Opinion ID: 706907
Heading Depth: 2
Heading Rank: 2

Heading: Current Proceedings on Licensees' Request to Suspend Antitrust Conditions

Text: 10 Almost a decade later, Licensees filed applications with the NRC to suspend these Sec. 105 license conditions. The Licensees claimed that, contrary to the expectations which had motivated passage of Sec. 105 antitrust protections, the cost of nuclear power far exceeded the cost of power from alternative sources. Thus, the Licensees argued, ownership of a nuclear plant could not confer any of the competitive advantages that Congress had feared and, given this turn of events, Sec. 105(c) prohibited the NRC from retaining antitrust conditions on a nuclear plant that generated high cost power. After NRC staff rejected these applications for suspension, see Notice of Denial, 56 Fed.Reg. 20,057 (May 1, 1991), Licensees petitioned for a hearing on the denial. 11 At this juncture, Cleveland entered the proceedings to oppose Licensees' hearing request, arguing that the NRC had no statutory authority to consider applications for suspension of antitrust license conditions. Alternatively, Cleveland sought to intervene in any hearing held on the applications so that it could oppose the requested suspensions. The Atomic Safety and Licensing Board (Licensing Board) dismissed Cleveland's petition on the grounds that the NRC did have authority to grant Licensees a hearing and to modify antitrust conditions subsequent to issuance of a license, and granted Cleveland's request to intervene. Ohio Edison Co., 34 N.R.C. 229, 238, 239-45 (1991) (Prehearing Conference Order). Cleveland appealed the Licensing Board's rejection of its challenge to the Commission's authority to suspend, and the Commission affirmed that authority under several sections of the AEA. Ohio Edison Co., 36 N.R.C. 47, 59 (1992). Cleveland now petitions for review of that decision by this court. 12 In a subsequent stage of the proceedings, the Licensing Board considered the bedrock legal issue presented by the parties: 13 Is the Commission without authority as a matter of law under Section 105 of the Atomic Energy Act to retain the antitrust license conditions contained in an operating license if it finds that the actual cost of electricity from the licensed nuclear power plant is higher than the cost of electricity from alternative sources, all as appropriately measured and compared? 2 14 The Board ruled that neither the plain meaning of Sec. 105(c), the provision's legislative history, general principles of antitrust law, nor prior NRC cases required a threshold showing of low-cost power production in order to maintain antitrust conditions challenged by a licensee. 36 N.R.C. at 289-306. The Commission declined to accept Licensees' petition for review of the Board's decision, thereby converting the ruling into final agency action. See 10 C.F.R. Sec. 2.786(c) (1995). 15 Licensees now appeal the NRC's ruling on the bedrock legal issue. They argue that the Commission ignored the plain meaning of Sec. 105(c) by asserting the authority to maintain antitrust conditions on the operation of a plant even when the cost of the nuclear power generated is higher than that of alternative sources of power. Cleveland also appeals the Commission's rejection of its challenge to the NRC's statutory authority to consider requests to suspend conditions under any circumstances. In response to Cleveland, the NRC contends that since Cleveland basically prevailed in the underlying proceeding which refused to suspend the conditions, it is not a party aggrieved as required by the Hobbs Act. 28 U.S.C. Secs. 2342(4), 2344 (1988). We consider each challenge in turn.II. BEDROCK LEGAL ISSUE 16 The parties involved in the proceedings below formulated one issue for the NRC to address in considering Licensees' suspension application: Does Sec. 105(c) permit the NRC to retain antitrust conditions on the operation of a nuclear plant when the cost of power generated by the plant is higher than the cost of power from available alternative sources? 3 In reviewing the NRC's answer to this question, we begin with the familiar principles of Chevron, which instruct that: 17 If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.... [But if] the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. 18 Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). As explained in greater detail below, we certainly cannot find in Sec. 105(c) any clear signal that a threshold showing of low-cost power production is or is not required in order to retain antitrust conditions on a license under Sec. 105(c), and so we proceed to the second step of Chevron to examine whether the NRC's construction of that provision was reasonable and consistent with the purpose and structure of the Act and relevant legislative history. Ultimately, we find the NRC's interpretation of Sec. 105(c) permissible. A. Chevron Step One 19 Paradoxically, both Licensees and the NRC contend that Congress has clearly spoken to the question of whether Sec. 105(c) requires a preliminary finding of low-cost power production as a prerequisite to antitrust conditions. In determining whether clear intent exists, we look to the language of the statute, as well as the language and design of the statute as a whole. 4 Fort Stewart Schools v. FLRA, 495 U.S. 641, 645, 110 S.Ct. 2043, 2046, 109 L.Ed.2d 659 (1990) (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 1817, 100 L.Ed.2d 313 (1988)); Tataranowicz v. Sullivan, 959 F.2d 268, 276 (D.C.Cir.1992) (citing McCarthy v. Bronson, 500 U.S. 136, 139, 111 S.Ct. 1737, 1740, 114 L.Ed.2d 194 (1991); Crandon v. United States, 494 U.S. 152, 158, 110 S.Ct. 997, 1001, 108 L.Ed.2d 132 (1990)), cert. denied, --- U.S. ----, 113 S.Ct. 963, 122 L.Ed.2d 120 (1993). 20 Focusing their argument on the phrase in Sec. 105(c)(5) that grants authority to impose conditions if activities under the license have an adverse antitrust impact, Licensees argue that these four words restrict the NRC's antitrust authority to situations where it can demonstrate that the actual operation of the plant creates or maintains an anticompetitive situation. Licensees claim that since electricity is a fungible commodity, the only difference between electricity generated by their nuclear plants and that from alternative sources is cost. Thus, ownership of a nuclear plant which generates more costly power than that of competitors necessarily imposes a competitive disadvantage, rather than enhancing the owner's competitive position on that basis. Licensees urge us to conclude that as a matter of law, any invocation of Sec. 105(c) requires a preliminary showing that the power generated by the licensed plant is lower in cost than power from available alternative sources. There is a ready response to that argument. 21 Had Congress intended to require a threshold showing of low-cost power production before allowing the NRC to regulate under Sec. 105(c), or had it determined that high-cost plants could not pose a competitive threat, we believe it would have phrased that intent much more precisely. As it is, no reference at all is made to the cost of power in Sec. 105(c). In fact, the plain language of Sec. 105(c) undercuts Licensees' argument. As the initial license proceedings surrounding these plants well demonstrate, various plant activities, such as generation of power that increases a utility's total capacity and reliability, or the construction of transmission facilities that make a new plant economically feasible, may further strengthen a utility's position in the regional electricity market, regardless of the cost of power generated by the plant. The words chosen by Congress allow a linkage of the NRC's antitrust authority to these kinds of activities, rather than making it contingent only upon power costs. 22 Conversely, the NRC asserts that Sec. 105(c)(5) clearly instructs the NRC to engage in a traditional antitrust analysis, as opposed to considering the higher cost of power as a threshold barrier beyond which no further analysis is necessary. It pins this claim on three other subsections of Sec. 105 that discuss the Commission's regulatory authority. The NRC contends that these provisions refer to utility behavior, not just cost, and argues that we must construe Sec. 105(c)(5) in a similar manner. The NRC first directs our attention to Sec. 105(c)(2), which directs the Commission to consider a licensee's activities or proposed activities in determining whether a second antitrust review is necessary before issuance of an operating permit. 42 U.S.C. Sec. 2135(c)(2). Because that provision refers to proposed activities, the Commission argues, it must encompass more than changes in cost of power, which can never be wholly within the licensee's control. While this provision does make clear that the statute does not limit the NRC to considerations of cost in assessing the need for a second antitrust review, neither does it clearly prohibit the NRC from imposing a threshold requirement of low-cost power production should it determine that low cost was an indispensable ingredient to any finding of anticompetitive impact. The NRC also points to Secs. 105(a) and (b), which warn that the NRC's antitrust authority does not relieve licensees from compliance with other antitrust laws and require the NRC to report violations of those laws, as bolstering its argument that Congress did not intend to limit interpretation of activities to considerations of cost alone. 42 U.S.C. Secs. 2135(a), (b). We do not see how these provisions compel or even advance the reading of Sec. 105(c)(5) that the NRC advocates. The NRC's efforts to construe Sec. 105(c) as an unambiguous directive not to impose a low-cost threshold for antitrust conditions fails as well. B. Chevron Step Two 23 If, then, Sec. 105(c) does not clearly require a threshold showing of low-cost power production in order to retain antitrust conditions, we must defer to the NRC's interpretation if it is reasonable and consistent with the statutory scheme and legislative history. Chevron, 467 U.S. at 845, 104 S.Ct. at 2783 (if agency's interpretation represents a reasonable accommodation ..., we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned (quoting United States v. Shimer, 367 U.S. 374, 383, 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908 (1961))). We find the NRC's construction reasonable, and thus we affirm its denial of Licensees' suspension applications. 5 24 This question comes to us in a somewhat awkward posture. Licensees explicitly elected not to argue that the circumstances justifying the original imposition of Sec. 105 conditions no longer existed, choosing instead to present only the bedrock legal question of whether the NRC is ever permitted to retain conditions when a nuclear plant's power costs more than power from alternative sources. 6 Thus, Licensees have not attempted to show that under this particular scenario, the high-cost power generated by their plants does not have any anticompetitive impact, despite the other advantages of reliability and coordination that they enjoy. Nor has the NRC sought to prove that in this specific context, operation of Licensees' plants still confers a competitive advantage, regardless of cost. As a result, we are left to consider the near-hypothetical question posed by the bedrock issue without the benefit of extensive factual development in a concrete situation. 25 For Licensees to persuade us that the NRC's interpretation of Sec. 105(c) is unreasonable, they must show that there is no set of circumstances where a plant producing high-cost power could contribute to a situation inconsistent with the antitrust laws. Licensees contend that the power generated by a nuclear plant is a fungible commodity which must compete with electricity from other sources; if power from a licensee's nuclear plant costs more than power from alternative sources, then licensees are necessarily disadvantaged vis-a-vis their competitors and cannot pose an anticompetitive threat. This analysis, however, with its exclusive focus on the cost of power, totally ignores other factors that may affect the competitive position of any producer. See LAWRENCE A. SULLIVAN, HANDBOOK OF THE LAW OF ANTITRUST 74-93 (1977) (factors indicating market power include market concentration, entry barriers, firm conduct, excessive profits, rigid pricing policies, price discrimination, and firm size). More to the point, it ignores several factors that the NRC considered dispositive in finding anticompetitive behavior on the part of these very Licensees when it first imposed antitrust conditions. 26 In the initial proceedings, the NRC identified a number of competitive advantages accruing to Licensees from their participation in the CAPCO power pool, all of which predated construction of the nuclear plants at issue here and existed despite the pivotal fact that even then, CAPCO's power was more costly than that of competing utilities. As previously discussed, the Commission at the time of the initial licensing found that Licensees had almost complete dominance over the generation, transmission, and sale of electric power in the CAPCO territory. It also found that Licensees had exercised this power in an anticompetitive fashion: they had refused to wheel competitors' power or allow them access to transmission facilities for carrying alternative sources of power; prevented competitors from joining the CAPCO pool, sharing power reserves, or selling or exchanging various types of power at low rates; and denied them the economies of scale and other benefits of coordinated planning and construction. 27 The Commission ruled that these circumstances constituted a situation inconsistent with the antitrust laws, and that the resulting increase in CAPCO's generating capacity and transmission facilities would enhance Licensees' market position and its ability to maintain entry barriers which precluded full participation by competing utilities. Licensees offer no compelling reason why these same factors that led the NRC to find a situation inconsistent with antitrust laws should not now be sufficient to maintain antitrust authority under Sec. 105(c). Licensees still exercise market control in the CAPCO territory, and the power generated by the nuclear plants contributes to that dominance by providing increased total capacity and greater reliability. Nuclear power may be higher in cost than available non-nuclear power, but just as higher-cost power generated by Licensees before construction of the nuclear plants did not prevent them from controlling competitors' power supply options, higher-cost power from a nuclear plant could have the same anticompetitive effect. Expanded transmission facilities built as part of the nuclear construction program further strengthen Licensees' ability to deprive competitors of access to alternative power sources. Absent the license conditions, there is no intrinsic reason why Licensees could not again use their market dominance to weaken and eliminate competitors, despite the higher cost of their power. Thus, we determine that the NRC reasonably answered the bedrock question in deciding that a threshold showing of lower cost nuclear power was not required as an indispensable prerequisite of retaining antitrust conditions. 7 28 Licensees also contend that the NRC's interpretation is inconsistent with Sec. 105's legislative history, pointing to several instances where witnesses appearing before Congress during hearings on Sec. 105(c) 8 stated their belief that nuclear power would prove to be a cheap source of power. The NRC does not contest this point, acknowledging that at one time the Commission and ... Congress ... anticipated that the electricity produced at nuclear facilities would be lower cost as compared to alternative sources. 36 N.R.C. at 296 (NRC denial of Licensees' suspension applications). Congress' mistaken assumptions about the relative costs of nuclear power, however, do not resolve the bedrock question. Even if Congress did believe that nuclear plants would generate a wealth of cheap power, it gave no indication in text or committee reports that the success of that prediction was in any way the touchstone of Sec. 105(c) authority. The Joint Committee Report, for example, makes no mention of cost at all, either as a background presumption informing the boundaries of the NRC's antitrust authority, or as a necessary prerequisite for exercise of that authority. Report By the Joint Committee on Atomic Energy, H.R.REP. NO. 1470, 91st Cong., 2d. Sess. 15 (1970) U.S.Code Cong. & Admin.News 1970, p. 4981. See Power Reactor Development Co. v. International Union of Elec., Radio & Mach. Workers, 367 U.S. 396, 409, 81 S.Ct. 1529, 1535, 6 L.Ed.2d 924 (1961) (noting peculiar responsibility and place of the Joint Committee in developing statutory scheme); accord Alabama Power Co. v. NRC, 692 F.2d 1362, 1368 (11th Cir.1982), cert. denied, 464 U.S. 816, 104 S.Ct. 72, 78 L.Ed.2d 85 (1983). Thus, the legislative history of Sec. 105(c) does not alter our conclusion that the NRC reasonably interpreted that provision in the proceeding below. 9 29