (42 u.s.c. S 2134(b)) is to remain licensed under that section rather than under Section 103.1/ The construction permit for the Palisades plant was issued in 1967 pursuant to Section 104(b).
Antitrust review of plants licensed under Section 104(b) is permitted by statute only in accordance with.the provisions of Section 105(c)(3) (42 u.s.c. S 2135(c)(3)).
That subsection pro-vides that where an entity had attempted to raise antitrust 1/
Section 102(b) provides that *[a]ny license hereafter issued for-a utilization or production facility for industrial or commercial purposes, the construction or operation of which was licensed pursuant to subsection 104b prior to enactment into law of this subsection [on December 19, 1970], shall be issued under subsection 104b.*
42 u.s.c. S 2132(b).
8910200136 891011 PDR ADOCK 05000255 M
SHAW, PITTMAN, POTTS &. TROWBRIDGE A PARTNERSHIP INC~UOING PAO,.E.SSIONAL. CORPORATIONS Joseph Rutberg, Esq.
October 11, 1989 Page 2 issues at the construction permit stage, that entity may raise antitrust issues at the operating license stage.
Absent these particular circumstances, the NRC is without statutory authority to conduct an antitrust review of a plant licensed under Section 104(b).
NRC decisions are in accord with this conclusion.
For exam-ple, in Houston Lighting & Power Co. (South Texas Project),
CLI-77-13, 5 N.R.C. 1303 (1977), the NRC firmly rejected the notion that its antitrust authority arose from any part of the Atomic Energy Act other than Section 105:
No part of the Atomic Energy Act other than Section 105 explicitly deals with anti-trust matters.
Under Section 186 of the Act, however, the Commission has general authority to revoke licenses for a~y reason which would have warranted the Commission in refusing to grant a license on an original application.
The power to revoke would normally imply the lesser power to modify licenses to incorpo-rate conditions which would have been imposed at the time of initial licensing had subse-quent circumstances then been known.
If this reasoning applies to our antitrust respon-sibilities, Commission initiated hearings would be possible beyond the limited circum-stances set forth in Section 105.
It is the further question whether Section 186 expands the antitrust hearing settings defined in Section 105, however, that drives the current debate.
For the rea-sons that follow, we find that the generality of Section 186 should be treated as subordi-nate to the specific, limited regime adopted by Congress as recently as the 1970 amend-ments to the Act.
We find the specificity and completeness of Section 105 striking.
The section is com-prehensive; it addresses each occasion on which allegations of anticompetitive behavior
SHAW, PITTMAN, POTTS & TROWBRIDGE A MATN£RSHIP INCLUDING PA0r'£5510NAL. CORPORATIONS Joseph Rutberg, Esq.
October 11, 1989 Page 3 in the commercial nuclear industry may be raised, and provides a procedure to be fol-lowed in each instance.
5 N.R.C. at 1311-12.
The Commission ultimately concluded "that the Commission's antitrust authority is defined not by the broad powers contained in Section 186, but by the more limited scheme set forth in Section 105."
5 N.R.C. at 1317.
The Commission also noted that *[s]imilar reasons lead us to reject the Depart-ment of Justice's suggestion that Section 161 may serve as a source of [antitrust] authority independent of Section 105."
Id., 5 N.R.C. at 1317 n. 12.
Similarly, in Florida Power & Light Co. (St. Lucie Plant, Units Nos. land 2) (Turkey Point Plant, Unit Nos. 3 and 4),
ALAB-428, 6 N.R.C. 221 (1977), review declined, CLI-77-26, 6 N.R.C. 538 (1977), aff'd, 606 F.2d.. 986 (D.C. Cir.), cert. denied,-
444 U.S. 842 (1979), the Appeal Board concluded that the Atomic Energy Act authorized antitrust scrutiny of Section 104(b) plants only in the circumstances provided for in Section 105(c):
Congress had considered this class reactors
-- viz., those authorized to be built as research and development projects before the 1970 antitrust amendments but which might later be determined to possess commercial utility when an operating license was sought for them -- and elected to exclude them from antitrust review under Section 105c (except in limited circumstances not present in this case).
Florida Cities' response is that anti-trust review is nevertheless available before this Commission under Section 186a of the Act.
Florida Cities reason that, because the Commission may refuse an operating license on antitrust grounds (at least where circumstances change following issuance of the construction permit), Section 186a empowers it to revoke a license previ-ously granted on those grounds.
Even if we assume arguendo that Section*
186a means what Florida Cities assert it
SHAW, PITTMAN, POTTS cS. TROWBRIDGE A PARTN£ASHIP INCLUDING PAO,-ESSIONA~ CORPORATIONS Joseph Rutberg, Esq.
October 11, 1989 Page 4 does, their cause is not advanced.
The nuclear power plants in question were licensed under Section 104b.
As we have already explained, by Congressional mandate antitrust considerations were not grounds for refusing operating licenses to such research and development facilities.
Florida Cities would have us get over this second hurdle by having us give a *com-mon sense" reading to Section 186a that requires us to treat these reactors as what they really are: viable commercial reactors that could only be licensed today under Sec-tion 103.
There appears to be no support for this reading of the section in the legisla-tive history of the Atomi.c Energy Act and petitioners cite none.
Nor is the "meaning" which Florida Cities ascribe to Section 186a necessarily so "plain" as they suggest.
But even accepting everything they say, no con-struction of Section 186 need be made here.
As we explain in Part III, * *
- the Commis-sion's antitrust authority is defined not by the broad powers contained in Section 186, but by the more limited scheme set forth in Section 105.
Florida Power, 6 N.R.C. at 225-26 (citing South Texas, 5 N.R.C.
1317).ii In 1 ight of the NRC' s cons is tent refusal to interpr.et other sections of the Atomic Energy Act as expanding the agency's anti-trust jurisdiction beyond that set forth in Section 105, Cus-tomers' argument that an antitrust review of the proposed Pali-sades transaction is justified by Section 184's *independent antitrust authority" must fail.
11 Although they do not cite it in their letter, counsel for Customers must be aware of the Florida Power decision, inasmuch as Robert Jablon (one of the signatories of Customers' Septem-ber 27 letter) represented the petitioners in the Florida Power case.
See 6 N.R.C. at 222.
SHAW, PITTMAN, POTTS & TROWBRIDGE A MATNCASHIP INCL.UDING PROF"ESSIONAL CORPORATIONS Joseph Rutberg~ Esq.
October 11, 1989 Page 5 Customers' assertion that Section 184 requires the Commis-sion to evaluate the antitrust aspect of the proposed Palisades license amendment is incorrect in two other respects.
That sec-tion's provision that the Commission may approve a license trans-fer only "after securing full information" does not mean.that a licensee seeking to transfer a Section l04(b) license must submit antitrust-related information.
The NRC regulation governing the transfer of licenses provides that an application for transfer of a license must include antitrust information only if the license to be issued is a class 103 license.
10 C.F.R. S 50.80(b)
(1989).
The result is the same even if the transaction were charac-terized as a license amendment.
NRC regulations governing license amendment procedure provide that "[i]n determining whether an amendment to a license *** will be issued to the applicant, the Commission will be guided by the considerations which govern the issuance of initial licenses *** to the extent applicable and appropriate.*
10 C.F.R. S 50.92 (1989).
According to 10 C.F.R. S 50.33a (information requested by the Attorney General for antitrust review), antitrust information need be submitted only if the application satisfies a number of conditions, including that the application is for *a class 103 permit."
Customers attempt to sidestep the NRC's statutorily-required
- once a Section 104(b) license, always a Section l04(b) license*
position by arguing that PGC's application should be treated as a request for a new license under Section 103, since PGC "is a newly created corporate entity.* Customers cite Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit No. 2), LBP-78-13, 7 N.R.C. 583, aff'd, ALAB-475, 7 N.R.C. 752 (1978), which is easily distinguishable on the crucial ground that the Fermi plant was licensed under Section 103, not Section 104(b).
Moreover, to
- follow this suggestion would violate the direct command of Sec-tion 102(b).
It is the fact that the facility was licensed under Section 104(b) -- not the identity of the licensee -- that trig-gers the applicability of Section 102(b).
Customers next attempt to avoid the fact that Section 104(b) facilities-are exempt from antitrust scrutiny (except, of course, where a potential intervenor at the construction permit ~tage later reasserts his claims) by suggesting that there is some sig-nificance to the fact that the proposed transaction is voluntary, and that following the requirements of Section l02(b) would
SHAW, PITTMAN, POTTS cS. TROWBRIDGE A... RTNERSHIP INCLUDING PAO~ESSIONAL. CORPORATIONS Joseph Rutberg, Esq.
October 11, 1989 Page 6 "ignore the reality" of the situation.
Not only is the volun-tariness underlying the transaction irrelevant to the applicabil-ity of Section 102(b),
but the NRC has explicitly rejected the argument that the mandate of Section 102(b) may be ignored by virtue of the *common sense" conclusion that Section 104(b} reac-tors could be licensed today only under Section 103.
See.Florida Power, supra.
Customers' argument that Section 102{b) is not triggered since the Palisades plant under PGC will be a different facility than it is under Consumers must also fail.
The replacement of a steam generator as is contemplated at the Palisades plant is not a "material alteration" changing the nature or function of the plant so as to require issuance of a construction permit.
See Virginia Electric and Power Co. (Surry Power Station, Units l and 2), DD-79-19, 10 N.R.C. 625 (1979).
In one instance where the NRC did issue a construction per-mit in connection with a modification to a reactor, the modifica-tion was extensive, consisting of the complete removal of control rods, rod drive mechanisms, core instrumentation, and control room equipment and replacement with a new design.
See Surry, supra, 10 N.R.C. at 656.
On another occasion where the Staff required a construction permit for the alteration of a fuel reprocessing facility, the changes involved the construction of new buildings and equipment substantially changing and expanding the capacity of the facility.
See Surry, supra, 10 N.R.C. at 656.
In connection with these two occasions, the Director stated in Surry that "[t]he characteristic shared by these cases is that the changes proposed by the licensees involved substantial changes in the type of major components of existing facilities to a different type of equipment.*
This rationale accords with the NRC's consistent practice not to require a construction permit for steam generator replacements: in addition to Surry, there have been steam generator replacements at the Point Beach, Robinson, Turkey Point, and o.c. Cook plants.
In each case, the
. steam generator replacements were authorized by license amend-ment, not by a construction permit.
Finally, even if antitrust review of a Section 104{b) facil-ity were permitted by statute, Customers' request must be denied as untimely, inasmuch as their letter was submitted five months after publication in the Federal Register of the notice of con-sideration of issuance of the amendment to the Palisades operating license.
54 Fed. Reg. 12703 (March 28, 1989). That
SHAW, PITTMAN, POTTS & TROWBRIDGE A P,t.RTNEASHIP INCL.UOING PAO,.ESSIONAL. CORPORATIONS Joseph Rutberg, Esq.
October 11, 1989 Page 7 notice set an April 27, 1989 due date for the submission of requests for hearing, and provided that nontimely requests would not be entertained absent a determination that the request should be granted based upon a balancing of the factors in 10 C.F.R.
S 2.714(a)(l)(i)-(v) and 2.714(d).
Id. at 12704.
And, of course, Customers' letter did not request a public hearing.
In summary, an antitrust review in the present circumstances is not authorized under the Atomic Energy Act.
Since Palisades was originally licensed under Section 104(b), Section 102(b) man-dates that PGC's license to own Palisades must also be issued under Section 104(b). *section 105(c) provides that a Section 104(b) license is not subject to antitrust scrutiny except in very limited circumstances not present here.
Consequently, no NRC antitrust review, whether formal or informal, should take place in connection with Consumers' application to amend the Pal-isades operating license to transf~r ownership to PGC.
MSSltrl0.2 rn;:Jr
- Z~ld Charnof f Counsel for Consumers Power Company and Palisades Generating Company cc:
Samuel J. Chilk, Secretary Nuclear Regulatory Commission Wayne A. Kirkby, Esq.
William M. Lange, Esq.
John T. Stough, Jr., Esq.
Robert A. Jablon, Esq.