ML20206J691
| ML20206J691 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 11/14/1988 |
| From: | Dignan T PUBLIC SERVICE CO. OF NEW HAMPSHIRE, ROPES & GRAY |
| To: | |
| Shared Package | |
| ML20206J674 | List: |
| References | |
| OL-1, NUDOCS 8811290078 | |
| Download: ML20206J691 (13) | |
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6 November 14, 1988 UNITED STATES OF AMERICA before the NUCLEAR REGUIATORY COMMISSION
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In the Matter of
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PUBLIC SERVICE COMPANY
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Docket Nos. 50-443-OL-1 OF NEW MAMPSHIRE, R1 31
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50-444-OL-1
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(Seabrook Station, Units 1
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(Onsite Emergency and 2)
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Planning and Safety
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Issues)
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APPLICANTS' STATENENT AS TO STA'1TS OF RECORD AS TO PSNH BAN 1GtUFFCY IntroductiED The plethora of filings which have been made seeking to 4
delay or prevent the grant of low power operating authority on grounds of financial qualifications seem to indicate confusion as to the effect on a corporation of a filing for reorganization under the Bankruptcy code.
In addition, because various filings have been premised upon various theories, the record is bereft of any chronological statement of the various positions taken before this commission and responses thereto.
To place the bankruptcy of Public Service Company of New Hampshire (PSNH), a 35+% owner of the Seabrook Project, in what we believe to be the proper perspective, the Applicants herein set forth a short discussion of the effects e,
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6011290070 001114 POR ADOCK 05000443 O
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I of the filing of a voluntary "Chapter 11" petition and a chronological history of the positions taken and responses thereto in this proceeding.
The Effect of a Petition for Relief Under Chapter 11 of the Bankruptcy Code The Bankruptcy Coue of 1978, as amended (the "Code"), is codified in Title 11, United States Code.
There are two principal chapters in the Code which deal with the bankruptcy of corporations:
Chapter 11, which governs the reorganization of corporations and certain other entities, and Chapter 7, which governs liquidation proceedings.
The voluntary petition for relief in Public Service Comeany of New Hamoshire, Case No. 88-00043, United States Bankruptcy Court for the District of New Hampshire, was filed under Chapter 11 of the Code.
Public Service Company of New Hampshire is, and remains, a "debtor in possassion" under l
Chapter 11.
A debtor-in-possession under Chapter 11 continues to l
operate its business under the general supervision of the l
Bankruptcy Court.
The debtor in possession may continue to j
l use, sell or lease its property and may enter into I
transactions, including the borrowing of money to the extent i
l it normally would in the ordinary course of its business.
l Code 5 363 (c) (1), 5364(a) and $1107(a).
It also may enter into transactions not in the ordinary course of business, including the use, sale or lease of property or borrowing on i
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x an unsecured, priority or secured basis, with approval from the Bankruptcy Court after notice to creditors and a hearing.
Code $ 363 (b) (1), 5364(b) and (c) and $1107(a).
Insofar as the Seabrook Project is concerned, the Chapter 11 proceedings with respect to PSNH have had virtually no effect on the ongoing activities of the project.
All bills are being paid when duer New Hampshire Yankee (NHY) continues to make all decisions for the project; and no actions which could in any way compromise plant safety have been taken or required.
A dabtor emerges from Chapter 11 through promulgation and confirmation of a plan of reorganization.
Code 91121, 11 gag.
The plan of reorganization is a proposal to creditors and equity interest holders of the debtor for the adjustment of the debts to such creditors and the interests of such equity interest holders.
Confirmation of a plan of reorganization by the Court binds the debtor, each equity interest holder and each creditor of the debtor, discharges the debtor from all debts, and revents in the debtor all property of the debtor free and clear of all claims and interests of creditors and equity interest holders, except as is otherwise provided in the plan.
Code 51141.
In short, a filing for reorganization is not a precursor to liquidation.
It is rather a device whereby a corporation O
can place its affairs in order to continue as a viable entity conducting its business.
Summary of Filings relating to the Petition in Bankruptcy Filed by PSN11 Set forth below is a chronology of events and a summary of the material heretofore filed in this docket relating to the petition in bankruptcy filed by Public Service Company of New Hampshire (PSNH) and the impact, if any, which such proceeding may have on the financial qualifications of PSNH.
1.
A petition for protection under Chapter 11 of the Bankruptcy Code (the "Petition") was filed by PSNH on January 28, 1988.
2.
At the time the Petition was filed there was pending before the Appeal Board an appeal by two intervenors in this proceeding from the denial by the Licensing Board of their earlier petition for a waiver of the electrie utility exemption provisions of the commission's financial qualification rule.
As a result of tha PSNH filing, the Appeal Board issued an order giving interested parties an opportunity to amplify the record.
In response, the two intervenora filed a supplemental brief.
However, the Attorney General of Massachusetts filed a separate petition for waiver of the exemption based on separate facts relating to MMWEC rather than the status of PSNH.
3.
In connection with the Attorney General's Petition and the responses in opposition thereto, the Appeal Board on
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April 13, 1988 issued an Order requesting information as to the status of PSNH's monthly payments to the Project.
4.
On April 22, 1988, in response to the ASLAB Order, I
the Applicants noted I
a)
"PSNH has made all monthly payments to the Seabrook Station" due on or after January 28, 1988.
This statement continues to be true on the date hereof.
j b)
"No direct action has been taken in the i
Bankruptcy proceedings to stop payments to the I
Seabrook Project as of this date."
That statement also continues to be true.
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c)
"The creditors' committee has passed a resolution supporting 'the continued l
l v
l payments'" and efforts by the third mortgage l
l bondholders of PSNH which could have been i
viewed as a "prelude to ruling a cutoff of I
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Seabrook payments... (were) rejected by the 1
I court as premature."
l d)
"Seabrook remains the major asset of PSNH, and the only likely source of sufficient funds to enable the payment of all or substantially all of the unsecured claims against the estate."
5.
On May 26, 1988, the Bankruptcy Court issued a Memorandum opinion on Plan Exclusivity Extension.
While the opinion dealt primarily with the statutory standards under l
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O the Bankruptcy Code for extending the statutory period within which the Debtor (i.e., PSNH) has the exclusive right to file a reorganization plan, the opinion also included comments by the Court relevant to Seabrook.
In upholding the extension, the Court noted the complexities in devising a plan for reorganization for a utility company with its unique responsibilities to the public and, in the case of PSNN, with the necessity of dealing with "the prospects of realizing the intrinsic economic value of the Seabrook nuclear plant."
The Court specifically noted that "it behooves no constituency involved in this case to allow Seabrook to be prematurely lost by default," an observation which is clearly consistent with the Court's tacit approval of the continuing payment of PSNH's obligation to the Project.
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l 6.
On June 3, 1988, the Bankruptcy Court approved the l
1 release of certain Project funds, including amounts paid by PSNH, for the payment of Seabrook Project payables.
The l
Bankruptcy Court has also indicated that it does not saa itself as the forum in which determinations about whether or when seabrook should go forward should be made.
At the Juna 9 hearing referred to above, the Court stated that "if Seabrook is lost, it is not lost because of uncertainties or attrition or myths or anything else relating to confusion about what is going on in the Bankruptcy Court, but it is lost because of those things that are the baillwick of these 1 l
other agencies that protect public health and safety.
- That, I think, is vital here."
7.
on July 5, 1988, the Appeal Board issued its Memorandum and Order dealing with the waiver issues pending before it.
The Order affirmed the denial of the petition relating to PSNH because it failed to establish a prima facie case justifying waivers however, the Appeal Board did conclude that the Attorney General's Petition did set forth sufficient facts to support a referral to the Commission.
In that order the Appeal Board thoroughly reviewed the Commission's financial qualifications rule and the rationale for the "relatively new electric utility exemption provisions", namely, the generic determination that in a i
regulated industry it is reasonable to assume "that f
l reasonable and prudent costs of safely operating a nuclear l
plant will be recovered through the rate-making process."
The Appeal Board then reviewed the rigorous requirements of l
10 C.F.R.
I 2.758 which are "intended to ensure that duly t
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promulgated regulations are not lightly discarded" and i
concluded that cuch "compelling circumstances" had not been i
demonstrated in connection with the PSNH bankruptcy filings j
"Because PSNH's bankruptcy filing is so unprecedented, the appellants' arguments have a certain visceral attraction.
Such i
a reaction, however, can never be a proper substitute for the showing j
(I)f required under 10 C.F.R.
I 2.758 (appellants) are to rely on PSNH's filing of a Chapter 11 reorganization petition, I
they must demonstrate that the bankruptcy proceeding deprives PSNH and the other
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applicants of the financial resources to operate the facility safely...
The appellants have totally failed to make this required showing."
(emphasis added) 8.
An "appeal" seeking Commission review of this aspect of ALAB-895 was filed by the intervenors and is presently pending before the Commission.
9.
In response to that "appeal," the Applicants' filed an Answer which, in addition to noting the procedural defects of the "appeal," emphasized that the "appeal" advanced a gar 12 rule to the effect that a utility in Chapter 11 cannot receive an operating license without a da n2YS review of financial qualifications and that adoption of such a rule which turns solely on the existence of bankruptcy proceedings would be a direct violation of Section 525 of the Bankruptcy Act which provides, in material part as follows:
a governmental unit may not deny, amend, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to
. a person that such a grant against, is or has been a debtor under this title or a bankruptcy or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor is or has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or"1 debtor under the Bankruptcy Act.
Because Public Service Company of New Hampshire is a debtor under Title lit and its joint owners of Seabrook are "associated" with Public Service in this endeavors they may 1
11 U.S.C. I 525(a).
not be discriminated against by forcing them, as opposed to other applicants for operating licenses, to avait a demonstration, in a hearing, of Public Service Company's financial qualifications simply because Public Service Company is in bankruptcy.
10.
On August 7, 1988, the Staff as part of its continuing review of the "financial aspects of Seabrook activities" requested the Applicants to furnish further information jn response to 8 specific questions.
These responses were filed on August 31, 1988.
The Response to NRC Question 6 included therein is of particular relevance because it describes the "ef fect of bankruptcy on PSNH's ability to cover its share of Seabrook costs" - a subject the Appeal Board was concentrating on in ALAB-895.
As stated in that response:
"PSNH's not revenues have, in fact, increased since the bankruptcy filing and are expected to be more than adequate to meet PSNN's share of the (Seabrook operating costs)... Any effect the bankruptcy proceeding itself has had on PSNH'a ability to cover its share of Seabrook costs has been positive, and it is anticipated that this will continue in the future, including during low power testing.
Filing the bankruptcy petition in effect "froze" payment of many prepetition debts, thus keeping funds available to meet Seabrook costs and the bankruptcy court will allow PSNH to emerge from bankruptcy only under a plan which provides means to satisfy all PSNH obligations, including those related to Seabrook, on a going forward basis."
Respectfully submitted, WW
'!W5Kaa 49t(han, Jr.
George M. Lewald Kathryn A. Selleck Ropos & Gray 225 Franklin Street Boston, MA 02110 (617) 423-6100 counsel for Applicants 4:
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88 W 17 All:19 CERTIFICATE OF SERV 1Cr I, Thomas G.
Dignan, Jr., one of the attorneysafor the i
Applicants herein, hereby certify that on November 01A/ 1948, I made service of the within document by malling copiesba4-thereof, postage prepaid, tot Lando W. Zech, Jr., Chairman Mr. Thomas M. Roberts U.S. Nuclear Regulatory U.S. Nuc19ar Regulatory Commission Commission Washington, DC 20555 Washington, DC 20555 i
Mr. Kenneth M. Carr Mr. James R. Curtiss U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, DC 20555 Washington, DC 20555 l
Mr. Kenneth C. Rogers U.S. Nuclear Regulatory Comniation
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Washington, 3C 20555 l
Alan S. Rosenthal, Chairman Mr. Howard A. Wilber Atomic Safety and Licensing Atomic Safety and Licenaing Appeal Panel Appeal Panel i
U.S. Nuclear Regulatory U.S. Nuclear Regulatory l
Commission Commission Washir.gton, DC 10555 Washington, DC 20555 l
l Mr. Thomas S. Moore Mr. Richtrd R. Donovan Atomic Safety and Lictnsing Federal Emergency Managenent i
Appeal Panel Agency l
U.S. Nuclear Regulatory rederal Regional Center Commission 130 228th Street, S.W.
Washington, DC 20555 Bothell, WA 99021-9796 i
l Administrative Judge Sheldon J.
Robert Carrigg, Chairman Wolfe, Esquire, Chairman Bohrd of Selectmen Atomic Safety and Licensi'ig Town Office i
Board Panel Atlantic Avenue i
U.S. Nuclear Regulatory North Hatipton, NH 03862 l
Commission Washington, DC 20555 j
Judge Emmoth A.
Luebke Diane Curran, Esquire Atomic Safety and Licensing Andrea c. Farster, Isquire i
Board Panel Harmon & k* ales f
550 Friendship Boulevard suite 430 l
Apartment 1923N 2001 S Street, N.W.
Chevy Chase, ND 20815 Washington, DC 20009
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Dr. Jerry Harbour Stephen E. Marrill, Esquire Atomic Safety and Licensing Attorney Genera)
Board Panel Georgs Dena Bisbee, Esquire U.S. Nuclear Regulatory Assistant Attorney General Commission Office of the Attorney General Washington, DC 20555 23 Capitol Street Concord, N;f 03301-6397 Adjudicatory File 0herwin E. Turk, Esquire Atocic Saiety and Licensing Office of the Executive Legal Board Panel Docket (2 copies)
Director U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, DC 20555 WLehington, DC 20555 Atomic Safety and Licerning Robert A. Backus, Csquire Appeal Board Panel Backus, Meyer & Solomon U.S. Nuclear Regulatory 116 Lovell Street Commission P.O. Box 516 Washington, DC 20555 Manchester, NH 03105 P'dlip Ahrens, Esquire Mr. J.
P. Nadeau Assistant Attorney General Salectmen's Office Deparczent of the Attorney 10 Central Road General Rye, NH 03870 Augusta, ME 04333 Paul McEachern, Ecquire Carol S. Sneider, Esquire Matthew T.
Brock, Esquire Assistant Attorney General Shaines & McEachern Department of the Attorney 25 Maplawood Avenue General
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P.O.
Pox 360 One Ashburton Place, 19th 71r.
Portsmouth, NH 03801 Doston, MA 02108 Mrs. Sandra Gavutis Mr. Calvin A. Canney Chairman, Board of Selectmen City Manger RfD 3 - Box 1154 City Hall Kensington, NH 03827 126 Denial StraJt Portsmouth, NH 03801 Senator Gordon J. Humphrey R. Scott Hill-Whilton, Esquire U.S.
Senate Lagoulis, Clark, Hill-Washington, DC 20510 Whilton & McGuire (Attn Tom Burack) 79 State Street Newburyport, MA 019S0 Senator Gordon J. Humphrey OM Eagle Square, Suite 507 Concord, NH 03301 (Attn Harb Boyntcn) 1 J
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O Mr. Thomas F. Fowers, III Mr. William S. Lord T0wn Manager Board of Selectmen Town of Exeter Town Hall - Friend Street 10 Front Street Amesbury, MA 01913 Exeter, NH 03833 H..Tosaph Flynn, Esquira Charles P. Graham, Esquire office of General Counsel Murphy and Graham i
Federal Emergency Managenerit 33 Low Street Agency Newburyport, MA 01950 i
500 C Street, sew.
Washington, DC 2047 Gary W. Holmes, Esquire Richard A. Mamps, Esquire McInes & Ells He.mpe and McNicholas 47 Winnacunnet Road.
35 Pleasant Strast Hampton, NH 03441 concord, MM 0J301 Judith H. Misner, Esquire William C.
Parler, Esquire i
79 state Street, 2nd Floor General counsel Newburyport, MA 01950 U.S. Nuclear Regulatory i
2 commission Marjorie Nordlinger, Esquire Washington, DC 20555 Deputy General Counsel l
U.S. Nuclear Regulatory Commission l
Washington, DC 20555
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