ML20202E327

Informs Commission of Status of Std Review Plan Development for Antitrust & Financial Issues

ML20202E327
Person / Time
Issue date:	10/03/1997
From:	Callan L NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
To:
References
SECY-96-148-C, SECY-96-202-C, SECY-97-227, SECY-97-227-01, SECY-97-227-1, SECY-97-227-R, NUDOCS 9712050319
Download: ML20202E327 (30)

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POLICY ISSUE October 3. 1997 (Notation Vote)

SECY-97-227 Es:

The Commissioners 8 06:

L. Joseph Callan Executive Director for Operations

SUBJECT:

STATUS OF STAFF ACTIONS ON-STANDARD REVIEW PLANS FOR ANTITRUST REVIEWS AND FINANCIAL QUALIFICATIONS AND DECOMMISSIONING-FUNDING-ASSURANCE REVIEWS PURPOSE:

To inform the Commission of the status of standard review plan (SRP) development for antitrust and financial issues.

BACKGROUND:

In SECY-96-148. " Draft Policy dtatement on Restructuring and Economic Deregulation of the Electric Utility Industry," the staff described a broad plan to address issues relating to industry restructuring and deregulation.

As part of these actions, the staff developed standard review plans addressing (1) antitrust reviews and (2) financial qualifications and decommissioning funding assurance reviews.

In a staff requirements memorandum (SRM) the Commission requested that the staff submit a copy of each SRP to the Commission for review before releasing it to the public for comment.

Consistent with the Commission's request, draft SRPs were forwarded to the Commission in SECY-96 202 and the staff was authorized to release them for public comment by an SRM dated November 19, 1996.

A notice of availability 07 the NRC's draft SRP for antitrust reviews (NUREG-1574) was published for public comment in the Federal Reg hter on December 27, 1996 (61 FR 68309)...The purpose of the draft SRP was to give the public an opportunity to comment on current staff practice in reviewing the competitive implications of construction permit. operating license, and transfer applications, and enforcing antitrust license conditions.

The staff has considered the public comments in deciding whether to modify the draft SRP before issuing it in final form.

Contacts:

NOTE:

TO BE MADE PUBLICLY AVAILABLE WHEN David B. Matthews, NRR THE FINAL sRM is MADE AVAILABLE (301) 415-1163 Michael J. Davis, NRR b

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(D M<M POR SECY 97-227 R PDR s

.2 The NRC's draft SRP for the financiel qualifications and decomissioning-funding-assurance reviews (NUREGel577) was also published for public comment on December 27, 1996.

The )urpose of the draft SRP was to give the public an opportunity to comment on tie process the staff uses to review power reactor licensees: financial-qualifications and their_ methods of providing

~decomissioning funding assurance.

The NRC received six comment letters on the two Draft SRPs.

DISCUSSION:

The staff has completed its consideration of the comments received.

With respect to the draft SRP on the antitrust review process (NUREG-1574), most of

" e commenters viewed NRC antitrust reviews as redundant because similar iews had been performed by other agencies or unnecessary because of Federal energy Reculatory Commission (FERC) Orders 888 and 889 and changes in the

-industry brought on by deregulation and restructuring. Attachment 1 sumar12es the coments received and provides NRC's response to them.

On the basis of the coments received and a staff reassessment of antitrust review procedures, the staff has made several modifications to the draft SRP for antitrust reviews (Attachment 2).

In summary. the staff has:

o described the NRC's efforts to coordinate with other federal agencies to minimize duplication of effort on antitrust issues.

e added a statement concerning NRC's support for legislative prr.posals to repeal the NRC's antitrust review responsibilities.

e revised the antitrust review process to reduce its impact on many restructurings and reorganizations.

If approval of an application under 10 CFR 50.80 for consent to a proposed transfer of control of a license does not involve the issuance of a license, the staff has concluded that the procedures under Section 105c. including the significant change determinations, do not apply.

Unless otherwise directed by the Commission, the staff will publish-a notice of availability (Attachment 3) of the final version of NUREG-1574

" Standard Review Plan for Antitrust Reviews" in the federal Register.

It should be noted that the Office of the General Counsel (0GC) is performing an analysis of whether there is a continuing need for NRC antitrust license-conditions in-light of recent statutory and regulatory Jevelopments intended to facilitate competition in the electric utility industry.

In addition. 0GC is-examining antitrust review practices at other Federal agencies to determine whether NRC antitrust review procedures may overlap and could be streamlined or reduced.

Depending on the results of this OGC effort, the procedures outlined in this-SRP may be subject-to change or revision.

The staff believes that NUREG-1577, " Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decomissioning Funding Assurance."

which was also issued for public coment on December 27, 1996, should not be i

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3-revised at this time.

Both decomissioning funding assurance requirements and financial qualifications recuirements for plant ~ operations will likely change significantly.

The proposec rule on decommissioning funding assurance. the issuance of which the Cuomission recently approved (SRM dated August 15.

1997). would, if-adopted, substantially revise NRC requirements in this area.

The staff is also developing a policy options paper concerning the financial qualifications reviews.

Several options. if adopted, could substantially change the NRC's current-financial qualifications requirements.

These changes would need to be reflected in a final SRP once they are formally adopted.

Accordingly, the staff will forward ap3ropriate revisions to NUREG-1577 on a schedule consistent with that establisled-for the final rule on decommissioning. funding assurance.

Finally, additional revisions to NUREG-1577 will be provided consistent with a schedule yet to be established for possible revisions to the regulation relating to licensee financial qualifications.

COORDINATION:

The Office of the General Counsel has no legal objection to this paper and the attached final SRP for antitrust reviews.

The Advisory Committee on Reactor Safeguards and the Committee to Review Generic Requirements decided not to review the SRPs. The Chief Financial Officer and Chief Information Officer have reviewed this paper and have no objections to its content.

RECOMMENDATION:

That the Commission acorove issuance of the final " Standard Review Plan for Antitrust Reviews."

. Joseph Call cutive Director for Operations Attachments:

1. Summary of Comments on the draft SRP for Antitrust Reviews

'2. Final SRP for Antitrust Reviews

3. Federal Register Notice Commlssioners' comments or consent should be provided directly to the Office of the secretary by cob Tuesday, october 21, 1997.

Commission Staff office comments, if any, should be submitted to the Commissioners NLT Tuesday, October 14, 1997, with an information copy to the office of the Secretary.

If the paper is of such a nature that it requires additional review and comment, the Commissionerr and the Secretariat should be apprised of when comments may be expected.

DISTRIBUTION:

oCA.

Commissioners CIO oGC CFO oIG' EDo oPA REGloNS SECY

Summary of and Response to_Coments

. The NRC received six public-comments-on the draft SRP on Antitrust:

four from electric utility licensees-or their representatives and two from industry groups. The comenters were:

1.

Southern California Edison:

~2. ; Nuclear Energy Institute-

3..Shaw. Pittman. Potts 81Trowbridge on behalf of Toledo Edison.

Cleveland Electric Illuminating. Ohio Edison Duquesne Light and-Wisconsin Electric-Power 4.- Winston & Strawn on behalf of the Utility Decommissioning Group 5.

Northern States Power (comments only on the SRP for financial qualifications and decommissioning funding assurance reviews).

6. -Carolina Power & Light Company Jeneral Comments:

Several comenters viewed the NRC antitrust review role as unnecessary and outdated.

Commenter 6.-for example, stated that restructuring and deregulation have made the NRC's antitrust review function obsolete and that monopoly control of transmission systems no longer existed since FERC Grder 888 required open access. Commenter 2 believed that changes in the industry eliminated the need for continued NRC involvement in this area and recommended that the NRC support repealing Section 105 of the Atomic Energy Act.

Commenter 4 stated that if complete deregulation and restructuring occurred.

-the antitrust SRP would have to be revised to ensure that electricity prices were set by auction and all entities had open access-to.transmissior

-facilities.

NRC's Resoonse:

in reviewing an application-for a license-to construct or operate a facility under section 103, the NRC is required under Section 105 of the Atomic Energy Act of 1954, as amended, to determine whether the applicant's or licensee's activities under the NRC license would create or maintain a

-situation incor.sistent with the antitrust laws of the United States.

However, the NRC is working with the Federal Energy Regulatory Commission, the

-Securities and Exchange Commission, and the Department of Justice to develop methods by.which-the NRC can minimize duplication of effort on antitrust issues and at the same time carry out its statutory responsibilities.

The NRC is also supporting legislative proposals'to eliminate its review

. responsibilities in the antitrust area.

Comments that the SRP Could Place Nuclear Units at a Comoetitive Disadvantace:

Several commenters stated that the NRC review proceduras could hinder nuclear licensees in competing with other electricity providers. Commenter 2 stated that the draft SRP asserts that virtually every restructuring or reorganization will be subject to a full-scale antitrust review: the significant change criterion is broad enough to encompass virtually every conceivable licensing action; and competitors could intervene using the NRC ATTACHMENT 1

2 process as a tool to advance their own interests to the disadvantage of nuclear owners and operators. Commenter 3 recommended that the SRP not reauire significant change reviews for indirect transfers of control, as when holding companies are created, where market share or entitlement to power are not an issue.

Commenter 3 also recommended that NRC be flexible and consider significant change reviews as unnecessary for mergers in which the merger participants are affiliates already operating as an integrated system or in which all merger participants are already subject to existing license conditions.

NRC Response:

The staff has interpreted the statutory requirements such that the incidence of significant change reviews will be reduced.

Since Section 105c of the Atomic Energy Act applies to an application for a 1Icense to construct or operate a facility licensed under Section 103 of the Act certain types of restructurings and reorganizations may not need antitrust reviews.

If approval of an application does not involve the issuance of a license, the staff believes that the procedures under Section 105c (including the procedure for significant change determinations), do not apply.

This position should reduce the impact of the antitrust review process on many restructurings and reorganizations.

Comments on License Conditions on Marketina of Power for New Doerators:

The dra?t SRP included a provision for adding a license condition for a new operating company.

The license condition prohibits a new operating company from marketing power from the facility.

Commenters 1 and 4 stated that there should be no need for a license condition prohibiting a purely operating company from marketing or brokering power from that site.

Commenter 4 also stated that requesting the applicant to affirm that the new operator would have no economic interest in the plant, including no interest in the power output, should be sufficient.

NRC's Response:

The NRC disagrees with the comments on the license condition for new operating companies.

Once an application has been reviewed and approved, it is very difficult to undo the transfer. A license condition prohibiting a new operating company from marketing or brokering power from the facility provides the necessary assurance that alI parties will abide by the representations made in the application.

Other Comments:

In response to comments that did not concern policy issues, other minor changes were made to several sections of the draft SRP to clarify certain things.

These items will not be discussed individually.

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,7 STANDARD REVIEW PLAN FOR ANTITRUST REVIEWS ABSTRACT t

-This standard review plan describes the' procedures used by NRC staff to in.plement the antitrust review and enforcement provisions in. Sections 105.and 1186 of the Atomic Energy-Act of 1954.:as amended (the-Act). and replaces-NUREG-0970. These procedures ere principally derived from the Commission's Rules and Regulations in 10 CFR Sections 2.101. 2.102. Part 2-Appendix A.

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.Section X 50.33a. 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

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permit / operating license applications. and applications for approval-of the transfer of construction-permits, operating: licenses..and combined licenses.

In addition. the procedures describe how the staff enforces compliance with

-antitrust-conditions appended to licenses.

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ATTACHMENT.2 1

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1 TABLE OF CONTENTS

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INTRODUCTION 1-1 1.1 Purnose.....

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1. 2 St anda rds of Revi ew......................

1-2 1.2.1 Section 105 of the Act.

1-3 1.2.2 Regulatory Guide 9.1.

1-4 1.2.3 Regulatory Guide 9.2...

1-5 1 2.4 Regulatory Guide 9,3 1-5 1.2.5 Summer Decision 1-5 1.3 Owners and 00crators.

1-6 1.4 COL License ADDlications............,.

1-6 1.5 Transfer Reviews.......

17 1.6 Enforcement 18 2 REVIEW OF CONSTRUCTION PERMIT /0PERATING LICENSE APPLICATIONS.....

2-1 2.1 Overview........

2-1 2.2 Recuired Information.....

2-2 2.2.1 10 CFR Information.....

2-2 2.2.2 Regulatory Guide 9.2......

2-3 2.2.3 Response to Inquiries From the Attorney General 2-3 2.2.4 Published Information 2-4 2.2.5 Field Review......

2-4 2.2.6 Applicant's Service Contracts and Agreements....

2-5 2.3 Accentance Review and Notice of Receiot of Antitrust Information.....

2-5 2.4 Staff Review. -....

26 2.4.1 Criteria for Review 2-6 2.4.2 Analysis of Market Power....

2-7 2.4.3 Analysis of Anticompetitive Behavior 2-8 2.4.4. Nexus 2-8 2.4.5 Settlement of Antitrust Issues 2-9 3 REVIEW OF APPLICATIONS SEFrlNG APPROVAL OF NEW OWNERS OR OPERATORS',

AND APPLICATIONS REGARDING INDIRECT TRANSFERS

.. 1 3.1 Overview 3-1 3.2 Summer Decision........

3-1 3.3 Transfers.. 2 3.3.1 De Minimis Applicants 3 -4 3.3.2 New Operators 3-4 3-5 3.4 Reauired Information 3-5

-3.4.1 Antitrust Files 3.4.2 Federal Energy Regulatory Commission Files 3-6 3.4.3 Field Investigation 3-6 3.5 Notice of Receiot of Antitrust Information 3-6 3.6 Staff Analysis 3-7 3.6.1 Parallel Reviews....

3-7 3.7 Director's Findina...........

3-7 ii

4 ANTITRUST ENFORCEMENT 4-1 4.1 Overview........

4-1 4.2 Enforcement Under Sections 105a.105b. ano 186a of the Act..

4-1 4-1 4.2.1 Section 105a....

4.2.2 Section 105b.....

4-2 4.2.3 Section 186a.....

4-3 4.3 Enforcement of Antitrust license Conditions 4-4 4.3.1 Section 10 CFR 2.206 Petitions..

4-4 4.3.2 Comp 11cuce Investigations 4-5 4.3.3 Dental of Petition.

4-6 4.3.4 Notice of Violation 4-6 4.3.5 Order To Modify. Suspend, or Revoke a License 4-7 4.3.6 Civil Penalties 4-8 iii

ABBREVIATIONS Act Atomic Energy Act of 1954, a:; amended CFR Code of Federal Regulations COL Combined Construction Permit.0perating License CP construction permit DOE Department of Energy D0J Department of Justice EIA Energy Information Agenc<

FERC Federal Energy Regulatorf Commission NARUC National Association of Regulatory Utility Commissioners NRC Nuclear Regulatory Commission NRR Office of Nuclear Reactor Regulation 0GC Office of the General Counsel OL operating license SEC Securities and Exchange Commission SRP Standard Review Plan iv

EXECUTIVE

SUMMARY

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.

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 applications and (3) enforcement authority over antitrust licert.e conditions.

Section 2 describes the NRC staff's antitrust procedures for reviewir.g an application for a construction 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 Commission'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 Sunmer 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 Of fice of Nuclear Reactor Regulation determines that significant changes (1) have occurred since the previous antitrust review.

(2) are attributable to the applicant, and (3) have anticompetitive implications warranting Commission remedy.

If a significant change finding is made, a second antitrust review is conducted, following the same procedures set forth in Section 105c(1). For license transfers, a threshold antitrust review is conducted when a direct transfer of the license to a new proposed 11cer.see is involved. A full antitrust review may follow if warranted by the threshold review. When indirect control is transferred but the licensee v

remains the same, no antitrust review or threshold antitrust review-is undertaken.

Section 4 discusses the Comission's antitrust enforcement responsibilities.

In fulfilling such res>onsibilities, the Commission may:

(1) suspend or revoke a licente or tate other actions deemed necessary in the event 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); and (3) enforce Commission 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.

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

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l STANDARD REVIEW PLAN FOR ANTITRUST REVIEWS 1

INTRODUCTION' 1.1 Puroose 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 arivate enterprise."

In 1970, antitrust

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amendments to Section 105c of t1e Act were enacted requiring the Commission to conduct antitrust reviews of applications for construction 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 pb nts. 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 Deaartment of Justice (00J) to develop methods by which the NRC can minimize t1e duplication of effort on antitrust-1ssues, 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, with the advice of the Office of General Counsel is responsible 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 CF) before Section 105 was enacted in December 1970. were grandfathered. The steff has

- also determined 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 differe'1t facility; The NRC does not expect that any plants will have to make such modifications as a prerequisite for license renewal aaproval. - 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 antitrust 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 Antitrust Matters." was published 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 ui 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 will be placed on the exercise of Federal Power Ccmmission [now Federal Energy Regulatory Commission) and State agency jurisdiction regarding the specific terms and conditions of the sale of power, rates for transmission services and such other matters as may be within the scope of their jurisdiction.

1-2

122.3iRegulatorfGuide9.2-Regulatory Guide 9.2 "Information Needed by the AEC Regulatory Staff-in i

- Connection with Its-Antitrust Review of Construction Permit Applications for Nuclear Power Plants " informs the applicant what information the Attorney

General and the NRC regulatory staff need to determine whether the applicant

= 1s abiding by the antitrust laws. This information request applies to-both Part-50 and Part 52 license applications.

4 1.2.4-Regulatory Guide 9.3 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."' identifies the types of information t1at 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 operating license stage-

- for combined construction permit / operating license (COL) Part 52 applications.

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

Summer Nuclear Station. Unit No.1). CL1-81-14.13 NRC 852 (1981) (Samer) involved an operatirg license review under the Part 50 licensing process and established criterit the staff must follow in assessing anticompetitive implications during licensing reviews after issuance of a construction permit.

The staff has also looked to Sunmer for guidance in connection with reviews of applications for epproval of direct license transfers under 10 CFR 50.80.

4 1.3 Owners and ODerators Each proposed owner or operator of a nuclear facility licensed under Section 103 of the 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 Sunmer 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 licensa ADDlications Generally, for 10.CFR Part 50 applications for new power production facilities, the NRC conducts a.prelicensing 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 completion of the CP review and issuance of the OL. However, the enactment of the Energy Policy Act in 1992 eliminated the NRC's authority to conduct '

separate operating license reviews for 10 CFR Part 52 COL applications.

1-3

The Part 50 CP review and Part 52 COL l 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-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 necessary. 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

'these matters, i

in Regulatory Guide 9.1 the Commission provided guidance-to applicants on how the staff views the various issues regar_ ding 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 situationf 1.51 Transfer Reviews in connection with 10 CFR 50.80 and rection 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 secome 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 Sumer 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 appl 4 cation for a l

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 gives 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 Section 186. the Commission is granted authority to

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revoke _ licenses for. noncompliance with the terms and conditions of

. construction permits. operating licenses. and combined licenses.

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221 REVIEW 0F CONSTRUCTION PERMIT /0PERATING LICENSE APPLICATIONS:

2.1. Overview' virtue ofLSection 105c.of-the Act, the U S. Nuclear Regulatory Comission By~ RC) with the advice of the Department-of Justice, must conduct a (N

H

.preifcensing antitrust review of applications to: construct nuclear power plants'.

Section-105c requires the Attorney General to provide advice to the.

Comission 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 Comission in determining whether the activities under the license would' create or maintain-a situation inconsistent with the antitrust laws.

In addition to the application, the NRC staff must promptly_ furnish background;information to the 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 Comission

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 Comission.

If a hearing is held, the Commission must make a finding as to whether activities under the 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 Comission 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) issue 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 L

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 with 10 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 Ap)endix L of 10 CFR Part 50 1s generally required only for applicants w1ose generating capacity exceeds 1400 MW.

Applicants with 1400 MW or less of generating capacity may file an affidavit setting forth the facts about their. generating capacity. Then, unless otherwise regtested, 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 minimis 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 Attorney General, the NRC staff collects information pursuant to Regulatory Guide 9.2. "Information Needed by the NRC Staf f 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 Attorne.y General will normally request " third party" information from municipal electric utilities, rural electric cooperatives, and other utilities located in and near the applicant's service area about.their competitive 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 ta these inquiries by the Attorney General should be obtained and used as part of the NRC review.

2.2.4 Published Information To evaluate the applicant's market power, the reviewer will use information from (1) Forms 1 and 12, collected by the Federal Energy Regulatory Commission (FERC)

(2) the Energy Information Agency (EIA) of the Department of Energy (DOE). and (3) other sources such as the Directory of Electric utilities and Noody'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-generating 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 may contact individuals in or near the area the applicant serves to substantiate the responses and-documents already examined. The reviewer may interview system planners and other officials affiliated with 2-2 o

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. -,n-2 the applicant. ;In addition.' officials from various municipalc cooperatives and privately owned utilities in or-adjoining the applicant's service or planning. area'mayibe interviewed; The intefviews wil1Lfocus on the interutility relationships among the various t 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 the nuclear

" facility to meet theLelectrical demands of their customers.

To determine if thel applicant has abused its market-power' the reviewer will ascertain whether the. applicant has attempted to fix prices or exclude

-competition in its relevant l geographic and product market.

4 12,2.6 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 limitedtothefollowing.examgles,may.(1)limitcustomersfromselling surplus power other than to t..e 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 membership or participation in planning and coordinating groups.

In addition, any pattern of-applicant refusals to serve will.be evaluated.

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 infonration 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 tha 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 cate 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 15 then submitted to the Attorney General-with a re';uest for antitrust advice.

1 2.4 Staff Review ~

-While the Attorney General's review is in progress, the.NRC reviewer should

prepare a preliminary analysis; This will be the basis of the staff's -

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-pos1tione The staff may support the views of the Department of Justice (D0J)

=on whether a hearing'is necessary or the staff may disagree with 00J 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.

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'2.4.1 Criteria for Review The proper scope of antitrust review depends upon the circumstances of each case.

The reviewer should employ market 6nalyses focusing on the area served by the ap)licant.

From the nature of the electric bulk pg.ser supply industry itself. t?e reviewer will have a general idea of the types of products and services supplied by the applica-)t.

Products relevant to each individual case

-(e.g.. baseload power. transmission access. reserve sharing, coordination planning) will ary depending on the extent of competition in the area and the l

needs of. surrounding entities engaged in the bulk power services market.

l Depending on tne availability of various products and services within the i

i relevant geographic area (i.e.. depending on whether there are entry barriers). the reviewer will analyze the geographic market to determine what i

the relevant market is for review purposes.

The relationship of-the nuclear j

facility to the applicant's total system or power pool should be evaluated In every case The rcliewer can then assess whether the applicant has market power and if-so, whether it has abused its market power.

j

-2;4.2 Analysis of Market Power The reviewer must determine if the applicant has the Inarket power to withhold access to nuclear power or abuse its market )ower in other ways and thereby maintain or create a competitive advantage t1 rough.use of the nuclear facil1ty.

In determining if the applicant has market power, the reviewer must t

ascertain how much control the applicant has over certain services in a l

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 i

relevant and should be analyzed i

e Consumers Power Co. (Midland Plant. Units 1 and 2). ALAB 452, 6 NRC 892 (1977) e -Alavama Power Co. (Joseph M. Farley Nuclear Plant. Units 1 and 2). ALAB.

i 646. 13 NRC 1027 (1981) 3 l

e Toledo Edison Co.. et al. (Davis-Besse Nuclear Power Station. Units 1. 2.

'and 3), ALAB 560; 10 NRC 265 (1979)

• -Alabama Power Co (Joseph M. Farley Nuclear Plart. Units 1 and 2) LBP 77

24. 5 NRC 804 (1977). and LBP 77 41. 5 NRC_1482 (1977) l 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 i'

issucs for study can be-found in farley. LBP 77-24. 5 NRC 804.

2 A.3 Analysis of-Anticompetitive'Beb3vior

-The fact that an applicant has market power does not necessarily mean that the applicant's conduct is inconsistent with the antitrust laws or that the

'applit.an;; will abuse its market power..To assess the probability that the applicant will abuse its market power the reviewer must examine the i

24 I

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 create or maintain a situation inconsistent with the ant.itrust laws.

Case examples the reviewer can refer to include Midland and Davls-Besse.

In Nfdland, the A) peal Board found that the applicant's refusals to wheel power.

coordinate wit 1 smaller utilities, and its exclusion of utilities from the Michigan power pool to be anticompetitive conduct and abuses of market power.

In Davfs-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 Ne xu'.,

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 maintain the anticompetitive situation.

Thus, a nexus, or connection, between an applicant's activ1tles under the license and the anticompetitive situation 1s required.

The farley and Davfs-Berse decisions show the reviewer what to con ider in ascertaining whether

ufficient nexus exists between the activities under the license and an antitcompetitive situation.

2.4.5 Settlemerit 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 ja a proceeding or through settlement of an entire oroceeding.

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 Attorney General issues an advice letter.

The Department of Justice usually invites the NRC staff to Jo1n 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 certain conditions. which '1 ave been agreed to by the applicant, are attached to the license.

If a settlement is not reached before the Attorney General's advice is rendered negotiations are encouraged during the prehearing stages and even af ter the hearing has began.

25

3 REVIEW 0F 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 approv.i of transfers of control of licenses,

)f there is a direct transfer of the license to a new entity or proposed licensee, a threshold antitrust review of the proposed transferee will be i

conoJcted 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 licensee 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 Svrmor Decision in reviewing changes in ownership or operators, the staff will consider the criteria established by the Commission in its Surmer decision (CL18114.13 NRC 862) to the extent applicable.

The staff must follow these criteria at the initial oaerating license stage in deciding whether there have been significant c1anges in the licensee's activities or proposed activities since issuance of the construction permit and the completion of an antitrust review at the construction permit stage. If so, a second antitrust review is undertaken at the opvating license stage.

The issues addressed in Surmer 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 inth 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 investigdtions, or from papers that have been filed.

3.3 Trane.fers Af ter 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, dependina upon the circumstances.

Transfers may involve (1) purchasing a share of a nuclear facility (2) 31

i i

purchasing a major share of stock in the existing licensee. (3) acquiring or ing with a licensee. (4) corporate restructurings, or (5) possibly the

r. erg / leaseback of a facility, if the transaction is deemed to be an indirect sale trabfer, with nu new licensee addea to the license, a Section 105 antitrust review (including a significant changes review) is not authorized by the Act.

If the transaction involves a new owner and is thus considered a direct transfer, the staff performs a threshold antitrust review to determine whether a full antitrust review (including a referral to the Department of Justice) should be undertaken.

Applicants that apply to become new owners through the sale and leaseback of a nuclear facility are subject to the same antitrust requirements as any new i

licensee. However, the sale and leaseback agreements that have been-reviewed 1

by the staff have involved new equity investors that have not taken an active l

role in the operation or control of the nuclear-facility involved in the sale and the Commission has determined that such 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 lessee, the facility and the power and energy 3roduced by the facility.

If the new equity investor takes an bet 1.e role, t1e new investor would be subject to an antitrust review like any other l

new owner.

3.3.1 De Minimis Applicants

]

An applicant owning less than 200 MW of total generating capacity is considered a de minimis applicant. Such applicants are generally too small to j

exercise any substantial decree 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 mynfmfs applicant is published in the federa1 Register. Further, if the de mynfmis applicant is a subsequent applicant, the Department of Justice is simply notified about the ex1stence of an additional de mfnfmis 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 r

requesting additional information.

3.3.2, New Operators for review purposes, new operators of licensed power reactors that become licensees through: corporate reorganizations acouisitions, or the formation of 1

nuclear operatii9 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 ser/ ices-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.

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

-32

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the existing owners responsible and accountable for the actions of the o>erator the staff normally will not conduct a threshold antitrust review of t1e proposed new facility operator.

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

3.4 Recuired Informatiqa 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 mak.e use of all available public information and any recnrds from other relat=' 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 ant.itrust files pertaining to the initial construction permit or COL review of the application form the baseline from which changes are measured.

In addition. CP oe 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 files at the FERC generally contain information about the applicant's activ1tles 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 Receipt of Antitrutt 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 proposeo transfer application when adequate antitrust information is included with the application.

The notice shall provide for a period of public comment of 30 days from publication of the notice in the Federal Register.

To be accepted ty the staff. public comments must address the antitrust aspects of the aps cation.

The staff uses the comments to determine whether the proposed tiant :r may significantly worsen the competitive situation.

33

3.6 Staff Analysis The reviewer, along with OGC prepares a written analysis of the competitive situation. This analysis will consider, among other things, the extent to which potential changes in the relevant markets are attributable to the i

ap)11 cant, the antitrust implic.ations of the changes, and whether they would li tely warrant a Commission re'nedy.

This threshold analysis is then forwarded to the Department of Justice (D0J) for review and comment.

Although there is no statutory limitation on the period in which D0J's comments may be provided to the staff (such as during the construction permit review phase), the reviewer should try to ensure that the DOJ renders its advice in a timely manner.

Upon receipt and review of D0J'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 00J). 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 Findiro 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 staf f 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 Offire of Nuclear Reactor Regulation makes a finding of No Significant Changes, the finding is published in the federal Register with a statement that any request for reevaluation of-the finding sh'all 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 comments in response to the notice of receipt of antitrust information in the Federal Register.

Normally 1f 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.

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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 reaffinning the Finding of No Significant Changes in the federal Register. Copies of the reaffirmation finding are also sent to the requestor, the applicant, cnd the Comission.

The finding becomes the final NRC dension 30 days after publication in the Tederal Register unless the Comission exercises its right to conduct a i

sua sponte review.

r 35

0 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 conformarce with the antitrust 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 Commission 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 provides 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 petition for a Section 105c hearing and advised the Commission of a decision by the Court of Appeals in the Fifth Circuit (Gainesvf 71e utilities Department

v. Florida Power and Light Company 573 F. 2d 292. ?94 (5th Cir.1978), c?rt denied. 439 U.S. 966 (1978)), wnich held that Florida Power and Light Company (FP&L) 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 findinas and determination of appropriate relief.

The petition for a Section 165a 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 boaros to take action with respect to Section 105a matters. Thus, for the present. the staff has an advisory role. calling the Commission's attention to possible Section 105a situations.

In performing this role, the staff treats the phrase 'in the conduct of the licensed activity" as synonymous with the phrase cited in Section 105c " activities under the license" (described in Section 2).

Both phrases encompass the planning, building, and operation of nuclear power reactors and their integration in effective bulk power supply systems.

4.2.2 Section 105b Section 105b requires the Commission to report apparent violations to the Attorney General.

Only one Section 105b case has come before tne 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.

41 l

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The Atomic Safety and Licensing Board denied the cities

• 3etition, in Florida Power and Light Co. (St. Lucie Plant. Unit No.1. Turkey )oint Plant. Units No. 3 and 4). ALAB 428, 6 NRC 221 (1977), the Appeal Board affirmed the decision of the Licensing Board, and the Commission declined to review the Appeal Board decision.

Florfda Power and Light Co.. CLI-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 violate the antitrust laws in utilizing s)ecial nuclear material or atomic energy.

In accordance with this Order. tie 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 the actions of the licensee (or applicant) are inconsistent with the antitrust laws.

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

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

Section 186 gives the Commission 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 applicant has falsified pertinent antitrust review information or had otherwise 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 appropriate action to correct the situation; to make restoration (as far as possible) to those that may have been harmed because of the false information: and, when appropriate, to impose civil penalties on the 11cer.see or issue orders to modify, suspend, or revoke the license in question, 4.3 Enforcement of Antitrust License Corditions 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) a Federal Register notice to be signed by the Director of the Office of Nuclear Reactor Regulation:

42

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(2) a written acknowledgent to the petitioner, including a copy of the Federal Register notice:

(3) a letter to the licensee or licensees against which the petition is filed including a copy of the petition and a cooy of the Federal 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 setition. the licensee may also voluntarily submit additional information that 11e 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 saare the output of its nuclear facility and/or to provide certain types of power supply services proscribed 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 ant 1-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 tne alleged violation was willful; and (5) what remedial actions raust 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 receivf.

nder 10 CFR 2.206 is without merit. a Director's Decision and Federa? 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).

43

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 prepared by the reviwer 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 senalties may be considered in accordance with 10 CFR 2.205 and Section 234 of t,e Act.

The Response The licensee's response to the Notice of Violation determines the course of the subsequent proceedings.

If the licensee agrees to take the necessary steps to comply with its license requiremere the staff will ensare that the compliance steps are carried out expedit tously.

IT 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 accordance with 10 CFR 2.205 and Section 234 of the Act.

4.3.5 Order To Modify. Su. pend, or Revoke a License An Order is prepared by the eeviewer. in conjunction with the Office of the General Counsel, and issued ty the Director of the Office of Nuclear Reactor Regulation in accordance with 10 CFR 2.202. The Order st3tes the following:

(1) the violations with whic1 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.

The Response If the licensee demands a hearing, the hearing process is initiated.2 If the licensee consents to the entry of an Order in substantially the form proposed l

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.

8 l

The hearing could result in a decision by the Atomic Safety and l

Licensing Board or an Administrative Law Judge to absolve the licensee of l

charges or to order the licensee to take the actions prescribed. An Order is appealable.

4-4

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4.3.6 Civil Pr.nalties 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 Imposition of Civil Penalty prepared by the reviewer in consultation with the Office of the General 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 cc.1 sider 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, i f 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 falls 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.

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i NUCLEAR REGULATORY COMMISSION 10 CFR Part 50 Final Standard Review Plan for Antitrust Reviews: Issuance. Availability The U.S. Nuclear Regulatory Commission (NRC) is issuing this final Standard Review Plan for Antitrust Reviews to describe the procedures (prescribed in Sections 105 and 186 of the Atomic Energy Act of 1954. as amended) for doing antitrust reviews and enforcing antitrust license conditions. This SRP reflects current regulations and policy and will be updated as necessary to reflect changes in NRC regulations.

The revised text for the SRP for Antitrust Reviews includes the resolution of public comments received in response to the draft version issued on December

27. 1996 (61 FR 68309).

The purpose of the draft SRP was to solicit coments on the current NRC staff practic( n carrying out the NRC's antitrust mandate in accordance with the Atomic Energy Act, to review construction permit and operating license applications and transfer requests and to enforce antitrust license conditions.

The NRC has published its Standard Review Plan for Antitrust Reviews (NUREG-1574). under Section 109. Nuclear Regulatory Commission Appropriation Authorization. Public Law 96 295. The SRP describes the procedures used to implement the antitrust review and enforcement provisions in Sections 105 and 186 of the Atomic Energy Act of 1954. as amended.

The final SRP for Antitrust Reviews is a " rule" for the purposes of the Small Business Regulatory Enforcement Fairness Act (5 U.S.C.

Chapter 9).

The staff believes that this SRP is a not a major rule and is confirming this with the Office of Management and Budget (OMB).

The final SRP for Antitrust Reviews does not, by itself, establish any new or revised requirements.

It incorporates previously established NRC staff positions, public comments on t1e draft SRP for Antitrust Reviews, and lessons learned from completed reviews of various restructuring and reorganization applications.

The review guidance in the SRP will be used by the NRC staff in evaluating future submittals in connection with applications for construction permits, operating licenses combined operating licenses, and operating license transfer requests.

The final SRP for Antitrust Reviews is being made available to the public as part of the NRC's policy to inform the nuclear industry and the general public of regulatory procedures and policies. The SRP will be revised )eriodically to reflect changes to statutes and NRC rules and regulations. T1e NRC encourages comments from interested parties. Coments and suggestions will be considered in future revisions to the document uen comments may be submitted to Chief. Rules Review and Directives Branch. Division of Freedom of Information and Publication Services. U.S. Nuclear Regulatory Comission.

Washington DC 20555 0001.

ATTACHMENT 3

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~ Copies of NUREG 1574 may be purchased from the Su>erintendent of Documents, U.S. Government Printing Office, P.O. Bov.- 37082, dashington, DC 20013 7082.

f Co)1es are also available from the National Technical Information Service, 5235 Port Royal Road. Springfield, VA 22161. A copy is also available for-inspection and/or copying for a fee in the NRC Public Documant Room, 2120 L -

i Street. NW. (Lower Level), Washington, DC.

1 Dated at Rockville, Maryland, this day of 1997.

j For the Nuclear Regulatory Commission.

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i Thomas H. Essig. Acting Chief l

Generic issues and Environmental Projects Branch Division of Reactor-Program Management i

Office of-Nuclear Reactor Regulation j

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