ML20197B209

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Standard Review Plan on Antitrust Reviews.Final Report
ML20197B209
Person / Time
Issue date: 12/31/1997
From: Marlone Davis, Lambe W
Office of Nuclear Reactor Regulation
To:
References
NUREG-1574, NUDOCS 9712230314
Download: ML20197B209 (31)
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NUREG-1574 Standard Review Plan on Antitrust Reviews Final Report U.S. Nuclear Regulatory Commission Office of Nuclear Reactor Regulation W. M. Lambe, M. J. Davis paan%q,

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AVAILABILITY NOTICE Availability of Referenco Materials Cited in NRC Publications Most documents cited in NRC publications will be available from one of the following sources:

1. The NRC Public Document Room, 2120 L Street, NW., Locer Level, Washington, DC 20555-0001
2. The Superintendent of Documents, U.S. Govemment Printing Office, P. O. Box 37082, Washington, DC 20402-9328
3. The National Technical Information Service, Springfield, VA 22161-0002 Although the listing that follows represnnts the majority of documents cited in NRC publica-tions, it is not intended to be exhaustive.

Referenced documents available for inspection and copying for a fee from the NRC Public Document Room include NRC correspondence and internal NRC memoranda: NRC bulletins, circulars, information notices, inspection and investigation notices; licensee event reports; vendor reports and correspondence; Commission papers; and applL' ant end licensee docu-monts and correspondence.

The f ollowing documents in the NUREG series are available f or purchase from the Govemment Printing Office: formal NRC staff and contractor reports, NRC-sponsored conference pro-coodings, international agreement reports, grantee reports, and NRC booklets and bro-churos, Also available are regulatory guides, NRC regulations in the Code of Federal Regula-tions, and Nuclear Regulatory Commission Issuances.

Documents available from the National T3chnical Information Service include NUREG-series reports and technical reports prepared by other Federal agencies and reports prepared by the Atomic Energy Coramission, forerunner agency to the Nuctoar Regulatory Commission.

Documents availablo from public and spocial technical libraries include all open literaturo items, such as books, journal articles, and transactions. Federal Register notices, Federal and State logislation, and congrossional reports can usually be obtained from these libraries.

Documents such as theses, dissertations, foreign reports and translations, and non-NRC con-forence proceedings are available for purchase from the organization spoasoring the publica-tio') Cited.

Singlo copies of NRC draft reports are available free, to the extent of supply, upon written request to the Office of Administration Distribution and Mall Services Sectio' n , US Nuclear Regulatory Commission, Washington DC 20555-0001, Copies of industry codes and standards used in a substantive manner in the NRC regulatory process are maintaincd at the NRC Library. Two White Flint North 11545 Rockville Pike, Rock-ville, MD 20852-2738, for use by the public. Codes and standards are usually copyrighted and may be purchased from the originating organization or, if they are American National Standards, from the American National Standards institute,1430 Broadway, New York, NY 10018-3308.

l NUREG-1574 Standard Review Plan on Antitrust Reviews Final Report Manuscript Completed: November 1997 Date Published: December 1997 W. M.1.ambe, M. J, Davis Division of Reactor Program Management Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, DC 20555-0001

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STANDARD REVIEW PLAN'FOR ANYITRUST REVIEWS .

ABSTRACT

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This standard review plan describes the procedures used by NRC staff to . .

. implement the antitrust review and enforcement provisions in Sections 105~and  !

186 of the- Atomic Energy. Act of 1954, as amended (the Act), and replaces NURfG-0970. . These procedures are principally derived from the Commission's Rules and Regulations in 10 CFR Sections =2.101, 2.102, Part 2-Appendix A,

Section X 5D.33a. 50.80, 50.90, and 52.77. These procedures set forth the steps and criteria the staff uses in antitrust reviews of construction permit applications,-operating license applications, combined construction permit / operating license applications, and applications for a) proval of the transfer of construction permits, operating licenses, and com)1ned licenses.

.In addition.-the procedures describe how the staff enforces compliance with 1 antitrust conditions-appended to licenses. '

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TABLE OF CONTENTS I

EMR 1- INTRODUCTION ,........................ 1-1 1.1 Purnose , . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1-1

1. 2 St a rda rds o f Revi ew . . . . . . . . . . . . . . . . . . . . . . 1-2 1.2.1 Section 105 of the Act . . . . . . . . . . . . . . . . . 1-2 1.2.2 Regulatory Guide 9.1 . . . . . ... ........ 1-2 1.2.3 Regulatory Guide 9.2 . . . . . . . . . . . . . . . . . 1-3 1.2.4- Regulatory Guide 9.3 . . . . . . . . . . . . . . . . ... . 1-3 1.2.5 Surrmer Decision .. ................. 1-3 1.3 Owners and Goerators . . . . . . . . . . . . . . . . . . . . . 1-3 1.4 [0L License Anolications . . . . . . . . . . . . . . . . . . . 1-3 1.5 Transfer Reviews . . . . . . . . . . . . . . . . . . . . . . . 1-4 1.6 Enforcement ......................... 1-4 2 REVIEW 0F CONSTRUCTION PERMIT /0PERATING LICENSE APPLICATIONS . . . . . 2-1 2.1 Qyerview . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.2 Reaui rec Information . . . . . . . . . . . . . . ...... 2-2 2.2.1 10 CFR Information . . . . . . . . . .......... 2-2 2.2.2 Regulatory Guide 9.2 . . . . . . . . . . . . . . . . . . 2-2 2.2.3 Response to Inquiries From the Attorney General .... 2-2 2.2.4 Published Informatien ................. 2-2 2 ?.5 Field Review . . . . . . . . . . . . ......... 2-2 2.2.6 Applicant's Service Contracts and Agreements . . . . . . 23 2.3 Accentance Heview and Notice of Receiot of Antitrust Information . . . . . . . . . , . . . . . . . . . . . . . . . 2-3 2.4 Staff Review . . . . . . . . . . .. .. ...... 2-3 2.4.1 Criteria for Review ......... ........ 2-4 2.4.2 Analysis of Market Power . . . . . . ..... . 2-4 2,4.3 Analysis of Anticompetitive Behavior . . . ..... 2-4 2 4.4 Nexus ............... ...... .. 2-5 2.4.5 Settlement of Antitrust Issues . . . . . . . . . . . . . 2-5 3 REVIEW 0F APPLICATIONS SEEKING APPROVAL OF NEW OWNERS OR OPERATORS.

AND APPLICATIONS REGARDING INDIRECT TRA"SFERS .. .. .... 3-1 3.1 Overview ..... ....... ............ 3-1 3.2 Summer Decisiort . . . . . ......... .. ... . 3-1 3.3 Transfers . . . . . . . . .............. .. 3-1 3.3.1 De Minimis Applicants ................. 3-2 3.3.2 New Operators ...... .............. 3-2 3.4 Reauired Information .... ........ .. ... 3-3 3.4.1 Antitrust Files .............. ..... 3-3 3.4.2 Federal Energy Regulatory Commission Files . . . . . . 3-3 3.4.3 Field Investigation ........., ....... 3-3 3.5 Notice of Receiot of Antitrust Information .......... 3-3 3.6 Staff Analysis ....... ...... ........ 3-4 3.6.1 Parallel Reviews .............. ... 3-4 3.7 Director's Findino . ..... ...... ..... 3-4 4 ANTITRUST ENFORCEMENT ... .................... 4-1 v NUREG-1574

4.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 4.2 Enforcement Under Sections 105a.105b. and 186a of the Act . . 4-1 4.2.1 Section 105a . . . . . . . . . . . . . . . . . . . . . . 4-1 4.2.2 Section 105b . . . . . . . . . . . . . . . . . . . . . 4-1 4.2.3 .Section 1803 . ,.......... ........ 4-2 4.3 Enforcement of-Antitrust License Conditions ......... 42 4.3.1 Section 10 CFR 2.206 Petitions . . . . . . . . . . . . . 4-2 4.3.2 Compliance Investigations ............... 4-3 4.3.3 Denial-of Petition . . . . . . . . . . . . . . . . . . . 4-3 4-4 4.3.4 Notice of V'.01ation ..................

4.3.5 Order To Modify. Suspend. or Revoke a License ..... 4-4 4.3.6 Civil Penalties ........... ....., . 45 1

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EXECUTIVE SLM ARY The' NRC's antitrust responsibilities are set 'forth in Section 105 of the Atomic Energy Act of 1954,'as amended (the Act). This SRP describes the-procedures and guidelines used by the NRC staff in carrying out the NRC's antitrust review and enforcement responsibilities under the Act. Though this ,

report may be informative to the general public. -it is primarily intended for  !

current and prospective licensees and NRC staff members concerned with antitrust matters.

l Section 1 of the standard review plan identifies the staff responsible for conducting antitrust reviews and provides an overview of staff procedures associated with the Commission's three broad categories of antitrust concern: *

-(1) construction permit / operating license applications: (2) transfer l applications; and (3) enforcement authority over antitrust license conditions.

Section 2 describes the NRC staff's antitrust procedures for reviewing an-application for a con;truction permit, operating license, or combined construction permit / operating license ap)lications (COL) and the advisory role played by the Department of Justice at tais stage of review. The antitrust staff of the NRC. with the Department of Justice, conducts a prelicensing review, as required by Section 105c of the Act.

Pursuant to Section 105c. the Attorney General advises the NRC concerning a construction permit, operating license or COL a) plication. In the past the Attorney General has advised either that (1) no learing was required by the NRC. (2) the NRC hold hearings, or (3) no hearing was necessary because the applicant had agreed to remedy any apparent inconsistencies with the antitrust laws. The Commission shall consider the Attorney General's advice and evidence provided during proceedings concerning such advice, and shall make a finding as to whether activities under the license "would create or maintain-a situation inconsistent with the antitrust laws." (The criteria and economic theory used in determining whether to grant licenses or impose antitrust license conditions are discussed as they pertain to specific cases that have already been litigated before Commission adjudicatory panels.)

Section 3 addresses the Comission's antitrust review procedures for operating license applications following a construction permit antitrust review and for

-applications for changes in control of licenses. A significant change review using the criteria set forth by the Commission in its Sunner decision is performed before issuance of a class 103 operating license under Part 50. A full antitrust review of an operating license application is required only if the Director of the Office of Nuclear Reactor Regulation determiries that significant changes (1) have occurred since the previous antitrust review.

(2) are-attributable to the applicant, and (3) have anticom?etitive implications warranting Commission remedy. If a- significar:t change finding is l made, a second antitrust review is conducted, following the same procedures l . set forth in Section 105c(1). For license transfers, a threshold antitrust u review is conducted when a direct transfer of the license to a new proposed

-licensee is involved. A full antitrust review may follow if warranted by the threshold review. ~When indirect control is transferred but the licensee remains the same, no antitrust review or threshold antitrust review is L

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undertaken.

Section 4 discusses the Comission's antitrust enforcement responsibilities.

In fulfilling such res)onsibilities, the Comission may: (1) suspend or revoke a license or tace other actions deemed necessary in the everc 1 licensee is found by a court of competent jurisdiction, or any govecciinent agency having jurisdiction, to have violated the antitrust laws (Section 105a of the Act): (2) report to the Attorney General any information indicating that a licensee appears to have violated the antitrust laws (Section 105b 01 the Act); and (3) enforce Comission license conditions (Section 186a of the Act), in addition. 10 CFR 2.206 provides a mechanism for parties to bring formal complaints to the attention of the Director of the Office of Nuclear Reactor Regulation when the parties believe that licensees are not complying with license conditions.

I In sumary, this standard review plan (1) guides the Comission's antitrust staff in carrying out the Comission's antitrust responsibilities under the Atomic Energy Act; and (2) explains how antitrust considerations fit into the overall licensing process.

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ABBREVIATIONS Act- Atomic Energy Act of 1954, as amended CFR Code of Federal Regulations COL Combined Construction Permit / Operating License-CP construction permit DOE- Department of Energy-00J Department of Justice EIA- Energy Information Agency FERC Federal Energy Regulatory Commission NARUC National Association of Regulatory Utility Comissioners NRC Nuclear Regulatory Comission NRR Office of Nuclear Reactor Regulation 0GC Office of the General Counsel OL operating license SEC Securities and Exchange Comission SRP Standard Review Plan ix NUREG-1574

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STANDARD REVIEW PLAN FOR ANTITRUST REVIEl-1 INTRODUCTION 1.1 P_umole The Atomic Energy Act of 1954, as amended (the Act). declared that "the development, use, and control of atomic energy shall be directed so as to...

strengthen free competition in private enterprise." In 1970, antitrust amendments to Section 105c of the Act were enacted requiring the Commission to conduct antitrust reviews of applications for constraction permits and operating licenses under Section 103 of the Act, with certain limitations.

This standard review plan (SRP) describes the procedures by which the NRC staff judges the antitrust implications associated with the construction and operation of nuclear power plants. This SRP also outlines procedures for reviewing new joint owners, transfers to new owners or operators, and requests for the enforcement of NRC antitrust license conditions.

The NRC has begun to work with the Federal Energy Regulatory Commission (FERC). the Securities and Exchange Commission (SEC), and the De)artment of Justice (D0J) to develop methods by which the NRC can minimize tie duplication of effort on antitrust issues, and still carry out its statutory responsibilities. For the same reason (to minimize duplication), the NRC is also supporting legislation to eliminate its review mandate.

The Office of Nuclear Reactor Regulation, witn the advice of the Office of General Counsel is responsit.le for conducting the antitrust reviews.

The Act requires the Commission to conduct antitrust reviews of all applicants for licenses under Section 103 that have submitted nuclear power plant construction permit (CP) applications after Section 105 was enacted. Plants that received a CP (or in some cases had filed an application for a CP) before Section 105 was enacted in December 1970 were grandfathered. The staff has also determiaed that no antitrust review is required for license renewals unless there are significant changes in licensee activities or plant modifications which would constitute a new or substantially different facility. The NRC does not expect that any plants will have to make such modifications as a prerequisite for license renewal a) proval. Thus, antitrust review of the renewal of an operating license is unlicely.

The following power reactors were licensed under Section 104b (DPR licenses):

Arkansas 1. Beaver Valley 1. Big Rock Point. Brown's Ferry 1. 2. & 3.

Brunswick 1 & 2 Calvert Cliffs 1 & 2, Cook 1 & 2. Cooper. Crystal River, Diablo Canyon 1 & 2 (which have antitrust license conditions). Dresden 2 & 3, Duane Arnold, FitzPatrick, Fort Calhoun. Ginna. Haddam Neck. Hatch 1. Indian Point 2 & 3. Kewaunee. Maine Yankee, Millstone 1 & 2 Monticello, Nine Mile 1.

Oconee 1. 2, & 3. Oyster Creek, Palisades. Peach Bottom 2 & 3. Pilgrim. Point Beach 1 & 2. Prairie Island 1 & 2. Quad Cities 1 & 2. Salem 1 & 2. Sequoyah 1

& 2. Saint Lucie 1. Surry 1 & 2 Three Mile Island 1. Turkey Point 3 & 4 Vermont Yankee, and Zion 1 & 2.

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1.2 Standards of Review Although the electric power industry has changed considerably since Section 105 was enacted and since the AEC began providing regulatory guidance in the early 1970s, the basic tenets and standards of review have not changed.

Nuclear power production applicants and licensees are subject to review for the purpose of determining whether activities under a license will create or maintain a situation inconsistent with the antitrust laws. The standards for reviewing licenses are embodied in the language of the Act itself and clarified in Regulatory Guides 9.1, 9.2. and 9.3 and have been applied to various licensing actions over the years, producing some case law to which applicants and the staff may refer in assessing future antitrust licensing activities before the NRC.

1.2.1 Section 105 of the Act Section 105 provides that nothing in the Atomic Energy Act will relieve any person from abiding by the antitrust laws. Moreover, Section 105c(5) requires the NRC to make a finding as to whether the activities under the license would create or maintain a situation inconsistent with the entit: st laws. The Act does not require the NRC to identify activities that constitute violations of the antitrust laws but to examine situations that appear to be " inconsistent" with the antitrust laws.

1.2.2 Regulatory Guide 9.1 Although Regulatory Guide 9.1, " Regulatory Staff Position Statement on Antit,'ust Matters," was (subiished in 1973. shortly after the enactment of Section 105 the scope and standards of competitive review employed by the regulatory staff remain the same:

the Regulatory staff views activities under the license to embrace the planning, building, and operation of a nuclear facility as well as the integration of such a facility into an effective bulk power supply system. Meaningful review requires consideration of

[ the applicant's activities to be licensed in the context of the bulk power supply system within which it operates.

In dealing with situations that may warrant NRC remedy, the staff will seek to avoid determining the specifics of a coordination agreement, the details of unit participation, and the like. In general, reliance wi' be placed .n the exercise of Federal Power Comission [now Federal Energy Regulatory Comission] and State agency jurisdiction regarding the specific -

terms and conditions cf the sale of power, rates for transmission services and such other matters as may be within the scope of their jurisdictio .

1.2.3 Regulatory Guide 9.2 Regulatory Guide 9.2. "Information Needed by the AEC Regulatory Staff in Connection with its Antitrust Review of Construction Permit Applications for Nuclear Power Plants." informs the applicant what information the Attorney NUREG-1574 1-2 m

General and the NRC regulatory staff need to determine whether the applicant is abiding by the antitrust laws. This information request applies to both Part 50 and Part 52 license applications.

1.2.4 Regulatory Guide 9.3 Regulatory Guide 9.3 "Information Needed by the AEC Regulatory Stcff in Connection with Its Antitrust Review of Operating License Ap)lications for Nucler Power Plants." identifies the types of information tlat the regulatory

-staff needs to decide whether a second antitrust review is required at the operating license stage in connection with Part 50 applications. The staff is not now required to conduct antitrust reviews at the o>erating license stage for combined construction permit / operating license (CO.) Part 52 applications.

1.2.5 Sunmer Decision The Commission's decision in South Carolina Electric & Gas Co. (Virgil C.

Stamer Nuclear Station. Unit No.1). CLI-81-14.13 NRC 862 (1981) (Sumer) involved an operating license review under the Part 50 licensing process, and ,

established criteria the staff must follow in assessing anticompetitive implication; during licensing reviews after issuance of a construction permit.

The staff nas also looked to Swmer for guidance in connection with reviews of applications for approval of direct license transfers under 10 CFR 50.80.

1.3 Owners and Ooerators Each pro)osed owner or operator of a nuclear facility licensed under Section 103 of t1e Act must' undergo a full antitrust review in connection with an application for a construction permit or COL. and if an affirmative significant changes finding is made under Sumer. applications for an operating license under Part 50. Proposed transferees that become owners or operators are subject to at least threshold antitrust reviews. Small electric systems may be exempted from some antitrust review requirements. Facilities that are licensed under Section 104b of the Act (DPR licensees) and that have not had antitrust license conditions added to their licenses are exempt from all further antitrust review.

1.4 COL license ADolications Generally, for 10 CFR Part 50 applications for new power production facilities the NRC conducts a prelicensirg antitrust review at the construction permit stage and a significant changes review at the operating license stage. In 1993, the NRC, under 10 CFR Part 52. introduced an alternative application process combining the construction permit and operating license reviews into a single COL review. The new COL allowed for an operating license review if "significant changes" occurred between the l completion of the CP review and issuance of the OL. However, the enactment of l the Energy Policy Act in 1992 eliminated the NRC's authority to conduct separate operating license reviews for 10 CFR Part 52 COL applications.

l The Part 50 CP_ review and Part 52 COL review processes are identical. The Comission sends the Attorney General a copy of the antitrust part of the license application. Within 180 days of transmittal, the Attorney General must' advise the Commission as to whether activities under the license would create or maintain a situation inconsistent with the antitrust laws. In 1-3 NUREG-1574

connection with such advice in the past.-the Attorney General has advised either (1) that no antitrust hearing needed to be held, (2) that a hearing was necesary, or (3) that a hearing was unnecessary if the applicant took certain actions or if certain conditions were attached to the license. In practice the Comission staff and the Department of Justice staff confer extensively on chese matters.

In Regulatory Guide 9.1 the Commission provided guidance to applicants on how the staff views the various issues regarding access to nuclear power and related services. Regulatory Guide 9.1 describes the staff's criteria for determining-whether a situation inconsistent with the antitrust laws may be either created or maintained by an unconditioned license and how the staff would remedy such a situation.

1,5 Transfer Reviews in connection with 10 CFR 50.80 and Section 184 of the Act, the staff has imposed certain antitrust review requirements on ap)licants requesting approval to acquire an ownership interest in or to ]ecome operators of a nuclear power production facility after issuance of an OL or a COL. The staff conducts a threshold antitrust review to determine whether the transfer would have any significant anticompetitive consequences. As much as possible, the staff uses the Sunner decision to determine whether a new owner or operator after issuance of an OL or COL would warrant a full OL antitrust review.

Since Section 105 of the Atomic Energy Act applies to an application for a license to construct or operate a facility licensed under Section 103 of the Act, certain transfers of control of a license effected by restructurings or reorganizations may not require any antitrust review. If approval of an application does not involve the issuance of a license, the procedures under Section 105c (including the procedure for significant changes determinations) do not apply.

1.6 Enforcement Section 105a of the Act gir.s the Commission the power to suspend or revoke a license or take other actions if a licensee is found by a court of competent jurisdiction to have violated the antitrust laws. Section 105b requires the Commission to report to the Attorney General any information it has that a utilization of special nuclear material or atomic energy appears to violate the antitrust laws. Under Srction 186, the Commission is granted authority to revoke licenses for noncompliance with the terms and conditions of construction permits, operating licenses, and combined licenses.

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2 REVIEW 0F CONSTRUCTION PERMIT /0PERATING LICENSE APPLICATIONS

- 2,1 Overview By virtue of Section 105c of the Act, the U.S. Nuclear Regulatory Commission (NRC).-with the advice of the Department of Justice, must conduct a-prelfcensing antitrust review of applications to construct nuclear power plants. -Section 105c requires the Attorney General to provide advice to the Commission as appropriate, within 180 days after the NRC has docketed and transmitted the application to the Attorney General. The Attorney General's advice assists the Commission in determining whether the activities under the license would create or maintain a situation inconsistent with the antitrust laws. In addition to the a) plication, the NRC staff must promptly furnish background information to tie Attorney General. The applicant furnishes this information pursuant to Appendix L of 10 CFR 50 and 10 CFR Part 52.

After investigating, the Attorney General generally will advise the Commission that (1) no antitrust hearing is necessary (2) a hearing is necessary, or (3) no hearing is necessary if certain actions are taken by the applicant or if certain conditions are attached to the license. The Attorney General's advice is published in the Federal Register and the public is offered an opportunity to request a hearing pursuant to Section 105 of the Act, or to participate in a hearing if the Attorney General recommends one to the Commission.

If a hearing is held, the Commission must make a finding as to whether activities under t'ne license "would create or maintain a situation inconsistent with the antitrust laws" (Section 105c(5), 42 U.S.C. 2135). In making that determination, the Commission must consider the Attorney General's advice and any other information it deems necessary. On the basis of its findings, the Commission has the authority to (1) issue or continue a license, (2) refuse to issue a license. (3) rescind or amend a license, or (4) 1ssue a license with conditions it deems appropriate.

In the past, when license conditions have been negotiated early in the review process, the Attorney General has advised the NRC that no hearing is necessary if the conditions are made a part of any license issued in connection with the application. However, pursuant to Section 105, if a settlement is not reached and the Attorney General recommends a hearing or an intervention petition is granted, a hearing must be held.

' When the Attorney General recommends no hearing or no hearing with conditions, a member of the public or the NRC staff may still request that a hearing be held. If a member of the public petitions for an antitrust hearing, a special three-member board is convened to rule on the petition (10

CFR Part 2 Appendix A.Section X).

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2.2 Reauired Information 2.2.1 10 CFR Information in accordance withzl0 CFR 2.101 and 50.33a of the Commission's Rules, the >

information: required by the Attorney General is submitted separately at least 9 months, but not more than 36 months, before any other part of the license application, The complete information described in Apaendir. L of 10 CFR Part 50 is generally required only for applicants w1ose generating capacity exceeds 1400 MW. Applicants with 1400 MW cr less of generating capacity may file an affidavit setting forth the facts about their generating capacity. Then, unless otherwise requested, applicants with capacity of 200 to 1400 MW need only respond to item 9 of Appendix L: applicants with less than 200 MW of

- capacity (de mfnimfs applicants) need not respond to any of the questions unless specifically requested to do so by the staff.

2.2.2 Regulatory Guide 9.2 In addition to the information requested by the Attorr.ey General, the NRC staff collects information pursuant to Regulatory Guide 9.2, "Information Needed by the NRC Staff in Connection With its Antitrust Review of Construction Permit Applications for Nuclear Power Plants."

2,2.3 Response to Inquiries from the Attorney General The Attorney General will normally request " third party" information i r.a municipal electric utilities, rural electric cooperatives, and othar tilities located in and near the applicant's service area about their competnive rela-tionships with the applicant. The applicant identifies these utilities in response to item 9 of the Appendix L information it provides. Copies of the responses to these inquiries by the Attorney General should be obtained and used as part of the DC review.

2.2.4 Published Information To evaluate the-applicant's market )ower, the reviewer will use information from (1)-Forms 1 and 12, collected )y the Federal Energy Regulatory Commission (FERC), (2) the Energy Information Agency (EIA) of the Department of Energy (00E). and (3) other sources such as the Directory of Electric Utilities and.

Moody's Public Utility Manual, thereby obtaining information on the applicants generating capacity and the transmission lines it owns within its service area and on its plans to increase its gene") ting capacity and add transmission lines. It may also be necessary for the reviewer to survey the smaller electric utilities in the relevant areas by telephone, by mail or in person, since statistics about such utilities may not be available in public sources.

2.2.5 Field Review After examining the Appendix L submittal and other relevant information, the reviewer nay contact individuals in or near the area the applicant servei to substantiate the responses and documents already examined. The reviewer may interview system planners end other officials affiliated with NUREG 1574 2-2

the applicant, in addition, officials from various municipal, cooperative, and privately owned utilities in or adjoining the applicant's service or planning area may be interviewed.

The interviews will focus on the interutility relationships among the various utilities in order to determine the competitive situation and whether the issuance of a license will create or maintain a situation inconsistent with the antitrust laws. The reviewer will be interested in how the utilities plan for their generation and transmission requirements, how and to what degree they coordinate, and how they plan to integrate the power from tL nuclear faulity to meet the electrical demands of their customers.

To determine if the applicant has abused its market power, the reviewer will ascert61n whether the applicant has attempted to fix prices or exclude competition in its relevant geographic and product market.

2.2.6 Applicant's Service Contracts and Agreements The reviewer will analyze the applicant's service contracts and agreements for unnecessarily restrictive provisions. Such restrictive provisions, while not limited to the following exam)les, may (1) limit customers from selling surples power other than to tie applicant. (2) include ratchet provisions (which require a customer to keep paying a higher charge for electric power and energy beyond the amount delivered) (3) limit the sale of power at wholesale to certain customers, or (4) prevent certain electric utilities from member hip or participation in planning and coordinating groups, in addition, any pattern of applicant refusals to serve will be evaiuated.

2.3 Accentance Review and Notice of Receiot of Antitrust Information Before the Appendix L information is sent to the Attorney General, the reviewer makes certain that the information is complete and therefore acceptable for docketing. If the application is acceptable, the reviewer will ask the licensing project manager to publish a notice in the federal Register and in trade journals informing the public that the antitrust information has been received and is available for inspection in the NRC Public Document Room in Washington. D.C., and in local public document rooms. The notice invites interested parties to express their views within 60 days of the date of publication. All responses to this notice will be sent to the Attorney General. The reviewer will also notify the Office of the General Counsel (OGC) that the application has been accepted for docketing. The information is then submitted to the Attorney General with a request for antitrust advice.

2.4 Maff Peview While the Attorney General's review is in progress, the NRC reviewer should prepare a preltminary analysis. This will be the basis of the staff's position. The staff may support the views of the Department of Justice (D0J) on whether a hearing is necessary, or the staff may disagree with DOJ or independently derive its own position. Similarly, when D0J advises that a hearing is needed. the staff will participate in any hearing and will determine independently what issues to press in the hearings.

2.4.1 Criteria for Review 2-3 NUREG-1574

The proper scope of antitrust review depends upon the circumstances of each case. The reviewer should employ market analyses focusing on the area served by the apalicant. from the nature of the electric bulk power supply inoustry itself, t1e reviewer will have a general idea of the types of products and services supplied by the applicant. Products relevant to each individual case (e.g., baseload power transmission access, reserve sharing, coordination planning) will vary depending on the extent of competition in the area and the needs of surrounding entities engaged in the bulk power services market.

Pepending on the availability of various products and services within the relevant geographic area (i.e.. depending on whether there are entry barriers), the reviewer will analyze the geographic market to determine what the relevant market is for review purposes. The relationship of the nuclear facility to the applicant's total system or power pool should be evaluated in every case. The reviewer can then assess whethu the applicant has market power and if so, whether it has abused its market power.

2.4.2 Analysis of Market Power The reviewer must determine if the applicant has the market power to withhold access to nuclear power or abuse its market ]ower in other ways and thereby maintain or create a competitive advantage ttrough use of the nuclear facility, in determining if the applicant has market power, the reviewer must ascertain how much control the applicant has over certain services in a specific geographic area. Although the reviewer must consider each application on its own merits and take circumstances into account, the reviewer may use the following cases as guides in determining what markets are relevant and should be analyzed:

o Consumers Power Co. (Midland Plant. Units 1 and 2). ALAB 452. 6 NRC 892 (1977) e Alabama Power Co. (Joseph M. Farley Nuclear Plant. Units 1 and 2). ALAB-646. 13 NRC 1027 (1981) e Toledo Edison Co.. et al. (Davis Besse Nuclear Power Station. Units 1. 2.

and 3) ALAB-560. 10 NRC 265 (1979) e Alabama Power Co. (Joseph M. Farley Nuclear Plant. Units 1 and 2). LBP 24, 5 NRC 804 (1977), and LBP-77-41, 5 NRC 1482 (1977)

In analyzing antitrust implications, the reviewer should consider, among other things, the applicant's relevant market strengths and weaknesses, transmission access and availability, and the system's capacity for change. (Detailed issues for study can be found in farley. LBP-77-24. 5 NRC 804.

2.4.3 Analysis of Ant 1 competitive Behavior The fact that an applicant has market power does not necessarily mean that the applicant's conduct is ince-isistent with the antitrust laws or that the applicant will abuse its market power. To assess the probability that the applicant will abuse its market power, the reviewer must examine the ap)licant's behavior in the relevant market and compare it with competitors' belavior in the same market. in other words, the reviewer must determine if it appears reasonably probable that the activities under the license would NUREG 1574 2-4

create or maintain a situation inconsistent with the antitrust laws. Case examples the reviewer can refer to include Hfdland and Davis-Besse. in Hfdland, the Appeal Board found that the applicant's refusals to wheel power, or to coordinate with smaller utilities, and its exclusion of utilities from the Michigan power pool to be ent1 competitive conduct and abuses of market power. In Davis-Besse, practices such as territorial allocations, attempts to fix prices, refusals to deal, and group boycotts were considered practices that increased the applicant's dominance and violated the antitrust laws.

2.4.4 Nexus Proof of a situation inconsistent with antitrust laws or policies is only one of the prerequisites for relief under Section 105c of the Act. The second is a demonstration that the activities under the license would create or inaintain the anticompetitive situation. Thus, a nexus, or connection, between an applicant's activities under the license and the anticompetitive situation is required. The farley and Davis-Besse decisions show the reviewer what to consider in ascertaining whether a sufficient nexus exists between the activities under the license and an antitcompetitive situation.

2.4.5 Settlement of Antitrust issues Section 2.759 of the Commission's Rules of Practice states that the public interest may be served through settlement of particular issues in :. proceeding or through settlement of an entire proceeding. Settlement, by way of agreement on antitrust license conditions, may be negotiated at any step in the review process. The negotiations may involve the Department of Justice, NRC staff, applicants, and, in some cases, members of the public, and smaller electric systems as intervenors or potential intervenors.

Negotiations with the applicant begin before the Attornay General issues an advice letter. The Department of Justice usually invites the NRC staff to join the negotiations in the beginning and invite other interested parties, such as potential intervenors, later. If the negotiations are successful, the Attorney General will advise the Commission that no hearing is necessary if certa 11, conditions, which have been agreed to by the applicant, are attached to the license. If a settlement is not reached before the Attorney General's adVICO is rendered. Degotiations are encouraged during the prehearing stages and even after the hearing has begun.

2-5 NUREG-1574

l l

I 3 REVIEW OF APPLICATIONS SEEKING APPROVAL OF NEW OWNERS OR OPERATORS, AND APPLICATIONS REGARDING INDIRECT TRANSFERS 3.1 Overview With respect to applications for construction permits and operating licenses under Section 103 of the Atomic Energy Act and 10 CFR Part 50, an antitrust review is undertaken at the construction permit stage. At the operating license stage, a "significant changes" review is done to determine whether significant changes in the applicant's activities or proposed activities since completion of the first antitrust review warrant a second full antitrust review. For COLs under Part 52, a single antitrust review is performed; there is no significant changes review.

With respect to applications for a) proval of transfers of control of licenses, if there is a direct transfer of t1e license to a new entity or proposed licensee, a threshold antitrust review of the proposed transferee will be conducted to determine whether the transfer would significantly change the competitive situation. An affirmative threshold finding of significant changes triggers a full antitrust review under Section 105c(1) of the Act. If the application involves an indirect transfer of the license through transfer of control of the existing licens.ee to another entity, where the existing licensee remains the licensee, no antitrust review is conducted since there is no effective application for an operating license.

3.2 Sumer Decision in reviewing changes in ownership or operators. the staff will consider the criteria established by the Commission in its Sumer decision (CLI-81-14.13 NRC 862) to the extent applicable. The staff must follow these criteria at the initial o)erating license stage in deciding whether there have been significant clanges in the licensee's activities or proposed activities since issuance of the construction permit and the completion of an antitrust review at tne construction permit stage. if so, a second antitrust review is undertaken at the operating Ilcense stage.

The issues addressed in Sumer concerned activities of the Summer licensee since the completion of the Summer antitrust construction permit review. To initiate a full scale antitrust review in accordance with the procedures set forth in Section 2. the activities under scrutiny by the staff must (1) have occurred since the previous antitrust review of the licensee, (2) be reasonably attributable to the licensee, and (3) have antitrust implications that would likely warrant some Commission remedy. These changes must be reasonably apparent and must be discernible from the applicant s submittals.

from the staff's investigations. or from papers that have been filed.

3.3 Transfers After an OL or COL has been issued, the addition or replacement of a licensee or change in control of an existing licensee is subject to the license transfer process under 10 CFR 50.80 and may require the license to be amended to reflect the additional or new owner or operator. Transfer applications may undergo varying degrees of antitrust review, deoending upon the circumstances.

Transfers may involve (1) purchasing a share of a nuclear facility, (2) i l

purchasing a major share of stock in the existing licensee, (3) acquiring or 1 3-1 NUREG-1574

merging with a licensee, (4) corporate restructurings, or (5) possibly th sale / leaseback of a facility. If the transaction is deemed to be an e A at transfer with no new licensee added to the license, a Section 105 - . mM review (including a significant changes review) is not authorize

  • f th Act if the transaction involves a new over and is thus considerect .r u transfer, the staff performs a thre sold antitrust review tc ' A '.y 5 a full antitrust review (including a referral to the Departre o' Jac'cm should be undertaken.

Applicants that apply to become new owners through the sale and leaseDack of a nuclear facility are subject to the same antitrust requirements as any new licensee. However, the sale-and leaseback agreements that have been reviewed by the staff have involved new equity investors that have not taken an active role in the operation or control of the nuclear facility involved in the sale and the Commission has determined that su:h transactions do not require an antitrust review (see letter from C.R. Thomas to W.L Stewart (December 8.

1995), forwarding Amendments 91 to NPF 51 and 74 to NPF-74 for the Palo Verde Nuclear Generating Station Units Nos. 2 and 3). For these situations the staff has developed a generic license condition. The license condition assures the passive role of any new equity investor by prohibiting the new owner from exercising control over the les]ee, the facility and the power and energy aroduced by the facility. If the new equity investor takes an active role tie new investor would be subject to an antitrust review like any other new owner.

3.3.1 De Ninfmis Applicants An applicant owning less than 200 MW of total generating capacity is considered a de minfmis applicant. Such applicants are generally too small to exercise any substantial degree of market power. Therefore, they are normally exempted from supplying Appendix L information, as discussed in Section 2 above, and no notice of receipt of information from a de minimis applicant is published in the federal Register, Further if the de minfm/s applicant is a subsequent applicant, the Department of Justice is simply notified about the existence of an additional de minfmfs owner, and antitrust advice about the applicant is not requested from the Attorney General unless the staff has information suggesting that such advice should be sought. This NRC staff procedure does not preempt the Attorney General from offering advice or requesting additional information.

3.3.2. New Operators for review aurposes, new operators of licensed power reactors that become licensees t1 rough corporate reorganizations, acquisitions, or the formation of nuclear operating service companies are treated by the staff much like new owner licensees. However, if a new operator is in fact only a plant operator and has no identifiable anticompetitive impact on the bulk power services market in which the licensee operates, there is no basis to attribute market power or its abuse, as defined by Section 105, to the new operator. 1 If a license condition appended in the operating license prohibits the new operator (or owner in the case of a sale-and leaseback agreement) from marketing or brokering power and energy produced by the facility and holds the existing owners responsible and accountable for the actions of the operator, the staff normally will not conduct a threshold antitrust review of NUREG-1574 3-2

the proposed new facility operator. However, new operators will be treated for purposes of antitrust review as new owners unless such a license condition is a pended to the operating license.

3.4 Recuired Information All applicants pursuant to Section 50.80 are to submit the information required by 50.33a. In making its threshold antitrust determination, the staff shall make use of all available public information and any records from other related proceedings. The information required by Regulatory Guide 9.3.

"Information Needed by the AEC Regulatory Staff in Connection With its Antitrust Review of Operating License Applications for Nuclear Power Plants."

concerns changes in licensee activities and will be considered by the staff.

3.4.1 Antitrust Files The antitrust files pertaining to the initial construction permit or COL review of the application form the baseline from which changes are measured.

In addition. CP or COL reviews of the same applicant may have been conducted in connection with other nuclear plants before the CP or COL review of the nuclear plant in question, thereby increasing the staff's general information about a particular applicant.

3.4.2 Federal Energy Regulatory Commission Files The docket flies at the FERC generally contain information about the applicant's activities in the bulk power services market and should be selectively reviewed by the staff.

3.4.3 Field Investigation in addition to obtaining information from the applicant, the NRC staff may contact selected nonapplicants concerning competitive relationships with the applicant.

3.5 Notice of Receiot of Antitrust Information At the CP or COL stage of review, the staff seeks information for its antitrust review from persons or entities affected by the activities of prospective owners or operators of the facility being licensed. The staff seeks similar information in the transfer review process and will publish in the federal Register notice of receipt of antitrust information or notice of receipt of the proposed transfer application when adequate antitrust information is included with the application. The ".otice shall provide for a period of public comment of 30 days from publication of the notice in the federal Register.

To be accepted by the staff, public comments must address the antitrust aspects of the application. The staff uses the comments to determine whether the proposed transfer may significantly worsen the competitive situation.

33 NUREG-1574

3.6 Staff Analysis The reviewer, along with OGC, prepares a written analysis of the competitive situation. This analysis will consi'er, among other things, the extent to which potential changes in the rele- markets are attributable to the ap)licant, the antitrust implication, the changes, and whether they would licely warrant a Commission remedy.

This threshold analysis is then forwarded to the Department o' Justice (00])

for review and comment. Although there is no statutory limitation on the period in which D0J's coments may be provided to the staff (such as during the construction permit review phase), the reviewer should try to ensure that the D0J renders its advice in a timely manner. Upon receipt and review of 00J's comments. a threshold antitrust finding is prepared for signature by the Director of the Office of Nuclear Reactor Regulation.

, 3.6.1 Parallel Reviews in its review of mergers, acquisitions. spinoffs or other owner or operator changes involving licensees which are concurrently being reviewed by other '

Federal regulatory bodies (e.g.. FERC. SEC 00]). the staff tries to use the information and the records of these proceedings in conducting its own independent threshold antitrust analysis.

3.7 Director's Findina If the threshold antitrust analysis by the Director of the Office of Nuclear Reactor Regulation results in a Finding of Significant Change. the staff will forward the finding to the Attorney General and request advice as to whether <

an antitrust hearing should be held as a result of the finding. When the ,

staff receives the Attorney General's advice. the staff will request publication of the Attorney General's advice in the federal Register to give interested parties an opportunity to intervene or request a hearing.

If the Director of the Office of Nuclear Reactor Reguletion makes a Finding of No Significant Changes, the finding is published in the federal Regfster with a statement that any request for reevaluation of tne finding shall be submitted within 30 days of the publication of the notice. Copies of the finding are also sent to the Commission the applicant, and any person who submitted coments in response to the notice of receipt of antitrust information in the Federal Register. Normally. if no requests for reevaluation are received within the 30 day period, the finding becomes the NRC's final determination. Requests for reevaluation of the Finding of No Significant Changes may be accepted after the date when the Director's Finding becomes final but before the transfer application is approved only if they contain new facts or information about events of antitrust significance that have occurred since the Director's Finding, or information that could not reasonably have been submitted before then.

The staff will review all requests for reevaluation and make a determination whether the events described in the request represent new information that would affect the initial Director's Finding. If the staff finds that the request contains new information that was not considered in the initial Director's Finding, the Director will reevaluate the initial finding.

NUREG 1574 3-4

if, after reevaluating the finding, the staff determines that there has been  ;

no significant change, the Director of the Office of Nuclear Reactor Regulation will deny the request and publish a notice reaffirming the finding of No Significant Changes in the federal Register, Copies of the reaffirmation finding are also sent to the requestor. the applicant, and the Comission. .

The finding becomes the final NRC decision 30 days after publication in the  !

federal Register unless the Commission exercises its right to conduct a i sua sponte review.

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3-5 NUREG-1574

4 ANTITRUST ENFORCEMENT 4.1 Overview Section 105 of the Act assigns to the NRC the responsibility for ensuring that applicants and licensees of nuclear facilities conduct their activities in conformance with the antitrest laws. The authority to enforce this respon-sibility includes the ability or duty to (1) suspend or revoke a license or take other actions deemed necessary if a licensee is found by a court of competent jurisdiction, or any government agency having jurisdiction. to have violated the antitrust laws (Section 105a of the Act):-(2) report to the Attorney General any information indicating that a licensee appears to have violated the antitrust laws (Section 105b of the Act): (3) enforce Comission license conditions (Sections 161 and 186a of the Act): and (4) impose civil penalties (Section 234 of the Act). In addition. 10 CFR 2.206 3rovides a formal mechanism for any person to request the Director of the Office of Nuclear Reactor Regulation to take appropriate enforcement action on antitrust matters.

4.2 Enforcement Under Sections 105a. 105b. and 186a of the Act 4.2.1 Section 105a Section 105a identifies relevant statues and provides for appropriate enforcement. Only one Section 105a enforcement case has come before the Commission. On May 31. 1978. counsel for several Florida cities submitted a 3etition for a Section 105c hearing and advised the Comission of a decision

)y the Court of Appeals in the Fifth Circuit (Gafnesvfile utflities Department

v. Florida Power and Lfght Cmpany. 573 F. 2d 292. 294 (5th Cir. 1978), cert denfed. 439 U.S. 966 (1978)).. which held that Florida Power and Light Company (FPAL) had conspired to divide the market for electric service in violation of Section 1 of the Sherman Act. The Court of Appeals remanded the case to the District Court for further findings and determination of appropriate relief. The petition for a Section 105a proceeding was withdrawn after the cities and FP&L settled their differences.

To date the Commission has not delegated authority to staff or to licensing ,

boards to take action with respect to Section 105a matters. Thus, for the

~

l present. the staff has an advisory role. calling the Commission's attention to  :

possible Section 105a situations. In performing this role, the staff treats l the phrase "in the conduct of the licensed activity" as synonymous with the I phrase cited in Section 105c, " activities under the license" (described in l

Section 2). l l

Both phrases encompass the planning, building. and operation of nuclear power i reactors and their integration in effective bulk power supply systems. j 4.2.2 Eection 105b a SectionL105b requires'the Commission to report apparent violations to the Attorney General. Only one Section 105b case has come before the Commission.- .

By motion of August 6.1976, a group of Florida cities petitioned under  :

Section 186a of the: Act for an antitrust hearing with respect to Florida Power.

and Light Company's Turkey Point 3 & 4 and St. Lucie 1 nuclear power plants.

The Atomic Safety.and-Licensing Board denied the cities' petition. In Florida ,

i 4-1 NUREG 1574

l Power and Lfght Co. (St. Lucie Plant Unit No.1 Turkey Point Plant. Units No. 3 and 4). ALAB 428, 6 NRC 221 (1977), the Appeal Board af firmed the decision of the Licensing Board, and the Commission declined to review the Appeal Board decision. Florfda Power and Light Co. CL1-77 26, 6 NRC 538 (1977). However, the Comission ordered the staff to promptly refer to the  ;

Attorney General the allegations of the Florida cities, as well as any related information it had suggesting that the licensee has violated or tended to l violate the antitrust laws in utilizing s)ecial nuclear material or atomic energy. In accordance with this Order. t7e staff will. in similar situations in the future, refer such matters, with an account of the circumstances to the Attorney General, emphasizing that the staff has not determined whether l the actions of the licensee (or applicant) are inconsistent with the antitrust laws.

4.2.3 Section 186a Section 186a gives the Comission authority to revoke licenses, in its June

15. 1977, Memorandum and Order concerning the South Texas Project, the l Comission referred to Section 186 of the Act as follows:

Section 186 gives the Comission authority to initiate a post-licensing enforcement proceeding in the event of violation of a specific antitrust licensing condition. For like reasons we would not be limited to mere reference to the Attorney General if a license a)plicant has falsified pertinent antitrust review information or had otlerwise obtained an unconditioned license by some sort of fraud or concealment. . . .

Houston Lighting & Power Co. (South Texas Project. Unit Nos. 1 and 2), CLI 13. 5 NRC 1303 (1977).

No further guidelines have been established for enforcing antitrust license conditions. The staff follows the actual wording of the license conditions in enforcing such conditions.

If a license has been obtained on the basis of false information, the staff will take ap3ropriate action to correct the situation: to make restoration (as far as possiale) to those that may have been harmed because of the false information and, when appropriate, to impose civil penalties on the licensee or issue orders to modify, suspend. or revoke the license in question, 4.3 Enf_crcement of Antitrust License Conditions 4.3.1 Section 10 CFR 2,206 Petitions A petition can be submitted in accordance with 10 CFR 2.206. The petitioner must specify the action requested and set forth the facts or conditions that constitute the basis for the request. _ Upon receipt of the petition, the reviewer will coordinate with the Office of the General Counsel in preparing ,

the following within 30 days: 1 (1) a Federal Register notice to be signed by the Director of the Office of Nuclear Reactor Regulation; (2) a written acknowledgrrant to the petitioner, including a copy of the Federal Register notice:

NUREG-1574 4-2

(3) a letter to the licensee or licensees against which the petition is filed. including a copy of the petition and a copy of the federa1 Register notice: and (4) a letter to the Attorney General. Including a copy of the petition and a copy of the federal Register notice.

in addition, the reviewer will begin an investigation of the petition. The licensee may be required to respond to the petition pursuant to 10 CFR 50.54(f) and Section 182 of the Act. In response to the )etitica, the licensee may also voluntarily submit additional information that t1e reviewer should consider.

The Director of the Office of Nuclear Reactor Regulation will inform the peti-tioner within a reasonable time whether the petition is granted or denied.

4.3.2 Compliance Investigations Most com)liance activities center on whether the applicant has refused in some way to slare the output of its nuclear facility and/or to provide certain types of power supply services prescribed by the antitrust license conditions.

A reviewer conducting a Section 2.206 compliance investigation ordinarily uses written questionnaires telephone contacts, and field surveys to determine the following:

(1) which antitrust laws (for Sections 105a or 105b matters) and which anti-trust conditions are involved:

(2) the extent to which the alleged violation depends on the interpretation of the antitrust laws or antitrust license conditions:

(3) the effect of and the reasons for the alleged violation:

(4) whether the alleged violation was willful; and (5) what remedial actions must be taken.

On the basis of the investigation, the staff will recommend (1) that the complaint or allegation has merit, (2) that a Notice of Violation be issued. or (3) that negotiations be pursued. followed by a Notice of Violation if the negotiations are unsuccessful.

4.3.3 Denial of petition If the staff investigation determines that a petition received under 10 CFR 2.206 is without merit, a Director's Decision and federal Register notice to that effect will be prepared and issued by the Director of the Office of Nuclear Reactor Regulation. The Office of the Secretary, the licensee against which the complaint was lodged and the petitioner will be provided a copy of the Director's Decision. The Director's Decision is subject to the Commission's review on its own motion under 10 CFR 2.206(c).

4.3.4 Notice of Violation if the staff investigation determines that a violation has occurred, a Notice of-Violation and a Director's Decision in accordance with 10 CFR 2.201 will be 4-3 NUREG 1574 i

prepared by the reviewer in conjunction with the Office of the General Counsel and issued by the Director of the Office of Nuclear Reactor Regulation. The notice and decision will be sent to the licensee and the petitioner, imposition of civil >enalties may be considered in accordance with 10 CFR 2,205 and Section 234 of tie Act.

The Response The licensee's response to the Notice of Violation determines the course of the subsequent proceedir.gs. If the licensee agrees to take the necessary steps to comply with its license recuirements, the staf f will ensure that the compliance steps are carried out expecitiously. If the licensee does not agree to take the steps the staff considers necessary to resolve the matter. or if the licensee unreasonably delays implementing such actions, the staff may move to issue an Order to modify. suspend, or revoke the license. The staff may also impose civil penalties in accortance with 10 CFR 2.205 and Section 234 of the Act.

4.3.5 Order To Modify. Suspend, or Revoke a License An Order is prepared by the reviewer, in conjunction with the Office of the General Counsel, and issued by the Director of the Office of Nuclear Reactor Regulation in accordance with 10 CFR 2.202. The Order states the following:

(1) the violations with which the licensee is charged or other conditions warranting an Order:

(2) the action proposed by the Order: and (3) the licensee's requirements and procedural rights in responding to the Order.

The Order is published in the Federal Register. and copies are mailed to the licensee and other affected parties.

I The Response If the licensee demands a hearing, the hearing process is initiated.' If the licensee consents to the entry of an Order in substantially the form proposed in the Order. the Order is issued by the Director of the Office of Nuclear Reactor Regulation. If the licensee consents to the Order To Modify a License or does not respond within the time allotted, the license is amended as indicated. Thereafter, the reviewer simply monitors the licensee's compliance with the Order, 4.3.6 Civil Penalties The Director of the Office of Nuclear Reactor Regulation (NRR) can aropose )

imposition of a civil penalty by issuing a Notice of Violation and )roposed i I

3 The hearing could result in a decision by the Atomic Safety and Licensing Board or an Administrative Law Judge to absolve the licensee of j charges or to order the licensee to take the actions prescribed. An Order is i appealable, j

)

NUREG-1574 4-4

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Imposition of Chil Penalty prepared by the reviewer in consultation with the Office of the Ge..eral Counsel, as required by 10 CFR 2.205. The Notice of Vio-lation specifies the date (or dates), and the nature of the alleged act or omission with which the licensee is charged: describes the circumstances:

states the facts: cites the particular provision or provisions of the Act.

license, regulations, or Order allegedly violated; and gives the amount of each penalty the Director of NRR proposes to impose. Within the period prescribed in the notice the licensee may either pay the proposed penalty or answer the notice. If the licensee requests remission or mitigation of the proposed penalty, the staff will consider the reasons proffered and will either withdraw the proposed penalty or issue an Order imposing the civil penalty as originally proposed or in a mitigated amount. If the licensee fails to respond to the notice. the reviewer will prepare and the Director of NRR will issue an Order imposing the civil penalty as proposed. The licensee may pay the penalty or may request a hearing on the Order imposing a civil penalty within the period prescribed in the Order.

If the licensee fails to pay the penalty or demand a hearing within the pre-scribed period, the Commission may refer the matter to the Attorney General for collection. Continuing violations could subject the licensee to further civil penalties or to other sanctions, such as suspension or revocation of its license.

I 4-5 NUREG 1574

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