ML20091H826

Suggestion of Mootness Due to Long Island Power Authority Imminent Demise.* Concludes That If Commission Were to Transfer Shoreham Licenses to Lipa,Nrc Could Find Itself W/Class 103 Facility W/O Licensee.W/Certificate of Svc

ML20091H826
Person / Time
Site:	Shoreham File:Long Island Lighting Company icon.png
Issue date:	12/19/1991
From:	Mcgranery J DOW, LOHNES & ALBERTSON, SCIENTISTS & ENGINEERS FOR SECURE ENERGY, SHOREHAM-WADING RIVER CENTRAL SCHOOL DISTRICT, NY
To:	NRC COMMISSION (OCM)
References
CON-#491-12438 OLA-3, NUDOCS 9112240147
Download: ML20091H826 (14)

Text

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, l UNITED STATES OF AMERICA 00jy;jf0 NUCLEAR KEGULATORY COMMISSION W DCC 19 PS:47 i

_BEFORE THE CQMMISSION t rnre rr n :[!r.cv

,19 I ;N ' r'il i i

) ,

-In the Matter-of ) Docket No. 50-322-OLA-3  ;

)

LONG ISLAND LIGHTING COMPANY )

) (Application for .i (Shoraham Nuclear Power Station, ) License Transfer) t Unit 1) )

)

SUGGESTION OF MOOTHESS DUE TO THE LONG ISLAND POWER AUTHORITY'S IMMINENT DEMISE The Shoreham-Wading River Central School District

.(" School District") and Scientists and Engineers for Secure Energy, Inc. ("SE2") draw the Commission's attention to circumstances that indicate that the applicant in the above-captioned matter, the Long Island Power Authority ("LIPA"), may have its existence terminated by operation of law as of' January i 15, 1992, rendering the above-captioned pending license transfer

-proceeding moot.

LIPA was created by New York Public Authorities Law $

1020-c, which became effective January 15, 1907 pursuant to New York L. 1986, c. 517, 5 11. .That section is silent on the period of LIPA's existence, stating neither.a term of years nor a

" perpetual" term. -

4 9112240147 911219 l:

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The New York Public Authorities Law also provides:

Every authority or commission hereafter created by this chaptor shall terminate at the end of five vaars from the datp,,,,gLi,t3 creati2D if at the end of such period it has outstanding no liabilities; provided, however, that any appropriation made to such authority or commission by the state of New York or by any political subdivision thereof

-shall not be deemed a liability for the purposes of this section.

N.Y. Public Authorities Law 5 2828 (formerly 5 2580, added L.

1957, c. 976, 5 1; renumbered L. 1983 c. 838, s 16) (emphasis

-added). This is a classic wxample of a " sunset law" " Sunset laws terminate agency programs or Acencies themselves unless the legislature soeelfically reauthorizes the program or agency."

Cohen, Reculatorv Reformt Assessina the california Plan, 1983 ,

Duke L.J. 231, 236 n.17 (April 1983) (emphasis added). The School District and SE2 note that January 15, 1992 will be

!~ precisely five years after LIPA's creation.-

Whether New York Public Authorities Law $ 2828 will operate to automatically terminate LIPA's dxistence on January 15, 1992 turns on the meaning of the phrase "no liabilities" and

_'a. particularized consideration of LIPA's current financial status.

The school District and SE2 suggest that since LIPA will.have n2 DR1 liabilities except for the unrepaid

. appropriations (" advances" pursuant to Public Authorities Law $

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1020-r) from the State of New York as of January 15, 1992, LIPA i

will become legally defunct as of that dato pursuant to Public Authorities Law 5 2828.

1. "No LIABILITIES" MEANS "No NET LIABILITIES".

I As a matter of generally accei,ted accounting l l

principles and by definition, no existing entity can gygr present a balance sheet showing "no liabilities" as of any date. Egg, gtgt, Sellin, Attgrney's Handbook of Accountina 5 102[1)(a) (3rd Ed. 1991). Thus, a " plain language" interpretation of the ,

statute would make it a nullity since no commission or authority could ever be found to have "no liabilities." This would mean that the New York State Legislature engaged in meaningless and absurd acts in enacting this law 24 years ago and reconsidering and renumbering it eight years ago. Therefore, this is an impermissible interpretation.M "An interpretation which is contrary to the dictates of reason or leads to unreasonable results is presumed to be against the legislative intcnt, and some other construction should be placed on the statute, if possible without violation of its language." McKinney's Statutes 5 143 (1971) (footnote omitted).

1/ "When a statute, though clear as clear can be on its face, makes no sense, the Court of. Appeals is not bound to mechanical subservience to its ill-chosen legislative language." Matter of Caraballo, 49 N.Y.2d 488, 426 H.Y.S.2d 974, 403 H.E.2d 958 (1980); McKinney's Statuten S 111.at n.5 (1992 Cumulative Annual Pocket Part).

Another relevant rule of construction of New York State statutes ist The courts will not impute to lawmakers a futile and frivolous intent, and the intention is not likely to be inputed to the legislature of solemnly enacting a statute which is ineffective. Statutes are to be interpretated workably, and a statuto must not be construed in such a way that it would result in the legislature having performed a useless or vain act.

A construction which would renaer a statute ineffective must be avoided, and as between two conr,tructions of an act, one which renders it practically nugatory and the other enables the evident purposes of the Legislature to be effectuated, the latter is preferred.

McKinney's Statutos S 144 (1971) (footnotes omitted),

McKinney's separately states that "it will be presumed that the Legislature did not intend an absurd result to ensue from the legislation enacted," that to " avoid an absurd construction of a statute, an exception may be recogniznd therein in a proper case, words will not be given their ordinary meaning when such a meaning involves an absurdity," and that to " prevent absurdity, the courts may supely a word ',aich is omitted from an act through inadvertence." Kinney's S'.atutes 5 145 (1971)

(footnotes omitted).

Thus, one must look to the reasonable purpose of thio qualification (ano liabilities") to determine its true meaning.

The School District and SE2 suggest that the purpose of this qualification (especially in light of the "provided" clause) was i

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. . s.  ;

to assure that the non-governanntal creditorsU of a New York State authority or commission would not suffer financial harm by  ;

being left without recourse due to the disappearance, by operation of law, of a N.Y. state authority or cornission debtor.F gas, 2 Meouillin Mun coro 55 8.15. & s.20. (3rd Ed.

1988 Revised Volume). Thus, the intent is that a commission or authority should not terminate if its liabilities (aside from its liability to repay appropriations) axceed its assets, that is, if it hau " net liabilities."

The probable correctness of this interpretation is reinforced by LIPA Act 5 1020-z which provides:

The authority and its corporate existence shall continue until terminated by law, provided, however, that no such law shall take effect so long as the authority shall L have.bondstu) , notes, or other obligations outstanding, unless adeauate orovision has been made for the navnent thereof.

H.Y. Public Authorities Law 5 1020-z (emphasis added). ,

2/ That is, all_ creditors except for those which are N.Y. state governmental creditors by virtue of having provided advances through appropriations which are subject to repayment.

2/ This is emphasized by the fact that creditors of LIPA and similar authoritit:s are atatutorily barred from relying on the credit of the State for payment of their obligations. E.a.,-N.Y.

Public Authorities Law 5 1020-1.

1/ The word " bonds" does not include " repayment bonds" issued to-the State pursuant to Public Authorities Law $ 1020-r since such " repayment bonds" are-for the repayment of State appropriations and, therefore, are " liabilities" excluded from

onsideration by the "provided" clause of Public Authorities Law S 2328. Ett page 2 supra.

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This is the LIPA Act's clear recognition of the fact that LIPA is subject to termination by operation of lav As lpng AA it does D21 have " bonds, notes, or other obligations outstanding" without " adequate provision . . . for the payment thereof." This leads to the inquiry whether there is currently

" adequate provision" for the payment of all of LIPA's

" obligations" (or " current liabilitien") except for the state appropriations.

II. THERE IS " ADEQUATE PROVISION" TOR THE PAYMENT OF ALL LIPA " CURRENT LIABILITIES" OR "OTHER OBLIGATIONS".

The balance sheets of LIPA's audited financial report as of March 31, 1991 (attached) indicate that as of that date L1PA had current assets in cash and U.S. Treasury Bills of

$6,140,443 and current liabilities of $3,896,486 ' 1as wel.1 as

" State of New York allocations"I' of $14,203,300, and

" accumulated deficit of $' 1,890,273.M That is, LIPA's current g

2/ The principal so-called " current liability" consists of

$2,118,845 in " advances from Long Island Lighting Company" which are really not a liability, but money held in trust for LILCO to be applied to Shoreham and is available from cash and U.S.

Treasury bills to be returned to LILCO upon LIPA's termination.

f/ The " State of New York allocations" are, in fact, State of

.New York appropriations made to LIPA and, hence, are not

" liabilities" pursuant to Public Authorities Law S 2828.

2/ In a truly creative presentation, LIPA treats the expended portion of its New York State appropriations (" accumulated deficit") a; an offset to its other liabilities of $18,099,786.

This creative disclosure mechanism was not used in LIPA's original financial statement as of March 31, 1988.

I A m.11 tL exceeded EMIM Dt liabilities by $2,2 0 ,957 resulting in not ascots.F Thus, it is easy to conclude that LIPA's cash and U.S, Treasury Bills on hand constitute more than " adequate provision .

. . for the payment" of its " current liabilities" or

" obligations", with the remaining asset balance to be repaid to New York Stato upon dissolution prusuant to Public Authorities Law S 1020-r.

In those circumstances, it is more than probable that the LIPA Act itself anticipated, in Section 1020-r, that LIPA would be " terminated by law" at the end of five years after its creation as long as current assets exceeded current liabilities (other than appropriation) unless the Legislature "specifically reauthorizes" LIPA.

III. THIS ISSUE REQUIRES RESOLUTION BY THE NEW YORK STATE COURTS. .

The legal existence of an applicant is the most fundamental determination that this commission must make in deciding whether to issue a license. However, since the applicant in this case, LIPA, is a creature of the State of New York its continued existence or non-existence is beyond this commission's jurisdiction and can only be resolved by a 1/ It is expected that the not assets margin has decreased over the last nine months, but still is positive in spite of LIPA's profligate spending in a variety of efforts to reduce LILco's y financial health and its ability to pay for the proposed decommissioning activites.

declaratory judgment or sin 11er action in the courts of that state.

As a part of its presentation of its qualifications to become a NRC Class 103 licensee, it is incumbent upon LIPA to seek resolution of this serious question as to its continued legal existence so that this Commission may have confidence in deciding whether the application is for transfer of license to a bankrupt entity or a pure phantom. The Commission should not take action on the instant application until it has state judicial confirmation of LIPA's existence, unless the Commission determines that LIPA would not be a qualified licensee in any event.

Since there is no possibility of federal preemption or a conflict between state and federal law on this issue, it would error for the Commission to make any assumption with regard to so fundamental a question without assurance from the New York Stato courts. Egg consolidated Edison co. (Indian Point Station, Unit No. 2), ALAB-399, 5 NRC 1156, 1168 (1977).

Further, there is precedent in this very docket for the deferral of consideration of actions base on the resolution of uncertain state law issues to allov athe parties to resolve the issue in (state) court." Lona Island Lichtinc co. (Shoreham Nuclear Power Station, Unit 1), ALAB-818, 22 NRC 651, 659-60 &

nn.15-20 (1985). In that case,_the Commission deferred a decision for almost seven months to allow for the issuance of the initial state court decision and then took two months to issue l

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its decision on the pending motion. Lono.lglpg LLigb11n2_. h (Shoreham Huclear Power Station, Unit 1), LBP-85-12, 21 HRC 600 (April 17, 1985).

If the NRC were to proceed on an ar.sumption of the continued existence of LIPA that would be only a " tentative answer which may be displacea tomorrow by a state adjudication

. . . . The resources of equity are equal to an adjgetaont that will avoid the waste of a tentative decision . . . ." Rafiroad Commiscion.gf-Texas v. Pullman Co., 312 U.S. 496, 500, 61 S.Ct.

643, 645, 85 L.Ed.2d 971 (1941) (citations omitted). Since the commission is able to stay itu proceedings while awaiting a definitive ruling from the New York Courts while ful'Jy protecting the pendency of LIPA's spplication for license transfer, the agency "should exercise its wide discretion by staying its hands." 312 U.S. at 501, 61 S.ct. at 645-46.

"(T]he rationale (for such forbearance) centfrs upon considerations of comity and the desirability of having a reliable and final determination of the state claim by state courts having more familiarity with the controlling principles and authority to render a final judgment." 11aanns v. Lavin2, 415 U.S. 528, 504, 94 S.Ct. 1372, 1385, 39 L.Ed.2d 577 (1974). If such forbearance is required of federal courts which de hA2A iurisdiction but not ultimate authority to decide issues of state law, such forbearance is not an act of prudence but rather one of necessity in this case where the federal aaenev dann not even luudg iurisdiction to decide a question of state law. NRC Staff l

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Response to Petitioners' Joint Motion to Stay at 10, Lona Island Lichtino co. (shoreham Nuclear Power Station, Unit 1), USNHC ,

Docket Nos. 50-322, 50-322-OLA & 50-3 22-OLA-2 (filed March 25,  ;

1991) (a New York state law' issue is "a matter not even subject to the Commission's jurisdiction").

This is a case where the applicant assuredly may be expected to assert its continued legal existence. However, it is not a case where'the " Commission has no basis to look behind [the applicant's) statement" and is certainly not a case where the commission may " accept (the applicant's) declaration at face value." gam Lona Island Lightina co s (Shorhaam Nuclear Power Station, Unit 1) , CLI-91-8, 3 3 NRC 4 61, 470 (1991). The resolution of this issue is not a " private decision" and LIPA's demise by operatinn of law certainly would have "an adverse i impact" on the proposed licents for LIPA. Id. It is time to pause.

CQFCLUSION While-this appears to be a question of first impression under New York State law, the School District and SE2 suggest

that the Nuclear Regulatory Commission should not even consider issuing any NRC licenses to an entity that is not only bankrupt, but is likely to cease to exist as a legal entity in 27 days.

The appropriate action is retain the Long Island Lighting Company as the licensee and allow the instant proceeding

~to become moot by operation of law within the-next four weeks unless LIPA can obtain a decision from the New York State Courts

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(not ages.cies under the away of the covernor) that L1PA's existence will not be terminated by Public Authorities Law 5 2828 on January 15, 1992.

If the Commission were to transfer the Shoreham licenses to LIPA, the HRC could find itself with a class 103 facility but without any licensee technically and financially responsible for that facility eside from the NRC itself.

Rospectively submitted, Ch2 December 19, 1991 -- / Mer -M $

Jan,eu DoW, P. McGranery, Jtj/ ILohnes&Albertson)

Suite 500 1255 Twenty-Third Street, N.W.

Washington, D.C. 20037 (202) 057-2929 Counsel for Petitionern Shoreham-Wading River Central School District and Scientists and Engineers for Secure Energy, Inc.

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i . * .

I LONG iSLLND POWER AtmiORITh 4 ' ,

000058 BALANCE SHEETS March 31.1991 and 1990 r

ASSETS

,J19,1,. . . J 9 ?O__

CURRENT ASSETS

, Cash, including restn::ed amounts of

$26.061 in 1991 and 1269.330 in 1990 5 155,675 investments in U.S. Treasury Bills, including

$ 392.252 restncted amounts of $3.361,003 in 1991 and 12.530.059 in 1990 5,964,568 5,545.238 Other cunem nsets 8 716 _1_?Zft Total current assets 6 149.159 J938 765 OmCE ECU1PMENT AND FURNm.lFE Net of accumuteted cepreciaten of

$19,577 in 1991 and 58,549 in 1990 53,182 31,951 OTHER ASSETS Securny deposhs 7_172 6 500 5_6 209 513 $__5 977 224 UABluT1ES AND ACCUMULATED DEFICIT CURRENT UAsitJr1ES Attributable to Shoreham:

Advance.s from t.ong Island Ughting Compa~f 5.2,118,645 5 2.251,943 Due te New York Power Authertry and UPA Third Party Suppliers Accrued expenses, other 373,452 267,825 Accrued consufting cesis 8B3.412 400,652 Accrued expenses, other 277,624 15.378 Due to the State of New VM, 98.505 56.572 ks agencies and authoritie*

144 640 344 937 Total cunent liabilities 3.896.486 3,347,307 STATE OF NEW YORK ALLOCATIONS 14,203,300 13,799.983 ACCUMULATED DEACfT (11 890 273) M7,gg)

$_ B 209 513

$_ 5 977 ??j i

SH Notes to financial staments.

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UNITED STATE 5 0F AMERICA NUCLEAR REGULATORY COMMISSION 1

BEFORE THE COMMISSION i

)

In the Hatter of ) Docket No. 50-322-OLA-3 1

) l LONG ISLAND LIGHTING COMPANY )  !

) (Application for (Shoreham Nuclear Power Station, ) License Transfer)

Unit 1) )

) 1 gfRTIFICATE OF SERVICE I hereby certify that copies of the Potitioners' Suggestion of Mootness due to the Long Island Power Authority's Imminent Demise in the above-captioned proceeding have been served on the following by hand, telecopy cnd/or firat-class mail, postage prepaid (as indicated) on this 19th day of December, 19911 Chairman Ivan Selin Commissioner Forrest J. Remick U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission one White Flint North One White Flint North

-11555 Rockvillo Pike 11555 Rockville Pike Rockville, Maryland 20852 Rockville, Maryland 20852 (hand) (hand)

Comajasioner Kenneth C. Rogers Commissioner James R. Curtiss U.S. Nuclear Regulatory Cummission U.S. Nuclear Regulatory Commission One White Flint North one White Flint North 11555 Rockville Pike 11555 Rockville Fike Rockville, Maryland 20852 Rockville, Maryland 20852 (hand) (hand)

Commissioner E. Gail de Planque Thomas S. Moore, Chairman U.S. Nuclear Regulatory Commission Administrative Judge One White Flint North Atomic Safety & Licensing Board 11555 Rockville Pike U.S. Nuclear Regulatory Commission Rockville, Maryland 20852 Washington, D.C. 20555 (hand) (first class mail) l Jerry R. Kline George A. Ferguson Administrative Judge Administrative Judge Atomic Safety & Licensing Board Atomic Safety & Licensing Board U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission dashington, D.C. 20555 T.307 Al Jones Drive (first class mail) Shady Side, Maryland 20764

(first class mail)

I l

Edwin J. Reis, Esq. W. Taylor Reveley, III, Esq.

Mitzi A. Young, Esq. Donald P. Irwin, Esq.

Office of the General Counsel Hunton & Williams U.S. Nuclear Regulatory Commission Riverfront Plaza, East Tower one White Flint North 951 East Byrd Street 11555 Rockville Pike Richmond, Virginia 23219-4074 Rockville, Maryland 20851 (telecopy and first class mail)

(hand)

Samuel A. Cherniak, Esq. Carl R. Senenker, Jr., Esq.

NYS Department of Law O'Melveny & Myers Bureau of Consumer Frauds 555 13th Street, N.W.

and Protection Washington, D.C. 20004 120 Broadway (hand)

New York, New York 10271 (first class mail)

Gerald C. Goldstein, Esq. Stanley B. Y.limberg, Esq.

Office of General Counsel Executive Director &

New York Power Authority General Counsel 1633 Broadway Long Island Power Authority New York, New York 10019 200 Garden City Plaza, Suite 201 (firs.t class call) Carden City, New York 13530 (first class mail)

Nicholas S. Reynolds David A. Repka Winston & Strawr.

1400 L Street, N.W.

Washington, D.C. 20005 (first class mail)

/\ -

d b , AL Japfje's P. McGranary, Jf/[/

CMnsel for the Petitioners Shoreham-Wading River central School District and Scientists and Engineers for Secure Energy, Inc.

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