ML20126D578
| ML20126D578 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry  |
| Issue date: | 12/23/1992 |
| From: | Strauss D AMERICAN MUNICIPAL POWER-OHIO, INC., SPIEGEL & MCDIARMID |
| To: | NRC COMMISSION (OCM) |
| References | |
| CON-#492-13490 91-644-01-A, 91-644-1-A, A, NUDOCS 9212280052 | |
| Download: ML20126D578 (16) | |
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-BEFORE THE NUCLEAR REGULATORY-COMMISSION In the Matter of )
)
OHIO EDIBON COMPANY ) Docket No. 50-440-A
) Docket No. 50-346-A (Porg Nuclear Power Plant, Unit 1 )
Facility Operating License )
No. NPF-58) ) (Suspension of THE CLEVELAND ELECTRIC ILLUMINATING
) Antitrust Conditions)
)
COMPANY ) ASLBP No. 91-644-01-A THE TOLEDO EDIBON COMPANY )
)
(Pern Nuclear Power Plant, Unit 1, )
Facillty Operating License )
No. NPF-58) )
(Davis-Besse Nuclear Power Station, )
Unit 1, Facility Operating License )
No. NPF-3) )
) '
ANSWER OF AMERICAN MUNICIPAL POWER-OHIO, INC.
!N OPPOSITION TO PETITIONS FOR REVIEW OF OHIO EDISON ,
COMPANY AND CLEVELAND ELECTRIC ILLUMINATING COMPANY / TOLEDO EDISON COMPANY Pursuant to 10 C.F.R. 5 2.786(B) (3) , American Municipal Power-Ohio, Inc. (" AMP-Ohio") responds in opposition to the December 8, 1992, Petition For Review filed by The Cleveland l
Electric Illuminating Company and The Toledo Edison Company
("CEI/TECo"), and to a portion of the December 8, 1992 Petition 9212280052 921223 PDR ADOCK 05000346 M PDR l 5o '))
Q For Review filed by Ohio Edison Company ("OE") (collectively,
" Petitioners"). 1/
CEI/TEco and OE present, using virtually identical language, several meritless reasons why the Nuclear Regulatory Commission ("NRC") should review and reverse the November 18, 1992 " Decision" of the Atomic Safety and Licensing Board
("ASLB"), No. LBP-92-32, on the meaning of Atomic Energy Act Section 105(c), 42 U.S.C. S 2135(c), the " bedrock" legal issue in this case. As stated in the ASLB decision, the bedrock issue is the following:
Is the Commission without authority as a matter of law under Section 105 of the Atomic Energy Act to retain the antitrust license conditions contained in an operating license if it finds that the actual cost of electricity from the licensed nuclear power plant is higher than the cost of electricity from alternative sources, all as appropriately measured and compared?
Slip op at 6 (footnote omitted). NRC review should not be undertaken because the the ASLB correctly found that the answer to this question is "No," As explained by the Board, Section 105(c) nuclear power plant antitrust license conditions were not intended to come and go from moment to moment, depending upon the relative price of nuclear power vis-a-vis alternatives.
1/ AMP-Ohio will not present a response to OE's argument concerning the " agency bias" issue (OE at 7-8). In addition, as has been the case in previous phases of this proceeding, AMP-Ohio understands that the city of Cleveland, Ohio (" Cleveland") will also be filing-in opposition to Applicants' petitions. AMP-Ohio will try again not to replicate Cleveland's effort (though there will be some overlap, as both oppositions are being filed on the same day). l l
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The ASLB's lengthy, well-reasoned ruling comports with the plain words of the statute and its legislative history.
Moreover, the Board's determination -- unlike Petitioners' position -- is sensible. If the CEI/TECo and OE position were adopted, the NRC would be forced to assume a complex undertaking, i.e., continual oversight of the costs of both nuclear and non-nuclear energy sources. If Congress intended that, as part of its Section 105(c) antitrust responsibility, the NRC exercise long-term, ongoing review of relative resource costs, then Petitioners should be able to point to at least some indication in either the statutory language or the legislative history to such effect. Petitioners made no such showing either before the ASLB or in their review petitions. Therefore, NRC review is unnecessary, and the petitions should be denied.
ARGUMENT I. THE ASLB CORRECTLY CONCLUDED THAT SECTION 105(c) DOES NOT MAKE THE IMPOSITION OR RETENTION OF ANTITRUST LICENSE CONDITIONS DEPENDENT UPON COST COMTARISONS In framing their arguments, Petitioners continue to ignore the words of Section 105(c), preferring instead to offer several extra-statute " indicia (of] support" (CEI/TECo at 5; OE at 6) for the view that the statutory provision includes a " cost comparison" standard.
It is easy to see why the Petitioners are uninterested a in the language of Section 105(c). This provision plainly does not require a finding that a nuclear plant produce relatively low
o-e cost power during every'noment-of commercial operation as'a continuing prerequisite for.the imposition and1 continuation of antitrust conditions. The statute states that to require license conditions the NRC must make a " finding as to whether the .
activities under the license would create or maintain a situationi ,
inconsistent with the antitrust laws ...." 42 U.S.C.
5 2135(c) (5) . In the event the NRC makes a'" finding ....in the affirmative (,)" it has the authority to " issue-a license with such conditions as it deems appropriate." section- 105 (c) (6) ,
42 U.S.C. 5 2135(c) (6) . As explained by the Antitrust Division-of the Department of Justice (in its June 13, 1990 letter to Dr. Thomas Murley) and subsequently endorsed by Dr. Murley, the i NRC's Director of the office of Nuclear Reactor Regulation (in his April 24, 1991 letter rejecting-Applicants' position):
l This-broad standard (in Section 105(c)]
L invests the NRC with the responsibility to j
determine, on a case.by case basis, whether.
L ownership of a particular plant'by as L particular utility system.is likely to have l anticompetitive effects of the' type the l antitrust laws are intended to remedy.. The-statute' directs'the.NRC not-only-toLlook-forward to determine'if-any anticompetitive situation could arise, but also to-look at-the
- past=to-see if 'an anticompetitive climate.
exists andLto see if the applicant ~has' acted
-in.an anticompetitive manner.' A/
A/ Alabama Power Co. v. NRC, 692 F.2d 1362, 1367-68 (11th Cir. 1982),: cert. denied, 464 U.S. 816 (1983).
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DOJ Letter at 2-3, cuotef3 1D NRC Staff's April 24, 1991 Evaluation of Applicants' Position ("NRC Staff Evaluation"), at 4.
Notwithstanding the words of the statute, and the interpretation of those words by both the Department of Justice and the NRC's Office of Nuclear Reactor Regulation, Petitioners claim that in making its ruling the ASLB " ignored the
' particularized regime' of antitrust review established by Section 105(c)." (CEI/TECo at 4; OE at 5). In support of this position, OE asserts (at 5) that the " Licensing Board's decision is based on the faulty position that the addition of a high cost facility may be competitively advantageous to the operator."
CEI/TEco make the same claim, using slightly different words (Petition at 4).
These contentions are erroneous. The ASLB has neither ignored Section 105(c) nor is its position premised upon assumptions about the competitive impact of producing relatively high as opposed to low-cost power. Instead, focusing -- unlike Petitioners -- upon the words of Section 105(c), the ASLB correctly concluded that the language of Section 105c makes reference only to any ' situation inconsistent with the antitrust laws.' The antitrust laws, in turn, incorporate a market power analysis that-is not dependent solely upon a determination about the cost of doing business or a ' cost comparison' analysis of competitors.
Slip op. at-39-40. As noted earlier by the Board,'"[n]othing in section 105c, or in the pertinent antitrust laws and cases,
r- .
supports the proposition that traditional antitrust market power analysis is inapplicable in the first instance when the assessment of the competitive impact of a particular asset is involved." Id. at 31-32.
Notwithstanding the broad language of Section 105(c),
Petitioners contend that the " Licensing Board was mistaken when it applied a ' market power' test rather than the cost-based test applicable to Section 105(c)." (OE at 6; CEI/TECo at 5.) In fact, as shown in the Board's careful analysis, the statute contains no " cost-based test." Petitioners assume their conclusion in arguing to the contrary. 2/
At bottom, Petitioners are claiming that absent a cost advantage, a nuclear power plant licensee cannot act in an anticompetitive manner. Thus, OE and CEI/TEco argue that a "high cost" nuclear facility "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." (OE at 5; CEI/TECo at 5-6).
This contention is nonsensical. Construction of high cost generation does not necessarily result in competitive injury where, as here, the utility building the plant continues to 1/ Similarly, CEI/TECo argue (Petition at 7) that the ASLB
" erroneously interpreted Section 105(c) ... by ignoring the fundamental underpinning of the statute - the anticipated cost advantage of nuclear power." In fact, as explained by the Board, the " fundamental underpinning" of Section 105(c) is the prevention of the exercise of. market power, not.the imposition of conditions only upon utilities producing relatively low cost nuclear power.
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0 control transmission facilities. Indeed, the ASLB observed (Slip op. at 37) that the license conditions imposed upon CEI which are at issue in this case were imposed notwithstanding " evidence suggesting that the competitive advantage CEI enjoyed over Cleveland was not based upon a lower cost of doing business."
The Board properly found that "what ultimately is at issue under" Section 105(c) is not a competitor's comparative cost of doing business, but rather its possession and use of market power. And if a commercial entity's market dominance gives it the power to affect competition, how it uses that power
-- not merely its cost of doing business --
remains the locus for any antitrust analysis under section 105c.
Id. at 38 (footnote omitted).
In fact, the record in this proceeding shows that notwithstanding the presence of the license conditions it urges be lifted, along with the apparent shift in the economics of nuclear power, Ohio Edison continues to engage in anticompetitive conduct. As explained in AMP-Ohio's March 9, 1992 brief to the ASLB (at 18-22), Ohio Edison's actions vis-a-vis AMP-Ohio since the imposition of the conditions chow that even with stringent conditions, OE cannot be trusted to behave in accordance with either the license conditions or the antitrust laws. OE's conduct may be the best evidence before the NRC-in support of rejection.of the petitions.
e II. NEITHER RELEVANT LEGISLATIVE HISTORY NOR AGEllCY INTERPRETATIONS OF SECTION 105(c) DEMONSTRATE THE NEED FOR NRC REVIEW Petitioners next argue (OE at 6-7; CEI/TEco at 5-6) that the Board ignored extensive legislative history " addressing the need for the imposition of Section 105(c) antitrust review because of the anticipated low cost of nuclear power [,)" as well as " legal precedent" in the form of Commission decisions and
" advice letters" from the Department of Justico. These meritless contentions are addressed below.
Assuming -- contrary to precedent -- that there is need to review legislative history where the statutory language at issue is unambiguous, 2/ the most that Petitioners can claim is that many in Congress EXD9Sitd that nuclear power would be significantly less expensive than alternativeP. Even if this assumption is correct, more is needed before one can safely conclude that Congress renuired that a nuclear plant produce low-cost power in order to create a situation inconsistent with the antitrust laws. The ASLB thoroughly reviewed the legislative history (Slip op at 47-61), properly concluding that "there does not appear to be the ' clearly expressed legislative intention to the contrary' necessary to override this clear statutory language." (Id. at 61, citation omitted).
2/ C2nnagticut National Bank v. Germain, ~~ S.Ct. -, 117 L.Ed.
2d 391, 397-98 (1992), gyoted by the ASLB, Slip op. at 51.
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9-l In trying to transform statsments of Congress into 1 statutory requirements, Petitioners are in escence contending that a modification of the Section 105 standard for the [
imposition of conditions is appropriate because Congress's 1970 assessment of the economica of the nuclear power industry is ne.
longer accurate. The request that an administrative agency amend a federal statute because times have changed must be rejected and surely cannot form the basis for a petition for review. Not surprisingly, the federal courts have long been unwilling to allow federal agencies to exercise Congress's authority to modify statutory language to reflect alleged changes in circumstances.
Ena Federal Power Commission v. Texaco, 417 U.S. 380, 394-96 (1974) (federal agency efforts to legislate in response to changing times are prohibited); and ggtrgpolitan Transoortation .
Authority v. FERC,.796 F.2d 584, 593 (2nd Cir. 1986) (assuming :
prouerdo the invalidity of Congress's economic premise for a statute, court cannot second-guess congressional determination). 1/
The ASLB carefully reviewed (Slip op, at 40-44) HRC and DOJ precedent on the meaning of Section 105(c), properly finding that evidence of expectations on the part of these agencies about the economics of nuclear power did not rise to the level of cost i
1/ The-rule that administrative agencies cannot modify statutory provisions has been tested and upheld on numerous occasions, particularly in the context of environmental regulation. Enn -
Office of Consumers' Council v. PERC, 655 F.2d 1132 (D.C. Cir.
1980) ; Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir.
1979); and NRDC v. Train, 568 F.2d 1369 (D.C. Cir. 1977).
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comparison requirements for the retention of antitrust ,
conditions. As stated by the Boardt i It is undoubtedly true that at one time the Commission and the DOJ ... anticipated that ;
the electricity produced at nuclear facilities would be lower cost as compared to alternative '
sources.... Nonetheless, we see nothing in the cited cases or letters that establishes that this premise caused the Commission or the DOJ to conclude that ' cost' was so fundamental to the section 105c regulatory scheme that the Applicants' constricted ' cost comparison' analysis must be utilized prior to, and exclusive of, undertaking the broader market power analysis generally applicable under the antitrust laws.
Id. at 41.
Moreover, the Board's evaluation of NRC and DOJ precedent concerning Section 105(c) is consistent with a recent NRC analysis of the Commission's antitrust conditioning authority with respect to the Seabrook Nuclear Power Station, a facility ;
the output of which can hardly be considered relatively " low cost." NRC antitrust review of the Seabrook license was triggered by the change in Seabrook ownership which would result from the proposed-corporate combination of Northeast Utilities and Public Service Company of New Hampshire. 5/ .
The Staff's August 1991 " Recommendation," signed by the Director of the Office of Nuclear Reactor Regulation on February 9, 1992, succinctly describes the process througn which 5/ It can be fairly stated that if " low cost" power and energy were a condition precedent.to the imposition of antitrust conditions, the recent Seabrook antitrust review would have been-totally unnecessary.
.a the NRC assesses antitrust issues and considers the imposition of conditions:
All applicants for an NRC~... license ...
undergo an extensive antitrust review at the construction parait (CP) stage and a review at the operating 3icense (OL) stage. The CP review is an in depth analysis of the anglicant's competitive act:.vities conducted by the DOJ in conjunction w;.th the staf f. The competitive analysis associated with the OL stage of review is conducted by the staff in consultation with the De partment, and is ,
focused on sianificant c lanoes in the npD11CADt's activities since the completion of the CP /ntitrust 4 review (or any subsequent review). In each of these reviews, bot.h the staff and the Department concentrate on tha anolicant's activities and determine wt,g.ther the aonlicant's conduct or chancen in (thel nonlicant's conduct creates or ma:.ntains a situation inconsistent with the antitrust 1AMA.
NRC Staff Recommendation at 6 (emphasis added). Thus, as explained by the NRC Staff and endorsed by the ASLB, at all stages of review the focus in deciding on the need-for antitrust conditions is the " applicant's conduct" and "activites," not solely (or even generally) the relative cost of the nuclear power and energy produced at the licensee's facility.
III. THE ASLB PROPERLY REJECTED PETITIONERS' EQUAL PROTECTION ARGUMENT Petitioners next contend (as they did below) that interpreting Section 105(c) as-not requiring suspension of antitrust conditions when the price of nuclear power is not competitive means that the statute as applied denies OE and L
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- CEI/TECo equal protection of the law. (OE at 7; CEI/TEco at 6-7).
The ASLB properly rejected this position. (Slip op. at 61-65).
Potitioners argue that interpreting the statute as the
- Doard has done is irrational, stating that "there is no rational basis for continuing to impose rostrictive antitrust license conditions ntt imposed on identically-situated operators of non-nuclear facilities." CEI/TEco at 7; OE at 7.
The Board answered this contention completely, stating-that Congrecs could rationally have determined to " afford a distinctive antitrust treatment to nuclear utilities" because of a " concern that the unique technology underlying commercial power
. reactors ... not become a tool for increasing the competitive advantage of some private utilities at the expense of others."
(ld. at 64, citation omitted). This response is mot'e than ,
adequate to uphold Section 105(c), which need meet no note than the "relatively relaxed standard" nf the rational relataanship test, under which the legislation at issue is presumed '.o be valid. Massachusetts Board of Retirement v. Murain, 427 U.S.
307, 314 (1976). The Supreme Court has also emphasized the limitations on its own ability to subatitute its judgment for that of Congress:
'It is not within our authority to determine whether the Congressional judgment expressed in that Section is sound or equitable, or whether it comports well or ill with the purposen of the Act . . . The answer to such inquiries must come from Congress, not from the Courts.'
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Q2S. Railroad Retirensnt Board v. Fritz, 449 U.S. at 175-76, A qqqting Flemmira v. Nestor, 363 U.S. 603, 611 (1960). In fact, a court will deny an equal protection challenge even where Congress has not actually articulated its legitimate objective, but where the court can imagine a legitimate objective. 1/ Professor Tribe has commented that rational relationship review generally amounts to a prenumption os constitutionality. Laurence H. Tribe, American Constitutional Law 1442-43 (Second Edition 1988).
Given the applicable level of scrutiny, the weakness of Petitioners' arguments, and the precision of the Board's analysis, review on equal protection grounds should be denied.
IV. THE PETITIONS FOR REVIEW RAISE No QUESTIONS OF LAW AND .
POLICY MERITING COMMISSION REVIEW 10 C.F.R. 5 2.786(b) (4) (1) states in part that a petition for review "wi.'.1 not ordinarily be granted unless it appears the case involves an important matter that ...
constitutes an important antitrust question . . . ." Petitioners address this standard only by arguing that *(ajntitrust matters are not the fundamental business of the NRC," and that the NRC's antitrust authority is " peripheral." OE at 8; CEI/TECo at 7.
Assuming argitsnds that this contention is accurate, it 4 urely does not favor a finding that petitioners are here raising an "important antitrust question." If anything, the statement shows that once antitrust conditions have been established by the NRC, s/ All ied Stargp of Ohio v. Bowers, 358 U.S. 522, 529-30 (1959);
U.S._Raalread Retirement Board, 449 U.S. at 179.
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the Agency should not be called upon to re-enter the antitrust arena by lifting and re-imposing them with every up-and-down movement in relative energy prices.
In any event, the Petitioners have not raised an "important antitrust question" because, as shown in the proceeding below, and as explained in both the ASLB Decision and this pleading, the position taken by OE, CEI and TECo is utterly without merit. As Petitioners have not demonstrated that their position has substantive support, the NRC's regulations preclude the granting of the petitions for review.
CONCLUSION WHEREFORE, for the foregoing reasons, AMP-Ohio respectfully requests that the ASLB deny the Petitions For Review filed by Ohio Edison and CEI/TECo.
Respectfully submitted, N ,
avid R. Straus '
Scott H. Strauss Of Counsel:
Attorneys for American Municipal John Bentino, Esq. Powcr-Ohio, Inc.
Chester, Hoffman, Willcox and Saxbe Spiegel & McDiarmid 17 South High Street 1350 New York Avenue, N.W.
Columbus, Ohio 43215 Suite 1100 614-221-4000 Washington, D.C. 20005 202-879-4000 December 23, 1992 l
1 e l
- ). 6
- ,;-v BEFORE THE '92 DEC 24 I@:10 NUCLEAR REGULATORY COMMISSION
- i o e, j
) l In the Matter of l
OHIO EDISON COMPANY ) Docket No. 50-440-A
) Docket No. 50-346-A (Perry Nuclear Power Plant, Unit 1 )
Facility Operating License )
No. NPF-58) ) (Suspension of
) Antitrust Conditions)
THE CLEVELAND ELECTRIC ILLUMINATING )
COMPANY ) ASLDP No. 91-644-01-A THE TOLEDO EDISON COMPANY )
)
(Perry Nuclear Power Plant, Unit 1, )
Facility Operating License )
No. NPF-58) )
(Davis-Besso Nuclear Power Station, )
Unit 1, Facility operatirq License )
No. NPF-3) )
)
CERTIFICATE OF SERVICE I hereby certify that on this 23rd day of December, 1992, copies of the foregoing Answer were served upon each of the following by first-class mail:-
Marshall E. Miller, Esq. Charles Bechhoefer, Esq.
Chairman Administrative Judge 1920 South Creek Boulevard Atomic Safety and Licensing
- Spruce Creek Fly-In Board Daytona Beach, FL 32124 U.S. Nuclear Regulatory Comm.
Washington, D.C. 20555 P
q e- v-+ --
m ,
9 G. Paul Bollwork, III Craig S. Millor Administr4tive Judge Juno _W. Weiner Atomic Saroty and Licensing William M. Ondrey Gruber Board City Hall, Room 106 U.S. Nuclear Regulatory Comm. 601 Lakeside Avenue Washington, D.C. 20555 Cleveland, Ohio 44115 Joseph Rutborg, Esq. Roubon Goldberg, Esq.
Sherwin E. Turk, Esq. Channing D. Strother, Jr. , Esq.
Offico of the General Counsel Goldberg, Fieldman & Lotham U.S. Nuclear Regulatory Comm. 1100 Fiftoonth Stroot, N.W.
Washington, D.C. 205J5 Washington, D.C. 20005 Mark C. Schechter, Esq. Gerald Chbenoff, Esq.
Janet Urban, Esq. Shaw, Pittman, Potts &
Antitrust Division Trowbridge Department of Justice 2300 N Stroot, N.W.
Judiciary Contor Building Washington, D.C. 20037 555 Fourth Stroot, N.W.
Washington, D.C. 20001 Philip H. Overholt U.S. Department of Energy James P. Murphy, Esq. NE-44 Squire, Sanders & Dempsey Washington, D.C. 20585 1201 Pennsylvania Avenue, N.W.
P.O. Box 407 Gregg D. Ottinger, Esq.
Washington, D.C. 20044 Duncan & Allen 1575 Eye Stroot, N.W.
D. Diard MacGuinoas, Esq. Suite 300 Volpo, Doskoy and Lyons Washington, D.C. 20005 918 Sixtconth Street, N.W.
Washington, D.C. 20006 N ,-
\ 1 1 v -
Davi . Straus Spiegel & McDiarmid 1350 New York Avenue, N.W.
Suite 1100 Washington, D.C. 20005-4798