ML20199B369

Notice of Violation of Antitrust License Condition 2,by Setting Unreasonable Terms & Conditions for Sale of Facility,Per Alabama Electric Cooperative,Inc 840629 Petition

ML20199B369
Person / Time
Site:	Farley
Issue date:	06/16/1986
From:	Harold Denton Office of Nuclear Reactor Regulation
To:
Shared Package
ML20199B352	List: ML20199B369
References
2.206, A, DD-86-07, DD-86-7, NUDOCS 8606170123
Download: ML20199B369 (18)

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ALADAMA POWER COf.1PANY ) Docket Nos. 50-348A

                                            )                   50-364A (Joseph f.l. Farley Nuclear            )

Plant, Units 1 and 2) ) NOTICE OF VIOLATION I. INTRODUCTION On June 29, 1984, the Alabama Electric Cooperative, Inc., (AEC) petitioned the Nuclear Regulatory Commission (NRC) pursuant to 10 C.F.R. $ 2.206 to enforce Antitrust License Condition No. 2 which is now incorporated in the Joseph M. Farley Nuclear Plant Units 1 and 2 (Farley) licenses. Alabama Power Company (APCo) responded to the petition on October 15, 1984. After reviewing the information submitted by the parties, the NRC staff had several meetings with all the parties, both separately and jointly, in an effort to resolve the issues. There was also one meeting with representatives of the Federal Energy Regula-l tory Commission to obtain information regarding the regulatory treatment of " Allowance for Funds Used During Construction ( AFUDC)." While the meetings were most helpful in understanding the positions of all the par-ties and in narrowing the issues, the parties have now advised the NRC staff that they were unable to reach a settlement of all the issues. Up-on review by the NRC staff of the information furnished by the parties, I have determined that the Alabama Power Company has violated its k b M

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_g_ Antitrust License Condition Number 2 in the manner set forth in this Notice of Violation. II. VIOLATION OF ANTITRUST LICENSE CONDITION NO. 2 Antitrust License Condition No. 2 states as follows:

2. Licensee shall offer to sell to AEC an undivided ownership interest in Units 1 and 2 of the Farley Nuclear Plant. The percentage of ownership interest to be so offered shall be an amount based on the relative sizes of the respective peak loads of AEC and the Licensee (excluding from the Licensee's peak load that amount imposed by members of AEC upon the electric system of the Licensee) occurring in 1976. The price to be paid by AEC for its proportionate share of Units 1 and 2, determined in accordance with the foregoing formula, will be established by the parties through good faith negotiations.

The price shell,be sufficient to fairly reimburse Licensee for the proportionete share of its total costs related to the Units 1 and 2 including, but not limited to, all costs of construc-tion, installation, ownership and licensing, as of a date, to be agreed to by the two parties, which fairly accommodates both their respective interests. The offer by Licensee to sell an undivided ownership interest in Units 1 and 2 may be con-ditioned, at Licensee's option, on the agreement by AEC to waive any right of partition of the Farley plant and to avoid interference in the day-to-day operation of the plant. NEC's petition alleges fourteen instances by which APCo's proposal for the sale of a portion of the Farley Units is in violation of its license conditions. The first seven amount to allegations that APCo is attempt-ing to extract " windfall" profits from the sale of the plant. The remain-ing allegations concern other terms and conditions requested by APCo. The allegations are:

1. Attempting to charge AEC partially on the basis of re-placement value of the Plant (i.e. , charging AEC appre-clation on a Plant which was depreciating during the period during which APCo has unlawfully denied AEC ownership access);

2. Attempting to charge a fictitious " incremental gross AFUDC" ($393 million for the Plant) which denies AEC

c_ its own cost-of-money benelits, which violates the Uni-form System of Accounts, and which would profit APCo for APCo's continued refusal to grant ownership access for a decade and a half;

3. Attempting to charge an incremental $70 million for the Plant for " ownership risk" on the irrelevant claim that utilities building nuclear plants today have higher equity costs than existed at the time the Farley Units were built;

4. Attempting to include an income tax factor of $246 million for the Plant (based in large part on the profit APCo seeks to make from AEC) without showing or even claim-ing that APCo will actually suffer any income tax pay-ment because of the sale, and without recognition that if any adverse income tax effect were to result, it would be solely the result of APCo's management's deliberate decision to unlawfully withhold ownership access from AEC and therefore must be borne by APCo stockholders;

5. Attempts to collect an " entitlement fee" ($170 million above Plant cost) as an arbitrary profit, contrary to the license conditions;

6. Attempts to receive $114 million per Plant for " adverse financial consequences" to compensate for alleged de-pressed Southern Company stock prices (without regard to whether these so-called " adverse financial consequenc-

           '    es" were attributable to the financial community's nega-tive opinion as to APCo's management, or a variety of other possible causes); and

, 7. Attempts to receive substantial profits from AEC over l and above APCo's actual costs from the sale of nuclear fuel rights, and for the operation of the facility.

8. APCo's insistence that the Rural Electrification Aaminis-tration " guarantee" AEC's performance for the life of the agreement. APCo continues to insist on this even though it has been informed that REA could not agree to such a condition. Nor has APCo indicated any basis upon which one might conclude that REA has the statutory authority to take such a position. Indeed, it must have been ap-parent to APCo from the beginning that there was not the slightest possibility that REA would ever issue such a guaranty. Accordingly, it would be difficult to avoid the conclusion that the proposal was advanced not in good faith but for the purpose of forestalling a contrac-tual arrangement of the type required by the license.

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9. Though APCo insists that AEC pay in advance for all capital and operating costs (even prior to the determi-nation of the dollar value of those costs), APCo also demands a second mortgage un AEC's entire electric sys-tem while at the same time APCo refuses to make even the barest commitment to operate the Farley Plant in a reasonable manner.

10. Not only has APCo refused to agree in any way to assist in the gaining of necessary regulatory approvals for AEC's acquisition of its ownership share, but APCo has informed AEC that APCo fully reserves the right to raise objections thereto.

11. APCo refused to accept any responsibility to AEC for any gross negligence or reckless misconduct by APCo in the operation of the Plant. At the same time, APCo in-sists that AEC share payment of any fines or penalties incurred by APCo as sole operator of the facility even to the extent that the APCo conduct resulting in such pen-alties occurred prior to the time when AEC takes title to AEC's share of the Units.

12. APCo insists that AEC is fully liable for any " incremental costs" (whatever that may mean) of AEC's joint owner-ship, and APCo attempts to reserve the right to define solely in its own discretion what such an " incremental cost" is.

13. A review of APCo's proposed agreements will demonstrate a number of other plainly unreasonable terms and condi-tions. However, the above examples are sufficient to establish that APCo has not been and is not pursuing compliance with its NRC license obligations in good faith, and that enforcement action by the Commission is promptly required to cure APCo's contemptuous refusal to meet its obligations as an NRC licensee.

14. APCo has also proposed a percentage ownership for AEC which is contrary to the formula developed in ALAB-646 (see 13 NRC at 1107-1108) and which attempts to deprive AEC of AEC's fair share of the Farley Units.

Based upon a review of the above, the NRC staff, has determined that APCo has violated antitrust License Condition No. 2, by setting i unreasonable terms and conditions for the sale of l'arley as set forth in allegations 1 through 9, 12 and 13. As described in the Director's _y 7 ,_ . _ . . . . , ,

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                                        -s-Decision under 10 C.F.R. 5 2.706 issued on this date, Staff believes the materials submitted by AEC are insufficient to establish that allegation 10 has occurred or that allegations 11 or 14 concern conduct so unreason-able as to araount to a violation of License Condition No. 2.

The Staff is aware that the conduct charged in a number of AEC's allegations , which the Staff believes to be unreasonable t.nd which form the basis for its determination that a violation of License Condition 2 has occurred, may have been modified by APCo in orcer to resolve this raat-ter . However, because a total resolution has not been obtained, APCo has reserved the right to maintain its original position on the appropri-ate cost of the Farley Plant. To the extent that it maintains its original pcsition, the Staff would continue to believe that a violation of its Li-conse Condition 2 has occurred. In view thereof, the NRC staff has concluded that APCo has violated and continues to violate antitrust Li-cense Condition No. 2 as described below. The numbers correspond to the numbered allegations of AEC set forth above. (1) AI C alleges 1/ and documentation by APCo 2/ supports the allegation that APCo is attempting to charge AEC partially on the basis

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June 29, 1984, letter with attaclinents fran Garles R. Lownan, Gen-eral Manager of Alabama Electric Cooperative, Inc. to ltichard C. DeYoung, Director, Of fice of Inspection and Enforcement , U.S. Nucle-ar Regulatory Conmission. Hereaf ter, "Lownan Letter".

   -2/   April 29, 1983, letter with attaclunents from H. Allen Franklin, Senior Vice President, Alabama Power Conpany to Garles R. Imman, General Manager of Alabana Electric Cooperative, Inc. Hereafter,
         " Franklin Istter." Also, April 11, 1984, letter with attactinents fran P.obert A. Buettner, of Balch, Bingham, Balker, Ward, Smith, Downan a 'Ihagard, Attorneys and Counselors, to Garles R. Imman.

Hereafter " buettner Letter."

3,/ Staff believes that the word of replacement value of the Plant.

 " reimburse" as used in the license condition clearly rules out any hypo-thetically deriveo replacement cost.      To be reimbursed, APCo's records must show that such costs were actually incurred for Units 1 and 2 and not for some hypothetical yet-to-be-built plaat.       The Uniform System of Accounts of the Federal Energy Regulatory Commissior (FERC) provides for all plant related direct and overhead costs including contract wurk, labor, materials and supplies , permits , engineering and supervision, general administration, insurance , materials , law expenditures, tanes, allowance for funds used during construction, and overheads.            These are the costs that go into APCo's rate base, and upon which regulatory commissions set rates to " reimburse" APCo for costs related to the con-struction and financing of the plant.      APCo has the burden of justifying the appropriateness of any capital-related costs, as contrasted to operat-ing costs, not included in the rate base.

('2) AEC alleges and documentation from APCo -4/ supports the allegation that APCo is attempting to charge AEC an improper amount for the allowance for funds used during construction (AFUDC). -S/ The Uniform System of Accounts provides for AFUDC. These funds are capi-talized and become part of the book costs of the facility and are included 3,/ Imman Letter, p. 6; Franklin Letter, p.1 of Exhibit I. 4_/ June 10, 1983, letter with attachnents fran Jesse S. Vogtle, Execu-tive Vice President of Alabama Power Capany to Charles R. Imman. Hereafter, "Vogtle Letter." 5/ Lownan Le t ter, p. 6 : Vogtle Letter, Data Request Itsrn 6.

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in the rate base. Depreciation of, and return on, the rate base reim-burses APCo for its construction related costs. The Uniform System of Accounts states: Allowance for funds used during construction includes the cost for the period of contruction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used. 18 C. F. R . 101, April 1, 1984, at 312. APCO appears to be taking the position that the AFUDC account understates the financial costs related to the construction of the Farley plant because the AFUDC account is based on system average financing and average financing costs over time. In supporting its claim, APCo has improperly computed the incremental cost related to financing the nuclear plant by using incremental costs of financing AFUDC rather than the embedded rate for debt and preferred stock during the period of construction and by assuming for equity financing that the Farley plant was perceived by investors as being more risky than APCo as a whole. In St, aft's opinion, the word " reimburse" as used in the license condi-tions does not provide for such hypothetical costs. (3) AEC alleges and documentation provided by APCo supports the allegation that APCo is attempting to charge AEC an improper cost re-ferred to as " owr.ership risk" because electric utilities building nuclear plants incur significant risks. 6_/ APCo states that the costs are based on financial judgment. As discussed previously the word " reimburse" as used in the license condition does not provide for such judgmental costs. 6/ Lovman Letter, p. 6; Vogtle Letter, Data Request Itan 6.

   -                                                           (4) AEC alleges and documentation from APCo supports the allega-tion that APCo is attempting to charge AEC an unreasonable income tax factor on the plant. 7/         The Uniform System of Accounts provides for taxes :

Taxes includes taxes on physical property (including land) during the period of construction and other taxes properly - includable in construction costs before the facilities become available for service. 18 C.F.It. 101, April 1, 1981 at 312. The NRC staff believes the same factors apply here as for AFUDC regarding APCo's burden to explain any errors or omissions in the tax account and to include only actual costs. 8/ APCo's hypothetical taxes, based on hypothetical ownership risks, resulting in devalued stock are not actual costs. (5) AEC alleges and documentation from APCo supports the allega-tion that APCo is attempting to charge AEC an " entitlement fee." The Uniform System of Accounts, upon which the Staff relies for its interpretation as to what should be included in costs, provides for all construction related costs, including labor, materials and supplies, engi-neering and supervision, general administration, and overheads. The Staff believes that the license condition provides for the reimbursement 7_/ Lownan Letter p. 7; Franklin Letter p. 2 of Exhibit I; Vogtle Let-ter , Da ta Reques t I tan 6. 8_/ At the time of the sale of the share of the plant to Arf, incane taxes assessed on AEC's share of the AFUDC not previously charged to the plant would prestznably be chargeable to AEC, provided AFC is credited with any deferred taxes or investment tax credits realized by APCo on AEC's pro rate share. 9/ Lownan Letter p. 7; Franklin Letter p. 2 of Exhibit 1; Vogtle Lot-ter, Data Request Itan 6.

of these costs but does not include an entitlement fee. The license con-dition does not provide for arbitrarily selected percentage fees or hypo-thetical estimates of the worth of facilitics not includable under the accounts. (G) AEC alleges and dacumentation from ACPo supports AEC's alle-gation that APCo is attempting to charge AEC for " adverse financial con-sequences" to APCo as reflected by its depressed stock values. E This is another hypothetically derived cost based on the relative value of APCo's common stock during the construction period. These values reflect investor perception of the profitability of investing in the APCo system , not in the Farley plant. They are improper costs based on an equity return which APCo deems would have been forthcoming had not its stock value depreciated. There is no basis for APCo assessing its depreciating stock value against the Farley units. (7) AEC alleges and documentation from APCo supports AEC's alle-gation that APCo is attempting to receive substantial profits from AEC over and above APCo's actual costs for nuclear fuel, and for the opera-tion of the facility. S APCo is attempting to assess costs for AFUDC, ownership risk, and income taxes against AEC for nuclear fuel above _10 / Imman Letter p. 7; Franklin Letter p. 2 of Exhibit 1; Vogtle Let-ter, Data Request Itan 6.

   -11/ Iownan Letter, p. 7; Franklin Letter, p. 6 and p. 3 of Exhibit I; June 1,1984, Letter with proposed operating agreement, from Robert A. Buettner to Garles R. Lownan, p.10 of proposed operating agreement.

recorded values. These charges are not appropriate for the same reason as discussed above for items (2), (3), and (4) respectively. APCo is also attempting to assess a 10% charge against AEC above its pro rata share of operating and maintenance costs and a 10% sur-charge on new investments, allegedly for cost not susceptable to precise quantification. In addition, APCo is proposing to charge AEC a 10% sur-charge on the fuel costs for AEC's pro rata share of the plant. These surcharges are not in conformance with the license condition which provides for reimbursement of actual costs. The parties could mutually agree on a surcharge in lieu of itemizing specified types of incidental costs, but in the absence of such agreement the surcharge is inappropriate. (8) AEC alleges b hatt APCo has insisted on contract terms that are unreasonable and confirm APCo's bad faith and refusal to comply with its license condition. The NRC staff believes in general that the contr et terms must be considered in their entirety and not individually in assessing their reasonableness. However, individual provisions of APCo's proposal were considered in order to determine whether a partic-ular provision was so unreasonable as to make agreement unlikely and thus tantamount to a refusal to comply with License Condition No. 2. These provisions are discussed below as items 8, 9,12 and 13. 12/ Imman Letter, at 9.

AEC also alleges b and documentation from APCo supports AEC's allegation that APCo has conditioned the sale on a guarantee which is unacceptable to the REA. The condition is as follows:

            " PIA shall guarantee the contingent liabilities of AEC asso-ciated with its ownership interest in the nuclear plant and its responsibility for pa       r/t of costs and expenses under the operating agreenent."

Although subsequent correspondence from APCo to the NRC staff seems to indicate that it no longer insists on a guarantee from the REA, APCo would still require a guarantee from the AEC member cooperatives as protection in the event said members choose not to provide the funds necessary for AEC to meet its financial obligations to APCo as an owner of the Farley Plant. Until the specific proposal by which APCo wishes to be guaranteed payment for expenses incurred by AEC is determined, the Staff believes that the REA guarantee demand is so unreasonable as to be a denial of access as required by License Condition No. 2. In addition the NRC staff notes the following conditions appear to be unacceptable to REA and thus are also considered as unreasonable:

            " Fee title only to land constituting the Security Protected Area         the nuclear plant site will be included in the sale.gj "All facilities shall be sold by quit claim deed.16/

13/ Id. 14/ Franklin Letter, at 11. 15/ Id. at 3. 16/ Id.

   .                                                          "AEC    will  :  j be    granted             title to the         fuel   or  its ingredients."

AEC states that the above conditions are unacceptable to REA. Because there is no agreement, REA has not been presented with the question as to whether it will approve any of these proposals. However, the Staff has observed that such terms as described above are not gen-erally found in other nuclear plant ownership agreements. Although other plant agreements were entered into under different circumstances and may not be directly applicable to Farley, they do provide guidance as to the reasonableness of certain types of provisions. It is the opin-ion of the Staff that if APCo continues to insist on contract terms that are ultimately not acceptable to REA this would be tantamount to a re-fusal to allow ownership access by AEC in the Farley Plant and a viola-tion of APCo's license condition. (9) This allegation is discussed subsequently along with allegation N o . 1*s. (12) AEC alleges 18/ and documentation from APCo supports AEC's allegation that APCo insists that AEC is fully liable for any incremental 4 costs of AEC's joint ownership. APCo has stated that the sale is predi-cated on the following: i AEC shall agree to accept the terms and conditions of, and I agree to be bound by, all contracts which have been entered into or will be entered into by APCo or others on APCo's behalf in connnection with the construction , operation and maintenance of the facilities or purchase of nuclear fuel or contract relating to any step in the nuclear fuel cycle. In 17/ Franklin Letter, at 6. 18/ Imman Let ter, p.10. l

( - , the event APCo incurs any incremental costs under suen con-tracts because of the sale of the interest in the nuclear plant to AEC, AEC all bear total responsibility for such incre-mental costs. AEC shall be responsible for the total costs of any require-ments for changes or alterations of the plant, APCo's accounting system or any other aspect of APCo's operation which result from AEC's acquisition of any ownership inter-est, such as, the gt of complying with requirements of REA as lender to AEC. AEC shall indemnify APCo against the adverse impacts on APCo arising from tax legislation, or interpretation of tax laws, which impact would arise because of the joint ownersidp arrangement , i.e. , as a resy t of either the sales agreement or the operating agreement. -{y AEC shall be responsible for the total cost of all incremental operating, maintenance, capital improvements or nuclear fuel acquisition activities which result from AEC's ownership inter-est and which would not h been incurred except for AEC's acquisition of an interest. The license condition states that AEC shall reimburse APCo for AEC's proportionate share of the costs. Charges against AEC for total costs are contrary to the lic(nse condition. An ownership interest in the plant implies a sharing of costs among the owners. Under that con-cept, AEC would be paying for some of the costs resulting from APCo's ownership and APCo would be paying some of the costs resulting from AEC's ownership. However, the license condition also states that the price shall be sufficient to fairly reimburse Licensee for the proportion-19/ Franklin Letter, p. 4. 20/ Id. M / Franklin Letter, p. 5. 22/ Id. at 7.

. ute share of the total costs. Where costs are related specifically to one of the owners, and not to construction or operation of the Farley plant, the proportionate share of the total costs could be interpreted to mean in proportion to the costs incurred by the individual owners. Staff would support this concept where it can be established that the costs are not plant related. The NRC staff also recognizes that certain income taxes may be charged on AEC's proportionate share of the plant at the time of the sale, whereas the corresponding income taxes on APCo's proportion-ate share may be cliarged over the life of the plant. Such timing differ-ences of the proportionate sharing of costs may be in order so long as the proportionate sharing concept is adhered to. (9) AEC alleges 23/ and documentation from APCo supports AEC's allegation that APCo has unreasonably conditioned the sale on a second mortgage of AEC's entire electric system: The condition is as follows:

       "AEC's  obligations second mortgage   onunder AEC'sthe  agreemg shall be secured by a system."

Although subsequent correspondence from APCo seems to indicate that it no longer insists on a second mortgage on AEC's system, it still would require a guarantee from AEC's member cooperatives as protection in the event said members choose not to provide the funda necessary for AEC to meet its financial obligations to APCo. Until it is determined how APCo wishes to have the guarantee provided, the Staff believes that APCo's pending proposal is unreasonable. See also U ) above. 23/ Lownan Letter, at 10. 24/ Franklin letter, at 11. m -p ,n .- v - -

g , (13) AEC alleges - that APCo's proposed agreement is predicated

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on the following remedies for default, which are to be cumulative and not exclusive of other remedies which may be provided by law and, thus, also unreasonabic. b . (1) In any event of default by AEC, it shall be denied its pro rata share of capacity and energy from the plant during continuation ~ of default. APCo shill have Ute right to sell or use energy from AEC's portion of the plant. AEC would buy replacement capacity and energy at APCO's incremental costs or obtain it from other sourCOs. (2) AEC would be obligated to pay interest on any monetary amount in default until the default is cured. (3) AEC shall pay all incremental costs attributabic. -to its default , such as, APCo's replacement power costs result-ing from delay. (4) If a default is not cured within 90 days, APCo would have option to purchase AEC's interest in the plant at AEC's cost less depreciation, less additional costs associ-ated with AEC's default and less costs associated with transfer and any amounts owed by AEC to APCo. For defaults of the character described in Paragraph B.3 (a)

            <   (10) above, no period of cure shall be allowed.

(5) In addition to, or in lieu of, right to purchase, APCo would have the right to collect amounts owed, in the past or in the future, by AEC under the Agreement from distribution cooperative members of AEC. Such entities shall enter into contracts which obligate these entities to assume liability for such amount on a joint and several basis. (6) REA shall guarantee the contingent liabilities of AEC associated with its ownership interest in the nuclear plant and its responsibility for payment of costs and expenses under the Operating Agreement. 2_5 / Lownan Letter, at 10. 26/ Franklin Letter, at 10 and 11.

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l , i (7) AEC's obligations under the Agreement shall be secured by a second mortgage on AEC's system. The NRC staff believes that this list of remedies for default taken as a whole is excessive and unreasonable and is tantamount to a refusal to offer AEC a reasonable ownership share in Farley and thereby a vio-lation of the license condition. This belief is strengthened by the provi-sions in APCo's proposed purchase and ownership agreements. b After only a 10 day late payment by AEC, these proposed remedies would give APCo the choice of withholding and using AEC's energy entitlements or of adjusting AEC's ownership percentage. Further, such ownership ad-justment would be based on costing principles which conflict with the principles proposed by APCo upon which AEC would initially obtain its ownership rights. In addition, if AEC's late payments exceed 45 days, APCo has the option to acquire all of AEC's ownership rights, based on costing princi-ples which conflict with the principles proposed by APCo for AEC to acquire its initial ownership rights. AEC could not prevent this from happening by curing its default. Under normal circumstances, the worth of AEC's energy entitlement will exceed the associated costs of producing such energy, and APCo can recover any payments due by simply withholding the corresponding amount of energy. Under such circumstances, APCo should not have the option of reaquiring AEC's ownership rights and thus defeating the li-

      -27/ April 11, 1984, letter with attachnent fran Robert A. Buettner to Garles R. Lownan, pp. 59-67 of attachnent.

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e - _ 17 _ cense condition. In the event of special circumstances whereby APCo could not recover payments due it by withholding energy, downward adjustment of AEC's ownership entitlements should not be irrevocable. That is, AEC should be allowed to reobtain its initial ownership rights if it corrects the default, including paying any additional costs incurred by APCo as a result of the default. In any event, guarantees by the REA, AEC's members, or by sec-ond mortgages on AEC's system are not in order. Other ownership agreements which the NRC staff has reviewed do not contain these re-quirements. The nuclear property insurance, liability insurance, work-man's compensation insurance and other insurance and decommissioning funds, all of which AEC must carry its pro rata share, provide for those events not covered by the value of the Farley Plant. Pursuant to the provisions of 10 C.F.R. 6 2.201 of the NRC's Rules of Practice, the Alabama Power Company is hereby required to submit to this office, within thirty (30) days of their receipt of this Notice, a written statement or explanation in reply, including for each violation: (1) admission or denial of the alleged violation; (2) the reason for the violation , if admitted; (3) the corrective actions which have been taken nnd the results achieved; (4) the corrective steps which will be taken to avoid further violations; and (5) the date when full compliance will be achieved. Consideration may be given to extending the response time for good cause shown. Under the authority of Section 182 of the Atomic

Energy Act of 1954, as amended, 42 U.S.C. 2232, the response shall be submitted under oath or affirmation. If an adequate reply is not submitted within the time permitted to answer this Notice, the Director of Nuclear Reactor Regulation may issue an order to show cause why the licenses should not be modified, sus-pended, or revoked, or take such other action as may be appropriate. FOR TliE N UCLEAR REGULATORY COMMISSION f .k Harold R. lienton, Director Office of Nuclear Reactor Regulation Dated at Bethesda, Maryland, this /dpf( day of 7dne ,1986

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