ML19317E761

Responds to DOJ Motion to Resettle Prehearing Order 6. Recommends Denial.Certificate of Svc Encl

ML19317E761
Person / Time
Site:	Oconee, Mcguire, McGuire
Issue date:	04/11/1973
From:	Avery G, Watson K DUKE POWER CO., WALD, HARKRADER & ROSS
To:	US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912180946
Download: ML19317E761 (13)

Text

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UNITED STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of ) Docket Nos. -2 50-270A

) A, 50-369A DUKE POWER COMPANY ) 50-370A (Oconee Units 1, 2 & 3 )

McGuire Units 1& 2) )

APPLICANT'S ANSWER TO MOTION OF DEPARTMENT OF JUSTICE TO RESETTLE PREHEARING ORDER NUMBER SIX The Department of Justice moved to resettle Pre-hearing Order Number Six by proposing to delete from subissue 3(i) the bracketed words " sham", as follows: l Has Applicant engaged in any other j activities including [ sham] litiga-tion and (sham] attempts to influence Government acts , which demonstrate that Applicant has engaged in monopo-lization or a combination to monopolize

- , or are evidence of an intent of Applicant to restrain competition or show the anticompetitive character of Applicant's course of conduct? ,

i Applicant submits that this motion should be denied. l The Department does not seek to correct an inadver-tent error in the Board's Order. Rather, contrary to the Board's directions regarding resettlement, it proposes to make a substantive change in one of the subissues without a showing f of " good cause". The Department's request is only an attempt to reargue the positions it raised twice previously and which were rejected as many times by this Board.

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Absence of Inadvertent Error After a lengthy prehearing conference on March 7, the Board agreed that resettlement of the Board's Order in regard to the Final Statement of Subissues should be limited to " inadvertent * ** [o] missions or errors in what the Board proposed." (Tr. 863). It also recognized, however, "that if there is good cause shown for a change in the pro-posed pretrial order," the Board would grant the motion (tr. 864).

The Department's motion in regard to subissue 3(1) is not based on " inadvertent" error.-1/ An extensive argument was presented to the Board on the matter of the inclusion of the clause " including sham litigation and sham attempts to influence Government acts" and the final wording of the issue was left for the Board's determination (tr. 774-802). The 1/

Tris situation, therefore, is unlike that raised by both A; plicant and the Department in regard to the omission of

, issue "S (b) " from the Final Statement of Subissues. The l

failure of the Board to include that issue appears to be i an inadvertent erro.7 since all parties agreed on the sub-stance of the issue. They merely left to the Board the i decision of whether a phrase suggested by the Justice i

Department should be included. See Applicant's Motion to i

Resettle Prehearing Order Number Six, Apr. 3, 1973, pp. 12-15.

Board's decision to include the clause, together with the word " sham" modifying both parts of it, is reflected in Prehearing Order Number Six. This phrasing was not the result of inadvertent error, but was clearly the result of informed deliberation. Thus , only if the Department has made a showing of good cause should the Board reconsider its decision on subissue 3 (i) .

Absence of Good Cause

1. The Prerequisites of Noerr The basic thrust of the Department's position against inclusion of the word " sham" is that " litigation or attempts to influence government action--even though not a sham--even though constitutional 1y protected--may be proper evidence of the purpose and character of other conduct alleged to be inconsistent with the antitrust laws." Department's Motion to Resettle, p. 2 (emphasis in original). This point has been argued previously at great length by the Department and was rejected by the Board. Furthermore, the Department offers no evidence of why a different result should ensue.

For example, in arguing in support of its request i

a.

_ . . - _ _i _ m for discovery into Applicant's political and legal acti-vities, the Department maintained "that although political activity may not be a violation of the antitrust laws, either standing alone or in conjunction (with] other acti-vity, it may be used as evidence of purpose and character of other activity" (tr.157) . The same line of argument was presented on behalf of the Intervenors (tr. 162, 164).

The Board rejected these contentions and sustained Appli-cant's objection to the broad discovery sought by the Joint Request with respect to Applicant's political and legal

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l activity (tr. 177).

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Again, on March 7, the Department argued "that i we are not necessarily looking at conduct that has to be a violation of the antitrust laws so that the standards of Noerr Pennington do not apply in this proceeding" (tr. 777).

The Department further contended that all it sought "here is to present the evidence of these (political] acts to (the Board] for (its] consideration along with many other things, to determine whether or not there is a situation inconsistent with the antitrust laws" - "[t]o show (the]

purpose and effect of other acts" (tr. 779).

2/ See also Prehearing Order Number Two, Nov. 27, 1972, pp. 2-3.

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The Board twice has rejected these arguments.

As the Board indicated, the exception in Noerr requires a finding that attempts to influence governmental action are both " sham" and a direct interference in the business 3/

of a competitor (tr. 792). The instant motion, based as it is on the premise that these prerequisites be read in the alternative rather than in the conjunctive, is merely a third attempt by the Justice Department to have this Board adopt an erroneous interpretation of Noerr.

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Indeed, even in the Household Goods case cited by the Department in support of its contentions, the court did no more than apply the Noerr standard in the context of the Pennington dictum. Thus, according to the footnote in Pennington, quoted by the Department in its

-3/ Thus , in Eastern R. R. Presidents Conference v. Neerr Motor Freight, Inc., 365 U.S. 127, 144 (1961), the Court stated:

There may be situations in which a pub-licity campaign, ostensibly directed toward influencing governmental action, is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the' business relationships of a competitor and the application of the Sherman Act would be justified.

4/ Household Goods Carriers' Bureau v. Terrell, 452 F.2d 152 (5th Cir. 19 71) .

motion, it would be "within the province" of the trial judge to admit otherwise-privileged evidence of political activity where he found it (1) " prob ative" , (2) "not unduly prejudicial" and (3) where the evidence "tends reasonably to show the purpose and character of the particular trans-actions under scrutiny." United Mine Workers of America

v. Penn uqton, 381 U.S. 657, 670-71 n.3 (1965).

Following this dictum, the court in Household Goods, a private antitrust action, upheld the admissability of evidence of defendants' attempts to influence two govern-mental agencies "as circumstantial proof of the purpor3e and character of the actions of the ( co-conspirators ] . " 452 F.2d at 158 & n.18. The basis on which those attempts were initiated, however, was the circulation by defendants of a

" libelous" letter " questioning the accuracy of [ plaintiff's product], threatening a complaint to the ICC, and stressing the undesirable competitive effects on the industry that would flow from the adoption of a competitive (mileage] guide." Id at 156, 157. Thus while a mere approach to a governmental agency to influence its' actions may be privileged political activity, within the meaning of the Pennington footnote, the use of

libelous material as a means of obtaining favorable action clearly is within the sham exception of Noerr and so taints the entire process. The action taken by the defendants in Household Goods, therefore, met both prerequisites of the Noerr exception: the approach to the governmental agencies was a sham, being based on false and misleading statements, and it constituted a direct interference with the business e

of defendants' competitor.

2. Constitutional Priorities The Department proposes an extreme position on political activity. Acceptance of it would entail subordi-nating Applicant's First Amendment rights to the Atomic Energy Act. Such a result would be directly at odds with the spirit, if not the letter, of the holding in Noerr.

Thus, while the Court in Noerr felt that " [blecause of the view (it took] of the proper construction of the Sherman Act," it was not necessary to consider the issue of whether "the activities complained of were constitutionally protec-tad under the First Amendment," it nevertheless included 5/ 365 U.S. 127, 132 n.6 (1961).

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in its rationale the importance of preserving constitu-tional rights. The Court rejected "a holding that the Sherman Act forbids associations for the purpose of in-fluencing the passage or enforcement of laws," and stated:

In the first place, such a holding would substantially impair the power of government to take actions through its legislature and executive that operate to restrain trade. In a representative 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 representative. * ** Secondly, and of at least equal significance, such a construction of the Sherman Act would raise important constitutional questions.

The right to petition is one of the f ree-doms protected by the Bill of Righ ts , and we cannot, of course, lightly impute to Congress an intent to invade these free-doms. [365 U.S. at 137-38, emphasis supplied. ]

The Department of Justice is attempting to " lightly impute to Congress an intent to invade [ Applicant's] freedoms".

by arguing that Congress framed the antitrust review of nuclear plant licenses in terms of " inconsistency" with, rather than " violation" of, the antitrust laws. This con-struction turns upside down the priorities which must be applied when considering the protection of constitutional

rights. Accordingly, the Department's position should be rejected.

3. The Chilling Effect Finally, the Department argues that correction of a situation " inconsistent" with the antitrust laws by imposing license conditions "is not to penalize the Appli-cant for exercising First Amendment rights or enjoin such exercise * * *". Department's Motion to Resettle, p. 2.

This contention, too, was raised and rejected earlier in this t

proceeding in regard to discovery. See, e.g. , Answer of the Department of Justice to Applicant's Objections to Document Request and Motion for Protective Orders, Oct. 25, 1972, pp. 15-17. The Department and Intervenors are seeking to impose conditions which Applicant is resisting. The imposi-tion of these requirements against Applicant's will can fairly be regarded as " penalizing" Applicant.

The Department's position also erroneously assumes that Applicant's First Amendment rights would not be " chilled" by the remedies sought since no injunctive relief was re-quested to prohibit Applicant's future political or legal activities. The Department once again has misinterpreted how l

these rights might be chilled. The " chilling", impact upon Applicant's First Amendment rights has nothing to do with punishment for past political activity or with the I

outcome of this proceeding. Rather, whatever the outcome, the use of Applicant's political activities will put Appli-cant on notice that the assertion of these rights 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 Amondment rights is a power denied to government." Lamont v. Postmaster General, 3 81 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 sum, the Department has not sustained its burden of showing good cause why the Order of the Board regarding subissue 3(i) should be resettled. Rather, all it has done is reargue points already considered and re-jacted by the Board.

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I For the reasons st&ted above, Applicant submits )

that the motion of the Justice Department to resettle subissue 3(i) should be denied.

Respectfully submitted, George A. Avery Keith S. Watson Toni K. Golden WALD, HARKRADER & ROSS 1320 Nineteenth Street, N.W.

Washington, D. C. 20036 Attorneys for Applicant April 11, 1973

UNITE'D STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of ) Docket Nos. 50-269A, 50-270A,

) 50-287A, 50-369A, DUKE POWER COMPANY ) 50-370A (Oconee Units 1, 2 & 3 )

McGuire Units 1 & 2) )

CERTIFICATE OF SERVICE

' I hereby certify that copies of the attached APPLICANT'S ANSWER TO MOTION OF DEPARTMENT OF JUSTICE TO RESETTLE PREHEARING ORDER NUMBER SIX, dated April 11, 1973, in the above-captioned matter has been served on the follow-ing by deposit in the United States mail, first class or air mail, this eleventh day of April, 1973.

Walter W. K. Bennett, Esquire J. O. Tally, Jr., Esquire P. O. Box 185 P. O. Drawer 1660 Pinehurst, North Carolina 28374 Fayetteville, N. Carolina 28302 Joseph F. Tubridy, Esquire Troy B. Connot, Esquire 4100 Cathedral Avenue, N.W. Reid & Priest Washington, D. C. 20016 1701 K Street, N.W.

Washington, D. C. 20006 John B. Farvakides, Esquire Atomic Safety and Joseph Rutberg, Esquira 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 Antitrust Matters Washington, D. C. 20545 Office of Antitrudt and Indemnity Joseph Saunders, Esquire Atomic Energy Commission Antitrust Division Washington, D. C. 20545 Department of Justice Washington, D. C. 20530

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 Nineteenth Street, N. W.

Washington, D. C. 20036 4

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