ML20010J577

Corrected Pages to Petitioners' 810925 Objections to ASLB Order

ML20010J577
Person / Time
Site:	Saint Lucie
Issue date:	09/25/1981
From:	PARSONS & WHITTEMORE
To:	Atomic Safety and Licensing Board Panel
Shared Package
ML20010J575	List: ML20010J574 ML20010J577
References
ISSUANCES-A, NUDOCS 8110050369
Download: ML20010J577 (17)

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INTRODUCTION Obj ection #1: The Board erred in finding that "FPL refused RRD's request for PURPA rights and contested its claim before FERC" (Mem. 2, 12).

RRD has asserted no claim before PERC. On March 13, 1981, RRD filed with FERC formal notice of its qualifying status.

The purpose of that required notice, according to FERC, is to facilitate the agency's environmental monitoring of qualifying facilities. See 45 Fed. Reg. at 17971(March 20, 1980)s Thereafter, on May 6, 1981, PPL petitioned.FERC to declare that RRD is not a qualifying facility, and that " claim" by FPL is now pending before FERC (Docket No. QF-81-19-001). RRD contends before FERC that PPL's Petition for a Declaratory Order should be dismissed because the agency lacks authority to determine RRD's c,aalifyii}g status in circumstances where RRD did not request such a determination.

CONSIDERATION OF FACTORS GOVERNING LATE INTERVENTION Objection #2: The Board erred in stating that "RRD's apparent reason for believing that its FERC remedy is incomplete is its concern that a settlement agreement entered into between Staff, the United States Justice Deparrment and FPL will adversely affect its PURPA rights" (Mem. 5, 13).

The FERC remedy mentioned by the Board is incomplete for

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U.S.C.] S2239(a)." Suscuehanna Valley, supra, 619 F.2d at 238; see Liesen, su=ra, 636 F.2d at 95.

Objection #3: The Board erred in concluding "that RRD can seek complete relief for all its grievances from FERC" (Mem. 6, 13); that "RRD wants to limit its participation as much as possible to exactly the

same issues as pend before FERC" (Mem. 9, 13);

"that the antitrust issues impliedly raised by RRD are peculiarly within the competence of FERC" '

(Mem. 9, 14); and that FERC's " competence arises i because PERC has the responsibility for administering PURPA and the antitrust issue impliedly raised here is whether small power is facilities have antitrust rights additional to  :(

their PURPA rights or whether PURPA rights preempt i.

antitrust rights" (Mem. 9, 13, to 10, 11).

For several reasons, FERCs antitrust jurisdiction is .

not an "other means whereby the petitioner's interest will be protected" within the meaning of 10 CFR 52.714 ( a) (1 ) (ii) . Toledo  :

Edison Co. (Davis-Besse Nuclear Power Station, Units 1, 2 and 3) C 10 NRC 265, (ASLAB 1979); South Texas, supra.  :.

First, in Davis-Besseira__f7Ithe applicants had argued ik#

v that the NRC was 7.equired to take into account the "public lI interest" (and thus impose lesser competitive duties) when making it its S105c determinations. The applicants had reasoned that this ti analysis would make NRC review consistent with Federal Power M Commission (now FERC) antitrust responsibilities. The Appeals .

Board rejected that argument, ruling:

The "public interest" standard applied by the FPC and FCC is not appropriate for ,

l section 105c purposes. Among unose l agencies' primary roles is economic -

regulation, either of a line of commerce ' i or of a particular industry. NRC i

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responsibilities are not of that kind.

Rather, section 105c calls upon the Commission to determine only whether the specific and (in the overall context of the electric power industry) relativelv _, p/

limited activities of its licensgb would cause or continue situations inconsistent with antitrust requirements. The section nowhere mentions -- much less conveys --

the right to relax or ignore settled antitrust strictures in favor of some broad conception of the "public interest" or to further another regulatory scheme with a different purpose.

If. at 284.

The Licensing Board in the South Texas case applied similar reasoning to reach a result that is inconsistent with this Board's conclusions. There, the applicants argued that the enactment of PURPA and its grant of authority to the FERC to order wheeling and interconnection eliminated the need for 5105c hearings where the petitioner sought interconnection or wheeling.

That argument was rejected. The Board noted that "the legislative t.istory and the language of PURPA clearly establish that it was not intended to divest NRC or any other antitrust tribunal of jurisdiction, nor to recuire deferral c.f such: matters to FERC."

_Id,. at 576 (emphasis added, citations omitted). Quoting Senator Metzenbaum, a member of the PURPA conference committee, the Board ruled:

the authority of the NRC in conducting an antitrust review (under section 105c] would not be af fected by this extremely limited wheeling authority granted to FERC under this new

legislation. These two agencies are charged with different responsibilities with respect to wheeling. FERC's new authority is conditioned on conservation, efficiency, reliability, and public interest. NRC's authority relates to correcting or preventing a situation inconsistent with the antitrust laws. ,

Accordingly, it cannot be held that proceedings by FERC based upon this statute in any way supersede the instant NRC proceeding.

Id. at 576-77 (citations omitted).

Second, there is no issue pending before FERC as to RRD's wheeling (or interconnection) rights. See the discussion of v' objection # , supra. Yet, the isrues raised by RRD's interest in V this proceeding are limited to the wheeling conditions of the NRC's settlement license conditiom... The FERC proceeding therefore involves totally dferent issues than those before this Board. -2/

The divergent issues before FERC and the NRC would make it impossible for RRD to limit its NRC participation "to exactly i

the same issues as pend before FERC" (Mem. 9 , 13 ) , and RRD has l 2/ Even under FPL's view of the FERC proceeding there is no 7 public interest" standard to be applied, thus precluding FERC consideration of antitrust issues. The present FERC croceedinc_, -r concerns FPL's efforts to convince FERC to 4 Evoke RRD's qualifying status. Antitrust matters are thoroughly irrelevant to that limited issue and thus cannot be raised there. __.

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never sought to do so. RRD's agreement "that we would take the

[NRC] record as it existed" (Tr. 22) and that "[w]e weren't going to try to sffect the [NRC] outcome based upon the issues that were already joined by the parties" (Tr. 23) were no more than statements of its understanding of the requirements of NRC law governing late intervention petitions. That understanding, we submit, is correct. Florida Power & Light Co. (St. Lucie Plant, Unit 2, 7 NRC 939, 948 (1978)(late intervenors should be amenable to limitations on scope); Virginia Electric and Power Co. (North Anna Power Station, Units 1 and 2), ALAB-342, 4 NRC 98, 109 m il e* Fa te d (1976)(limited scope of late intsrvdnors' contentions -itij't;4 j in "

favor of intervention); Nuclear Fuel Services , Inc., et al. (West-Valley Reprocessing Plant), 2LI-75-4, 1 NRC 273 (1975)(late intervenors to take the proceeding as they find it) . RRD's compliance with the limitations imposed by NRC Regulations and precedents cannot fairly be cited against it as a reason for denying its intervention petition.

Third, the Board's conclusions quoted in Objection #3, supra, are inconsistent with the reasons for granting RRD conditional amicus curiae status to be heard on "the appropriateness of granting relief to PURPA facilities to

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supplement rights already granted by PURPA" (Mem. 19, 13). 1/ Those conclusions also conflict with the Board's recognition that "(w} ere RRD seeking to participate fully in the adjudication of the merits of this case, then it is possible that relief would be available before the NRC that is not available before FERC" (Mem. 9,13 ) (emphasis added) .-4/ This Board has thus correctly recognized that the NRC is empowered to afford Petitioners relief unavailable in any FERC proceeding; that power cannot be diminished by considerations of RRD's status (as amicus or intervenor) or of the scope of its participation.

Fourth, the antirrust issu'e raised by RRD is not "whether small power facilities have antitrust rights additional to their PURPA rights or whether PURPA rights preempt antitrust rights" (Mem. 10, 11). Rather, the issue is whether FPL, a utility with a monopoly over the South Florida transmission grid, can use the nuclear licensing process to subvert the procompetitive policies reflected in PURPA's creation of 3/ The Board's pronouncements on this point would lead to the result that Petitioner has greater rights before the NRC as an amicus curiae than it could have as an intervenor.

4/ The Board's reliance on the possibility that RRD might

-perate the facility on an interim, one-year basis is wholly inappropriate. (Mem. 9, 14) Such issues of interim relief and the timing of the plant's operation are irrelevant to a decision upon y' the NRC's ability to afford RRD relief. Fu'r th e r , the Board's ___ 9.,

reference to FPL's alleged offer to permit the f acility jg. operate for one year mischacacterized counsel's comments, which are y unsuccorted by any evidence in the record. (Mem. 9, 14; Tr. 41). V 7

u^-^M  : f'FPL'has'not made theunconditionalofferdescribed{the the Board.

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wheeling rights; nor does it involve FPL's St. Lucie license and the conditions therein.

The issues in the arbitration and FPSC proceedings are totally inapposite to the issues raised by RRD's intervention petition before the NRC. Those proceedings therefore are factually inadequate substitutes for an order allowing RRD to intervene in this proceeding. Beyond this, those proceedings are inadequate substitutes, as a matter of law, for the relief RRD seeks here.

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Even the[ method of privace antitrust enforcement, a federal court lawsuit under the Sherman Act, has been held to be an insufficient replacement for a S105c antitrust heari 7 The Appeals Board in this very docket has observed "the barrier: to such (antitrust] relief is higher in court than before us."

In an NRC proceeding, a remedy is available under section 105c to an intervenor who can demonstrate the existence of a " situation inconsistent with the antitrust laws." According to the Joint Committee which drafted the provision, "[t]he concept of certainty of contravention of the antitrust laws or the policies clearly underlying these laws is not intend ed to be implicit in .

this standard."

i Florida Power & Light Co. (St. Lucie Unit No. 2), 6 NRC 8 (1977).

This point was elaborated upon in the South Texas case, supra.

Finding that a federal antitrust suit failed to provide adequate relief, the Licensing Board held:

The instant proceeding involves a finding under $105c(5).... Such an inquiry covers a broad range of activities considerably beyond the scope of the " violation" standard of Section 1 of the Sherman Act. It is well-established that in a Section 105 proceeding it is not necessary to show an actual violation of the antitrust laws.... The scope of Section 105c proceedings also includes consi<leration of SS of the Federal Trade Commission Act, which permits proscription of unfair or deceptive business practices that infringe neither the letter nor the spirit of the Sherman and Clayton Acts.... There are substantial differences between the standards and issues involved in the Sherman Act, Section 1 suit based on restraint of trade...when contrasted with the issues involved in this proceeding arising from allegations of monopoli=ation, unfair methods of competition, and inconsistency with underlying policies of antitrust laws (Section 105c).

M. at 570-71 (citations and footnotes omitted)g ef u e -dA-d} r !

Objection 45: The Board erred in holding that the crder approving the settlement agreement "has become final and even were RRD to succeed in intervening it could not challenge that Order" (Mem. 8, 11).

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RRD seeks intervention to challenge {the terms of the settlement agreement as well as FPL's conduct in reaching that settlement. 1/ RRD's petition to intervene was filed 5/ RRD also seeks intervention to challenge the terms of the settlement agreement solely in its capacity as a qualified PURPA facility npecifically covered by the agreement. See SX(a)(5).

That point, which is not based upon an antitrust argument, is discussed in connection with Objection #13, infra.

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I The date of public release of the settlement agreement

is the critical date in determining the timeliness of RRD's Petition to Intervene. Natural Resources Defense Council v.

Costle, 561 F.2d 904 (D.C. Cir. 1977). There, the United States Court of Appeals for the District of Columbia upheld the timeliness of intervention petitions under Rule 24 of the Federal Rules of Civil Procedure. -The case was seven years old when Petitioners moved to intervene. Their petitions, however, were filed within four weeks of the date on which they first learned of the critical settlement agreement. What is more, the intcrvention petitions indicated no interest in litigating the merits of the case, chey sought leave oniv to monitor the future administration of the settlement aoreement.

Similarly, RRD petitioned to intervene within a nonth of

the public notice of the settleinent agreement, and its Petition asserted claims for relief limited to the agreement'sSection X(a)(5), the wheeling provisions. There is NRC precedent for allowing intervention to pursue a limited goal (see Virginia ,

Electric & Pot 3r Co. (North Anna Power Station, Units 1 and 2),

ALAB-342, 4 NRC 98 ( 1976 ) ) ., and that precedent should be followed here. To hold otherwise would deprive RRD of its due pr1 cess -

rights. See Sea-Land Service, Inc. v. Federal Maritime Commission, F.2d __ (D.C. Cir. 1981)(No. 79-2493, Slip Op. at 16)(Commission alteration of a settlement agreement without persons s opportunity for af fected _,r rjics to be heard was violation of due v/

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V p/ process]); Arkansas-Best Freicht Svstem v. United States, 399 F.Supp. 157 (W.D. Ark. 1975), aff'd, 425 U.S. 901 (1976)(Interstate Commerce Commission's failure to give interested penon s yf p/ h,~L++ adequate notice and opportunity to comment before

[edJ expanding a grant of authority "resultg in depriving a person or 9/

corporation of due process.")

Objection #8: The Board erred in finding "that RRD's reasons for late filing were not specific enough" (Mem. 14, 13), and that "[iln particular, we are concerned that RRD failed to contradict FPL's representations that RRD should have *iled soon after February 1980" (Mem. 14, 13 ) .- 6>

RRD was not advised until the July 20, 1981 hearing that FPL would argue in this proceeding that the parties' contractual dispute had reached an impasse in February, 1980. RRD deniad that assertion during the July hearing (Tr. 74-79 and 116-117).

Indeed, RRD contended that it would need discovery as to FPL's unsubstantiated assertion, Tr. 116, based on nothing in the record, that Petitioners said in February, 1980 they "woul/ not operate the EGF." (Mem. 15, 12) RRD followed that request with a summation of its position, as follows:

Everything they (FPL] have said is compatible with an honest dispute that did not erupt until April of 6/ Tne FPL representations referred to were made orally during the July 20, 1981, conference of counsel. They are semmarized at Mem. 12, 11.

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have sufficient probative force. See Coates v. Califano, 474 F.Supp. S12 (D. Colo. 1979).

By relying upon FPL's references to the unanswered and unsupported allegations in a civil complaint filed by Dade County against RRD, the Board fell below the min'imum standards of due process of law required of it. A naked complaint, especially one that was dismissed, is lacking any probative force whatsoever.

Reference to it by FPL was improper; reliance upon it by the Board was arbitrary and capricious. At the conference of counsel, FPL, for the first time, raised the tax credit, the alleged February, 1980 letter, and the FERC petition as grounds for denying the Petition to Intervene.-8/ Obviously, RRD could not con ten tions respond to these new r^aditi;n; at the hearing, and the Board l

denied it the opportunity to respond sub,sequently. Because the Co n f'enHows Board rested its decision, in part, upon the new renfitica: of /

FPL, it was a violation of RRD's due process rights not to provide it with an opportunity to examine, explain or reb.t FPL's .

assertions. See Kellv v. Herak, 252 F.Supp. 289, 295 (D. Mont.

1966), aff'd 391 F.2d 216 (9th Cir. 1968)(party hus right to 8/ FPL's reference to the tax credit issue goes to the merits IUI the controversy between FPL and RRD and is wholly irrelevant to a decision on an intervention petition. In mentioning FPL's

" arguable ownership right in the alleged small power facility" (Mem. 13, '14 ) , the Board improperly evaluated the intervention petition upon a factor going to the merits of the antitrust issues.c Moreover, FPL does not claim ownership of the facility. "

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(seeoo]ection97, supra {}

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contractually determined amount to which RRD became entitled when it suestantially completed the construction. The 590 million figure does not indicate a starting point for price renegotiations, as the Board seemed to assume.

Third, for over a year after Feburary, 1980, Petitioners continued to add to their construction expenditures by continuing to build the facility. The S150 million facility was built solely at Petitioners' expense, and they have not been paid for it. In addition, it was RRD who sought arbitration of the contractual dispute with Dade County in January, 1981, after the County had sued RRD in December, 1980. These actions run counter to the idea that RRD ever intended to abandon its legitimate obligations under V the disputed contrac* And they are flatly inconsistent with the v!

finding that such abandonment crystalliced nearly a year earlier, in Februarr, 1980.

Objection 49: The Board erred in finding trat "[a]lthough RRD's intervention would not retard the licensing of St. Lucie..., its participation in this proceeding inevitably would complicate and delay it" (Mem. 18, 12).

In reaching its decision on the delay factor, the Board completely discounted RRD's stipulation to accept the scheduled l issuance of FPL's operating license. The Board, in addition, ,

failed to consider the impact of the ongoing dispute between FPL

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g/ and the present intdvenorsovertheissuanceoftheoperating license.

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l particpationintheproceeding/(Mem.26, 55 to 27, 51). Iiowever,  !

the Board concluded that inquiry into RRD's claims "would substantially overlap facts already in controversy," (Mem. 19, %1) and thus , RRD would not contribute to the development of a sound record. Further, the Board found "that Florida Cities adequately represents RRD's interests in this proceeding ," up to the point at which RRD is accorded status as amicus curiae (Mem. 21, 12). Such '

findings are factually incorrect and legally unsound.

RRD's claims , while based in part or. FPL's maintenance.

of a situation inconsistent with the antitrusn . laws, are unique to this proceeding. RRD has raised antitrust claims related to FPL's refusals to deal'with RRD, FPL's conduct in reaching the settlement, anr3 FPL's use of the settlement to undermine PURPA.

(Sed Objection 47, supra). No other entity has raised these contentions. RRD's perspective.is distinct from that of the other i

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parties to the proteeding. e/

Mo re ov e *2, RRD's allegations do not relate to a " tiny facet of FPL's overall conduct" (Mem. 19, 52). RRD directly chal'.enges FPL's use of the Commission's settlement process and its persistent conduct and policy in refusing to deal with the RRD facility. Central to RRD's claim is its contention that FPL's 1

anticompetitive behavior is a product of its market position as developed by its monopoli:ation of nuclear-powered electrical generation in Southern Florida. There is no other PURPA facility (nor PURPA-like facility) presenting these claims to the Board.

RRD's input into the development of the record is, therefoto, essential for a full and fair consideration of the threshold 9/ Moreover, the NRC licenses construction of nuclear plants on the fundamental premise of a need for the power. If alternative technology sources or power or competing =roducers of power, or both, are ava11acle economically, they will affect the need for more nuclear sources. Conversely, if FPL's monopoly powers are allowed to disadvantage and to suppress alternative sostcts and ccmpeting producers, FPL will be allowed both to inflate the apparent need for central-station, nuclear power and to fulfill FPL's negative prophecies as to the alternative.

The need for power issue has confronted NRC with a series of dilemmas. The solution lies in assuring the most vigorous competitive opportunity to the non-nuclear sources, the correction _, y' and prevention of anticompetitive actions by licensgh, and to that end full exercise of the NRC's responsibilities, including denial of licenses, conditional issuance of licenses, revocation of licenses, and enforcement of licenses. Proper exercise of NRC responsibility would welcome to these proceedings the oniv party that speaks from the vantage of a ecmcetinc producer tnat would introduce an alternate, non-nuclear source into the energy market.

Exclusion of enat party violates the fundamental msadates of the NRC.

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antitrust issues and the sucsequent determination of appropriate relief.

The record is devoid of any basis for the Board's conclusion that Florida Cities will adequately represent RRD's interests. Indeed, the Board cited no support for its finding tha t Cities intends to pursue PURPA-related issues, and RRD knows of no such intention on the part of Cities.

The Board recognited that RRD and Cities do not have identical interests, but ic went on to observe that both have raised antitrust issues. (Mem. 20, 14) The mere assertion of

' claims under the antitrust rubric does not reflect upon the similarity of the claims. The Commission recognized as much when it permitted Florida Cities to intervene af ter the City of Orlando had interveneJ. St. Lucie, 7 NRC at 949. Both intervenors soug ht to prove the existence of a situation inconsistent with the antitrust laws, but neither could adequately represent the interests of -he other. The same result must obtain here.

The Commission's rules e'.GJ:'7r)

.- prevent RRD, as an  %/

amicus curiae, from contributing to the record developed before the Board. RRD would be prohibited from participating in discovery and would be required to rely wholly upon Cities' attempts to elicit information relevant to the interests of PURPA facilities. See 10 C.F.R. 52.740. Further, RRD would be barred from adducing any evidence at the hearing on the .intitrust issues or the relief to be provi:ed upon a finding of an existing 26 -

sucra). The Board did not give adequate consideration to all of those claims in making the nexus determination and thus it erred.

(Mem. 26, 51)

Objection 413: Tne Board erred in failing to recognize Onat PURPA provides an independent basis for RRD to intervene to challenge the settlement agreement.

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' The settlement agreement between FPL, the Commission staff, and the Department of Justice requires FPL to provide transmission services as a condition of its license to operate St. Lucie Unit No. 2. Because RRD is directly affected by the terms of the settlement agreement, it sought to intervene to cnallenge that agreement and the circumstances prompting it.

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RRD's interest in the settlement agreement arises because the parties to the agreement chose to affect PURPh facilities in the section on transmission. Having injected PURPA issues into the settlement agreement, the Board cannot now deny RRD's legitimate interest in intervening to :hallenge the agreement's treatment of PURPA facilities. The PURPA issues raised by RRD cannot be pursued in any other forum because. of the 1

Board's unique antitrust jurisdiction (see Objection ?{, suora) and its role in implementing the cettlement agreement.

In sum, the settlement agreement provides an independent ground that requires granting RED's Petition to 31 -

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ntervene.-- To the extent that the Board overlooked this independent basis for intervention, it erred.

10/ At the oral argument on August 17, 1981 on Cities' Motion

~!or Summary Judgment, the Chairman evidenced seme miscomprehension on this point:

[RRD was] asserting that there was a situation inconsistent with the antitrust laws. That was the only thing they could assert here. They were a little confused and at some time said more things about direct PURPA issues. (Tr. 1194).

Therefore, there is no question that the PURPA claim was asserted, and the Board understood this. As stated in the text, the settlement agreement, which directly affects the interests of PURPA entities, requires that such entities be permitted to participate in order to protect their statu_ tory and due process ,

rights. See Sea-Land Service, Inc. v. Pe6Ea1 Maritime Commission, 9/'

F.2d (D.C. Cir. 1961)(No. 79-2493, siip Op. at 16)(affected

1r@['r must be heard in challenge to settlement agreements.) f r

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