ML19254D740
| ML19254D740 | |
| Person / Time | |
|---|---|
| Site: | Perry, Davis Besse  |
| Issue date: | 10/22/1979 |
| From: | Olds D, Rau L DUQUESNE LIGHT CO., REED, SMITH, SHAW & MCCLAY |
| To: | NRC COMMISSION (OCM) |
| References | |
| NUDOCS 7910300035 | |
| Download: ML19254D740 (13) | |
Text
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d sp-g1g@y (2TI'IED STATES OF N4 ERICA d
NEX22AR FEUINICRY O'M4ISSION 81 g@h c
S Before the Cennission T
In the Matter of
)
)
DIE CIEVEIAND ELECIRIC IIICNINATING
)
Docket Nos. 50-440A COMPANY, et al.
)
50-441A (Perry Nuclear Power Plant,
)
Units 1 and 2)
)
)
'IEE 'ICIZID EDISCN CCMPANY, et al.
)
Docket Nos. 50-500A (Davis-Besse Nuclear Power Station,
)
50-501A Units 2 and 3)
)
PErITION OF w UMNE LIGHT CHPANY ECR REVIEW EUquesne Light Cmpany ("Duquesne"), pursuant to S2.786(b) of the Rules of Practice of the Nuclear Regulatory Comission,10 C.F.R.
S'2.786(b) (1979), hereby petitions the Cmmission for review of a decision of the Atoinic Safety and Licensirg A@eal Board ("A@eal Board") dated Septecber 6,1979 (AIAB-560).
SIM4ARY OF 'IEE DECISION AND PERTDETr MATIERS PAISED BEEERE APPEAL BCARD
'Ihe proceeding below was a consolidated antitrust review held pursuant to S105(c)V of the Aternic Energy Act in connection with applications filed jointly by five utility companies, including Dtqmsne, y
Cnder S105 (c) (5), 42 U.S.C.
S2135 (c) (5), the Comission is to detecnine whether the activities under a lice.5c to construct or operate a nuclear plant will " create or maintain a situation inconsistent with the antitrust laws."
Under $105 (c) (6), 42 U.S.C.
52135 (c) (6),
the Comission may impose conditions on such licenses if " inconsistent situations" are found.
.nq 791030oo-3 7
. to construct four nuclear generating stations in northern Ohio.M mese five utility ccx::panies have separate retail electric service areas in western Pennsylvania 3/ and northern Chio.
mey participate in a five-ccn:pany power pool known as CAPCO.
te A@eal Board's decision and order affirms, with'certain modification, an Atmic Safety and Licensirg Board decision finding that activities under license applications being reviewed by it "would create or maintain a situation inconsistent with the antitrust laws" and imposing conditions on each licensee intended to redress the situations so found.
te Appeal Board's decision was decided by only two board members, who, however, relied heavily on a draft opinion written by the third departed ment:er with which they conceded they disagreed in certain unspecified respects.3/
In defining the aplicable legal standards to be aglied, the Appeal Board rejected the contentions that it must apply a 'p2blic interest" s'hd as well as consider the specialized economic and pervasive regulatory context of the p2blic utility irdestry in assessing p2rported inconsistencies with the antitrust laws. Slip Opinion, 2f te preceedirgs with respect to these four units were consolidated with the application by two of the five ccupanies (but not Duquesne) for a license to operate Davis-Besse Nuclear PoWr Station, Unit No.1.
y Duquesne is based in Pittsburgh, Pa., ard provides electric service solely within Pemsylvania.
4/
No opportunity was given Duquesne and the other applicants to object to the decisional process used by the Appeal Board.
Se places where other issues asserted here were raised before the Board are indicated by agropriate refererres to appMcants' briefs and the Appeal Board's decision.
on 71A
~
/ I *t t
. passim. In doing so, it failed to take into account this special context in finding applicants possessed :ronopoly power and were guilty of unlawful :ronopolization.
- See, e.g., Slip Opinion at 166.
Similarly, despite findirg that power pools were in the public interest and that consensus requireaents for pool decision-makirs were necessary, it inferred from meetings conducted in this mode a " group boycott" based on the failure to include other utilities in CAPCD and on subsequent decisions purportedly to deny non-members access to CAPCO and to nuclear power to be generated by CAPCD.
It rejected business justifications for such decisions, ruling in part that " good motives" were irrelevant.
Slip Opinion at 302-03, 164-65, 167-73, 181-96, 197-203.
Finally, it found that Duquesne's actitivies under the licenses would " create or maintain" an inconsistent situation based on conduct which predated both the v.
U.S.,
410 U.S.
366 Suprera Court decision in Otter Tail Power Co.
(1973), and the enactnent of Section 105(c). Slip Cpinion at 165-66.
ERROR CCM4ITIED AND REASONS WEY OMISSICN SHDUID REVIDiS/
I.
The Appeal Board Applied Erroneous Iagal Standards and Ignored Important Factors.
1.
The "public interest" factor required to be considered in fashioning relief by 5105 (c) (6), as is true in other regulatory contexts, requires a weighing of the potential benefits of ccupetition against other regulatory obje<-tives. Even though the Ccamission itself
_5/
Since review by the Cemission is discretionary, Duquesne sets forth belcw only those issues which it believes peculiarly merit the Comission's attention.
By doing so, it dces not Lnterd to waive its right to obtain judicial review of any other errors which the Appeal Board cmmitted.
" 8 215
. does not have broad econanic regulatory authority over the p2blic utility industry, ccngress clearly did not contenplate that the Comission would ignore the broad "public interest" objectives of pervasive federal and state regulation of this industry in the licensing of nuclear facilities.
Be Appeal Board, therefore, clearly erred in concluding that it is merely an antitrust enforcement agency to whan the public interest is irrelevant.
Ca: pare Slip Cpinion at 30-40, 115-24, 297-300 with Applicants' Appeal Brief at 29-40, 254-92.
In particular, the Board gave no consideration to the extent to which Pennsylvania, in the furtherance of the public interest, had eliminated corpetition anong electric utility entities, including municipalities.
Instead, it imposed conditions designed to create carpetition that neither federal nor state agencies had intended would exist.
2.
Bere is an important need to define the appropriate standards.to be applied in assessin? whether antitrust principles have been or will be breached in cases such as this.
For exanple, can traditional Sherman Act S2 standards on monopolis:ation be applied to t'.2e electric public utili*.y industry without taking into account regulation rpecifically intended to limit the ability to exploit acnopoly powed/
6/
A case in point is the Appeal Board's finding that Duquesne refused to sell Pitcairn emergency power except under its "unreascr. ably" expensive Fate M.
Slip Opinion at 165-6).
Pitcairn could have had the reasonableness of this rate deter:nined by a neutral and objective ageref but did not do so.
Se Appeal Board, however, styled Duquesne's conduct an exercise of monopoly power and effectively gave the municipality the power to dictate ter=s and conditions in this kind of situation.
,an O
.! 3tD me Appeal Board did not consider this factor of pervasive regulation or the economic and technological factors that characterize this industry.
Its monopolization findings are simplistically premised on its findings of " dominance" in generation and transmission, without explanation and without regard for the econcraic and regulatory realities of the industry.
Similarly, it failed to consider the special circuns*ms of Duquesne, where Pennsylvania law so prevents cometition that Duquesne's allegedly "::enopolistic" corduct simply had no significant anticcr: peti-tive consegmnses.
Ccr:rcare Slip Opinion 164-66,
- 180, 195 with Applicants' AEpeal Brief at 40-71,83-102, 263-68; Applicants' Feply Brief at 22-56, 94-96; Applicants' Supplemental Brief at 20-33.
Given the special economics and techonologies of this industry, it is unlikely that an applicant will not possess such "dcminance" and, thus, under the hppeal Board's vit:y, on this. fact alone possess monopoly power.
It follows that g refusal to deal with a municipal or rural electric system would be ex=lusionary and unlawful monopolization.
Even in an unregulated industry, this is erroneous.
See, e.g., Berkev Photo Inc.,
v.
East:ran Kodak Co.,
F.2d 1979-1 Trade Cas. 162,718 (2d Cir.
1979).
Similarly, the Appeal Boa:d's findings that rentership in CAKD aM acx:ess to nuclear power were denied as a result of a g se unlawful group boycott also ignored the special context of this industry.
Indeed, even though the Board found that the focration of power pools is in the public interest and that the CAPCO voting procedures were necessary, it failed to recognize this legitimate purpose
'70
'/ 1 7 0
Ii m
for collective action in assessire the reasonableness and independence of membership and acx::ess decisions made by CM members.
See Associated Press v. United States, 326 U.S.
1 (1945); Gamco, Inc.
v.
Providence Fruit & Produce Building,194 F.2d 484 (1st Cir.), cert. denied, 344 U.S.
817 (1952).
In doing so, the Appeal Board apparently drew improper inferences of conspiratorial behavior frcan the fact of concededly necessary and proper meetings.
Further, although Duquesne's decision en these issues was made by it unilaterally for good business reasons, the Board ruled that " good motives" were irrelevant. Comoare Slip Cpinion at 164-65, 167-71, 196-202, 300-04 with Applicants' Appeal Brief at 102-24, 275-82.
Traditional antitrust analysis has always recognized the need to consider the specialized context of restrictive practices (Broadcast. btsic, Inc. v. CBS, U.S.
, 47 U.S.L.W. 4359 (April 17, 1979)), and regulation has been clearly recognized as a factor that affects mtitrust anal; is, U.S. v. Marine P2ncorocration, 418 U.S. 602 (1974). Se Appeal BoatI refused to consider either.
3.
Even assumirs arguendo that Duquesne's dealings in the only individual acts by 1966-68 with Pitcairn and Aspinwall Duquesne at issue - were evaluated under the appropriate standards, these dealings occurred prior to any reasonable notice to Duquesne that such behavior cculd be regarded as inconsistent with the antitrust laws.
Moreover, the ccnduct criticized by the Appeal Board was ter:nLuted well before this proceeding began and was never repeated. As a legal
" 8 218 proposition, such conduct cannot justify a findirg that activities urder the licenses "would create or maintain a situation inconsistent with the antitrust laws" as to Duquesne's ownership and use of the subject nucle '.r facilities.
Compare Slip Opinion at 164-66, 293-300 with Apolicants' Appeal Brief at 260-62; Applicants' Reply Brief at 94.
4.
ne AEpeal Board improperly failed to distinguish ancrq the ccupanies in the license conditions it imposed, despite Duquesne's urging to the contrary.
AEplicants' Appeal Brief at 61-63, 283-84.
Instead, it devised a blanket set of conditions which it imposed on all, regardless of the substantial differences in the situations it found as to each.
- See, e.g.,
its extensive treatment of refusals to wheel, territorial agreenents, and price squeezes, Slip Opinion at 125-38, 222-39, and 255 none of which pertained to Duquesne.
As a result, the Board subjected Duquesne to conditions intended to prevent conduct in which Duquesne never engaged.
Such indiscri;ainate imposition of conditions is arbitrary and an abuse of the Conmission's authority under
$105 (c) (6).
II. 2e Appeal Board Erred in Proceeding to a Decision Without the Full Participation of the Departed Member or a Replacenent.
5.
Section 2.787(a) of the Ccr. mission's Rules of Practice requires that an A; peal Board be "cceposed of three mercers" and does not set forth any provision as to a quorum,_7/ cle-t inferring participa-7/
Cf.10 C.F.R. 52.721(d) as to atcmic safety and licensing boards.
" 3 219 tion by all three aos rd menters in all Board activities.
meeover, the rules of practice provide for alterrates to be appointed to an Appeal Board, 10 C.F.R. 52.787 (a).
We statute apparently allows Appeal Board mmbers to be drawn from private life, 42 U.S.C. 52241(b). We Conmission further has not set forth detailed procedures to be followed if a member of an Appeal board is unavailable as it has in the case of the unavailability of a Licensirq Board member,10 C.F.R. 52.704(d).
In light of these rules and the atserce of any quorum provision, it is at best unclear whether it was proper for the remaining tw menters to decide the case before a replacement for Mr. Sharfman was appointed.
See Ayrshire Collieries Corp. v.
U.S.,
331 U.S.
132 (1947),
ruling that, in the context of three-judge courts, such corr!uct is reversible error.
See escecially, Butterworth v.
Dempsey, 229 F.
Supp.
754, 757 n.*
(D. Conn. 1964), where a replacement was appointed to a three-judge court even though the deceased judge for whcm the replacement had been appointed had drafted an epinion before his death.
Bis is a matter in which the Camission's clarification is needed.
6.
We " ultimate" factual and legal conclusions of the departed Board memoer, to which the remaining memoers of the Appeal Board limited their agreemnt, were necessarily premised on subsidiary findings, with which the other members of the Board admitted they disagreed in scme unspecified way.
Slip Opinion at 3.
21s kind of incorporation, without give-and-take discussion with the author of the draft epinion, is fundarentally at odds with the Administrative Procedure Act's requirement for reascned decision making: there is no assurance that all i:q:ortant
.'"8 220 factors were given adequate consideration, and there is certainly no adequate articulation of the remainig mmbers' findings correrning such factors where it was correded that they disagreed in unspecified ways with an opinion on which they so heavily relied.
Such conduct is error.
See United States Lines Inc.
v.
Federal Maritime Ccmnission, 584 F.2d 519 (D.C. Cir.1978).
7.
mis case reaches the Ccmuission at a time in its ad=inistration of Section 105(c) when the Ocmission's boards have lad a reasonable amount of exposure to its problem, arx3 when several other proceedirgs are pending which are likely to benefit from the resolution of the i=portant questions presented here. Bis is the first oppcrtunity for the Comission to review a ecznpleted antitrust proceeding for this purpose. It is inctrient on the Ccmnission to provide its boards guidarx:e as to how its licensing responsibilities are to be exercised in the context of the highly regulated public utility industry, arxi the extent to which this factor and the special economic and technological characteristics of this industry must be considered in assessing carpetitive questions.
21s petition further provides the opportunity to resolve i=portant procedural questions governing the decision-making process of those boards.
"8 221 02CLUSION For the foregoing reasons, this petition should be granted.
Paspectfully subnitted, T ees IL Na,/ G %
David McNeil Olds REED SMIW SHAW & McCIAY P.O. Box 2009 Pittsburgh, Pa. 15230 (412) 288-3148 Ice A. Rau Joseph A. Rieser, Jr.
REED SMI M SFE & McCIAY Suite 900 1150 Connecticut Ave, N.W.
Washington, D.C. 20036 (202) 457-6100 Attorneys for Duquesne Light Canpany Dated: October 22, 1979
8 222
CERTIFICATE OF SERVICE The undersigned hereby certifies that copies of the foregoing were served this 22nd day of October, 1979, by hand-deliverf or by first-class sail, postage prepaid, upon thos's persons if
'r.d on the attached service list.
a L.L
,ae
/
/
, 8 2 2 ')
SERVICE LIST Alan S. Rosenthal, Esq.
Joseph J. Saunders, Esq.
Chairman, Atomic Safety and Antitrust Division Licensing Appeal Board Department of Justice U.S. Nuclear Regulatory Co= mission Washington, D.C.
20530 Washington, D.C.
20555 Donald L. Flexner, Esq.
Richard S. Sal==an, Esq.
Melvin G. Berger, Esq.
Atomic Safety and Licensing Janet R. Urban, Esq.
Appeal Board Antitrust Divisica U.S. Nuclear Regulatory Commission P.O. Box 14141 Washington, D.C.
20555 Washington, D.C.
20044 Atomic Safety and Licensing Reuben Goldberg, Esq.
Appeal Board David C. Ejelmfelt, Esq.
U.S. Nuclear Regulatory Commission Michael 0 Oldak, Esq.
Washington, D.C.
20555 Goldberg, Fieldman & Hjelmfelt Suite 650 Mr. Samuel J. Chilk 1700 Pennsylvania Avenue, N.W.
Secretary Wa:shington, D.C.
20006 U.S. Nuclear Regulatory Commission Washington, D.C.
20555 Jack M. Schulman, Esq.
Director of Law Ivan W.
Smith, Esq.
Robert D.
Hart, Esq.
Atomic Safety and Licensing ist Ass't. Director of Law Board City of Cleveland U.S.
Nuclear Regulatory Commission 213 City Hall Washington, D.C.
20555 Cleveland, Ohio 44114 John M.
Frysiak, Esq.
Frank R. Clokey, Esq.
Atomic Safety and Licensing Special Ass't. Attorney General Board Room 219 U.S. Nuclear Regulatory Coc=ission Towne House Apartments Washington, D.C.
20555 Earrisburg, Pennsylvania 17105 Atomic Safety and Licensing Donald E. Hauser, Esq.
Board Panel Victor A.
Greenslade, Jr.,
Esq.
U.S. Nuclear Regulatory Co=missicn William J. Karner, Esq.
Washington, D.C.
20006 The Cleveland Electric Illuminating Cc=pany Joseph Rutherg, Esq.
55 Public Square Benjamin E. Vogler, Esq.
Cleveland, Ohio 44101 Roy P.
Lessy, Jr., Esq.
Office of the Executive Michale M. Briley, Esq.
Legal Director Paul M.
Smart, Esq.
U.S. Nuclear Regulatory Co~md ssion Fuller, Henry, Hodge & Snyder Washington, D.C.
20555 P.O. Box 2082 Toledo, Ohio 43603
"~'
sd a'l ) d e
~~.
-~_
2-Russell J. Spetrino, Esq.
Chairman Hendrie Thomas A. Kayhua, Esq.
Office of the Commission Ohio Edison Ccmpany U.S. Nuclear Regulatory Commission 75 South Main Street Washington, D.C.
20555 Akron, Ohio 44306 Commissioner Gilinsky Terrence H. Benbow, Esq.
Office of the Commission A.
Edward Grashof, Esq.
U.S. Nuclear Regulatory Cermission Steven A. Berger, Esq.
Washington, D.C.
20555 Steven 3. Peri, Esq.
Winthrop, Stimson, Putnam &
Commissioner Kennedy Roberts Office of the Cor 4 ssion 40 Wall Street U.S. Nuclear Regulatory Commission New York, New York 10005 Washington, D.C.
20555 James R.
Edgerly, Esq.
Commissioner Bradford Secretary and General Counsel Office of the Ccmmission Pennsylvania Power Company U.S. Nuclear Regulatory Ccamission One East Washington Street Washington, D.C.
20555 New Castle, Pennsylvania 16103 Commissioner Ahearne John Lansdale, Esq.
Office of the Commission Squire, Sanders & Dempsey U.S. Nuclear Regulatory Commission 21 Dupont Circle, N.W.
Washington, D.C.
20555 Washington, D.C.
20036 Alan P.
Suchmann, Esq.
Squire, Sanders & Dempsey 1800 Union Com=erce Building Cleve' land, Ohio 44115 Edward A. Mat'to, Esq.
Richard M.
Firestone, Esq.
Karen E. Adkins, Esq.
Antitrust Section 30 E.
3rcad Street 15th Ficor Col"-"us, Ohio 43215 Christcpher R. Schraff, Esq.
Assistant Attorney General Environmental Law Section 361 E.
3rcad Street Sth Flcor Columbus, Ohio 43215 Wm Bradford Reynolds, Esq.
Robert E.
Zahler, Esq.
Shaw, Pit--an, Pctts & Trowbridge 1800 M.
Street, N.W.
Washington, D.C.
20036
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