ML18227B526

Reply of Florida Cities to Responses of Florida Power and Light Company and Nuclear Regulatory Commission Staff

ML18227B526
Person / Time
Site:	Saint Lucie, Turkey Point
Issue date:	10/15/1976
From:	Jablon R Florida Cities, Spiegel & McDiarmid
To:	NRC/OCM
References
Download: ML18227B526 (96)

Text

UNXTED STATES. OF AMERICA BEFORE THE NUCLEAR'EGULATORY COMMISSION Florida Power a Light,Co.

(St. Lucie Plant, Units No.

and, No.

2)

Florida Power' Light Co.

(Turkey Point Plant,'Units No.

3 and No.

4-)

Nos..

5 250A 50-Docket, Nos, 50-335A

)

50-. 389A

')')

)

)

)

TO:

. Atomic Safety and Licensing Board REPLY OF FLORIDA CITIES TO RESPONSES OF FLORIDA POWER AND LIGHT COMPANY AND NUCLEAR REGULATORY COMMISSION STAFF Robert A. Jablon Attorney for the Fort Pierce Uti'lities Authority of the City of Fort 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, and the Cities, of. Alachua,

Bartow, Bushnell,. Chattahoochee, Daytona'Beach, Fort

Meade, Key West, Leesburg, Mount Dora,.Newberry, Quincy, St. Cloud, Tallahassee and Williston,

Florida, and the'lorida Municipal: Utilities Association Law Offices of:

Spiegel

'6 McDiarmid 2600 Virginia Avenue, N.W.

Washington, D.C.,'0037 15 October 1976

f p

~1

CONTENTS I.

SUMMARY

OF ARGUMENT Contrary to Antitrust Law and Policy, Florida Power 6 Light Company's Use of Its Virtual Nuclear Monopoly to Deprive Florida Cities of Nuclear Access, in Conjunction with Its other Exclusionary Conduct, Severely 'L'imits Florida Cities'ower Supply alternatives and Unnecessari'ly Increases Their Costs:,

II. PRINCIPAL STATUTORY ARGUMENTS A.

The Atomic Energy Act Expressly Provides for Cancellation or Modification of. Existing Licenses or Permits 8

B.

Florida Cities Do Not Seek a Delay in Con-struction and Operation of'he Units 16 III. FPGL AND STAFF'S ARGUMENTS ADDRESSED IN DETAIL.

18 A.

B.

C.

D.

The Commission and the Licensing Board Have the Authority and the Responsibility to Grant Intervention and Initiate the Requested Antitrust Hearing The Commission and the Licensing Board Have the Authority to Grant Late Interven'tion, and Initiate an Antitrust Hearing. in the St.. Lucie Unit No.

2 Construction Permit Proceeding The Commission Has the Authority to Initiate an Antitrust Hearing on the Activi-ties Under the Existing Operating Licenses and Under the Facts of this Case Cannot Appropri-ately Refuse t'o Initiate Such a Proceeding The Commission Has Ample Authority and Pro-cedural Flexibility to Grant. Intervention and to Initiate a Procee'ding to Modify or Revoke the'xisting Licenses; Such Authority'mplies a Duty to Act to Further Statutory Policies 18 20 20 29 The Right to Repose on Antitrust, Matters.

Postulated by FPsL Is Unwarranted 32

F.

The Purposes to Be Served by Granting. Florida Cities Xntervention and an Antitrust Hearing on the St. Luci'e Unit No.

2 Application, Coupled with Significant Changes Since the

.Issuance of the A<torney General's Advice

Letter, Make it Proper for the Board to Use Xts Broad Discretion to Grant the Rel'ief Re-quested in Florida Cities'oint Petition 1..

General considerations under. Section 2.714-(a) of-'he Commission's Rules of Practice'0 41 G.

Florida Cities Have Shown Good Cause for Filing at. this Time t

H.

An Evaluation of the Four Factors in Section 2.714(a) of the Commission's Rules of Prac-tice Demonstrates the Propriety-of Granting Intervention 47 I.

Should the Commission Determine for any Reason Not to Grant any Part of the Relief Requested in Florida Cities'etition, Would Be Appropriate for Xt to Refer the Antitrust'laims Against FPGL to. the Federal Trade Commission for Further Investigation IV;:"A':".CONSOLIDATED HEARING INVOLVINGALL OF. FLORXDA CITIES'NTITRUST CLAIMS WOULD BES'g PROVIDE THE EXPEDITED RESOLUTION OF ANTITRUST ISSUES SOUGHT BY BOTH FLORIDA CITIES AND FLORIDA POWER 6 LIGHT COMPANY 64 69 CONCLUSION 71

CITATIONS:

Associated Industries v. Zckes, 134 F.2d 964 (2d Cir., 1943), vacated as moot, 320 U. S.

707 (1943)

Bluefield Water Works G Improvement Co.

v. Public Service Commission, 262 U.S.

679 (1923)

California v. FPC, 369 U.S.

482 (1962)

City of Pittsburgh v.

FPC, 237 F.2d 741 (D.C.Cir.,

1956)

Cities of Statesville v.

AEC, 441 F.2d 962 (D.C.Cir., 1969)

Conway Corp. v.

FPC, 510 F.2d 1264 (D.C.Cir.g 1975)g aff d '.S.

g 96 S.Ct.

1999 (1976)

Denver

& Rio Grande Western Railroad Co. v. United States, 387 U.S.

485 (1967)

Eastman Kodak Co. v. Southern Photo Materials Co.,

273 U.S.. 359 (1927)

Easton Utilities Commission v.

AEC, 424 F 2d 847 (D C Cir I 1970)

Environmental Defense Fund v.

Ruckelshaus, 439 F.2d 584 (D.C.Cir.,

1971)

FMC v. Svenska Amerika L'inien, 390 U. S.

238 (1968)

FPC v. Louisiana Power 6 Light Co.,

4'06 U.S.

621 (1972)

FTC'.

Raladam Co.,

316 U.S.

149 (1942) 4 Gainesville Utilities Dept. v. Florida Power Corp.,

402 U.S.

515 (1971) 6, 50 17 69 9, ll, 14, 21, 22, 31, 36 25's 26r 29<" 45'4 9,

19~ 25, 26 50 40 25 9,

10 33

Grand Union Co. v. FTC, 300 F.2d 92 (2d Cir., 1962)

Gulf States Utilities Vo. v.

FPC, 411 U.S.

747 (1973)

Holloway v. Bristol Meyers Corp.,

485 F.2d 986 (D.C.Cir.,

1973)

Hope Natural Gas Co. v.

FPC, 196 F.2d 803 (4th Cir 1952)

L'awlor v. National Screen Service Corp I

349 U ~ S 322 (1955)

Midwestern Gas Transmission Co. v.

FPC, 388 F.2d 444 (7th Cir., 1968)

Municipal Electric Association of Massachusetts v.

SEC, 413 F.2d

1052, 419 F.2d 757 (D.C.Cir., 1969)

NLRB v. Shipbuilding Local 22, 391 U.S.

418 (1968)

Natural Resources Defense Council, Inc.

v NRC I No. 74-1385 (D. C. Cir.

21 July 1976)

Niagara Mohawk Power Corp. v.

FPC, 379 F.2d 153 (D.C.Cir., 1967)

Northern Natural Gas Co. v. FPC, 399 F.2d 953 (D.C.Cir

, 1968)

Otter Tail Power Co. v. United States, 410 U.S.

366 (1973)

Ovitron Corp.- v. General Motors, 295 F.Supp..

373 (S

~ D ~ N Y ~ I 19.69)

Pan American World Airways, Inc. v.

United States, 371 U.S.

296 (1963)

Permian Basin Area Rate 'Cases/

390 U.S.

747 (1968) 68 9~ 19, 25, 26, 30 68 17 34 18 39 29, 62 10 5,37 37 27

Scenic Hudson Preservation Confex'ence v.

FPC~

354 F, 2d 608 (2d Cir ~

~ 1965) cert.

denied sub nom. Consolidated Edison Co. of New York, v. Scenic -Hudson-Preservation Conference, 384 U.S.

941 (1966)

Sprague

v. Woll, 122 F.2d 128 (7th'ir.,

1944), cert.

denied, 314 U.S.

699 Textile Workers v. Darlington Co.,

380 U.S.

263 (1964)

Udall v.

FPC, 387 U. S.

428 (1967)

United Gas Improvement.Co. v. Continental Oil"Co.,

381. U.S.

392 (1965)

United States

v. Aluminum Co. of America, 148 F.2d 416 (2d Cir., 1945)

United States v.

New Orleans Chapter, Associated General Contractors of

'merica, Inc.,

238 F.Supp.

273 (E.D.

~ La., 1965), rev'd per curiam, 382 U.S.

17. (1965)

United States

v. Stone 6 Downer, 274 U.S.

220 (1920) 8,. 50, 59 34

'18 59 22, 30 32 34 Duquesne Light Co.

(Beaver Valley, Unit 2)g 7 AEC 959 (ALAB '208'974)

Florida Gas Transmission Co.

(Basic Magnesia, Inc., et al.),

FPC Docket Nos.

RP74-50-1, et al.

Houston Light

& Power Co.;(South Texas Units. 1.and 2),, Docket Nos.

50-498A and 50-499A (ALBP, 9 Sept.

1976)

Kansas Gas s Electric Co; (Wolf Creek Unit 1),

1 NRC 559 (A'LAB-279, 1975)

Long Island Light Co.

(Jamesport Units 1 and 2),

NRC 631 (ALAB-292'975) 42, 56

'I 49 41~ 55, 58, 60 61, 62, 69 5~ 27, 29 41, 42, 44, 52'3, 55

Nuclear Fuel Services, Xnc., and New York State Atomic and Space Dev'elopment

'uthority (Nest Valley'-Reproce'ssing Plant),

1 NRC 273 (CLI-75-4, 1975)

Public Service Company of Indiana (Marble Hill Units 1 and 2), Docke't Nos.

50-546 and 50-547, NRCI 76/7 (ALAB-339, 27 July 1976)

Toledo Edison Co.

(David-Besse Unit 1),

NRCl 76/4, 31 (ALAB-323, 14 April 1976)

Union Electric Co.

(Callaway Plant, Units 1 and 2),

1 NRC 438 (LBP-75-20, 1975)

Virginia Electric

& Power Co.

(North Anna Units 1 and 2),

2 NRC 395 (ALAB-

289, 1975).

41,'3, 52., 53, 54 22 28 43, 45

't

'U

'C UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION Florida Power a LightCo,

.)

'(St.

L'ucie Plant,, Units.No, 1

)

and.No'.

-2),

)

)

Florida Power a Light, Co.

)

(Turkey Point Plant, Units

)

No.,

3 and No.

4)

)

Docket Nos, 50-335A 50-389A Nos.. 50-250A 50-251A TO:

Atomic Safety and Licensing Board REPLY OF FLORIDA CITIES TO RESPONSES OF FLORIDA POWER AND LIGHT COMPANY AND

'UCEEA'R'. REGUL'A'TORY COMMISSION'TAFF I ~

Florida. Cities 1/ appreciate the opportunity to reply to the "Response of Florida Power and Light Company in Op-position to:

Joint, Petition of Florida Cities for Leave to Intervene Out of Time; Petition to Intervene; and Request for, Hearing,"

1 September 1976 (cited hereafter as "FP&L Response" ).

1/

Florida Cities consist of t!he Fort Pierce Utilities Autho-rity: of the City of Fort 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 Se-bring Utilities Commission, and the Cities of Alachua,

Bartow, Bushnell, Chattahoochee, Daytona Beach, Fort Meade, Key West,

Leesburg, Mount Dora, Newberry, Quincy, St. Cloud, Tallahassee and Williston, Florida, and the Florida Municipal Utilities Association.

Florida Cities have. filed a,petition. in the above-captioned dockets seeking access to nuclear capacity and energy generated from the St. Lucie No.

1 and No.

2 and the Turkey Point No.

3 and'o.

4 nuclear units and other attendant relief.

For the'convenience of the Board and marized below.

the other parties, their main contentions are briefly sum-These contentions are fully detailed in their 6 August 1976 Petition to Intervene 1/ and the affi-davits filed in support thereof.

Zn Part II, their principal statutory arguments are. outlined.within:..the

.context.-of'lorida Power

& Light Company's (hereafter alternatively referred to as "FP&L" or "the Company" )

Response

and cer-tain hortatory statements by Florida Power

& Light Company are addressed.

A. more detai;led response to FP&L and Nuclear Regula-tory Commission Staff (hereafter referred to alternatively as "Staff" ) contentions comprises Part III.

1/

"Joint Petition of Florida Cities for Leave to Intervene Out of Time; Petition to Intervene; and Request for Hearing,"

filed with the Nuclear Regulatory Commission on 6 August 1976.

I.

SUMMARY

OF ARGUMENT A.

Contrary to Antitrust Law and Policy, Florida Power 6 Light Company's Use of Its Virtual Nuclear Monopoly to Deprive Florida Cities of Nuclear A'cces's, in Conjunction with Its other Exclusionary

Conduct, Severel'y Limits Florida Cities'ower Supply'Alternatives and Unneces'sarily Increases Their Costs It is undisputed that Florida Power G Light Company presently has a nuclear monopoly in peninsular Florida.

The Company will continue to possess a virtual nuclear monopoly such that FPGL's refusal to deal in nuclear capacity to any sig-nificant extent greatly increases the cost of power supply to Florida Cities.

The impact of barring Florida Cities from nuclear access must be viewed in conjunction with the trebled cost of. oil since the OPEC embargo and its aftermath and Florida Cities'reatly reduced access to natural gas.

Smaller peninsular Florida utilities have limited economic access to coal and hydroelectric power.

Thus, failure to allow Florida Cities access to nuclear power severely limits their economic alternatives and, in some instances, may threaten their continued existence as independent utilities.

The situation must be viewed, in addition, against FP&L's actions or inactions--in taking advantage of the economic imbalance thus created.

Not only does FPGL con-trol access to nuclear power, but, by virtue of its size and

.t

economic dominance, FPGL limits Florida Cities'ccess to low cost power. supply..

-It refuses to agree to make its transmission facilities generally available, or to an in-tegrated power pool.

The result is that cities, already faced with vastly. increased fuel costs, are deprived of the ability to-operate their generation. in conjunction with other generation on the most economic basis.

Because of its size, FPaL has the advantages of sophisticated internal coordination as well as external coordination arrangements. l/

Indeed, FPGL can enjoy nuclear technology and effi-cient generation only because of its existing monopoly posi-tion.,

FPGL cannot lawfully use that position to limit l/

Power pooling allows utilities to "share" generation re-

serves, limiting the need for expensive excess capacity and allowing for sales or "exchanges" of energy in order to uti-lize the. most efficient units at any one time available to the combined systems.

By integrating generation resources, the lowest cost generation on the combined systems will operate to serve total load.

Preventing access to full pooling for any system increases the cost of power produced by forcing use of a less economic source of generation..

It is Florida Cities'osition that under the prin-'iples of the. antitrust laws and utility practice, their citizens and ratepayers, as well as EPGL's-customers, are entitled to low cost power supply and that FPsL cannot law-fully block that access.

At the very forefront of Congres-sional concern was that systems such as FPGL not be able to limit access to low cost power supply for other systems through their ability to control access to nuclear generation.

its competitors by refusing to deal.

See'ain'e'svil'le Utili't'ie's De t. v.1'ori'd'a'ow'er Co',

402 U.S.

515 (1971).

FPGL accepts the benefits of monopoly control, but refuses to accept the corollary obligation to deal on a fair basis.

Otter Tail Power'o.

v. Uni'te'd S't'ates, 410 U.S.

366 (1973);

United States

v. Aluminum C'o. 'of Am'er'i'ca, 148 F.2d 416 (2d.,

Cir., 1945).,

As it exists in Florida, absent FPGL's participation in an integrated power pool, the structure of the electric power industry limits the access of'maller systems to mul-tiple sources of power'upply.

However, since the Company can coordinate its units "'internally," as well as enjoying external coordination, it already has access to those alter-natives which it denies to others.

Certainly Congress would not have intended nuclear power to be the direct means of forc-ing concentration in the industry..

See,'ans'a's Ga's '6'l'ectric Co.

and Kansas Cit P'ower G-Li ht Co.':("Nolf Creek" ), NRCI 75/6, pp.

564-565.

In the Vero Beach, Florida, Press-Journal (5 Sept.

1976), just before a vote to authorize the Vero Beach City "Council to sell the City's municipal electric system, FPGL's Senior Vice President wrote a letter "to every Vero Beach resident.

.", stating:

[I]f you approve the sale "If our rate request is eventually granted by the Public Service Commission, the electric bills of

a'll Florida Powex'"a-'Light customers,wi11 rise, Power a Light Company, provides you electric ser-vice than if Vero Beach continued to operate the el'ectric system."-

"Ne expect. to have a new nuclear generating unit at St..Lucie in service in the near future.

This should bring annual fuel savings of more than

$ 100 million that will be passed directly to our cuso-mers through a reduction in the fuel adjustment, which has been reflected above."

Emphasis in original.

Thus, the Company was urging voters to approve a sale, de-spite a proposed FPsL rate increase, because its rates would be cheaper--as a result of its nuclear eneratin

~ca acit

. 1/

l/

FPGL suggests (FPGL Response, p.

39 n.

66, pp.. 40-41),

that it is somehow inappropriate for Florida Cities to raise facts concerning transactions to which they are not directly party, includingamazingly the Company's dealings with the City of.Vero Beach, Florida, and Seminole Rural blur h v'. FPC, 237 F.2d 741 (D.C.Cir., 1956); Kssooiated In-in acquisitions situations, the parties to' transaction must all be satisfied, or one party may be considered to have been coerced.,

However, especially in antitrust situations, there is a public interest in free competition to be con-sidered beyond the interests of the parties.

~

To the,extent'FPGL further monopolizes service ter-ritory and further extends its already dominant position, alternative sources of power supply" and:opportunities for power transactions are further reduced.

Thus FPGL's con-duct in attempting to acquire Vero Beach or restrict Semi-nole has a direct impact on Florida Cities.

Demonstration of anticompetitive conduct by FPGL against Seminole demonstrates a pattern or motive.

Further, FPGL's possible acquisition of Vero Beach--resulting from the Company's nuclear monopoly and restriction of alternatives to its competitors amply illustrates the ultimate effect on all cities of its limitation of available alternatives.

The relief requested by Florida Cities is mandated essentially

because, within the 'context of present circum-

stances, FPGL has bee'n using its nuclear capacity to limit competitive opportunities available to smaller systems to the point of possible elimination of competition, while at the same time blocking access of smaller systems both to nuclear capacity itself and, to efficient use of power supply.

Zt is difficult to perceive a more clear threat to "free competition."

Atomic Energy Act, Section 1,

42 U.S.C;"

52011.

Moreover, that the South Dade nuclear units are'not scheduled until the 1980's and then at a significantly higher cost than FPGL's St. Lucie and Turkey Point units makes pre-sently requested relief more important.

For the above-stated

reasons, in their petition to intervene of 6 August 1976, Florida Cities sought Nuclear Regulatory Commission relief.

They state multiple theories under which relief could be granted.

However, their over-all contention is that this Commission has a responsibility under the Act to insure that its licensees not misuse the authority granted them to act directly contrary to the pur-poses of the Act.

II.

PRINCIPAL STATUTORY ARGUMENTS

\\

A.. The Atoniic Energy Act Expressly Proyides for Cancellation.or Modification of.Existing Li'censes or Permits Florida Power

& Light Company admits '(e.g.,

FP&L

Response, p.

31, p.

36, n.

36) that granting intervention in Florid'a P'ower '&i h'tC'o.('S'O'.u'c'ie P'1'a'nt','n'i't No. '2),

NRC Docket No. 50-389A, is discretionary.. In'lorid'a'ow'er

& Li't C'o.'- '(S'o'uth'a'de1'a'n't),

NRC Docket No. P-636-A, in-tervention was granted based upon the same sub's't'an'tive alle-gations.

1/

Given the above-outlined contentions and the determination that similar contentions to those raised here warrant. hearing, there can be no basis for the Commission's exercising its discretion to deny. Florida Cities an oppor-tunity to be heard.

E.g.,

Scenic Hudson Preservation Con-ference v.

FPC, 354 F.2d 608 (2d Cir., 1965), cert.

'den'i'ed sub nom. Consolidated Edison Co. of N'w York v. Sceni'c'ud-son Preservation Conference, 384 U. S.

941 (1966).

With regard to St. Lucie Unit No.

1 and Turkey Point Units No.

3 and No.

4, FP&L argues simply (FP&L Response,

p. 13):

"The Antitrust Review Provisions of Section 105c Do Not Apply to the Existing Licenses."

Citing Ci't'i'esof States'vil'le v. AZC, 441 F.2d 962 (D.C.Cir,, 1969), it 1/

FP&L does not respond to questions of sufficiency of the underlying arguments.

states further '('Ib'id. ):

"It is clear beyond auestion that, prior to the 1970 amendment to the Act, the antitrust provisions of Section 105c were not, applicable to licenses issued under Section 104b;"

Finally, based ont'at'e's'vi'1'le,'

u'p'ra',

FP&L argues that there can be no relief granted independently. of Section 105 of the It must be stressed that FPGL does not argue the merits of Florida Cities'etition.

The Company argues in effect that no matter how egregious a use of existing li-censes or permits might be, no matter how contrary to the authority of the Act, this Commission hasno direct authority to do anything about it.

Certainly a statutory limitation must be clearly shown to support the conclusion that an agency must ignore use of its own licenses or permits con-trary to the purposes, of the Act under which they are granted. 1/

1/

To the contrary, courts have long interpreted the powers of administrative agencies to be consistent with the overall design and purposes of their statutes.

E.g.,

FPC v. Louisiana Power G Li ht'o.,

406 U.S.

621, 631-636, 638-643 (1972);

Permian Basin Area Rate C'ases, 390 U.S.

747, 776 (1968).

More-over, in exercz.sing their functions, agencies without-express antitrust mandates have been told repeatedly that they must be alert to antitrust law and policy. '.g.,'ul'fS'ta't'e's'ti-lities Co. v.

FPC, 411 U.S.

747 (1973);

'FMC v.'ve'nska A'merika Lz.nz.en, 390 U.S.

238 (1968);

D'enver

'6 Ri'o Gra'n'de'e's't'e'rn R.R.

Co. v. Unit'ed S'tates, 387 U.S.

485 1967

MunÃc'z'pal Elec'tr~c Associ'ate.on'f Massa'ch'use'its v.SEC, 413 F.2d 1052, 419 F.2d 757 (D.C.Cir., 1969); Nor'them'atura'1as'o.

v.'PC, 399 F.2d 953 (D.C.Cir

, 1968).

As the Supreme Court said in another context (dealing with the application of the National Labor (cont'd)

'(1/ cont'd)

Relations Act in a situation involving criminal violation of the law):

"It is sufficient for this case to observe that the Board has not been commissioned to effectuate the policies of the Labor Relations Act so single-mindedly that it may whilly ignore other and equally important Congressional objectives..

Frequently the entire scope of Congressional purpose calls for careful accommodation of one statutory scheme to

another, and it is not too much to demand of an ad-ministrative body that it undertake this accommoda-tion without excessive emphasis upon its immediate task."

Southern S'te'amsh'ip'o.

v. NLRB, 316 U.S.

31, 47 (1942).

See also, Nia ara Mohawk Power Cor

. v.

FPC, 379 F.2d 153, 158 (D.C.Car.,

1967),

z.n which the D.C. Circuit stated, referring to the Federal Power Act:

"The Act is not to be given a tight reading wherein every action of the Commission is justified only if referable to express statutory authorization.

On the contrary, the Act is one that entrusts a broad subject-matter to administration by the Commission, subject to Congressional oversight, in the light of new and evolving problems and doctrines."

It strains credulity to believe that the Nuclear Regulatory Commission, expressly entrusted with the oversight of nuclear licenses and a specific antitrust mandate, has no authority once a license has been issued.

Compare FPC v.

Louisiana Power 6 Light Co.,

406 U.S.

621 (1972).

FP &L reaches its conclusion by setting up a straw man and largel'y ignoring Florida Cities'rimary arguments.

Florida Cities do, not argue 'that the statutory authority to modify, rescind or otherwise condition Section 104 li-censes (under which St. Lucie Unit No.

1 'and Turkey Point Units No.

3 and No.

4 are operating) comes under Section 105.

They do argue that Section 105 does not. provide the

~onl means of ever considering competitive problems under the Act.

The issue, therefore, is whether Section 105 is meant to be exclusive so as to give so-called "research and development" to be free of ~an obligation to comport with antitrust policy.

FPGL relies on St'atesvil'le,

~su ra, for its conclu-sion that there can be no subsequent opening of antitrust proceedings for "research and development" licenses.

But in Statesville,

~su ra, the Court (through its various opinions) ruled that antitrust issues need not be considered at: 'the time of construction, because in accord with the statutory

scheme, such issues would be considered when the license became commercial '(i.e

, at the time the operating permit issued).

The case is squarely against FP&L.

FP&L then argues that the 1970 amendments cut off all possible'antitrust review.

(FP&L Response, pp. 14-15).

However, the 1970 amendments only cut, off a Section 105 11

hearing for "research and development" licenses.

Research and development licensees could construct and operate their plants without antitrust review'.

However, Congress hardly free'd such licensees from any existing obligations they might have under Section 104 or elsewhere.

But Sections 185'through 188 of the Act, 42 U.S.C.

552235-2238, specifically provide for modifications of li-censes.

For example, Section

187, 42 U.S.C.

52237, states:

"The terms and conditions of all licenses shall be subject to amendment, revision, or modification, by reason of amendments of this chapter or by reason of rules and regulations issued in accordance with the terms of this chapter."

Language more explicitly avoiding a vesting of rights to licensees can hardly be imagined.

Section 50.54(e) of the Nuclear Regulatory Commis-sion Rules and Regulations under the Act states:

"The license shall be subject to revocation',

sus-pension, modification, or amendment for cause as provided in the act and regulations, in accordance with the procedures provided by the act and regula-tions."

Section 1,-42 U.S.C.

52011, sets forth the-statutory purpose of the Act.. It seems clear that, by statutory terms, the license can and must be modified if it is used contrary to that statutory purpose (i.e., contrary to the policy of the antitrust laws).

Indeed, any other interpretation would allow licensees to use rights granted by the government (and 12

publicly-funded technology) as..tools for wrong.-.doing, 1/

Perhaps, recognizing.

a weakness in its statutory argument,.

FP&L infers fron. their legalhistory.that the purpose of the 1970 amendments was to guarantee to FP&L and other investor-..owned utilities an investment certainty.

E.g FP&L Response, pp.

25-27,,

This may be the reason that FP&L argues at such length that. Florida Cities'ere receuest for relief can "cast" a "cloud" on operating licenses, making them meaningless.

FP &L Response, p.

63.

Thus, as is clear 'from reading the Act, as well as the 1970 Joint 1/

Similarly, Section

183, 42 U.S;C.

52233(d), provides:

"Every license issued under this chapter shall be subject to the right, of recapture or control reserved by section 2138 of this title, and to all of the other provisions of this chapter, now or hereafter in effect and to all valid rules and regulations of the Commis-sion."

Section

186, 42 U.S.C.

52236(a) states:

"Any license may be revoked

. for violation of, or failure to observe any of the terms and provisions of this chapter or of any regulation of the Commission."

Obviously, the "terms of this chapter" include that, Act's stated statutory purpose.

Indeed, Section 186 states that a license may be revoked because of ".

. conditions revealed which would warrant the Commission to refuse to grant a license on an original application 42 U.S.C.

52236(a).

Even assuming that this refers to the standards of Section

104, rather than current standards (although this is far from cer-.

tain in view of the concern of the, authors that licenses be granted subject to current i.e., Section 105-standards),,

"minimum amount of regulation" to insure compliance with the standards of the Act would still be required.

42 U:S.C.

52134(a).

13

Committee Report Ql, the 1970 amendments have two principal purposes:

to assure fair antitrust review and to allow for timely construction and operation of nuclear power plants.

By eliminating Section 105 review for "research and develop-ment" licenses, Congress assured that construction and opera-tion of plants could go forward on a timely basis.

Congress provided that nuclear'nits authorized under existing licenses could be constructed and operated without further antitrust delay.

This would be equitable in light of already committed resources.

However, there is nothing in the 1970 amendments or in the legislative history

.of the amendments to suggest that because it would be de-sirable for already licensed plants to be built and operated, licensees should therefore enjoy a greater right to utilize federally granted licenses contrary to the antitrust laws than they would have had before.

Such interpretation is consistent with Statesvi'1'le,

'~su ra, and. with the Congres sional intent that nuclear power not be used to further'nti-competitive purposes, but that construction and operation of nuclear plants should be allowed to go forward.

Xn-thi.'s:context,

-the Joint Committee states (Joint 1/.

R'e 'ort'

theJ'o'into'mm'i't't'e'eotom'i'c'n'er

[To accom-pany H.R. 18679],

24 September

1970, 91st Cong.,

2d Sess, H.R.

No.

91-1470

- (hereafter referred to as "Joint Committee Report",).

14

Committee Report, p, 13):

"Xf the Commission makes a finding of 'practical value,'erious legal problems would probably come into play.

These could i'nclude such matters as the convertibility of'ubs'ection 104 b. licenses to section 103 licenses, and, of. course, the interpre-tation and effect of. the provisions of subsection 105 c.

The accompanying delays and expense could be ex-tremely onerous.

It must'e borne in mind that the licensing process is already being 'extended and sorely strained these

days, and costly delays are being ex-perienced, due to.the sudden impact of the National Environmental Policy Act of 1969 (Public Law 91-190) and the Water Quality Improvement Act of "1970 (Public Law 91-224);

thus far the attempted implementation of these acts seems to be creating more delays due to legal questions of interpretation and implementation than to environmental considerations as-such."

The statutory purpose of the amendments as thus expressed'ould be thwarted if licensees were forced to delay construc-tion and operation of Section. 104 plants until completion of an antitrust review.

The legislative history suggests that Congress con-sidered the construction of'nuclear plants without costly delay. to be in the public. interest; there is no suggesti'on that Congress intended that PPGL should be granted permission for an unlimited period to utilize its existing licenses contrary to antitrust principles without any possibility for subsequent Commission review.

This seems especially so in view of Congress'verriding intent that competitive con-siderations be recognized.

Joint Committee Report, p.

15.

In short, Congress "grandfathered" Section 104 1'icenses to serve public purposes; the 1970 amendments do not comprise 15

an FPGL relief act, relieving the Company of.subsequent agency review.

B.

Florida Cities Do Not Seek a Delay in Construction and Operation."of the'.Units Throughout its Response,'PGL accuses Florida Cities of abusing this Commission's processes

'(e'.g.,

FPGL Response,

p. 4), of possibly creating "an adverse, impact upon FPL's ability to obtain needed capital on favorable terms by the sale of securities to the investing public" (FPGL Response,

p. 3),

and of otherwise acting improperly.

Such accusations are easy to make, but difficult.to defend.

Florida Cities are public bodies.

They have seriously petitioned this Commission for relief from perceived harms.

In view of the serious consideration given by the Board to Florida Cities'etition in Flo'rida Power 6 L'i't'o.outh Dade Plant),

NRC Docket, No. P-636-A, FPGL's claims of frivolity here seem misplaced.

Moreover, FP&L has been'totally nonspecific about the harms it fears, despite Florida Cities'equest for par-ticulars in their 27 September 1976 "Joint Motion of Florida Cities for Leave to Reply to Answers to Petition to Intervene and Request for Clarification."

In their Joint Petition, Florida Cities reiterate that they-(p'. 6):

are prepared, at the threshold of this case, to enter into all appropriate stipulations, procedural and substantive, necessary to eliminate any real ad-verse impact on FPsL."

16

Considering that they are the ones in the instant case being deprived of access to nuclear power, Florida Cities find it.

strange-that FP&L, a regulated utility, here claims that its ability to finance is threatened.* 1/

1/

Zf Florida Cities were to receive a direct ownership share in the existing nuclear units, FP&L's investment would be well protected since Florida Cities would provide capital directly.

Alternatively, Florida Cities.do not.preclude other forms,of relief; such as unit power. purchases, ia forms that would equally protect FP&L's'bilitv to earn a-fair return on investment.

Nor do they preclude FP&L's raising claims against certain forms of relief, if the Company can show that such relief would in fact threaten its ability to finance.

Florida Cities have offered to stipulate issues, in order to eliminate uncertainty.

To be absolutely clear, they do not seek. delay of construction or operation of the. units and would not seek to tie the question of FP&L's ability to continue construction or operation of the units to FP&L's agreeing to interim conditions (although Florida Cities do assume that FP &L would comply with a Board order granting in-

terim relief.,

FP&L seems, therefore, to be protected against whatever harms it may fear.

Florida Cities do not seek to hereby delay construction and operation of the subject units.

Florida Cities are also willing to enter into settle-ment of any or all controversies with FP&L.

They recognize that FP&L need not attempt to settle any claims.

However, by the same token, FP&L cannot appropriately insist upon a full

hearing, as is their right,

~ and claim that Florida Cities are responsible for harms to its wellbeing that ~he Company re-fuses to even particularize.

Ultimately, Florida Cities are claiming an entitlement to participation in nuclear power, which FP&L resists.

Florida Cities ought to be able to raise such claims without being accused of harassment.

As a consequence of its position as a regulated retail

monopoly, FP&L is assured rates sufficient to raise capital.

Ho e'a'tu'ra'1 G'as'o.

v.

FPC, 196 F;2d 803, B'lue'fi'e'1'd'at'er Works a'n'd Zm 'rovemen't Co. v. Publice'rvi'ce'o'mmissi'on, 262 U.S.

679 (1923 While, admittedly, low cost nuclear capacity is

valuable, FP&L cannot be seriously claiming a right to monopolize (cont'd) 17

Florida Cities have,.in the foregoing, attempted to summarize thei,r basic contentions and axguments.

The sections following address FP&L and Staff's arguments in more 'specific detail.

IXX.

FP&L AND STAFF'S ARGUMENTS ADDRESSED IN DETAIL A.

The Commission and the Licensing Board Have the Authority and the Responsibility to Grant Inter-vention and initiate the Requested Antitrust Hearing E

FP&L terms Cities'etition "novel and far-reaching" (FP&L Response, at 3).

The petition is founded upon the basic policies of the Atomic Energy Act ("Act") and invokes the undoubted powers of the Commission to police anti-(1/ cont'd) such nuclear capacity for the reason that. FP&L will be better off if relief is not granted.

P Finally, FP&L implies that it may chose not to con-struct St. Lucie Unit No.

2 iZ a hearing is ordered, but care-fully does not state so explicitly.

Whether this is meant to influence the Board, Florida Cities do not know.

However, assuming a stipulation guaranteeing FP&L full payment for any capacity ordered transferred, or guaranteeing appropriate rates for power sold, FP&L appears to state that it would choose to forego benefits of low cost nuclear power for itself and its customers

because, ursuan't'o B'o'a'rdorder, it might not be able to exercise a monopoly over those benefits.

One can hardly imagine a statement more at odds with the principles underlying the antitrust laws and its obliga-tions as a public utility to achieve all necessary economies.

Midwestern Gas'ran'smis's'i'on'o..

v. KC, 388 F.2d 444 (7th Cir.,

1968),'ert.

denied, 392 U.S.

928 (1968).

See also Text'i'le fl <<).

18

competitive situations caused or maintained by. activities under licenses whi'ch it has granted or may grant.

Xn creating the Licensing Board the Commission has delegated to it the initial task of fulfillingmany of its regulatory duties, pursuant to Section 191 of the Act 42 U.S.C.

Sec. 2241(a).

The Board and the Commission, have the authority and. the concomitant respon-sibility to grant Cities intervention and commence antitrust proceedings in the relevant dockets.

By isolating individual provisions of the Act from each other and from the overriding statutory policy:..in favor of I

competition, FPGL is attempting to force the Commissio'n's anti-trust powers into inflexible and uncoordinated compartments and thereby negate the Commission's authority to consider valid claims.

FPGL hopes to establish that the Commission has less power and duty to deal effectively with anticompetitive situations than other federal agencies whose organic acts merely contain broad "public interest" mandates'/,

rather than the explicit policy goal enunciated in the Atomic Energy Act to "strengthen free competition."

Section 1,,

42 U,S, '52011.

gl See" G'u'1'ft'a't'es't'i'1'i't'i'e's'o.

v,.

FPC,.

411 U.S, 747.

(1973},

anden'v'er6=-R'i'O'-,"Gr'and'e'.R'ailro'ad'o..v..'.

Un'i'te'dS'ta't'es, 387'.S.

485 (1967

, whz.ch held that the broad "public interest" standard of Section 204 of the Federal Power Act, 16 U.S.C.

5824c, and Section 20a of the Xnter'state Commerce Act imposed upon the Federal Power Commission and the Interstate Commerce Commission, respectively, the duty to assess the antitrust consequences of their actions.

19

B, The Commission and the Licensing Board. HaVe the Authority to Grant Late Intervention and. Initiate an Antitrust Hea'ring in,- the, St-. Lucie.Unit No.

2 Construction Permit.Proceeding As stated

'~su ra', "the Board has'ndoubted authority to grant Elorida Cities intervention and initiate an antitrust hearing in the St. Lucie Unit No.'2 construction. pe'rmit pro-ceeding..

Section 2.714(a) of the Commission's Rules of Prac-

tice, 10 CFR 52.714, makes it clear that the Commission or the Board may grant a petition to intervene when "a substan-tial showing of good cause for failure to file on time" has been made.

FPGL does not contest that the Commission has the discretionary power to grant intervention.

(FPGL Response,

p. 2).

The Company even admits (FP&L Respons'e,'.

36, n.

63) that intervening events can justify late intervention..

The only substantial dispute surrounding St. Lucie Unit No.

2 is whether Florida Cities have demonstrated the requisite "good cause" under Section 2.714(a).

The policies and stan-dards which should underlie the Board's "good cause" evalu-ation are discussed below.

C.

The Commission Has the Authority to Initiate an Antitrust Hearing on the Activities Undex'he Existing Operating Licenses and Under the Facts of'hi's Case Cannot Appropriately Refuse to Initiate Such a Proceeding FP&L asserts'FPGL

Response, p.. 11):

"'.l,"T]:here is no statutory basis for the Commission to conduct the requested antitrust review of the existing 20

licenses or to revoke or modify them on the antitrust grounds alleged by Petitioners."

The Company even suggests (p.

19) that there is no overriding policy in the Act which would justify. the initiation of anti-trust proceedings.

FPGL conten'ds that the C'ommission',

no matter how out-rageously a licensee may violate the antitrust laws, may not move to revoke ox modify its license (until a court. finds that the licensed activities violate a relevant statute)

As is stated

~su ra, FpaL.cites'i::t'ie's" 'o. St'ate'sv'i'lie

v. AEC, 441 F.2d 962 (D.C.Cir., 1969),

in. support of, this position.

However, at the same page as a'assage quoted by FPGL (FPGL Response,

p. 20), the court in St'at'e's'vil'le made it clear that the Commission may act to restrain a licensee whose activities under an NRC license are anticompetitive.

After pointing out that the Commission has a "most serious duty" to evaluate the anticipatory antitrust impact of a plant which has demonstrated commercial practicability, the court concludes:

"Finally,.under section 186(a),

42 U.S.C.

sec. 2236(a)

(1964), the Commission has the power to revoke any type of license it has issued when there is a 'violation of, or failure to observe any of the terms and provisions': of the Act.

This section invests the Commission with a continuing

'police'ower over the activity of its licensees and provides it with the abil-ity to take remedial action if a license is being used to restrain trade."

441 F.2d at 974.

21

It should be obvious that such a continuing police power exists.

Only such an interpretation would give "content,to the national objectives of [the'ct]

and to the 'Commission's jurisdiction to accomplish them." Un'i'ted'a's'Im 'ro've'meant'o.. v.ont'i'n'e'nt'al OilC'o 381 U.S., 392, 403 (1965;.,interpreting the Natural Gas Act). 'ccord; TO1'edo'diepn'o'.'(Devi's'-B'es'se'u lc'e a'rpow er'ta't'i'on','nit 1), ALAB-323, NRCI 76/4,

331, 343-. 344 (14 April 1976).

Any other interpretation would read the pro-competitive policy declared in Section l(b) of the Atomic Energy Act, 42 U.S.C.

52011, out of the statute insofar as Section 183(c),

42 U.S.C.

52233(d),

subjects each license issued by-the Com-mission to "all of the,.other provisions of this chapter."

Any other interpretation would mean that the Commission must issue licenses at its peril, and at the'eril of the consuming public, unable to act if the licensee subsequently uses the grant of public authority given it contrary to the purposes of the Act..

Florida Cities have invoked the very section cited in Statesville.,

~su ra, as the source of the Commission's continuing police power over anticompetitive activities of its licensees.

Section 186 of the Act grants the Commission the general, power to revoke a license for conditions which would. warrant its refusal to grant, a license on an original application or for failure to observe any of the:terms and.provisions of the Act, or of any regulation of the Commission.

Cities have also invoked 22

Section 187 af the'ct, which 'grants. the Commissi.on powex to modify or, condition, any licen'se.. 'f the Commission. can initi-ate proceedings to invest:igate the 'anticompetitive activities of its licensees, Florida Cities can file a petition asking it to do so

~

Both Staff (Answer, p.- 12) and FPGL (Response, p.

3) state that Section 2.206 of the Commission's Rules-of Practice, 10 CFR 52.206,.provides the mechanism'o request that a pro-ceeding be instituted to consider revoking or modifying a li-cense.

The factual and legal issues involve application of antitrust principles.

Indeed, had they not-sought. review in accordance with antitrust. procedures, Florida Cities.might have expected claims that they had invoked the wrong internal review procedure.

Florida Cities have set forth what they deem the ap-propriate legal standards in light of* a serious and immediate problem and request Commission relief as may be appropriate.

If it is necessary that the Section 2.206 mechanism be separately and specifically invoked, and assuming they have not done so by filing their 6 August 1976 Joint Petition, Florida Cities seek relief under that Section.

They shall serve a copy of their ox'iginal Petition and this Reply upon the Director of Nuclear Regulation, but to avoid confusion shall ask that action be held in abeyance until this Board 23

acts.

1/

Florida Cities seek an agency determination= whether a proceeding should be instituted'pursuant to Section 2.202 to modify,

suspend, ox revoke FP&L's operating licenses for the St,. Eucie Plant, Unit No.

1 and the Turkey Point Plant, Units No.

3 and 4.

Cities will cooperate fully.with the Board in fulfillingthe procedural pre-requisites to receiving a decision. on the merits of its request that proceedings be instituted to determine whether FP&L's activities under said licenses are consistent with its statutory antitrust. duties.

To the extent FP&L implies (Response, p,

11, n.

25) that the NRC's regulations are not explicit, this Board's delegated authority is sufficient to fillin such gaps.

There is a clear statutory basis providing a continuing obligation on the part of licensees to comport with the Act and the regulations under it.

Section

183, 42 U.S.C.

52233; Sections 185-188, 42 U.S.C.

552235-2238.

The Commission=.rec'ogn'izes'such obligations in 550.54 I

and 550.100 of the regulations; 'in't'er1'ia.

Pursuant to Commission Rule of Practice 2.206(b),

10 C.F.R. Section 2.206(b),

the appropriate Commission official must either institute the requested proceeding or advise the person who made the request of the reasons for not instituting 1/

Should additional copies be necessary, Florida Cities will provide them.

24

the 'proceeding,.

Since Section 181. of the Act,-,42. U.'S;C,

52231, pxovides that the "provisions of thedministrative Pxocedure Act shall apply to all agency action taken under', this'chapter,"

any such refusal would be subject to judicial review for'.abuse of discretion.

See Section 2(ii)(c) and Section 10(a) of the Administrative Procedure

Act, 5 U.S..C.

55551, 702, 703..

And see Environmental'ef'ens'e'und v.

Ru'ck'e'1'sh'a'us, 439 F.2d 584 I

(D.C.Cir., 1971; order denying suspension of registration of pesticides is subject to judicial review; agency ordered to issue notices that commence formal administrative proceedings to determine whether registration should be cancelled.)

The limits of the Commission's discretion as to instituting a modi-fication hearing after receiving claims of anticompetitive ac-tivities are certainly unclear at this point..

But, as is ex-plained below, judicial authority indicates that an agency entrusted with antitrust review duties has. but limited discre-tion in deciding whether or when to consider the antitrust rami-fications of its actions.

Other regulatory agencies have been judicially cha's-tised for seeking to avoid or, delay full consideration of the anticompetitive consequences of their actions,.

For example, Denver&ioxa'n'd'e Wes't'e'r'na'il'ro'ad'o..

v..'n'i't'e'dt'ates, 387 U.S.

485 (1967)

'Gul'ft'ate's: Ut'i:1'i'ti'e'sCo. v.'PC.,

411 U.S.

7 (1

).~..

6 aff'd, U.S.

96 S.Ct.

1999 (1976).The Supreme'Court

'I 25

has said that whex'e an agency'ummarily disposes og proffered antitrust contentions,'he review'ing court must "clo'sel'y scru-tinize its action in light of the

. statutory obligations to protect the'ublic interest and to.enforce 'the antitrust laws." eh'ver&'i'Oran'd'e We's'tern: Rai'lxo'ad'o.

v.'.Un'it'ed St'ates, 387 U.S. at 498.

One reason for such close scrutiny is the regulatory agency's role as a "first line of defense" against competitive practices that might: later be the subject of judicial antitrust proceedings.

Gulf States,

supra, 411. U.S.. at 760.

Another is judicial realization that anticompetitive conduct can have I

immediate and.unremediable impact on small municipal electric

systems, which must struggle to preserve their independence,.

attract new customers, retain current customers and justify their existence to their citizens and consumers.

See the ap-1268.

The judicial notion that agency expertise should be applied first to the problems and'olutions relating to the E

I anticompetitive activities of regulated entities also leads them to insist that agencies not lightly deny a hearing to one pressing antitrust claims.

The practical and policy'considerations which

led the'upreme Court to hold, that the Civil Aeronautics Board has primary 'jurisdiction over antitrust claims which involve the granting, qualifying, denying; modifying or revoking of air 26

carrier certificates are illuminating.. See P'an'meri'can', world

'Am, the,'Court sugges'ts that such matters are the "precise ingredients" of the'gency's licensing authority and can be treated more compreh'ensivel'y and holistically by 'the agency than by a court.

371 U.S. at 305..

The "aggrieved" party should not, therefore, be turned away from the more approp-riate forum without strong justification by the agency, The above factors limiting agency discretion to deny an antitrust hearing are especially appropriate in the context of the Nuclear Regulatory Commission.

Unlike the Interstate Commerce Commission and the Federal Power Commission,.

the NRC has been given an express antitrust mandate in its organic act.

After noting that even agencies which are not acting under expressly stated statutory antitrust obligations must "take full account of those laws and their underlying policies before acting," the Appeal Board, in 'Kansas'a's 6 El'ectric Co.

and Kansas'it Power O'i ht'o.

(Wo'1'f'reek'ene'ra't'in Sta-tion,'nit:'1),

1 NRC 559, 568 (ALAB.-279, 1975), pointed out tha.t:

.[W]here Congress has explicitly mandated the type of conduct to be screened for anticompetxtive

effects, attempts to limit the scope of that obliga-tion by giving a narrow or articifical meaning to the statutory terms have been'ejected.

E.g., Volkswagen-werk v.

FMC, 390 U.S.

261 (1968)."

27

Since Congress has specifically entrusted the Commission with antitrust obligations, it should be most reluctant to turn away a petitioner which claims that a situation inconsistent with the antitrust laws exists.

Likewise, the specific mention of the Federal Trade Commission Act Ql in Section 105(a) of the Atomic Energy Act demon-strates the Congressional intention that the Commission keep an administrative eye not only on full blown anticompetitive conduct, but also upon acts which might lead to restraints of trade if not stopped in their incipiency, practices which constitute un-fair methods of competition, or acts which violate the spirit of the Sherman and Clayton Acts. 2/

The whole tenor of Section 105 is to direct the Commission to play a prophylactic role in fulfillingits antitrust duties.

Such a preventive function cannot be properly fulfilled by refusing to act upon good faith contentions that activities under a license are having sub-stantial anticompetitive consequences.

Forcing a petitioner to go first to court with antitrust claims significantly increases the probability that substantial or unremediable damage may occur before a court, and then much later the Commission under Section 105(a), will act on meritorious claims.

1/

15 U.S.C.

gg41-51.

1 1

2/

See'n'i'oh1'ect'ri'co'.(Cal'1'aw'a Pl'ant',.'n'i't's'.'1and'.'2),

1 NRC 438, 441-442 (Licensing Board, 1975)

Re ort of'he 'Jo'i'nt Comm'it't'e'e'on'.Kt'omi'c'n'e'r, H.R.

No.: 91-1470, 91st Cong.,

2d Sess.

(24 Sept.

1970), at 14, 28

I

The D.

C. Circuit Court of Appeals has very recently reminded the NRC that it should not delay consideration of im-portant issues.'/'.

The 'Commission;, sought to defer.:.consideration of the environmental effects of the waste produced by a nuclear reactor in deciding whether to build the reactor because those effects would be considered when a plant is proposed to deal with them.

Because the National Environmental Policy Act was meant to be prophylactic in effect, breaking the cycle of such incremental decision-making, the court ordered that the environ-mental effects be thoroughly examined in the instant licensing proceeding.

The Commission's prophylactic role as an antitrust regulator should also prohibit it from ignoring colorable claims of antitrust violations.

D.

The Commission Has Ample Authority and Procedural Flexibility to Grant Intervention and to initiate a Proceeding to Modify or Revoke the Existing Licenses; Such Authority Implies a Duty to Act to Further Statutory Policies FPaL attempts to fabricate regulatory gaps which would confer immunity-by-default upon monopolistic licenses.

But, when Congress has given an agency regulatory authority over antitrust matters, the legislative intent to achieve a regu-latory gap should not. be presumed unless expressly presented, Q2 1/ 'atu'ra'1'e'so'u'rc'e'se'fen'se'ou'n'cil',

Inc..v.'RC, No. 74-1385 7D.C.Ca.r.,

21 July 1976

/~

~

M!

NRC at 568, where the Appeal Board states that an agency;acting under an express antitrust mandate may not, give 'a narrow scope to its antitrust obligations..

29

As the Supreme Court said in Un'i't'e'd Gas,~su 'ra, a.statute should be interpreted to give content to the Act's purposes and to the agency s jurisdiction to accomplish

them, Just as a regulatory statute must not be'hamstrung" by technical concepts of local or common law Ql', an agency 'given a regula-tory task must have the flexibilityneeded to- "mold its pro-cedures to the exigencies of the. particular case."'/

The general reluctance to find regulatory gaps is especially appropriate when applied to the Atomic Energy Act, since Section 186 of the Act explicitly allows revocation of any license because of "conditions revealed" which would "warrant the Commission to refuse to grant a license on an original appli-cation".

Section 105(c) (6) gives the Commission the authority to

."refuse to issue a license" based on finding that the activities under the license would create or maintain conditions inconsistent with the antitrust laws".

Congress did not, exclude the regu-latory powers of Section 105 from the scope of Section 186. It must therefore be assumed that the legislature expected the Commission to exercise the "continued police power".over anticom-petitive activities of licenses foreseen by the 'State'sville 1/ 'n'it'e'da's'xm rovemen't'.co.

v.: continen't'a1'ii'. co.,

'~su 'ra, 381 U. S., at 400.

2/

Gul'ft'a'tes,

'sup'ra, 411 U.S. at 762.

30

court.

Cr't'diesaf't'atesyille.

v, AEC,~su ra<,.441 F,2d at 974.

Congress envisioned that the Commission would continuously supervise its licensees'ctivities as they relate to health and safety,

defense, and antitrust matters.

When it becomes aware of activities under a proposed or existing license which may be in restraint of trade, it has full authority to act.

As was discussed above, this authority to prevent or stop restraints of trade which are caused or maintained by activities under an NRC license implies a responsibility to act effectively when confronted with antitrust claims.

The Commission must consider the possible consequences of its failure to consider antitrust contentions fully, as well as any justifications which might exist for deferring action on the matter or refusing to act.l/

Neither Staff nor FP&L have discussed the possible con-sequences of a refusal to act by the Commission.

Without gauging the present and potential harm to Florida Cities from FPGL's anti-competitive practices, the Commission cannot properly decide whether to hold an antitrust hearing as part of the St. Lucie Unit No.

2 construction permit proceedings or in a proceeding to modify the existing operating licenses.

Cities respectfully contend that it would be an abuse of the Commission's discretion, under the criteria and duties outlined in the Gulf States

decision, to refuse to order'..the requested antitrust proceeding or. grant Florida Cities intervention.

1/

Gulf S'tates,supra, 411 U.S. at 763, 31

E.,

The Right to Repose on Antitrust. Matters Postulated by FP&L Xs Unwarranted To a large extent, FP&L bases its opposition to Florida Cities'equest for an antitrust hearing with respect to St.

Lucie Unit No.

2 upon a vague right to repose.,

whi'ch apparently FP&L believes should insulate 'it from attack by Florida Cities and the Commission.

FP&L'posits

'(Response, p;." 2) a reliance interest based upon the Section 105 antitrust review conducted by the Attorney General and the Commission in late 1973..

The Company asserts a "substantive right". to the assurance that there are no outstanding antitrust. questions relating to St.

Lucie Unit No.

2 (Response,

p. 54).

Whi'le Cities can imagine many reasons why FP&L would seek such assurance,.

neither general antitrust or administrative=-law nor the Atomic Energy Act. grant such an absolute right to be left alone, Analogies with general antitrust law are contrary to the position espoused by FP &L.

Neither a Justice Department business review letter nor a Federal Trade Commission, advisory opinion immunizes a practice from subsequent attach by the Govern-ment or by private individuals..

The agency giving such cl'ear-ances reserves a free hand for the future'l ', just as the'ttorney General, in giving advice to the Commission pursuant to Section IQ5 mereII gives his. present

opinion,

.In Un'ited 1/

See Areeda,'n'titrust'A~na'1'is (2d Ed, 1974).

32

Sta't'es. v,'eW 0'rl'e'a'n's'h'at'e'r',

'A's's'o'c'ia't'e'd:.'Gen'e'za'1ont'r'act'o'rs of'Amer'i'ca,'nc..,

238 F.supp.

273 (E..D.La, 1965) rev'd ~er curi'am, 382 U.S.

17 (1965), the Supreme Court summarily re-versed a district court whi'ch. had held that the gover'nment was estopped from prosecuting under. the Sherman Act because there had been no change in the 'antitrust laws in the decade since the Justice Department had examined the activities of the association and acquiesced in the use of the questioned bid system.

Even winning a prior government suit does not immunize a company from attacks on the same practices.'l As Professor Areeda has said.

(Areeda,

~su ra, 9175 at 100):

Continuation of conduct attacked in a prior antitrust suit is generally held to give rise to a new cause of action.

Thus defendant's victory in a Government suit does not preclude a

later proceeding on the same theory for de-fendant's later repetition of the very conduct held lawful in the prior suit.

...This judicial willingness to reexamine matters formerly litigated rests on the premise that defendant should not be able to use a former 'ud ent. as a means of gaining immunity from a change in rn the law, or of assurin a

ermanent ad-vanta e over hz.s com etitors." [Emphasis added.]

Surely FPGL cannot rely upon notions of collateral es-toppel or res judicata to bolster its claim to repose.

Collateral I

100*

I tI w'a t wvv'L'4

/

~

~

~

1/

See FTC V.: Ra1'a'dam Co, 316.

D rS..149 (1942}.

Zf victory in prolonged litigatron wrth the Justice Department or the FTC gives a company no "license"'o continue its practice free from future governmental or private antitrust attack, it is ludicrous for. FPaL to asser't such immunity prior to"'~an kind of adjudication on the anticompetitive aspects of its use of. nuclear power.

The Commission cannot be straightjacketed by a rule that gives finality to its informal review procedures.

/

33

estoppel, of course,'nly applies to litigated determinations.

L'awl'or v. Na't'i'on'a'1c'r'e'e'n S'e'rv'i'c'e'.C'or,,

349 U.S.',.

322 (1955},

There ha's been no adjudication here by the Commission and the doctrine has no application to nonjudicial administrative ac-tion 1/, nor is it applicable when' statute gives an agency the authority to reopen or modify its decress or orders.

~Sre ue v.'o11, 122 F.2d 128 (7th Cir,.1944'),'c'e'rt.'d

'n'i'ed, 314 U.S.

699.

See Davis, Admin'i'strativeaw T'r'eati'se, 518e12 (1958 Edition).

Collatoral estoppel need not bar reopening of even an adjudicated matter if the earlier'agency decision had unknown significance or has been given new significance.

See United States

v. Ston'e 6 Downer, 274 U.S.

220 (1926).

FPGL can only fall back upon the Atomic Energy Act it.self as a foundation for its claimed right to be left alone.

But, the Act offers little solace for the monopolist hoping to avoid all but the initial Section 105(c) antitrust scrutiny.

Numerous sections of the Act make it, clear tha.t an applicant or licensee can never attain complete assurance that all antitrust issues concerning a particular'lant (or'ts whole system) have been. resolved.

Ql Davis,dmin'i'st'ra'tive'aw'r'e'a'ti'se, 518412, at 626 (1958 Edition).

34

First, Section 105(a) wagons the applicant or licensee that no scrutiny by the Commission can immunize it from the operation of the nation's antitrust laws.

Private persons, the Federal Trade Commission or the 'Justice Department can all upset the repose of a utility by claiming that activities under its NHC license violate the very antitrust laws which are considered by the Commission in its Sec. 105 review.

Thus, a utility may find itself in litigation with parties at any time.

The "cloud",

which FPSL contends (at 3 of its Response) has been placed over the validity of its licenses by Cities'etition, seems far less ominous than uncertainties that a utility may be subjected to under the scheme. of Section 105(a).

Section 105(c)(2) also cautions the license applicant that the initial antitrust review offers no permanent shelter from the storm.

For the procedures of paragraph (1) of Section 105(c) are specifically said to apply to both an application for a construction permit and an application for an operating license.

The proviso may sometimes spare an applicant an antitrust hearing at the operating license stage, but it authorizes (and thereby obligates) the Commission to be alert to "significant changes" and to claims that such changes have occurred.

There is no guarantee that a second Commission review and a first or second hearing may not be helf long after the initial review.

Other provisions, in the Act convey that even.existing licenses are subject to anti-trust scrutiny by the Commission.

As has been stated, Section 183 makes it clear that all licenses are issued subject to "all of the

other provisions of this chapter, now or he'reafter,in effect and to all valid rules and regulations of. the Commission."

Thus, no licensee has vested right to co'ntinue constructing or operating a nuclear power plant under'he original, terms of its license.'/

Further',

Section 186'llows the Commission to revoke

'a license "because of conditions

. which would warrant the Commission to refuse to grant a license on an original application

. or for failure to. observe any of the terms and provisions of this chapter or" of any regulation of the Commission."

Likewise, Section 187 grants the Commission the authority to modify a license.

As recognized by the court in Statesville 2/, these provisions authorize the Commission to exercise a continuing "police power" over restraints of trade perpetrated by its licensees.

3/

This continuing police power is obviously inconsistent with FPaL's claim that the Commission has no active antitrust role after the initial gl FPGL has itself applied for numerous license moficiations.

Such modifications (which the Commission has the. undoubted power to, issue with appropriate conditions) belie, claims of finality which would bar subsequent conditioning of existing licenses.

2/ 'iti'e's'of 9't'ate'svi'11e v.'ZC,: '~usra, 4'41 9..2d. at. 974.

3/'lorida Cities'rgument, in the'ir Petition..that antitrust rev'iew'as proper under Section 104(b). would be in conjunction with Sections

183, 186 and 187, which 'affec't'll -licenses.

36

Section 105 review,'/

Finally, even, if FPGL claims that it has done nothing which violates either the letter or the spirit of the antitrust laws since the original antitrust review of-'the St. Lucie Unit No. 2.application, it'annot base its claim to repose upon the fact that it is not responsible for the energy crisis and mounting fuel costs facing Florida Cities. 'tt'e'r Tai'1'ower Co. v. United States, 410 U.S.'366 (1973),

and Ovi'tro'n'orp.

v. General Motors, 295 F.Supp.

373 (S.D.N.Y., 1969) make it clear that even monopoly power acquired passively, "innocentlyp" or as a result of historical accident can form the basis of an antitrust violation, if that power is utilized in an exclu-sionary manner.

Thus, general antitrust law and'he Atomic Energy Act anticipate that FP&L and any licensee or applicant may have to 1/

Section 105 (c) (6) of the Act, 42 U. S.C.

52135 (c) (6), also appears to anticipate that the Commission will make antitrust determinations subsequent to the issuance of a license.

For that provision deals with the Commission's decision to "issue or con'ti'nue" a license after the conclusion that-a "situation inconsistent" exists and authorizes the Commission to "issue or continue

a. license,". or to "'resc'i'nd' license or arne'nd it."

(Emphasis added)'.."

Xt does not seem likely that Congress in-cluded such terms as "continue," "rescind,"

and "amend" merely to cover instances involving subsections (c)(3) and (c)(8).

After making. findings under Section 105(c) (3), the Commission would be issuing a new operating license, since a subsection (c)(3) facility=by definition only has a construction permit.

Thus, 0he Commission could not continue,

rescind, or amend such operating licenses.

Likewise, the terms in (c)(6) which authorize the alteration of an existing license could not refer merely to sub-section (c)(8), for such an interpretation would make the provision in (c)(8) totally unnecessary.

Xt would be inappropriate for the Commission to interpret Section 105(c)(6) so as to make a portion of the carefully drafted 1970 amendments superfluous.

37

run an antitxust gauntlet fa,x more 'demanding than the oxiginal antitrust review, under Secti,on 105,.

42 U.S.C, 52135.

FP&L's claimed right to be left 'alone has no foundation in the Atomic Energy Act.

While FP&L ax'gues strenuously that merely granting

~ a. hearing'.on. Florida Cities'laims wi;11 upset its rights of

repose, at the same time it argues against holding a hearing on St. Lucie Unit. No.

2 as "premature,"

where under the cir-cumstances here involved a hearing must be held later when

.FP&L applies for an operating license.

'(FP&L Response, pp.

58-59).

But FP&L's underlying policy arguments rest on its claimed need for certainty.

It would be most unfair to wait for'he last minute to hold a hearing on the operating license, where claims are now ripe for decision and when FP&L will be arguingpresumably its right to operate St. Lucie Unit No.

2 to, the exclusi'on of Florida Cities'ights-when the operating license is applied for.

FP&L's opposition to a hearing con-cerning St. Lucie Unit No..

2 now belies its contention that its interest is in resolution of claims and finality rather m

than in-seeking to,avoid resolution of claims on their merits.

C Not only is FP&L'illing to wait to resolve issues concerning St. Lucie Unit No.

2, but, as stated earlier,. it argues against a Commission hearing, claiming that Floxida Cities'ppropriate remedy is to fi;le.an antitrust suit.

I 38

C

(FPGL Response,

p. 18)..

However, such action could take years, while FPGL continues to abuse NRC granted licenses.

And in response to such a 'suit, FPGL would presumably argue the need for a Section 105(a)

hearing, thereby delaying relief further.'/

Where it serves'o delay.res'olution of substantive

issues, FP&L no longer worries about. repose,

~

While the Act allows hearings on antitrust matters whenever necessary to fulfillthe Commission's regulatory responsibilities, the focus of Section 105 makes it plain that it is preferable to-institute such proceedings prior to the issuance of the construction, permit.

A hearing at this stage is the applicant's best assurance that. antitrust issues surrounding a particular plant have been resolved.

Postponing a hearing until the operating license stage, when such delay is not necessary, only prolongs the effects of any "cloud" which the claims may place over the facility.

Xn summary,. the statutorily imposed lack. of repose after a license is issued precludes the use ofpurported reliance interests as. the basis for-a.refusal,to commence hearings. on the competitive effects of, existing..licenses, gl As the Supreme Court said in another context:

"Xf the

[Plaintiff].

.. bec'omes exhausted,.

instea'd of the remedies, the issues of public policy are never reached

.," 'LRB v; Sh'i bu'i'1'din L'peal22, 391 U.S.

418, 425. (1968),

39

Such lack of repose, coupled with the built-in antitrust uncertainties prior to receipt of the operating license, makes it even less persuasive 'for an applicant to claim reliance interests during the licensing process.

Moreover, FPaL has not even particularized its claims of financial injury, and cannot otherwise prevail by invoking an unwarranted and vague right to be left alone.

F..

The Purposes to Be Served by Granting Florida Cities Intervention and an Antitrust Hearing on the St. Lucie Unit No.

2 Application, Coupled with Significant Changes Since the Issuance of the Attorney General's Advice Letter, Make it Proper for the Board to Use Its Broad Discretion to Grant the Relief Requested in Florida Cities'oint Petition The bulk of Florida Power 6 Light Company's

Response

r is addressed to the argument that Florida Cities'etition to intervene in St. Lucie Unit No.

2 proceedings should be denied since it is filed out of time.

Florida Cities recog-nize that their right to obtain intervention and the insti-tution of an antitrust hearing in the construction permit proceeding for FPGL's St. Lucie Unit No.

2 became discretion-ary when the date for filing intervention petitions pursuant to Section 2.714(a) of the Commission':s. Rule of Practice

'assed.

1/

But Florida Cities submit (and FPGL concedes, at 1/

E'as'ton'til'it'i'e's'oinm'is's'i'on v.'AEC, 424 F. 2d 847 (D.C.

Cir., 1970).

40

page 2 of its Response) that the L'icensing Board has ample authority to permit such 'intervention; statutory purposes and policies, as well as practical considerations, make it appropriate

and, indeed, mandatory for the Board to grant the relief requested in Florida Cities'oint Petition, under the circumstances presented.

1.

G'enera'1co'nsi'de'r'a't'i'on'sun'd'e'r'e'c'ti'on2:.'71'4'(a) of thommi'ssion"s Ru'1'es'f'ra'cti'ce Matter of'ucl'e'a'r Fu'e'1 S'ervi'c'e's',

I'n'c. '(We'st'.,Val'1'e Re rocessin Plant),

1 NRC 273, 275 (1975),

stands for the proposition that intervention decisions must be made with a focus on the policies underlying Section 2.714 of the Commis-sion's Rules of Practice, by inquiring into the purposes whi'ch may be served or hindered by accepting an untimely petition and with an awareness that the rule was written to give the licensing boards. "broad discretion in the circumstances of individual cases."

Numerous cases have echoed the theme that Section 2.714 grants the boards broad discretion in de-ciding untimely petitions to intervene.

1/

Such discretion 1/

Ma'tt'e'r. of Publ'ice'rvi'ce C'om an o'f I'ndia'na (Marb'1'e'i'll Nuc'1'e'ar'eher'ati'n

ta't'ion',', Un'i't's'and '2),

ALAB-. 339 (NRCI 76/7, 20),

Docket. Nos..

STN 50-546 and 50-547 (27 July 1976)'a't'ter oon I's'lahdi ht'in Com 'a'n (Ram'e's 'ort'u'cl'e'ar Pow'er Stat'i'on, Units '1and'),

ALAB-292, 2

NRC 631 1975

Matte'r'

,Vzrgxnxa Electric 'ahd'owe'rompa'ny(Nor'thA'M'aower State.on',. Units and'

, ALAB-342, Docket Nos.

50-. 338, 50-339, Slzp Opznxon (31 August 1976);" Ma'ttero'f Hou'ston'i'gh't'i'ng 'an'd'ower

'Company (South Texa's'ro "e'ct','nzt's'an'd 2',

Doc et Nos.

50-8A an 50- 99A, S zp Opznxon, at Lzcenszng

Board, 9 September 1976).

41-

when coupled with the many factors and policies which must be considered, means that "good cause" for late intervention must be determined on the basis of the'erits of the particular

case, with the dispostions in othe'r cases which are not closely parallel offering little guidance.'/

mary of the formal requirements of Section

2. 714:

In deciding the

'good cause'uestion, the Board is not. to confine'itself to a consideration of whether the petitioner has advanced an adequate excuse for being late.

Even if the lateness is en-tirely unjustified, the Board must nonetheless look at four factors spelled out in Section 2.714(a):

'1)

The availability of other means whereby the petitioner's interest will be protected.

'(2)

The extent to which the petitioner's participation may reasonably be expected to assist in developing a sound record.

'(3)

The extent to which petitioner's in-terest wi11 be represented by existing parties.

'(4)

The extent to which the petitioner's par-ticipation will braoden the issues or delay the pro'ceeding.'In addition to those four factors, which come into play only in circumstances where the intervention pe-tition is untimely", Section 2.714(a) refers to three other factors which are detailed in Section 2.714(d) and are to be considered in passing uponall interven-tion petitions whether or not tardy:

'(1)

The nature of the petitioner's right

'l Matt'e'r'o'f D'u uesn'e'$ 't., Coma'an

'(Be'a'v'e'r ValQ:e'~:.2'ow'e'r'. 'Sta-ti'on,, Unit '2),

7-AEC '959, 967, n.

7.(ALAB=, 1974).

2/ 'S'u ra, 2 NRC't 635.

42

under the Act to be made a party to the pro-

. ceeding.

'(2)

The nature and extent of the petitioner's property, financial, or other interest in the proceeding.

'(3)

The possible effect of any'rder which may be entered in the'roceeding on the pet'itioner's interest.'"

These factors must be weighed in the context of the statutory purposes. to be served by 'granting or denying the late inter-vention 1/, with tardiness balanced against any countervailing considerations.

2/

Florida Cities submit, as discussed below, that, Staff and FPGL have incorrectly weighed Florida Cities'ustifications for late intervention as well as the four factors listed in Section 2.714(a);

They have also totally failed to address the policies underlying the rule and the interests which Florida Cities are attempting to protect through intervention.

The basic polic'y behind Section 2.714 is the belief that persons vitally affected by administrative action must have the opportunity to be heard before an agency acts.

This is a major. premise underlying the Administrative Procedure

Act,

/"~

El'e'ct'r'i'c'&; Power'Co'(North &'n'aowerta'ti'on','Un>;ts

'1 a'nd'2},

NRC Docket Nos.

50-338A and 50-339A (ALAB-342; 31 August 1976),

Slip Opinion at 56,(Opinion of D.

R. Buck dissenting to Appeal Board's failure to deny intervention).

'I 2/ See'atterof'i'rini'a'l'e'c'tric6 Pow'e'r'o'.(Northnna Power Stat'x'on',

Un'its'

'a'nd2),

2 NRC. 395, 396 (ALAB-289 1975}.=

43

5 U.S,C. 55551,'t:

s'ece.,

to which the actions of. the Nuclear Regulatory Commission are 'subject pursuant to Section 18l of the Atomic Energy Act, 42 U.S.C.

52231.

Therefore, a right to intervene has been extended to those parties whose interests are protected by the Act.

This right should not be lightly denied when the interest asserted's one given special protec'-

W tion by the A'ct.

Section 2.714(a) specifically directs the Board to consider the factors set. out in Section 2.714(d), yet neither Staff nor FPGL discuss the nature of the interests raised by Florida Cities, or the possible ill effects that the issuance of a construction permit without antitrust conditions protect-ing their interests might have up'on Florida Cities.

Zt should H!'"

that "a late petition is entitled to some greater measure of solicitude if its sponsors have a clearly cognizable interest."

2 NRC at 645.

Florida Cities have asserted the right to be free from anticompetitive effects resulting from FPGL's activities under any future licenses issued for the Company's St. Lucie Unit No.

2.

Much of the discussion above makes it clear that this right is firmly grounded in the explicit policies of the Atomic Energy Act.

Florida Cities claim an interest given special protection under theAct; they are precisely the type of entities which Congress hoped to protect under Section

4

105.'oreover, they'ave 'alleged that licenses issued absent conditions to protect them from potential. restraints of, trade may have dire anticompet'itive impacts, including even their ceasing to exist as independent en'tities.

aff'd,'

U.S

,'44 U.S.

Law Meek 4777 (June 7,

1976)g makes clear the need for the quick resolution of such claims.

Neither Staff nor FPRL could properly weigh Cities'ateness or the four factors in Section 2.714(a) without taking these important interests and. consequences into account.

They have also failed to consider Cities'ate 'petition in the context of the purposes behind the. deadline for timely intervention petitions.'.

Neither Congress nor the Commission wanted intervention rights to cause significant delays in the construction or operation of proposed plants..

Since Florida Cities do not. seek to halt construction, this purpose for discouraging late interventions is not relevant to Florida Cities'equest.

The other significant reason for limiting the time in which parties may exercise their right to intervene is the fear that late intervention will cause confusion and be unfair to the applicant:. 'orth'.Anna,

'~eu ra',

2 HRC at 400.

But this consideration is most relevant just before a hearing is scheduled to begin or during an ongoing proceeding, where a late inter-vention may catch the applicant off guard and unprepared to 45

meet an intervener's contention.i.'uch an applicant might have to give up important rights (such as that of full dis-covery) in order to, avoid undue delay and expense.

But such worries over. confusion. and unfairness are not present in this case.

FP&L will have ample time, as deemed by the Board, to prep'are to meet'lorida Cities'llegations.

Zn fact, it should already be preparing to mee't nearly identical claims in Florid'a'ower& L'it: C'o'.(S'o'u'th'a'd'e'l'a'n't),

NRC Docket No. P-636-A.

Florida Cities submit that consideration of the four factors outlined in Section 2.,714(a) must be made in light of the policies of the Act and of Section 2.714.,

Because Florida Cities raise interests that are specially protected by the Atomic Energy Act; because a denial of. the requested relief will significantly exacerbate the injuries caused to Florida Cities by FP&L's anticompetitive conduct; and because initiation.of the requested hearing will not be pro-cedurally unfair to FP&L, the Board 'should be most reluctant to deny intervention or to refuse to order an antitrust hear-

~ ing on Florida Power

& Light Company"s application for a construction permit for its St. Lucie Unit No. 2.

46

9, Florida Cities Have Shown Good; Cause for

. Filing.,at'his Time Florida, Cities respectfully submit. that good cause has been shown for thei'r late filing.

Both Staff and FPGL conclude that Florida Cities have not made appropriate.justifi-cation.

Staff=and" FPGL's major contentions i.n this regard will be discussed here briefly.

Neither Staff nor FP&L indicate in any way when Florida I

Cities might have 'fiXed so as to have been late, but not too

late, after the period prescribed for interventions under Section 2.714 of the Commission's rules and regulations had elapsed.

The passing of a filing deadline under the rules is most significant when an antitrust hearing is scheduled for the near future.

The requirement for timeliness

becomes, as noted above, a mechanism for protecting the applicant and the Board from the confusion and complication caused by the procrastinating intervener.

That element of surprise or un-fairness is not present in this case.

At pages 45, et sece.,

of its Response, FPGL denies that the energy crisis was an intervening event which justi-fied,Fl'orida Cities'ateness.

FPGL certainly does,not con-test that 'the effect, of'hat. crisis increases the importance to Florida Cities of access to fuel supply sources,=such as nuclear. generation,

.more economical than oil; or that a nuc-lear monopoly is a far more significant weapon, now that other 47

moderately priced sources of power are not available to Florida Cities, with 'which to undermine the viability of FPGL's competitors; or that the anticompetitive effect of FPGL's refusal to deal in nuclear power was amplified by the energy crisis.

FPGL does seem'o be saying that Florida Cities should have known long ago that the crisis would have drastic ramifications, over'"prolonged period with no relief on the horizon.

However, had Florida Cities filed one year agoor two years agoalleging that-the energy crisis was a signi-ficant intervening event, FPGL would surely have claimed that the consequences of the energy crisis were not yet.

clear.

Were Florida Cities to delay. until the operating li-cense

stage, FPGL would surely claim that they should have sought intervention sooner.

The fact. is that FPGL's attempts to maintain its nuclear monopoly create great. competitive 'disadvantage to Florida Cities in light of the current fuels situation.

The impact is present and continuing.

While Florida Cities were not unaware of the possibility of fuel shortage or gas curtailments in 1974, they were receiving and had reason to predict, gas deliveries at far greater levels than have in fact occurred.

The extent of the impact of the energy crisis and FPGL's future actions were not clear in 1974.

48

Had Florida, Cities foundthe'msel'ves the'n in their'resent circumstances, they would of course have 'sought relief then.'1

. FPGL asserts that the disagreement.

between the Seminole Electric Cooperative, Inc.,

and FPGL is not rele-.

vant to the question. whether the Board should initiate an antitrust hearing at.Florida Cities'ehest.

(FPGL Responseg p.

39, n. 66).

.Yet it certainly would be proper at such a hearing for Florida Cities to show that FPGL was engaging in a course of conduct inconsistent with~ the nation's antitrust 1/

FPGL appends to its response a portion of a brief signed by the undersigned counsel on behalf of some of the petitioners herein.

Exhibits entered in that case

'(Fl'o'ri'd'a G'a'sran'smi's'si'on Co.

(Basic Ma'esia,In'co'r or'at'e'd',etal'.),.

FPC Docket Nos, RP74-50-1, et al.)

on behalf"of Florida Gas Transmission Com-pany

("FGT"), the interstate pipeline serving Florida, show that in 1974 gas'deliveries-..to direct sale customers were curtailed approximately 50% and that deliveries to resale customers (via distributors) were being made in approximately full contract quantities.

Projections for 1976 show that direct preferred customers would receive about 25$ of their contract entitle-ments, with resale customers being only minimally curtailed.

At that time a number of direct industrial customers were con-testing their reduced deliveries.

The severity of subsequent curtailments was not predicted.

Ex.

48, RP74-50-1, et al.

To avoid burdening this record, Florida Cities have not, appended

, Exhibit 48, but shall supply it to the Board or the parties upon request:.

49

laws. 1/ It is the very multifaceted nature of FPGL's anticompetitive activities which make it imperative that Florida Cities and other small utilities receive protection from this Commission.'/-

Moreover, FPGL's relations with Seminole and New Smyrna Beach, whi'ch entities have received

. commitments from FPGL that. will condition the terms of any license issued for the construction of St. Lucie Unit No. 2, certainly are relevant as illuminating FPGL's attitude.

The United States Department of Justice decided not to recommend an antitrust hearing on the St. Lucie Unit No.

2 application based-on FPGL's apparent attitude of, cooperation.

(Advice Letter of 14 Nov.. 1973, p. 7).

Evidence of a now stubborn, uncooperative FPGL should be entirely relevant to the decision to now hold an antitrust hearing.,

FPGL's inability to reach 1/

A party acting as a "private attorney general" can raise issues not personal to it.

See A'sso'ciate'd'nd'u'stri'e's',In'c.

v. 2ckes, 134 P. 2d 694, 705 (2d Cir., 1943), vacated

'as moot, 320 U. s.

707 (1943); s'ceni'c su'dson'reservation'onference v.

FPC, 354 F. 2d 608, 619 (2d Cir., 1965), ce'rt.'enxed

'sub nom.

Conso'li'd'at'e'dd'is'o'nC'o'."'o'f New York v.'cen'i'c'uds'on Preservat'ion'onference, 384 U.S.

941 (1966).

Q2 Similarly, despite FPGL's protestations to the contrary, Florida Cities should be allowed to allege that FP&L's attempt

. to take over the Vero Beach electric system is inconsistent with the antitrust laws.

See'as'trna'n'od'akCo.

v. So'uth'er'n'h'o'to Nate'ria'lsCo.,

273 U.S.

359 (1927; refusal to deal with inde-pendent dealer. after dealer refused to sell out is an unfair practice).

Florida Cities have a vital interest in the acquisi-tion of any municipal system in Florida, since such acquisition leaves other municipal utilities with fewer options for coordi-nated activities and strengthens FPGL's monopolist position..

If Florida Cities allege a scheme by FPGL to acquire neighboring

systems,

.evidence of actual offers and purchases are obviously relevarit.

See Section 2, P.

6, n. 1,'su ra 50

agreement with systems to whom it has already made formal com-mitments surely provides a basis for the inference that uti-lities without such commitments can expect FPGL to continue to deny them access to nuclear. facilities.

Both Staff (Answer, p.

6) and FPGL (FPGL Response, p..

38) state that FPGL's alleged failure to adhere to li-cense conditions can be addressed after issuance of the con-struction permit.

This position is inconsistent, with FPGL's insistence that all antitrust, issues surrounding its plants be resolved as soon as possible.

Both'Staff (Answer, p.

6) and FPGL (FPGL Response,'.

43) brush off Orla'ndo's claim that FPGL misled the City into inaction 'at a time when intervention in Flori'd'aower

'6 Light Co.

(St. Lucie Plant, Unit No. 2),

NRC Docket No, 50-389A, would have been timely (by promising the City a share of FPGL's proposed South Dade project) by stating that Orlando will have an opportunity to dispute such claims in the course of the antitrust hearings set in Florida Power 6 Li ht Co.

(South Da'de Plant),

NRC Docket, No. P-636-A.

FP&L and Staff

, ignore-the fact that Orlando failed to intervene because it was promised a negotiated share of the South Dade project, not because it would be permitted.to litigate for a share of South Dade.

Orlando's situation is further illustrative of FPGL's conduct and the reasons for Orlando's failure.to intervene timely.

51

Finally, FPsL insists (FPGL Response, p., '4) that Florida Cities can no longer raise New Smyrna Beach's price squeeze allegations.

However, the fact that New Smyrna Beach was forced to forego a price squee'z'e claim at the Federal Power Commission in exchange for-necessary interconnection rights can have no effect on the Nuclear Regulatory Commission "s authority and responsibility'o act on-a price squeeze created or maintained by activities under an NRC license particularly under an agreement that explicitly leaves open resolution of claims before the NRC.

New Smyrna Beach's agreement to not raise the issue at the Federal Power Commission is not an agree-ment releasing FPGL from all claims concerning price squeeze.

For the reasons stated

above, the intervening events described in Florida Cities'oint Petition are significant.

and relevant..

Xn their totality, those events and conditions constitute "good cause" for granting Florida Cities'oint Pe-tition.

H.

An Evaluation of the Four Factors. in Section 2.714(a) of the Commission' Rules of Practice. Demonstrates the Propriety of Granting Xntervention

'ven if a party seeking intervention has not shown good cause for delay, the Board may grant intervention based upon its evaluation of the four factors listed in Section 2.,714(a) of the Commission's Rules and Regulations." 1/

The Board must 52

weigh those factors even when the petitioner's piocrastination is entirely unjustified.'/

Florida Cities contend that the Board, within its broad discretion, may properly find that in-tervention is justified because good cause for. untimeliness has been

shown, because

'the four factors weigh in favor of granting intervention and ordering a hearing, or because the intervening events cited by Florida Cities, together with those four factors, make it proper to grant the requested relief.

The consideration of the four factors listed in Section 2.714(a) is, in essence, an "inquiry into the purposes which

'ay be served, or hindered, by accepting an untimely petition."

h ated with an awareness of the Commission's responsibilities under the Act both as to'antitrust issues and the statutory interests which the petitioner claims will be jeopardized should intervention be denied, as well as of the public in-terest in the timely and orderly conduct of the agency's pro-ceedings.

2/

Thus, the Commission has held that a tardy 2/'he public interest in the timely and order'ly conduct of h

at 275) will not be jeopardized by granting Florida Cite.es'equest.

As discussed

above, intervention will not serve to

'omplicate or confuse an imminent or 'ongoing proceeding.

The Board can expedite an antitrust hearing without causing disorder.

Moreover, delays in resolution of the safety issues surrounding St. Lucie Unit No.

2 will apparently enable the Board to hold an antitrust hearing (perhaps consolidated with the South Dade hearing) that will not delay FP&L's construction permit.

As discussed Below, Florida Cities do not seek to delay issuance of the permit until their antitrust claims have been resolved.

53

V petitioner need not "win" on each "'of the four-factors in order to obtain interventiop and a hearing.'l The first factor set out in Section 2e714(a) is "The availability of other means whereby the petitioner's interest will be protected."

Staff (Answer, p.

8) and FPGL (FPGL Response,.

pp.

49-50) conclude that the availability of other fora in which Florida Cities may raise antitrust issues weighs against granting intervention here.

Florida Cities disagree.

Any consideration of "other means" must compare the effectiveness and speed of the alternati.ves.

The Appea'l Board made that clear in the recent NorthA'n'na decision'/,

in which it noted that the proceeding in which the petitioner wished to participate provided "the best, if not the only, effective means available" to protect the interests

asserted, As the appellate court noted in ~Conwa 3/,: a..small utility system raising antitrust claims is especially in need of quick resolution of its contentions.

It is obvious that fora other than the Commission will not assure Florida Cities the quickest relief available, nor the most comprehensive.

Moreover, it

'~l' evaluation of, the second factor (development of a sound record) was "i.nconclusive."

'/

~Su ra, (ALAB-342; 31 August 1976),

at. 18.

3/

~Su ra, 510 F;2d at 1272.

54

is this Commission that is res'ponsible for nuclear licensing.

Indeed, were Florida Cities to have sought relief elsewhere FPaL could have been expected to claim "primary jurisdiction" in the Nuclear Regulatory Commission..The existence of such potential means to raise antitrust issues should not disad-vantage Florida Cities', whereas the fact that the Commission offers the most effective forum for raising issues central to the Atomic Energy Act should weigh in Florida Cities'avor.

1/

Staff argues that Florida Cities'pportunity to raise antitrust claims in the South Dade proceedings obviates any need for a hearing concerning FPGL's application for a con-struction permit. for St. Lucie Unit No.

2..

Zf Florida Cities'equests for intervention in St. Lucie and for other relief are to be denied because of the availability of the South Dade forum, they must have the assurance that access to 1/

Note. that this case is not al all comparable to the was actually.a party 'in an ongoing proceeding before a state siting board which was exploring, in depth essentially all of the same issues and had authority to withhold site approval as requested by the petitioner.

And see Matter 'of H'ous't'onight6 P'ower 'Co.('South Texas Pro 'ec'O'," Un'x'ts No'.3:'an'd No'.'

NRC Docket No.s 50-498A and 50-499A, License.ng Board (9 Sept.

1976), where the pe-titioner was actually litigating many of its antitrust claims in various proceedings 'before the Federal Power Commission, Securities and Exchange Commission and a U.S. District Court.

The Board,

however, noted (at p.

6) that "No other means are available in this proceeding to resolve antitrust questions, since no issue of this kind has been raised before."

Florida Cities are in a more favorable position, than the S'o'uth'e'xas petitioner, since they are not litigating their ant>.trust claims in other fora and they also have no other means in the instant proceeding to have those claims heard.

55

the South Dade and other existing units will.be determined under the doctrine expounded in'u uesne L'i h't; Co'.,'{Beaver Va'll'e Power 'St'at'io'n,'ni't'. No'. '2), ALAB-208, 7 AEC 959, 969 (l974), on the same 'terms and under the same legal standards as would have been allowable had intervention been" granted.

Florida Cities must be assured that, participation in the less costly plants will not be precluded, assuming entitlement thereto is shown on the merits, because the Board claims no right to attach conditions relating to the older plants to a license issued for the South Dade units.

For these

reasons, as discussed below, Florida Cities request that a consolidated antitrust hearing be held.

Only then can there be no doubt that an order in Cities'avor may. properly reach any or all of FPGL's nuclear plants.

Without such assurances, relief available in the South Dade proceeding is not necessarily ade-quate l/

and it would be unfair to conclude, based on the availability of the South Dade proceeding, that other means exist whereby Florida Cities'nterests will be protected.

Moreover, should 0he Board rule against. Florida, Cities on the l/

As Staff notes (Answer, p. 8), Florida Cities must also be assured that Key West and St. Cloud will be allowed to intervene in the South Dade proceeding, so that the interests raised in the instant petition may be protected.

grounds that, theie 'exists.,:an:.. adequate remedy in the South Dade 'procee'ding (or stay proceedings pending the outcome of litigation.there),

the Board should rule that, should Florida Cities prevail on the merits in the South'ade proceeding, the issues need not be retried in these dockets.

However, Florida Cities respectfully submit that the parallel nature of their claims here and,,in the.South Dade proceeding sug-gests granting intervention and consolidation to avoid possible subsequent procedural difficulties, rather than dismissal.

The second and third factors listed in Section 2.714(a) are:

"(2)

The extent to which the petitioner's participa-tion may reasonably be expected to assist in develop-ing a sound record.

"(3)

The extent to which petitioner's interest will be represented by-existing parties."

Staff does not discuss these factors.

FPSL insists (FP&L

Response, p.

51) that the second and third factors "obviously contemplate the existence of an ongoing proceeding and which therefore, in the absence of such a proceeding, are irrele-vant or should be given no weight."

This is an example of FPGL's propensity to interpret the xules, and the Act, so as to give the narrowest scope to the Commission's authority and the rights of aggrieved persons.

FPaL is plainly wrong

)

in its assertion.

In a case where the Attorney General had not recommended a hearing and no requests for one had been 57

made until shortly. after. the allotted time period had elapsed, the Board would consider whe'ther the petitioner's could help develop a record that would assist the 'Board-in carrying out its antitrust, responsibilities and whether any or all of the petitioners would be represented'adequately by existing par-ties-or other intervener's in any such hearing,'/'hese same considerations should be made 'in.this case.

Florida Cities obviously have the interest and knowledge to significantly contribute to determining whether a situation inconsistent with the antitrust laws might be created or main-tained by activities under a license granted to FP&L.

Andi confronted with the fact of a vastly changed fuels market and the allegations of continued anticompetitive practices by FPGL, the Commission and the Board have the responsibility to take another look at. the antitrust ramifications. of issuing an un-conditioned license for the construction of St. Lucie'nit No.

2 ~

FPGL claims (FPaL Response, p.

58, n.

97) that cases 1/

Se'e the S'outh Texas case,upra, at 5-6.

Although the'onstruction permit had already been issued and no hearing was contemplated (the operating license stage being "several years" away), the Licensing Board found that..the second. and third factors,'while somewhat awkward to apply, weighed in favor of'intervention.

Zt stated that, if there were to be an antitrust inquiry, petitioner's participation would be ne-cessary to develop a sound recoxd, and that it's interests would not be represented by existing parties, since none had raised antitrust issues.

Certainly both of these points also favor Florida Cities'equest.

58

establishing the requirement that. agencies make decisions based upon "-informed judgment" and.- a "full.record" are irre-levant.'/

Given the'acts, FPsL would prefer that the Commission act without benefit of such a record, but neither FPGL's desires nor mere administrative convenience can out-weigh the public inter'est, as enunciated by Congress, in the enhancement of'ompetition in the field of nuclear generated power.'n Scenic Hudson,2/,

the court did not-confine itself to the narrow context of the particular problem facing it when it asserted that the agency must act on a complete re-cord, since "the right of the public must receive active and affirmative protection at the hand of

.." an agency which claims to represent, the public interest.

354 F,2d.at 620; If the Board refuses to

. reopen the antitrust issues in the St. Lucie Unit No.- 2 case, it will be reduced to the role of a mere ".

. umpire blandly calling balls and strikes."'bid.

More aptly, the Board will be acting the part of a referee ignoring punches landed below the belt or a policeman watching 1/

Xt is. hard to see how FPaL can. characterize a case such as

. Udal'1 -.v..'.:PPC,. 387. U,.S:..428 (l967):;

as irrelevant.

The statute.involved: required the.. Ped.eral. Power Commission to re-fer a.hydroelectric project;.to Congress, when, in the agency's judgment> the proj'ect could be best developed. by the Federal government.

The Commission, finding insufficient evidence of feder'al superiority, issu'ed a license.to.-.the applicant.

The Secretary of-.Interior sought to reopen the-hearing to-present evidence of federal superiority in development of the project.

The FPC refused to reopen.

Embhasi'zing the agency's obligation to make a decision based on an informed 'judgment," the Supreme Court ordered the FPC-to reopen the hearing on the neglected issue of federal developm'ent 2/

Scenic Hudson Preservation Conference v.

ZPC,~su ra.

59

a, mugging from his squad car.

Because Florida Cities can help to develop a sound record on a matter vital to the'oard. in its antitrust role, the second factor weighs heavily in their favor; Since Florida Cites are obviously not represented by other parties to this case, the third factor also weighs heavily in Florida Cities'avor.

The fourth factor listed in Section 2.714(a) is "The extent to which the petitioner's participation vill broaden the issues or delay the proceeding."

FPaL contends that this is the factor weighing most heavily against Florida Cities'etition.

Florida Cities strongly disagree.

Even where thorough consideration of a matter will prolong a proceeding, intervention should be granted if the significance of the "late" 'issue outweighs the delay; the administrative response to such a situation should be to resolve the issue as rapidly as may safely be done.

1/

But where instituting a hearing will not delay the issuance of a construction permit, the public interests protected by the fourth-factor are not jeopardized..

This is such a case.

The fourth factor was found to weigh in favor-of the petitioner in the recent;'S'o'u'th'exas case,, 2/.

There a

1/ 'ee North An'na,'su ra, at 21 (Decision of 31 August 1976).

2/

~Su ra, at 5-6 of Order 60

construction permit had already been issued, and it would be several years until the operating license stage; so the Licensing Board found tha't there 'would be 'no delay, even though the issues would obviously be broadened..

The 'ques'tion of any cloud being'ast on the construction permit was obvi-

~

ated, said the Board, by expediting the "operating license proceeding

. for the express purpose of facilitating a prompt determination of antitrust matters."outh'.T'exas,

~au ra, (Order, at

6).

In the present

case, although the construction permit has. not yet been issued, Florida Cities have expressly stated their position (Joint.Petition, p.. 14) that construction should not be delayed because of a St. Lucie: Unit No.. 2 antitrust hearing.

FPGL misconstrues Florida Cities position in stating (FPsL Response, pp.

52-53) that they would block con-struction unless interim relief were granted.

Florida Cities believe that interim relief preventing the use of existing nuclear generation as part of an anticompetitive scheme is warranted, and will request such relicf should the Board grant them intervention.

But, their agreement not to delay construction pending the resolution of thei;r antitrust claims p

h relief.

This should allay FPGL's fears since its legitimate concern that construction not be delayed would be thus

satisfied.

FPGL cannot reasonably expect more so long as 61

good faith antitrust claims against it are outstanding.

FPGL cannot ask that its possession and use of nuclear power be immune. from the requirements of the 'antitrust laws.

Thus, Florida Cities will not seek to block construction,

but, will continue to press the'i'r,legitimate antitrust claims against FPGL.

This position means that a comprehensive antitrust hearing can be held by the Board without delaying construc-tion, and the fourth factor does not weigh against granting Florida Cities'etition.

1/

As was shown in Sou'th Texas,

~su ra, the proper way to treat a utility's iear that a "cloud" is being bast over its assets, is to expedite the antitrust hearing so as to facilitate a speedy resolution of the matters in dispute..

The fourth factor therefore actually weighs in favor of intervention and a hearing, since such action will hasten the resolution of all antitrust claims of Florida Cities against FPGL.

Zn addition to points rais'ed,above concerning FPGL's 1/ lt should also be noted that recent environmental

impact, cases make it quite probable that the antitrust hearing could be held before other proceedings involved in issuance of FPGL's construction permit are completed.

See'atur'a'1'e's'o'ur'ce's'e-fens'e'oun'cil v.

NRC, Case No.

74-1385 (D.C.Cz.r.,

21 July 1976).

This makes FPGL's argument as to delay even less persuasive as..a reason to deny,"an antitrust hearing.

See "Legal Fallout Lethal:

Recent Court Decisions Threaten Nuclear Power." arron's, p.

3 (4 October 1976).

62

vague contentions that the ver'y filing og Florida Cities'etition somehow injures its financial, position (FP&L Responseg

p. 3}, it should be noted that FP&L has in no way specified the injury which has or might be caused by the ever-present.

cloud allegedly emanating, from Florida Cities'oint Petition.

Florida Cities take FP&L's accusations quite seriously, as evidenced in their 24 September 1976 Motion for Leave to Reply.'-and Request for Clarification, where they state (p. 6):

FP&L cites no specific facts or evidence to support its contentions, making it difficult for Cities to respond.

Prompt clarification would aid Cities in replying to FP&L's Response and would as-sist the Board in evaluating FP&L's allegations, "Petitioners are prepared, at the threshold of this

case, to enter into all appropriate stipulations, procedural and substantive, necessary to eliminate*

any real adverse impact on FP &L.

Accordingly, Pe-titioners hereby request a statement of particulars from FP&L concerning this matter, so that the parties and Commission Staff can take prompt steps.

Xf.FP&L takes the view that nothing would suffice except with-drawal of Cities'etition to Xntervene, it should also state its views as to how the Commission can pre-serve Cities'ight to make their instant good faith argument in favor of intervention and antitrust hearings without substantially affecting FP&L's ability to fi-'ance on favorable terms."

FP&L has not responded to Florida Cities'equest for clarification.

63

I, Should. the Commission Determine for any Reason Viot to Grant any Part of the Relief, Requested

,in Florida Cities'etition, it Would Be Approp-riate for It to Refer the Antitrust'laims Against FP&L to the Federal Trade Commission for Further Investigation Cities believe that the Commission and. the Board have ample power to grant intervention and a hearing in the St.. Lucie 2

construction permit proceedings and to initiate antitrust hearings to the existing operating licenses held by FPEL.

Cities further believe that the Commission's antitrust. re-sponsibilities make it incumbent upon it to grant the relief requested.

If, however, for any reason, the Commission or the Board conclude that any part of the relief requested would be inappropriate, Cities feel that the. significant, antitrust claims against FP&L should be referred by the Commission to the Federal. Trade Commission.

FPGL seems to imply (Response pp.

60-61) that Florida Cities are forum shopping in suggesting that, should the Board find a want of authority, it should seek the advice-of the FTC.

In view of the latter's jurisdiction under the Federal Trade Commission Act,. cited in 5 105a, 42 U.S.C.

2135a, Florida Cities can find no basis for such charges.

Florida Cities merely contend that the serious.nature of FPGL's actions warrant responsible governmental response.

64

FPGL correctly states that the Florida Cities have sought an investigation of FPGL's conduct.

This was done by a letter from Osee R. Fagan, Esq., to Honorable Edward H. Levi dated July 15, 1976. 1/

Florida Cities assume the matter is still under investigation, but have no direct knowledge of the status of it. 2/

However, especially in light of "advice letters" suggesting that an anticompetitive situation may exist, there appears no basis for concluding that the Department of Justice has given FPGL a clean bill chealth.

Moreover, Florida Cities can only surmise that the Department would be most sur-prised if any. time it. did not take action-on a particular matter, this created an inference of no law violation.

At pages 59-61 of its Response, FPGL mainfests disdain for Cities'uggestion that the Commission refer the matter to the FTC.

But Cities submit that such referral would be quite appropriate.

When an agency has been presented with claims of injury caused by one of its licensees or an applicant for a grant of the public domain, and that injury is to interests protected by the 1/

Florida Catches will supply a copy of the letter to the Board and parties, if requested.

2 /

FPGL states (Response,'p..

60)

"FMUA officials have made public statements Florida Cities do not know what statements are referred to;.context of such statements, if:madel'r the basis for the underlying conclusion.

65

gency's organic act, the claimant should expect administrative action, 'if its claims are meritorious.

When, however, the agency concludes (for reasons other than its assessment of the merits) that the requested relief would be inappropriate, it should nonetheless promote the policies of its organic act.

Referral to another agency with the authority to investigate the claims made and give appropriate relief is one such alternative.

Referral in the instance of the present case is especially fitting.

Congress.

has already signalled the propriety of the Commission "lending its prestige"1/

to significant claims of anticompetitive activities relating to nuclear power by mandating referrals to the Attorney General, in Section 105(b) of the Act, whenever it appears to the Commission that information in its possession demonstrates a violation of, or the tendency to violate, the relevant antitrust laws.

The Commission has made such a referral to the Attorney General concerning the activities of FP&L.

Only seven months ago, in its Advice Letter of March 2, 1976, the Just'e Department made it clear that it had serious doubts about the nature and consequences of FP&L's activities.

Rather than recommend an antitrust hearing at that time, it advised the Commission to consider subsequent events before deciding on whether to hold an antitrust hearing in the South Dade proceedings.

1 /

See FP&L'.s Response, pp.

59-60.

66

~

~

~

Thus, the Justice Department has recently reviewed P

many of the claims made by'Cities and had grave doubts about the propriety of FP&L's activities.

The Department apparently be-lieved that the Commission should use its discretion in deciding upon further investigation of FPGL's anticompetitive practices.

Returning the whole matter to the Justice Department,

then, does not seem to be the best alternative, if the Commission would like more guidance or feels that action by the Commission itself would be inappropriate.

But, an "outside consultation" with the Federal Trade Commission seems optimal:

1)

The FTC has recently, in accord with express congressional

concern, shown much interest in the status of competition within the various segments of the nation's energy industry.l/

I 2)

The Atomic Energy Act2/ and its legislative history 3/ plainly show that Congress meant the two Commissions to be concerned with the same types of anticompetitive and unfair practices.

3)

No other agency.

has such comprehensive authority to enforce the antitrust laws mentioned in Section 105(a) of the Act. 4/ Along with NRC, it has the exclusive authority to enforce 1

This concern was emphasized by Owen Johnson, Director, Bureau of Competition, Federal Trade Commission, in unpublished remarks

. to the Federal Bar Association's 1976 Energy Law Conference, September 28, 1976.

2/

See Section 105(a) of the Act.

3/

See Joint CommitteeRe ort,

~eu ra, at 14.

4/

Those acts z.nclude the Federal Trade Commission Act, 15 U.S.C.

A(41-51; The Clayton Act, 15 U.S.C.

ggl2-27, and the Sherman Act, 15 U.S.C.

551-7.

67

Section 5 of the Federal Trade Commission Act. 1/

(This means that it may police'unfair methods of competition" as well as practices which cause substantial injury to consumers or competitors, even when such activities fall without the traditional antitrust laws overseen by the Justice Department.)

It may enforce Sections 2,

3, 7 and 8 of the Clayton Act, pursuant to Section.ll(a) of that Act.

And it, may attack violations of the 'Sherman Act through its enforcement. of Section 5 of the FTCA, as well as fillgaps in I

both the Sherman and Clayton Acts. 2/

If, therefore, the Commission feels that there are some gaps in its own organic act which make direct action on Cities'equests inappropriate, it is proper indeed to refer Cities'laims to the Federal Trade Commission, an agency with complementary duties to play an active, prophylactic role in preventing antitrust violations and unfair, anticompetitive practices.'/

1f '~o1'1'owa v.; Bz'i'st'ol Me ers'" Cps.,

485 9.2d 986.(D.C.,Ciz,,

1973).

2/ 'r'a'n'd'n'i'on'o. v.'TC, 300 F,2d,92.

(2d.Cir., 1962),

3/

To the 'extent that FPGL implies the 'Justice 'Department should also review the" facts, Florida Cities agree.,

Should the Board determine a referral to that

agency, as well as the FTC is appropriate and warranted, Florida Cities'ould fully cooperate.

This agency, of course, has ultimate 'decisional authority.

68

IV.

A CONSOLIDATED HEARING INVOLVING ALL.OF, FLORIDA CITIES'NTITRUST CLAIMS WOULD BEST PROVXDE, THE EXPEDITED RESOLUTION OF ANTITRUST ISSUES SOUGHT BY, BOTH FLORIDA CITIES AND FLORIDA POWER 6 LIGHT COMPANY If the Commission concludes that Cities are entitled to an antitrust hearing and inter'vention in the St. Lucie Unit No.

2 construction permit proceedings and/or a proceeding to modify, suspend or revoke FP&L'.s existing licenses, it should order'.the. consolidation of such hearings with the upcoming antitrust hearing on FPGL's South Dade construction permit.

Such consolidation will provide the "orderly, procedure" sought by the Supreme Court in the California case.l/

For it would avoid the waste of time and money that would be caused by repetitious hearings on the same basic legal and factual issues..

And, as to the construction permit, would avoid the "unscrambling" 2/ that would be required if Cities prevail on the merits after the permit is issued, rather than in the same proceeding which issues the permit.

Section 2.402(b) allows for consolidation of hearings

. to consider "common issues" when such action would be "conducive to the proper dispatch of [the Commission's]

business and to the ends of justice."

In the South Texas

case, 3/ the Staff feared that a

post-issuance hearing into a licensee's anticompetitive practices

, could cast a "cloud" on its construction permit.

The Board responded that the best way to allay such fears is to expedite the desired antitrust hearing.

4/

The same reasoning applies to investigations 1

California v.

FPC, 369 U. S.

482 (1962).

2/ Ibid, at 488.

3/

~Su ra, at 6.

4/ Ibid.

69

of practices under existing operating licenses.

Thus, expedition through consolidation with the upcoming South Dade proceedings would best allay Staff's and FPGL's "cloud" fears.

In fact, since the question of system-wide relief will be considered in the South Dade proceeding (as recognized by the Staff at page 6 of its Answer and by FP&L at page 51 of its Response),

the legal issues dealt with C

~

W in that hearing will not be significantly broadened by con-solidation with a hearing under Section 2.202 of the Commission's Rules of Practice to modify the existing licenses; and the E

Commission would be able to dissipate any cloud allegedly cast upon the existing licenses in the South Dade proceedings immediately by resolving all claims in one consolidated proceeding.

Cities also seek consolidation as a self-protection measure.

Only consolidation will remove any doubts that Cities will be able to receive all the antitrust relief to'which it may be entitled after only one comprehensive hearing.

Otherwise, Cities face the possibility of having to litigate identical legal and factual issues in multiple fora and over a prolonged period of time.

Since consolidation would fulfillthe desire of FPGL, Cities and the Staff for the quickest possible resolution of Cities'ntitrust claims, and since the Commission has the power to order such consolidation in the name of speed and justice, Cities respectfully request that such consolida-tion be ordered.

70

CONCLUSXON For the foxegoing reasons, Florida, Cities'etition of 6 August 1976 should be granted and these 'dockets should be consolidated with Fl'or'ida: Pow'eri'ght'o'.

'(S'outh'.D'ade Pl'a'n't),

NRC Docket No.'P-636-A.

Respectfully submitted, Robert A. Jablon Attorney for the Fort Pierce Utilities Authority of the City of Fort 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, and the Cities of Alachua.,'Bartow,'. Bushnell, Chattahoochee, Daytona Beach, Fort Meade, Key

West, Leesburg, Mount Dora, Newberry,, Quincy, St.

Cloud, Tallahassee and Williston, Florida, and the Florida Municipal Utilities Association Law Offices of:

Spiegel 6 McDiarmid 2600 Virginia Avenue, N.W.

Washington, D.C.

20037 202-333-4500 15 October 1976 71

ATTACHMENT "Reply of.Florida Cities to Responses of Florida Power and Light. Company and Nuclear Regulatory Commission Staff" Svrl., Sept.

S, 191d, Vero Beach, Fle., PRESS-JOURNAL

~ ~

~~~L "'.

FlORIDA POWER 4 LIGHTCOMPANY

~ opeo. letter to everyVeroBeaIch resident &oro.Fio~cI Pov~m &I.ightCo~partysIRaIph. Mu./honan.cI.

~

I

- ~

September 0, 1976 4

Dear Vero Beach Resident:

On September 3, 1976, Florida Power &. Light Company

-i~ informed the Public Service Commission ofour intention to file For rate relief. When you first heard or read that Florida Power &.LightCom-pany was asking forrate relief, two questions probably popped right into your mind:

What willthis do to my electric billifwe vote to sell our electric

'ystem to Florida Power'. Light Company?

,Why does this come ncaa. at the last minute, before the referendum?

ld like to ease your mind on both these points'with quick

.: " First,'there willbc noeffecton your electric billat all forquitca

'hile.'ltgenerally takes months forthe Public Service Commission to study and act on a rate request. We tvillbe well into 1977 before a final

~ decision is made.

Meanwhile, if'youapprove the sale inTuesdays vote and it is

'. concluded in the near future, yoti willbegin enjoying Florida Power &. "

LightCompanys present rates-which are, as you know, considerably lower than what you now pay.

Ifourrate request is eventually granted by the Public Service Commission, the electric billsofall Rorida Power &.Lightcustomers willrise.'But you urill'stillt,ay significantly k'ss when Florida Power &.

LightCompany provides you electricservice than ifVcro Beach con-tinued to operate the electric system.

As for the timing: Friday, September 3, was the earliest possible day wc could prepare all the details and paperwork forthe Public Service Commission. 1n fact, ive didn't expect to be ready until the cnd of

~

~ September.

We want'edyou to have all the facts before you vote, soa lotof:

'eople at Florida Power &.LightCompany worked overtime to speed

". thingsup. Getting the ncwsa fcwdaysbcforc thc vote may notbe ideal...

but itsure beats getting the news ajier the vote... '

~ 'ow, ld like to give you more ofthe details because you'e en-'

. titled to a full, frank explanation. To give you an idea hoe the vote and" our rate request might affect your electric biHs, here are some figures based on'a residential customer in Vcro B ach who uses IKOkilowatt hours per month. First, we m'ade a comparison using the average monthy':

bills this customer wo'uld have paid over the firsteight months of 1976." ',"

-. AZ'RESE>t "TKE32

'..VERO BEACH, ',. FLORIDAPOPOVER &.LIGHT'

"

" - $47.58

$38.<0

'ero Beach rates are 24% higher than Florida Power &.Light. -'-.

'Company.

Nowsuppose during 1977 the Public Service Commission approves Florida Power &.LightCompanys request for rate reliefin full.

'ompare the average billbased on that with what rhis same customer would pay ifVero Beach continued to operate the electricsystem. To

~ make this comparison realistic', we must add to the Vero Beach rate the 12.7% increase which its accounting firm; Ernst &.Ernst, informed the

'itywould be necessary:

AFTER RAZZINCREASES VERO BEACH FLORIDAPOPOVER &.LIGHT

~ '53.60.,'.

Q6.60 This still indicates Veto Beach rates to be 15% higher than, Florida Power &.Light Company.

A?Ithese figure's include tocat utitig taxes, filladjustment and franchise fees.

We expect to have a new nuclear generating unit at St. Lucie in service in the near future. This should bring annual fuel savings of more than $ 1CO millionthat willbe passed directly to our customers through a reduction in the fueladjustment, which has been reflected above.

", So there you have it: everi withFloridaPower &.LightCom-panys fullrate reliefrequest approved, you willstill realize a considerable saving.

Whydoes'all this come just now, withthe referendum only a fewdays away? Allthrough the negotiations withVero Beach we have been completely Frank about the possibility ot;a rate increase:

We pointed out that Florida Power &.LightCompany faces the same tremendous cost pressures that are squeezing every electric utilityin Florida. Florida Power &.LightCompany is paying the inflated costs of 1976 wiCh income from a 1974 rate structure.

Florida Power &.LightCompany rates have rraditionally been among the lowest in Florida. We are confident that in the long run, when the other Florida electnc utilities adjust to meet rising costs, you'l find.

~ Ro'rida Power &.LightCompany rates near the bottom ofrhe list.

lts true that we didn't suddenly decide on the morning oF September 3 to ask for r'ate relief. Allyear we've said publicly that we were seriously concerned about rising costs and the possibility ofa rate

'equest has often been considered.

'hen we couldn't postpone the inevitable any longer, westarted.

, preparing the facts and figures we need to support our request; lts a big

.. and complicated job and, as lsaid before, it looked like we couldn't be

-'eady until the end ofSeptember.

This worried me a lot because 1 knew you'r referendum was

'r toming on September 7.

1 asked our people to really put the pressure on-.

>" ~ to worknights and weekends ifnecessary to get our request to the Pub!ic,

",. Service Commission readybefore Septe'mber 7 They did a grear job. '

Withina few minutes after we filed our request with the Public Service

~l,'Commission, 1 was able to pass the information on to y'our Cityofficials

and your local news media.

i!..',.

< ": Tosum itall up, we did everything we could togive you the

- heiv's before the'referendum.

Even ifFlorida Power &.Lights fullrequest

>. is granted, you'l still pay less for Rorida Power &.Lightservice than l'ou'd pay ifVero Beach continued to operate the electric system..

~ %e sincerely believe the proposed sale willbe a good thing-

< good forVero Beach electric customers, and good forthe Cityitself; lf'it'is

~ 'approved, we pledge to deliver you reliable electric service at the lowest

'; possible'cost. We hope you willgive us the opportunity to keep this promise.

~ '...

s: ~:.

~

~'incerely,,

. FLOR1DA POWER &.LfGHTCOMPANY

~

~

II R.G. Mulholland Senior Vice President

~ ~

I I

~

~

Thfs m<<sssrc was ps'or bs (hc scockholdcrs of Racists rower 6<<uyhc Company.

CERTIFICATE OF SERVICE I hereby certify that I have this day caused the foregoing Reply of Florida Cities to Responses of Florida Power and Light Company and Nuclear Regulatory Commission Staff to be served upon the following persons:

Ivan W. Smith, Esquire

Chairman, Atomic Safety and Licensing Board: Panel Nuclear Regulatory Commission Washington, D.C.

20555 John M. Frysiak,, Esquire Atomic Safety and, Licensing Board Panel Nuclear Regulatory Commission Washington, D.C.

20555 Daniel M. Head, Esquire Atomic Safety and Licensing Board Panel Nuclear Regulatory Commission Washington, D.C.

20555 Tracy Danese, Esquire Vice President for Public Affairs Florida Power 6 Light Company P.O., Box 013100 Miami, Florida 33101 4

J.

A. Bouknight, Jr., Esquire Lowenstein,

Newman, Reis Axelrad 1025 Connecticut Avenue, N.W, Washington, D.C.

20036 John E.'. Mathews, Jr., Esquire

Mathews, Osborne,

Ehrlich, McNatt, Gobelman 6 Cobb 1500 A'merican Heritage Life Building Jacksonville, Florida 32202 Lee Scott Dewey, Esquire Office of Executive Legal Director Nuclear'egulatory Commission Washington, D.C.

20555 Chief, Docketing and Service Section

~ Office of the Secretary Nuclear Regulatory Commission

~ Washington, D.C.

20555 David.A. Leckie,,Esquire Antitrust Division Department of Jus tice 1101 Pennsylvania

Avenue, N.W.

Washington, D.C.

20530 Dated at. Washington, D.C., this 15th "day of October; 1976.

Robert A. Jablon

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