[Federal Register Volume 64, Number 121 (Thursday, June 24, 1999)]
[Notices]
[Pages 33916-33927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16073]
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NUCLEAR REGULATORY COMMISSION
[Docket No. 50-482-LT; CLI-99-19]
In the Matter of Kansas Gas and Electric Company, et al. (Wolf
Creek Generating Station, Unit 1): Memorandum and Order
Commissioners: Shirley Ann Jackson, Chairman, Greta J. Dicus,
Nils J. Diaz, Edward McGaffigan, Jr., Jeffrey S. Merrifield.
[[Page 33917]]
I. Introduction
Pending before the Commission is a license transfer application
filed on October 27, 1998, by Kansas Gas and Electric Company (KGE) and
Kansas City Power and Light Company (KCPL) (Applicants) seeking
Commission approval pursuant to 10 C.F.R. 50.80 of a transfer of their
possession-only interests in the operating license for the Wolf Creek
Generating Station, Unit 1, to a new company, Westar Energy, Inc.
Currently Wolf Creek is jointly owned and operated by the Applicants,
each of which owns an undivided 47% interest, and Kansas Electric Power
Cooperative, Inc. (KEPCo), which owns the remaining 6% interest. The
Applicants request that the Commission amend the operating license for
Wolf Creek pursuant to 10 C.F.R. 50.90 by deleting KGE and KCPL as
licensees and adding Westar Energy in their place.
Pursuant to the Commission's recently-promulgated Subpart M, 10
C.F.R. 2.1300 et seq., KEPCo opposed the transfer on antitrust grounds,
claiming, in a February 18, 1999, ``Petition to Intervene and Request
for Hearing,'' that the transfer would have ``serious adverse and
anticompetitive effects'' (p. 5), would result in ``significant
changes'' in the competitive market (pp. 15-17), and, therefore,
warrants an antitrust review under Section 105c of the Atomic Energy
Act, 42 U.S.C. 2135(c). In response to the petition to intervene, on
March 1, 1999, Applicants filed an ``Answer of Applicants to Petition
to Intervene and Request for Hearing of the Kansas Electric Power
Cooperative, Inc.'' Applicants requested that the Commission deny the
petition because the issues raised were outside the scope of the
license transfer proceeding, the positions taken were not factually
supported, and the Commission had not made and should not make a
finding of ``significant changes'' in the activities under the license.
By Memorandum and Order dated March 2, 1999, CLI-99-05, 49 NRC 199
(1999), the Commission indicated that although its staff historically
has performed a ``significant changes'' review in connection with
certain kinds of license transfers, it intended to consider in this
case whether to depart from that practice and ``direct the NRC staff no
longer to conduct significant changes reviews in license transfer
cases, including the current case.'' The Commission stated that, in
deciding this matter, it expected to consider a number of factors,
including its statutory mandate, its expertise, and its resources.
Accordingly, the Commission directed the Applicants and KEPCo to file
briefs on the single question: ``whether as a matter of law or policy
the Commission may and should eliminate all antitrust reviews in
connection with license transfers and therefore terminate this
adjudicatory proceeding forthwith.'' Id. at 200. The Commission also
invited amicus curiae briefs.
Briefs and reply briefs have been filed by the Applicants and
KEPCo. Amicus briefs were timely filed by the National Rural Electric
Cooperative Association (NRECA), the Nuclear Energy Institute (NEI),
the American Public Power Association (APPA), the Florida Municipal
Power Agency (FMPA), the National Association of State Utility Consumer
Advocates (NASUCA), and the American Antitrust Institute (AAI), and an
untimely brief was filed by WML Associates (WML).1
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\1\ WML's brief was filed approximately five days after the time
provided by CLI-99-05. WML's excuse is that the filing date
coincided with Passover and the Easter holiday week and created
unforeseen scheduling problems for it. Although WML has not
satisfied us that it had good cause for the untimely filing, in the
circumstances here we have considered WML's comments.
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Applicants argue that both legal and policy reasons justify the
elimination of all antitrust reviews in license transfer proceedings.
They state that by the express terms of Section 105 of the Atomic
Energy Act, which is the sole source of the Commission's antitrust
jurisdiction, antitrust reviews are required only at two stages of the
licensing process: when an application for a construction permit is
submitted and then when the application for the initial operating
license is submitted. Applicants' position is that ``Commission
antitrust review of a license transfer is not authorized by statute,
nor would such a review be consistent with the purpose of section 105c.
For these reasons, as a matter of law the Commission should eliminate
all antitrust reviews in connection with license transfers.'' ``Initial
Brief of Applicants in Response to the NRC's Memorandum and Order
Regarding Antitrust Review of License Transfers' (March 16, 1999)
(Applicants' Initial Brief) at unnumbered p. 11. Applicants state it
clearly another way: ``Neither section 105c nor Commission case law
supports a finding that the Commission has jurisdiction to review the
antitrust implications of a license transfer * * *'' Id. at unnumbered
p. 18. In addition to their argument that the Commission is not
authorized to conduct antitrust reviews of transfer applications,
Applicants also argue that there are compelling policy reasons why the
Commission should not perform such reviews. Finally, and
notwithstanding their ``lack of authority'' argument, Applicants
request that the Commission decide this case not on the absence of
authority, but rather on the merits of the merger and the antitrust
issues (i.e., by finding no ``significant changes'' in the Applicants'
activities).
KEPCo and NRECA, in their ``Joint Brief of the Kansas Electric
Power Cooperative, Inc., and Amicus Curiae National Rural Electric
Cooperative Association'' (March 16, 1999) (KEPCo Brief), argue that
the Commission may not, as a matter of law, eliminate all antitrust
reviews in license transfer proceedings. They argue that neither the
statutory language nor its legislative history hint that Congress
intended to allow the Commission to eliminate administratively any and
all antitrust review when a nuclear power facility is sold or
transferred. They further argue that even if the Commission had the
statutory authority to eliminate such reviews, it cannot do so in this
proceeding because applicable regulations ``unambiguously'' require a
threshold ``significant changes'' determination which can only be
changed by notice-and-comment rulemaking, which should not be
undertaken for policy reasons.
NEI's position, reflected in the ``Amicus Brief of the Nuclear
Energy Institute on the Issue of Antitrust Reviews in License Transfer
Cases'' (March 31, 1999) (NEI Brief), is that the NRC has the legal
authority to, and as a matter of policy should, eliminate antitrust
reviews in license transfer cases as duplicative of other federal and
state agencies with mandates to address competitive issues and because
such reviews divert NRC's finite resources from its fundamental health
and safety mission and constitute an unnecessary barrier to the
completion of beneficial license transfers.
APPA and FMPA, in their ``Joint Brief of the American Public Power
Association and Florida Municipal Power Agency'' (March 31, 1999) (APPA
Brief), assert that a license transfer application seeks the issuance
of an operating license requiring antitrust review and that this
``proposition is so plain it previously has never been challenged.''
APPA Brief at 3. APPA and FMPA argue that the Act, the Commission's
regulations, and its consistent past practices would be unlawfully
disregarded were the Commission to abandon antitrust reviews of license
transfer applications.
NASUCA supports KEPCo's argument that the Commission may not, as a
matter of law, eliminate all antitrust reviews in connection with
license
[[Page 33918]]
transfers. ``Amicus Filing, The National Association of State Utility
Consumer Advocates'' (March 31, 1999) (NASUCA Brief).
AAI argues that antitrust is a primary statutory function of the
Commission which can only be eliminated by Congress, though it can be
limited by the Commission. ``Motion to Submit Comments and Comments of
Amici Curiae of the American Antitrust Institute'' (March 31, 1999)
(AAI Brief) at 4-5. AAI takes the position that the Commission's role
of focusing an antitrust review on electric industry competitive
problems cannot be substituted for by other agencies.
WML argues that the ``Commission's success in conducting
competitive reviews is unchallenged,'' and that without delaying any
construction permit or operating license, NRC antitrust license
conditions have saved ``disadvantaged'' entities millions of dollars in
``monopoly rents'' and significantly enhanced the competitive
environment of the bulk power services markets. Amicus Curiae Brief,
WML Associates'' (April 5, 1999) (WML Brief) at 4. WML points out that
Congress has not eliminated the NRC's antitrust function and speculates
that, in view of its history, probably would not do so. Id. at 5.
II. Analysis
After consideration of the arguments presented in the briefs, and
based on a thorough de novo review of the scope of the Commission's
antitrust authority, we have concluded that the structure, language and
history of the Atomic Energy Act cut against our prior practice of
conducting antitrust reviews of post-operating license transfers. It
now seems clear to us that Congress never contemplated such reviews. On
the contrary, Congress carefully set out exactly when and how the
Commission should exercise its antitrust authority, and limited the
Commission's review responsibilities to the anticipatory, prelicensing
stage, prior to the commitment of substantial licensee resources and at
a time when the Commission's opportunity to fashion effective antitrust
relief was at its maximum. The Act's antitrust provisions nowhere even
mention post-operating license transfers.
The statutory scheme is best understood, in our view, as an implied
prohibition against additional Commission antitrust reviews beyond
those Congress specified. At the least, the statute cannot be viewed as
a requirement of such reviews. In these circumstances, and given what
we view as strong policy reasons against a continued expansive view of
our antitrust authority, we have decided to abandon our prior practice
of conducting antitrust reviews of post-operating license transfers and
to dismiss KEPCo's antitrust-driven request for a hearing on the
proposed Wolf Creek license transfer.
A. The Atomic Energy Act
1. Statutory Framework: The Antitrust Provisions
Analysis of the Commission's statutory authority must begin with
the language and structure of the Atomic Energy Act itself. To properly
interpret both the specific language and the overall scheme of the
Commission's antitrust authority, it is important to understand the
background and history of that statutory authority.
In 1954, Congress wished to eliminate the government monopoly over
the development of atomic energy for peaceful purposes and provide the
incentives of competition and free enterprise in the further
development of nuclear power.2 Since nuclear power
technology was developed to a great extent at government (i.e.,
taxpayer) expense, Congress believed that its benefits should be
available to all on fair and equitable terms. Congress was concerned,
however, that because the construction of large nuclear generating
facilities was expensive and only the largest electric utility
companies likely could afford such a capital asset, they could
monopolize nuclear power plants and exclude smaller utility companies
from sharing in the benefits of nuclear resources and thereby create an
anticompetitive situation. It, therefore, was especially concerned that
smaller electric systems have access to nuclear power plant electrical
output by sharing in their ownership at the outset. Ownership access by
itself, however, would be meaningless if the generated electricity
could not be effectively transmitted and distributed by the smaller
owners, many of whom were ``captive'' bulk power supply customers of
the larger, dominant utilities which would be constructing and
operating the nuclear facilities. Thus, ownership access had to be
accompanied by other services such as ``wheeling'' of bulk power.
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\2\ See Report By The Joint Committee On Atomic Energy: Amending
The Atomic Energy Act of 1954, As Amended, To Eliminate The
Requirement For A Finding Of Practical Value, To Provide For
Prelicensing Antitrust Review Of Production And Utilization
Facilities, And To Effectuate Certain Other Purposes Pertaining To
Nuclear Facilities, H.R. Rep. No. 91-1470 (also Rep. No. 91-1247),
91st Cong., 2nd Sess. at 8 (1970), 3 U.S. Code and Adm. News 4981
(1970) (``Joint Committee Report'') (quoting from legislative
history of 1954 Act).
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To alleviate these concerns, Congress amended the Atomic Energy Act
of 1946 (``Act'') to authorize the Atomic Energy Commission, the NRC's
predecessor, to conduct an antitrust review, in consultation with the
Attorney General, prior to issuing a license for a nuclear generating
facility. As subsequently amended in 1970, Section 105 of the Act, 42
U.S.C. 2135, requires the Commission to determine whether the
activities under the license would create or maintain a situation
inconsistent with the antitrust laws. The Commission, with its unique
authority over the licenses it issues, also was given the authority to
remedy such situations by refusing to issue licenses or by amending or
conditioning them as it deemed appropriate. With this historical
background in mind, the carefully-crafted antitrust review authority
given to the Commission can be considered.
Section 105 of the Act is the sole source of the Commission's
antitrust authority. Before examining the Commission's specific
antitrust authority granted in Section 105, it is important to
understand that this authority is not plenary but instead, as a general
matter, is limited to certain types of applications or otherwise
limited in scope or nature. No other provision of the Act grants any
antitrust authority to the Commission. As the Commission stated some
years ago:
We find the specificity and completeness of Section 105
striking. The section is comprehensive; it addresses each occasion
on which allegations of anticompetitive behavior in the commercial
nuclear power industry may be raised, and provides a procedure to be
followed in each instance.
Houston Lighting & Power Company (South Texas Project, Unit Nos. 1 and
2), CLI-77-13, 5 NRC 1303, 1311 (1977). Further, the Commission's
antitrust authority is not derived from its broad powers provided by
Sections 161 and 186 of the Act. Id. at 1317, 1317 n.12. Thus, absent
Section 105, the Commission would have no antitrust authority.
Because the prelicensing antitrust reviews described in Section
105c. apply only to applications for certain types of licenses
authorized under Section 103, we set out Section 103 before turning to
Section 105. Section 103a provides, in relevant part:
The Commission is authorized to issue to persons applying
therefor to transfer or receive in interstate commerce, manufacture,
produce, transfer, acquire, possess, use, import or export * * *
utilization or
[[Page 33919]]
production facilities for industrial or commercial purposes.
Section 105 (``Antitrust Provisions'') of the Act 3
provides, in relevant part:
\3\ A point of clarification is in order concerning ``antitrust
laws.'' The ``Acts'' explicitly cited in Section 105a include the
two most basic antitrust laws--the Sherman Act and the Clayton Act--
as well as the Federal Trade Commission Act (FTC Act). Whether the
FTC Act truly is an ``antitrust'' law is debatable. Clearly, conduct
that violates the Sherman or Clayton Acts is also cognizable under
Section 5 of the FTC Act. In FTC v. Cement Institute, 333 U.S. 683,
690-91 (1948), the Supreme Court specifically rejected the argument
that because the price-fixing scheme (which the FTC had held was an
``unfair method of competition'') was cognizable under the Sherman
Act, the FTC lacked jurisdiction. In general, all conduct prohibited
by either the Sherman Act or the Clayton Act is within the scope of
Section 5 of the FTC Act. See FTC v. Brown Shoe Co., 384 U.S. 316
(1966); FTC v. Motion Picture Advertising Service Co., 344 U.S. 392,
394 (1953); Times-Picayune Publishing Co. v. United States, 345 U.S.
594, 609 (1953); Fashion Originators' Guild of America v. FTC, 312
U.S. 457 (1941). But practices which do not necessarily violate
either the letter or spirit of the traditional ``antitrust laws''
(the Sherman, Clayton and Robinson-Patman Acts) may nevertheless
violate Section 5 of the FTC Act as unfair or deceptive acts or
practices affecting consumers, regardless of their effect on
competition. FTC v. Sperry & Hutchison Co., 405 U.S. 233, 239
(1972). Whether or not purists would consider the FTC Act as an
``antitrust law,'' that act is one of the specific acts enumerated
in Section 105a and we hereinafter include it in our use of the
phrase ``antitrust laws.''
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a. Nothing contained in this Act shall relieve any person from
the operation of the [antitrust laws]. In the event a licensee is
found by a court of competent jurisdiction, either in an original
action in that court or in a proceeding to enforce or review the
findings or orders of any Government agency having jurisdiction
under the laws cited above, to have violated any of the provisions
of such laws in the conduct of the licensed activity, the Commission
may suspend, revoke, or take such other action as it may deem
necessary with respect to any license issued by the Commission under
the provisions of this Act.
b. The Commission shall report promptly to the Attorney General
any information it may have with respect to any utilization of
special nuclear material or atomic energy which appears to violate
or tend toward the violation of any of the foregoing Acts, or to
restrict free competition in private enterprise.
c. (1) The Commission shall promptly transmit to the Attorney
General a copy of any license application provided for in paragraph
(2) of this subsection, and a copy of any written request provided
for in paragraph (3) of this subsection; and the Attorney General
shall, within a reasonable time, but in no event to exceed 180 days
after receiving a copy of such application or written request,
render such advice to the Commission as he determines to be
appropriate in regard to the finding to be made by the Commission
pursuant to paragraph (5) of this subsection. Such advice shall
include an explanatory statement as to the reasons or basis
therefor.
(2) Paragraph (1) of this subsection shall apply to an
application for a license to construct or operate a utilization or
production facility under section 103: Provided, however, That
paragraph (1) shall not apply to an application for a license to
operate a utilization or production facility for which a
construction permit was issued under section 103 unless 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 this subsection in
connection with the construction permit for the facility.
* * * * *
(5) * * * The Commission shall give due consideration to the
advice received from the Attorney General . . . and shall make a
finding as to whether the activities under the license would create
or maintain a situation inconsistent with the antitrust laws as
specified in subsection 105a.
(6) * * * On the basis of its findings, the Commission shall have
the authority to issue a license, to rescind a license or amend it, and
to issue a license with such conditions as it deems appropriate.
* * * * *
Not surprisingly, the parties' and the amicus briefs focus almost
exclusively on Section 105c, which describes the construction permit
and operating license antitrust reviews, the antitrust finding the
Commission must make, and the licensing remedies available to the
Commission in the event of an adverse finding. While the language in
Section 105c unquestionably is at the heart of the determination
whether an antitrust review is required in connection with post-
operating license transfer applications, we find that the scope of
antitrust authority granted the Commission in Section 105 as a whole
sheds considerable light on the correct interpretation of the specific
language in Section 105c. And as will be seen, the structure of the
Section 105 scheme, as well as the legislative history of Section 105,
support the conclusion that Section 105c does not require, and indeed
does not authorize, antitrust reviews of post-operating license
transfer applications.4
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\4\ The issue of our authority to conduct antitrust reviews of
post-operating license transfers has not been explicitly addressed
heretofore in any Commission adjudicatory decision (or elsewhere by
the Commission). While some briefs contain arguments that certain
past Commission adjudicatory decisions can be read to imply that the
Commission has asserted such authority, and others suggest the
opposite, we conclude that at most they reflect an assumption by the
Commission of such authority, but certainly not a reasoned
conclusion. Accordingly, past adjudicatory decisions provide, at
best, marginally useful assistance in resolving this issue.
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a. Statutory Structure
We start at the beginning, and will examine each portion of Section
105 in turn. At the outset, Section 105a makes clear that nothing in
Section 105 relieves any person (e.g., applicant or licensee--see
Section 11s of the Act) from complying with any of the antitrust laws.
Further, if any licensee is found by a court to have violated any
antitrust law, then the Commission is empowered to suspend, revoke, or
take such other action as it deems necessary, with respect to the
license issued. Thus, after issuing an operating license, to the extent
that an antitrust violation is found which may warrant some remedy
involving the license itself, or ``licensed activities,'' the
Commission could order a remedy. Similarly, Section 105b requires the
Commission to report to the Attorney General any information it may
have with respect to its licensees' anticompetitive practices. As will
be seen, these provisions assist in understanding the nature and scope
of the prelicensing antitrust reviews required by Section 105c.
Section 105c.(1) provides for transmittal of ``any license
application provided for in paragraph (2)'' and related information to
the Attorney General, and for advice, with explanatory reasons, from
the Attorney General regarding the antitrust finding to be made by the
Commission pursuant to paragraph (5).
Section 105c.(2) states that the review process provided in
paragraph (1) ``shall apply to an application for a license to
construct or operate'' a nuclear power facility but that ``paragraph
(1) shall not apply to an application for a license to operate a * * *
facility for which a construction permit was issued * * * unless 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 * * * in connection with the construction permit for
the facility.''
Section 105c.(5) requires the Commission, with respect to
applications subject to paragraphs (1) and (2), ``to make a finding as
to whether the activities under the license would create or maintain a
situation inconsistent with the antitrust laws * * *.'' In the case of
affirmative findings, Section 105c.(6) grants the Commission authority
to refuse to issue the license, to rescind or amend it, or ``to issue a
license with such conditions as it deems appropriate.''
The overall structure of the process designed by Congress to
address its concerns about potential antitrust problems arising from
the licensing of nuclear generating facilities is evident from the
nature of its concerns and the
[[Page 33920]]
corresponding scheme provided above. To address the concern over
smaller utilities' ability to obtain ownership access to a nuclear
facility (and associated services such as ``wheeling'') before it
operates and in order to resolve incipient antitrust problems before
any competitors were damaged, a mandatory and ``complete'' antitrust
review was provided at the construction permit stage of the licensing
process.5 At this time, all entities who might wish
ownership access to the nuclear facility, and who are in a position to
assert that the activities under the license would create or maintain a
situation inconsistent with the antitrust laws, are able to seek an
appropriate licensing remedy from the Commission prior to actual
operation of the facility, thus realizing their fair benefits of
nuclear power from the beginning of electrical power generation.
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\5\ The Commission's traditional process for licensing nuclear
facilities is known as a two-step licensing process, consisting
first of a construction permit followed by an operating license. See
Section 185 of the Act, 42 U.S.C. 2235.
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This construction permit review theoretically is the broadest
antitrust review provided in the law, not only because it measures the
competitive situation against all the antitrust laws, including the FTC
Act, but also because the standard of anticompetitive conduct and basis
for a remedy is not the traditional one of antitrust violations but the
potential for the licensed activities to create or maintain ``a
situation inconsistent with the antitrust laws.'' 6 At the
time Congress enacted Section 105, it envisioned this broad and
comprehensive review at the construction permit phase of licensing a
facility but, as we shall see, not at other licensing or post-licensing
phases for the facility in question. Congress believed that at the
construction phase--before the plant is built and before its operation
is authorized by the Commission--the Commission would be peculiarly
well-positioned to offer meaningful remedies, such as license
conditions, if it found that granting the license would create or
maintain a situation inconsistent with the antitrust laws.
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\6\ But see note 22, infra.
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The Commission's independent antitrust review responsibilities
diminish from plenary reviews prior to initial licensing to passive
information-reporting after licensing. Section 105c.(2) explicitly
states that the Act's formal antitrust review provisions ``shall not
apply to an application for a license to operate a utilization or
production facility for which a construction permit was issued under
section 103 unless 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 * *
* in connection with the construction permit for the facility.'' As
suggested in the legislative history (see discussion below), Congress
added this restriction--in effect, a prohibition of second antitrust
reviews at the operating license stage absent a significant changes
finding--as part of compromise legislation in 1970 intended both to
require vigorous prelicensing antitrust reviews and to avoid undue
disruption of utility planning and investment decisions.
Consistent with the progressively diminishing role Congress
intended for the Commission regarding the competitive practices of its
applicants and licensees, Sections 105a and b preserve traditional
antitrust forums to resolve allegedly anticompetitive conduct by
Commission licensees. Once a nuclear facility is licensed to operate,
traditional antitrust forums--the federal courts and governmental
agencies with longstanding antitrust expertise--are better equipped
than the Commission to resolve and remedy antitrust violations by NRC
licensees. To the extent that a court finds antitrust violations that
arguably warrant some unique ``licensing'' relief that only this
Commission can provide, such as by imposing conditions on the operating
license, then 105a provides the Commission with remedial (but not
review) authority.
From the mandatory and broad construction permit review to the
conditional review in connection with the initial operating license, to
the constricted review authority after issuance of the initial
operating license (limited to information-reporting), Section 105, in
concept, describes a logical and progressively more narrow and less
active role for a Commission whose primary and almost sole
responsibility under the Act is to protect the public health and safety
and the common defense and security.7
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\7\ If the Commission has continuing antitrust review
responsibility over post-operating license transfers, it conceivably
could have to conduct at least a ``significant changes'' review
almost 40 years after the initial operating license is issued, since
Section 103 of the Act provides that Section 103 licenses are issued
for up to 40 years. Nothing in the Act or in its legislative
history--which, as we shall see below, focused on the Commission's
``anticipatory,'' prelicensing antitrust role--suggests that
Congress intended to assign the Commission such extensive and long-
lasting antitrust review duties.
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b. Statutory Language
The overarching structure of the Commission's antitrust
responsibilities, both the prelicensing construction permit and
operating license antitrust reviews, as well as the post-operating
license authority to order a remedy for antitrust violations found
elsewhere, as described above, is consistent with the very purpose for
the Congressional grant of specific and limited antitrust authority to
the Commission. We turn now to our analysis and interpretation of the
key statutory words and phrases material to the issue of whether
Section 105 contemplates antitrust reviews of post-operating license
transfer applications.
Although the antitrust laws continue to apply to all Commission
licensees after issuance of the facility operating license and the
Commission continues to have authority to order licensing type relief,
if warranted, based on violations of the antitrust laws found by other
forums (Sections 105a and b), the prelicensing antitrust reviews
required by Section 105c are limited both in terms of the types of
applications subject to the review and the threshold for conducting the
review. Section 105c.(1) requires transmittal of antitrust information
to the Attorney General only for a ``license application provided for
in paragraph (2).'' Paragraph (2), in turn, applies to ``an application
for a license to construct or operate a * * * facility under section
103'' but limits the review of operating license applications by
stating that paragraph (1) ``shall not apply to an application for a
license to operate a * * * facility for which a construction permit was
issued under section 103 unless 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 * * * in
connection with the construction permit for the facility.'' Section
103a provides, in relevant part, that the ``Commission is authorized to
issue licenses to persons applying therefor to transfer or receive in
interstate commerce, manufacture, produce, transfer, acquire, possess,
use, import or export * * * utilization or production facilities for
industrial or commercial purposes.''
By its terms, Section 105c.(2) requires a Commission antitrust
review of applications for certain activities. The only types of
applications the provision explicitly subjects to antitrust review are
those for construction permits and operating licenses issued under
Section 103. Section 103, however, does not use
[[Page 33921]]
either ``construct'' or ``operate'' to identify the activities for
which the Commission is authorized to issue licenses. These two basic
terms, which are the hallmarks of the NRC's historical two step
licensing process (construction permit followed by operating license),
are conspicuously absent from Section 103. To construct a facility,
however, is the same as to manufacture or produce a facility.
``Construct'' in Section 105c.(2), therefore, is equivalent to the
Section 103 activities of ``manufacture'' or ``produce.'' Similarly, to
operate a facility is the same as to possess and use the facility.
``Operate'' in Section 105c.(2) thus is equivalent to the Section 103
activities of ``possess'' and ``use.'' The only types of applications
expressly made subject to antitrust review under Section 105c.(2),
therefore, are applications to manufacture or produce (``construct'') a
facility and applications to ``possess'' and ``use'' (``operate'') a
facility, not applications for any other activities requiring a license
under Section 103.
Equally as conspicuous as the absence of the words ``construct''
and ``operate'' from Section 103 is the inclusion of ``acquire'' and
``transfer'' in Section 103 as activities explicitly requiring a
license from the Commission. Yet Section 105c.(2) does not, explicitly
or implicitly, identify applications to either ``acquire'' or
``transfer'' facilities as being subject to antitrust review. So the
only types of applications explicitly mentioned in Section 105c.(2) as
requiring an antitrust review (construction and operation) are not
mentioned verbatim in Section 103 but are mentioned using equivalent
language, while the type of application which is not mentioned in
Section 105c.(2), but for which an antitrust review is urged by some
(transfer), is identified verbatim in Section 103 (transfer) as well as
in equivalency (acquire).
It would be strange, to say the least, if Congress intended the
Commission to perform an antitrust review of post-operating license
transfer (or acquisition) applications but did not mention applications
for those Section 103 activities, either explicitly or equivalently, in
Section 105c.(2), but instead mentioned only applications to
``construct'' and ``operate,'' two commonly used words for the Section
103 activities of manufacture or produce, and possess and use,
respectively. Construing Section 105c.(2) in this fashion would violate
the basic canon of construction that where a particular term is used in
one section of a statute, neither it nor its equivalent should be
implied in another section of the same statute where it is omitted. See
BFP v. Resolution Trust Co., 511 U.S. 531, 537 (1994); R. Mayer of
Atlanta, Inc. v. City of Atlanta, 158 F.3d 538, 545 (11th Cir. 1998).
The explicit focus of Section 105c.(2) on applications for only two
types of Section 103 activities--construction (manufacture or
production) and operation (possess and use), coupled with the omission
from Section 105c.(2) of any mention, either explicitly or by
equivalency, of applications to ``transfer'' (or ``acquire'')--strongly
suggests that our Section 105c prelicensing antitrust review authority
does not include applications for post-operating license transfers.
This conclusion is supported both by the overall structure of the
Commission's antitrust authority provided in Section 105 and the
specific language Congress used to authorize prelicensing antitrust
reviews of only certain types of license applications. Congress's grant
of limited antitrust review authority to the Commission does not give
us free rein to conduct across-the-board reviews of license
applications not specified by Congress. ``The duty to act under certain
carefully defined circumstances simply does not subsume the discretion
to act under other, wholly different, circumstances, unless the statute
bears such a reading.'' Railway Labor Executives' Ass'n v. National
Mediation Bd., 29 F.3d 655, 671 (D.C. Cir. 1994) (en banc). Accord,
University of the District of Columbia Faculty Ass'n v. DCFRMAA, 163
F.3d 616, 621 (D.C. Cir. 1998).
The only conceivable way to interpret Section 105c to require some
form of antitrust review of applications to transfer an existing
operating license is to construe the application to transfer as an
application for an operating license.8 But if it is so
construed, Section 105c.(2) brings our antitrust review responsibility
into play only if there is a ``significant changes'' finding made in
accordance with the process described in that section. The mandated
significant changes process, however, does not lend itself to reviews
of post-operating license transfer applications.
---------------------------------------------------------------------------
\8\ Such a construction is at odds with reality, since no new
license will be issued to effectuate a Commission-approved transfer.
Instead, as will be true in this Wolf Creek case if the Commission
approves the transfer request, a license amendment will be issued to
reflect the new licensee. The Commission has characterized such
amendments as ``essentially administrative in nature'' and not
involving any significant substantive changes. Streamlined Hearing
Process for NRC Approval of License Transfers, 63 FR 66727 (Dec. 3,
1998) (codified at 10 CFR Part 2, Subpart M). An amendment
reflecting a license transfer does not require a prior hearing. See
Long Island Lighting Co. (Shoreham Nuclear Power Station, Unit 1),
CL1-92-4, 35 NRC 69, 77 (1992).
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To trigger the Commission's duty to conduct an antitrust review of
an operating license application, there must be ``significant changes''
in the licensee's activities that ``have occurred subsequent to the
previous review by the Attorney General and the Commission * * * in
connection with the construction permit for the facility.'' Section
105c.(2). It is immediately obvious from this language that the
statutory ``significant changes'' inquiry is not compatible with
antitrust reviews of post-operating license transfers, for the
statutory baseline from which to measure ``significant changes'' is the
facility's construction permit, whereas at the time of post-operating
license transfers the facility already would have received its
operating license, and undergone a previous ``significant changes''
review. It would be absurd for the Commission to look back again to the
original construction permit and make the ``significant changes''
inquiry anew.
In short, while the statutory method of making the ``significant
changes'' finding reflects a common sense approach in the case of the
initial--original--application for an operating license submitted to
the Commission by the construction permit licensee, the approach makes
no sense whatever if a post-operating license application for license
transfer is construed as the equivalent of an initial operating license
application and thus force-fit into the ``significant changes''
process. A comparison of activities of new licensees with activities of
other licensees who underwent at least two previous antitrust reviews
(there could be a series of post-operating license transfer
applications) for any facility that underwent an operating license
antitrust review makes no practical sense and also would ignore the
significant changes explicitly found to exist between construction and
initial operation of the facility. The statutory scheme and language
are simply inconsistent with treating post-operating license transfer
applications as operating license applications.
Interestingly, the Commission's past practice of conducting
``significant changes'' reviews of post-operating license transfer
applications, now being reconsidered in this case, compared the
activities at the time of transfer with those at the time of the
previous operating license review, a comparison more logical than that
required by the statute. We suspect that no one ever suggested that the
Commission should have been using the statutorily-required
[[Page 33922]]
construction permit review as the benchmark for its ``significant
changes'' determination for post-operating license transfer
applications for the simple reason that it makes no sense in reality if
post-operating license transfer applications are deemed to be
``operating license'' applications for purposes of a Section 105c
antitrust review. This, too, strongly suggests that Section 105c cannot
be read to require Commission antitrust reviews of post-operating
license transfer applications and that the Commission's past practice
of reviewing post-operating license transfer applications for
significant changes is at odds with the clear language of the statute.
Because the statute does not explicitly address the issue of
antitrust authority over post-operating license transfer applications,
however, we turn to the legislative history for additional guidance on
Congressional intent.
2. Legislative History
Desiring to end the government's monopoly over the development of
nuclear power for peaceful purposes, Congress, in 1954, amended the
Atomic Energy Act of 1946 to provide for further development by private
enterprise. Because the development of nuclear power had theretofore
been at government (i.e., taxpayer) expense, Congress wanted to ensure
that commercial nuclear facilities were accessible to all types of
electric utility systems, large investor-owned, smaller private ones,
municipal systems, electric cooperatives, and others, on fair and
equitable terms. Although large nuclear generating facilities would be
expensive to construct, the non-capital generating costs were expected
to be inexpensive (one AEC Chairman erroneously predicted that nuclear-
generated electricity would be ``too cheap to meter''). This meant
that, absent some mandated means to address this situation, large,
wealthy, dominant electric utilities could achieve great economies of
scale by constructing large, expensive nuclear facilities which the
smaller utilities could not afford to do, thereby increasing the
already dominant competitive position of the larger utilities in the
marketplace. To address these concerns, Congress included in the 1954
Act a requirement that the Atomic Energy Commission ( the NRC's
predecessor), in consultation with the Attorney General, conduct an
antitrust review prior to issuing any license under Section 103 for a
nuclear power facility for commercial or industrial
purposes.9
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\9\ Only commercial licenses issued under Section 103 of the Act
were made subject to the antitrust review provisions. ``Research and
development'' licenses issued under Section 104 were exempt from
antitrust review. The 1954 Act authorized the issuance of commercial
licenses only upon a written finding that such facilities had been
``sufficiently developed to be of practical value for industrial and
commercial purposes.'' For many years after 1954, the Commission
made no findings of ``practical value'' and issued all licenses for
the construction and operation of civilian nuclear power plants as
``research and development'' facilities under Section 104b of the
Act.
---------------------------------------------------------------------------
Because nuclear power plants were being licensed in the years after
the 1954 amendments under Section 104b as ``research and development''
facilities, however, no Section 105 antitrust reviews actually were
being conducted. In 1970, the Joint Committee on Atomic Energy
identified the Section 105c antitrust review requirement as a major
roadblock to ``commercial'' licensing under Section 103 and in need of
clarification and revision. See Joint Committee Report at 13.
Proponents and opponents of prelicensing antitrust review expressed
strong positions and emotions from one extreme to the other. Id. at 14.
Proponents of prelicensing antitrust review feared that, absent such
review, the large, already dominant utilities would further increase
their market share and power by monopolizing nuclear power, with its
large economies of scale, with the smaller private, municipal and
cooperative systems denied their fair share of nuclear power. These
proponents, therefore, urged the need and importance of antitrust
review ``at the outset of the licensing process,'' ``before any
competitor was damaged'' or ``much money and time has been spent.'' See
Hearings at 21, 420, 481.10
---------------------------------------------------------------------------
\10\ Prelicensing Antitrust Review of Nuclear Power Plants:
Hearings Before the Joint Committee on Atomic Energy, Part I, 91st
Cong., 1st Sess. (1969), Part II, 91st Cong., 2d Sess. (1970).
---------------------------------------------------------------------------
Opponents of prelicensing review, on the other hand, believed that
the Commission's Section 105a and b authority (to report
anticompetitive conduct of its licensees to the Attorney General and to
take licensing action to remedy antitrust violations found by a court)
was sufficient by itself. Joint Committee Report at 14. They believed
that it would be unreasonable and unwise to delay the construction and
operation of nuclear facilities by imposing special antitrust reviews
on those willing to invest in nuclear facilities. Id.
The AEC proposed an antitrust review at both the construction
permit and operating license stages of the licensing process but with
no operating license review in cases where antitrust concerns were
satisfactorily resolved at the construction permit stage. Hearings at
38, 481. This proposal was met with strong opposition, including that
of the Chairman of the Joint Committee. See Hearings at 37-38 (remarks
of Rep. Holifield). The concern was that after a utility had planned,
sized and constructed a facility to meet its customers' power
requirements, including any requirements from the construction permit
antitrust review, any further review would delay the licensing of the
facility and unfairly damage the utility's considerable investment. Id.
The legislation that resulted--including the limitation of such reviews
to construction permit applications and adding the ``significant
changes'' trigger for a second antitrust review of operating license
applications--reflects a careful balancing and compromise of the
respective concerns and positions. Joint Committee Report at 13. See
also 116 Cong. Rec. H9449 (Daily Ed., Sept. 30, 1970). The 1970
amendments, which remain in effect today as reflected in Section 105,
were passed by Congress after considering the Joint Committee Report.
As is evident from the language of Section 105c, the Commission's
antitrust review obligations are triggered by applications for only two
types of licenses issued under Section 103: construction permits and
operating licenses. As indicated above, applications for activities
requiring a license under Section 103 other than enumerated activities
equivalent to ``construction'' or ``operation,'' such as ``acquire''
and ``transfer,'' are not included in Section 105c.(2). The legislative
history is consistent with this reading. In its Report, the Joint
Committee 11 made clear that the term ``license
application'' referred only to applications for construction permits or
operating licenses filed as part of the ``initial'' licensing process
for a new facility not yet constructed, or for modifications which
would result in a substantially different facility:
\11\ The Joint Committee Report is the best source of
legislative history of the 1970 amendments. See Alabama Power Co. v.
NRC, 692 F.2d, 1362, 1368 (11th Cir. 1982). The Report was
considered by both houses in their respective floor deliberations on
the antitrust legislation and is entitled to special weight because
of the Joint Committee's ``peculiar responsibility and place . . in
the statutory scheme.'' See Power Reactor Development Co. v.
International Union, 367 U.S. 396, 409 (1961).
The committee recognizes that applications may be amended from
time to time, that there may be applications to extend or review
[sic'renew] a license, and also that the form of an application for
construction permit may
[[Page 33923]]
be such that, from the applicant's standpoint, it ultimately ripens
into the application for an operating license. The phrases ``any
license application'', ``an application for a license'', and ``any
application'' as used in the clarified and revised subsection 105 c.
refer to the initial application for a construction permit, the
initial application for an operating license, or the initial
application for a modification which would constitute a new or
substantially different facility, as the case may be, as determined
by the Commission. The phrases do not include, for purposes of
triggering subsection 105 c., other applications which may be filed
---------------------------------------------------------------------------
during the licensing process.
Joint Committee Report at 29. See generally American Public Power Ass'n
v. NRC, 990 F.2d 1309, 1311-12 (D.C. Cir. 1993). These remarks were
made with the narrow issue in mind of clarifying the scope of the terms
``license application'' and ``application for a license'' used in
Section 105c and thus reasonably can ``be said to demonstrate a
Congressional desire.'' See Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 862 (1984). The ``other
applications which may be filed'' but which do not trigger an antitrust
review clearly encompass applications for those activities listed in
Section 103, such as transfers, that do not constitute construction or
operation.12
---------------------------------------------------------------------------
\12\ In American Public Power Ass'n v. NRC, 990 F.2d 1309 (D.C.
Cir. 1993), the Commission's determination that license renewal
applications were not required to undergo a Section 105 antitrust
review was upheld because such applications were not ``initial''
applications or applications for a ``new or substantially different
facility.''
---------------------------------------------------------------------------
In sum, the legislative history of the Commission's antitrust
authority supports the overall scheme of one mandatory antitrust review
at the initial construction permit stage of the licensing process and
one potential antitrust review at the initial operating license stage
if and only if there are significant changes from the previous
construction permit review. So, too, does it support the interpretation
of the term ``license application'' to exclude post-operating license
transfer applications from an antitrust review based on their being
interpreted as applications for an initial operating
license.13 There is no evidence in the statutory text or
history that Congress expected the Commission to conduct antitrust
reviews of post-operating license transfers. In such a detailed
statutory scheme, Congressional silence on such transfers seems to us
tantamount to an absence of agency authority. At the least, it cannot
be said that Congress required antitrust reviews of post-operating
license transfers.
---------------------------------------------------------------------------
\13\ In its Joint Brief (amicus curiae) (at 6), the American
Public Power Association and the Florida Municipal Power Agency
argue that it ``could not have been Congress's intention . . . that
a utility must undergo an antitrust review if it applies for a
construction permit, but not if it 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.'' (Emphasis
in original.) We find it highly unlikely, to say the least, that one
utility could ``induce'' another to construct a nuclear power plant
in a sham scheme to obtain operational control of the completed and
operationally-licensed plant without undergoing the NRC's
prelicensing antitrust review. Moreover, if that were suspected and
could be proven, then it would be strong evidence that the inducing
utility had serious concerns that its market position or competitive
practices might run afoul of the antitrust laws. In that case, those
who arguably have been injured could bring a private antitrust
action or bring the matter to the attention of the Justice
Department, FERC, the FTC, or other governmental agencies with
traditional antitrust authority. And if NRC authority over the
license were considered to be necessary to fashion an appropriate
remedy, the Commission could exercise its Section 105a authority.
APPA also argues that Sections 184 and 189 of the Act prevent
the Commission from foreclosing antitrust hearings on license
transfers. APPA Brief at 9-10. Section 184 prohibits license
transfers unless, ``after securing full information,'' the
Commission finds the transfer in accordance with the Act, and
Section 189 provides for hearings in certain licensing proceedings,
including transfers. We disagree. If the Act does not require or
even authorize antitrust reviews of post-operating license
transfers, then antitrust issues associated with the transfer are
not material to the license transfer decision and antitrust
information is not required to be considered by the Commission,
except perhaps to determine the fate of existing antitrust license
conditions. We, therefore, do not believe that these provisions
provide any obstacle to terminating these antitrust reviews.
---------------------------------------------------------------------------
B. NRC Regulations, Guidance, and Practice
The Commission's practice has been to perform a ``significant
changes'' review of applications to directly transfer Section 103
construction permit and operating licenses to a new entity, including
those applications for post-operating license transfers. While the
historical basis for such reviews in the case of post-operating license
transfer applications remains cloudy--it does not appear that the
Commission ever explicitly focused on the issue of whether such reviews
were authorized or required by law, but instead apparently assumed that
they were 14--the reasons, even if known, would have to
yield to a determination that such reviews are not authorized by the
Act. See American Telephone & Telegraph Co. v. FCC, 978 F.2d 727, 733
(D.C. Cir. 1992). We now in fact have concluded, upon a close analysis
of the Act, that Commission antitrust reviews of post-operating license
transfer applications cannot be squared with the terms or intent of the
Act and that we therefore lack authority to conduct them. But even if
we are wrong about that, and we possess some general residual authority
to continue to undertake such antitrust reviews, it is certainly true
that the Act nowhere requires them, and we think it sensible from a
legal and policy perspective to no longer conduct them.
---------------------------------------------------------------------------
\14\ Until recently, the Commission's staff applied the
``significant changes'' review process to both ``direct'' and
``indirect'' transfers. Indirect transfers involve corporate
restructuring or reorganizations which leave the licensee itself
intact as a corporate entity and therefore involve no application
for a new operating license. The vast majority of indirect transfers
involve the purchase or acquisition of securities of the licensee
(e.g., the acquisition of a licensee by a new parent holding
company). In this type of transfer, existing antitrust license
conditions continue to apply to the same licensee. The Commission
recently did focus on antitrust reviews of indirect license transfer
applications and approved the staff's proposal to no longer conduct
``significant changes'' reviews for such applications because there
is no effective application for an operating license in such cases.
See Staff Requirements Memorandum (November 18, 1997) on SECY-97-
227, Status Of Staff Actions On Standard Review Plans For Antitrust
Reviews And Financial Qualifications And Decommissioning-Funding
Assurance Reviews.
---------------------------------------------------------------------------
It is well established in administrative law that, when a statute
is susceptible to more than one permissible interpretation, an agency
is free to choose among those interpretations. Chevron, 467 U.S. at
842-43. This is so even when a new interpretation at issue represents a
sharp departure from prior agency views. Id. at 862. As the Supreme
Court explained in Chevron, agency interpretations and policies are not
``carved in stone'' but rather must be subject to re-evaluations of
their wisdom on a continuing basis. Id. at 863-64. Agencies ``must be
given ample latitude to ``adapt its rules and policies to the demands
of changing circumstances.' '' Motor Vehicle Mfrs. Assn. of United
States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 42
(1983), quoting Permian Basin Area Rate Cases, 390 U.S. 747, 784
(1968). An agency may change its interpretation of a statute so long as
it justifies its new approach with a ``reasoned analysis'' supporting a
permissible construction. Rust v. Sullivan, 500 U.S. 173, 186-87
(1991); Public Lands Council v. Babbit, 154 F.3d 1160, 1175 (10th Cir.
1998); First City Bank v. National Credit Union Admin Bd., 111 F.3d
433, 442 (6th Cir. 1997); see also Atchison, T. & S. F. Ry. Co. v.
Wichita Bd. of Trade, 412 U.S. 800, 808 (1973); Hatch v. FERC, 654 F.2d
825, 834 (D.C. Cir. 1981); Greater Boston Television Corp. v. FCC, 444
F.2d 841, 852 (D.C. Cir. 1971).
We therefore give due consideration to the Commission's established
practice of conducting antitrust reviews of post-operating license
transfer applications but appropriately accord
[[Page 33924]]
little weight to it in evaluating anew the issue of Section 105's scope
and whether, even if such reviews are authorized by an interpretation
of Section 105, they should continue as a matter of policy. Moreover,
as we noted above, the Commission's actual practice of reviewing
license transfer applications for significant changes is on its face
inconsistent with the statutory requirement regarding how significant
changes must be determined. The fact that the statutory method does not
lend itself to post-operating license transfer applications, while the
different one actually used does logically apply, also must be
considered and suggests that such a review is not required by the plain
language of the statute and was never intended by Congress.
In support of the arguments advanced in KEPCo's briefs and some of
the amicus briefs that the Commission must conduct antitrust reviews of
transfer applications, various NRC regulations and guidance are cited.
Just as the Commission's past practices cannot justify continuation of
reviews unauthorized by statute, neither can regulations or guidance to
the contrary. Before accepting the argument that our regulations
require antitrust reviews of post-operating license transfer
applications, however, they warrant close consideration.
Section 50.80 of the Commission's regulations, 10 C.F.R. 50.80,
``Transfer of licenses,'' provides, in relevant part:
(b) An application for transfer of a license shall include
[certain technical and financial information described in sections
50.33 and 50.34 about the proposed transferee] as would be required
by those sections if the application were for an initial license,
and, if the license to be issued is a class 103 license, the
information required by Sec. 50.33a.
Section 50.33a, ``Information requested by the Attorney General for
antitrust review,'' which by its terms applies only to applicants for
construction permits, requires the submittal of antitrust information
in accordance with 10 C.F.R. Part 50, Appendix L. Appendix L, in turn,
identifies the information ``requested by the Attorney General in
connection with his review, pursuant to section 105c of the Atomic
Energy Act of 1954, as amended, of certain license applications for
nuclear power plants.'' ``Applicant'' is defined in Appendix L as ``the
entity applying for authority to construct or operate subject unit and
each corporate parent, subsidiary and affiliate.'' ``Subject unit'' is
defined as ``the nuclear generating unit or units for which application
for construction or operation is being made.'' Appendix L does not
explicitly apply to applications to transfer an operating license.
KEPCo argues that the section 50.80(b) requirement, in conjunction
with the procedural requirements governing the filing of applications
discussed below, requires the submittal of antitrust information in
support of post-operating license transfer applications and that the
Wolf Creek case cannot lawfully be dismissed without a ``significant
changes'' determination. See KEPCo Brief at 11. While we agree that
section 50.80 may imply that antitrust information is required for
purposes of a ``significant changes'' review, linguistically it need
not be read that way. The Applicants plausibly suggest that the phrase
``the license to be issued'' could be interpreted to apply only to
entities that have not yet been issued an initial license. See App.
Brief at 11.15 Moreover, neither this regulation nor any
other states the purpose of the submittal of antitrust information. For
applications to construct or operate a proposed facility, it is clear
that section 50.80(b), in conjunction with section 50.33a and Appendix
L, requires the information specified in Appendix L for purposes of the
Section 105c antitrust review, for construction permits, and for the
``significant changes'' review for operating licenses. But for
applications to transfer an existing operating license, there are other
Section 105 purposes which could be served by the information. Such
information could be useful, for example, in determining the fate of
any existing antitrust license conditions relative to the transferred
license, as well as for purposes of the Commission's Section 105b
responsibility to report to the Attorney General any information which
appears to or tends to indicate a violation of the antitrust laws.
---------------------------------------------------------------------------
\15\ This reading is consistent with the history of section
50.80(b). Its primary purpose appears to have been to address
transfers which were to occur before issuance of the initial
(original) operating license, transfers which unquestionably fall
within the scope of Section 105c. See Detroit Edison Company (Enrico
Fermi Atomic Power Plant, Unit No. 2), LBP-78-13, 7 NRC 583, 587-88
(1978). When section 50.80(b) was revised in 1973 to require
submission of the antitrust information specified in section 50.33a,
the stated purpose was to obtain the ``prelicensing antitrust advice
by the Attorney General.'' 38 FR 3955, 3956 (February 9, 1973)
(emphasis added).
---------------------------------------------------------------------------
While we acknowledge that information submitted under section
50.80(b) has not been used for these purposes in the past, and has
instead been used to develop ``significant changes'' findings, the
important point is that section 50.80(b) is simply an information
submission rule. It does not, in and of itself, mandate a ``significant
changes'' review of license transfer applications. No Commission rule
imposes such a legal requirement. Nonetheless, in conjunction with this
decision, we are directing the NRC staff to initiate a rulemaking to
clarify the terms and purpose of section 50.80 (b). 16
---------------------------------------------------------------------------
\16\ In one important respect the language of section 50.80(b),
quoted above, in fact supports the Commission's analysis of Section
105 and its legislative history. The phrase ``if the application
were for an initial license'' certainly demonstrates that,
consistent with the clearly intended focus of Section 105c on
antitrust reviews of applications for initial licenses, the
Commission has long distinguished initial operating license
applications from license transfer applications. Be that as it may,
clarification of section 50.80(b) will be appropriate in the wake of
our decision that our antitrust authority does not extend to
antitrust reviews of post-operating license transfer applications.
---------------------------------------------------------------------------
KEPCo also argues that the Commission's procedural requirements
governing the filing of license applications supports its position that
antitrust review is required in this case. See KEPCo Brief at 11-13.
The Applicants disagree, arguing that nothing in those regulations
states that transfer applications will be subject to antitrust reviews.
See App. Reply Brief at 3. For the same reasons we believe that the
specific language in Section 105c does not support antitrust review of
post-operating license transfer applications, we do not read our
procedural requirements to indicate that there will be an antitrust
review of transfer applications. Indeed, the language in 10 CFR
2.101(e)(1) regarding operating license applications under Section 103
tracks closely the process described in Section 105c. As stated in 10
CFR 2.101(e)(1), the purpose of the antitrust information is to enable
the staff to determine ``whether significant changes in the licensee's
activities or proposed activities have occurred since the completion of
the previous antitrust review in connection with the construction
permit.'' (Emphasis added.) As explained above, this description of the
process for determining ``significant changes'' is consistent with an
antitrust review of the initial operating license application for a
facility but wholly inconsistent with an antitrust review of post-
operating license transfer applications.
Nevertheless, clarification of the rules governing the filing of
applications by explicitly limiting which types of applications must
include antitrust information is appropriate. So too should 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,'' and NUREG-1574, ``Standard Review
[[Page 33925]]
Plan on Antitrust Reviews,'' be clarified. In conjunction with this
decision, we are directing the NRC staff to initiate an appropriate
clarifying rulemaking.
C. Policy Considerations; Other Agencies and Other Forums
The parties' and amicus briefs, at our invitation, advanced policy
reasons why the Commission should, or should not, terminate its
practice of reviewing post-operating license transfer applications for
antitrust considerations. Presuming that the Commission is free under
the Act to continue its prior practice, we would abandon it as largely
duplicative of other, more appropriate agencies' responsibilities, and
not a sensible use of our limited resources needed to fulfill our
primary mission of protecting the public health and safety and the
common defense and security, from the hazards of radiation.
At the time of the 1970 antitrust amendments to the Atomic Energy
Act, Congress believed that the Commission was in a unique position to
ensure that the licensed activities of nuclear utilities could not be
used to create or maintain a situation inconsistent with the antitrust
laws. As explained above, the focus of the 1970 amendments was on
prelicensing antitrust reviews conducted during the pendency of the
two-step licensing process comprising applications for construction
permits and initial operating licenses. In contrast to the competitive
situation which existed in 1970, the current competitive and regulatory
climate in which the electric utility industry operates is markedly
different. Key statutory changes substantially enhance smaller
utilities' ability to compete with the larger generating facilities and
gain access to essential transmission services. These differences from
1970 reduce, if not eliminate, the incremental protection of
competition that the NRC could provide through its antitrust reviews.
To the extent that the Commission can still be considered to be in a
unique position vis a vis other governmental authorities to address
antitrust concerns, such uniqueness surely ends at the time the
facility is granted its initial operating license.
In 1992, Congress passed the Energy Policy Act of 1992, Pub. L.
102-486 (EPAct), substantially enlarging the authority of the Federal
Energy Regulatory Commission (FERC) to prevent and mitigate potential
and existing abuses of market power by electric utilities, including
nuclear utilities. Specifically, the EPAct amended sections 211 and 212
of the Federal Power Act,17 16 U.S.C. 824j and 824k, with
respect to wholesale transmission services. Pursuant to these amended
sections, any electric utility or person generating electricity may
apply to FERC for an order requiring a transmission utility to provide
transmission services to the applicant at prices recovering just and
reasonable costs.
---------------------------------------------------------------------------
\17\ Section 272 of the Atomic Energy Act provides that every
NRC nuclear facility licensee is subject to the regulatory
provisions of the Federal Power Act.
---------------------------------------------------------------------------
After enactment of the EPAct, FERC issued Orders 888 (April 24,
1996) and 888-A (March 4, 1997) which in part provide for tariffs to be
filed regarding transmission service and certain necessary ancillary
services.18 In Order No. 888, FERC exercised its expanded
statutory authority and required all public utilities that own, control
or operate transmission facilities ``to have on file open access non-
discriminatory transmission tariffs that contain minimum terms and
conditions of non-discriminatory services.'' 19 Pursuant to
these required tariffs, utilities can now enter into arrangements for
transmission and ancillary services without instituting proceedings
under section 211.
---------------------------------------------------------------------------
\18\ It is our understanding that these FERC orders are
currently undergoing judicial review.
\19\ Promoting Wholesale Competition Through Open Access Non-
discriminatory Transmission Services by Public Utilities and
Recovery of Stranded Costs by Public Utilities and Transmission
Utilities, 61 FR 21,540 (May 10, 1996), (to be codified at 18 CFR
Parts 35 and 385), reh'g denied in pertinent part, Order 888-A, 62
FR 12,274 (March 14, 1997), petitions for review pending, People of
New York, supra n.13.
---------------------------------------------------------------------------
As a result, FERC now possesses statutory authority overlapping
that of the NRC under Section 105 to remedy potential and existing
anticompetitive conduct by the NRC's nuclear facility licensees, at
least with respect to transmission services. As we noted above,
transmission services are the services without which access to nuclear
power facilities is meaningless and which, therefore, were of great
concern to Congress in granting prelicensing antitrust review authority
to the Commission. With this expanded FERC authority, however, the NRC
cannot be said to be in a unique position to address or remedy
antitrust problems involving access to transmission services. To the
contrary, NRC antitrust review might even be said to be redundant and
unnecessary. As FERC stated in Order 888-A, ``unbundled electric
transmission service will be the centerpiece of a freely traded
commodity market in electricity in which wholesale customers can shop
for competitively-priced power.'' FERC Order 888-A, 62 FR 12,275
(1997). In conjunction with the Department of Justice's broad authority
to enforce compliance by NRC licensees with the antitrust laws (see
subsections 105a and b of the Act), this expanded FERC authority and
enhanced competitive climate for the electric utility industry render
the NRC's post-operating license antitrust reviews duplicative
regulation contrary to the sound objective of a streamlined government.
Since 1970, changes in the Clayton Act also have contributed to
eliminating any need for an NRC role in reviewing acquisitions of
nuclear power facilities by new owners. The Hart-Scott-Rodino Antitrust
Improvements Act or 1976, Pub. L. 94-435, 90 Stat. 1383 (1976), added
section 7A to the Clayton Act, 15 U.S.C. 18a, which established a
``waiting period'' notification process which allows the Department of
Justice and the Federal Trade Commission to screen certain commercial
transactions such as acquisitions of assets 20 for potential
violations of the antitrust laws before the transactions are
consummated. Under section 7A(f), DOJ has the authority to institute a
court proceeding to enjoin a transaction that it has determined would
violate the antitrust laws. Since the Clayton Act standard, like that
of Section 105c, is ``anticipatory'' in nature, designed to permit the
correction of anticompetitive problems in their
incipiency,21 the scrutiny of DOJ's pre-acquisition review
is comparable at least to the NRC's ``significant changes'' review.
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\20\ The transaction must meet certain threshold jurisdictional
amounts, but acquisitions of nuclear power facilities always have
met, and are expected to meet, the requirement and thus are subject
to the screening process.
\21\ See generally Houston Lighting & Power Co., CLI-77-13, 5
NRC 1303 (1977).
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In summary, the competitive and regulatory landscape has
dramatically changed since 1970 in favor of those electric utilities
who are the intended beneficiaries of the Section 105 antitrust
reviews, especially in connection with acquisitions of nuclear power
facilities and access to transmission services. For this Commission to
use its scarce resources needed more to fulfill our primary statutory
mandate to protect the public health and safety and the common defense
and security than to duplicate other antitrust reviews and authorities
22 makes no sense and only
[[Page 33926]]
impedes nationwide efforts to streamline and make more efficient the
federal government.
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\22\ Theoretically, the Section 105c.(5) standard of ``whether
the activities under the license would create or maintain a
situation inconsistent with the antitrust laws' is broader than any
used elsewhere in antitrust law enforcement since no actual
violation is required. As a practical matter, however, it is
difficult at best to even envision a competitive situation which
satisfied the Section 105 standard for relief but would not warrant
relief under traditional antitrust statutes, which have been broadly
construed by the courts. For example, Section 5 of the FTC Act has
been held to empower the FTC ``to arrest trade restraints in their
incipiency without proof that they amount to an outright violation
of Section 3 of the Clayton Act or other provisions of the antitrust
laws.'' FTC v. Brown Shoe Co., 384 U.S. 316, 322 (1966). Thus, there
will be no realistic gap in antitrust law enforcement if the NRC no
longer performs antitrust reviews of post-operating license transfer
applications.
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D. Existing Antitrust License Conditions
Whether or not the Commission conducts a ``significant changes''
review of post-operating license transfer applications, it still must
consider the fate of any existing antitrust license conditions under
the transferred license. Theoretically, at least, three possibilities
exist: (1) The existing license conditions should be attached verbatim
to the transferred license, (2) the existing conditions should be
rescinded or eliminated in their entirety, or (3) the existing
conditions should be modified and attached as modified to the
transferred license. We do not believe it is possible in the abstract
to generically preordain any one solution for all conceivable cases.
The license conditions on their face, the nature of the license
transfer, and perhaps the competitive situation as well, would need to
be considered to determine what action were warranted in a given case.
(For example, and without regard to the competitive situation, (1) it
might be appropriate to retain the existing conditions where they apply
only to a particular co-owner or co-operator which will remain a
licensee under the transferred license, (2) it might be appropriate to
remove the conditions where they apply to only one of several licensees
and that one will no longer be a licensee after the transfer, and (3)
it might be appropriate to remove existing conditions or modify
references to licensees in the conditions when existing licensees to
whom the conditions apply merge among themselves or with other entities
and new corporate licensees will result.)
While the issue of the appropriate treatment of existing antitrust
license conditions in the past would have been addressed as part of the
``significant changes'' review of license transfers, there will need to
be some means provided for consideration of the matter in connection
with transfers of licenses with existing antitrust license conditions.
In such cases, the Commission will entertain submissions by licensees,
applicants, and others with the requisite antitrust standing that
propose appropriate disposition of existing antitrust license
conditions. Here, antitrust license conditions are attached to the Wolf
Creek license. We therefore direct all parties to this proceeding (and
other persons with an interest in the license conditions) to submit
letters to the Commission addressing the disposition of the conditions.
Such letters shall be filed within 15 days of this decision and shall
not exceed 15 pages.23
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\23\ Consideration of the Wolf Creek antitrust license
conditions is not inconsistent with our holding that the NRC need
not conduct ``significant changes'' antitrust reviews of license
transfers, for the Wolf Creek conditions were imposed at a licensing
stage (initial licensing) when the NRC undoubtedly had antitrust
authority. The Commission plainly has continuing authority to modify
or revoke its own validly-imposed conditions. See Ohio Edison Co.
(Perry Nuclear Power Plant, Unit 1), CLI-92-11, 36 NRC 47, 54-59
(1992).
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E. Rulemaking Versus Adjudication
KEPCo argues that the Commission cannot lawfully eliminate
antitrust reviews by pronouncement in an adjudicatory decision, either
in general or in this Wolf Creek case in particular, without first
resorting to notice and comment rulemaking. See KEPCo brief at 11-14.
KEPCo asserts that to do so would violate the NRC's regulations, id.,
and such a policy determination could not lawfully be binding in other
cases, id. at 13. We disagree.
As explained above, no NRC regulation explicitly mandates an
antitrust review of post-operating license transfer applications. Not
one comma of the Commission's current regulations need be changed in
the wake of a cessation of such reviews, although because of the NRC's
past practice of conducting such reviews, we have decided that
clarification of our rules is warranted. Thus, while a dismissal of
this antitrust proceeding based on a new but permissible interpretation
of the Commission's authority would be contrary to past practice, it
would not be contrary to the explicit language of any Commission rule.
With respect to the propriety of deciding in this proceeding that
henceforth there will be no antitrust reviews of post-operating license
transfer applications in this or any future cases, ``the Supreme Court
has repeatedly emphasized that the choice between rulemaking and
adjudication ``lies primarily in the informed discretion of the
administrative agency.'' General Am. Transp. Corp. v. ICC, 883 F.2d
1029, 1031 (D.C. Cir. 1989), quoting SEC v. Chenery Corp., 332 U.S.
194, 203 (1947). See also Cassell v. FCC, 154 F.3d 478, 485 (D.C. Cir.
1998).
In fact, what criticism there has been of agencies' use of
adjudication to decide new general policy or changes in general policy
has focused on the unfairness of doing so without giving nonparties
advanced notice and opportunity to comment. See General Am. Transp.
Corp., 883 F.2d at 1030, and the authorities cited therein. For the
very purpose of avoiding such unfairness, however, the Commission in
this case sought amicus curiae briefs from ``any interested person or
entity'' and received briefs on the issue from a number of nonparties.
CLI-99-05, 49 NRC at 200, n.1. Widespread notice of the Commission's
intent to decide this matter in this proceeding was provided by
publishing that order on the NRC's web site and in the Federal
Register, and also by sending copies to organizations known to be
active in or interested in the Commission's antitrust activities. Id.
While KEPCo and others may have preferred that the Commission proceed
by rulemaking, the Commission is acting well within its discretion in
deciding this matter now in this proceeding.
III. Conclusion
For the foregoing reasons, the Commission has concluded that the
Atomic Energy Act does not require or even authorize antitrust reviews
of post-operating license transfer applications, and that such reviews
are inadvisable from a policy perspective. We therefore dismiss KEPCo's
petition to intervene on antitrust grounds. Applicants and KEPCo may
submit letters to the Commission suggesting the appropriate disposition
of the existing antitrust license conditions due to the planned changes
in Wolf Creek ownership and operation. All such letters shall be
submitted to the Office of the Secretary no later than 15 days after
the date of this Order and shall not exceed 15 pages in length. Any
other person with an interest in the Wolf Creek antitrust license
conditions also may submit a letter, not to exceed 15 pages, within 15
days of the date of this Order. Finally, the NRC staff will be directed
to initiate a rulemaking to clarify the Commission's regulations to
remove any ambiguities and ensure that the rules clearly reflect the
views set out in this decision.
It is so ordered.
Dated at Rockville, Maryland this 18th day of June, 1999.
[[Page 33927]]
For the Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
[FR Doc. 99-16073 Filed 6-23-99; 8:45 am]
BILLING CODE 7590-01-P