ML20205C779
| ML20205C779 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 03/31/1999 |
| From: | Davidson D AMERICAN PUBLIC POWER ASSOCIATION, FLORIDA MUNICIPAL POWER AGENCY, SPIEGEL & MCDIARMID |
| To: | NRC COMMISSION (OCM) |
| Shared Package | |
| ML20205C784 | List: |
| References | |
| CON-#299-20181 LT, NUDOCS 9904020017 | |
| Download: ML20205C779 (12) | |
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DOCKETED UNITED STATES OF AMERICA USHRC NUCLEAR REGULATORY COMMISSION 99 APR -1 P 4 :05 In the Matter of:
Docket No. 50-482-LT I
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Kansas Gas and Electric Corp. et al; g(' '
- g' (Wolf Creek Generating Station, Unit 1); CLI-99-05 JOINT BRIEF OF THE AMERICAN PUBLIC POWER ASSOCIATION AND FLORIDA MUNICIPAL POWER AGENCY This brief amicus curiae is being submitted pursuant to the invitation extended by the Commission in its Memorandum and Order of March 2,1999, published at 64 Fed.
Reg. I1,069. It is submitted on behalf of the American Public Power Association (APPA)' and the Florida Municipal Power Agency (FMPA).2 The brief addresses the questien identified by the Commission: whether as a matter oflaw or policy the Commission may and should eliminate all antitrust reviews in connection with license transfers. APPA and FMPA support and urge the positions and arguments contained in the brief amicus curiae of the American Antitrust Institute.
' The American Public Power Association ("APPA") is the national service organization representing the interests of the nation's approximately 2,000 municipal and other state and local government-owned utilities throughout the United States. Approximately 1,870 of these systems are cities and municipal governments that currently own and control the day-to-day operations of their electric utility systems.
- APPA members include state public power agencies and serve many of the nation's largest. Collectively, APPA members make 15 percent of all kilowan-hour sales delivered to 40 million Americans.
2 Florida Municipal Power Agency (FMPA) is a nonprofit, joint action agency formed by municipal electric utilities. The Agency's primary purpose is to enable municipal electric utilities to work together for mutual advantage on joint projects, such as power supply resources, fuel supplies and transmission facilities. Twenty-seven municipal electric systems, serving approximately 650,000 customer accounts, are members of FMPA. (Twelve members have generation; fifteen do not.)
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The matter is so clear that to the best of our knowledge, NRC antitrust review of license transfers has never before been questioned. The law has been recognized as requiring that the NRC consider the antitrust impacts of transfer of a nuclear license and that when significant impacts are found an antitrust review must be conducted. The language of the statute, the requirements of the Commission's regulations, and the decisions of the Commission all recognize this requirement. Indeed, the Commission's Memorandum and Order recognizes this prior practice 64 Fed. Reg. at 11,070.
Furthermore, we believe it would defy the clear intent of Congress for any applicant for a nuclear operating license to never have to face even the possibility of an antitrust review by the Commission and the Department of Justice. Yet what is being considered in this matter is the grant of an operating license without the recipient (Westar Energy) ever having undergone antitrust review.
j As Chevron instructs "if the intent of Congress is clear, it is the end of the matter." Chevron, Inc. v. NRDC, 467 U.S. 837, 842 (1984). Here the issue is whether the Commission may eliminate all antitrust reviews even in the face of significant changes in connection with the transfer of a nuclear license. The dispositive statutory provision is section 105(c) of the AEA, which requires antitrust review of an " application for a license to construct or operate a utilization or production facility under section 103." 42 U.S.C.
i G 2135. A transfer of a license, at least in some contexts, effectively grants a new license that requires antitrust review. Section 105(c) further provides that if a construction permit has been issued antitrust review of"an application for a license to operate" is required if" the Commission determines such review is advisable on the ground that
significant changes in the licensee's activities or proposed activities have occurred subsequent to the previous review by the Attorney General and the Commission under f
this subsection in connection with the construction permit for the facility." Id.
'l The issue the Commission is considering is the issuance of both a new license and i
"an application for a license to operate." Unless the transfer is approved, the transferee is I
not authorized to operate the nuclear facility. The plainest meaning, therefore, j
demonstrates that what is being sought is a license to operate a nuclear facility. This 1
proposition is so plain it previously has never been challenged.
As stated, the Commission's memorandum of March 2,1999 acknowledges that "the NRC staff historically has perfonned a 'significant changes' review in considering the antitrust aspects of certain kinds oflicense transfers." That has indeed been the practice of the staff, but the staff was certainly not operating as rogue elephants. It was following the Commission's decisions and regulations. In Ohio Edison Co. (Perry Nuclear Power Plant, Unit 1),36 N.R.C. 47 (1992), this Commission noted that the sale of a plant was one occasion triggering an exception to the general rule against post-licensing antitrust jurisdiction on the part of the Commission.
The Commission's regulations require that applications for transfer of a license must contain information required by 10 C.F.R. &50.33a, as if the application were for an initiallicense. Id. Q50.80(b). The Commission has to our knowledge consistently 3
followed these procedures in license transfer cases Moreover, in Houston Lighting &
' Sec. c g., GulfStates Utilities Co. 60 Fed. Reg. 18,151 (1995)(finding no significant change); Ohio Edison Co. 36 N.R.C. at 60 n.45 ("under 10 CFR f2.101(e) a significant change review is undertaken if an amendment request involves the transfer of control of the operating license from the original owner (s) of a
4 Power Co. (South Texas Project, Unit Nos. I and 2),5 N.R.C.1303,1318 (1977), the
' Commission recognized that this regulation implied the existence of antitrust review in conjunction with applications for transfer of an interest in a licensed nuclear plant.
, in short, the governing statute requires, the Commission's regulations require, and the Commission has consistently treated an application for a license transferring operating control of a nuclear facility as one subject to antitrust review upon a finding of significant change. The Commission does not have authority to disregard the plain meaning of the statute and its consistent past practice, any more than an agency such as
-the FCC or the FPC is free to disregard a statutory regulatory scheme simply because the agency believes it to be outdated. MCITelecommunications v. AT&T,512 U.S. 218,231-32 (1994); FPC v. Texaco, Inc.,417 U.S. 380, 399-400 (1974).
It appears that the Commission's (hopefully) tentative conclusion that "the governing legislation, section 105(c) of the AEA, and its legislative history does not appear to call for fresh C,mmission antitrust reviews after the initial construction permit and operating license stage" rests almost exclusively on dictum in American Public Power Ass 'n v. NRC,990 F.2d 1309,1311-13 (D.C. Cir.1993), and the excerpts from legislative history employed in that decision. The holding in that case was that the language of section 105 could be construed not to require significant changes antitrust reviews of applications to renew an operating license. A renewal license does not change
' the status quoper se. There is no reason to suspect apriori that a facility will operate facility to another entity.") '
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any differently the day before and the day after the renewal or that its antitrust impact will f differ before or after. That is certainly not the case when a license is transferred.
Antitrust is concerned with economic issues and potentials for market power abuse.
~ These factors are directly impacted by issues of plant ownership and the use of a plant in.
particular markets and under particular market arrangements.'
Thus, the addition of a nuclear facility to the ' system of the new licensee could itself constitute a substantial change and could lead to a situation inconsistent with the antitrust laws. For practical purposes a'new situation is b:ing created by the issuance of a new operating license to a new operator. The Licensees' contention that there is only l
1 need for one antitrust review during the life of a facility is nonsense. As a statutory l
matter, the issue at the license application stage is whether there have been substantial 1
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changes in the licensee 's activities orproposed activities since the last review. A cursory glance at Appendix L to 10 C.F.R. Part 50 shows that the Attomey General's antitrust review is focused on the properties and activities of the license applicant, not on the plant. Moreover, the definition of" Applicant"in Appendix L states that where a plant is to be licensed to multiple entities not under common ownership or control, each utility must respond separately.
If antitrust review in connection with license transfers is barred, then the plain intent of Appendix L, and more importantly, the statute will have been circumvented.
- Antitrust review is supposed to cover every independent applicant for a plant. Each new
' The impact of ending NRC antitrust review of transfers of nuclear license is set forth in the attached affidavit of David Penn.
owner must be licensed and, therefore, becomes subject to antitrust review.. Mcreover, adding a new applicant by._means of a license transfer plainly has the potential to render the initial antitrust review incomplete, and therefore may constitute a significant change.
It could not have been Congress's intention, nor the Attomey General's, that a utility must undergo an antitrust review ifit applies for a construction permit, but not ifit induces others to construct the project and then purchases the already-operational nuclear plant.' After all, it is the operation of the plant, not its construction, that most offers the potential of harm to competition. What is being considered here, therefore, is nullification of the command of Congress.
This Commission clearly recognized in Ohio Edison Co., supra, 36 N.R.C. at 23, that Congress placed a limitation on post licensing antitrust review to provide certainty to the licenree that it would not be drawn into continuing antitrust proceedings before the Commission." Here the antitrust review will not deal with the antitrust position of the existing licensee. It will deal with the antitrust situation of the new applicant for the new license. Ensuring that every nuclear licensee undergoes one antitrust review in conjunction with a given nuclear facility is supportive of the policy interests discussed in Ohio Edison, not contrary to those interests as the licensees now argue.
The applicable policy is that any licensee of a nuclear plant must be subject to antitrust review. This basic principle was examined and applied in Detroit Edison Co.
(Fermi),7 N.R.C. 583 (1978)(ASLB). There a' construction permit had been granted to Detroit Edison which filed an amendment to add new co-owners. An individual sought antitrust review'of the proposed change in ownership. In response, Detroit Edison did not -
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r argue that the two co-owners should never be subject to antitrust review (the proposition now being considered) but merely that they should be subject to antitrust review at the later operating license stage if significant changes were found to have occurred. The Board held that antitrust review could not be so deferred, because the statute required an antitrust review in conjunction with a would-be licensee's initial application. It explained:
Without exalting form over substance, it is clear that these applications [to become co-licensees] are within the scope of the phrase 'any license application' for antitrust review purposes within the meaning of 105c(1); supra, and trigger an opportunity for intervention raisieg antitrust isst.es as to the two cooperatives. To construe the statute otherwise would permit a utility with no antitrust problems to undergo an antitrust review and obtain an unconditioned construction permit, and then sell an overwhelming interest to another monopolizing utili.y. Under the Licensee's argument, there could then be no antitrust review until the later operating license stage, which itself could be a more limited review than the normal prelicensing antitrust review contemplated by the statute. Such an unequal treatment of applicants, insulating from prelicensing antitrust review those who came in later by way of amendments to construction permits, would subvert the C3ngressional intentent and purpose of 105c.
The legislative history of the statute is consistent with this interpretation. The House Report states:
The Committee recognizes that applications may be amended from time to time, that there may be applications to extend or review a license, add :so that the form of an application for a construction permit may be j
such that, from the applicant's standpoint, it ultimately ripens into an application for an operating license. The phrases 'any license application, * 'an application for a license,'
'any application
- as used in the clarified and revised subsection 105c refer to the initial application for a construction permit.
[ Emphasis supplied.]
8 Since the two cooperatives in this case are required to submit an application to become co-licensees, these
. constitute their ' initial application for a construction permit.'... it would be unrealistic to look solely at the original applicant which later sought ownership amendments, and ignore later applicants for a co-license to avoid a prelicensing antitrust review of the latter.
7 N.R.C. at 588.
Finally, we note that in Ohio Edison Company, supra, at 't.39, this Commission queried whether a request by a party that it be relieved of the antitrust conditions of a license means that other parties should be able to request thct additional conditions be imposed. This Commission recognized that "such an approach may not be inconsistent with the underlying philosophy of section 105(c) and could be sound policy. Congress placed limitations on post licensing antitrust review to provide certainty to the licensee that it would not be drawn into continuing antitrust proceedings before the Commission.
When the licensee initiates a proceeding to suspend or modify the antitrust conditions, the policy ofinsulating the licensee from continuing at 1 rust proceedings may not hold the t
same, if any, force." That is certainly true in the instant situation.
If a nuclear license subject to antitrust conditions is transferred, it might seem that the new licensee should be subject to the same antitrust conditions as the old licensee.
- However, in many cases, those conditions were tailored to the activities inconsistent with the antitrust laws that the old licensee was engaging in or could be engaged in. In many circumstances it would be ridiculous to impose these inapposite conditions upon a new
-_ licensee. However, it also would nc,t necessarily be appropriate to nullify them. The
r question must turn on whether the new licensee should be subject to the old conditions, new conditions, or no conditions. In other words. < s significant changes analysis.
We repeat it is undeniable that the intent of section 105(c) is to ensure that no entity operates a nuclear facility without having undergone antitrust review, or at least the potential of such review. Any other construction is entirely intent-defeating.
The passage of the Energy Policy Act of 1992 has no relevance to the question whether antitrust reviews should be conducted in conjunction with license transfers. That statute expanded the authority of the Federal Energy Regulatory Commission to order the provision of transmission service when a complaint is filed. Moreover, EPAct has a savings clause to protect existing antitrust review.5 However, nuclear license transfers raise issues of concentration of generation, which are beyond the scope of the EPAct provisions.
The Licensees have argued that NRC antitrust review oflicense transfers is unnecessary in light of the FERC's jurisdiction to review mergers under Section 203 of the Federal Power Act. However, the FERC has repeatedly disavowed Section 203 jurisdiction over sales of generation,6 so there is no basis for the NRC to presume any regulatory overlap. The utilities also mention the FERC's open access policies and its general increasing reliance on competition. But reliance on competition makes antitrust
' The suggested of the exclusivity of Federal Energy Regulatory Commission, now FERC, regulatory authority was disposed of over twenty-five years ago in Otter Tai / Powr Co. v. F.P.C. 410 U.S. 366.
(l913). Accord. UnitedStates v. Philadelphia National Bank, 374 U.S. 321 (l963); Consumers Power Co (Midland Units I and 2),6 NRC 892 (1977).
- E.g.. Consumers Power Co., S2 F.E.R.C.161,023, at 61,142 (l990),petitionfor review denied sub nom.
Michigan Pub. Power Agency v. FERC,963 F.2d 1574 (D.C. Cir.1992).
, scrutiny of nuclear plant acquisitions more important, not less important, because of the absence of other regulatory checks.
In general, irrespective of the antitrust responsibilities of other entities, this Commission has always recognized that pre-licensing antitrust review has a very special role in the general antitrust enforcement scheme because of the r se opportunity presented to resolve difficult antitrust issues. E.g., Houston Lighting & Power,5 N.R.C.
at 1316-18. Ultimately, pre-licensing antitrust review is not the NRC's responsibility on account of special expertise so much as on account of the special opportunity presented.
That opportunity arises at a would-be licensees's first involvement with a nuclear plant, whether that first involvement be through a construction permit application or an application for transfer of control.
Finally, the Commission must give due consideration to Section 189(a)(1)(A) of the Act,42 U.b.C. & 2239(a)(1)(A), which includes an " application to transfer control" among the events which trigger the right to a hearing upon request of any person whose interest may be affected by the proceeding. A person who stands to lose the effective protection of existing antitrust license conditions as the result of an application for transfer of control clearly comes within the ambit of Section 189(a)(1)(A). Accordingly, foreclosing a hearing under these circumstances, as the Commission is considering, plainly runs afoul of the Atomic Energy Act. Likewise, Section 184, prohibits transfers unless "after securing full information," the Commission " find [s] that the transfer is in
- accordance with the provisions" of the Act, which demands adherence to the mandated antitrust policy.
. For the foregoing reasons, APPA and FMPA submit that a policy of blanket elimination of antitrust reviews in conjunction with applications for transfer of control of licensed nuclear facilities would contravene the Atomic Energy Act and would constitute an unsound departure from established Commission practice.
Respectfully submitted, N
' Daniel I. Davidson N
s Ben Finkelstein Attorneys for APPA and FMPA Law Offices of:
Spiegel & McDiarmid 1350 New York Avenue, NW Suite 1100 Washington, DC 20005-4798 (202) 879 4 000 i
March 31,1999 i
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00CKETED UNITED STATES OF AMERICA USNRC NUCLEAR REGULATORY COMMISSION 9 APR -1 P4 :05 In the Matter of Docket No. 50-482-LT OFFa:
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Kansas Gas and Electric Company, et al.
RULL' uf (Wolf Creek Generating Station, Unit ADJUi.a.
WF 1)
CERTIFICATE OF SERVICE I hereby certify that I have caused copies of the foregoing document to be served upon the following persons by deposit in the U.S. mail, first class, postage prepaid, as indicated by an asterisk (*) or through deposit in the Nuclear Regulatory Commission's internal mail system as indicated by double asterisks (**), with copies by electronic mail as indicated.
Office of Commission Appellate William T. Miller, Esq.*
Adjudication *
- Miller, Balis & O'Neil, P.C.
U.S. Nuclear Regulatory Commission Suite 700.
Washington,DC 20555 1140 Nineteenth Street, NW Washington,DC 20036 (E-mail: wmiller@mbolaw.com)
Harold Haun*
Jay Silberg, Esq.*
Vice President of Administration Shaw, Pittman, Potts & Trowbridge and General Counsel 2300 N Street, NW Kansas Electric Power Cooperative, Inc.
Washington, DC 20037-5990 SW 28th Street (E-mail:iav silbere@shawoittmar..com)
P.O. Box 4877 Topeka,KS 66604 j
(E-mail: hhaun@keoco.org)
{
i Douglas Smith, Esq.*
Richard Geltman, Esq.*
. General Counsel General Counsel Federal Energy Regulatory Commission American Public Power Association 888 First Street, NE 2301 M Street, NW Washington, DC 20426 Washington,DC 20037
o r
Robert W. Bishop
- Wallace Tillman, Esq.*
Vice President and General Counsel General Counsei Nuclear Energy Institute National Rural Electric Cooperative 17761 Street, NW Association Washington, DC 20006 4301 Wilson Blvd.
Arlington,VA 22203 Joel I. Klein, Esq.*
Office of the Secretary Assistan'. Attorney General' U.S. Nuclear Regulatory Commission U.S. Department of Justice Attn: Rulemakings and Adjudications Staff '
Antitrust Division, Room 3109
' Washington, DC 20555 10th Street and Constitution Avenue, NW (E-mail: secy@nrc.nov)
Washington, DC 20530 Respectfully submitted, ws./K Robert A.Jabfon Law Offices of:
Spiegel & McDiarmid 1350 New York Avenue, N.W.
Suite 1100 Washington, D.C. 20005-4798 202--879-4000 March 31,1999
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