ML19207A281
| ML19207A281 | |
| Person / Time | |
|---|---|
| Site: | Perry, Davis Besse  |
| Issue date: | 08/10/1979 |
| From: | Shenefield J JUSTICE, DEPT. OF, ATTORNEY GENERAL, OFFICE OF |
| To: | Harold Denton Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 7908140697 | |
| Download: ML19207A281 (7) | |
Text
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Unittb O!atts Dtpartmtnt of Justict
,,m n M111Mrl ON, D.C. 20530
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A W 5 T ANT AI TOA %(v C(%E R A L 4Nis f Rv$7 Di wSK96 10 AUG 1979 Mr. Harold Denton Director Office of Nuclear Reactor Regulation Nuclear Regulatory Commission 1717 H Street, N.W.
Washington, D.C.
20555
Dear Mr. Denton:
The Department of Justice requests the Nuclear Regula-tory Commission ("NRC") to institute proceedings pursuant to section 234 of the Atomic Energy Act (42 U.S.C. S 2282) and section 2.205 of the Nuclear Regulatory Commission Rules of Practice (10 C.F.R.
S 2.205) to impose a civi TheClevelandElectricIlluminatingCompany'({rpeop1tyon CEI") for violating the license conditions attached to the operating li c e r.s e for Davis-Besse Nuclear Power Station Unit 1 and the construction permits issued for Perry Plants Units 1 and 2.
The specific basis for our request is that CEI is, and has been, in violation of license condition 3, which requires that Applicants engage in wheeling for non-Applicant entities within Applicants' combined service areas. 1/
On January 6, 1977, an Atomic Safety and Licensing Board
(" Licensing Board") issued its Initial Decision in The Toledo Edison Company, et al. (Davis-Besse Nuclear Power Station, Units 1, 2 and 3), Docket Nos. 50-346A, 50-500A, 50-501A, and The Cleveland Electric Illuminating Company, et al. (Perry Nuclear Power Plants, Units 1 and 2), Docket 1;o s. 50-440A, 50-441A, 5 N.R.C. 133 (1977)
(" Perry proceeding").
The Licensing Board found that the issuance of unconditioned licenses for the five nuclear units which were the subject of that proceeding "would both create and maintain a situation in-consistent with the antitrust laws and the policies underlying 6
those laws."
Id. at 133.
Accordingly, the Licensing Board O(
licenses.d(/h3 y
g ordered that ten conditions attach to the requested
/
Among those conditions was condition 3, which reads-s g I f\\q
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CEI was one of the applicants for the Davis-Be.23e operating
- license, g7 790814cm y
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On Ap-il 22, 1977, the operating license for Davis-Besse Unit 1 was issued with the antitrust ccnditions attached.
On May 3, 1977, the construction permit for the Perry Nuclear Power Plants, Units 1 and 2, was issued with the antitrust conditions attached.
On January 6, 1978, CEI filed a transmission tariff with the Federal Energy Regulatory Commission. On June 28, 1978, after a request by the City of Cleveland that was supported by the Department, the ';RC issued a Notice of l
Violation to CEI stating that "at least as of CEI's sub-mittal of the January 27, 1978, transmission schedule to j
the Federal Energy Regulatory Cor.ission ("FbRC"), a continu-ing refusal to wheel in accordance with the license con-ditions negan to occur."
che Notice of Violation cited I
five conditions cont ained in CEI's filed tariff which individually and collectively violated license condition 3, and which amounted to a refusal to wheel. _3_/
On April 27,
1979, a FERC Administrative Law Judge ( " A LJ " ) issued an Initial Decision which found that the CEI transmission tariff filed January 27, 1978, was " unjust, unreasonable and l
unduly discriminatory" (Initial Decision at 56), and ordered CEI to file the revised tariff described in the Initial l
Decision. 'che A LJ specifically declined to rule on whether "CEI is in compliance with the NRC 1icense conditions or the antitrust laws of this country," because " [ t ] he N RC and other duly constitued bodies will be the judges of that."
(Initial Decision at 6). 4/
On June 25, 1979 the NRC 3/
The conditions described by the JRC Staff in 3ppendix i
1 X to the Notice of Violation were:
- 1) agreeiaa to provide
- heeling services only until the date of the tinal decision of the NRC in the Perry proceeding; 2) providing l
I that CEI is the sole judge as to whether it has the capa-city to make available wheeling services; 3) conditioning the wheeling services in a manner which allows CEI to preempt unused transmission c'.gacity; 4) requiring that the minimum wheeling t r a n s a.c t io n last for a period of no less than 12 months; and 5) proposing wheeling services upon the condition th;t CEI file separate supplemental wheeling ;chedules tor each,; heeling transaction.
4_/
The tariff required by FERC doos not bring CEI into compliance with the NRC license conditions.
CEI was not required to reduce transoission service to the other Appl icant companies prior to reducing such service to r.un-Applicant entities and was not required to consider disclosed transmission needs of non-Apnlicant entities in its future planning. r-
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3.
Applicants shall engage in wheeling for and at the request of other entities in the CCCT: 2/
1) of electric nergy from delivery points of Applicants to the entity (ies); and, 2) of power generated by or available to the other entity, as a result of its ownership or entitlements in generating facilities, to delivery points of Applicants designated by the other entity.
Such wheeling services shall be available with respect to any unused capacity on th e transmission lines of Applicants, the use of which will not jeopardize Applicants' system.
In the event Applicants must reduce wheeling services to other entities due to lack of capacity, such reduction shall not be effec-tive until reductions of at least 5% have been nade in transmission capacity allocations to other Applicants in these proceedings and thereafter shall be made in proportion to re-ductions imposed upon other Applicants in this proceeding.
Applicants shall make reasonable provisions for disclosed transmission requirements of other I
entities in the CCCT in planning future trans-mission either individually or with the CAPCO grouping.
By " disclosed" is meant the giving of reasonable advance notification of future require-ments by entities utilizing wheeling services to be made available by Applicants.
(Footnote added)
On January 14, 1977, Applicants moved to stay imposition of the license conditions pending appeal. The motion to stay was denied by the Licensing Board on February 3, 1977, and by the Atomic Safety and Licensing Appeal Board on March 23, 1977.
2/
Within the context of the NRC proceeding the CCCT referred the Combined CAPCO Companies Territories.
to 9 ;b
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issued an Order Modifying Antitrust License Condition No. 3 of Davis-Besse Unit 1, License No. NPF-3 and Perry Units 1 and 2, CPPP-148, CPPR-149
(" Order").
The Order amends CEI's licenses and construction permits to require CEI to file with the FERC within 25 days of the Order the transmission tariff oraered by the PERC ALJ.
In addition, CEI is required to file with the FERC other soecified amendments to its transmission schedule which will bring CEI into compliance with license condition
- 3. 5/
On September 15, 1978 subsequent to the issuance by the NRC of the Notice of Violation and while the January 27, 1978 tariff was pending at the PERC, CEI sub-mitted to the NRC staff a second proposed transmission schedule (" Sept ember 15, 1978 schedule"), but this proposal did little to undo the anticompetitive restraints that the Licensing Board had ordered CEI to remove.
While the September 15, 1978 schedule which CEI submitted to the NRC staff for approval cured some of the defects found in the January 27, 1978 tariff, it contained new provisions which i
violated license condition 3:
(1) it limited wheeling ser-vices to the estimated native peak demand of the City's system unless otherwise agreed, thereby allowing CEI to control the City's load growth since the estimate of the City's nat ive peak demand must be agreed upon by the City and CEI; (2) it provided that wheeling service shall be at 138 kv or above; (3) it provided that the wheeling j
schedule terninates if a final decision in the Perry pro-i ceeding alters license condition 3, whether or not that alteration is significant; and (4) it provided that nothing in the schedule should be construed as requiring CEI to enlarge its facilities to wheel, despite the fact that license condition 3 specifically requires CEI to make l
reasonable provision for disclosed requirements of other i
entities in planning future transmission capacity.
To our knowledge this proposed tariff was not filed with FERC.
Section 234 of the Atomic Energy Act, 42 U.S.C.
S 2282, expressly authorizes the NRC to impose civil penalties on any person who violates any license condition imposed by the NRC.
Prior to the 1969 enactment of section 234, the NRC was authorized only to revoke or modify 5/
Within 20 days of the Orde r, CEI may request a hearing with respect to all or any part of the licence amendments.
A request for a hearing will not stay the effectiveness of the Order.
(Order at 7) -
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licenses in the event of a violation of license con-ditions.
See section 186 of the Atomic Energy Act, 42 U.S.C. S 2236.
The legislative history indicates that section 234 was enacted in order to permit the NRC to impose penalties less drastic than evocation or modification in the event of a violation of a license condition.
Congress believed that furnishing the NRC with a broader range of powers to deal with persons who violate license conditions would enhance compliance with license conditions.
See 1969 U.S.
Code Cong. and Adm. News at 1616. 6f The imposition of civil penalties on CEI is com-pelled by CEI's longstanding and willfol refusal to abide l
by the conditions to which its licens(s to construct and operate nuclear power plants are subject.
While the i
Department supports the Order recently issued by the NRC which will bring CEI into compliance with license con-dition 3, additional action is necessary because of CEI's l
intentional non-compliance with that license condition.
i In the 28 months since the issuance of the Initial Decision in Perry, CEI has failed *> bring itself into compliance with the antitrust lice-e conditions imposed by the i
Licensing Board.
It was a full twelve months after the issuance of the Initial Decision before CEI filed its initial tariff, which, although purporting to comply with license condition 3, contained numerous provisions which were in obvious conflict with both the letter and spirit of the license.
Not only did this tariff require the NRC to issue a Notice of Violation, but it was also held by a FERC ALJ i
to be " unjust, unreasonable and unduly discriminatory."
Twenty months after the issuance of the Initial Decision, CEI filed the September 15, 1978 schedule with the NRC in response to the Notice of Violation, but this schedule still contained numerous provisions which conflicted with the l
s antitrust license conditions imposed by the Licensing Board.
j 6/
The legislative history of section 231 discusses that section in terms of health and safety violations.
This may be attributable to the fact that when section 234 was enacted only commercial facilities for which a finding of
" practical value" had been made were subject to prelicensing antitrust review.
Since all nuclear plants at that time had been licensed as developmental, not commercial, facilities, no antitrust reviews had taken place prior to the enactment of section 234.
It is the Department's view that section 234 applies equally to antitrust violations as it does to health and safety violations.
ee The January 27, 1978 and September 15, 1978 tariffs are so clearly violative of license condition 3 that CEI must be considered as having intentionally engaged in activity designed to avoid complying with the license con-ditions.
In so doing, CEI should be held to have perpetuated a situation which the Licensing Board found to be "incon-sistent with the antitrust laws and the policies underlying those laws."
Perry proceeding, 5 N.R.C.
at 133.
Because of CEI's flagrant disobedience, it is incumbent upon the Commission to impose the maximum civil penalty permitted by section 234 of the Atomic Energy Act.
By imposing the maximum civil penalty, the NRC will encourage CEI to desis t from flaunting the authority of the NRC to enforce license conditions and will enhance the integrity of its entire licensing program by serving notice that future antitrust violations will not be tolerated.
The Department proposes that a civil penalty of
$1.2 million be imposed on CEI.
This civil penalty is cal-culated by cultiplying $25,000, the maximum penalty permitted for all violations occurring within a 30-day period by 16, which is the number of months of continuous violation since the Notice of Violation was issued, 7/ for each of the three licenses to which the antitrust license conditions attached.
A penalty of this magnitude is justified by CEI's continuing, willful violation of the lic:nse conditions and its direct restraint on competition that has resulted by virtue of that violation.
The civil penalty requested by the Department is of the came order of magnitude as che maximum fine which Congress has found appropriate for violation of sections 1 and 2 of the Sherman Act (15 U.S.C. SS 1 and 2). 8/
Finally, the Department urges that the NRC recommend to EERC ar.d other appropriate agencies that CEI not be allowed 7/
The Commission may also determine that it is appropriate to impose a further civil penalty on CEI for failing to file a tarif f consis tent with the license conditions within a reasonable period after the operating license and construction permits were issued.
8/
In 1976 Congress increased the penalties for violation of the Sherman Act from a misdemeanor to a felony and increased the fine to $1,000,000 for a corporation.
Antitrust Proce-dures and Penalties Act, Public Law 93-528, 88 Stat. 1706, 15 U.S.C.
S1 (1976). n7i
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to pass through to its rate payers the civil penalties imposed here.
If CEI's consumers, who are wholly innocent, are required to absorb these civil penalties, the de-terrent effect of imposing civil penalties will be greatly diminished.
In conclusion, the Department believes that in order for the NRC's antitrust licensing program to maintain its effectiveness in preventing utilities from using nuclear licenses in an anticompetitive manner, CEI, and other licensees, must be made to understand that willful violations of antitruct license conditions vill not be tolerated, and that civil penalties imposed by the IJRC cannot be considered as just a minor cost of doing business.
.x Sincerely, c.
N,'4 d/
!wa [(d' c(N
, J o h nl II.
Shonefield Assictant Attorney General An'titrust Division cc:
Service List in This Proceeding Except for Members of the NRC Safety and Licensing Appeal Board s
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