ML19308B145
| ML19308B145 | |
| Person / Time | |
|---|---|
| Site: | Oconee  |
| Issue date: | 11/30/1967 |
| From: | Grigg W, Horn C, Snapp R DUKE POWER CO. |
| To: | |
| References | |
| NUDOCS 7912130799 | |
| Download: ML19308B145 (42) | |
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- j Wf-UNITED STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of )
) DOCKET NOS. 50-269 ,
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DUKE POWER COMPANY ) 50-270 (Oconee Nuclear Station ) 50-287 Urd:s 1, 2 and 3) )
BRIEF OF APPLICANT DUKE FOWER COMPANY IN OPPOSITION TO THE EXCEPTIONS OF ?IEDMONT CITIES POWER SUPPLY, INC. , AND EI.EVEN NORTH CAROLINA MUNICIPALITIES TO THE INITIAL DECISION OF THE ATOMIC SAFETY AND LICENSING SOARD The Proceeding This prcceeding involves the application filed on December 1, 1966 by Duke Power Company (the " Applicant") wi6 the A:omic Energy Commission (de " Commission") under See:icn 104b of the Atomic Energy Act of 1954 (the "Act") for licenses to first constcuct, and later to operate, iree closed cycle pressurized water reactors. The reactors, to be kncwn as Ocenee Nuclear Station Units 1, 2 and 3, are each designed to operate initially at 2452 thermal megawa ts, wii an ultimate expected power level of 2,568 thermal megawatts , and will be located in Oconee County, South Carolina, about eight miles nor2 east of the Town of Seneca, Sou$ Carolina.
The application was reviewed by ie Repulatcry Staff (Se "S:aff")
cf the Commission which concluded da: Se Applican: has satisfied W W
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, a R- .* r all Commission requircments for the issuance of permits to construct the nuclect facilities. (Transcript (Tr.} p. 297, Staff's Safety Eval-
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uation (Safety Evaluation) pp. 76-77). The application has also been reviewed by the I,dvisory Committee on Reactor Safeguards which concluded that the proposed facilities can be constructed with .
reasonable assurance that they can be opera *ed at the proposed site without undue risk to the health and safety of the public. (Tr. p.
397, Safety Zvaluation, Appendix A) .
On August 11, 1967, eleven Nord Carolina cities and towns
- and a North Carolina nor.-profit corporation recently formed by them, Piedmont Cities Power Supply, Inc. , filed a joint p=ica to inter-vene in the proceeding (the " joint petition"). On the same day, the joint petitioners also filed a motion to dismiss the application for licenses on the ground that the proposed facilities were not "research and development" facilities, and therefore the Commission was with-cut jurisdiction to issue licenses to ie Applicant under Section 104b.
It was contended that the facilities were " commercial" and therefore licensable only under Section 103.
Over the objection of the Applicant and the Commission's Staff, the Beard by Order dated August 28, 1967 permitted the eleven
- City of Statesville, City of High Point, City of Lexington, City of Monroe, City of Shelby, City of Albemarle, Town of Cornelius, Town of Drexel, Town of Granite Falls, Town of Newton, and Town of Lincolnton.
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cities and towns to intervene on the ground that as customers of the Applicant they have an economic interest in the proceeding, Leave to intervene was denied to Piedmont Cities Power Supply, Inc. because it lacked such economic interest.
By separate Order dated Iugust 28, 1967 the Board held -
that the application in regard to Oconee Nuclear Station, Units 1 and 2, was properly filed under Section 104b of the Act. The motion to dismiss the application with respect to these units was there-fore denied. The Board deferred ruling on the Motion in regard to Unit 3 because the record,as it then stood, was in its opinicn not complete enough to permit a determination of whether the application in regard to Unit 3 was properly filed under Section 104b. The Board referred its ruling with respect to the motion to dismiss to the Com-
- mission for review in accordance with Section 2.730 (f) of the Com-mission's Rules of Practice. By Memorandum and Order dated September 8,1967, the Commission affirmed the Board's decision, both with respect to the denial of the motion to dismiss the appli-cation as to Units 1 and 2 and the deferral of a decision as to Unit 3.
A public hearing to consider the application was held by the Board on August 29 and 30 and September 12, 1967 pursuant to Section 189a of the Act and Section 2.104 of the Commission's Rules of Practice. In the Notice of Hearing, published in the Federal Register ,
on July 27,1967 (32 F.R.10996) the Commission prescribed the I e
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,a ( 3 3 following issues for consideration:
"1. Whether in accordance with the provisions of 10 CFR Section 50.35 (a)
(a) The applicant has described the proposed design
/ of the facilities, including, but not limited to, .
the principal architectural and engineering criteria for the design and has identified the major features or components incorporated therein for the pro-tection of the health and safety of the public; (b) Such further technical or design information as may be required to complete the safety analysis and which can reasonably be left for later consider-ation, will be supplied in the final safety analysis reports; (c) Safety features or components , if any, which re-quire research and development have been described by the applicant and the applicant has identified, and there will be conducted, a research and develop-ment program reasonably designed to resolve any safety questions associated with such fearures or components ; and (d) On the basis of the foregoing, there is reasonable assurance that (1) such safety questions will be
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satisfacterily resolved at or before the latest dates stated in the application for com,$letion of construction of the proposed facilities and (ii) taking into consideration the site crite.'a contained in 10 CFR Part 100, the proposed .
facilities can be constructed and operated at the proposed location without undue risk to the health and safety of the public;
- 2. Whether the applicant is technically qualified to design and construct the proposed ficilities;
- 3. Wnether the applicant is financially qualified to design and construct the proposed facilities; and
- 4. Whether the issuance of permits for the construction of the facilities will be inimical to the common defense and security or to the health and safety of the public."
At the public hearing (to which the parties were the Applicant, the Staff and the eleven cities and towns referred to above) none of the prescribed issues was contested; and the Applicant's evidence relating thereto was uncontroverted.
On November 3,1967 the Board, in accordance with $2.750 of the Commission's Regulations, issued its Initial Decision. It found and concluded that the Applicant had sustained its burden of proof that
[ the Oconee Nuclear Units are involved in the conduct of research and l
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{ M f development activities within the scope of Section 104b of the Act and that all three of the v .3 are therefere properly subject to license under that Section. It also found that the Applicant had met the requirements of Section 50.35 (a) of the Commission's Regulations with respect to the design features of the Oconee Station relating to -
the health and safety of the public; that the Applicant is technically qualified to design and construct the proposed facilities; that the Applicant is financially qualified to design and construct said facili-ties; and that the issuance of permits for the construction of the facilities would not be inimical to the common defense and security or to the health and safety of the public. Accordingly, the Board (a) denied the motion of the eleven cities to dismiss the application in regard to Oconee Nuclear Station Unit 3 (as it had done in regard to the motion to dismiss as to Units 1 and 2); (b) subject to review by the Commission, authorized the Applicant to construct the nuclear facilities in acccrdance with the application and the evidence and representations entered in the record at the hearing; and (c) directed the Director of Regulation of the Commission to issue provisional construction permits pursuant to Section 104b of the Act substantially
/ in the form of Appendices A, B and C to the Notice of Hearing.
Provisional construction permits for each of the three Oconee Units were so issued by the Director of Regulation on November 6,1967.
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On November 22, 1967 Piedmont Cities Power Supply, Inc.
filed an exception to the Order of the Board denying it leave to inter-vene in the proceeding. On November 21 and 22,1967 the eleven cities and towns filed separate exceptions to the Order of the Board denying their motion to dismiss the application and authorizing the .
Applicant to construct the proposed nuclear facilities and directing the Director of Regulation to issue provisional construction permits therefor.
This Brief on behalf of the Applicant is filed in accordance with Section 2.762 (b) of the Commission's Regulations and is in opposition to the exceptions filed by both Piedmont Cities Power Supply, Inc. ( viedmont") and the eleven cities and towns (the "Muncipals") .
Answer to Excections of Piedmont and the Municipals For response to the exceptions of Piedmont and the Munici-pals, the Applicant states:
- 1. The exception of Piedmont to the Order of the Board denfing it leave to intervene in this proceeding is contrary to law and should therefore be everruled.
- 2. The eleven exceptions of the Municipals to the Order of the Board are naught but argumentative and repetitive dissertations bearing.upon the subject of " practical value". They (and each of them) are contrary to the 9
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] 'l Act as clearly and consistently interpreted by it.e Commission and should therefore be overruled.
Summary of Arcument
- 1. The Atomic Safety and Licensing Board was correct in .
denying leave to intervene to Piedmont and in error in granting leave to intervene to the Municipals.
(a) Neither Piedmont nor the Municipals has an interest which may be affected by this proceeding within the meaning of Section 189 of the Act and of Section 2.714 of the Commission's Regulations.
l (b) The Joint Petition for Leave to Intervene of Piedmont and the Municipals is defective on its face in that it (1) relates to and concerns issues not pertinent to thic proceeding, (ii) asks for relief which is beyond the authority of the Com-mission to grant, and (iii) attempts to enlarge the issues with I
respect to matters beyond the jurisdiction of the Commission.
- 2. Oconee Nuclear Station, Units 1, 2 and 3, is licensable only under Section 104b of the Act and not under any other section.
'(a) The Commission has refused to make a statutory find-ing (under Section 102 of the Act) of " practical value" of boiling 5
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and pressurized light water nuclear reactors which is pre-requisite to their licensing under any section of the Act other than Section 104.
(b) A finding of " practical value", as a matter involv-ing the particular expertise of the Commission, is left by -
statute to its discretion and there has been no abuse of that discretion in the Commission's refusal to make such .
a finding.
(c) The evidence clearly establishes that the three Oconee reactors are involved in the conduct of research and development activities within the meaning of Section 104b of the Act.
- 3. Even if the application were filed under Section 103 of the Act, as Piedmont and the Municipals contend it should be, they would have no right in law or equity to an interest in the Oconee Nuclear Station.
Arcument
- 1. The Atomic Safety and Licensinc Ecard was correct in denving leave to intervene to Piedmont and in error in crant-inq leave to intervene to the Municicals.
(a) Neither Pied =cnt nor the Municicals has an interest which may be affected bv this croceedina within the meaninc 1
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. i 3 -s of Section 189 of the Act and Section 2.714 of the Cem-mission's Reculations.
Section 189 of the Act provides in reference to licenses:
". . . the Commission shall grant a hearing upon the request of any person whose interest may be affected by the proceeding, and shall admit any ,
such person as a party to such proceeding."
Section 2.714 of the Commission's Rules of Practice clearly prescribes the applicable principles under this statute .
governing intervention: "Any person whose interest may be affected by a procecding . . . shall file a writton petition
. . . [and] set forth the interest of the petitioner in the proceeding, how that interest may be affected by Commission action, and the contentions of the petitioner."
The Commission in a series of decisions has consistently interpreted this Rule to require that a person in order to inter-vene in an adjudicatory proceeding, must demonstrate an im-mediate and substantive interest which may be affected by the preceeding . Thus, in Matter of Walker Tmckinc Comranv, 1 AEC 103 (1959) the Commission held that vague statements concerning claimed danger to the petitioner and his family did
! not present such an immediate and substantive interest, even in a field where the public health and safety is of paramount importance, and leave to intervene was accordingly denied.
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See also: Matter of Elk River Power Demonstration Reactor Procram Project, 2 AEC 245 (1962); Matter of Philadelchia Electric Comcany, 2 AEC 54 (1962), affirmed , Goldberc v.
U.S. , June S,1962 (3rd Cir.), cert. denied, 371 U.S. 902; Matter of Pacific Gas and Electric Comcanv, 2 AEC 172 (1962). -
The only interest in this proceeding alleged by Piedmont or the Municipals is that the Municipals, as wholesale power customers of Applicant, desire to reduce their cost of bulk power (now purchased from the Applicant) by having Piedmont acquire an undivided interest in the Oconee Nuclear Station and sell electric power generated by it to the Municipals at cost. (Joint Petition, pp. 2-3) . Nothing in the record estab-lishes any other relationship between Piedmont or the Munici-pals and th'e Applicant or its proposed facility upon which a right to intervene could be predicated. Moreover, nothing in the record establishes any relationship which distinguishes the Municipals from the Applicant's other electric power cus-tomers, which number in excess of S60,000, or from cther members of the public.
Neither the desire of the Municipals nor the purpose of Piedmont constitutes an immediate en:1 substantive interest
. comprehended within the meaning and intent of the applicable
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] q statutory and regulatcry provisions. A contrary conclusion would be to say that the Act empowers the Commission to consider a claim of an applicant's electric customers to a preferential right in a nuclear power plant and its output to the exclusion of the applicant's other customers. If a ,
vehicle exists for such a claim, which is emphmically denied, it is not to be found in the Act er with the Commission.
Clearly, any possible adverse economic effect upon the Municipals or Piedmont from this proceeding is too remote to justify intervention. The Good Music Station, 6 Ad. L. (2d) 930. The economic interests of the Municipals, as purchasers of bulk power from Applicant in interstate commerce, are fully and adequately protected by the Federal Power Commission whose responsibility it is under Part II of the Federal Power Act to ensure that wholesale power rates are "just ar.d reason-able" . (49 Stat. 851,16 U.S.C. 824d).
1 It is submitted that the Board erred in granting leave to intervene to the Municipals. In its Order of August 28, 1957,
-granting intervention to the Municipals (and denying intervention I
to Piedmont) the Board stated (p. 3) that " Economic interests have been held sufficient basis for intervention in regulatcry "
proceedings", and cited cases in suppcrt of this position.
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In its Initial Decision of November 3,1957, de Atomic Safety and Licensing Scard stated (p. 5) dat ". . . judicial determinations permit intervention to groups who assert economic interest and who contest procedures or pro-cesses. . ." The Board further states that "A customer .
of a licensee has a valid economic interest entitling it to be an intervencr and to con:est wheder Se administrative action is lawful" . The Scard ten, in support of these last two statements, cites additional and different cases than the cases cited in its August 23, 1967, Crder.
What the Atomic Safety and Licensing Scard failed to do was to differentiate between statutes (or proceedings) of other agencies which are focused 'on economic matters and the Atomic Energy Act which is focused on the public health and safety and the common defense and security. The Board, I
in its Order of August 28, 1967, cited three Federal Power Commission cases and in its Initial Decision of November 3, 1967, cited two Comptroller of the Currency cases, one Depart-ment of Agriculture case, one Federal Power Commission case, and one Interstate Commerce Commission case. These agencies were created to handle economic matters. An economic interest under certain circumstances may well determine what consti-tutes an " interest which may be affected by de proceeding"
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I before the FPC, the FCC, the ICC, and the like. Merely to list these agencies is to indicate the economic orienta-tion of their statutory basis. However, that does not imply i that the ." economic interest" asserted by the Municipals in the present proceeding before the AEC is sufficient to permit -
! their admission as a party, i
The participation of third parties in any administrative proceeding depends upon the Ccagressionalintention and the ,
framework that the Ccngress provided by statute within which l
j the regulatory agencies must function. The regulatory function of the Atomic Energy Commission is to protect against radiolo-
- gical hazards (the public health and safety) and to promote the common defense and security - - and these are the only j issues in an application under Section 104b upon which any j party may be permitted to intervene. The possible economic l
effect upon the Municipals as Duk'e customers is too remote i
from the basic responsibility of the AEC to permit their inter-
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vention even though a similar economic interest might permit l intervention in matters before other agencies operating under i
5 other statutes.
- The interest of Piedmont in contrast to the Municipals,-
however, is too remote to justify intervention even in proceedings p.
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involving economic considerations such as those before the FCC. The Federal Communications Commission v. Sanders Brothers Radio Station, 309 U.S. 470, is the key case hold-ing that a person who would suffer economic injury has an appealable interest under the Communications Act of 1934 and, therefore, should be permitted to intervene. In the Sanders case the intervenor had an existing radio station ,
serving the area affected by the decision and, therefore, had a present economic interest in the outcome of the proceeding.
But when a proposed intervenor, instead of having an existing station, merely wished to cbtain a channel at a future time in the same area, the FCC refused to allow the intervention and distinguished the case on this ground from the Sanders case, Mansfield Tournal Comoany v. The Federal Communications Commission,173 F. 2d 646 (1949). In the present case, Piedmont in its application for leave to intervene dated Aug-ust 10,1967, stated (p. 2) that it was organiced ". . . for the purpose of acquiring an undivided interest in the Oconee Nuclear Station, Units 1, 2 and 3. . ." Thus , Piedmont's status in this case is, in principle, identical with that of the Mansfield Journal in the case cited above and, there-fore, does not come within the rule of the Sanders case.
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t-In summary, it has long been held that a petiticn to i
l intervene is properly overmled where no grcund of jurisdict-ion exists for the granting of the asserted right of the peti-1 l tioner. Rothwell v. Davis, 2 Black 613,17 L. ed. 309 (1863).
(b) - The Toint Petition for Leave to Intervene of Piedmont and the Municioals is defective on its face in that it (i) re-lates to and concerns issues not certinent to this croceedina, .
(ii) asks for relief which is bevond the authority of the Com-mission to arant, and (iii) attemots to enlarce the issues with rescect to matters bevond the iurisdiction of the Commission.
The Notice of Hearing in this proceeding set forth in detail the matters to be considered. The scope of the hearing was i
thereby expressly limited to aspects of radiological safety and l commen defense and security.Section III (b)(4) of the Com-mission's Statement of General Policy for the conduct of pro-ceedings relating to the issuance of construction permits for
! nuclear power facilities provides that "the board shculd not permit enlarging of the issues, er receive evidence from an intervenor, with respect to matters beyond the jurisdiction of the Commission." This position has been consistently followed in cases where questions beyond the scope of the issues specified l
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for determination have been raised. Matter of Tersey Central Power and Licht Comoanv, 2 AEC 446, 447 (con-sideration of thermal effects excluded); Matter of Niacara Mohawk Power Corocration, Docket No. 50-220, Initial Decision, pp.11-12, April 1,1965, 3 AEC (consider-ation of whether grant of a construction permit constituted support of segregation excluded); Matter of Consolidated .
Edison Comoany of New York, Inc. , Docket No. 50-3, Memorandum and Order, November 24,196 5, 3 AEC (consideration of thermal effects excluded); Matter of Wisconsin-Michican Power Comoanv, Docket No. 50-266, Order Denying Intervention, June 20,1967, 3 AEC (consideration of aesthetic and recreational and land use values of lakeshore environs excluded).
In its Memorandum and Order issued on November 24, 1965.
in Matter of Consolidated Edison Comoany of New York, Inc. ,
3 AEC , the Commission said:
"Our regulatory control is ::oncerned with con-siderations involving the common defense and security and the protection of the health and safety of the public with respect to the special hazards associated
/ with the operation of nuclear facilities . . . We are net called upon to decide to what extent the contentions of the Council may fall within the areas of responsibility of other Federal, State or local authorities" .
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. These interpretations by the Commission of its obligations under the Act are consistent with its statutory directive to " promote the common defense and security and to protect the health and safety of the public" and to l encourage "research and development activities leading to .
the demonstration of the practical value of such facilities for industrial er commercial purposes." Sec. 104b . They are also consistent with well-established principles of law concerning the right of a person to intervene in a pending case. In Chandler & Price Comoanv v. Erandtzen & Kluce, Inc. , 296 U.S. 53, 8 L. ed. 34 (1935) the Court said:
"It is essential that the applicant (for leave to intervene) shall claim an interest in the matters there in controversy between the plaintiff and the original defendant. The purpose for which permis-sion to intervene may be given is that the appli-cant may be put in position to assert in that shit a right of his in respect of something there in dispute between the original parties".
And in Vinson v. Washincton Gas Licht Co. , 321 U.S.
489, 64 S. Ct.1068 (1944), the Court said:
" . . . and one of the most usual procedural rules is that an intervenor is admitted to the pro-ceeding as it stands, and in respect of the pending issues, but is not permitted to enlarge those issues or compel an alteration of the nature of the proceed-ing. . ."
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Not only would consideration of the extraneous issues raised by the Municipals and Piedmont change the nature of the proceeding, it would tend to thwart the intent of Congress expressed in Section 104b of the Act that "in issuing licenses under this subsection, the Commission shall impose the mini- .
mum amount of such regulations and terms of license as will
- permit the Commission to fulfill its obligations under this Act."
/ It would also be an exercise in futility. This is so because, as stated in subsection (a) above, Piedmont and the Munici-i pals are seeking something that is beyond the authority of the i
Commission to grant. They are, in fact, seeking something which they are precluded by law from having.
The Municipals are eleven cities and towns, located in i
the State of North Carolina. Their express objective is to own, through a " paper corporation", Piedmont, an undivided interest in an electric generating plant in the State of South Carolina . In the case of McGuinn v. Hich Point, 217 N.C.
449, 8 3.2. 2d 462 (19-10) it was held that the City of High Point, a North Carolina municipality and one of the Munici-pals in this case, was without authority to accept a license issued by the Federal Power Commission fer the construction, i
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operation and maintenance of a hydroelectric project pro-posed to be located some twenty-five miles from its cor-porate limits. The development of a hydroelectric project was deemed by the Court to be beyond the scope of the municipality's charger and in excess of the powers granted .
td a by the General Assembly of North Carolina.
Piedmont is a creature of the Municipals, which can
/ delegate to it no greater power or authority than they indi-vidually possess. No authority, either express or implied, is granted a municipality by the General Statutes of North Carolina to apply for or accept a construction permit and
! operating license for a nuclear generating facility or to own or operate an electric generating facility in interstate commerce. It must be concludad, therefore, that the scheme which they propose and upon which they have based their entire case is impossible of fruition under existing law.
Applicant believes that the tactics employed by Pied-mont and the Municipals amount to an abuse of the adminis-trative process. After publicly announcing their intention to institute proceedings before the Federal Power Commission for a wholesale power rate reduction (See Exhibit A to Appli-cant's Answer to Protest of Piedmont Electric Cities dated e
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- . . I July 23,1967), the Municipals instead filed on August 11, 1967, their Joint Petition to Intervene for the purpose of making a motion to dismiss the application as being improperly filed under Section 104b of the Act. As part of the Opening Statement of Attorneys for the Municipals .
at the hearing on August 29-30, Attorney Spencer W.
Reeder stated:
"Now we do not say that we are entitled to a license to operate or to a license to construct any part of this Oconee Nuclear Station, Units 1, 2 and 3. All we say is that we are entitled to a license to acquire a part ownership in this system I as tenants in common. . ." (Transcript, p. 220).
Two weeks after this statement was made Piedmont filed a so-called application for licenses for a four per cent undivided interest in the Oconee Station. This " application" was re-jected by the Director of Regulation by letter to Jack R. Harris, Esq. , dated October 16, 1967 for the reason, among others, that it failed to comply with the Commission's Regulations, 10 CFR, Part 50 with respect to the furnishing of adequate information upon which the Applicant's qualifications for the requested license could be evaluated. Yet, the Municipals and Piedmont persist in their efforts to obtain lower power costs - clearly a matter for the Federal Pcwer Commission -
thrcugh the processes established by law for the licensing
, s of nuclear power plants. In so doing they have attempted to threaten the adequacy of the future power supply of a large section of the two Carolinas.
In any event, the authorities cited above make it clear that intervention can in no way enlarge the issues in a -
proceeding and that matters irrelevant to the issues in a case should be excluded. The matters raised by ?iedmont and the Municipals in their Joint Petition to Intervene do not remotely pertain to radiological safety or national defense and security. They do not ask relief which the Commission can grant or which they could accept, if granted.
It is submitted, therefore, that the Joint Petition is patently defective and should have been denied as to the Municipals as well as to Piedmont and that the evidence offered at the hearing by the Municipals, which related exclusively to pending or completed cases of other applicants, should have been excluded in its entirety.
- 2. Oconee Nuclear Station, Units 1, 2 and 2, is licensable on1v under Section 104b of the Act and not under anv cSer Section .
Piedmont and the Municipais contend that the proposed Oconee reactors are in reality " commercial" reactors within
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the meaning of Section 103 of the Act rather than reactors
" involved in the conduct of research and des elopment activities leading to the demonstration of practical value of such facilities for industrial er commercial purposes" within the meaning of Section 104b. They in fact concede that their case depends upon the dismissal of the application as being improperly filed under Section 104b (Joint Petition, ,
pp. 2-3) . Their position is entirely without merit, and directly controverts an unequivocal and consistently enun-ciated conclusion to the contrary by the Commission as hereinafter set forth.
(a) The Commission has refused to make a statutory findinc bnder Section 102 of the Act) of "cractical value" of boilina and cressurized licht water nuclear reacters which is crerecuisite to their licensinc under any section of the Act.
other than Section 104.
Section 102 of the Act provides:
"VTnenever the Commission has made a finding in writing that any type of utilization or production facility has been sufficiently developed to be of w practical value fcr industrial or commercial pur-poses, the Commission may thereaf er issue licenses for such type of facility pursuant to Section 103."
(emphasis added).
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That Section 102 requires the Commission to find that a type of utilization or production facility is of practical value as a prerequisite to issuing licenses for commercialinstalla-tions of such facilities under Section 103 is clear not only from the language of the statute, but also from its legislative .
history. See Recort of Ioint Committee on Atomic Enerav quoted in part in CCH, Atomic Enerav Law Recerter, Para.13,090.
On Decsmber 29, 1965 in Decket Nos. RM-102-1 and PRM-102-A, in response to a petition filed by the National Coal Policy Conference, the National Coal Association, and the United Mine Workers of America requesting a Commission rule finding that boiling light water reactors and pressurized light water reactors, had been sufficiently developed to be of " practical value" for industrial and commercial purposes ,
the Commission declined to make such a finding. It ruled in part:
"The statutory finding of practical vai :e, while presupposing a determination of technical leasibility, also involves economic censiderations, the essential economic test being the competitiveness of the nuclear power plant with conventional power pJants."
And further:
"Without +he operating information the i.ntermediate sized plants are expected to provide, we are not prepared to make a statutory finding on the basis
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of demonstrated results of the currently operable plants that plants at least three times larger than 200 net MW (e) are of practical value within the
, meaning of section 102."
A similar petition was filed by the same parties en
! October 18,1966 requesting reconsideration by the Commis-sion based on developments since December 29, 1965.
i Dcckec No. PRM-102-3. The Commission denied the second petition en December 21, 1966, on the grounds that its -
December,1965 conclusions were still valid. It said in part:
"Pending the completion of scaled-up plants ,
and the information to be obtained from their ope t-tion, the Commission remains of the view that there
, has not yet been sufficient demonstration of the cost
' of construction and operation of light water, nuclear electric plants to warrant making a statutory finding that any types of such facilities have been sufficiently developed to be of practical value within the meaning of section 102 of the Act."
On August 28, 1967, in this proceeding, the Board denied the motion of Piedmont and the Municipals to dismiss the appli-cation respecting Oconee Units 1 and 2 and deferred a decision respecting Unit 3 until further data could be made available.
The motion to dismiss was based upon the allegation that the t
Oconee Nuclear Station can only be licensed as a "ccamercial nuclear station" under Section 103 of the Act. (Motion to Dis-miss Application, p. 3). It was also contended by counsel for
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- S. am j the Municipals at the public hearing on August 29, 1967 that "this Commission, in numerous cases where it has hold hearings and made findings and issued orders, has found as a matter of law within the Atomic Energy Act, within the meaning of the Atomic Energy Act, that the -
pressurized water type of reactor does have practical value for commercial use." (Tr. , p . 2 2 7) .
This statement of counsel, viewed in the light cf the Commission's explicit pronouncements to the contrary in 1965 and 1966, revealed the Municipals' position as tenuous
- i. at best. And :if there remained any question at all concern-ing a finding of " practical value" it was laid to rest by the Commission in its Memorandum and Order dated September 8,1967 issued upon a referral by the Board of its Order o~f August 28. The Coremission said in part:
"We believe that the licenses , if issued, may properly be issued under Section 104 b. , that is, as licenses for facilities' . . . involved in the conduct of research and development activities leading to the demonstration of the practical value of such facilities for industrial or commercial purposes . . .' We agree with the bcard's view that the definitica cf 'research and development' in the Act and the Commission's regulations is sufficiently broad that it encompasses
-as ' development' a demonstration that will provide a basis for ccamercial evaluation. The construction and operation of the proposed facilities would be sufficiently related to the demonstration of the practical
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value of such reactors for commercial purposes
/ to permit the proceeding to be conducted under Section 104 b of the Act. We additionally note the board's statement in its order that 'there are asscciated with the Duke reactors the specific research and development items characteristic of the cases which have been considered to date by the Commission ' . The beard's crder mentions a number of such research and development items. -
"From the pattern established by the Act for the licensing of utilization facilities, Section 104 b.
is the appropriate section for the licensing of facilities of the type covered by this application. .
Section 104 a. facilities are those for use in medi-cal therapy. Section 104 c. facilities are those research and testing facilities, not designed for the generation of power, which may be used for research and training purposes. The licensing authority under Section 103 is not appropriate for this application. Section 103 facilities are those of a type which the Commission has found, in ac-
, cordance with Section 102, to have been sufficiently i developed to be of practical value for industrial or commercial purposes. The Commission has recently considered and rejected on two occasions
< in rule making proceedings the question of whether such a finding should be made with respect to some type or types of light water, nuclear power reactors l . . . There appears to be no basis at the present time for altering this view.
4 "The mere characterization of the reacters by the applicant as ' commercial' nuclear stations has no probative effect on the determination of whether such reactors are still developmental for purposes of statutory categorization as to appropriate class cf license. As stated in the Staff Memorandum accom-panying the Commission's first determination regard-ing a finding of practical value:
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. . . It is entirely appropriate for manufact-urers and utilities to base their economic es-timates on fcrecasts rather than to await sub-stantial demonstration of cost once the basic technology has been proven; however, the staff considers that the Commission's statutory responsibility under section 102 cf the Act re-quires more than strong belief that the next '
generation of plants will operate at anticipated Costs. . .'"
(b) A findinc of "cractical value" , as a matter involving the carticular exoertise of the Ccmmission, is left by statute to its discretion and there has been no abuse of that discretion in the Commission's refusal to make such a finding.
It is discretionary with the Commission as to whether a statutory finding of" practical value" should be made with respect to a particular type of reactor. In a memorandum to the Commission interpreting the requirements and implications of Section 102 (see CCH, Atomic Enerev Law Reporter, Para.
3563) the Commission's General Counsel said:
"The absence of clear definition and limiting criteria in the statute and its legislative history leaves the Commission with considerable latitude in exercising the discretionary au*.hority under section 102. Among the actions that -he Commis-sion might properly take in the exercise of this discretion, apart from the making of a finding.of practical value, would be a decision that a finding should not be made until (1) the technical feasibility of the reactor concept and its basic technical charac-teristics had been adequately demonstrated and (2) 8
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there had been sufficient demonstration of the cost of construction and operation of the type of nuclear
/ power plant as to provide a sound basis, with reasonable extrapolation, for a reliable estimate of the economic competitiveness of pcwer produced in this type of plant with power that would be pro-duced in a comparable conventional power plant that would be constructed at the same time and plac e. " .
The Commission, in Docket Nos. RM-102-1 and PRM-102-A, sucra, stated in part:
"The Commission has discretion to determine that no type of production or utilization facility will be considered to be sufficiently developed within the meaning of section 102 until it has been adecuately demonstrated, not only technically but also economic-ally. "
It is a well established principle of administrative law that the interpretations of an Act of Congress by the agency charged with the responsibility for its administraticn are entitled to very great weight and should be rejected only if plainly contradicted by explicit statutory provisions or utterly inconsistent with the demonstrated intention of Congress manifested in the legislative history of the Act. Associated Industries v. Ickes ,134 F. 2d 694 (1943). See also United States v. City and Ccunty of San Francisco,' 310 U.S.16, 60 S. Ct. 749 (1940); United States
- v. American Truckinc Association, 310 U.S. 534, 60 S. Ct.1059 (1940).
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This principle is particularly applicable to the Atomic Energy Commission because of its unusual relationship with Congress through the Joint Committee on Atomic Energy. In Power Reactor Develooment Co. v. Electrical Union, 367 U.S.
396, 81 S. Ct.1529 (1961) the Court said:
- I "We see no reason why we should not accord to the (The Atomic Energy) Commission's interpreta-tion of its own regulation and governing statute that Inspect which is customarily given to a practical *
- 2. . Linistrative construction of a disputed provision.
, Pa. . cularly is this respect due when the administra-tive practice at stake ' involves a contemporaneous construction of a statute by the men charged with the responsibility of setting its machinery in motion, of making the parts work efficiently and smoothly while they are yet untried and new. . . . And finally, and perhaps demanding particular weight, this con-
, struction has time and again been brought to the atten-tion of the Joint Committee of Congress on Atomic Energy, which under 202 of the Act, 42 USC 52252, has a special duty during each session of Congress to ' conduct hearings in either open or executive session for the purpose of receiving information con-cerning the development, growth, and state of the atomic energy industry,' and to oversee the operations of the AEC . "
Considering the peculiar responsibility of the Joint Cen-gressional Committee on Atomic Energy, it must be assumed that Congress has acquiesced in the several determinations of the Commission concerning a finding of." practical value" .
Certainly, its tacit approval of these determinations leads to the conclusion that Congress finds no abuse of the Commis-sion's discretion under Section 102 of the Act. .
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(c) The evidence clearly establishes that the three Oconee reactors are involved in the conduct of research and develooment activities within the meaninc of Section 104b of the Act.
A succinct statement of the nature and scope of the re-search and development activity contemplated by a license under Section 104b of the Act is contained in CCH, Atomic Enercy Law Recorter, Paragraph 3508 as follows:
"A special type of research and development license is required under Section 104b where the contemplated activity is not for the purpose of research and development in itself, but rather is for research and development intended to establish that the production facility or utilities facility itself has practical value for industrial or commer-cial purposes . For example, if an applicant wishes to construct a reactor which he believes may be capable of producing electric power on a practical basis for commercial or industrial use (such a facility has generally been termed a ' demonstration' facility), a license is issued under Section 104b."
! (emphasis added).
It has never been contemplated that a reactor licensed under Section 104b could not be used to generate electric power for sale . In fact, the nuclear generating plant at Parr, South Carolina (CVTR), to which Piedmont and the Municipals refer in the Memorandum (p. 6) attached to their Petition to Intervene, is licensed under Section 104b and has generated substantial P
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amounts of electric power for sale to the customers of South Carolina Electric & Gas Company since 1963.
In a memorandum upon which the decision in Docket No. PRM-102-A, sucra, is in part based, the Commission Staff said:
"The recommendation that the Commission make the determination that a statutory finding under sect-ion 102 will not be made now is in no way inconsist-ent with the Commission's announced view that nuclear power has come of age, and with the Commis-sion's confidence in the progress of the nuclear indus-try. Certain types of nuclear power plants are being sold on the basis of economic competition with other ways of providing electrical power, and the staff considers that such sales constitute reasonable busi-ness risks. It is entirely appropriate for manufacturers and utilities to base their economic estimates on fore-casts rather than to await substantial demonstration of cost once the basic technology has been proven; however, the staff considers that the Commission's statutory responsibility under section 102 of the Act requires more than strong belief that the next genera-tion of plants will operate at anticipated costs. The staff also believes that, at the present time, there is not enough information available from which to extra-polate technical and performance characteristics and associated economics with sufficient assurance to provide a sound basis for making the statutory finding of practical value."
Applicant fully expects the Oconee Units to generate elec-tric power for sale. However, each of these pressurized water units is designed to operte initially at 2452 thermal megawatts (839 electrical megawatts ) . Each reactor is more than four timas
3j . 3j larger in capacity than the largest pressurized water reactor operational today (Tr. , pp. 411-412). No evidence was ad-duced at the public hearing which would tend to est sblish that any pressurized water reactor of the size and type of the Oconee reactors have demonstrated or will demonstrate. tech-nical feasibility and economic competitiveness with other types of generating facilities prior to the planned operation of .
Oconee Unit 3 in 1973.
The suggestion that the licen. sing by the Commission of ten pressurized water reactors
- under Section 104b constitutes in law a finding of practical value of the pressurized water -
type of reactor for commercial use (Municipals' Proposed Find-ings of Fact and Conclusions of Law, pp. 6-8) evinces a total misunderstanding of a 104b license as a vehicle for demonstrat-ing practical value.
Among the ten reactors cited, only three have experienced regular operating service. Reports of operating experience on these three reactors issued by the Federal Power Commission
- Indian Point Station, Unit 1; San Onofre Nuclear Generating
- Station; Yankee Nuclear Power Station; E.3. Rchinson Unit No. 2; Indian Point Station, Unit 2; Palisades Nuclear Power Station; Turkey Point Station, Unit 3; Turkey Point Station, Unit 4; and Robert Emmett Ginna Plant, Unit 1; Ccanecticut Yankee Atomic Power Plant.
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.. .. > _j show that the generating cost per kwh by these reactors, including production expense and fixed charges on invest-ment, is substantially greater than the generating cost of any of Applicant's existing generating plants, and further is greater than the revenue per kwh received by Duke from the Municipals for electricity sold to them on a delivered 4
ba sis . Thus neither the largest reactors now in service nor any reacters have demonstrated competitive economics leading to a finding of practical value.
That Congress intended actual economically competitive operation of a specific reactor type as a prerequisite to the making of a finding of " practical value" for that type is ex-plicit in the legislative history of the Act. During debates prior to its enactment, Representative Cole, then Chairman of the Joint Congressional Committee on Atomic Energy, stated:
. . . After a reactor has been tested out under section 104(b) and its practicability as an atomic reactor has been established, and after it has been demenstrated that this force can be used economically competitively, the Commission then makes a determina-tion that such a reactor as a type does have commer-cial utility. ..
(emphasis added). 100 Conc. Rec.
11-23 (Daily Edition); 111 Lec. Hist. 2875.
. The Municipals and Piedmont also denigrate the substantial
" pure research" aspects of the Oconee Station. These include j .
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a once-through steam generater test, a control red drive line test, self-powered in-core neutron detector test, thermal and hydraulic programs, reactor vessel flow dis-tribution and pressure drop test, and a fuel assembly heat transfer and fluid flow test. The Board concluded that be- -
yond these individual programs, the combination, itself, of them " represents a major experiment because the actual efficiency and feasibility need to be demonstrated."
(Initial Decision, pp.16-17) . The Board's conclusion, it is submitted, is correct and requires that the Oconee Units be licensed under Section 104b.
- 3. Even if the aoolication were filed under Section 103 of the Act, as Piedmont and the Municioals contend it should be, thev would have no richt in law cr ecuitv to an interest in the Oconee Nuclear Station.
Piedmont and the Municipals argue that if the Oconee re-actors were licensed under Section 103 of the Act the licenses would be " nonexclusive" and that in some undefined way th'is would afford them the right to insist that the licenses be con-ditioned upon their being permitted to acquire an interest in the Station. (Reply of Icint Petitioners to Answers of Duke Power Company and Regulatory. Staff Opposing Joint Petition, p. 5).
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It is not entirely clear whether they would extend this right to all persons (including all of the applicant's other custemcrs and members of the public generally) or whether it would be confined to "public or cooperative bodies " within the meaning of Section 182d of the Act (in which case Piedmont, as a .
. private corporation formed "by public spirited citizens" would be excluded).
Section 103 of the Act provides that licenses issued there-under shall be on a " nonexclusive basis to persons applying therefor. . . " Piedmont and the Municipals would convert
/ this provision into a right to condemn the property of another applicant. However, they cite not one case or statute to sup-poIt their interpretation - and none exists. On the contrary, the legislative history of the Act reveals that the granting of a license under Section 103 was intended by Congress not to confer upon the licensee any exclusive right to a license within a carticular cecorachic area or territorv. The word " nonexclusive" was not made applicable to a particular nuclear facility such as the Oconee Nuclear Station. (See Hearings on S. 3323 and H.
R. 8862~, "To Amend The Atomic Energy Act of 1945", before the Joint Committee on Atomic Energy, 83rd Cong. , 2nd Sess. ,p. 644) .
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.. .. J Nor can Piedmont and ie Municipals derive any com-fort from the provisions of Section 182d of the Act, which provides as follows:
"The Commission, in issuing any license for a utilization or production facility for the genera-tion of commercial power under section 103, shall ,
give preferred consideratica to applications for such facilities which will be located in high cost
. power areas in the United States if there are con-flicting applications for a limited coconunity for such license. Where such conflicting applica- .
tions resulting from limited cccortunity for such license include those submitted by public cr cooperative bodies such applications shall be giv3a preferred consideration." (emphasis added).
This provision for preferred consideration of cenain Section 103 applications was devised at a time when a pos-sible scarcity of special nuclear material was visualized.
In such event a " limited opportunity" for licenses would exist.
As there is no such scarcity today, there is no limited oppor-tunity for licenses and, therefore, Section 182d has no prac-t tical significance. (See Commission Staff Memorandum filed with and made a part of the Commission's decision in Docket Nos. RM-102-1 and PRM-102-A.)
In summary, there is nothing in the Act or Regulations which would give i)iedmont or the Municipals the right to con-demn a portion of the Oconee Nuclear Station. As stated in its 4
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applicatien, the Applicant owns or has control over all prope:.y within a one mile radius of the proposed sita of the Oconee Station. In addition, it owns substantially all of the property to be included in the reservoir of the near-by Lake Keowee which will provide cooling waters for the ,
Oconee Station. It has obtained a license from the Federal Power Commission for the Keowee-Toxaway hydroelectric project, which the Oconee Station will utilize as a source of cooling water. Substantial sums have been expended in sita prope _ ion for the Oconee Station and in clearing the reservoir of proposed Lake Keowee. This project is the result of years of planning and preparation. The licensing process for the Oconee Station alone has consumed approx-imately one year and has involved the expenditure cf hun-dreds of thousands of dollars. To grant the rellof asked by Piedmont and the Municipals would be inequitable. It would require a torturous construction of the word "nonex-clusive" in Section 103; it wculd require reading the words "resulting from limited oppcrtunity" cut of Section 182d; it would create a result clearly not intended by Congress; and it would seriously jeopardize the development of nuclear power by the private sector of industry.
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To force the Applicant to grant an undivided interest in the Oconee Nuclear Station to Piedmont and the Municipals would also discriminate against all of Applicant's other cloc-tric customers in violation of a fundamental principle of pub-lic utility regulation. Both the Applicant and the Municipals ,
are engaged in distributing electric power to consumers in the Piedmont Carolinas. The total power requirement of the
/ Municipals is cbtained from the Applicant - none operates electric generating facilities. The cost of power to the Appli-cant (and hence to those who receive it, including its own customers and those of the Municipals) is a composite cost of all of the Applicant's generating facilities - some new and economical and some older and less economical but which, be-cause of load demands, must be operated. To permit any cus-tomer, or class of customers, to single out Applicant's most modern and most efficient generating plant and purchase an interest in it er power requirements from it at cost, thus leav-ing the Applicant's remaining customers to bear the greater ex-pense of operating the older, less efficient plants of its system, would be to grant an unfair preference to the customers singled out for such treatment. Under vigilant rate regulation by de Federal Power Commission of wholesale rates, and by the North Carolina Utilities Commission and the Public Service Commission
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of South Carolina of residential, general service and indus-trial rates, the savings resulting from large scale generation, including those which, although not demonstrated, are ex-pected to result from operation of the Oconee Station, will-be shared by all customers of the Applicant, and not just a pre-ferred few.
The necessity for fair treatment, not only of the customers .
of the small distribution systems, but also of the retail cus-tomers of the wholesale supplier, was recently underscored in a speech by Federal Power Commissioner Carl Bagge at a Legal Seminar of the American Public Power Association as follows:
. . . if the price fully and reasonably reflects the allocated cost of rendering the service to the wholesale all-requirement purchasers, it is clear that such customers receive the benefits of advanc-ing technology to precisely the same extent that such benefits are afforded to the retail customers of their wholesale supplier. It seems to me that this is eminently fair. I see no reasonshy the retail customers of small systems should benefit to a greater extent than the retail customers of the bulk power supplier." (Weekly Letter No. 46 of the National Association of Electric Ccmpanies, dated November 17, 1967).
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CONCLUSION The matters raised by the Municipals and Piedmont in the course of this proceeding do not constitute valid grounds for their being admitted as intervening parties. The Order of the Atomic Safety and Licensing Board denying leave to intervene to Piedmont was $erefore correct. The Order granting intervention to the Municipals was in error, and Applicant requests that the Commis- .
sion, as provided in Section 2.770 of its Regulations, review the i
whole record of the proceeding and in its Final Decision set aside the Order granting intervention to the Municipals.
The record of the proceeding reveals that the application for licenses for Oconee Nuclear Station Units 1, 2 and 3 was properly filed under Section 104b of the Act. The Orders of the Board denying the motion of Piedmont and the Municipals was therefore correct, and the findings relating thereto should be adopted by the Commission.
Applicant is of the opinion that the documents filed by all parties in this proceedirg adequately set forth the arguments on both sides of the issues raised by the exceptions to the Board's Initial Decisien filed by Piedmont and the Municipals and that cral a.nguments are unnecessary. It is therefore submitted that the request for cral~
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_j argument by the Municipals should be denied. It is further submitted-that the request of Piedmont that the hearings be reopened should also be denied for the reasons fully set forth in this Brief.
Respectfully submitted, DUKI POWER COMPANY By its Attorneys -
/s/ Carl Horn , Ir.
Carl Horn, Jr.
/s/ William H. Grice William H. Grigg
/s/ Roy B. Snaco Roy B. Snapp This 30th day of November,1967
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