ML20126A575

Petition for Review.* Requests That NRC Review LBP-92-32, 921118 Board Decision in Proceeding.Board Erroneously Interpreted Section 105(c) of AEA by Ignoring Fundamental Underpinning of Statute.W/Certificate of Svc

ML20126A575
Person / Time
Site:	Davis Besse, Perry
Issue date:	12/08/1992
From:	Jerome Murphy CLEVELAND ELECTRIC ILLUMINATING CO., SEYFARTH, SHAW, FAIRWEATHER & GERALDSON, TOLEDO EDISON CO.
To:	NRC COMMISSION (OCM)
References
CON-#492-13450 91-644-01-A, 91-644-1-A, A, LBP-92-32, NUDOCS 9212210128
Download: ML20126A575 (12)

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r j3q4265) t nunto uwc 92 Er -8 P / G 4 UllITED STATES OF AMERICA fluCLEAR REGULATORY COMMISSION BEFORE THE NUCLEAR REGULATORY COMMISSIOtt

)

In the Matter of )

)

01110 EDISO!1 COMPANY ) Docket No. 50-440-A

) 50-346-A (Perry Nuclear Power Plant, Unit 1, )

Facility Operating License )

11 0 . NPF-58) ) (Suspension of

) Antitrust Conditions)

TIIE CLEVELAND ELECTRIC ILLUMINATI!iG )

COMPANY ) ASLBP tio. 91-644-01-A TIIE TOLEDO EDISON COMPAllY )

)

(Perry Nuclear Power Plant, )

Unit 1, Facility Operating )

License !!o. 11PF-58 ) )

(Davis-Besse Nuclear Power Station, )

Unit 1, Facility Operating License )

11 0 . 11PF- 3 ) )

)

PETITION FOR REVIEW Pursuant to 10 CFR S 2.786, The Cleveland Electric Illuminating Company ("CEI") and The Toledo Edison Company

("TECo") respectfully request that the Nuclear Regulatory Commission (" Commission" or "NRC") review LBP-92-32, the November 18, 1992 Atomic Safety and Licensing Board decision in the above-captioned matter. In granting summary disposition in favor of the NRC Staff and intervenors and against CEI, TECo and the other applicant, Ohio Edison Company ("OE"), the Licensing Board e=122,e12e em1mee PDR ADOCK 05000346 cs M pop

b, i erroneously determined that, as a matter of law, the Comnission retains authority under Section 105(c) of the Atomic Energy Act to impose antitrust license conditions on a nuclear facility's operating license where the cost of nuclear power-is greater than alternative sources, all as appropriately measured and compared.

CEI and TECo submit that this legal determination is incorrect.

1.

SUMMARY

OF DECISION AND STATEMENT OF ISSUES RAISED CEI and TECo are co-owners of the Davis-Besse Nuclear Power Station and, together with OE, Pennsylvania Power Company, and Duquesne Light Company, are joint owners of the Perry Nuclear Power Plant. In 1987, OE filed a license amendment request with the NRC Staff.1 That request sought the suspension of the Perry license conditions that imposed antitrust restrictions on OE.

CCI and TECo subsequently filed a parallel request seeking suspension of the Perry and Davis-Besse antitrust license conditions.2 Three years later,3 the NRC Staff denied these 1/ See Application to Amend the Perry Operating License to Suspend the Antitrust Conditions Insofar as they Apply to OE-(. Sept. 18, 1987) ("OE Application").

2/ See Application to Amend the Perry and Davis-Besse Operating .

Licenses to Suspend the Antitrust Conditions (May 2, 1988)

("CEI and TECo Application").

3/ In the interim, OE sought relief,in the federal courts on certain issues of agency bias stemming-from dialogue concerning the disposition of the pending application. See.

Ohio-Edison v. Zech,-No. 89-1014, slip op. (D.C. Cir. Apr.

27, 1989). CEI and TECo do not join in OE's allegations regarding agency bias.

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requests.4 A hearing was convened, and summary disposition j motions were filed by the parties on the dispositive " bedrock" legal issue that formed the basis for-applicants' license -

amendment requests.6 LDP-92-32 resolves that bedrock legal  ;

issue.

CEI and TECo seek Commission review of the question oft

• law decided by the Licensing Board:

Is the Commission without authority as a matter of law under Section 105 of the' Atomic Energy Act to. retain the antitrust license-if i it finds that the actual cost of electricity from the licensed nuclear power plant is

~4/ Letter from T. Murley to M. Lyster, CEI, and D. Shelton, TECo (Apr. 23, 1991) (transmitting NRC Staff Evaluation of-Applications for License Amendments to Suspend the Antitrust License Conditions) and Notice of Denial of Applications for i Amendments to Facility Operating Licenses and Opportunity-for Hearing (Apr. 24, 1991). See also Notice of Denial of--

Applications for Amendments to FacTITEy Operating Licenses and Opportunity for Hearing, 56 Fed.-Reg. 20,057 (May 1, 1991).

5/ The issue of law raised in the bedrock legal issue-was first raised by CEI and TECo in their Application. .See CEI and TECo Appl'1 cation at 4-17,~46-49. After counseT Yor the various parties agreed on its formulation, the bedrock legal issue war incorporated into the Licensing Board's Prehearing L Conference Order. LDP-91-38, 34 NRC 229, 258-59, aff'd,

.CLI-92-11, 36-NRC ,.1992 NRC LEXIS 36 (August;12, 1992),

petition for review filed, No. 92-1532 (D.C. Cir. Oct. 9, 1992). CEI and TECo filed two briefs addressing the bedrock legal issue, Applicants'4 Motion for Summary Disposition (January 6, 1992) (" Applicants' Motion)) Applicants' Reply -

to Opposition Cross-Motions for Summary: Disposition and-Responses to Applicants' Motion for Summary Disposition (May-7, 1992) (" Applicants' Reply"), and argued the bedrock legal 1 issue before the. Licensing Board at' oral argument. . See Transcript of June 10, 1992; Argument before the Licensing Board ("Tr.") at'pp.:251-305, 397-437.(Ms.'Charnoff, counsel for OE, speaking on behalf of all Applicants) and Tr. at 305-24 (Mr. Murphy, counsel for CEI and TECo, speaking on behalf of all Applicants)'.

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higher than the cost of electricity from ,

alternative sources, a t measuredandcompared?glasappropriately  ;

The Licensing Board answered the issue in the negative, and found that as a matter of law the Commissjon has authority under Section 105(c) to retain antitrust license conditions even if the l 9

actual cost of electricity from a licensed nuclear power plent is  !

higher than the cost of electricity from alternative sources.7 i

II. Ti!E LICE!!SIf4G DOARD'S DECISIOli IS ERROllEOUS, The Licensing Board's holding on the-bedrock legal issue-is erroneous and should be reviewed by the commission. LDP-92-32 [

is based on an incorrect interpretation of .4ection 105(c) of the Atomic Energy Act. That statute allows the imposition of antitrust license conditions only where the activities of the licensed facility would ' create or maintain a situation ,

inconsistent with the antitrust laws."8 The Licensing Board has ,

ignored the " particularized regime" of antitrust review established by Section 105(c).

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First, the Licensing Board's decision is based on the fallacious position that the addition of a high cost facility may ,

be competitively advantageous to an operator. Such a. facility -i F

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6/ LBP-92-32, slip op, at~6. See also Tr. at 244 (bedrock l

legal issue read into recordlT 1

! 7/ See LDP-92-32. slip op at 60-51.

l 8/ 42 U.S.C..S 2135(c). >

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would increase the cost of the operator's power, necessarily  !

allowing its competitors greater competitive-freedom to take advantage of the operator's higher costs to attract new customers.9 -

Second, the Licensing Board has ignored that Section  !

105(c) is not a grant of plenary authority over antitrust matters. Other agencies, including the Department of Justice and FERC, have continuing authority to review the competitive implications of actions taken by operators of nuclear facilities.

In contrast, the Commission's authority under Section 105(c) is -

limited to the competitive impact of the licensed nuclear- .

facility. Review under Section 105(c) is not the same as a plenary antitrust review, and the Licensing Board was mistaken when it applied a " market power" test rather than the cost-based  ;

test applicable to Section 105(c).10 Several indicia support the-position advanced by CEI and TECo. First, contrary to the " interpretation" of the Licensing .

Board, a fair and objective review of the legislative history. of Section 105(c) discloses that the record is replete with 9/ See Applicants' Motion at 57-68; Applicants' Reply at 29-39. .

10/ LBP-92-32, slip op, at 39; compare Applicants' Reply'at 19-

29. The Licensing Board spends substantial time-addressing the allegedly ant 1 competitive conduct _ undertaken by CEI over a decade ago, See LBP-92-32,-slip op. at 34-38. -That conduct was reviewed closely by a jury which exonerated CEI' of all antitrust violations in that action.- See City of Cleveland v. Cleveland El '

. Illumir.ating-Co.,-734 F.2d 1157 (6th Cir.) (affirming the jury's findings), cert, denied, 469 U.S. 884 (1984).

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statements by witnesses and legislators addressing the need for the imposition of Se Llon 105(c) antitrust review because of the anticipated low cost of nuclear power.ll The Licensing Board also ignored the broader context in which the addition of Section 105(c) took place.12 The Licensing Board's decision is also contrary to legal precedent. As CEI and TEco argued before the Licensing Board, a number of Commission decisions and Department of Justice advice letters address the critical importance of the anticipated cost advantage of nuclear power.13 These cases turn upon the anticipated cost advantage of nuclear power and-the potential misuse of this cost advantage by a nuclear operator.

Finally, the Licensing Board's interpretation of the statute viola # 3s CEI's and TECo's right to equal protection as guaranteed under the Due Process Clause of the Fifth Amendment.

A statute must be rationally related to a legitimate government objective to satisfy equal protection requirements.14 The 11/ See Applicants' Motion at 34-45 (reviewing legislative-history); Applicants' Reply at~40-57 (reviewing legislative history).

12/

~~

See Applicants' Reply at 57-62 (reviewing " practical value"-

legislative history).

13/ See Applicants' Motion at 45-68-(reviewing NRC~ cases 1and DOJ advice letters); Applicants' Reply:at 62-70 (reviewing NRC cases); see also Applicants' Motion at 68-76 (other factors have no signiffcance under Section~105(c) in the absence of a low-cost facility).

14/- City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 440 (1985).

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Licensing Board's interpretation of Section 105(c) violates this requirement. If the cost of nuclear power is not competitively advantageous when compared with other sources of electricity (n ch as coal and oil), there is no rational basis for continuing to impose restrictive antitrust license conditions not imposed on l

Identically-situated operators of non-nuclear facilities.

III. THE COMMISSIOli SHOULD EXERCISE ITS POWER TO REVIEW THE LICEllS114G BOARD'S DECISIOli BECAUSE Tile DECISION IS CONTRARY TO LAW AND ESTABLISHED PROCEDURE, AND BECAUSE Tile DEDROCK LEGAL ISSUE RAISES IMPORTANT  ;

QUESTIOllS OF LAW AllD POLICY LBP-92-32 erroneously interprets Section 105(c) and, accordingly, should be reviewed and reversed by the Commission.

The bedrock legal issue raises substantial questions of law and ,

policy. Antitrust matters are not the fundamental business of the NRC. This case raises an important-question about the legality, propriety, and, indeed, reasonableness of the NRC's continued exercise of this peripheral authority when a nuclear power plant is no longer competitively advantageous. As such, it goes to the very heart of continuing Commissica authority over licensed nuclear facilities. The Commission should make a determination on this question.

In summary in LBP-92-32, the Licensing Board has erroneously interpreted Section 105(c) of the Atomic Energy.Act by ignoring the fundamental underpinning of the statute - the anticipated cost advantage of nuclear power. Without that

s advantage, CEI and TECo submit that the Commission is withuut authorit*/ to continue to impose license conditions on CEI and TECo. Accordingly, Commission review of the decision is appropriate.

L-_

0. %q Taves P. Murphy \

E'611 e en A . Conry SQUIRE, SA!1DERS & DEMPSEY 1201 Pennsylvania Avenue, fl . W .

P.O. Box 407 Washington, D.C. 20044 (202) 626-6600 Counsel for The Cleveland Electric Illuminating Company and The Toledo Edison Company Dated: December 8, 1092

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.i I.U b k k k.if UsNi:C

'92 - DEC -8 P4 :14 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION cro ri va 'fa .

Guiti .g ca0 BEFORE THE NUCLEAR REGULATORY COMMISSION

).

In the Matter of )

)

OHIO EDISON COMPANY ) Docket No. 50-440-A

) 50-346-A (Perry Nuclear Power Plant, Unit 1, )

Facility Operating License )

No. NPF-58) ) (Suspension of

) Antitrust Conditions)

Tile CLEVELAND ELECTRIC ILLUMINATING )

-COMPANY ) ASLBP No. 91-644-01-A_

THE TOLEDO' EDISON COMPANY )

)

(Perry Nuclear Power Plant, )

Unit 1, Facility Operating )

License No. NPF-58) .

)

(Davis-Besse Nuclear Power Station, )

Unit 1, Facility Operating License )

No. NPF-3)  :)

__ )

1 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a copy of the foregoing Petition for Review is served this 8th day of December, 1992Jto each of the following persons in the manner indicated below:

Samuel J. Chilk-SecretaryLof the Commission

-U.S.' Nuclear Regulatory-Commission 11555 Rockville Pike Rockville, Maryland 20852 (BY llAND)

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_._._2...~. _ _ _ , . ~,~; , . . _ . ,

t Charles Bechhoefer Atomic Safety and Licensing _ Board Panel

.U.S. Nuclear Regulatory Conunission 4 350 East West liighway, 4th Floor Bethesda, Maryland 20814 (BY !!AND)

G. Paul.Bollwerk, III Atomic Safety and Licensing-Board Panel U.9. Nuclear Regulatory Commission 4 360 East West liighway,- 4th Floor -

Bethesda, Maryland 20814 (BY liAND)

Marshall E. Miller, Chairman Atomic Safety and LicenLing Board Panel U.S. Nuclear Regulatory Commission 1920 South Creek Boulevard Spruce Creek Fly-In Daytona Beach, Florida 32124 (BY FEDERAL EXPRESS)

Joseph-Rutberg, Esq.

Sherwin E. Turk, Esq.

Steven R. Ilom, Esq.

Office of the General Counsel U.S. Nuclear Regulatory Commission 11555 Rockville Pike Rockville, Maryland 20852

( BY . flAND )

Office of Commission Appellate Adjudication _

U.S. Nuclear Regulatory Commission 11555 Rockville Pike Rockville, Maryland 20852 (BY HAND)

Mark C. Schechter, Esq.

Janet Urban, Esq.

Transportation, Energy and Agriculture Section Antitrust Division L Department of Justice Judiciary Center Building.

555 Fourth Street, N.W.

l Washington, D.C. 20001 L (BY llAND)_

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June W. Weiner, Esq.,

Chief Assistant Director of Law William M. Ondrey Gruber, Esq.,.  !

Assistant Director of Law William T. Zigli, Esq.

Assistant Director of Law <

City Hall, Room 106 601 Lakeside Avenue Cleveland, Ohio 44114 (BY-FEDERAL EXPRESS) ,

Reuben Goldberg, Esq. '

Channing D. Strother, ? , Esq. i Goldberg, Fieldman & Lecnam, P.C.

1100 Fifteenth Street, N.W.

Washington, D.C. 20005 *

(BY HAND)

D. Biard MacGuineas, Esq.

Volpe, Doskey and Lyons 918 Sixteenth Street, N.W.

Washington, D.C. 20006 (BY HAND)

Philip N. Overholt Office of Nuclear Plant Performance-Office of Nuclear Energy U.S. Department of Energy, NE-44.

19901 Germantown Road, Room E-478 Germantown, Maryland 20585 (BY HAND)

Kenneth L. Hegemann, P.E.

President American Municipal Power-Ohio, Inc.

601 Dempsey Road P.O. - Box 549 Westerville, Ohio- 43081 (BY FEDERAL EXPRESS)

David R.EStraus, Esq.

Spiegel & McDiarmid 1350 New York Avenue, N.W.

Suite 1100 washington, D.C. 20005-4798_

(BY-HAND)

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Anthony J. Alexander, Esq.

Vice President and General Counsel Ohio Edison Company 75 South Main Street Akron, Ohio 44308 (BY FEDERAL EXPRESS)

Gregg D. Ottinger, Esq. 4 John P. Coyle, Esq. I Duncan & Allen Suite 300 1575 Eye Street, N.W.

Washington, D.C. 20005-1175 (BY HAND)

David A. Lambros, Esq.

Law Director City of Brook Park 6151 Engle Road Brook Park, Ohio 44142 (BY FEDERAL EXPRESS) l Gerald Charnoff, Esq.

Shaw, Pittman, Potts and Trowbridge 2300 N Street, N.W. .

Washington, D.C. 20037 I (BY HAND) dMe 6. 8m_d -

Colleen A. Conry Squire, Sanders & Mmpsey 1201 Pennsylvania Avenue, N.W.

P.O. Box 407 Washington, D.C. 20044 (202) 626-6600

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