Court Opinion

ID: 8885270
Source: CourtListenerOpinion
Date Created: 2022-11-26 21:40:52.641761+00
Date Added: 2024-06-11T17:06:52.920264
License: Public Domain

BAZELON, Chief Judge
(concurring in part and dissenting in part):
The Atomic Energy Commission disclaims jurisdiction to consider the antitrust issues raised by the municipal utilities.1 By construing § 103 to require proof of practical value well beyond a reasonable doubt, the Commission confines its review of these nuclear reactors to safety and defense matters under § 104. Hence, huge power plants that are commercial by any standard but the agency’s are classified as research and development projects and therefore exempt from the prior antitrust review required for commercial projects by § 105(c) of the Act.
Duke Power Company was granted a research and development permit to build three nuclear reactors in Oconee County, South Carolina. With their designed capacity of 2,600,000 kilowatts, the reactors will meet about one third of Duke’s anticipated demand when completed. Duke’s estimated investment in the project is $341,000,000.
In the Massachusetts case, ten privately-owned utilities, apparently the major New England private utilities, have formed a joint venture, Vermont Yankee Nuclear Power Corporation, to construct and operate a nuclear reactor at Vernon, *993Vermont. Its expected power capacity is 1,665,000 kilowatts. Total capital requirements are estimated at $123,000,000. The financial arrangements were approved by the Securities and Exchange Commission, upon a showing that the Vermont Yankee project is expected to produce power at a cost lower than conventional power plants.2 This project, too, has been licensed by the Commission as a demonstration model.
In a rulemaking proceeding three years ago and again in the decisions at bar, the Commission declined to make a finding of practical value for this type of boiling water nuclear reactor on the ground of insufficient evidence that such nuclear projects would be economically competitive with conventional power sources. The Commission noted that small nuclear reactors in the 200 megawatt range did not produce power at competitive costs and that intermediate-sized plants with a 400-500 megawatt capacity were not yet operative. It concluded that without information from these intermediate-sized plants, it could not hazard a finding of practical value for still larger plants. 31 Fed.Reg. 221 (1966).
The Commission’s reasoning has a nice ring in the abstract, but the result is at odds with the facts. These nuclear plants are designed for regular commercial service. They are financed entirely by private capital without government subsidy; indeed, private investors have staked nearly half a billon dollars on the commercial success of the plants in these cases alone. The Commission concedes that the basic technology has been proven and that these projects are subject to no more than “reasonable business risks.” 31 Fed.Reg. at 224. Nonetheless, as a result of the Commission’s peculiar standard, these plants are officially still not of practical value.
The Commission maintains that its “statutory responsibility” requires more than “strong belief that the new generation of nuclear plants will operate at anticipated costs,” 31 Fed.Reg. at 224, but cites nothing in the statute to compel this cautious pessimism.3 The Commission stated in the 1966 ruling that the consequences of a practical value determination were “relatively narrow.” They were principally to require consideration of a commercial project’s impact on what was once thought to be a scarce nuclear fuel supply and to make commercial projects ineligible for further government assistance. By 1966 nuclear fuel was not scarce; and projects like and including the Oconee and Vermont Yankee reactors are not receiving subsidies.4 Thus, in practice the only sub*994stantive consequence of the Commission’s reluctance to find practical value has been to excuse the Commission from considering the antitrust implications of all nuclear projects licensed to date.5
Is there any reason why a practical value finding should await evidence that nuclear plants are subject to something less than “reasonable business risks?” Since the main result of the agency’s stiff standard of proof is to make antitrust considerations irrelevant to its licensing responsibility, perhaps the Commission thinks these questions are premature. This is a dubious explanation, however, since under the Commission’s Rules answers to antitrust questions could be delayed indefinitely, regardless of an intervening finding of practical value.6 I concur fully in the majority’s implicit interdiction of this possibility.7
If there are reasons for the Commission’s procrastination, the agency has not offered them. I have no quarrel with the showing that Congress intended to limit § 105(c) to commercial licensing proceedings. As a common sense matter, a reasearch and development project does not portend an immediate and substantial impact on competition. But nothing in the legislative history suggests that Congress intended much of the country to be lit and powered by nuclear research and development projects, licensed without the antitrust review required by the Act.8 The Commission claims to be bound by the statute. Nothing in the Act requires that practical value mean absolute certainty of commercial success. When an agency’s reading of a term of its governing statute virtually nullifies one of its substantive provisions, the interpretation is not entitled to the usual deference.
Nor is the gap filled by the bare invocation of the Commission’s expertise. Certainly nuclear engineering is a technical subject, but it is not clear that the Commission is better equipped than the industry and the financial community to *995judge the commercial prospects of these nuclear plants,9 once the technology has been proved, as the agency assures us it has. Normally, I would vote to remand these cases to the Commission, but the situation has changed since these appeals. At the oral argument, counsel for the Commission announced that a new rulemaking proceeding on the question of practical value would be commenced within one year. Since reconsideration is forthcoming in time to affect these projects, there is no need for further proceedings in these cases.
In the interim, there may be new legislation to change or clarify the Commission’s conflicting roles. The agency has served as an aggressive and effective salesman for nuclear power, hastening its commercial development. But when nuclear facilities reach the point of practical value the Commission acquires new regulatory duties under the statute. The tension between its roles as promoter and potential regulator of nuclear facilities may account for its often irreconcilable statements on their commercial prospects. We may hope that the agency’s duties or its statements will be harmonized before another of these cases comes to court.

. I dissent, too, from the holding that the Commission properly denied intervention to the Massachusetts municipals on the ground that the motion to dismiss Vermont Yankee’s application as improperly filed was not made in the initial petition. The antitrust allegations in the petition provided adequate notice to the Commission that the jurisdictional distinction between research and development and commercial licenses was basic to the municipals’ claim. The Commission did not sustain the Atomic Safety and Licensing Board’s denial of intervention solely on this point of pleading, but cited the rationale of the Duke Power decision holding that jurisdiction under § 104(b) was proper. To allow intervention to raise the jurisdictional issue would not have greatly expanded the proceedings, especially in light of its likely disposition. Cf. Northwest Airlines v. Civil Aeronautics Board, 90 U.S.App.D.C. 158, 164-165, 194 F.2d 339, 344-345 (1952).

. The validity of the Securities and Exchange Commission’s approval of Vermont Yankee’s financing under § 10(b) (1) of the Public Utility Holding Company Act, 15 U.S.C. § 79j (b) (1964), was contested by the Massachusetts municipals on antitrust grounds in Municipal Electric Ass’n of Mass. v. Securities and Exchange Comm., 134 U.S.App.D.C. 145, 413 F.2d 1052 (decided March 26, 1969). The Commission’s orders were set aside and the cases remanded for a hearing and reconsideration of the municipal’s antitrust claims.

. This ease stands in sharp contrast to the situation in Power Reactor Development Co. v. International Union of Electrical, etc., Workers, 367 U.S. 396, 81 S.Ct. 1529, 6 L.Ed.2d 924 (1961). There the Supreme Court upheld the Commission’s issuance of a provisional construction permit for a reactor, based on “reasonable assurance” that there would be sufficient firm evidence that the reactor would meet operating safety standards by the time it was ready for service. All nuclear facilities are, of course, cleared for safety before they receive operating licenses. It seems at least bizarre that reasonable assurance is enough to predict safe operation, but not enough for a forecast of commercial profitability.

. “Thus, the consequences of a statutory finding of practical value with respect to present types of single purpose light water, nuclear power reactors for the production of energy for central station power are relatively narrow, since waiver of fuel use charges and research and development or direct design assistance is no longer being afforded by AEC to nuclear electric plants of this category that are now being sold, and it is well *994understood that AEO does not presently intend to recommend such aid and that the cognizant committee of Congress would not be likely to report favorably on its authorization.” 31 Fed.Reg. at 223.

. See letter of August 29, 1966, from Chairman Glenn T. Séaborg of the Commission to Representative Chet Holifield, Chairman of the Joint Committee on Atomic Energy, setting forth the consequences of a practical value determination. Hearings on Participation by Small Electrical Utilities in Nuclear Power Before the Joint Comm, on Atomic Energy, 90th Cong., 2d Sess., pt. 1, at 271-274 (1968).

. The Commission conceded that Section 50.56 of its regulations (10 C.F.R. § 50.56) required that plants licensed for construction as § 104 research and development projects also receive their operating licenses under § 104.
“§ 50.56 Conversion of construction permit to license; or amendment of license. Upon completion of the construction or alteration of the facility, in compliance with the terms and conditions of the construction permit and subject to any necessary testing of the facility for health or safety purposes, the Commission will, in the absence of good cause shown to the contrary, issue a license of the class for which the construction permit was issued or an appropriate amendment of the license, as the case may be.”

. See majority opinion at 973 supra. The majority’s serious “warning” to the Commission on this point should buttress the position of the Justice Department that § 105(c) be given full effect. See majority opinion at 973, n. 9, supra.

. In a press release dated October 9, 1969, the Commission reported on the status of nuclear power plants as of September 30,1969:
KILOWATTS
15 operable 3,851,700
48 under construction 37,689,200
32 planned (reactors ordered) 28,375,000
9 planned (reactors not ordered) 8,455,000
78,370,900
The nation’s electric capacity by conventional means as of June 30, 1969 was 321,153,088 kilowatts.

. Indeed, a spokesman for the General Electric Corporation urged at the hearings on the 1954 Act that “maximum reliance * * * be placed on willingness to risk capital in determining whether a new idea is of practical value.” Legislative History of the Atomic Energy Act of 1954, vol. II, at 1961.