ML20210A031
| ML20210A031 | |
| Person / Time | |
|---|---|
| Site: | Millstone  |
| Issue date: | 07/20/1999 |
| From: | Gutierrez J CONNECTICUT LIGHT & POWER CO. (SUBS. OF NORTHEAST, MORGAN, LEWIS & BOCKIUS, WESTERN MASSACHUSETTS ELECTRIC CO. |
| To: | NRC COMMISSION (OCM) |
| References | |
| CON-#399-20665 LT, NUDOCS 9907220006 | |
| Download: ML20210A031 (16) | |
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,- UNITED STATES OF AMERICA USNHC NUCLEAR REGULATORY COMMISSION r JJ. 21 A10 5 1
) Off In the Matter of Northeast Nuclear Energy Company, tLal.
) AbI
) Docket No. 50-423 -L T Millstone Station, Unit 3 ) License No. NPF-49
. I MOTION OF THE CONNECTICUT LIGHT AND POWER COMPANY AND WESTERN MASSACHUSETTS ELECTRIC COMPANY FOR LEAVE TO INTERVENE AND PETITION FOR A HEARING t .
I. INTRODUCTION Pursuant to 10 CFR s 2.1306 of the Nuclear Regulatory Commission's ("NRC" or "Com-mission") Rules of Practice and Procedure, and in response to the NRC's June 30,1999 Federal Register Notice of Consideration of Approval of Ap;ication Regarding Proposed Corporate Merger and Opportunity for Hearing, see 64 Fed. Reg. 35191, The Connecticut Light and Power Company ("CL&P") and Western Massachusetts Electric Company ("WMECO") mou to inter-vene in the above-captioned proceeding and petition for an oral hearing. CL&P and WMECO are co-owners and licensees of Millstone Unit 3 ("Millste ' 3").
On March 15,1999, New England Power Company ("NEP"), a co-owner and licensee of Millstone 3, filed an application ("NEP Application") seeking authorization for an indirect trans-fer of control of NEP's ownership interest to The Nr.tional Grid Group plc (" National Grid"), a j holding company incorporated in England and Wales. NEP currently owns a 12.2% interest in l
Millstone 3.
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9907220006 970720 PDR ADOCK 05000423 C PDR jO3 i-
NEP is a who,lly owned subsidiary of New England Electric System ("NEES"), which entered into a merger agreement with National Grid on December 11,1998. Pursuant to the j L proposed merger, NEES will become a wholly-owned subsidiary of National Grid, and NEP will j remain a subsidiary of NEES? The effect will be an indirect transfer of the NEP interest to National Grid, an entity that is not an electric utility and that is a foreign entity. As described below, this license trensfer, if approved, could affect the financial, property, and other interests of CL&P and WMECO as co-owners and licensees of Millstone 3. Accordingly, CL&P and WMECO seek to intervene and request a hearing to ensure that these interests are protected.
II. PETITIONERS MEET THE STANDARDS FOR INTFRVENTION SET FORTH IN 10 CFR 2.1306 AND 10 CFR f 2.1308 i l
The Commission's standards for granting intervention in nuclear po wer plant license transfer proceedings are set forth in 10 CFR Q 2.1306 and 10 CFR Q 2.1308.
A. Identification of Petitioners Pursuant to 10 CFR Q 2.1306(b)(1), the names, addresses, and telephone numbers of peti-tior.ers are:
The Connecticut Light and Power Company Western Massachusetts Electric Company 107 Selden Street Berlin, Connecticut 06037-1616
.(860) 665-5000 1/ NEES is currently in tne process of merging with Eastern Utilities A:,sociates, which owns Montaup Electric Company, an approximate 4% owner of Millstone 3. In connection with this merger, NEP will acquire Montaup Electric Company's interest in Millstone 3, and as a result will own approximately 16% of Millstone 3.
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Service of documents in this proceeding is to be made on:
Jay M. Gutierrez Esq.
William E. Baer, Jr., Esq.
Goran P. Stojkovich, Esq.
Morgan, Lewis & Bockius LLP 1800 M Street, N.W. ,
Washington, D.C. 20036 '
(202) 467-7000 (202) 467-7176 (facsimile) guti7466@mlb.com (e-mail) baer7454@mlb.com (e-mail) !
stoj7684@mlb.com (e mail) l l
B. f_etitioners Have Standing and a Strong and Clear Interest that Will be Affected by the Proposed Indirect Transfer Entities that "own (or co-own) an NRC-licensed facility plainly have an AEA-protected interest in license proceedings involving their facility." North Atlantic Energy Service Corp. )
(Seabrc,ok Station, Unit 1), CLI-99-06,49 NRC 201,216 (1999). As the Commission recently l noted, "it is hard to conceive of an entity more entitled to claim standing in a license transfer case than a co-licensee whose costs may rise, and whose property may be put at radiological risk, as a result of an ill-funded license transfer. This kind of situation justifies standing based on 'real world consequences that conceivably could harm Petitioners and entitle them to a hearing."'Id. ,
at 215, quoting Yankee Atomic Electric Co. (Yankee Nuclear Power Station), CLI-98-21,48 NRC 185,205 (1998). For CL&P and WMECO, these real-world consequences wouZ include having to provide additional funding to make up for failures of a co-owner who is unable or unwilling to' meet its financial obligations to Millstone 3.
In this case, the NRC is asked to approve an indirect transfer of NEP's license to National Grid, a foreign entity that is not an electric utility. As co-owners and licensees of Millstone 3, 1 WA/1261031.1 3 e
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CL&P and WMECO,have direct and vital interests in the following areas implicated in the proposed transfer:
- . the continued financial qualifications ofP and i
- assurins appropriate mechanisms to prevent foreign control of NEP's license.
These issues are directly relevant to judgments that the Commission must make in
' response to the proposed indirect transfer. As co-owners, CL&P's and WMECO's property interests in Millstone 3 will be affected if there is not a continued assurance of NEP's financial qualifications or if the extent of foreign control remains unclear. Specifically, CL&P and i l
WMECO will be injured if the Commission grants the indirect transfer because the information
'in the NEP Application does not provide sufficient assurance that NEP will remain financially. j qualified or that NEP's proposed " negation action plan" places appropriate limits on foreign L
domination or control. Accordingly, CL&P and WMECO may suffer financial harm and harm to l their property if NEP no longer provides sufficient financial resources to support safe and
- efficient operation of Millstone 3, or if NEP's foreign owner takes action not in the interest of this U.S. nuclear plant. These injuries can be prevented or redressed by the Commission by !
' denial of the proposed license transfer or by conditioning of the transfer on a showing of
' adequate financial assurances and appropriate mechanisms to prevent foreign control of the l license. ' There interests are clearly within the " zone ofinterest" protected by the Atomic Energy Act of 1954, as amended,42 U.S.C. Q 2011, et. seq. (the "Act").
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. 1 C. Statement of Admissible Issues Petitioners seek to intervene and request a hearing on the following issues:
- 1. NEP has not provided sufficient assurance ofits continued financial quali-fications to support Millstone 3 as required by the Act and its implement- l l ing regulations; and
- 2. NEP's " negation action plan"is not sufficient to prevent foreign domina-tion or control as required by the Act and its implementing regulations.
Both of these issues fall squarely within the scope of this proceeding and are relevant and i 1
material to the findings NRC must make before granting an indirect transfer of NEP's license. !
i With respect to each issue, there is a genuine and material dispute based upon the information ;
provided in the Application, and Petitioners have provided facts and references supporting each issue. l
- 1. NEP has not provided sufficient assurance ofits continued financial qualifications to support Millstone 3 as required by the Act and its implementing regulations.
The issue of NEP's continued financial qualifications is both within the scope of this proceeding ar.d relevant to the findings the NRC must make to grant th<: :71ication forlicense transfer. See 10 CFR Q 2.1306(b)(2)(i) & (ii). Section 182a of the Act authorizes the Commis-
- sion to establish financial qualification requirements, and the Commission's regulations define the information that must be included in licenv. applications. Specifically,10 CFR Q 50.80(b) requires that an application for transfer of control of a license must include the informr' ion r ecessary to establish such financial qualification as provided in 10 CFR Q 50.33. Pursuant to these regulations, an applicant may either: (1) establish that it is an " electric utility" exempt from financial qualifications review pursuant to 10 CFR Q 50.33(f); or (2) submit information 1.wA/126to31.1 5
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- which demonstrates that the licensee either possesses or has reasonable assurance of obtaining
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the funds necessary to cover the estimated operating costs for the period of the license?
~ In iniplementing these regislations, NRC's guidance regarding the review oflicense I. transfers in connection with mergers makes clear that the NRC must either determine that "the
( r surviving licensed owner . . . will remain an ' electric utility' as defined in section 50.2," or mt.st evaluate the financial qualifications of a non " electric utility'.' applicant. NUREG-1577, Rev.1,
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" Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommission-ing Funding Assurance,"Section III.l.e. at 6-7 (March 1999) ("SRP").- NEP's continued financial qualifications are therefore directly within the scope of this proceeding and relevant to
< approval of the requested license transfer.
- Notwithstanding these requirements, NEP has not provided sufficient information in its
. application for the NRC to find that it, as the surviving licensed owner, will remain an " electric
. utility" within the meaning'of 10 CFR QQ 50.2 and 50.33(f). NEP's application also does not ,
i include the information required for the NRC to find that, as a non " electric utility," NEP either
. possesses or has reasonable assurance of obtaining the funds necessary to cover estimated operat-i ing costs ofits share in Millstone 3. The specific facts which support Petitioners' position with respect to the inadequacy of Applicants' financial qualifications are set forth below. See 10 CFR l
l'2.1306(b)(2)(iii) and (iv).
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-- 2/ 10 CFR Q '50.2 defines an electric utility as an entity that generates or distributes l
' electricity and which recovers the cost of this electricity, either directly or indirectly, through 'l rates established by the~ entity itself or by a separate regulatory authority. ;
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. NiiP's application is silent on 'whether it will continue to qualify as an " electric utility"
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~ under 10 CFR Q@ 50.2 and 50.33(f). Rather, the Application asserts that in the context of providing adequate assurance for decommissioning fund;ng "NEP provides assurances equiva-lent to those offered by an ' electric utility' pursuant to 10 CFR Q 50.75." NEP Application at 6
~ (emphasis added).' However, this assertion relates to decommissioning funding and neither
' addresses nor meets the standards regarding financial qualifications to support ongoing opera-tions and maintenance. The Commission, therefore, has been provided with no basis for -
. concluding that NEP will continue to be an electric utility after the merger (i.e., that it will
- coritinue'to recover its share of the costs of generating electricity through rates established by a separate regulatory authority. See 10 CFR 50.2)?
[ ' Given that NEP has provided no information for determining whether or not it will con-tinue to qualify as an electric utility, the only basis for reviewing and approving NEP's continued financial qualification is an evaluation of NEP as a non-electric utility. However, NEP has simi-larly failed to provide the infonnation required of non-electric utilities under 10 CFR QQ 50.33
- and 50.80.(Under these regulations, NEP is required to submit what is often called a "five-year
- proforma, i.e., estimates for the total operating costs for five years and an indication of"the Jource(s) of funds to cover these costs.".10 CFR Q 50.33(f)(2). In addition, NEP may be required to provide "information on cash or cash equivalents that would be sufficient to pay fixed 3/: - In this regard, the only inforraation provided is a passing reference that a contract termin-
' ation charge (CTC) for cedain of NEP's affiliates in one of thejurisdictions in which it operates, contains a variable component that will enable NEP to recover "80% of the operations and
, 7 maintenance' expenses and property taxes for the units." See NEP Application' at 44-45.
- However, NEP provides no discussion' or context to Atermine whether it will rema;n an " electric
, , , utility" as defined in 10 CFR QQ 50.2 and 50.33(f).
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O operating costs during an outage of at least six months" as suggested by the NRC's SRP.
NUREG 1577, Rev. I at 5.i' Absent such information, the NRC has no basis for a determination that following the transfer NEP will continue to be financially qualified to meet its obligations under its license, and that the transfer is otherwise consistent with applicable regulations. See 10 CFR { 50.80(c)(1) and (2). Therefore, NEP's application is defective and must be either cured or denied.
- 2. NEP's proposed " negation action plan" is not sufficient to prevent foreign domination or control as required by the Act and its implementing reguistions.
Under the Applicant's proposed transaction, NEES will become a wholly-owned subsid-iary of the National Grid Group plc, a "public limited company" incorporated under the laws of England and Wales. NEP will remain a wholly-owned subsidiary of NEES. Accordingly, NEP will indirectly become 100% owned by National Grid, a foreign entity.
NEP's application recognizes that conditions need to be imposed through a " negation plan" to ensure that this transaction fully complies with 103d of the Act, prohibiting issuance of a license te any alien or any corporation that is " owned, controlled, or dominated" by a foreign entity. This restriction is reflected in the Commission's rules at 10 CFR {@ 50.38 and 50.40(c).
Furthermore, the Standard Review Plan on Foreign Ownership, Control or Domination requires that applicants propose a " negation action plan" to provide positive measures to assure that the 4/ The quoted guidance falls under Section III.l.b of the SRP which applies to " Operating License Reviews." Notably, however, the guidance for reviews oflicense transfers in Section III.I.e. specifically acknowledges that "the reviewer will use the criteria described in other sections ofIII.1 of this SRP, as appropriate, to conduct his or her license transfer reviews."
NUREG-1577, Rev. I at 6.
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foreign ownership interest is denied control or domination over licensee decisions. G4 Fed. Reg.
10166,10169 (March 2,1999).
NEP's proposed negation action plan fails to provide sufficient assurance that the license will not be controlled or dominated by National Grid and, therefore, NRC does not have a suffi-cient basis to find that the proposed transaction complies with the Act's prohibition against i
l foreign control. It is without question that the issue of foreign c'ontrol of NEP's licenses is both within the scope of this proceeding and relevant to the findings the NRC must make to grant the L application for litense transfer. 42 U.S.C. { 2133(d); 10 CFR (( 50.38 and 50.40 (c). More -
specific facts and references are provided below. See 10 CFR j 2.1306(b)(2)(iii) and (iv).
Following the proposed merger, NEP will be 100% owned (through NEES) by National Grid, a foreign entity. Directly or through NEES, the NEP Board of Directors will be answerable to, and subject to appointment or dismissal by, National Grid. In other words, NEP's Board will i
be subject to control by National Grid. Furthermore, there do not appear to be any restrictions on l Board membership of NEP, so that a majority of NEP's Board may ultimately be comprised of foreign nationals - an even more direct form of foreign control?
' In an effort to mitig' ate foreign domination and control, NEP has proposed a " negation l action plan," NEP Application at 32, that consists essentially of three elements:
(i): A Nuclear Committee of the NEP Board, comprised of U.S. citizens, has been created and has been given authority over a range of nuclear matters
- with the exception of certain rights reserved u de full NEP Board, Id.t F Four of nine of the Directors of NEES, including its Chairman, will be foreign nationals - i
, . following the merger with National Grid. ~ As with NEP, there appear to be no limits precluding
- NEES, the direct owner of NEP, from being controlled by a foreign-majority Board.
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(ii) , Only the Nuclear Committee will have access to certain sensitive nuclear-related information, id. at 35; and (iii)' The Nuclear Committee will be free from any foreign control or influence, because Nuclear Committee members will be shielded by "whistleblower protection." Id. at 36.
As demonstrated below, this negation plan does not provide sufficient protection against foreign
' domination or control.
-With respect to establishment of a Nuclear Committee, NEP's negation action plan is insufficient because it reserves fundamental rights over nuclear matters to the full NEP Board of
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Directors such that the full Board (which has no prohibition against foreign control), and not the Nuclear Committee, retains substantial control of the license. Among the rights reserved to the full NEP Board of Directors are:
= the right to decide whether or not to close the facility and begin decom-missioning and whether to seek license renewal, id at 33;
.. . the right to decide whether to sell, lease, or otherwise dispose ofNEP's interest in the facility; and -
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. the right to take action ordered by the Commission or any agency or court i ofc apetentjurisdiction. Id.e' In its " Preliminary Criterion for Non-owner Operatitt Service Companies," the Commis-i sion enumerated areas to be considered when determining whether certain decisionmaking auth- )
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ority is sufficient ' to constitute a transfer of an NRC license. 63 Fed. Reg. 54,389. Included in these enumerated areas is the decision to' permanently cease operations. Id. at 54,390. As a 6/l L CL&P and WMECO recognize' that by reason of the Sharing Agreement NEP has limited authority to unilaterally implement any of these actions; nonetheless, the Petitioners remain concemed that decisions on whether or not to support and, in tum, fund these actions rernain in control of a foreign entity.
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practical matter, retention of this right (as well as the right to dispose of NEP's interest in Millstone 3) by the full NEP Board provides it with tremendous leverage to influence the actions of Nuclear Committee members, as well as to directly impact operations at Millstone 3 by exer- i cising the authority to withhold funds. Expressly reserving to the full NEP Board final decision-making authority with respect to continuing or permanently ceasing operations is tantamount to a
. transfer of control of the license to National Grid. Thus, the negation plan is insufficient to i
provide assurance NEP's license will not be controlled er dominated by a foreign interest. l Another of the powers reserved to the full NEP Board of Directors is the right to "take
. action': ordered by this Commission or any other agency or court of competentjurisdiction. NEP Application at 33-34. This ' exception is overly broad and provides the opportunity for a poten-tially foreign-controlled NEP Board to bypass the Nuclear Committee's authority to act on nuclear matters that are addressed by an agency or court order. The authority to "take action"in
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response to'an order would logically encompass the right to decide whether to comply, challenge, e i or how to interpret such an order. All of these determinations go to the essence of the responsi-bility of being an NRC licensee. In these instances, a foreign-controlled NEP Board would be able to bypass the Nuclear Committee and exert the very control prohibited by the Act. Thus, the i proposed negation action plan does not provide adequate assurance that NEP's license will not be i
. controlled or dominated by any foreign interest.2/
i 7/ ' NEP's purported extension of"whistleblower protection" to Nuclear Committee mem-
, , bers similarly adds no greater assurance that the Nuclear Committee and NEP's license will not
- be dominated or controlled by a foreign interest. The Commissi
- ,a's "whistleblower" regulations
' contained in 10 CFR Q 50.7 prevent any licensee - foreign dominated or otherwise from dis-criminating against any employee for engaging in " protected activity." Id. at 37. The existence 1 (continued...)
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III.. CONCLUSI,0N For the foregoing reasons, CL&P and WMECO respectfully request that they be permit-l ted to intervene in this proceeding and that a hearing be granted on the issues presented. If NEP 1
I is given the opportunity to cure the defects in its application, the Petitioners respectfully request 1
that (1) they be provided thirty days to review and assess the new information provided by NEP, and (2) they be prw :s with an opportunity to amend, supplement, or withdraw this Petition based upon their assessment of any such new information.
Respectfully submitted,
.Jffp. Gutiep'/z, Esq./
William E. Bier, Jr. Esq.
Goran P. Stojkovich, Esq.
Counsel for CL&P and WMECO Morgan, Lewis & Bockius LLP 1800 M Street, N.W.
Washington, D.C. 20036 (202) 467-7466 (202) 467-7176 (facsimile) guti7466@mlb.com (e-mail) .
July 20,1999 i
1 1
1 2/(... continued) of this regulation does not vitiate or supplant the Act's separate prohibition on foreign j domination or control. In short, the purported endorsement of 10 CFR Q 50.7 (which would l apply in any event) in NEP's negation action plan provides no additional acu' ace that the i licensee will not be controlled or dominated by any foreign interest and would not prevent harm i as a result of that domination. ;
Il WA/1261031,1 12 i
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DOCKETED UNITED STATES OF AMERICA USHPC NUCLEAR REGULATORY COMMISSION F
T4) JUL 21 A10.53
. ) oi:;
In the Matter of ) a
-) AD .
NORTHEAST NUCLEAR ENERGY ) Docket No. 50-423 COMPANY, etal )
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Millstone Station Unit 3 )
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, NOTICE OF APPEARANCE The undersigned, being an attorney at law in good standing admitted to practice before the courts of the District of Columbia, hereby enters his appearance as counsel on behalf of petitioners The Connecticut Light and Power Company and Western Massachusetts Electric Company, in any proceeding related to the above-captioned matter.
.1 f)M. Dut' ez\}
(ORG - EWIS & BOCKIUS LLP 1800 M Street, N.W.
Washington, D.C. 20036 i Telephone: (202) 467-7466 '
Facsimile: (202) 467-7176 E-Mail: guti7466@mlb.com Dated: July 20,1999 l-WA:1261395.1
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00CKETEO
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UNITED STATES OF AMERICA USNRC NUCLEAR REGULATORY COMMISSION o9 JUL 21 A10 53 In the Matter of ) O{p, ADK!- - "
)
NORTHEAST NUCLEAR ENERGY ) Docket No. 50-423 COMPANY cLal )
)
Millstone Station, Unit 3 )
)
NOTICE OF APPEARANCE The undersigned, being an attomey at law in good standing admitted to practice before the courts of the District of Columbia, hereby enters his appearance as counsel on behalf of petitioners The Connecticut Light and Power Company and Western Massachusetts Electric Company, in any proceeding related to the above-captioned matt :r.
~
William E. Baer, Jr. !
MORGAN, LEWIS & BOCKIUS LLP 1800 M Street, N.W.
Washington, D.C. 20036 Telephone: (202) 467-7454 :
Facsimile: (202) 467-7176 E-Mail: baer7454@mlb.com Dated: July 20,1999 l
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DOCKETED l- -
UNITED STATES OF AMERICA (!SHRC
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L NUCLEAR REGULATORY COMMISSION I
99 JiL 21 T4053 !
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In the Matter of ). AD$ ,
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NORTHEAST NUCLEAR ENERGY ) Docket No. 50-423 !
COMPANY, etal )
)
Millstone Station, Unit 3 )'
)
NOTICE OF APPEARANCE The undersigned, being an attomey at law in good standing admitted to practice before the courts of the District of Columbia, hereby enters his appearance as counsel on behalf of petitioners The Connecticut Light and Power Company and Western Massachusetts Electric Company, in any proceeding related to the above-captioned matter.
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Goran P. Stojkovich a MORGAN, LEWIS & BOCKIUS LLP 1800 M Street, N.W.
Washington, D.C. 20036 Telephone: (202) 467-7684 i Facsimile: (202) 467-7176 E-Mail: stej7684@mlb.com Dated: July 20,1999 l
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,.- CERTIFICATE OF SERVICE Uf RC i.
I hereby certify that copies of the foregoing Motion and Notices of MpeaEanc7elh a@bM
- served upon the following by courier this 20th day of July,1999.
OFFi; Office of the Secretary rum -
U.S. Nuclear Regulatory Commission ADJU 7 AFF Attn: Rulcmakings and Adjudications Staff .
l Washington, D.C. 20555-0001 I hereby certify that copics of the foregoing Motion and Notices of Appearance have been
' served upon the following by facsimile, with a conforming copy deposited in the U.S. mail, first class, postage prepaid, this 20th day of July,1999.
Office of the General Couns.;l - Samuel Behrends IV, Esq.
l U.S. Nuclear Regulatory Commission Mary A. Murphy, Esq.
Washington, D.C. 20555-0001- Yvonne M. Coviello, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Lillian M. Cuoco, Esq. 1875 Connecticut Avenue, N.W., Suite 1200 Senior Nuclear Counsel Washington, D.C. 20009 '
Northeast Utilities Service Company 107 Selden Street Paul K. Connolly, Jr., Esq.
l< Berlin,CT 06037 LeBoeuf, Lamb, Greene & MacRae, L.L.P.
260 Franklin Street Edward Berlin, Esq. Boston,MA 02110 Scott P. Klurfeld, Esq. ,
Swidler Berlin Shereff Friedman, LLP
]
3000 K Street, N.W., Suite 300 -l Washington, D.C. 20007-5116
. Thomas G. Robinson, Esq. -
LNew England Power Company Md. dutip[rez y ,
- 25 Research Drive y I Westborough,MA 01582 I
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