ML18227B299

Reply of Florida Cities in Opposition to Memorandum by Florida Power & Light Company

ML18227B299
Person / Time
Site:	Saint Lucie, Turkey Point
Issue date:	09/05/1978
From:	Jablon R Florida Cities
To:	Office of Nuclear Reactor Regulation
References
Download: ML18227B299 (52)

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UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION gQ Florida Power 6 Light Company ) P (St. Lucie Plant, Unit No.. 1 ) Docket No. 50

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Florida Power & Light Company )

(Turkey Point Plant, Units ) Docket Nos. 0-250A 3 a 4) ) 50- A REPLY OF FLORIDA CITIES IN OPPOSITION TO MEMORANDUM BY FLORIDA POWER 6 LIGHT. COMPANY INTRODUCTION

'Florida Power & Light, Company ("'FPSL" ) has violated the law.

Florida Ci;ties +1 have long sought the aid of this Commission to remedy FPSL's use of its NRC licensed nuclear plants to violate ant'itrust law and policy. The. Commission has ordered a hearing in connection with the St. Lucie Unit II construction permit, but'has told the Cities that no remedy is available through the Commission under Section 186 of the Act, 42 U.S".C. 52236, with regard to FP&L's misuse of licenses for its operating units. See Ft.. Pierce Authorit of the Cit of Ft. Pierce v. NRC, CADC Docket No-.

77-1925, et al.

1/ Florida Cities include the Ft. Pierce Utilities Authority of the City of. Ft. Pierce, the Gainesville-Alachua County Regional Electric Water and Sewer Utilities, the Lake Worth Utilities Authority, the Utilities Commission of the City of.

New Smyrna Beach, the Orlando Utilities Commission, the Sebring Utilities Commission, the Cities of Alachua, Bartow, Fort Meade, Key West, Lake Helen, Mount Dora, Newberry, St.

Cloud and Tallahassee, Florida, and the Florida Municipal Utilities Association.

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Florida Cities disagree with the Commission's decisions, virtually reading antitrust concerns from Section 186. E.cC.,

Houston Li htin a .Power Co .. (South Texas Project, Units 1 and 2), CLI-77-13, 5 NRC 1303 (1977), petition for review dismissed sub nom Central Power a. Li ht Co. v. NRC, CADC No.

77-1464 et al. (South Texas). See generally, briefs to the United States. Court of Appeals in Ft.. Pierce Uti'lit with South Texas to give 5105(a), 42 U.S.C.. 521'35(a), the limi;ted scope advocated by FP&L. The premise underlying that decision is: that, the "completeness" of. Section 105, 42 U.S.C.

52135, militates against Section 186 providing an independent source of Commission antitrust authority. For example, the Commission states in South Texas (5 NRC at page 1312)

(emphasis supplied):

Ne find the specificity and completeness of Section 105 striking. The secti:on is comprehensive; it addresses each occasion on which the allegations of anticom-,

petitive behavior in the commercial nuclear power industry may be raised, and rovides a rocedure to be followed in each instance. . ., . Nor can xt reasonably be argued that 'Congress, did not foresee- that antitrust allegations might be raised outside the license review con-text. Subsequent. allegations that. licen-ses are being used in such a way as to violate the anti. trust laws are to be referred to the Department of Justice for investigation and possible enforcement action, and if violations are found b a court, the Commxssxon xs xven ex ress statutor authorit to take such license-related remedial action as is necessar

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Such violation having been found by a court, FP&L would now seek to have the Commission interpret Section 105 of the Act so narxowly and to adopt procedures. so costly and drawn out that Section 105(a) remedies would be ineffective.

However, Congress'oncern that NRC licenses not be used to further, monopolization of the bulk power electric industry has been stressed by this Commission many times, most recently in a; case involving FP&L. itself. "Memorandum and Order", Florida Power & Li ht Com an (St. Lucie Plant, Unit No.. 2) .(June 22, 1978, pages, 9-10 of slip opinion) ., Zt is inconceivable that Congress could have intended an interpre-tation of Section 105(a), as FP&L, suggests, that would render the Commission powerless even after a finding by a court of competent jurisdiction that a licensee had violated the antitrust laws. in ways that could impinge upon licensed acti-vities. Nor could; such interpxetation stand, assuming the:

absence of a Section 186, remedy, 1/ without doing violence to the Congressional intent that nuclear powex not be used anti-competitively.

Certainly, FP&L. should be able to xaise any defenses to relief that it or its attorneys can conjur. However, the central thrust of FP&L's August 25 "Memorandum" is that the Commission should not even set the matter for investigation 1/ Even 5105(a) if any of FP&L's technical axguments for were. correct, Florida Cities believe that limiting in such situation the Commission could grant 5186 relief consistent with South Texas. See 5 NRC at 1318.

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and hearing, but that FP&L's defenses should be accepted on the pleadings without further factual or legal analysis.

Alternatively, in spite of FP&L's priox protestations of the need for expeditious consideration of'ntitrust matters (see Florida Power & Li ht Com an (St. Lucie Plant, Unit No. 2),

~su ra), ppaL would adopt procedures which would delay resolu-tion of the matters raised for years, while leaving it free to continue its illegal activities. It should be plainly understood, that what FP&L is telling the Commission, assuming it successfully has its way, is: that the Commission should do nothing pending action upon its'ertiorari petition to the Supreme Court, renewed District Coux't trial on the remanded issues in Gainesville, and pxesumably appeals of'hat deci-sion to the Coux't, of Appeals and United States Supreme Court.

Such pxocesses could easily take half a decade or more. 1/

FP&L would elevate to a cardinal principle the cynical aphorism that the best defense to an antitrust claim is delay.

While Florida. Cities believe, that their August 28, 1978 response to the Commission's July 28, 1978 Order fully dispo-ses of FP&L's arguments why there should not be a. Section 1/ Judge Brown opened his decision with the following statement:

"After ten years of litigation and one trip to the Supreme Court in a related case we finally reached the merits in this private antitrust suit." Gainesville Utilities v. Florida Power &

footnote omitted) .

0' 105(a) hearing, 1/ because of FP&L's arguments that the Commission should not even consider FP&L's law violations (or should indefinitely defer consideration of them), Florida Cities respond to further demonstrate the obvious fact that a threshold investigation should be ordered. Ultimate rulings of law or fact. that may be relevant to rel'ief should be based upon the investigation and not, as FP&L would have it, in avoidance of it.

I. SECTION 105(a) REVIEW IS'ACTIVATED BY A FINDING BY A COURT.

JURISDICTION OF ANTITRUST VIOZATIONS; NOT BY A OF COMPETENT FINAZ RESOZUTION OF ALL ASPECTS OF A COURT CASE of Supreme Court review, or because of further procedures in the District 'Court, the Commission should take absolutely no present action as a result of the Fifth Circuit, decision .in Gainesville Utilities v. Florida Power & Li ht Com an, 573 F.2d 292 (1978) .. The Fifth Circuit ~findin is final. District Court responsibilities are separate from those of this Commission.

Moreover, in the event that relief seems inappropriate, because of Supreme Court action or otherwise, in fashioning relief the Commission can take such facts into account.

1/ FP&Z's: "Motion for Recall, of Order in Light of Changed Circumstances" provides merely an additional procedural adjunct to its argument that the Commission should take no action in spite of a Court antitrust finding against it. As stated'n their August 28, 1978 letter to the Secretary (mailed August 29), Florida Cities rely upon their response to the Commission's July 28, 1978 Order as a complete response. To the extent that FP&Z argues in its "Response" that the Gainesville decision by the Fifth Circuit is not final and therefore does not needI the tests of Section 105(a),

pleading.

it is further responded to in Section 1 of this

The Commission's procedural authority is not in doubt and FP&L presents no equitable reason why the NRC should hold its hand. Indeed, as is discussed below, in spite of a specific statutory authority granted the Commission- to modify licenses in the event of findings of antitrust violations by the courts,, FPaL would, have the Commission give, more weight to decision than would courts themselves, which would give res judicata effect to the Fifth Circuit decision.

At the outset, the. operative sentence of $ 105(a) should be set out in full.,

"In the event a licensee is found by a court, of competent jurisdiction, either in an ori inal action in that court or a roceedin to enforce or review the fxndxn s or orders of an Government a enc havin urisdictz.on under. the sections cited above, to have violated any of the provisions. of such-sections 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 chapter." 42 U.S.C. 52135(a)

(emphasis added)

The underlined language, omitted by FP&L i;n its quotation of gl05(a),, FP&L Memorandum, p. 6, plainly contemplates a finding by a court not a final resolution of a case. The statute is not limited,to a District Court and does, not refer to a final judgment. Normally in antitrust, litigation this finding would be made. by a Federal District Court; under the circumstances of Gainesville Utilities De artment v. Florida Power a Li ht

~Com an, 573 F.2d 292 (5th Cir. 1978), such a finding

has been made by the Court of Appeals. 1/

Giving full effect to a court judgment pending appeal is an established rule of Federal jurisprudence. With regard to the principles of res judicata and collateral estoppel, an otherwise final judgment is presumed to be valid and is given conclusive. effect in other litigation re ardless of the pen-denc of an a eal. 2/ Even if a stay pending appeal is ordered, res judicata and collateral estoppel continue to apply in other litigation. 3/ En addition, a: judgment may be final, and the basis for res judicata, as to some but not all 1/ Despite FPaL's portrayal of the Gainesville decision as an exoneration of FP&L on other counts, FP&L Memorandum, p.

5, the Fifth Circuit found evidence. that "point[ed] so strongly to the existence of a conspiracy that 'reasonable men could not arrive at a contrary verdict. . . .'" 573 F 2d ~

at 301 (citation omitted).

2/ Huron Holdin'or . v. Lincoln Mine 0 eratin Cora., 312 1 l.

U.S. 499, 510-511 (1903); Nixon v. ~Riche, 513 F.2d 430, 438,

n. 75 (D.C. Cir. 1975); Refior v. Lansin Dro For e Co., 134 F.2d 894, 896 (6th Cir. 19'43); Roberts v. Anderson, 66 F.2d 874, 875-76 (10th Cir. 1933); United States v.. United Airlines, Inc., 216 F.Supp. 709,. 722-25 (E.D. Wash. 1962).

~ ~ 1: ~k Even if the judgment upon which the res judicata is based is subsequently reversed, the second judgment stands. Reed 11, 191. 9 (1 Frankfort, 191 U.S. 499, 510-512 (1903). See Crescent Live Stock Co. v. Butcher's Union, 120 U.S. 141, 157-60 (1887);

3/ Huron Holdin Co . v. Lincoln Mine 0 eratin Co., 312 U.S.

183, 189 (1941) (dictum); Amoco Oil Co. v. Zarb, 402 F.Supp.

1001, 1008 (D.D.C. 1975); United States v. N sco Laboratories, Inc., 215 F.Supp. 87 (E.D.N.Y., 1963), aff'd. 318 F.2d 817 (2d Cir. 1963).

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issues. 1/ Thus, the fact that the Gainesville opinion did not resolve all issues in the case, and the issuance of a stay until September 13, 1978, are not reasons for the Commission to refrain from treating the antitrust violation as conclusively established.

ll Section 105(a) requires the Commission to consider various remedies within its power once the fact of antitrust violation has been established in the courts. This general approach was articulated by the, Commission in, Houston Li htin G Power Co. (South Texas Project, Unit Nos. 1 & 2),

CLI-77-33, 5 NRC 1303 (1977). South Texas discussed f105 generally as containing the basic antitrust enforcement scheme of the Atomic Energy Act; and specifically found that "subsection (a) provides for enforcement of antitrust judgments reached elsewhere.." 5 NRC at 1309. Commission action under 5105(a) is consistent with further concerns expressed by the Commission in, South Texas, since a, judicial finding either in an original action or in review of administrative action, is required to trigger 5105'(a) review.. There is no risk of juri-.

sidictional overlap in ongoing, antitrust policing because the Commission starts with a given: the existence of an antitrust violation.

1/ Bee Machine Co. v. Freeman, 131 F.2d 190, 192-93 .(1st Cir. 1942), aff'd. on other rounds, 319 U.S. 448 (1943),

reh. denied, 320 U.S. 809 (1943); Tuolumne Gold Dred in Corp, v. Walter W. Johnson Co., 71 F.Supp. 111 (N.D. Calif.

1947").

~I Understandably, FP&L would, in its interpretation of 5105, place the Commission in the role of a mere functionary carrying out orders of a. court, similar to a sheriff applying judicial orders. 1/ Such an interpretation would eliminate the Commission's, independent jurisdiction over "licensed activities"'n violati'on of the antitrust laws, a distinct

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jurisdiction given the Commission by statute. For courts have the power,, in enforcing the antitrust laws, to impose conditions directly, or order the Commission to impose conditions, quite apart from the authority of 5105(a).. In enacting 5105(a), Congress can only have intended to create an additional power in the Commission to impose remedies within, its jurisdiction and area of expertise the licensed activities. Furthermore, as has been stated above, the Commission's. narrow interpretation of its powers under 5186 in South Texas rests. in part on the understanding, that the 1/ FP&L quotes from the legislative history a statement, by AEC General Counsel Mitchell, as witness at a hearing, discussing'he interaction of court and Commission, imposed remedies, as evidence of what the "framers" intended. FP&L Memorandum, p. 12., The evidentiary value of such a statement by a witness, not even a member of Congress, is questionable.

On the other. hand, in the same exchange, Representative Holifield inquired whether it would not be more advisable for the law- to require revocation of a license after a finding of antitrust violation. II Legislative History of the Atomic Energy Act of 1954, 2280. Although. Congress ultimately. gave the Commission discretion on the question of. remedies, rather than indicate a limitation of authority in the Commission, the exchange recognizes the concern of members of Congress most responsible for the Atomic Energy legislation and review that the Commission exercise authority over the enforcement of antitrust laws where they interplay with Commission issued licenses.

Ci Furthermore, the legislative history cited. by FP&L is taken out of context. FP&L Memorandum, p. 12. It -is part of a longer discussion between- Representative Holifield and General Counsel Mitchell on the interaction of court remedies and. Commission remedies for antitrust violations; the gist of Rep. Holifield's questioning is whether revocation a remedy should be mandatory. II Legislative History of the Atomic Energy Act of 1954,. 2279-80.

The requirement that a court finding of antitrust viola-tion trigger an antitrust hearing under 5105(a) is supported by the Act's statutory scheme. In a recent decision, the Commission held that a recommendation to hold an antitrust hearing, under 5105(c) by the Attorney .General pursuant to 5105(c)(5), is dispositive and that a, hearing must be ordered. Houston Li hti;n & Power Com an (South Texas Project, Unit Nos. 1 & 2), CLI-78-5, 7 NRC 397 (April 5, 1978). This recommendation fulfills,the same functions, in the setting of 5105(c), that a court finding does in the con-text of 5105(a). The case for holding, a. hearing is stronger where there 's a court ~findin as opposed to an advice letter.

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12 II'NCE A VIOLATION OF THE ANTITRUST LAWS RELATING TO A LICENSED ACTIVITY IS. ESTABLISHED BY A COURT FINDING, 5105(a) REVIEW IS AUTHORIZED WHENEVER ANY LICENSED ACTIVITY MIGHT BE USED OR MIGHT, HAVE BEEN'SED CONTRARY TO THE ANTITRUST LAWS.

FP&L makes two. basic arguments for limiting the application of Section 105(a): First, it argues that the language of the sta-tute provides for a limited applicability of Commission authority in the event of a finding of law violation; second', it argues for the same result by analogy to the Section 105(c) nexus require-ment.,FP&L Memorandum, pages 6-10. 1/ Of course, Florida Cities do not dispute FP&L's basic- premise that there should be a meaningful. xelationship between the law violation, found by a court and the licensed activities of an applicant subject to Section 105(a) review. The pxecise legal'and factual determination of relief must await investigation. However, FP&L's overbroad argu-ments would. override the Commission's responsibilities under gl05(a) .

The legislative history of the 1954 Atomic Energy Act sheds no direct light on the .breadth of "licensed activity". The phrase "in the conduct of the licensed activity" was inserted in the final bill by the conference committee, and, the committee xeport makes no comment, on the addition. 2/ Therefore, any explanation 1/ The contention that the time of FP&L's,antitrust violation negates $ 105(a) jurisdiction is discussed separately below.

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Legislative Histoxy of the Atomic Energy Act of 1954, 1465.

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13 of Congressional intent must be conjecture. However, the inser-tion of language restricting Commission responsibility to enforce the antitxust laws must be viewed in the context of the broad language of some versions of the bill 1/ and of the concexn expressed that the Atomic 'Energy Commission would be empowered to enforce antitrust laws when violations had nothing whatsoever to do with atomic energy. 2/ Thus the naxrowing intent evidenced by the added language may merely have been a reassurance that the Commission's activities had to relate to atomic energy.

Zt should also be noted that the debate over the 'Atomic Energy Act of 1954 was used as a vehicle for, in, attacking the 1/ Fox example, H.R. 8862, 83d Cong., 2d; Sess. 5106 (1954) f 1954, 105, 139-40, reads:

In the event that any license is found by a court of competent jurisdiction... to have been in violation of any such law, then the Commission may establish a reasonable time within which such licensee shall have purged himself of such violation.

Taken. literally, this authorizes the. Commission to respond to any violation of any antitrust law.

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2/ For example, the Comments of General Electric Company on May 21 Draft of Proposed. Atomic Energy Act of 195'4, as submitted by Energy Act of 1954,, 1983, state:

y If cross-.sanctions ax'e to be included at all, we feel they should be stxictly limited to antitrust violations directly affecting atomic developments.

Section 105(a), as, presently drafted, is so broad that the Commission could suspend or revoke an atomic license in a Robinson-Patman Act violation relating to the sale of refrigerators.

4) 14 current state of enforcement of the antitrust laws. 1/ The state-ments made by Senator Hickenlooper and relied on by FP&L Memorandum, page 7, in context signify only that the Act was not intended to deal with all the legislative problems of the antitrust laws as draf ted. 2/ They do not help in interpreting the scope of "'specialized application with specialized penalties."

Since this is the first proceeding involving f105(a), there is no body of Commission decisions interpreting "in the conduct of the licensed, activity."'owever, $ 105(c) (5) contains similar, language requiring that the Commission "make. a finding as to 1/ E.cC., the debate. following Senator Langer's introduction of a stringent patent misuse, amendment. 100 Cong. Rec. 11737 (July 27, Act of 1954,, 3862.,

2/ Supplying the sentences omitted by FP&L, the passage reads:

That provision was put in as a protection in the future against violations which might arise as a result of the licensing provision.

We felt we should not attempt to rewrite the antitrust laws and other provisions in this particular bill.. I say to the Senator I personally would rather approach the problem by increasing the penalties in the antitrust laws and in measures which considered the antitrust laws as a whole:.

I personally think that is better legal pro-cedure and better legislative procedure. This would be a specialized application with specialized penalties referring only to one thing and not to the general theory of the violation.

Statement of Senator Hickenlooper, 100 Cong . Reg. 11741 (July 24, 9

Act of 1954, 3864.

~I 15 whether the activities. under the license would create or maintain a situation inconsistent with the antitrust laws as specified in subsection (a) of this section." (emphasis added). Although the purposes of the two subsections are somewhat different, guidance may be drawn fxom 5105(c) decisions, 1/ especially since the "nexus" xequirement as, set forth in Louisiana Power a Li ht Co.

(Waterford Steam Electric Generating Station, Unit 3), CLI-73-7, 6 AEC 48 (1973) (Waterford I), is not a. term of art. Consumers Power Co. (Midland Plant Units 1 and 2), ALAB-452, 6 NRC 892, 915-17'1977) ~

The Atomic Energy Commission's initial axticulations of the nexus requirement were careful not to foreclose inquiry into the broader context of an applicant's total system. 2/ A number of sub-sequent decisions have found a connection between licensing of nuclear powex generation and anticompetitive practices in the area of wholesale power supply. 3/ The principle is quite simple. As a Licensing Board said in another case, 1/ Indeed, FP&L also relied on them. FP&L Memorandum at. 7-9..

2/ Waterford I, 6 AEC at 49;, Louisiana Power a Li ht Co. (Water-foxd Steam Electric Generating Station-, Unit 3) CLI-73-25, 6 SEC 619, 621 (1973) (Waterford II)'.

3/ Consumers Power Co. (Midland Plant,. Units 1 and 2), ALAB-452, 6 NRC 892, 1094-98 (1977) ("fair access to efficient, dependable and economical base load generation is at the heart of the com-petitive situation before us," id. at 1095); Kansas Gas & Electric Co. (Wolf Creek Generating Station, Unit No. 1), ALAB-279, 1 NRC 559, 566-74 (1975) (refusals to wheel and interconnect); Alabama Power Co. (Joseph M. Farley Nuclear Plant, Units 1 and. 2), LBP 24, 5 NRC 804, 837-45, 957-01 (1977) (reasonable access to nuclear facilities and', transmission); Toledo Edison Co. (Davis-Besse Nuclear Power Station, Units 1, 2 and 3), LBP-77-1, 5 NRC 133, 237 (FOOTNOTE CONTINUED ON NEXT PAGE)

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"[T]hese nuclear units do not exist in splendid isolation. Part of Applicants purpose in the . . . construc- 'nnounced tion of these plants is to provide, for system-wide needs. .... These benefits of the specific nuclear plants under con-sideration may not be available to other electric entities even according to the stipulation offered by Applicants [access to nuclear facilities] . Thus, the rela-tionship between these plants and the assumed "situation" [inconsistent with the antitrust laws] is discernible.

Toledo Edison Co. (Davis-Besse Nuclear Power Station., Unit 1),

LBP-75-36, 1 NRC 705, 709 (1975). The "licensed activity" of FP&L i's the construction. and, generation of nucleax powex plants not in isolation, but as a basic part of an electric power generation system. The finding in Gainesville related directly to systematic practices in the sale of electric power. If. these practices con-tinue:, or threaten to recur, or if illegally obtained market control may give FPSL additional. benefit in its sales of nuclear-generated power, a, Commission-imposed remedy would be appropriate.

In short, FP&L monopolizes and has continued to monopolize nuclear generation. The Gainesville court found, a concerted conspiracy to refusal t deal in bulk power with othex municipal systems. Certainly, the Commissin has authority to correct such monopolization of nuclear generation.

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(1977') (effect of nuclear facilities on structure of the industry and restxaints on specific outputs each constitute sufficient nexus); Toledo Edison Co. (Davis-Besse Nucleax Power Station, Unit

1) g LBP-75-36, 1 NRC 705 ( 1 975 ) ( re j ecting an argument that, assuming ~ar uendo antitrust violations in other parts of the system, access to nuclear facilities obviated any othex issues under 5105(c)).

41 41 17 FpaL argues that, its conduct found unlawful is unrelated to its licensed activities. E.cC., Memorandum, pages 8-10. Howevex g as, is set forth in "Florida, Cities'esponse to the Commission's July 28, 1978 Order", pages 5-6, a petition's board has found allegations identical. to the conduct held illegal by FP&L to allege sufficient nexus to warrant an antitrust hearing.

Certainly, the attempted monopolization of wholesale and retail power sales in its service "territory" and the refusal to deal in such power supply in another company's "terx'itory" which underlie the terxitorial conspiracy found by the Fifth Circuit have nexus to the use by FPaL of NRC licensed nuclear xeactors: FP&L has been and is refusing to sell nuclear generated power, thereby aiding and abetting monopolization. In any event, as Florida Cities state above, the question of. "nexus" or relationship between the antitrust violations found and FPGL's- conduct under its licensed activities is one fox findings and'earing .

III'HE TIME FRAME OF THE ACTIVITIES FOUND IN GAINESVILLE TO BE IN VIOLATION OF THE ANTITRUST LAWS'OES NOT JUSTIFY A REFUSAL TO IMPOSE CONDITIONS'ET ALONE REFUSAZ EVEN TO HOLD A HEARINGS For the reasons outlined below, a Commission-imposed remedy might be appropxiate even if the Gainesville decision were solely based on evidence prior to the issuance of. a license. Under these circumstances, a hearing must be held, to determine what remedy is in fact appropriate.

There is a direct connection between the activities violating the antitrust law and licensed activities. FPaL proposes to draw a line at the date of the issuance of the first license as the

0 18 jurisdictional limit of 5105(a) . FP&L Memorandum, page 10. But prior to this date, and within the time period of the evidence considered in Gainesville, FP&L initiated the formal licensing process by applying for nuclear licenses that were eventually granted. FP&L Memorandum, page 10 and note 4. Furthermore, prior to the actual applicationg FP&L s corporate planners must cer-tainly have carefully considered all aspects of investment in nuclear plants, as well as have made detailed plans for specific plants such as Turkey Point. Although these plants. had not yet been licensed for construction or operation,. the use of nuclear.

power for the generation of electricity is clearly subject to licensing. under the Atomic Energy Act; and antitrust violations in the course. of planning to make use of licensed. facilities fall within the scope of $ 105(a).

In this connection reference should once again be made to the series of decisions interpreting the nexus requirement under 5105(c). 1/ These decisions recognize that the generation and sale of. nuclear power must be examined in the context of a utility's bulk power supply system and its activities. They have also viewed general access to power supply as. important in pro- .

tecting smaller systems from antitrust abuses involving- nuclear generation. The Gainesville decision represents at the very least a finding of antitrust violation at a. time when FP&L must have been heavily involved in the nuclear licensing process .

1/ ~sn ta, page 16, note 3.

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19 In considering the scope of the hearing and the scope of eventual remedies, the Commission should be mindful of its antitrust enforcement. under 5105(a)-. It is well established that in judicial antitrust enforcement, When defendants are shown to have settled into a continuing practice or entered into a conspiracy violative of antitrust laws, courts will not assume that it proof..

has been abandoned without clear Local 167 v. United States, 291 U S. 293 g States v. Ore on State Medical Societ, 343 U.S. 326, 333 298'nited

(.1952) . In discussing the app3.ication of the doctrine of mootness in antitrust cases,, the Supreme Court pointed out in United States.

v. W.T.. Grant Co., 345 U.S. 629 (1953) that voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and, determine the case . . . ." Id. at 632. The Supreme Court also noted that, while the defendant may establish mootness by showing there is no reasonable expectation of repeti-tion, "[t]he burden is a heavy one ." Id . at 633. The Court in W.T. Grant also pointed. out that power to grant injunctive relief survives discontinuance of the illegal conduct, since the purpose of an injunction is to prevent future violations. Id . Of course, the court must be satisfied that: such relief is needed . In con-nection with mootness and injunctions against future conduct, United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir.

1945) is significant. There an injunction was issued against con-duct discontinued twelve years before.

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",[N]o one can be suxe how the industxy may change and it is impossible to say that the same practice may not in the future commend itself to those who may come into contxol; and at any rate there can be no injustice in making doubly sure." Id. at 447.

The court in Alcoa also enjoined a foreign cartel that had ceased operations . See United States v. Jerrold Electronics Cor ., 187 F.Supp. 545, 571 (E.D.Pa.. 1960), aff'd ~er curiam 365 U.S. 567 (1961); United States v. Central, States Theatre Cor ., 187 P.Supp.

114, 147-48 (D.Neb. 1960).

Within its jurisdiction .the possible remedies the Commission might order, revocation, suspension or conditioning of a license are the equivalent of an injunction, in that they limit the future activity of a party. As such, the application of these remedies in the f105(a) context of'ntitrust enforcement would'e largely governed by the pxocedural principles established in the courts . Although PP&L may be able to avoid conditions on its license, it must do so at a hearing, where. evidence for and against mootness can be weighed; not by avoiding a hearing alto-gether.

Antitrust jurisprudence establishes yet another reason why a finding of antitrust violation occurring in the 1960's should not bar the Commission. from investigating, now. In United States v.

E.I., duPont de Nemours G Co., 353 U.S. 586 (1957), a 57 Clayton Act case, acquisition of stock in 1917-1919 was challenged by the government in, 1949. Defendants, argued that the statute prohibited only acquisition, not holding, of stock. 353 U.S. at 596-97. In ruling fox the government, the Supreme Court reasoned that the

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21 purpose of the Clayton Act was to arrest incipient trusts, conspiracies and monopolies, and that suit could be brought when-ever a prior acquisition threatened to produce prohibited effects . Id. at 597-98. A recent Supreme Court case, in interpxeting DuPont, stresses that acquisition of assets can be a violation because of subsequent "retention and use of those assets." United States v. ITT Continental. Bakin Co., 420 U.S..

223, 243 (1975). These cases. stand for sfbveral general proposi-tions-. A prior violation of the antitrust laws that threatens to produce prohibited effects may be considexed. by a tribunal. In addition, retention and use of what was acquired in violation of the antitrust laws may be the basis of an enforcement proceeding .

In this xegard, an acquisition of .assets in violation of 57 and a horizontal market agreement have more than a general subject matter in common. In a g7 violation, by acquiring assets, one company acquires control of another, potentially increasing control of the market. In horizontal terxitorial allocation, an agreement gives each participant a territory, within which control is exercised.. In either case., "retention and use"'ay continue long. after the initial act of, acquisition.

In terms of remedies, this is the pxinciple that a wrongdoer may be deprived of ill-gotten gains. See also "Florida Cities Response to the Commission's July 28, 1978 Order", page 14. 1/

1/ At page 10, note 4, FPaL notes that Florida Cities have disclaimed "an ongoing conspiracy between FPL and, FPC in their pleadings." At various times, but after 1972, when FFAL states it began generation from NRC licenses, vartous of Florida Cities entered into settlements with Florida Power Corpoxatioh. Such (FOOTNOTE CONTINUED ON NEXT PAGE)

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The cases make clear once again that "the passage of time per se is no barrier" to depriving a violator of antitrust laws of those gains.. United States v., Greater Buffalo Press Inc., 402 U.S.

549< 556 (1971) (divestiture under Clayton Act, 57,); United States

v. E.'I. duPont de Nemours & Co., 366 U.S. 316 (1961) (divestiture under Clayton Act, 57)..

With respect to both the issues of. scope of subject matter,,

and of time lapse, the above discussion should make clear that a examination of evidence may be necessary in order to resolve the issues . Thus, if. the Commission has doubts on either of these counts, the proper course. is'o proceed with a hearing, at. the end of which jurisdictional issues as we11 as the matter in contro-versy can be decided. This suggestion is contained in the Response of the Department of Justice, page. 5, note 1. While an examination of pleadings is in some situations adequate to deter-mine the existence of subject matter jurisdiction and standing, Florida Cities clearly can meet this threshold. Gainesville re-cites many facts concerning the effect on various municipal systems of FP&L's horizontal territorial agreement. 573 F.2d at 297-99.

( FOOTNOTE'ONTINUED FROM PREVIOUS PAGE) settlements included one by Gainesville Utilities v. Florida Power Li ht Co., 573 F..2d 292 (5th Cxr., 1978) . Florida Catches have not a eged subsequent antitrust violations by Florida Power Corporation. However,, they -have alleged and do allege continuing violations. of antitrust law and policy by FP&L Plainly, FP&L

~

cannot exculpate itself from its continued law violations, including continued refusals to deal of a nature involved in the Fifth Circuit finding, on the basis of Florida Power Corporation's conduct consistent with the law. As the Gainesville case, itself demonstrates, an antitrust law settlement with one defendant does not excuse the conduct of others,. Zenith Radio Cor . v. Hazeltine Research Inc., 401 U.S. 321, 342-349 (1971)

4i 4l II

23 There is at least a possibility that absent licensing conditions, FP&L will be able to use the fruit of its past antitrust violation in its sales. of nuclear generated electric power to Florida Cities to affect adversely their competitive position.

CONCLUSION The executive, legislature, courts and administrative agen-cies are part of one government that exists under law. In utilizing. NRC, licenses, FP&L benefits, from an extremely valuable grant of government technology. As a: result of the judicial.

finding of law violation by FP&L, for the reasons stated herein and in "Florida Cities'esponse to the, Commission's July 28, 1978 Order", Florida Cities believe that the Commission has both the authority and the .obligation to investigate remedies and to take appropriate action as a result of those investigations.

Ultimately, FP&L's response that the Commission either lacks the authority to act in light of the Fifth Circuit finding or, alter-natively, that the Commission should ignore it, is an argument that government should be ineffective, while FP&L continues to reap millions of dollars of. benefits annually from anticompetitive use of. nuclear licenses. Acceptance of'his claim would. compart-mentalize governmental action and render application of the antitrust laws to nuclear licenses ineffective. In view of

0 0 24 the attention and care that Congxess took to make sure that antitrust pxinciples are applied to nuclear regulatory commission licensees, such result cannot be supported..

'Respectfully submitted, Robert,A. J on Attorney for the Florida September,5, 1978 Cities Law offices of:

Spiegel & McDiarmid.

2600 Virginia Avenue,, N.W.

Washington,. D.C. 20037

4l 4i CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing Reply Of Florida Cities In Opposition To Memorandum By Florida Power &

Light Company have been served, by deposit in the U.S. Mail, first class postage prepaid, or by hand delivery as indicated by an asterisk, upon the following persons.

Chairman Joseph M. Hendrie Office of the Commissioners U.S. Nuclear Regulatory Commission Washington, D.C., 20555 Commissioner Victor Gilinsky Office of the Commissioners U.S. Nuclear Regulatory Commission

.Washington, D.C. 20555 Commissioner Peter Bradford Office of the Commissioners U.S. Nuclear Regulatory Commission Washing ton, D.C. 20555 Commissioner John G. Ahearne Office of the Commissioners U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Alan S. Rosenthal, Esq.

Atomic Safety and Licensing Appeal Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Richard S. Salzman, Esq..

Atomic .Safety and Licensing Appeal Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Jerome E. Sharfman, Esq.

Atomic Safety and Licensing Appeal 'Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Robert M. Lazo, Esq.,

Atomic Safety and Licensing Board U.S..Nuclear Regulatory Commission Washington, D.C. 20555

4 Ivan W. Smith, Esq.

Cha irman, Atom ic Saf e ty and Licensing Board Panel U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Valentine B. Deale, Esq.

Atomic Safety and Licensing Board Panel, U.S. Nuclear Regulatory Commission Washington, D.C. 20555

• Melvin G'. Berger, Esq.

Antitrust Division U.S. Department. of Justice P.O. Box 14141 Washington, D.C., 20044-

• Lee Scott Dewey, Esq.

Counsel for the Staff U.S.. Nuclear Regulatory Commission Washington, D.C., 20555

• C.R. Stephens, Supervj.sor Docketing and Service Station Office of the Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D.C. 20555 William C. Wise, Esq.

Suite- 200 1019 19th Street, N.W.

Washington, D.C. 20036 William H.. Chandler, Esq.

Chandler, O'Neal, Averga, Gray, Lang & Stripling P.O.. Drawer 0 Gainesville, Florida, 32602

• J.A. Bouknight,, Jr., Esq..

Linda L. Hodge, Esq.

Lowenstein, Newman, Reis a Axelrod 1025 Connecticut Avenue, N.W.

Washington, D.C. 20036 John E. Mathews,, Jr. Esq.

Mathews, Osborne, Ehrlich, McNatt, Govelman & Cobb 1500 American Heritage Life Building Jacksonville, Florida 32202 Tracy Danese, Esq.

Vice President, Public Affairs Florida Power a Light Company P.O. Box 529100 Miami, Florida 33152

4l' Jerome Saltzman Chief, Antitrust a Indemnity Group U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Samuel. J. Chilk, Secretary.

U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Dated at Washington, D.C. this, 5th. day of September, 1978.

Robert A. Jab'ion Attorney. for. the Florida.

Cities

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