ML20199D635
| ML20199D635 | |
| Person / Time | |
|---|---|
| Site: | Palisades  |
| Issue date: | 09/21/1990 |
| From: | Jablon R, Trauger T MICHIGAN PUBLIC POWER AGENCY, SPIEGEL & MCDIARMID |
| To: | Holihan B NRC (Affiliation Not Assigned) |
| References | |
| A, NUDOCS 9801300252 | |
| Download: ML20199D635 (5) | |
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Mr. Brian llolihan J)ELIVERED BY HAND Project Directorate 1111 Division of Reactor Projects -
111, IV, V & Special Projects Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Re: Palisades Plant:
W-MS Transfer of Palisades Plant Ownershin Dear Mr. Holiham This letter is written in response to your letter of August 22,1990, on behalf of the Michigan Municipal / Cooperative Group ("MMCG"). The MMCG consists of the Michigan Municipal Electnc Association, for itself and its members, the Michigan Public Power Agency, for itself and its members, the Michigan South Central Power Agency, for itself and its members, the Wolverine Power Supply Cooperative, Inc., the City of Bay City, the City of Charlevoix, the Village of Chelsea, the City of Eaton Rapids, Grand Haven Board of Ught and Power, the City of Harbor Springs, the City of Hart, Holland Board of Public Works, the Lansing Board of Water and Ught, the City of 1.nwell, the City of Petoskey, the City of Portland, the City of St. Louis, Traverse City Board of Ught and Power, and the City of Zeeland. The group represents approximately one million ratepayers, who have an interest in /
economic and competitive power supply.
g Consumers Power Company (" Consumers Power") submitted a Ucense Change Request to the Nuclear Regulatory Commission in connection with its proposed transfer of og1 the Palisades Plant to the Palisades Generating Company (" Palisades Genco"), a newly.
created corporation over which Consumers Power is to exercise considerable control.
- Becausc the Michigan Municipal / Cooperative Group was concerned about the potential anticompetitive consequences of transactions underlying the license transfer applica' ion,it requested that the Commission initiate an antitrust review of the application by a letter to Joseph Rutberg, Esq., Deputy Assistant General Counsel to the Commission, dated September 27,1989. In a letter dated August 22,1990, you denied this request.
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A r$.il inn liohan Euclear Re latory Commission tepber 21,1g0 We request that you reconsider your refusal to establish an antitrust review in connection with the 1.jcense Transfer Application. Alternatively, we ask that you notice our request formally in the Federal Register to permit comments upon, and the formal consideration of, such review.
In your letter of August 22nd, you based your denial of the MMCG's request for an antitrust review on two factor!.. First,you stated that the license transfer was exempt from antitrust review because it was initially issued under Section 104b of the Atomic Energy Act, as amended ("Act"),42 U.S.C. 5 2134, and Congress intended such licenses to be exempt from the antitrust review contemplated for licenses issued under Section 103,42 U.S.C.
5 2133. Second, you indicated that changes in the facility were insufficient to necessitate a determination that relicensing was required it was not disputed that if a new license were issued today, an antitrust review would be required.
Section 104 of the Act is entitled " Medical Therapy and Research and Development."
Congress exempted operations licensed under Section 1N from the antitrust provisions applied to regulate operations licensed under Section 103, entitled " Commercial Licenses,"
because it wished to promote developments in medical science and encourage industrial research. For historical reasons, a number of commercial nuclear plants were licensed under Section 1M prior to the December 17,1970 amendments to the Act. See Joint Committee on Atomic Energy," Amending the Atomic Energy Act of 1954, as Amended, to Eliminate the Requirement for a Finding of Practical Value, to Provide for Prelicensing Antitrust Review of Production and Utilization Facilities, and to Effectuate Certain Other Purposes Pertaining to Nuclear Facilities," U.S. Congress Senate Report No. 91 1247,91st Congress,2nd Session.
pp.3-4. In order to minimize disruption to licensed entitles, Congress " grandfathered" the status of commerciallicensees already issued licenses pursuant to Section 104. Thus, as long as Consumers Power continued to hold the license for the Palisades plant without significantly altering the facility, it was exempt from antitrust review. Yet the license attaches to the licensee, not to the facility. Consumers Power was exempt from antitrust review while it held a license to operate the Palisades plant, but there is no basis to state that it can transfer its grandfathered exemption wherever it will, regardless of changes in the licensee and plant status. If that were ?crmitted, a new licensee could engage in new anticompetitive abuse under an asserted granofathering of a different license. Palisades Genco is not entitled to any "grandfathering." NRC licenses cannot be freely transferred without restraint.
Congress did not intend to create an opportunity for licensees to permanently circumvent antitrust review. The drafters of the 1970 amendments provided strong antitrust protection, while protecting utility companies from excessive disruption by limiting the occasions for their antitrust review,"provided that no important changes have been made in their plans...." Comments of Senator Aiken, Prelicensing Antitrust Review of Nuclear Power Plants: Hearings before the Joint Committee on Att tic Enerev,91st Congress,1st
&2nd Sessions, p. 319 (1969 70). A change in circumstances as significant as a change in ownership would trigger an opportunity for review.
Since a license is granted to the licensee, rather than the facility, the transfer of a license issued pursuant to Section INb must be treated as an application for a new licence
lanllofhan
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tepber 21,1 under Section 103. That this is in accordance with the regulatory scheme contemplated by
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i the Act is illustrated by the fact that an application for a transfer of a license must include the same information as an application for a new one.10 C.F.R. 5 80(b).Thus the same standard of review with respect to the ap)licant's financial, technical and safety related qualifications is imposed on an application for t ie transfer of a license as is applied in assessing a new license application. If 'he license appertained to a facility rather trian the license holder, there would hardly be a need for a review which focuses on the characteristics and qualifications of a licenscholder. The treatment of a license transfer as an application for a new license is common to regulatory schemes analmous to the embodies in the Atomic Energy Act. See, e.g., Section 310(b) of the Federal Communications Act,37 U.S.C. 5 310(b).
Section 184 of the Act,42 U.S.C 5 2234, prohibits the transfer of a license "unless the Commission shall, after securing full information, find that the transfer will be in accordance with the provisions of this chapter," including all antitrust provisions of the Act. Even if the transfer is deemed exempt for the antitrust provisions of Section 105 of the Act,42 U.S.C.
5 2135, due to "gracdfathering" under Section 104b, the transfer must be found to be in accord with the first principals of the Act. Section 1 of the Act,42 U.S.C.5 2011, requires that "the development, use and control of atomic energy shall be directed so as to...
strengthen free competition in private enterprise." In compliance with Section 184, the Commission L s a duty to determine whether the license transfer in question accords with the requirement that free competition be strengthened before approving the transfer.
1 In an additional avenue of review, a new license must be issued, with attendant antitrust review pursuant to Section 105, when substantial changes are deemed to have occurred.10 C.F.R. 50.91. It is manifest that, since Palisades was licensed, there have been very substantial changes to the unit. For example, as the Commission is aware, there l' ave been major changes in engineering, in investment, and in operations, so that the unit, as it will be operated by Palisades Genco, is no longer the same as the facility which was initially licensed. Changes to the facility include:
1.
the installation of safety parameter display systems 2.
the addition of a technical support center and emergency operating facility 3.
the addition of added vents to the reactor coolant system 4.
the addition of r pump and related sub system to the emergency feedwater system 5.
major changes to post accident sampling and monitor systems 6.
the addition of plant specific training simulator facility 7.
the addition of an oil collecting system for the main reactor cooling pump; 8.
the addition of alternate scram systems
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- e atory Commission falc 4 9.
the addition of diverse trip of turbine and diverse starting of emergency feedwater system -
7 foi the installation of costly security barriers, portals, and computerized access control system 11.
the replacement of spent fuel racks with new racks of a different design to accommodate several times the amount of spent fuel originally intended 12.
the installation or major revision of heat disposal / condenser cooling in the Palisades cooling tower in light of the broad scope of these alterations to the Palisades facility, MMCG request that you Commission to reconsider the necessity of considering antitrust issues. In the context of environmental review req uirements, less extensive modifications have recently been held to trigger review by the Env ronmental Protection Agency. Wisconsin Electric Power Company
- v. William Reilly,1990 U.S. App. Lexis 677 (7th Cir).
The mtential anticompetitive consequences of the transactions underlying the requested icense transfer are cause for great concern. The circumvention of antitrust
. regulation would be inappropriate under such circumstances. According to the License Change Request (at 5), the Asset Purchase Agreement between Consumers Power and Palisades Genco allocates 4/9_ of Genco's stock to Consumers Power,3/9 to Bechtel Power Corporation, and 2/9 to unidentified third party investors. Although Consumers Power is described as the largest shareholder, counsel for Consumers Power stated before the Federal Energy Regulatory Commission that Consumers Power would not have a controlling interest in Palisades Genco "under any test that [he is] aware of, legal or otherwise." Transcript of proceedings, Palisades Generating Co;, FERC Docket No. ER89 256-000, Vol. : (August 14,.-
1989), p. 94. From an operations standpoint, this claim seems questionable, but the transfer of ownership appears designed to free Consumers Power from regulatory controls and impels investigation by this Commission. The potential impact of the license transfer is considerable, ne change in ownership will permit Consumers Power and its parent, CMS Energy, to take approximately $500,000,000 from the project, as it may unfold. See Palisades Genco filing of Amendment No.1 to Power Purchase Agreement, Palisades Generating Company, FERC Docket No. ER90-333-000, filed April 23,1990, prepared testimony of Eric Parker, pp. 5-6. The ramifications of the lack of arm's length deahng which underlies the arrangements at issue require that the Commission conduct an antitrust review of the license transfer.
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uh r e ufatoryCommission The MMCG requests, for the reasons described, that you reconsider your decision and grant an antitrust review at this time. If such review is not now granted, MMCG request that proceedings be held to determine the whether antitrust review is appropriate, and notice be placed in the Federal Register of such proceedings.
Respectfully submitted, WW k Robert A.Ja lon Y=l y~
n.'
Thomas C. Trauger Attorneys for Michigan Municipal / Cooperative Group
- Enes, Mr. Samuel Chilk, Secretary, Nuclear Regulatory Commission cc:
Wayne A. Kirkby, Esq., Counsel for Consumers Power Company William M. lange, Esq., Counsel for Consumers Power Company John T. Stough, Jr., Esq., Counsel for Palisades Generating Company M. I. Miller, Esq., Sidley & Austin Mr. Thomas A. McNish, Secretary, Consumers Power Company Judd L Bacon, Esq., Consumers Power Company Regional Administrator, Region III, U.S. Nuclear Regulatory Commission Jerry Sarno, Township Supervisor, Covert Township, Michigan Office of the Governor,I.ansing Michigan Mr. David J. Vandewalle, Director, Safety and Ucensing, Pr.lisades Plant Resident Inspector, Palisades Plant Nuclear Facilities and Environmental Monitormg, Lansing, Michigan Gerald Charnoff, P.C., Shaw, Pittman, Potts & Trowbridge Mr. David L Brannen, Vice President, Palisades Generating Plant Mr. Joseph Rutberg, Esq., Deputy Assistant General Counsel to the Commission
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