ML19317E214
| ML19317E214 | |
| Person / Time | |
|---|---|
| Site: | Oconee, Mcguire, McGuire  |
| Issue date: | 11/10/1972 |
| From: | Avery G, Ross W, Watson K DUKE POWER CO., WALD, HARKRADER & ROSS |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| NUDOCS 7912170462 | |
| Download: ML19317E214 (28) | |
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UNITED STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of )
) Docket Nos. 50-269A, 50-270A DUKE POWER COMPANY ) 50-287A (Oconee Units 1, 2 & 3 ) 50-369A, 50-370A McGuire Units 1 & 2) )
To the Atomic Safety and Licensing Board: ,
APPLICANT'S REPLY TO ANSWER OF THE DEPARTMENT OF JUSTICE Pursuant to Section 2.730 (c) of the Commission's Rules of Practice, 10 C . F . R . Part 2, and to the attached motion for leave to file, Duke Power Company (hereinafter
" Applicant") hereby submits its Reply to the " Answer of the 1/
Department of Justice-- to Applicant's Objections . . .",
dated October 25, 1972 (hereinaf ter " Answer") .
For the reasons set out herein, the Department's Answer is without merit and each of Applicant's objections should be sustained.
- 1. Fishing As the Department's Answer observes, several of Appli-cant's objections rest on its view that document requests in question constitute " fishing", i.e., defining decument desig-nations so broadly as to sweep into their dragnet thousands of
-1/ The Department of Justice, the AEC regulatory staff and the Intervenors joined in submitting the Joint Document Request to Applicant. See covering letter from Brand to Ross dated September 5,1972. Only the Department of Justice has submitted an answer to Applicant's objections.
7912170%k [
irrelevant documents "in the hope that something will turn up". FTC v. American Tobacco Co., 264 U.S. 298, 306 (1924) 2/
(Holmes , J. )--
The Answer admits that the Commission's Rules of Practice prohibit " fishing". However, the Department attempts to brush aside Applicant's contention that several of the Joint Document Requests are no more than fishing expeditions by suggesting that the Department is not subject to the Commission's Rules of Practice on discovery. The Department, it is claimed, may pursue its discovery "on suspicion" and without regard to the relevance of the documents that it seeks (Answer, p.5).
The Department's hypothesis is untenable. According to Section 2.700 of the Commission's Rules of Practice, the sections of the Rules which contain the discovery procedures (Sections 2.720, 2.740-742, and 2.744) govern procedure in all adjudications " initiated by the issuance of a . . . notice of hearing". This proceeding, of course, was initiated by a notice of hearing on June 28, 1972, and is, therefore, governed by those discovery procedures.
2/ The concept of " fishing" set forth in American Tobacco and many other cases is clearly broader than the definition pro-posed by the Department's Answer (p.6). See, e.g., Jones
- v. SEC, 298 U.S. 1, 26-28 (1936); United States v. Ling-Tempo-Vought, Inc., 49 F.R.D. 150 (W.D. Pa. 1970); Flickinger v.
Aetna Cas. & Sur. Co., 37 F.R.D. 533 (W.D. Pa. 1965). See also 8 Wright and Miller, Federal Practice and Procedure S2206 (1970 ed.) and cases cited in fn 99.
L It is also clear that Congress intended the Depart-ment of Justice be governed by the same discovery rules as other participants in this proceeding since the 1970 amendment to Section 105 (c) (5) of the Atomic Energy Act provides for the Department's participation "as a party" (emphasis supplied) 3/
in the antitrust hearings which its advice letters recommend.~~
The Commission's procedures carefully delineate the discovery rights and responsibilities of parties to the proceeding; one such delineation explicitly proscribes " fishing" for evidence.
Another Atomic Energy Commission antitrust hearing board recently rejected similar Department contentions that the Commission's Rules of Practice pertaining to discovery are not applicable to the Justice Department. At a prehearing 4/
conference in the Consumers Power case,"~ the Department argued that the Applicant should provide it with free copies of requested documents, even though the Rules of Practice clearly provide otherwise. The Department claimed that its role "shouldn' t be regarded as simply that of an adversary where we are seeking some private advantages, but [as] simply 3/ 84 Stat. 1473, 42 U.S.C. 52135 (c) (5) .
4/ AEC Docket Nos. 50-329A-330A (Application for Construction Permits for the Midland Units) . The Prehearing Conference in question was held October 12, 1972.
~4-carrying out the inquisitorial role of the Commission in this regard". (Tr. 171). The Board rejected the argument in a holding equally persuasive here:
CHAIRMAN GARFINKEL: I appreciate your concern, Mr. Brand, but I think this Board is govnerned
[ sic] by rules of discovery now.
What should have been done or what the practice should be prior to the actual notice of hearing is one thing, but the case, in dealing with dis -
covery, does not require the furnishing of docu-ments or copies free. So I am bound by that type of ruling. I can't be concerned, in this proceeding, with what the procedure should be prior to the initiation of a law suit (Emphasis supplied).
This Board should similarly affirm that the Commis-5/
sion's Rules apply to all parties to this proceeding.~- Each Department request should then be examined in light of the Rules' proscription of fishing.
- 2. Request 2: Applicant's Filing System According to the Department's Answer, the request seeks a " detailed description of Applicant's filing system" in order to obtain a " clear picture of the sources of documents 5/
The Department's reliance upon United States v. Morton Salt Co., 338 U.S. 632, 640-643 (1950) is entirely misplaced. In Morton Salt the Court was concerned with the general law en-forcement powers of the Federal Trade Commission. Signifi-cantly, once that Commission's adjudicatory process begins, these broad powers are superseded by more restrictive dis-covery procedures which are applicable to all parties , in-cluding the Commission's staff. See All-State Industries of North Carolina, Inc., FTC Docket 8738, 3 CCH Trade Reg.
Rep. 118,103 (Nov. 13, 1967).
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provided in response to their request . . ." (Answer,p.7).
In discussions with opposing counsel, the joint discoverers have made clear that they request the descriptive titles contained upon every file folder in the Company.
Contrary to the Department's assertions , this re-quest for every descriptive title contained on every Company file folder is not " narrowly directed" (Answer, p.6).
Indeed, Applicant suggests that the Department's rationale for the request is only a pretext for a fishing expedition, i.e., an effort to peruse file titles "in the hope that some-thing will turn up". 6ee Part I, supra. If the Department actually seeks no more than to ascertain the " source" of documents provided in response to the Joint Document Request, the method it preposes to utilize here will not only be unnecessarily time-consuming but also will fail to achieve its purported purpose. The file indexes will not indicate the files from which any given document came. If the Dep&rtment wishes to obtain that information, it can pro-ceed under Section 2.740b of the Rules of Practice.
- 3. Requests 4 (f) et al: Applicant's Legal and Political Activity The Department's effort to justify its request to obtain documents relating to Applicant's political and legal activities misstates the relevant facts and misconceives the applicable case law.
The Department addresses itself to two issues: rele-vance and privilege. Its argument on relevance simply begs the question. The Department discourses at great length on a point which Applicant readily concedes: Applicant is, by the nature of its business, thrust into the political and legal process at several levels. This being so, says the Department, Applicant's activities in these spheres must be relevant to the antitrust questions at issue in this pro-
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ceeding. - The Department thus neatly ignores the holdings of Pennington and Noerr that political and legal activities are not violative of the antitrust laws. This tack is particularly pertinent in light of the failure by either the Department or Intervenors to allege that any " sham" is here involved--7/ --
a position reaffirmed by the Department in its present plead-ing (Answer, p.12).
-6/ In the course of this effort, the Answer (p. 8) inaccurately characterizes Applicant's objection in this regard as "in all essential respects, identical" to that of the plaintif f in Gulf States Util. Co. v. McLaren, Civil Action No.71-102 .
(M.D. La. 1972). The Court's minute entry, which is attached to the Department Answer as Appendix A, does not discuss the basis for its holding concerning documents related to polit-ical and legal activity. Moreover, plaintiff's memorandum in that case, which is attached hereto as Appendix A, reveals that, unlike Applicant here, Gulf States' objections were not founded upon Constitutional principles. Moreover, that case arose under the Antitrust Civil Process Act, 15 U.S.C.
SS1311-1314, which, unlike the Commission's Rules, permits the discovery of irrelevant documents and condones " fishing" expedi- '
tions. Petition of Gold Bond Stamp Co., 221 F. Supp. 391, 397 (D. Minn. 1963). Thus the aforementioned case is not remotely in point to the issues raised in Applicant's Objections.
7/ See pp. 12-13, infra.
Once the Answer finally turns to the question of privilege raised by Applicant's Objections, its argument rests upon the erroneous assumptions that (1) Applicant enjoys fewer Constitutional protections than other persons and (2) that Applicant's First Amendments rights would not be " chilled" by the discovery sought by the Department.
The Department's Answer concedes that Supreme Court cases have protected certain entities from document production where such production would " chill" the exercise of First Amendment rights. But, it asserts, Applicant cannot " step into the shoes" of those to whom the Court has offered such Constitutional protections because it is a " mighty utility" with considerable assets and revenue (Answer, p.1 ). We would have hoped that the Department would be more sensitive to a fundamental principle of Constitutional law -- that protection of basic Constitutional rights is not a funct'.on of economic status. Gideon v. Wainwright, 372 U.S. 335 (1963); Griffin
- v. Illinois, 351 U.S. 12 (1956). We recognize that this principle has usually found expression in cases where the rights of the economically disadvantaged were under attack.
Id. However, the threat to basic freedoms which arises from erosion of this principle is also cause for concern when weight is given to the favorable economic status of the person claiming Constitutional rights . Moreover, it is clearly established that the Constitution equally protects the rights of corporations .
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Wheeling Steel Corp. v. Glander, 337 U.S. 562 (1949); Grosjean
- v. American Press Co., 297 U.S. 233 (1936).
Significantly, in the Noerr case itself, the defen-dants included 24 railroads - an industry whose impressive political power and financial resources were, in part, respon-sible for the establishment of government regulation eighty years ago. Eastern R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961). Yet, in Noerr, the Court held the railroads ' participation in the political process to be beyond the scrutiny of the Sherman Act in words which are equally applicable here:
"[W]e have restored what appears to be the true nature of the case -- a 'no-holds-barred fight' betweer two industries both of which are seeking e : trol of a profitable source of income. Inherent in such fights, which are commonplace in the halls of legislative bodies, is the possibility, and in many in-stances even the probability, that one group or the other will get hurt by the arguments that are made. In this particular instance,
- each group appears to have utilized all the political powers it could muster in an attempt to bring Mbout the passage of laws that would help it or injure the other. But the contest itself appears to have been conducted along lines normally accepted in our political sys-tem, except to the extent that each group has deliberately deceived the public and
, public officials. And that deception, rep-rehensible as it is, can be of no consequence so far as the Sherman Act is concerned. That Act was not violated by either the railroads or the truckers in their respective campaigns to influence legislation and law enforcement."
(Footnotes omitted). 365 U.S. at 144-45.
l The Department's Answer not only clouds the Appli-cant's right to the protection of the First Amendment, but it is also disingenuous in its analysis of how the exercise of those rights would be chilled by granting the Department's discovery request. The " chilling" impact upon Applicant's First Amendment rights has nothing to do with punishment for past political activity or with the outcome of this proceeding, as claimed by the Department (Answer, pp.15-16). Rather, whatever the outcome, permitting discovery of Applicant's internal files relating to political activity will put Appli-cant on notice that the privacy of these files is not ,
inviolate. This knowledge, in turn, will inevitably inhibit Applicant's future exercise of its First Amendment rights.
"[I]nhibition as well as prohibition against the exercise of precious First Amendment rights is a power denied to govern-ment". Lamont v. Postmaster General, 381 U.S. 301, 309 (1965) (Brennan , J. , concurring). See also Baird v.. State Bar of Arizona, 401 U.S. 1 (1971); Baggett v. Bullitt, 377 U.S. 360 (1964).
In Lamont, supra, the Court held that the Post Office could not condition delivery of Communist " political l
t propaganda" upon the addressee's written request for delivery.
l According to the Court, the condition was "almost certain to l
have a deterrent effect" on the exercise of the First Amendment l
l rights since the addressees "might think" that public disclosure
of the request could result in adverse consequences. 381 U.S. at 307. Clearly, the inhibitory and chilling effect of the discovery which the Department seeks in this proceeding is no more " remote" (Answer, p.16) than governmental action proscribed by the Court in Lamont.
The Department's Answer also asserts that the i
" chilling" effect which would result from discovery of t political activities must defer to the Government's " inter-est" in making such discovery (Answer, p.16). However, where, as here, the discovery would inhibit activity which is in the public interest, the discoverers must satisfy a stan-dard of " exceptional necessity". Bredice v. Doctors Hospital, Inc., 50 F.R.D. 249, 250 (D.D.C. 1970). The Department has made no such showing.
In an effort to show the necessity for production of documents relating to political activity, the Department relies upon dicta contained in a footnote to the Pennington case, supra, 381 U.S. at 670, n.3. According to the footnote, it would be "within the province" of the trial judge to admit i otherwise-privileged evidence of political -ctivity where he found it (1) " probative", (2) "not unduly prejudicial" and (3) where the evidence "tends reasonably to show the purpose and character of the particular transactions under scrutiny".
Reliance upon such dicta here is misplaced since as one court has held, "not only is it illogical to infer from l
evidence that (defendant] engaged in certain completely lawful (political] conduct that it also engaged in other conduct which was unlawful, but it would seem that to draw such an inference in this case would be an infringement upon defen-dant's First Amendment rights". United States v. Johns-Manville Corp., 259 F. Supp. 440, 453 (E.D. Pa. 1966). The Johns-Manville court also perceptively observed that none of the cases cited in the Pennington footnote " involved a situation in which pradatory intent was inferred from participation in constitutionally protected activities". Id.
It is significant that the Department's Answer does not indicate for which "particular transaction under scrutiny" it seeks the requested documents. Having failed to identify any such transaction or to demonstrate the relationship be-tween it and the documents requested, the Department has not justified the " chilling" impact on Applicant's First Amendment rights that would be the inevitable result of producing these documents.
Finally, the objections put forward by Applicant cannot be circumscribed by reliance upon the so-called " sham" exception to the Noerr-Pennington principle. In the N? err case, supra, the Court noted that its holding did not encompass conduct which is a " mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor . . ." 365 U.S. at 144 (emphasis
supplied). Recently, while reaffirming the principles enun-ciated in Noerr and Pennington, the Supreme "ourt explained that, in the context of the judicial process, the sham excep-tion includes efforts to deter ccmpetitors having " free and unlimited access" to agencies and the courts or to abuse the adjudicatory process by perjury, fraud or bribery. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 511 (1972).
The sham exception is of no relevance here. First, the requested documents here under challenge involve all of Applicant's political and legal activity. They are not re-i stricted to documents related to Applicant's alleged efforts to deter competitors' " free and unlimited access" to agencies or the courts er to abuse the adjudicatory process by perjury,
- fraud or bribery. Second, neither the Justice Department nor the Intervenors have alleged that Applicant ever engaged in any political conduct which could be categorized as falling within the " sham" exception to the Noerr-Pennington doctrine .--8/
The Justice Department specifically states that it does not 4 8/ The cryptic footnote contained in the Answer to the effect l
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that Applicant "may have" engaged in threats to "ensnarl com-petitors in a web of regulatory and judicial proceedings" (p.12) is not only without foundation but also, even if proven, would not constitute a " sham", as the Court has de-fined such activity in California Motor. Such a reading of the sham exception would result in the anomaly that one could not threaten to engage in political activity but one could engage in such conduct, i.e., a "no-holds-barred" fight i " seeking control of a profitable source of income." Noerr, supra, at 144.
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know whether Applicant's activities fall within its alleged
" sham" exception (Answer, p.12; Reply of Department of Justice to Applicant's Answer and Motion of July 24, 1972, filed August 3, 1972, p.16). The Intervenors simply claim that Applicant's activities "may" violate the Sherman Act. (Initial Prehearing Statement, filed August 9, 1972, p.13.) Moreover, the materials specifically relied on by Intervenors reveal that Applicant's opposition to various public power proposals has been open, vigorous, "on the merits " , and essentially political in nature -- the very conduct most particularly protected by the First Amendment. (See Exhibits to Inter-venor's Initial Prehearing Statement, filed August 9, 1972). --9/
No tribunal should permit a chilling invasion of Applicant's Constitutionally-protected rights based upon the bald assertion that Applicant has frequently undertaken political or legal activities. Applicant's objections relating to political and legal activities should therefore be sustained.'
-9/ These exhibits show that Applicant did no more than come for-ward with facts and arguments for consideration by various governmental agencies: by the United States Congress in deciding whether to appropriate funds for Interior Department, Corps of Engineers and Public Works construction projects (Proposed Intervenors Ex. 1-7, 19-20, 23); by municipalities in the State of North Carolina (Ex. 11, 12), by the North Carolina Utilities Commission (Ex. 8, 14), by the Atomic Energy Commission (Ex. 9) and by the Federal Power Commis-sion (Ex. 13) in deciding whether to authorize the EPIC project and other matters; and by other parties interested in Applicant's views on these and related public policy issues (Ex. 10 - shareholders, Ex. 15 - prospective bondholders, l Ex. 18 - municipal officials).
- 4. Reques t 6 (e) : Allocation of Service Areas The Department fails to refute Applicant's objec-tions concerning the production of documents reflecting activity required by state law, i.e., directives from sta' utility commissions tc Applicant to negotiate territorial allocations with neighboring utilities. Acceptance of the Department's conclusory arguments could lead this Board into a hopelessly complex examination of reasons why state action was under-taken, thereby emasculating the doctrine of Parker v. Brown.
The Department begins with the claim that any aspect of the business relationships between Applicant and smaller utilities is discoverable (Answer, pp.18-19). The Department would thus jettison any standard of relevance to antitrust concepts and open the door to discovery of all aspects of Applicant's business. This is not the approach permitted by discovery rules and practice.
Next, the Department cites three specific reasons for seeking discovery in this area, none of which is persuasive.
First, it pleads that documents relating to wholesale terri-torial allocations are properly within the scope of its inquiry; however, Applicant has objected here only to the Department's request for documents concerning retail territorial allocations required by state law. Second, the Department claims that "it is not clear" whether the state utility commissions' directives to Applicant and other utilities to negotiate territorial
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r allocations were sanctioned by state law (Answer, p.19). How-ever, the Department offers this claim without even attempting to analyze the applicable state law. In the absence of even an attempt to show that the applicable statute supports the Department's theory, the Board should give this argument short shrift.
Ultimately, the Department admits that it is not really concerned with these state-approved territorial assign-ments (Answer, p.20). Rather, it argues , it should be per-mitted to inquire into these negotiations, since inquiry l "might" reveal anticompetitive conduct and "could be" signifi-cant (Answer, p.20) (emphasis supplied). Utilization of the verbs "might" and "could be" reveals that the request is no more than an effort to " fish" for evidence. See Part I, supra.
Thus, permitting inquiry into negotiations required by state authority not only flies in the face of Parker v.
Brown but also constitutes an effort to open up a new area of inquiry in the hope that scmething will turn up. The Rules proscribe such a fishing expedition.
l 5. Request 16: Municipal and State Elections The Department seeks to justify its request for all documents relating to all elections en the grounds that Appli-cant's objections foreclose "the possible discovery of rele-vant documents" ( Answer, p . 21) (emphasis supplied). Again, the
language of the Department's Answer demonstrates that its l request is improper. The Rules require only the production of relevant documents and prohibit fishing; they do not permit requests leading to the "possible discovery" of relevant documents.
l In its assiduous pursuit of documents reflecting Applicant's exercise of its First Amendment rights, the Department here abandons certain basic standards of fairness.
We trust that the Board shares Applicant's dismay that the i
Department has sought to influence the Board's thinking as to Applicant's conduct by appending to its Answer a news-paper clipping about activities of an entirely unrelated utility operating in another state -- activities which themselves are more than ten years old. Equally repre-hensible is the Department's reliance upon such generalized statements as "large electric utilities such as Applicant have traditionally possessed considerable political power" (Answer, p.21). The Department's lapse into emotional rhetoric makes it clear that, through Request 16, it is pressing no more than a fishing expedition into Applicant's activities.
- 6. Requests 13 and 17: Documents " Located In" Files i The Department's Answer on its face demonstrates the impropriety in permitting documents to be designated solely by j their location in certain files. According to the Answer, the Department seeks to ascertain "the entire record" of " day to l
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day relationships" between Applicant and all of its wholesale customers in order to discover "the anticompetitive means and techniques employed by Applicant over the years . ..
(Answer, p.23).
This explanation constitutes a virtual admission that the Department seeks access to entire files in the hope of turning up documents which may relate to anticompetitive con-duct. In other words, the Department here abandons any effort .
I to designate documents, as the Rules of Practice require, and i l
asserts a right to inspect files which, it concedes , are
" voluminous" (p.23) and which, it also admits, may (or may noti contain relevant documents. The Department's offer to " sample and exclude" " repetitive, routine documents" found in these files (p.23) merely confirms that its request sweeps volumes of documents into its ambit which are not relevant to this proceeding.
- 7. Request 30: Documents Related to Regulatory Jurisdiction The Department does not make a convincing case for obtaining all documents in which Applicant has asserted that its activities are subject to state or Federal regulation. It recognizes this fact by retreating substantially from its original request.
The Department claims that the requested documents would be relevant to the determination, in this proceeding, as to which activities of Applicant are subjece. to regulation and
by whom. That question is one of law which this Board may have to determine. We submit that the Board will make that determination on the basis of its own legal analysis, not on the basis of positions taken by Applicant in other proceed-ings. The Department's request would simply require the review and producticn of masses of material which would not be evidentiary at all. The only possible use which the Department might make of it would be as citation in legal argument.
In explicit recognition that it has gone too far, the Department states that production of all the documents it seeks would be "not particularly useful" (Answer, p.24),
Hence, it suggests that Applicant produce a sample showing assertions as to regulatory jurisdiction over each " type of activity for which the fact or extent of regulation may be at issue." (Answer, p.24) This suggestion solves none of the problems raised by this Request. The documents produced would still be non-evidentiary and irrelevant. The search would be just as extensive. In addition, the standard is impossible to comprehend since Applicant does not know which
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activities are "at issue" with respect to regulatory juris-diction.
If the Board does feel that past assertions as to r
jurisdiction are, in fact, germane, we suggest that the Department could more prcperly pursue the matter through l
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interrogatories under Rule 2.740b. The very process of framing interrogiatories would delineate the activities as to which regulatory jurisdiction is "at issue." In the meantime, this Request should be denied.
- 8. Request 31: Tax Returns i
! As the Department concedes , the issue raised by Appli-cant's objection to request 31 is whether or not data relevant to this proceeding and contained in its tax returns is "readily obtainable otherwise" (Answer, p.24).
Throughout negotiations with the Department concerning this request, counsel for the Department refused to identify precisely what data contained in the returns it seeks and needs.
Having persisted in its failure to do so in its Answer, the Department is clearly not entitled to invade the privacy of these returns .
The Department's only elucidation of the grounds for its request is that it does not seek to find out how much tax Applicant pays, but rather wants to ascertain "how much tax was not paid" (Answer, p.28) (emphasis supplied) . The latter question appears to be an exercise in metaphysics; in any event, contrary to the Department's assertions, the amount of taxes not paid has never been put in issue by Applicant (Answer, p.27).
Applicant has raised the issue of comparative tax l
burdens, i.e., the amount of taxes it epis compared to the 1
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amount of taxes paid by other neighboring utilities. This inquiry is, of course, vital since many of these utilities pay ne taxes and borrow capital at reduced rates, and are thus afforded competitive advantages of direct relevance to this proceeding. The Department fails to explain why a study of comparative tax burden require.9 any more than a record of taxes paid, capitalization, revenues received, and expenses incurred. Such data, as the Department concedes, is contained in Applicant's Form l's filed with the Federal Power Commission. (Answer,p.28).
Thus, since the data relevant to the tax issues raised in this proceeding are "readily obtainable otherwise",
request 31 should be denied.
- 9. Request 6 (p) and 37: Pending FPC Proceedings The Department's response to Applicant's objections to production of documents reflecting pending proceedings be- l fore the Federal Power Commission demonstrates that requests l 1
6(p) and 37 merely seek to re-litigate matters currently l l
before the FPC. ;
The Department is clearly hard pressed to find issues in this proceeding to which the documents sought are remotely related. Its Answer alleges that the documents sought will demonstrate Applicant's " thwarting in various ways potential competing water power projects". Only request 6 (p) , which e
calls- for all documents relating to EPIC's Green River appli-cation before the FPC, is remotely in point . Although Appli-cant opposed that application, the Commission has granted EPIC a preliminary permit which gives the right of priority of application for license over other non-federal entities, while 4
the permittee undertakes studies to determine the feasibility of the proposed project in accordance with FPC regulations. --10/
Since the Green River project has not therefore been " thwarted" by Applicant, it is difficult to discern how any documents with regard to the application relate to alleged " thwarting" of competing facilities .
The Answer also contends that the documents requested are relevant to the issue whether " Applicant has imposed a price squeeze upon its wholesale customers / retail competitors" (Answer, p.30). The reference here must be to request 37 which calls for documents relating to the Applicant's current fuel adjustment clause proceedings before the FPC. Such an alleged squeeze relates to the effect of existing rates and conditions, not to proposed changes to those rates and conditions.
Thus, the documents requested are not related in any way with the issues upon which the Department bases its request.
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-- In fact, in its order issuing the permit, the Federal Power Commission ruled that the matters raised by the Intervenor (the Applicant here) were appropriate for consideration in a proceeding for an application for a license and not in a proceeding for a preliminary permit.
CONCLUSION Wherefore, Applicant urges the Board to sustain its objections to the aforementioned items of the Joint Document Request.
Respectfully submitted, Wm. Warfield Ross George A. Avery Keith S. Watson Toni K. Golden of Counsel:
William H. Grigg Duke Power Company P. O. Box 2178 Charlotte, North Carolina 28201 November 10, 1972 l
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NOTE: Only those pages of the Memorandum dealing.with the
. Noerr-Pennington argument.have been included in this
. Attachment.
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UNITED STATES DISTIuCT COURT MIDDI.E DISTRICT OF LOUISIANA CUJ.F STATES UTILITIES COS'PANY, :
PETITIONER : CIVIL ACTION NO.71-102 VS. :
1 TIlomS E. KAUPER, ASSISTANT :
A'170RNEY GEllER.E, :
ANTITRUST DIVISION, U:IITED : MEMOP.ANDUM RESPONSE TO MOTICS STATES DEPARTMENT OF JUSTICE, : fur, t u us u a .A RESPONDENT :
Upon the terse assertion th5t the Antitrust Division, Department of- Justice, was conducting an inquiry for the purpose of ascertaining whether or not there existed a violation of Title 15, USCA, sections 1 and 2, by conduct of "agrecaents in reasonable restraint of trade betvcen your conpany and ncighborin; hulk p Wrr supply 0y:tc:0, monopoli:2 tion end attempted monopolization of bulk power . supply and monopolization and .
i attempted monopolization of the retail distribution of clectric power", and without notice or previous request for information, the Antitrust Division in'voked the Antitrust Civil Process Act (15 USCA, 1311-1314) and servid Gulf States Utilitics Company with a motion to produce documents covering a significant portion of the corporation's activities over an elevco-year period.
Afcc: deliberation Gulf States responded' by filing a petition for order to set aside or codify the civil investigative demand pursuant to 15 USCA 1314 (b), in which a number of objections to the production of documents verc raised. 'Itowever, with the knowledge that the discovery procedure invoked was only investina'ury t in r.ature and that partial cocplian,cc coult.: not iac renctrued as an acknowledgment that there constituted a rent.onabic baci for it.suance of the catien in tlte first place, Culf States r.mde .i good-feith c fort to produce the documents demanded in the subpoens, O
cad, in fact, has fcrwarded appr:xic:stely thoutand documents 'to the Antitrust Division. Arrangements were reached between..
counsel limiting the scope of the motion in order to minimize the burden of Culf States in sc1ceting, sorting and reproducing documents thus curing an area of objection.
However, Culf States, as a.catter of principal, adhered to its initial objection to providing two categorics of documents included in the production provided for in the civil investigative demand, viz: (a) documents involving company activitics to influence government action - legislative, judicial, executive or administrative which were withheld by Culf States for the reasons stated in paragraphs 5 (b) and (c) of its petition; and (b) communications between Gulf States and its attorneys and attorneys and parties similarly aligned with Culf States in litigation on which che attorney-client privilege has' been urged. This proceeding involves those documents.
- , There are two questions of law to be resolved by the court in this proceeding, and they are
(1) Relevance of documcats relating to the company's activities to influence " govern =ent action" to a civil antitrust investigation in the light of the NOERR-PENNINGTO:' doctrine (EASTEPJi RR CONFERENCE VS.
NOERR, MOTOR FREICHT, 365 US 127 (1961); UNITED MISE WORKERS VS. PEN'iINGTON, 381 US 657 (1965); and (2) Uhether the Department of Justice has made a prima facie case that the otherwise privileged co==unications
,, between Gulf States and its attorneys and at'tiorneys e
coc:=only aligned in litigation, constitute cor. unications
. 1 in furtherance of illegal activity and, therefore, not '
entitled to a privileged status. l l
l (1) Eccaus.c of the volume of docu entu revic ed and returned Culf Statcc did not rigidly .idhere to t.hu objection in its r.orting of doc 'n t i, a t:. ,
accordin,;1y, : iny does.aents covered by this catevery have alte.iJy besu furninhed the Departt.ect of Jectice.
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Culf Stato interpo:ce no cbjectitn to tha gtvsrnment's request for an in-camera inspection of the privileged documents by the court, and such d'ocuments will be produced at the hearing on this matter.
- 1. RELEVANCE TO A CIVIL ANTITRUST INQUIRY OF DOCUMENTS INVOLVING ACTIVITIES TO IN11UENCE COVERNMENT "
ACTION UNDER NOERR-PENNINGTON DOCTRINE Culf States urges as a matter of law that the NOERR-PENN1}'GTON rule as further defined by the Supreme Court in CALIFORNIA 1:0 TOR TRANSPORT COMPANY VS. TRUCKING UNLIMITED, 404 US 508, 40 US Law Week 4153 (1972),
precludes documents reflecting activities to influence government action from being relevant or reasonable to a civil antitrust inquiry. The Antitrust Civil Process Act extends to documentary material " relevant"to a civil anti-
. trust investigation (15 USCA 1312 (a)), provided such demand does not require the production of any document which would be held to be " unreasonable" if contained in a subpoena duces tecum issued in aid of a federal grand jury inves-t igation (15 USCA 1312 (c)). Documents reflecting activitics involving attempts to influence government action are not relevant to civil antitrust inquiry,and their production would be considered as unreasonable if viewed in the light of grand jury subpoenas.
The NOERR-PENNINGTON doctrine, as amplified by the recent TRUCKING UNLIMITED decision,151volDes a conflict ~ between the reach of the ~
Sherman Act in catters of economics and the basic constitutional rights of
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persons. to freedom of speech and right of petition guaranteed by the First Amendment. In the NOERR case the Supreme Court was concerned with an injunctive action brought by an association of motor carriers seeking to restrain a railroad association from conspiring to restrain trade and monopoli:o the long-distance' freight business through a publicity campaign and lobbying efforts allegedly calculated to destroy the motor transport freight business. Justice Black, speakit$g for a unanimous court, recogni cd the fundamental constitution'al issues raised in any action sccking O
to deny or clininsta a pern:n's frecdra cf speech and right cf pstition to de government, stating:.
In the first place, such a holding would substantially impair the powcr of government to take actions through its legislature and executive that operate to restrain trad e. In a representativo democracy such as this, these branches of government act on behalf of the people and, to a very large extent, the whole concept of representation depends upon the ability of the
. people to make their wishes known to their representatives.
To hold that the covernment retains the power to act in this representative capacity and yet hold, at the same time, that the people cannot freely inform the government of their wishes would impute to the Sherman Act a purpose to
. regulate, not business activity, but political activity, a purpose which would have no basis whatever in the legislative history of that Act. Secondly, and of at least equal significance, such a construction of the Sherman Act would raise important constitutional questions.
The right of petition is one of the freedoms protected by the Bill of Rights, and un cannot, of course, lightly in-pute to Congress an intent to invade these freedoms. .
Indeed, such an imputation would be particularly un-justified in this case in view of all the countervailing considerations enumerated above. For these reasons, we think it is cicar that the Sherman Act does not apply to the activities of the railroads at least insofar as those activitics comprised mere solicitation of govern-mental action with respect to the passage and enforcement of laws. *** 365 US at pages 137-8.
s****
In rejecting each of the grounds relied upon by the courts below to justify application of the Sheruan Act to the
, campaign of the railroads, we have rejected the very grounds upon which those courts relied to distinguish -
, the campaign conducted by the truckers. In doing so, we have restored' what appears to be the true nature of the case - a "no-holds-barred fight" between two industries
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both of which a're seeking control of a profitabic source of income. Inherent in such fights, which are commonplace in the halls of legislative bodies, is the possibility, and in tiany instances even the probability, that one group or the other will get hurt by tha arguments that are made. In this particular instance, each group appears to have utilized all the political powers it could muster in an attcmpt to bring about the passage of laws that would help it or injure the other. But the contest itself appears to have been con-ducted.along lines normally accepted in our political -
systec.'ckcept ta the extent that cach group has deliberately l deceived the public and public officials.' And that de-ccption, reprencible as it is, can be of no consequence so
, far as the Shcr:an Act is concerned. That Act was not m e l
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viola 6ed by cither the railroads er the tra.chers in th1ir rispective esmpaigns to influence legislatien
- and law enforcement. *** 365 US at pages 144-5.
- In UNITED MINE WORKERS VS. PENNINGTON, SUPRA, the court was conccrned with an alleged conspiracy in violation of the antitrust laws between a labor union and large coal companics to impose upon the coal industry a wat'e and productivity agreement through efforts to influcnce TVA to refrain from purchasing coal from the companics not subject to the agreement and effectively clininate such small coal operator's from
'husiness. In a decision which can be argued- as broadening the rule of the NOE'RR caso, the court concluded that: -
Noerr shicids from the Shercan Act a . concerted effort to influence public officials regardless of intent or purpose. .
Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate coipetition. Such conduct is mt illegal, cither standing alone or as a part of a brogder
.cchcme itself violative .of the Shcrean Act.
381 U.S. at page 670.
In the TRUCKING UNLl:!ITED decision the Supreme Court reaffirced the NOERR-PE:0'INCT0" doctrine and added that the NOERR-PENNINGTON ruling, which pertained principally to activitics to obtain icgislative action, also encompassed legal actions calculated to ob:ain judicial decisibes favorable to the economic interest of the noving party. Justice Douglas said:
We conclude that it would be d'estructive of rights of accociation and of petition to hold that groups with ebemon interests may not, without violating the anti-trust laws, use the channels and procedures of secte and federal agencies and courts to advocate their causcs and points of view respecting resolution of their business and economic interests vis-a-vis their competitors. 40 U.S. L*d! UEEK at page 4154. ~
On the basis of these decisions Culf States Utilitics Company denics relevancy.of the documents.
- l With all candor it is admitted that the Antitrust Divinion has been quite successful in having the courts conclude that information it sought t o t roi!uce was "relev. tut .in ! rs:.i n it'l e" . There are c::ceptio :,
howsver. *
- 2. botm:.cl f ur .?u :t ice De;bar t: . t.t a rt;ucc t his t languq;e in a foot netr to !!. ' a quo tat tua. ecs .i!,l h.h. . L in- rs.1 *cain.y o t' the do u:. cut s in .p:er.t ion. .
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In l':ITED ST.'.T12; VS. Cric:: 01L CO::PANY OF CALIFor.3IA, 343 F. 2d
- 9 (9th Cir.,1965), the production sought by the govern:ncut was denied because it pertained to activity which was alleged to lead to a possibic future violatica and not restricted to the literal interpretation of the definition 'of " antitrust investigation" contained in 15 USCA, section 1311, which en:e: passed only activity constituting a present or past violatien. It is true that the documentary inforsation objected to here cust be considered in a different context from the documentary information involved in tha l'::IO:: CIL CO::PA:.T case; however, the case does establish that " relevance" is a =caningful prercquisite to production. Culf States subinits that the docunants covered by paragraph 5 (b) and (c) of the civil investigative de _snd to which objection has been made could not constitute evidence of a violation of sections 1 and 2 of the Sherman Act under the K0 ERR-?C;:INGTC:s - TRUCF.ING Ul:LI2:ITED doctrine, and consequently are not a relevant subject of inquiry, if " relevancy" is to be given any meaning.
- Counsci for the Justice Department contends that the information requested in paragraph 5 (b) and (c) "can constitute evidence of a violatien of sc:tions 1 and 2 of the Sherman Act under the " sham" cxception enunciated in th: ;0 ERR decision as explained by the " denial of access to the c:urts cni agencies" language in TRUCKING UNLI!!ITED, Alternatively, Justice contenda that the docu=catsarc relevant to this inquiry because they ci;ht tend to be ad=issibic in evidence to show purpose and ch racter cf cther conduct which allegedly forms the basis of violaticn, citir; a footnote in ?Z:CII::CTO:;3, and the Fif th Circuit opinion 1
in !!OUS~i!SLD'C0003 CAPJ. IIA's S'.7.T_*,U VS. TERPJ:LL, 452 F. 2d 152 (5th Cir. , '
l 1971). '
With respect to the first ecntentica, Gulf States simply denies that its actlyitics to influence government action (legislative, judicial, executivc and alninistre.tive) within th: r. caning of the ':0 ERR-E".':31::GTO::
rule deicd any ; arty access to courts and agencies as contemplated la
- 3. See page 7 infra. ,
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-C- tj EW.J u u V""""""""~
TRt!CKING t!NLl:11TED. Therefore, t. hey cannot constitutu a violation of the
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Sherman Act and would not be relevs.nt to the inquiry.
Our reasons for support of this conclusion will be developed and discuased in follouing Portions of thic brief dealing with the issue of whether or not Justice han made a prina facio case that otherwise privileged docu:acnts arc discoverabic because they reficct activity violating sections 1 and 2 of the Sherman Act.
As to the second and altcenative centention, Gulf States suggests that such doctrine as may evolve from the PENNIIGTON footnote and developed in the CARRIER'S BUREA11 case is not apposite here. This ruling presupposes that there is other conduct separate and apart from the activitics to influence govern =cnt action which could for= the basis of a Sherman Act violation. L'c have carefully reviewed the affidavits filed by Justice and it is rescenable to conclude that the only activities which
- Justice docu=ents in its clain of an alleged violation of the antitrust laws are lobbying to influcnce legislative and adainistrative action, lawsuits to obtain a favorabic judicial result and publicity efforts in connection therewith 4 directed against rural electric cooperatives.
. The govern ent argues in a circle - the alleged illegal activity consisted of action to influence gover==cnt action; but if not relevarit to catablich a violation of the Shernan Act, is is relevant
, to establish a purpose for othcr activities which might establish a violation. The circic is not cocplete. No other activitics are cited and docuicnted.
- 2. T!!E PT.IV:! EGE '.'ITi! RESPECT TO CC:2.".*NICATIONS EEM.'EE?. AT'loRNEY A:.T, C'.1ENT The govern w:2t cont ends that co.r.unications between Gul f
- 4. In the af fid:vit thc c are ec .-lusiont.ry assertions of deni:1 of ac:cze of Cul f Sta te:.' tran .'t.nien line.. to others, of f ering sene nuaicipall ics reserve-charin; coatr. s to the prejudice of :.EC, anel off erinr. contra:t propos ls which if ace pu d would all qcdly rce t -ict LEC, f.:if .yut te. la,.:
. ..'. e a r.] Nv Cl.er.f er.) Corpsrat :en fre:. u:, o of Culi- 4:tes transmi:.nf oa 11nc-: it.7 their !.e:t inv. rest. "a U.ctual dt. : in oficrs -! to corroborate cuch 4
conclunfun. .
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ATOMIC ENERGY COMMISSION In the Matter of )
) Docket Nos. 50-269A, 50-270A DUKE POWER COMPANY ) 50-287A (Oconee Units 1, 2 & 3) 50-369A, 50-370A McGuire Units 1 & 2) )
CERTIFICATE OF SERVICE I hereby certify that copies of the MOTION FOR LEAVE TO FILE APPLICANT'S REPLY TO THE ANSWER OF THE DEPARTMENT OF JUSTICE AND SAID REPLY, dated November 10, 1972, in the above-captioned matter have been served on the following by deposit in the United States Mail, first class or air mail, this 10th day of November, 1972:
Walter W. K. Bennett, Esquire J. O. Tally, Jr., Esquire P. O. Box 185 P. O. Drawer 1660 Pinehurst, North Carolina 28374 Fayettte, North Carolina 28302 Joseph F. Tubridy, Esquire Troy B. Connor, Esquire 4100 Cathedral Avenue, N. W. Reid & Priest Washington, D. C. 20016 1701 K Street, N. W.
Washington, D. C. 20006 John B. Farmakides, Esquire Atomic Safety and Joseph Rutberg, Esquire Licensing Board Panel Benjamin H. Vogler, Esquire Atomic Energy Commission Antitrust Counsel for Washington, D. C, 20545 AEC Regulatory Staff Atomic Energy Commission Atomic Safety and Washington, D. C. 20545 Licensing Board Panel Atomic Energy Commission Mr. Frank W. Karas, Chief Washington, D. C. 20545 Public Proceedings Branch Office of the Secretary Abraham Braitman, Esquire of the Commission Special Assistant for Atomic Energy Commission Antitrus t Matters Washington, D. C. 20545 Office of Antitrust
, and Indemnity -
Joseph Saunders, Esquire Atomic Energy Commission Antitrust Division Washington, D. C. 20545 Department of Justice Washington, D.-C. 20530 E
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William T. Clabault, Esquire J. A. Bouknight, Jr., Esquire David A. Leckie, Esquire David F. Stover, Esquire Antitrust Public Counsel Section Tally, Tally & Bouknight Department of Justice Suite 311 P. O. Box 7513 429 N Street, S. W.
Washington, D. C. 20044 Washington, D. C. 20024 Wallace E. Brand, Esquire Antitrust Public Counsel Section Department of Justice P. O. Box 7513 Washington, D. C. 20044 Wald, Harkrader & Ross By:
Attorneys for Duke Power Company 1320 Nincteenth Street, N. W.
Washington, D. C. 20036 l
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