ML20086J482
| ML20086J482 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry  |
| Issue date: | 12/31/1991 |
| From: | Goldberg R, Strother C CLEVELAND, OH, GOLDBERG, FIELDMAN & LETHAM, P.C. |
| To: | NRC COMMISSION (OCM) |
| Shared Package | |
| ML20086J476 | List: |
| References | |
| 91-644-01-A, 91-644-1-A, A, NUDOCS 9112110280 | |
| Download: ML20086J482 (31) | |
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UNITED STATES OF AMERICA DEFORE THE t op1;[D NUCLEAR REGULATORY COMMIGSION UHRC
) 91 DEC 10 P3 52 In the Matter of ) Docket Nos. 50-440-A
) 5 a OHIO EDISON COMPANY ) cr bgcyp;L1-3,46.-Alit NC 4 7 VDil- 4Y (Perry Nucluar Power Plant, ) Bh AM' Unit 1, Facility Operating )
License No. NPF-58) )
)
THE CLEVELAND ELECTRIC )
ILLUMINATING COMPANY )
THE TOLEDO EDISON COMPANY )
fuerry Nuclear Power Plant < ) ASLDP No. 91-644-01-A {
init 1, Facility Opera'~ )
License No. NPF-58) )
(Davis-Desse Nuclear Pos. ,
Station, Unit 1, Faci 3i ,
Operating License No. NPF REPLY DRIFF OF THE C. . vr .-. P 7 M L n N D , OHIO, IN SUPPORT OF NOTICE OF AVPELL O? PREHEARING CONFERENCE ORDER GRANTING REQUEST FOR HEARING Danny R. Williams Director of Law June W. Wiener Chief Assistant Director of Law William T..Zigli Assistant Director of Law City Hall, Room 106 601 Lakeside Avenue Cleveland, Ohio 44115 Telephone (216) 664-2000 Reuben Goldberg Channing D. Strother, Jr.
B. Victoria Brennan Goldberg, Fieldman & Letham, P.C.
1100 Fifteenth Street, N.W.
. Washington, D.C. 20005 Telephone (202) 462-8:300 Attorneys for City of Cleveland, Ohio December 1991 911 P1102OO 911231 DDR AIIDCK 0D000346 M PilR
TABLE OF CQBTENTS Ea90 ARGUMENT................................................. 2 I. SECTION 189a(1), A PROCEDURAL PROVISION, PROVIDES NO SUBSTANTIVE COMMISSION AUTHORITY WITH RESPECT TO THE CATEGORIES OF PROCEEDINGS ENUMERATED IN THAT SECTION. SECTION 105 IS THE EXCLUSIVE SOURCE OF THE COMMISSION'S AUTHORITY RESPECTING ANTITRUST LICENSE CONDITIONS................................ 2 II. APPLICANTS ARE NOT WITHIN THE COVERAGE OF SECTION 189a OF THE AEA........................ 11 III. DETERMINATION OF THE APPLICATIONS NECESSARILY REQUIRES ANTITRUST REVIEW UNDER SECTION 105................................. 13 IV. THE BENEFICIARIES OF THE ANTITRUST LICENSE CONDITIONS ARE PROTECTED BY SECTION 105 OF THE AEA......................... 17 V. DICTA IN THE APPEAL BOARD'S DECISION IN THE DAVIS-BESSE CASE DOES NOT AND CANNOT SUPPORT POST-OPERATING LICENSE ANTITRUST REVIEW .......... 19 VI. CONCLUSION........................................ 23 h
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TABLE OF AUTHORITIES Pane oCourt Cases Alabama Power Co. v. NRC, 692 F.2d 1362 (11th Cir.
1982), cert, denied, 464 U.S. 816 (1983)............. 18 o Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit No. 2)), LBP-78-13, 7 NRC 583 (Licensing Board), aff'd, ALAD-475, 7 NRC 752 (1978)............ 7-8 Ft. Pierce Utilities Authority v. United States, 606 F.2d 968 (DC Cir. 1979), cert, denied, 444 U.S. 842 (1979)...................................... 4 Safe Energy Coalition v. NRC, 866 F.2d 1473 (D.C. Cir. 1989)..................................... 2 System Federation v. Wright, 364 U.S. 642 5 L.Ed 2d 349 (1961)................................. 8-9 Union of Concerned Scientists v. Nuclear Regulatory Commission, 735 F.2d 1437 (D.C. Cir. 1984),
cert, denied, 469 U.S. 1132 (1985)................... 12 United States v. Swift & Co., 286 U.S. 106,
-76 L.Ed 999 (1932)................................... 8, 9 Commission Cases Florida Power & Light Company (St. Lucie Plant, Units 1, 3 and 4), ALAB-420, 6 NRC 8 (1977).......... 3, 22 Houston-Lighting &' Power Co., et al., (South Texas Projects, Units 1 and 2), CLI-77-13, 5 NRC 1303 (1977)............................................... 3, 22 South Carolina E & G Co. (Virgil C. Summer Nuclear Power Station, Units 1,.2 and 3), ALAB-560, 10 NRC 265 (1979)....................................... 16 The Toledo Edison Co. (Davis-Besse Nuclear Power Station, Units 1, 2 and 3) ALAB-560, 10 NRC'265 (1979)............................................... 19, 20 NRC Reaulations (10 CPR)
Section 2.101.......................................... 3 Section- 2.200-204...................................... 19, 21 Section 2.206.......................................... 19 Section 50.1........................................... 5 Section 50.4........................................... 5 Section 50.42(b)....................................... 6 Section 50.90.......................................... 5 Part 2................................................. 6
TABLE OF AUTHORITIES (continuedl EaGQ Statuto Atomic Energy Act (4 2 IISC)
Section 103 (42 USC S2133)........................... 5 Section 104 (42 USC S2134)........................... 5 Section 105 (42 USC S2135)........................... 2, 3, 4, 6, 14 Section 161 (42 USC S2201)........................... 4, 12 Section 182 (42 USC S2232)........................... 3, 4 Section 186 (42 USC S2236)........................... 4 Section 186(a) (42 USC S2236(a))..................... 4 3, 4 Section 187 (42 USC S2237)...........................
Section 189a(1) (42 USC S2239(a)ti))................. 2, 3, 4, 11, 12, 14 k
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UNITED STATES OF AMERICA bEFORE THE NUCLEAR REGULATORY COMMISSION
)
In the Matter of ) Docket Nos. 50-440-A
) 50-346-A OHIO EDISON COMPANY )
(Perry Nuclear Power Plant, )
Unit 1, Facility Operating )
License No. NPF-58) )
)
THE CLEVELAND ELECTRIC )
ILLUMINATING COMPANY )
THE TOLEDO EDISCN COMPANY )
(Perry Nuclear Power Plant, ) ASLBP No. 91-644-01-A Unit 1, Facility Operating )
License No. NPF-58) )
(Davis-Besse Nuclear Power )
Station, Unit 1, Facility )
Operating License No.-NPF-3) )
)
REPLY BRIEF OF THE CITY OF CLEVELAND, OHIO, IN SUPPORT OF NOTICE OF APPEAL OF PREHEARING CONFERENCE ORDER GRANTING REQUEST FOR HEARING To the Honorable, the Commissioners of the Nuclear Regulatory Commission:
This reply brief is' filed in answer to.the arguments of the joint brief of Ohio Edison Company ("OE"), Cleveland Electric-Illuminating Company and Toledo Edison Company (collectively
" Applicants") and the brief of the Staff of the Commission. In a separate motion, filed concurrently herewith, Cleveland hac sought leave to file this brief.
i ARGUMENT I. SECTION 189a(1), A PROCEDURAL PROVISION, PROVIDES NO SUBSTANTIVE COMMISSION AUTHORITY WITH RESPECT TO THE CATEGORIES OF PROCEEDINGS ENUMERATED IN THAT SECTION. SECTION 105 IS THE EXCLUSIVE SOURCE OF THE COMMISSION'S AUTHORITY RESPECTING ANTITRUST LICENSE CONDITIONS.
Cleveland's initial brief in support of its Notice of Appeal showed that the Board erred in ruling that Section 189a(1) of the Atomic Energy Act ("AEA") confers upon the Commission substantive antitrust review authority to conduct a post-licens-ing antitrust review on Applicants' application for suspension of the antitrust license conditions in the Perry and Davis-Besse Nuclear Power Units Operating Licenses. (Cleveland Br. 36-37).-
Contrary to Applicants' contention that Section 189a(1) confers substantive authority on the Commission (App. Br. 25), Section L 189a(1) is merely a procedural provision providing for a hearing l on any of the eight enumerated categories of existing proceedings i
i upon request of a member of the public whose interest is affect- ,,
ed. -Safe Enerav Coalition v. NRC, 866 F.2d 1473, 1478 (D.C. Cir.
1989).
Staff and Applicants in their briefs in opposition to L Cleveland's Notice of Appeal support the Board's ruling, arguing that Section 189a(1) confers upon the Commission authority to conduct a post-operating License antitrust review which has for its purpose the elimination of the antitrust licensing condi-
, tions, notwithstanding the fact that Section 105c of the AEA, the exclusive provision conferring antitrust licensing condition authority on the Commission, prohibits post-Operating License
l antitrust review, as the Commission has explicitly ruled. (Staff Dr._6-7,_14-15; Applicants Br. 3).1 llouston Lichting & P_pwer Co.. et al., (South Texas Projects, Units 1 and 2), CL1-77-13, 5 NRC 1303 (1977); Elorida Power & Light Company (St. Lucio Plant, Units 1, 3 and 4), ALAB-420, 6 NRC 8 (1977). Indeed, Staff concedes (Staff Br. 7-8, 11-12) that Section 105 focuses on amelioration of antitrust behavior and provides no procedure where antitrust behavior may have ceased or can no longer occur; that the Commission's antitrust jurisdiction is limited to the Construction Permit and the pre-Operating License proceedings; and that any remedial action beyond that is left to the Depart-ment of Justice er the Federal Trade Commission, citing the Epnth TeKag case, m1pla, 5 NRC at 1316-17.2!
Notwithstanding this concession, Staff asserts that as a " general matter" the Commission's general amendment authority "should govern in such instance" and, thus, authorize post-Operating License antitrust review, citing Sections 182a, 187 and 1/ Applicants also contend (Br. 3), apparently not secure about the Board's assertion of jurisdiction under Section 189a(1),
that the Commission's jurisdiction also lies under Section 105 (App. Br. 29, 39),
2/ Applicants contend (Br. 8) that Cleveland asserts that the Commission lacks authority to amend the licenses it issues.
This is not Cleveland's position. Cleveland's contention is precise. Cleveland's position is that Applicants' " amend-ment," assuming it is an " amendment," invokes the Commis-sion's antitrust license conditioning authority of Section
. 105 and the Commission's regulations implementing Section 105, namely Section 2.101, and that no antitrust review post-Issuance of the Operating License is authorized. Although an applicant may file an amendment whenever it desires to do so, the Commission must have jurisdiction to consider the amend-ment on the merits in order to do other thar. to reject it.
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189a of the AEA and 10 CFR SS50.1 and 50.90 and 10 CFR Part 2 of the Commission's Regulations (Staff Br. 6-7, 11-12). This same contention was rejected by the Commission in South Inxaa, 5 NRC at 1317. There, reliance for the rejected proposition was also placed on general authority, such as that contained in Sections 161 (42 USC S2201) and 186 (42 USC S2236). The Commission noted that the carefully circumscribed and detailed antitrust review process in Section 105 alone was intended to govern the antitrust review process and that other sections of the AEA that deal in a general way with the Commission's authority do n21 govern this process. Id. In 7t. Pierg_e Utilities Authority v. United Staten, 606 F.2d 968, 991-92 (D.C. Cir. 1979), cert, denied, 444 U.S. 842 (1979), in response to petitioner's argument that Section 186a, a provision governing licensing revocation, vests the Commission with antitrust authority other than that provided in Section 105, and that the operating licenses at issue in the case were subject to antitrust review under Section-186a, the Commission determined that Section 105 is the Commission's exclusive grant of antitrust authority in licensing nuclear facilities.2 Reference to Sections 182 and 187 reveals no antitrust review authority. Section 182 basically is concerned with the contents of the application for a Construction Permit or an 2/ In deciding the Ft. Pierce case, the court of appeals said "We need not, and do not, reach the question whether Section 105 is the Commission's exclusive grant of antitrust authori-ty over operating licenses for nuclear facilities." 606 F.2d at 1001.
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Operating License under Sections 103 or 104 and the procedure by which an application is processed. Section 187 provides that
- terms and conditions of all licenses are subject to amendment, revision or modification "by reaman of amendmenta" of the AEA "or by rules and regulations issued in accordance with the terms of this Act" (emphasis supplied). Section 50.3 of the Commission's Reguistions merely explains that the regulations "in this part" were promulgated by the Commission pursuant to the Act of 1964, as amended, and Title II of the Energy Reorganization Act of 1974 "to provide for the licensing of production and utilization facilities". With respect to Section 50.90 of the Regulations, relied on by Staff (Br. 6) and Applicants (Br. 9), it does no more than require the holder of a license or construction permit, which desires to amend the license or permit, to file an applica-tion for amendmont as specified in Section 50.4, and fully describe the changes desired in the form prescribed for the original application.d Section 50.4 does no more than delin-eate formal filing requirements such as place of filing, " form of communications" and the like. Staff, other than referring to these Sections of the AEA and Commission's Regulations, makes no effort to show where those sections and regulations provide
, 1/ ApplAcants argue that Section 50.90 authorizes a licensee to apply to am ' its license "whenever (it] desires"However, and that there is no exception to this right. (Br. 23).
. Section 50.90 only specifies that amendment applications must have certain content and must comply with certain require-ments of service, among other requirements. Contrary to Applicants' argument, the section confers no substantive rights on the Applicants and imposes no obligations on the Commission.
- 6-antitrust review authority as does Section 105. In fact,.Section 50.42(b) states that in determining whether a class 103 license
. will be issued to an applicant, the Commission "will be guided by the following considerations":
Due account will be taken of the advice provided by the Attorney General, pursuant to subsection 105c of the Act, and to such evidence as may be provided during any proceedings in connection with the antitrust aspects of the application. [empha-sia supplied).
This is clear rocognition by the Commission that the only source of the Commission's authority respecting antitrust considerations is Section 105.
Similarly, Staff's bare reference to 10 CFR Part 2, as-authority for review of the present applications, does not
-further Staff's contentions. Moreover, it11s significant that
-Staff makes no effort to point to any provision (s) of 10 CFR Part
-2=to support its claim that Section 189a(1) clothes the Commis-sion with substantive authority to engage in post-operating License antitrust reviews. Surely, in dealing-with the extensive and voluminous Part 2 Regulations of 10 CFR, Staff has an obliga-tion to specify the portions on which it relies for its position and to point to the_ provisions that it contends provlue such support. This obligation is a particularly heavy one in light of the Commission's precedents that no post-Operating License
' antitrust review is authorized. If there were any provision of Part 2 supporting Staff's position,_ Staff would have pointed it out.
Stuff and Applicants argue (App. Br. 16-17, and n. 28,
)
l 21; Staff Dr. 12) that there are exceptions to the limitations on post-Operating License review. Strictly speaking, although it is
- convenient to refer to the cases in which post-operating License review took place as post-operating License reviews, the fact is that the so-called exceptions do not involve antitrust review with respect to the original licensee's conduct or attributes.
The so-called exceptions include, for example, the introduction of new ontities through transfer of control and tho introduction of new co-owners either after the antitrust review of the con-struction permit stage or after issuance of the Operating Li-cense. Antitrust review under such circumstances with respect to the new entitles is not post-operating License review with respect to the original licensee. Consider for example, one of the " exceptions" involved in the Qptroit Edison case (Detroit Edison Co. (Enrico Fermi Atomic Power Plant, Unit No. 2)), LBP-78-13, 7 NRC 583 (Licensing Board), aff'd, ALAB-475, 7 NRC 752 (1978). In Detroit Edison, the original licensee proposed to introduce new owners as licensees which had not been the subject of an antitrust review. Hence, the introduction of new owners required antitrust review as to them. As the Board noted (7 NRC at 588):
As to the two cooperatives, the present applica-tion for an amendment to add them as co-owners of Fermi 2 must be approved by the Commission before an ownership interest is acquired, and the cooper-atives will be required to submit applications to become co-licensees of the facility prior to the issuance of an amendment allowing change in owner-ship. Without exalting form over substance, it is clear that these applications are within the scope of the phrase "any license application" for anti-trust review purposes within the meaning of l
$105c(1), aupra, and trigger an opportunity for intervention raising antitrust issues as to the two cooperatives. To construe the statute other-wise would permit a utility with no antitrust
. problems to undergo an antitrust review and obtain an unconditioned construction permit, and then sell an ownership interest to another monopolizing
- utility. Under the Licensee's argument, there could be no antitrust review until the later oper-ating license stage, which itself could be a more limited review than the normal prelicensing anti-trust review contemplated by the statute. Such an unequal treatment of Applicants, insulating from prelicensing antitrust review those who came in -
later by way of amendments to construction per-mits, would subvert the Congressional intent and purpose of S105c.
There is no analogy between the circumstances of these "excep-tions" and the instant applications. There is no transfer of control to new entities nor the introduction of new owners. The instant applications simply seek to secure for some of the original licensee / applicants a new license that does not include any provision that operates to restrain antitrust behavior. The applicants are the same applicants that wer the subject of antitrust review in connection with the Construction Permits _and r Operating Licenses. In facts applicants assert that it is to be assumed in considerina their applications that their anticompeti-tive behavior that resulted in the imposition of the antitrust conditions is unchanced. (PHC Tr. 155, 164).
Staff also argues that the Commission's broad authority to impose antitrust conditions that it deems appropriate includes the power to remove or modify such conditions to become less restrictive whenever circumstances warrant (Staff Br. 13). For this proposition, Staf f cites Malted States v. Swift & Co., 286 U.S. 106, 115, 76 L.Ed 999, 1006 (1932) and System Federatien v.
Bright, 364 U.S. 642, 647, S L.Ed 2d 349, 353 (1961). In these cases the Supreme Court held that a court of equity has the power
, to modify an injunction in adaptation to changed conditions.
"This judicial principle," Staff argues, "certainly should have applicability to the quasi-judicial role of the Commission, and therefore the terms and conditions of a license issued by the Commission should not be deemed to be carved in stone for time eternal." (Staff Br. 14).
Staff overlooks the difference between a court and the Commission. As the Supreme Court put it in United S.tates v.
Swlit, 286 U.S. at 114, noting that the power to modify the terms of the injunction issued by the court of equity "by its very terms" reserved the power to modify it, even if the reservation had been omitted, " power there still would be by force of princi-ples inherent in the jurisdiction of the chancery to modify the terms of the injunction." The same cannot be said of the Commission's jurisdiction, even when it acts in a quasi-judicial capacity. Unlike a court, the Commission has only those powers granted to it by the statute it is charged to administer. The Commission, unlike a court, has no " inherent" jurisdiction.
Staff fails to state why the Commission should have the authority, for example as in this case, to remove the antitrust license conditions which have had the salutary result of reduc-ing, if not entirely eliminating, licensees' anticompetitive
~
behavior, with its deleterious effects on Cleveland and on other municipal entities in the State of Ohio, as well as, on the public interest, generally. There is no doubt that the Appli-
cants seek elimination of'the antitrust license conditions because the conditions have, in their view, enabled Cleveland and c other entities to purchase power at more advantageous terms and conditions from others.- At the Prehearing Conference, counsel for Ohio Edison complained that the antitrust conditions have enabled Ohio Edison's customera to look elsewhere for more advantageous purchases of power. (PHC Tr. 160-61). Counsel made it very clear that Ohio Edison is seeking to force these entities to buy its power from the nuclear units, which, of course, it could do by denying wheeling services and thereby foreclosing access to other, more advantageous power purchase opportunities.
Ohio Edison wants the Commission to free it for anticompetitive conduct and if that conduct constitutes violation of the anti-trust laws, to remit the entities to civil antitrust lawsuits or to bring the matter to the Commission for restoration of the antitrust conditions.
The utilities wanted protection against having to face continued opportunity for antitrust reviews. The statuto pro-vides that relief. The applicants cannot now waive out of the AEA the prohibition on post-license antitrust review that the utilities secured-from Congress. The fact that the utilities may have been responsible for the inclusion of this limitation on post-operating License antitrust review in the AEA does not alter the fact that the prohibition applies whether the post-Operating License antitrust review is sought by a third party or the licensee. That guarantee is also provided by the AEA to Cleve-land and others similarly situated. The statute is not a one-way
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street.
II. APPLICANTS ARE NOT WITHIN THE COVERAGE
. OF SECTION 189a OF THE AEA.
Applicants and Staff distort beyond recognition Cleveland's contention that Section 189a(1) does not provide Applicants with a right to a hearing because they are not within the category of entitles granted such hearing rights. Applicants go so far as to affirwatively state (Br. 26) that "Section 189a, in no way limits those " persons affected" who may " request a hearing." The issue is not, as framed by Applicants, whether c2 not Applicants under the Act as a general matter are " persons."
(App. Br. 27-29) Neither is the issue as framed by Staff whether or not applicants are, as a general matter, " persons . . . (whose interests] may be affected." (Staff Br. 15). The issue is whether Applj ants are persons whose interests may be affected, who upon quest for a hearing, shall be qdmitted as parties to miglLp> aing (Section 189a(1)).
The Board tries to fit Applicants in the 189a(1) slot by " admitting" them into the proceeding begun by their own applications (PHC Order of Oct. 8, 1991, p. 56). Cleveland knows of no judicial or administrative jurisprudence which would require the admission of an applicant, complainant, petitioner or similarly situated entity to a proceeding ostensibly begun by their own application, complaint, or petition. Neither Staff nor the Applicants attempt to defend the Board's ruling on the grounds that the Board had to make a determination that Appli-cants should be admitted as parties. The fact that Applicants
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are not required to file for intervention in accordance with the Commission's Regulations, obviously because they are already
. parties to the proceeding by reason of their status as the applicants, leaves no room for doubt that the Board's " admission" of Apolicants as parties is unnecessary and meaningless. All other persons requesting a hearing under Section 189a(1) must file for intervention to attain status as a party. If they meet the requirements of the Commission's Regulations for interven-tion, the statute mandates they be admitted as parties. Umion of C2H22rned Scientists v. Nuclear Regulatory Commission, 735 F.2d 1437, 1438 (D.C. Cir. 1984), cert, denied, 469 U.S. 1132 (1985).
Applicants' and Staff's arguments that Applicants are
" persons" and " interested persons" are unavailing because they do not reach the issue of whether Applicants are entities that would have to be admitted as parties to a proceeding after a request by them for a hearing. As discussed by Cleveland previously (Br.
pp. 39-40), the legislative history of, and the precedents considering Section 189a(1), are clear that the Section's purpose was to bring the public into the Commission's decisional process for the public's protection.EI The Applicants, of course, by h/ Section 161 of the AEA authorizes the Commission to hold such hearings as the Commission may deem necessary or proper to assist the Commission in exercising any authority in the AEA or any regulations or orders issued thereunder. Consequent-ly, the Commission sua sponte or on request of the Applicants could grant a hearing. So far as public participation in the process of the Commission's consideration of applications for permits or licenses is concerned, Section 161 provided no assurance that the public could secure participation. Hence, Congress enacted Section 189a(1) to guarantee public partici-pation in the process.
reason of their application, are already part of the process au parties.
III. DE7T.RMINATION OF Tile APPLICATIONS NECBSSARILY REQUIRES ANTITRUST REVIEW
. UNDER SECTION 105.
The Applicants contend that they are not seeking antitrust review. An application, however, to amend a license by a licensee to remove antitrust conditions, of necessity, is an antitrust review since it requires an inquiry into the market structure, as well as the past and potential conduct of the licensee if the antitrust license conditions were to be amelio-rated or elimine.ted.EI Applicants argue that their applications require only the resolution of a legal question, namely, whether the Comniis-sion's authority to impose antitrust license conditions is dependent on whether the cost of the nuclear power provides the Applicants with a " competitive advantage" over power from other non-nuclear sources. (App. Br. 6). Applicants admit that if they prevail on this question, as a matter of law, then there must be a hearing to determine the cost of the nuclear power vis-a-vis the cost of power from other sources. That, of course, involves the question of what is " cost" and how is it to be E/ The absence of antitrust behavior during the period of the
- existence of the antitrust license conditions prohibiting such conduct would not be indicative of what the licensee's conduct would be if the prohibitions were eliminated. Con-sider the present case. OE, as its counsel made clear, wants to eliminate the antitrust conditions which restrain its antitrust conduct so that OE can force the purchasers of power in OE's service area to buy the output of the nuclear plant. (PHC Tr. 160-161).
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determined? It necessarily involves, also, a determination of the relevant market. If those other costs are not costs within the appropriate relevant market and in the appropriate quanti-ties, they are irrelevant even under Applicants' theory. And a host of other considerations are involved, all of which are part and parcel of antitrust reviews. Call the applications what you like, but a rose (an antitrust review) is still a rose (an
-antittast review).
The fact is, as Applicants cannot deny,.the applica-tions were expressly filed under Section 2.101 of the Commis-sion's regulations. This regulation implements Section 105 and invokea the provisions of Section 105, including the antitrust review provisions. Any application, regardless of the legal questions involved, that is based on Section 105 involves anti-trust review. In their brief Applicants argue that in addition to Section 189a(1), the Commission has jurisdiction under Section
'105 in this proceeding (App. Br. 33-34, 35). Section 105 in-volves nuly antitrust review, Counsel for the Department of Justice made a telling response at the Prehearing Conference to.the arguments of Appel-lants tha' antitrust review is not involved (PHC Tr. 170-172).
First, counsel stated that the Department stands by its advice j ,
letter that the AEA does not require a finding that a plant-will l-l be low cost as a predicate to imposing antitrust license condi-L -
! tions since neither the AEA nor its legislative history supports that proposition (Tr. 170). Next, counsel addressed the argument of the Applicants that Davis-Besse and Pe cy no longer give the
Applicants a competitivo advantago. Wo "aro on the vergo,"
counsol said, "of confusing compotittivo advantage or the ability
- to win, to compoto with another company and win the customer with the ability of the utility, in this caso, to exorciso monopoly power." (Tr. 170-71). The oxorciso of monopoly powor, counnel observed, *roally doesn't havo to da with the ability to win; it has to do with whether . . . you havo onough control so that you can oither decreano output or you can raise pricos." "That control,* counsel continued, "does not chango because of or 11 '
the cost of nuclear power increases." The transmission 11nos are ,
still thera,-as are the coordination agreements and the whole structure. (Tr. 171). "If anything, in fact," counsel notod, "tho increase in erst, if there in such an increase, increasob the de 'io of the utility to exerciso its monopoly power and ex9rci, its dominance," pointing out that OE counsel's comments about OH e concerna "just points very clearly to what I'm say-ing." (Tr. 171). "The dominanco is still there, the structuro is still thoro, they have tho ability to exerciso monopoly power and, in fact, their incontivo to oxorciso it has increased. . . .
[Wo) cannot moroly look at the prico of this power," counsel notod, and then conclude "they don't have a competitive advan-tage," counse) stated. *What we have to look at is, is thoro still a structuro, do they still have dominance? Do the condi-tions that the Licensing Board and the Appeal Board worried about
~
in the mid-1970's still exist? Will they be able to exerciso monopoly power that they gained from this plant? ILthink that would ht re to be an issue, and, of course, I think the answer is
- clearly, yes.* (Tr. 171-72). Staff counsul agrood with the Dopartx..ont 's counsel .
- Contrary to Applicants' broad brush contentions, thoro is no avoidanco of significant antitrust analysis. Applicant's claim that the cost of the licensed nuclear power is not "compot-itive" with other sourcos of power signals the nocessity for antitrust review. Clearly, an antitrust review, such as the present one the licensoos would have, involves the potential of the imposition of more stringent antitrust conditions if the inquiry so warrants--not dolotion.1/
Thus, it is obvious that the end point of Applicants' and Staff's arguments ir that this commicalon should rule that it was Congross' intent that after the issuanco of an Operating License the Commission has the authority to undertake hearings to datormine whether thoro woro changed circumstancos but, according to Applicants, such hearings aro not to be described as " anti-trust reviews," although they are that, and they could result in the removat or amolioration of antitrust conditions. But, the argument continues, the Commission could never underteko to datormine whether circumstancos had changed to rondor more stringent antitrust conditions necessary or appropriato.A 1/ As the Enmmer caso (Sputh Carolina _ E & G Co. (Virgil C.
Summer Nuclear Power Station, Unita 1, 2 and 3), ALAB-560, 10 NRC 265 (1979);, makes abundantly clear, contrary to the position of Applicants, the "significant changos", which is found in Section 10Sc, refors to changes that result in, and require, the imposition of additional antitrust conditions, and does not refer *.o dolotion of antitrust conditions.
B/ Applicants' arguments here are inconsistent with their appli-cations. There it was explained that the antitrust condi-(continued...)
1 What it all comes down to is that Applicants and Staff contend '
that Congress had in mind that licensoos could seek to havo
- antitrust conditions removed, "whenever [they) desire [d)," with full rights to domand a hearing with no risk to themselves sinco antitrust conditions rolled upon by the bonoficiarios could at the most be lessonod or oliminated, but never mado moro strin- l gent. If-Applicants aro correct, Congress, by prosenting Appli-cants with such a no-loso' situation, cortainly expected tho Commission to be a busy place with hearings on repetitivo anti-trust condition deletion procoodings.
IV. THE BENEFICIARIES OF THE ANTITRUST LICENSE CONDITIONS ARE PROTECTED BY SECTION 105 OF THE AEA.
I It is astonishing to-find Applicants assorting that ;
Cloveland a reliance on the antitrust conditions is irrolovant; that third parties such as Cleveland "aro not investors in NRC- t licensed facilities" and, thorofore, "NRC has no such obligation to them"; and that to "the extent a third party, liko Clevoland, rollos on its access to an operating facility,El it doos so at H/_(... continued) tions should be " suspended" to be reinstated if circumstancos again changed. Reinstatomont would almost by necessity require antitrust review resulting in the imposition of more stringent conditions. Applicants' own applications bolin their one-way street contentions concerning post-Operating Licenso antitrust review.
2/ We note that Applicants refer to an " operating facility." Wo
. surmise that the use of this phrase by Applicants is intended to refer only to the nuclear generating units and not to their transmission fccilities. Wo bo11ovo our surmise is correct since counsel for Ohio Edison at the Prohoaring Conferenco erroneously contended that the Commission has (continued...)
its own risk." (App. Dr. 20-21, footnoto added).
Suroly, the Applicants recognizo that Section 105 was
- included in the AEA only for the benefit of third parties, such as Cleveland with the resulting bonofits to the public generally.
Section 105 was obviously not includod for the bonofit of app 11-cants for Construction Permits or Operating Licensos. Surely, also, Applicante recognize that the licenso conditions that granted access to the Applicants' transmission facilities woro included for the bonofit of Cloveland and other ontities in tho-service areas of Applicants and its co-licensoos (which co-licensees have not sought dolotion of the antitrust conditions).
If antitrust licenso conditions cannot be rolled upon, they cannot be very effoctive in accomplishing the goals sought by the Commission when it included the conditions in the licenso in the first instanco.
Staff also argues that the Commission may amend a license to make antitrust conditions loss burdensome for a licensee (Staff Dr. 8 and n. 9), while at the same timo inconsis-tently arguing that the limitation on post-operating Licenso 1/(... continued) authority to requiro whooling,-the use of~the licensoo's transmission facilitios, only to transmit power purchased by the third party from the nuclear power output of-the licensed
~
. plants (PHC Tr. 161-162). The samo contention, advanced by Alabama Power Company,_was rejected in Alnhama Power Co. v.
HEC, 692 F.2d 1362 (11th Cir. 1982) cort.-denied, 464 U.S.
i .
816 (1983). In that caso tho Eleventh Circuit uphold the antitrust licenso conditions that required the licensee of the Farley plant to provide wheeling servicos to third party municipal distributors of electric onorgy although they woro denied ownership participation in the nuclear units and were not purchasing power from those units.
l-I
l antitrust review was to placo a " limitation on 11consoo's vulnor-ability to being subjected to scrutiny and potentially burdonsomo rostriction on its operating and business" (Staff Dr. 8). An examination of this internally inconsistont argument, which, of courso, is inhoront in Applicants' argument as wall, reveals the faults in their arguments as well as in the Board's ordor.
V. DICTA IN T!!E APPEAL BOARD'S DECISION IN THE DAVIS-BESSR CASE DOES NOT AND CANNOT SUPPORT POST-OPERATING LICENSE ANTITRUST REVIEW. .
Staff and Applicants arguo that the dicta of the Appeal Board in its opinion in the Davis-Besso caso (The Toledo EdisRD Cqi (Davis-Bosso Nuclear Powtrr Station, Units 1, 2 and 3) ALAB-560, 10 NRC 265 (1979)) support their arguments that the Commis-sion has post-Operating Licenso authority to modify licenso conditions " seemingly fair today" that "may provo inequitable tomorrow", relying thorofor on 10 CFR 2.200-204 and 2.206 (10 NRC 294-295). (Staff Dr. 10, n. 10; App. Br. 30-33). Applicants assert: "In fact, their imposition (of antitrust licenso condi-tions) was conditioned on the stated authority of tho NRC to amend them, if their imposition lator provided (sics provod) to bo 'inoquitablo' to the Applicants," and conclude that Appli-cants' "ponding requests for rollef from those conditions fall squaroly within this framework." (App. Dr. 33; material in brackets suppliod).
- Roforence to the sections of 10 CPR rolled on by the Appeal Board reveals that the Appeal Board's dicta is no support for the prosent applications. The sections of the regulations
cited by the Appeal Board reveal that they authorizo modifica-tion, suspension or revocation of a license "for alleged viola-Linn of any provision of the AEA of this chaptor or the condi-tions of the licenso" (emphasis supplied). Obviously, Appli-cants' applications do not present that situation hero as the Applicants would be the first to assort.
Moreover, Applicants have not horotoforo contended that the antitrust conditions have boon rondered " inequitable." On-the contrary,-Applicants' position is that ovon if the liconsees are-the worst violators of the antitrust laws and thoro has boon no chango in their antitrust behavior, that is none of the Commission's busin7ss, because a "nocessary proroquisito" to the Commission's authority to imposo antitrust licenso. conditions is a finding that the cost of the power gonorated by the licensod projects is lower cost-than power from other sources and gives the licensees a "competitivo advantage" in the salo of their power.1E/ (PHC Tr. 155-156, 164).
In short, Applicants' argument is that the antitrust conditions must be doloted whether or not they are fair and irrespectivo of whether they are in the public interest.
The only action referred to by the Davis-Bosna APpoal Board to support its dicta actually highlighte 40 limits on tho
-. Commission's authority to modify antitrust 1 .snoo conditions and exposes the Appeal Board's misreading of the Commission's Regula-tions. The Appeal Board referred to the June 25, 1979 decision 1A/ But see the responso of counsel for the Department of Justico to this position of Applicants, gitpra, 19-20.
21 -
by the Commission in the consolidated procooding enforcing one of the licenso conditions in view of CEI's failure to comply with the condition.III Tho June 25 order was in responso to a re-quest by Cleveland on January 4, 1978, asking the Commission to take enforcement action pursuant to Section 2.201, et al., of the Commission's regulations against CEI for violations of antitrust licenso condition No. 3 in its Construction Permits and Operating Licensos. Licenso condition No. 3 requires tho joint Applicants to provido whooling for entitles in the servico areas of tho licensoos. Clovoland argued that the transmission schedulo filed by CEI with the Fodoral Enorgy Regulatory Commission ("FERC") did not comply with this licenso condition. On June 28, 1978, the Acting Director of the NRR Offico responded to Clovoland's motion by issuing a Notice of Violation to CEI pursuant to Section 2.201 of the NRC's regulations. The Director found that CEI, one of the present Applicants, had not complied with Licenso condition No. 3 in filing a whooling schodule with the FERC. With respect to matters not resolved by FERC, the Director ordered CEI to file an amendment to the whooling schedule to ensure compliance with the antitrust licenso condition. The Director oxorcised his authority pursuant to Section 2.204 of the Regulations and modified licenso condition No. 3 to add language requiring CEI to file a revised transmission schedule with the FERC reflecting the changes ordered by the Commission and FERC.
11/ " Order Modifying Antitrust Licenso Condition No. 3 of Davis-Besse Unit 1, License No. NPF-3 And Porry Unita 1 and 2, CPPR-148, CPPR-149" (unroportod).
. _ _ _ _ _ _ ~ . , _ . -
,. _ _ _ , . _ , _ _ _ . ~ . . -
Thus, the Appeal Board's citations to the Director's Enff1LQEmant order moroly reflects the fact that a licenso condi-tion can be modifiod to insure that the licenso condition is not circumvented by the Applicants. Significantly, the Appeal Board mado no mention of the Smith Tenn and EJorida Power cases of which it was surely cognizant. In view of the lack of any reference to those decisions, the Appeal Doard was certainly rat saying that in the circumstances here the antitrust conditions could be suspended or dolotod.
As for Applicants' bold assertion (App. br. 33) that but for the Appeal Doard's alleged boliof that 11censo conditions could be modified if they becomo *inequitablo" the Appeal Board would not have imposed the licenso canditions, thoro is no basis for that assertion in the Appeal Board's decision. If deflos belief that in light of the Appeal Board's affirmance of the biconsing Board's findings of the Applicants' ogrogious antitrust conduct that the Appeal Board would not have imposed the anti-trust licenso conditions.
t
VI. CONCLUSION WilEREFORE, for each and ovory one of the reasons
- submitted in Clovoland's initial brief and in this reply brief in support of the Notico of Appeal, Clovoland's appeal should bo grantod, the reference to the Board should be revoked and tho applications should be dismissed with prejudico.
Respectfully submitted, Danny R. Williams Director of Law Juno W. Wiener Chief Assistant Director of Law William T. Zigli Assistant Director of Law City llall, Room 106 601 Lakosido Avenue Clovoland, Ohio 44115 Tolophono (216) 664-2000
't ( ',t Jk &b ;'
+ n . -r f -
(_,l~ l VE W j< .
Reuben Goldberg Channing D. Strother, Jr.
B. Victoria Hrennan Goldberg, Pioldman & Lotham, P.C.
1100 Fiftoonth Stroot, N.W.
Washington, D.C. 20005 Tolophone (202) 463-8300 Attorno f s for City of Clovoland, Ohio December 9, 1991
! '.R * ( T i. 0 UNITED STATES OF AMERICA DEFORE Tile NUCLEAR REGULATORY COMMISSION '91 DEC 10 P3 :52
. QP 'C)(' , ! i,-(t IM f U M r 4 & N ?.
~
un. if In the Matter of ) DockotNos.50-4l0-A
) 50-346-A 01110 EDISON COMPANY )
(Porry Nuclear Power Plant, )
Unit 1, Facility Operating )
Licenso No. NPF-58) )
)
Tile CLEVELAND ELECTRIC )
ILLUMINATING COMPANY )
Tile TOLEDO EDISON COMPANY )
(Porry Nucionr Power Plant, ) ASLhp No. 91-644-01-A Unit 1, Pacility Operating )
Licenso No. NPF-58) )
(Devis-Dosso Nuclear Powor )
Station, Unit 1, Facility )
Operating Licenso No. NPF-3) )
-)
CERTIFICATE OF SERVICE I IIEREDY CERTIFY that on this 9th day of Decoraber,-
1991, a copy of the forogoing " Motion of City of Clovoland,-Ohio For Leave To Filo Reply Drlof" and thu attached " Reply Driof of the City of Clovoland, Ohio, in support of Notico of Appeal of l
Prohoaring Conference Order Granting Roquest for lloaring" was majlod first class, postago propaid, to each of the followingi Samuel J. Chilk Secretary of the Commission U.S. Nuclear Regulatory Commission
. Washington, DC 20555 Ivan Solin, Chairman
_U.S. Nuclear Regulatory Commission Washington, DC 20555 Kenneth C. Rogers, Commissioner
-U.S. Nuclear Regulatory Commission Washington, DC 20555-
-2 -
Jamen R. Curtion, Comminoloner U.S. Iluclear llegulatory Commincion Washington, DC 20555 Forrect J. Remick, Commionioner U.S. 11uclear Regulatory Comminnion Washington, DC 20555 lion. Marnhall E. Miller, Chairman Atomic Safety and Licenoing Board Panel U.S. Iluclear Regulatory Commiccion 1920 South Creek 15oulevard Spruce Creek I'ly-In Daytona Beach, FL 32124 lion. Charles Bechhoef er Atomic Safety and Licensing Board Panel U.S. 11uclear llegulatory Commincion Washington, DC 20555 lion. G. Paul 13o11werk, III
.itomic Safety and Licencing Board Panel U.S. liuclear Regulatory Commincion Washington, DC 20555 Joseph Rutherg, Esq.
Sherwin E. Turk, Ecq.
Steven 11. Ilom, Ecq.
Office of the General Counsel U.S. 11uclear Regulatory Comminaion Washington, DC 20555 Mark C. Schect. tor Esq.,
Janet Urban, Esq.
Transportation, Energ/ and Agriculture Section Antitruct Division Department of Justice Judiciary Center Building 555 Fourth Street, 11W Washington, DC 20001 Gerald Charnoff, Esq.
Deborah B. Charnoff, Ecq.
Margaret S. Spencer, Esq.
Shaw, Pittman, Potts & Trowbridge
- 2300 11 Street, 11W Washington, DC 20037 James P. Murphy, Ecq.
Squire, Sanders & Det:.psey 1201 Pennsylvania Avenue, 11U P.O. Box 407 Washington, DC 20044
June W. Weiner, Esq.,
Chlof Assistah Director of Law '
William T. Zigli, Esq.,
Assistant Director of Law j
. City llall, lloom 106 601 Lakoside Avenuo Cleveland, 011 44114 D. Biard MacGuinoas, Esq.
Volpo, Bonkey and Lyons 918 Sixtconth Stroot, NW Washington, DC 20006 David R. Straus, Esq.
Splogol & McDiarmid 1350 Now York Avenue, NW Suito 1100 Washington, DC 20005-4798 John W. Bontino, Esq.
Choster,11of fman, Willcox and Saxbo 17 South 111gh Stroot Columbus, oli 43215
/
&)AM*4 Rodbon Goldborg /
Goldberg, Fioldman & Lotham, P.C.
1100 Fittoonth Street, NW Washington, DC 20005 (202) 463-8300 I
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