[Federal Register Volume 64, Number 2 (Tuesday, January 5, 1999)]
[Proposed Rules]
[Pages 432-435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-97]
=======================================================================
-----------------------------------------------------------------------
NUCLEAR REGULATORY COMMISSION
10 CFR Part 50
[Docket No. PRM-50-64]
Atlantic City Electric Company, Austin Energy, Central Maine
Power Company, Delmarva Power & Light Company, South Mississippi
Electric Power Association, and Washington Electric Cooperative, Inc.;
Receipt of Petition for Rulemaking
AGENCY: Nuclear Regulatory Commission.
ACTION: Petition for rulemaking; notice of receipt.
-----------------------------------------------------------------------
SUMMARY: The Nuclear Regulatory Commission (NRC) has received and
requests public comment on a petition for rulemaking filed by the
Atlantic City Electric Company, Austin Energy, Central Maine Power
Company, Delmarva Power & Light Company, South Mississippi Electric
Power Association, and Washington Electric Cooperative, Inc.
(petitioners). The petition has been docketed by the Commission and has
been assigned Docket No. PRM-50-64. The petitioners are all non-
operating joint owners of nuclear plants who have concerns about
potential safety impacts that could result from economic deregulation
and restructuring of the electric utility industry. The petitioners are
requesting that the enforcement provisions of NRC regulations be
amended to clarify NRC policy regarding the potential liability of
joint owners if other joint owners become financially incapable of
bearing their share of the burden for safe operation or decommissioning
of a nuclear power plant.
DATES: Submit comments by March 22, 1999. Comments received after this
date will be considered if it is practical to do so, but assurance of
consideration cannot be given except as to comments received on or
before this date.
ADDRESSES: Submit comments to: Secretary, U.S. Nuclear Regulatory
Commission, Washington, DC 20555. Attention: Rulemaking and
Adjudications staff.
Deliver comments to 11555 Rockville Pike, Rockville, Maryland,
between 7:30 a.m. and 4:15 p.m. on Federal workdays.
For a copy of the petition, write: David L. Meyer, Chief, Rules and
Directives Branch, Division of Administrative Services, Office of
Administration, U.S. Nuclear Regulatory Commission, Washington, DC
20555-0001.
You may also provide comments via the NRC's interactive rulemaking
website through the NRC home page (http://www.nrc.gov). This site
provides the availability to upload comments as files (any format), if
your web browser supports that function. For information about the
interactive rulemaking website, contact Ms. Carol Gallagher, (301) 415-
5905 (e-mail: [email protected]).
FOR FURTHER INFORMATION CONTACT: David L. Meyer, Office of
Administration, U.S. Nuclear Regulatory Commission, Washington, DC
20555. Telephone: 301-415-7163 or Toll Free: 1-800-368-5642 or E-mail:
[email protected]
[[Page 433]]
SUPPLEMENTARY INFORMATION:
Background
The Nuclear Regulatory Commission received a petition for
rulemaking submitted by the petitioners. The petitioners are all non-
operating joint owners of nuclear power plants who are concerned about
their potential liability in the event that other co-owners or the
licensee(s) licensed to possess and operate those nuclear power plants
were to default on, or become financially incapable of bearing, their
share of the costs of operating in accordance with NRC requirements.
Specifically, the petitioners are concerned that the NRC's ``Final
Policy Statement on the Restructuring and Economic Deregulation of the
Electric Utility Industry'' (Policy Statement) published on August 19,
1997 (62 FR 44071), has resulted in confusion among joint owners of
nuclear power plants regarding the potential liability of the owner of
a relatively small ownership share of a nuclear power plant. The
petitioners believe that a joint owner could incur the burden of all or
an excessive portion of a plant's costs if other joint owners or the
operators defaulted or became financially incapable of bearing their
share of the burden. The petitioners believe that the NRC might ignore
existing pro rata cost sharing arrangements. The petitioners also
believe that the NRC has published no information regarding what would
constitute a de minimis share and under what circumstances the NRC
might find the imposition of joint and several liability necessary to
protect the public health and safety.
The petitioners have concluded that these factors have caused much
confusion and uncertainty about the potential liability of a joint
owner, and can adversely affect the ability to raise capital in an
uncertain market that is undergoing consolidation and restructuring.
The petitioners believe that the Policy Statement might stifle the
emerging market for the sale of nuclear power plants and associated
interests, and have concluded that the unsettled nature of potential
liability would adversely affect joint owners who wish to be acquired
by other utilities because decommissioning costs are unknown. The
petitioners request that the issue of potential liability among joint
owners be resolved by amending the regulations pertaining to
enforcement in 10 CFR Part 50.
The NRC has determined that the petition meets the threshold
sufficiency requirements for a petition for rulemaking under 10 CFR
2.802. The petition has been docketed as PRM-50-64. The NRC is
soliciting public comment on the petition for rulemaking.
Discussion of the Petition
The petitioners note that the NRC Policy Statement issued on August
13, 1997 and published in the Federal Register on August 19, 1997 (62
Fed. Reg. 44071), ``Final Policy Statement on the Restructuring and
Economic Deregulation of the Electric Utility Industry'' (Policy
Statement) contemplated how NRC would respond to potential safety
impacts on power reactor licensees that could result from economic
deregulation and restructuring of the electric utility industry.
Although the NRC recognized that many licensed nuclear power plants are
jointly owned facilities, the petitioners are concerned that the NRC
stated that pro rata cost sharing arrangements might be ignored in
``highly unusual situations where adequate protection of public health
and safety would be compromised if such action were not taken, to
consider imposing joint and several liability on co-owners of more than
a de minimis share when one or more co-owners have defaulted.'' The
petitioners are also concerned that the NRC has published no
information regarding what would constitute a de minimis share and the
situation where the NRC might find the imposition of joint and several
liability necessary to protect the public health and safety. The
petitioners believe that the quoted portion of the Policy Statement
appears to create a possibility that the owner of a small share of a
nuclear power plant could be held responsible for all or an excessive
portion of a plant's costs if other co-owners or the operators became
financially incapable of meeting their pro rata obligations.
The petitioners contend that these factors create much uncertainty
as to the potential liability of a joint owner and could adversely
affect a joint owner's ability to raise capital in an industry
undergoing consolidation and restructuring. The petitioners believe
there is an emerging market for the sale of nuclear power plants and
interest in those plants that could be stifled. The petitioners also
believe that the unsettled potential liability issue could prevent co-
owning utilities from being acquired by other utilities because actual
or projected costs, such as decommissioning costs, are unknown.
The petitioners stated that a group of joint owners requested NRC
review of the Policy Statement and ultimately petitioned for judicial
review in the U.S. Court of Appeals for the D.C. Circuit, American
Public Power Association, et al. v. Nuclear Regulatory Commission, et
al. (Case No. 98-1219). Although the case was dismissed after an
agreement between the parties, the NRC stipulated that future legal
challenges on the potential liability issue of joint owners would not
be precluded by the dismissal.
The petitioners have proposed the following language they believe
will eliminate confusion and establish a stable regulatory process on
the potential liability issue, and request that it be included among
the enforcement provisions in 10 CFR part 50:
Whenever the Commission finds it necessary or desirable to
impose additional requirements by rule, order or amendment on a
person subject to this part to promote or protect the public health
and safety, the additional requirements will be directed first to
the person licensed to possess and operate the facility. If it
becomes necessary to impose additional requirements on persons who
only own the facility, and were never licensed to operate, then the
Commission will not impose greater than the agreed allocation of
responsibility among all the owners and operators reflected in
applicable joint ownership or similar agreements pertaining to the
plant.
Although the petitioners agree that all licensees must comply with
their licenses, they believe the prospect of joint and several
liability is directly contrary to joint ownership agreements in which
ownership commitments were made and substantial sums of capital were
raised based on a contractual pro rata allocation of liability for
plant costs. The petitioners also contend that accounting of assets and
liabilities for potential sales of ownership interests is made more
uncertain because of the unsettled potential joint liability issue.
In addition to the petition for rulemaking, the petitioners have
attached a document entitled, ``Memorandum of Law in Support of
Petition for Rulemaking.'' The petitioners state that the Atomic Energy
Act of 1954, as amended (AEA), does not authorize the NRC to impose any
liability (per se) and only allows the NRC to impose certain
substantive safety obligations on licensees. The petitioners state that
the Price Anderson Act (AEA Sec. 170), contains an elaborate statutory
framework for public liability and associated actions, and provides for
various fees and NRC involvement in deferred premiums. However, the
petitioners contend that the NRC has no public safety authority to
impose liability or initiate or adjudicate claims of liability on
behalf of the public.
Under the Price Anderson Act, the petitioners note that legal
actions are brought by injured persons, rules for
[[Page 434]]
decision in public liability cases are derived from State law, and that
the U.S. district courts have jurisdiction to adjudicate claims. The
petitioners note that although the AEA and congressional appropriations
acts permit the NRC to impose and collect fees, they believe the power
to create fee liability does not extend to other types of liability.
The petitioners believe that although the NRC has authority to impose
financial qualifications requirements and has used this authority to
require funds to be provided for decommissioning, no comparable funding
requirement for operation exists. The petitioners also note that
although the Environmental Protection Agency, under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA), has
authority to initiate safety improvements at taxpayers' expense and
then sue the licensee for reimbursement, nothing in the AEA allows the
NRC to decommission a plant and impose liability for reimbursement. The
petitioners state that the NRC policy on joint and several liability
could be understood to ``. . . hold co-licensees jointly and severally
responsible for meeting specific substantive safety obligations under
the AEA. However, even as so understood, the Commission's statement is
directly contrary to the contractual basis on which joint ownership
arrangements for nuclear power plants have been structured. In most, if
not all, such arrangements, ownership commitments were made and
substantial sums of capital raised based on a contractual pro rata
allocation of responsibility for plant costs.'' (Emphasis in original).
The petitioners state that because the NRC has implicitly accepted
these arrangements, all interested parties would have their reasonable
expectations overturned by the imposition of joint and several
liability.
The petitioners assert that NRC has approved many agreements among
co-owners based on a contractual pro rata allocation of responsibility
for plant costs. The petitioners assert that a draconian imposition of
liability is not necessary because even nuclear power plant licensees
in bankruptcy have always been able to comply with NRC safety
requirements. The petitioners note that the situation at Three Mile
Island Unit 2 after the accident was adequately addressed by the
accident cleanup insurance requirements in 10 CFR 50.54(w). The
petitioners believe that the NRC has never faced a situation where a
nuclear power reactor licensee was financially unable to meet its
safety obligations and that even with the operating licensee in
bankruptcy, the NRC's safety authority is preserved. The petitioners
cite Midlantic National Bank v. New Jersey Department of Environmental
Protection, 474 U.S. 494, 506-507 (1986); Ohio v. Kovacs, 469 U.S. 274
(1985); and Penn Terra, Ltd. v. Department of Environmental Resources,
733 F. 2d 267 (3rd Cir. 1984), as cases which found that a bankruptcy
court does not have the power to authorize an abandonment without
compliance with environmental laws and protection of the public's
health and safety.
The petitioners also believe the Policy Statement is inconsistent
with the final rule published on September 22, 1998 (63 FR 50465), and
associated proposed rule that was published on September 10, 1997 (62
FR 47588), ``Financial Assurance Requirements for Decommissioning
Nuclear Power Reactors,'' in which the NRC noted difficulties that
could stem from attempting to impose joint liability on co-owners and
co-licensees for decommissioning costs. These difficulties included
problems regarding potential disagreements on decommissioning methods,
the inhibition of flexibility, the weakening of competitive position,
and implementation that the petitioners believe exist regarding
potential joint owner liability. The petitioners reiterate that under
the AEA, it would be unreasonable and unlawful for the NRC to impose
``an onerous safety obligation on non-operating co-owners simply
because the person with the real safety obligation'the operator'is
facing financial difficulty'' especially when the NRC has the authority
to impose financial qualifications requirements on those who propose to
operate a reactor.
The petitioners also contend that the Policy Statement raises
questions of impermissible retroactivity to nuclear power plant owners.
The petitioners note that in Landgraf v. USI Film Products, 511 U.S.
244, 265-266 (1994), the Supreme Court has held that:
[E]lementary considerations of fairness dictate that individuals
should have an opportunity to know what the law is and to conform
their conduct accordingly; settled expectations should not be
lightly disrupted * * *. In a free, dynamic, society, creativity in
both commercial and artistic endeavors is fostered by a rule of Law
that gives people confidence about the legal consequences of their
actions.
In General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992), the
petitioners note that the Supreme Court ruled that: ``Retroactive
legislation presents problems of unfairness that are more serious than
those posed by prospective legislation, because it can deprive citizens
of legitimate expectations and upset settled transactions.'' In Bowen
v. Georgetown Univ. Hospital, 488 U.S. 204, 208 (1988), the petitioners
also noted that the Supreme Court found that ``congressional enactments
and administrative rules will not be construed to have retroactive
effect unless their language requires this result.''
The petitioners believe that these cited decisions illustrate that
an NRC order imposing onerous safety requirements on a co-owner
licensee disregard pro rata sharing agreements, defeat legitimate
expectations, and upset settled transactions. The petitioners assert
that joint owners have relied upon pro rata arrangements for decades
with implicit NRC approval and that the industry restructuring and
emerging market for nuclear power plants require that these sharing
agreements continue. The petitioners believe that under Bowen, the NRC
cannot issue retroactive rules unless that authority is granted
explicitly by statute. The petitioners believe that the NRC does not
possess this authority because nothing in the AEA specifically gives
the NRC the power to issue retroactive rules.
The petitioners distinguish backfit rules from those that are
retroactive. The petitioners acknowledge that the vast majority of NRC
backfits apply to plant operation after the effective date of the
backfit and could never have been applied without the beginning of
plant operation. However, the petitioners state that the imposition of
new requirements on non-operating co-owners without regard for pro rata
cost sharing agreements is distinguishable from a backfit because
entities licensed to own or operate have no reasonable expectation that
the NRC will never impose additional safety requirements as a condition
of continued operation. The petitioners maintain that for non-operating
co-owners there is reasonable expectation that the NRC would continue
to honor pro rata cost-sharing contractual agreements even though NRC
has power to impose additional safety measures.
The petitioners acknowledge that any determination that an NRC rule
or order is impermissibly retroactive will be made by the courts.
However, the petitioners have concluded that an NRC imposition of a new
operational safety requirement on a non-operating co-owner group that
holds all co-owners equally responsible and disregards pro rata cost-
sharing agreements would be unreasonable and unlawful.
[[Page 435]]
Lastly, the petitioners acknowledge that the NRC has the authority
to prevent an unsafe plant from operating. They also agree that a plant
that cannot operate is a liability, not an asset. The petitioners cite
Public Service Company of New Hampshire (Seabrook Station, Units 1 and
2), CLI-88-10, 28 NRC 573 (1988), and state that it is in the interest
of all licensees, co-owners, and operators to agree on the funding of
necessary safety measures so the plant can operate. However, the
petitioners believe that the Policy Statement interferes with
licensees' rights to make their own decisions regarding allocation of
safety expenses. The petitioners have concluded that NRC interference
in allocation decisions among co-owners is not necessary for safety and
creates potentially great difficulties for co-owning utilities who wish
to consolidate, restructure, or sell assets.
The Petitioners' Conclusions
The petitioners have concluded that the NRC Policy Statement
regarding electric utility deregulation and restructuring has caused
great confusion among non-operating co-owners about the issue of
potential joint liability if an operating licensee becomes financially
incapable of meeting license conditions. The petitioners have concluded
that the NRC might ignore existing pro rata contractual agreements
among joint licensees and that no information has been published
regarding what would constitute a de minimis share or under what
circumstances the NRC might find the imposition of joint liability
necessary to protect the public health and safety. The petitioners have
also concluded that the unsettled potential liability issue could mean
that a co-owner of a very small ownership share could become
financially incapable of fulfilling its contractual obligations.
Lastly, the petitioners have concluded that these factors might stifle
an emerging market for the sale of nuclear power plants and associated
interests because future operating and decommissioning costs are
unknown.
The petitioners request that the issue of potential liability among
joint owners be resolved as requested in their petition by amending the
regulations pertaining to enforcement in 10 CFR part 50.
Dated at Rockville, Maryland, this 29th day of December, 1998.
For the Nuclear Regulatory Commission.
John C. Hoyle,
Secretary of the Commission.
[FR Doc. 99-97 Filed 1-4-99; 8:45 am]
BILLING CODE 7590-01-P
