In the Matter of Kansas Gas and Electric Company, et al. (Wolf Creek Generating Station, Unit 1): Memorandum and Order

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.

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\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.

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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

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\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).

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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

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\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.''

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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.

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\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.

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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.

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\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.

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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.

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\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).

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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

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\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.

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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.

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\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.

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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.

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\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.

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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