ML20245J733

Request of Cap Rock for Reevaluation of Director'S Determination That No Significant Changes in Licensee Activity Warrant Antitrust Review at OL Stage.Certificate of Svc Encl

ML20245J733
Person / Time
Site:	Comanche Peak
Issue date:	07/26/1989
From:	Adragna J CAP ROCK ELECTRIC COOPERATIVE, INC., MILLER, BALIS & O'NEIL
To:	Office of Nuclear Reactor Regulation
References
CON-#190-9877 A, NUDOCS 8908180166
Download: ML20245J733 (13)

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UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGUIATORY COMMISSION Texas Utilities Electric )

Company, 3.1; & ) Docket Nos. 50-445A, Comanche Peak Steam Electric ) 50-446A Station, Units 1 and 2 )

TO: Director, ,

Office of Huclear Reactor Regulation '2 P.

REQUEST OF CAP ROCK ELECTRIC COOPERATIVE, INC. .'

FvR REEVALUATION OF THE DIRECTOR'S DETERMINATION THAT THERE EAVE BEEN NO SIGNIFICANT CEANGES IN LICENSEE'S ACTIVITY TEAT WARRANT AN ANTITRUST REVIEW AT THE QPERATING LICENSE STAGE Pursuant to 10 C.F.R. $ 2.101(e) (2) , Cap Rock Electric Cooperative, Inc. (" Cap Rock") hereby requests that the Director of the Office of Nuclear Reactor Regulation (" Director")

reevaluate and reverse his determination that no significant changer; have occurred in the licensee's activities subsequent to the antitrust review associated with the construction permit for Unit 1 of the comanche Peak Steam Electric Station.1/ Cap Rock submits that the Director's determination is based upon a misinterpretation of the summer decision 2/ and factual conclusions that are contradicted by substantial and unrebutted evidence.

The overriding question is whether the willful abrogation of the Comanche Peak antitrust license conditions by Texas Utilities 1/ The Director's finding was published at 54 Esd. Eg.g. 26865 (June 26, 1989).

2/ South Carolina Electric & Gas Co.. et. al. (Virgil C. Summer Nuclear Station, Unit No. 1),13 N.R.C. 862 (1981).

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4 Electric Company ("TUEC") constitutes a significant change in TUEC's activities within the meaning of Section 105(c) (2) of the Atomic Energy Act, 42 U.S.C. 5 2135(c) (2) . Cap Rock believes that the nature of the violations, and the denigration of Commission jurisdiction that results from such violations, lead ineluctably to the conclusion that TUEC's abrogation of the -

license conditions is a significant change within the meaning of Section 105(c) (2) .

The antitrust review instituted by the Commission in 1978 was terminated because, and only because, TUEC agreed to abide by the terms of the antitrust license conditions.2/ TUEC's willful violation of the conditions, therefore, is necessarily a significant change in TUEC's activities. In 1980 TUEC agreed to abide by the conditions imposed by this Commission, now TUEC refuses to abide by and to honor those same conditions. TUEC's current violations are relevant to show that the anticompetitive practices that the conditions sought to preclude are, contrary to the Staff and Director findings, now being undertaken again by TUEC. Perhaps more importantly, TUEC's current violations are, themselves, new and independent evidence of ongoing TUEC enticompetitive conduct of precisely the nature of conduct the 2/ Houston Lichtina & Power Comoany, et al. (South Texas Proiect. Units 1 and 2) and Texas Utilities Generatina l

Comoanv. et al., (Comanche, Peak Steam Electric Station.

! Units 1 and 2), " Memorandum and Order Approving Settlement  ;

Agreements and Proposed Licensed Conditions and Dismissing 1 Proceeding," 15 NRC 1143 (1982).

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~ Commission explicitly sought to prevent in 1980 through institution of the license conditions.

Abrogation of the antitrust license conditions leaves TUEC's monopoly power and monopolistic proclivities unchecked, a situation that impelled the Department of Justice to recommend, j and the Commission in 1978 to institute, an antitrust hearing.1/

The apparent absence of effective antitrust license conditions, and the essentially unrebutted evidence of TUEC's anticompetitive activities presented by Cap Rock, necessitate that the Commission institute a full investigation and hearing into TUEC's conduct and fashion an effective remedy.2/ The need for such Commission action is only heightened by TUEC's impenitent attitude and actions.f/ Cap Rock submits that the failure to institute an i

af Finding of No Significant Antitrust Changes (" Staff Finding"), p. 3. " Staff" is intended herein to have the  ;

same meaning as the term has when used by the Director in ]

his finding of no significant changes. 54 Egd. Eng. at 26865. i 2/ As discussed in the following section, if the Director decides, as Cap Rock believes, that TUEC's anticompetitive  ;

conduct is already proscribed by the current license l 1

conditions, then the need to fashion a new remedy is obviated. But the fact that the Director may compel TUEC, through enforcement of the existing license conditions, to provide the services to which Cap Rock is entitled under the  !

license conditions does not obviate the relevance of TUEC's  !

willful violation of those license conditions as evidence of significant changes in TUEC's activities.

f/ Indeed, Staff noted that TUEC's activities, as alleged by Cap Rock, "may represent recurrences of problems that were addressed and remedied during the antitrust construction permit review ...." Staff Finding, p. 31.

l antitrust hearing in light of these facts would constitute ,

reversible error.2/

I. TEE FACT TEAT TUEC MAY BE COMPELLED TO BONOR ITS LICENSE CONDITIONS IN A COMPLIANCE PROCEEDING DOES NOT OBVIATE TEE COMMISSION'S OBLIGATIONS UNDER BECTION 105fc)(2).

The Director and Staff findings each suggest that the l allegations raised and documented by Cap Rock may more appropriately be addressed in a compliance proceeding. The Director noted:

Although there have been allegations made recently by an electric cooperative power system in TU Electric's service area that TU Electric has not provided transmission and coordination services upon request, staff believes, in light of the Summer decision, that the issues raised by the cooperative are not germane to the Commission's "significant changes" review, but may be more appropriately addressed in the context of a compliance proceeding.

54 Ind. Eng. 26s65, n. *.3/

Cap Rock readily agrees that TUEC's actions are appropriately the subject of a petition to the Director to enforce the existing antitrust license conditions.2/ On May 12, 1989, Cap Rock filed a motion with the Director seeking 2/ Many of the findings concerning supposed changes in the Texas bulk power market and TUEC's supposed cooperation do not, in Cap Rock's view, comport with the realities of the electric utility industry in Texas. This request for reevaluation is nevertheless limited to the Director's treatment of the matters raised in Cap Rock's comments.

g/ Egg, also, Staff Finding, pp. 31-32.

2/ As discussed in the following section, Cap Rock believes that Staff has misinterpreted the Summer decision.

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enforcement of the antitrust license conditions pursuant to.

l Section 2.206 of the Commission's regulations.1pf The fact that TUEC's actions may violate existing license conditions and therefore be subject to enforcement, however, does not negate the relevance of those actions to the commission's "significant I changes" determination. To the contrary, TUEC's willingness to persist in anticompetitive conduct in the face of express license conditions prohibiting that conduct is new and compelling evidence that TUEC is maintaining a situation inconsistent with the antitrust laws. Moreover, TUEC's flagrant disregard for the license conditions evidences a seemingly arrogant unconcern for its obligations under this Commission's license.

• Cap Rock submits that Commission consideration of TUEC's ongoing violations of the existing license conditions is essential to the validity Commission's "significant changes" determination. For example, the Director found that " increased coordination and cooperation among bulk power suppliers has resulted in a more open market in the State of Texas" and that TUEC "has implemented numerous transmission and scheduling agreements which have enabled a variety of systems to shop for alternative power throughout the northern portion of the state."

54 f.gd. Eg.g. 26865. Yet it is uncontroverted that TUEC has refused to provide these services to Cap Rock and has refused to acknowledge an obligation to provide these services to Cap Rock 1pf Request of Cap Rock Electric Cooperative, Inc. For An Order Enforcing And Modifying Antitrust License Conditions, May 12, 1989.

under the license conditions.11/ The Director's finding is.also belied by the findings and conclusions of a hearing examiner of the Public Utilities commission of Texas ("PUCT"), which subsequently was approved by the PUCT, that:

According to Rayburn Country, having alternative economy energy arrangements creates ccmpstition among the power suppliers and providez alternative sources of power.in the event of curtailments because of transmission limitations or other reasons.

Un f ortunate ly. Rayburn Country will crebably not be able to necoriate additional economy enerav arrangements, because TU Electric has refused to enter into any more schedulina-acent screements for economy enerav.[12/]

By declining to consider Cap Rock's allegations in the context of the changed circumstances determination, therefore, the Commission has blinded itself te unrebutted evidence that demonstrates that its factual findings cre in error.

Staff's conclusion that, because cap Rock?s allegations may be addressed in a compliance proceeding they are irrelevant to its significant changes determination also presumes that which TUEC persistently denies: that its anticompetitive activities are proscribed by the existing antitrust license conditions. Cap Rock believes that there can not be, in good faith, any question that the antitrust license conditions obligate TUEC to sell Cap 11/ Egg TU Electric Response to Comments of Cap Rock Electric Cooperative, Inc., dated October 21, 1988 ("TU Res."), p.2; Reply of Cap Rock Electric Cooperative, Inc. to Comments of Texas Utilities Electric Company, dated February 10, 1989

(" Cap Rock Reply"), pp.6-10.

12/ Supplement to Comments and Reply Comments of Cap Rock Electric Cooperative, Inc., dated harch 10, 1989, Attachment B, p. 9 (emphasis supplied).

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- Rock the servicas that Cap Rock has requested. Nevertheless, in response to TUEC's obdurate refusal to recognize this fact, Cap Rock has demonstrated that TUEC's activities are clearly

- inconsistent with the'antitruct laws. W TUEC's anticompetitive activities are, therefore, new and independent evidence that refutes Staff findings and should have been considered and evaluated as part of the "significant changes" determination.

Cap Rock submits that consideration of TUEC's ongoing anticompetitive activities as part of the "significant changes" determination would. result in a finding of significant changes and would require the: institution of an antitrust hearing before the issuance of an operating license.

II. STAFF PROVIDED 'NO EXPLANATION WHY CAP ROCK'8 A' LEGATION 8 DO NOT FALL WITHIN THE SUMMER DECISION AND STAFF'8 APPARENT INTERPRETATION OF THE SUMMER DECISION IS IF ERROR.

Staff concluded that the issues raised by cap Rock were not "within the scope of the Commission's Summer decision." W Staff did nct explain how it reached this conclusion, and the

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Director accepted this finding without comment. The logic and reasoning behind these findings are therefore inscrutable. Basic principles of administrative law require that an agency explain the bases and reasoning behind its decisions and, within those ,

1 W Cap Rock Cou.ments, pp. 13-34.

.W Staff Finding, p. 31.

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decisions, resolve factual conflicts on the record before it.11/

Moreover, an agency may abuse its discretion by proceeding to a decision which the record before it will not sustain because the record raises fundamental questions for which the agency has adduced no reasoned answers.11/

Cap Rodk has adduced substantial and unrebutted evidence of

• TUEC's refusals to honor the license conditions and actions otherwise inconsistent with the antitrust laws. As demonstrated above (supra at 5-6), many of TUEC's actions directly contradict findings made by Staff end the Director. Absent some reasoned explanation that resolves these factual conflicts, the findings cannot stand. As discussed below, TUEC's current anticompetitive activities fall well within the test established by the Commission in the Summer case.

Under the Summer test, "significant changes" exist that warrant institution of an antitrust hearing under Section 105 (c) (2) if there are:

1. Changes that have occurred since the previous antitrust review of the licensee;

2. Changes that are reasonably attributable to the licensee in the sense that the licensee 15/ Greater Boston Television Corn. v. F.C.C., 444 F.2d 841, 850-52 (D.C.Cir. 1970), cert. denied 403 U.S. 923 (1971);

Portland Cggent Association v. Ruckleshaus, 486 F.2d 375, 393-94 (D.C. Cir. ) , gartz Annied 417 U.S.921 (1973);

Colorado Interstate Gas Co. v._EPC, 324 U.S. 581 (1945);

City of Houston v. P.A.A., 679 F.2d 1184 (5th Cir, 1982).

15/ Natural Resources Defense Council v. Nuclear Reculatory Commission, 547 F.2d 633, 646 (D.C. Cir. 1976), rev'd on j

other arounds Vermont Yankee Power Coro, v. N.R.D.C., 435 U.S. 519 (1978).

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i has sufficient causal relationship to the .

change that it would not be unfair to permit it to trigger a second antitrust review; and

'3. Changes that are "significant" in the sense that-the change has antitrust implications that would likely warrant Commission remedy.

South Carolina Electric & Gas Comoany, et al. (Virgil C. Summer.

Nuclear Station, Unit No. 1), 13 NRC 862, 871-72 (1981).12/ The

. Commission has stated that the third criterion requires assessment of whether the changes would likely warrant commission remedy.and the type of remedy.lff TUEC's current anticompetitive activities clearly fall within this test. Each anticompetitive activity for which Cap Rock has adduced evidence either has occurred since 1986, well after the last antitrust investigation in 1974, or is still occurring.12/ The activities for which Cap Rock seeks remedy are obviously attributable to TUEC and TUEC alone. The activities are clearly significant, as they are precisely the kind of 12/ Egg gig.g, South Carolina Electric & Gas Comoanv (Virgil C.

Summer Nuclear Station, Unit No. 1), 11 NRC B17 (1980);

"- ESDtlal Electric Power Cocoerative. Inc. (Virgil C. Summer Nuclear Station, Unit No. 1), 14 NRC 787 (1981).

13/ Summer, 13 NRC at 872.

12/ Notwithstanding recent TUEC protestations (in its June 30, 1989 response to Cap Rock's request for an order enforcing the license conditions) that it is now willing to sell cap Rock partial requirements and 12mg other necessary services, Cap Rock still does not have a contract for those services and has not received any written or other communication about this subject. Nor has TUEC quoted Cap Rock the rates, terms and conditions for those services. Moreover, TUEC persists'in its position that it has no obligation to provide Cap Rock these services under the license conditions.

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activities that the Commission sought to remedy through the.

license conditions,7and the remedy is obvious: strict enforcement of the existing license conditions assuming they are found already to proscribe TUEC's conduct, or amendment and enforcement of the license conditions to' cure TUEC's anticompetitive conduct.

Under'the circumstances, Cap Rock believes that the apparent Staff conclusion that TUEC's current anticompetitive activities need not be considered in the context of this "significant changes" determination is. incorrect and should be reversed..

CONCLUSION For the reasons stated above and in earlier pleadings in this matter, Cap Rock requests that the Director reevaluate his June 26, 1989 determination, find that significant changes in TUEC's activities within the meaning of Section 105(c) (2) have occurred, and institute an antitrust investigation and hearing.

Respectfully submitted, B ~A obert A. O'Neil 4'

Jchn Michael Adragna Attorneys for Cap Rock Electric Cooperative, Inc.

Miller, Balis & 0'Neil, P.C.

1101 Fourteenth Street, N.W. .

Suite 1400

' Washington, D.C. 70005 (202) 789-1450 July 26, 1989

1 UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULETORY COMMISSION Texas Utilities Electric' )

Ccapany, at alt ) Docket Nos. 50-445A Comanche Peak Steam Electric ) 50-446A Station, Units 1 and 2 )

CERTIFICATE OF BERVICE I hereby certify that a copy of the foregoing " Request of Cap Rock Electric Cooperative, Inc. For Reevaluation of The Director's Determination That There Have Been No Significant Changes'In Licensee's Activity That Warrant An Antitrust Review At The Operating License Stage" was served by hand delivery to:

Director William Lambe Office of Nuclear Reactor Office of Nuclear Regulations Regulations U.S. Nuclear Regulatory U.S. Nuclear Regulatory One White Flint North Commission 11155 Rockville Pike One White Flint North Rockville, MD 20852 11155 Rockville Pike Rockville, MD 20852 Mr. Victor Stello Executive Director for Cecil O. Thomas, Jr. Operations Chief Room 17H-1 Policy Development Technical One White Flint North Support Branch 11155 Rockville Pike Main Stop 12-3 Rockville, MD 20852 One White Flint North 11155 Rockville Pike Rockville, MD 20852 and by first class mail, postage prepaid on the 26th day of July, 1989 to:

Peter B. Block, Esquire Chairman Administrative Judge Atomic Safety and Licensing Atomic Safety and Licensing Appeal Board Panel Board U. S. Nuclear Regulatory U. S. Nuclear Regulatory Commission Commission Washington, D.C. 20555

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Dr. Walter H. Jordan Ellen Ginsberg, Esquire Administrative Judge Atomic Safety and Licensing 881 W. Outer Drive Board Panel Oak Ridge, TN 37830 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Elizabeth B. Johnson Thomas G. Dignan, Esquire

' Administrative Judge William E. Eggeling, Esquire Oak Ridge Natural Laboratory Ropes & Gray P. O. Box X, Building 3500 225 Franklin Street Oak Ridge, TN 37830 Boston, MA 02110 Chairman Roy P. Lessy, Jr., Esquire Atomic Safety and Licensing Akin, Gump, Strauss, Hauser U.S. Nuclear Regulatory & Feld Commission 1333 New Hampshire Ave., N.W.

Washington, D.C. 20555 Suite 400 Washington, D.C. 20036 Mr. James E. Cummins Mrs. Juanita Ellis Resident Inspector President, CASE Comanche Peak S.E.S. 1426 S. Polk Street P. O. Bon 38 Dallas, Texas 75224 Glen Rose, Texas 76043 Mr. William L. Clements Anthony Z. Roisman, Esquire Docketing & Service Branch Cohen, Milstein & Hausfeld U.S. Nuclear Regulatory 1401 New York Avenue, N.W.

Commission Suite 600 Washington, D.C. 20555 Washington, D.C. 20005 Nicholas S. Reynolds, Esquire Billie Pirner Garde, Esquire Wiliam A. Horin, Esquire Citizens Clinic Director Bishop, Liberman, Cook, Government Accountability Purcell & Reynolds Projects 1200 17th Street, N.W. 1901 Que Street, N.W.

Washington, D.C. 20036 Washington, D.C. 20009 Robert A. Wooldridge, Esquire Nancy Williams Worsham, Forsythe, Sampels Cygna Energy Services, Inc.

& Wooldridge 101 California Street 2001 Bryan Tower Suite 10000 Suite 2500 San Francisco, CA 94111 Dallas, Texas 75201 i

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i- Renea Hicks, Esquire Assistant Attorney Gcneral

. Environmental Protection Div.

P. O. Box 12548 Capitol. Station Austin, Texas 78711 Mr. Lanny A. Sinkin Christic Institute 1234 North Capitol Street Washington, D.C. 20002 Mr. Kenneth A. McCollom Administrative Judge 1107 West Knapp Stillwater, OK 74075 Stuart A. Treby, Esquire Geary S. Mizuno,. Esquire Office of the Executive Legal Director U. S. Nuclear Regulatory

ommission Washington, D.C. 20555 Joseph Gallo, Esquire Hopkins, Sutter, Hamel & Park 888 16th Street, N.W.

Washington, D.C. 20006 Mr. Robert D. Martin Regional Administrator, Region IV U.S. Nuclear Regulatory Commission 611 Ryan Plaza Dr., Suite 1000 Arlington, TX 76011 John Michael Adragna "

Miller, Balis & O'Neil, P.C.

1101 Fourteenth Street, N.W.

Suite 1400 Washington, D.C. 20005 (202) 789-1450 l

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