ML19317E819

Applicant'S Answer to 720704 Notice of Hearing, & Opposition to & Motion to Reconsider Delegation of Review Authority.App a & Certificate of Svc Encl

ML19317E819
Person / Time
Site:	Oconee, McGuire, Mcguire
Issue date:	07/24/1972
From:	Golden T, Ross W, Watson K DUKE POWER CO., WALD, HARKRADER & ROSS
To:	US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 7912190838
Download: ML19317E819 (33)

Text

- ._ . _. - . .. - _ - _ - - - . - - - -_ _ _ .

4 i

UNITED STATES OF AMERICA i

a BEFORE THE ATOMIC ENERGY CO:01ISSION a

In the Matter of )

)DocketNos.5cI3393?>50-270A,

) 50-287A, 50-369A, Duke Power Company l

(Oconee Nuclear St tion Units 1, ) and 50-370A I

1 2 and 3 and McGuire Nuclear )

Station Units 1 and 2) )

l ANSWER TO NOTICE OF HEARING AND

' OPPOSITION TO, AND MOTION TO RECONSIDER, I DELEGATION OF REVIEW AUTHORITY i

Pursuant to the provisions of 10 C.F.R. section j

2.705 of the Commission's Rules of Practice, Duke Pcwer Company (hereinaf ter " Applicant") files this Answer to the Notice of Antitrust Hearing on Applications for Construction Permits and 1

1 Operating Licenses published in the Federal Register (3 7 Fed. i Reg. 13202, July 4, 1972) (hereinaf ter "Nocice") . I Apolicant's Position i

It is Applicant's position that the activities under j

the permits'in question would not create or maintain a situation i

inconsistent with the antitrust laws as specified in subsection 10 5 (a) of the Atomic Energy Act, as amended, 42 U.S.C. 52135(a).

Subsectica 105 (c) of the Atomic Energy Act, as amended, 42 U.S.C. 52135 (c) , requires the Commission, whenever antitrust issues have been properly raised in a licensing proceeding, to 7 912190 f3[

.-. .. . . _ - .. w

"make a finding as to whether the activities under the license a

would create or maintain a situation inconsistent with the antitrust laws ***." An " affirmative" antitrust finding does not preclude unconditional issuance of a license, however, since the Commission is further directed by this section to

"also consider *** such other factors, including the need for

power in the affected area, as the Commission in its judgment deems necessary to protect the public interest."

The legislative history of the Act demonstrates that Congress intended the Commission to consider the impli-cations, from the standpoint of antitrust laws and policies, of the construction and operation of the proposed facilities 4

only, and not to assume the responsibilities of the Depart-ment of Justice and the courts for the enforcement of the antitrust laws with respect to an applicant's overall activi-ties as a utility. Rather, the statute commands that the Commission scr'utinize the possible effects of the " activities 1

under the license", and only those activities, in an anti-trust context. The licenses applied for in this proceeding would permit Applicant to operate the Oconee units and to construct and ultimately to operate the McGuire units, but ,

no more. The licenses are not concerned with the operation of Applicant's system in a broader context, including other gen-eration or transmission facilities, sales contracts, coordin-ation arrangements and the like. Thus issues relating to 2

d L

! _3 1

i coordination, market allocation, pooling, rates, and proposed, existing or former interconnection agreements, as set forth

! by the Justice Department, in its advice letter dated August 2, 1971, and by those filing a joint petition to intervene, 3

are irrelevant to the inquiry which the statute contemplates, i

and should not be considered in this proceeding. A fuller statement of Applicant's views on this matter is attached

[ as Appendix A to this Answer.

i, Subject to -- and without waiving -- the foregoing position, it is Applicant's further position that it has not monopolized any relevant market within the meaning of section 2 of the Sherman Act, 15 U.S.C. 52. Nor has Applicant

! engaged in any other conduct or activity which is inconsis-tent with any of the federal antitrust laws, to the extent that those laws are applicable to an industry characterized j

by pervasive government regulation and natural monopoly economies. In addition to other alternatives available i

to Applicant's neighboring utilities, such utilities presently enjoy the option of nondiscriminatory and wholly adequate

. access to the benefirs of large scale generation and trans-

' mission through purchases under Applicant's wholesale rate

~

schedules approved by the Federal Power Commissior.

Appli-1 i

cant's neighboring utilities, including those obtaining all or part of their requirements under Applicant's wholesale schedules, are financially viable and, to the extent con-l l

l l

4

• templated by federal and state law, competitively viable as well.

In those areas where ccmpetitive impediments have been raised, such restrictions have been imposed by the state, not by Applicant, and, indeed, Applicant is equally subject to these strictures. First, a pervasive scheme of state regulation in both North Carolina and South Carolina strictly controls and limits the activities of public utilities.

For example, the ability of Applicant and other suppliers  ;

I of electric energy to compete within those states has been

• /

seriously curtailed by operation of law. In addition, the rates and practices of the Applicant are subject to regulation by the North Carolina Utilities Commission and i I

the South Carolina Public Service Commission, respectively; and within the ambit of such regulation, those with an interest in the rates and practices of the Applicant have an opportunity to be heard. Thus, the states' intimate involvement with the activities of the Applicant, and the meaningful regulation and supervision to which it is subject, immunizes Applicant's rates and practices under challenge here from scrutiny under the antitrust laws.

Furthermore, it is Applicant's position that requir-ing Applicant to grant some of its customers a preferential form of access to its generation and transmission system would be unfair and discriminatory to Applicant's customers l

-~

• / See Gen. of North Carolina, 562-110.2 (Supp. 1971); Code of Laws of Sc c.th Carolina of 1962, 524-13 through 524-18 (Supp. 1971).

who are not afforded such access and would therefore violate the Federal Power Act and the laws of the states of North Carolina and South Carolina. Additionally, to afford such access to municipal or other small systems, which enjoy tax and other advantages, would place such entities in a position to compete unfairly with Applicant for wholesale and industrial --and in some areas, residential -- load, and would be inconsistent with the antitrust laws and the public interest.

Finally, it is Applicant's position that its activities in regard to the proposed Electric Power in Carolinas (EPIC) projec: to which the Justice Department refers in its advice letter are fully protected by the Constitution of the United States. These efforts before legislative and other governmental bodies constitute a legitimate exercise of Applicant's Constitutional rights under the First Amendment. They in no way represent an abuse of the processes through which Applicant may direct its views, do not evidence an intent to unlawfully monopoli:e, and therefora cannot be introduced as evidence in this proceeding.

Specification of Issues and Facts Applicant denies that the activities under the per-mits in question would create or maintain a situation incon-sistent with the antitrust laws as specified in subsection

10 5 (a) of the Atomic Energy Act as amended [42 U.S.C. 2135(a)].

Applicant also takes issue with the fact that the petition of the town of Newton to intervene in this proceed-ing (Notice, p. 2) in regard to the Oconee units is new before the Board. By letter to the Commission dated October 11, 1971, counsel for the petitioning intervenors made a formal request ,

1 l

to delete Newton as a party.

Appearance Applicant proposes to appear and present evidence in this proceeding.

Opposition to Delegation of Review Authority Applicant respectfully opposes, and moves the Com-mission to reconsider, that portion of the Motice which dele-gates, pursuant to 10 C.F.R. Section 2.785, to the Atomic Safety and Licensing Appeals Board '(hereinaf ter " Appeals Board") , the final authority, including the review function, which would otherwise be exercised and performed by the Com-mission. .

Applicant submits that the issues to be considered in the above-captioned proceeding are so fundamental, and may be so novel to this Commission, that they' require a full re-view by the Ccmmission itself. The hearing will be held to determine whether the activities which Applicant proposes under the construction and operating permits in question-would

i i create or maintain a situation inconsistent with the antitrust laws, pursuant to amendments to the Atomic Energy Act enacted in December, 1970. See 42 U.S.C. S2131 et seg. Until the 1970 amendments, the Commission's antitrust review under the 1954 Atomic Energy Act remained inoperative because all reactors were licensed under section 104 of the Atomic Energy Act, as amended, to which the antitrust review provisions did not apply. The 1970 amendments changed the law so that almost all reactor licensing proceedings now require anti-trust review. See Bertram Schur, Background Discussion of Nuclear Pcwer Licensing, ALI-ABA Course on Atomic Energy Licensing and Regulations, Washington, D. C., (November 12, 1

j 1971), pp. 1-3.

The instant proceeding is the second to be noticed for hearing on antitrust issues pursuant to the 1970 amend-ments. While.the first of these, Consumers Power Campany (Midland Plants Units 1 and 2), Dockets Nos. 50-329A and 50-530A, has progressed through an initial prehearing con- ,

i l ference, it cannot new be determined which matter will be l completad first. In any event, it is likely that many i

additional antitrust hearings will folicw'. In the words of one Justice Department official, "many of the applications involve issues just as ccmplex and difficult as those uhich we encounter in a major antitruse investigation under the l

,i I

9 , ,- , _ - . . -- , - - . .

Sherman Act." Milton J. Grossman, Antitrust -- Aspects of I Nuclear Power Licensinc -- The Role and Philosophy of the Antitrust Decision, ALI-ASA Course of Study on Atomic Energy Licensing and Regulations, Washington, D.C., (November 12, i 1971), p. 3.

' In addition to the complex questions of fact and j

law arising under the Sherman Act, this proceeding (and those which will follow it) raises difficult questions about the Commission's role in enforcing the antitrust laws, serious issues of comity with the Federal Power Commission and other federal and state governmental agencies, and vital questions concerning the nature and scope of hearings required by the 1970 amendments. The issues are further compounded because of the consolidation of the Oconee and McGuire applications.

The Commission has never before had to address itself to these or other fundamental issues of antitrust law and public

. I policy. The published amendments to the Commission's Rules l which inplement the 1970 amendment (see 35 Fed. Reg. 19655 (1970)] are of little guidance in this regard since, " gen-erally, these rules simply crank into our regulatory system the statutory amendment." Schur, supra,,at 9. l Given the lack of Commission precedent and the fundamental nature of the issues raised, Applicant submits that the delegation of final review to the Appeals Board would be particularly unwise and impractical. An appellata review board's role is to apply agency policy to given factual I

.. -. .- - .. ~_ . _ - .- . . . . .. - -

circumstances, not to formulate policy. See Freedmc1, Review Boards in the Administrative Process, 117 U. Penn. L. Rev.

t 546 (1969). Significantly, in the Federal Communications Commission and the Interstate Commerce Commission, where Congress has explicitly provided for the establishment of appellate review boards, 47 U.S.C. S15 5 (d) (1) and 49 U.S.C.

i S17(5) , such boards are not utilized as final authority where important policy questions are concerned. See Note, i

i Intermediate Appellate Review Boards for Administrative L. Rev. 1325, 1329-30 (1968). Similarly, Agencies, 81 Harv.

the Administrative Conference's proposed amendment to section I

i  !

i 8 (b) (1) of the APA, 5 U.S.C. 5557, calls for Commissien-

- level review of cases where a party makes a " reasonable .

showing" that the case involves "a decisicn of law or policy 1

which is important". See Freedman, supra, at 577.

I Here, there is no extant Commission policy for l the Appeals Spard to apply, and the Commission's on-going 4 regulatory process will suffer from a lack of Commission i

guidance in policy areas. Unlike the ICC and FCC, the Com-l mission's Rules of Practice, 10 C.F.R. section 2.786(b),

i

do not permit parties to petition the Commission to review i

Appeals Board decisions. This provision ' emphasizes that 4

! the Appeals Board mechanism was established to review ordinary cases, not to' formulate Commission policy or'otherwise resolve important questions of law mui public policy. Thus, here, where the issues are novel, complex, and fundamental, and t

i F

i

=

., , . - - -.,.,.-,p. . , . - - - . , , , . , , , ,7 - , - . , - ,, .-,,__g, , , , , , - .,m,g.,,a ,, ,-v.y ay , y

10 where their disposition will have a far reaching effect on a vital segment of our economy, the parties are entitled to have the issues heard and reviewed by the Commission itself, the agency charged by Congress with paramount oversight responsibility for nuclear energy.

Conclusion For the foregoing reasons, Applicant prays that the Commission reconsider that portion of its Notice dele-gating final review authority to the Appeals Board.

Respectfully submitte k,

h/ ' N $_' .

'IA r "

Wrd.~' ?larfielp Ross' "

1. . t  : ,

l /

MY u'iV' - / . ( ll: . 9 A Keita S. Watson l ,$hh^

Toni K. Golden

- Attorneys for Duke Power Company WALD, HARKRADER & ROSS 1320 Nineteenth Street, N. W.

Washington, D. C. 20036 (202) 296-2121 Of Counsel:

William H. Grigg ,

Duke Power Company '

422 South Church Street Charlotte, North Carolina 28201 July 24, 1972

UNITED STATES OF AMERICA 3EFORE THE ATOMIC ENERGY COMMISSION In the Matter of )

)

Duke Power Company ) Docket Nos. 50-269A, 50-27CA, 50-287A, 50-369A (Oconee Nuclear Station Units 1, )

50-370A 2 and 3 and McGuire Nuclear ) and Station Units 1 and 2) )

Appendix A to Answer to Notice of Hearing and Opposition to, and Motion to Reconside.

Delecation of Review Authority It is the position of Duke Power Company (hereina f ter <

1

" Applicant") that the scope of the antitrust scrutiny is limited by Section 105(c) of the Atomic Energy Act, as amended, 42 U.S.C.

2135(c), to activities under the licensed units. Any holding to the contrary would ignore the statutory standard set forth in Section 105 (c) which governs this proceeding and misread the legislative history underlying this section.

A. The Applicable Statute Itself Limits the Scope of the Commission's Antitrust Review .

The Atomic Energy Commission has no authority to con-duct antitrust enforcement proceedings as such, i.e., proceed-ings directly to compel compliance with the antitrust laws. That power is reserved principally to the Department of Justice as prosecutor in civil or criminal court actions; to injured pri-vate parties suing in court for damages or injunctions; and to the Federal Trade Commission. Some federal administrative 1

w e ,

i

?

agencies are also authorized by Sectica 11(a) of the Clayton Act, 15 U.S.C. 5 21 (c ) , to conduct enforcement proceedings with respect to the industries they regulate, but the Atomic Energy Commission is not one of those so authoriced.

Most administrative agencies with licensing responsi-I bilities are required by statute or judicial decision to take account of antitrust policy. Such licensing responsibilities, however, do not require, or permit, the agency to conduct an overall review of the license applicant's conduct in light of a

' the antitrust laws. Rather, there must be "a reasonable nexus between the matters subject to its surveillance and those under attack on anti-competitive grotnds". City of Lafayette v.

l SEC, Slip Op. 27 (D.C. Cir. Nos. 24,764 and 24,963, 1971). cert.

granted sub nom. Gulf States Utilities v. FPC, et al., 40 USLW 1/

i 3565 (1972).

In the Lafayette case, supra, the Court found an in-i sufficient "nel;us" between the SEC's approval of security issues under the Holding Company Act and the operation of the facilities for which the financing was required, because "the agency, here i

--1/ The Court granted certiorari only in the companion case to Lafayette, supra, of Lafayette v. FPC (D.C. Cir. No.

' 71-1041), wnica neld thar rhe Federal Power Commission must consider antitrust issues relating to the issuance 1

of securities by a public utility.

4

the SEC, has not been given any regulatory jurisdiction over the operations of the company". Slip Op. at 27. The same restrictions limit the Atomic Energy Commission's antitrust review. As the Court of Appeals said in Cities of Statesville

v. AEC, 441 F.2d 962, 975 (D.C. Cir. 1969) (en banc),

4

[w] hat is unique about the instant situation, is the extreme narrowness of the Commission's jurisdiction in making licensing determina-tions. Unlike the Federal Power Commission, the Federal Communications Commission, and the many other regulatory agencies, the Atomic Energy Commission is dealing with a subject matter that is not, as yet, open to vast com- ,

4 mercial exploitation. These atomic power plants are not like adio stations of proven l

technical and commercial feasibility which are coveted prizes of the elite; instead, j nuclear reactors are extremely speculative

investments because of the many technical 4

and financial imponderables. Unlike the other regulatory agencies, the Atomic Energy Commission concerns itself not with economic feasibility but with practical development and application of this wondrous scurce of 3 energy. While the regulatory agencies in most of the other fields concern themselves with establishing an efficient national al-location of resources in the area which they are administering, and base this goal on a "public interes t" concept of free enterprise, the Atomic Energy Commission concerns itself with promoting technical innovation in a highly experimental field and implementing "public interest" concepts through crotec- q tion of the health, safetv, and- :ecurity of the nation. .  ;

'l 4

)

W l

ll

.u

Section 105 (c) of the Atomic Energy Act, as amended, 42 U.S.C. 2135(c), requires the Atomic Energy Commission to consider the antitrust laws in its licensing process. But it does not provide the Commission with general antitrust enforce-4 ment authority, or subject every f acet of the license appli-cant's activities to antitrust review by the Commission. On the contrary, whenever antitrust issues have properly been raised in a licensing proceeding, the section only mandates the Commission to "make a finding as to whether the activities under the license would create or maintain a situation incon-sistent with the antitrust laws" (emphasis supplied) .

An attempt to subject all of Applicant's activities as an electric utility to an unlimited antitrust review in this proceeding would require this Board to construe Section 105 (c) as if the words " activities under the license" (emchasi- ,

supplied) had been deleted from the statute. Significantly, these words limiting the Commission's antitrust review authority were added by the 1970 amendments to the Act. By centrast, the previous version of Section 105 (c) required only that the Attorney General advise the Commission as to the anticompeti-i tive impact of the proposed license. The statute was silent  !

I i

as to what antitrust principles or parameters should guide the l Commission in its consideration of license applications. See

! I

68 Stat. 938. At the hearings which considered the 1970 amend-ments, the Justice Department proposed a revision of Section i i

I I

l I

. 105(c) which again failed to set forth the parameters or

principles of the Commission's antitrust review functions.

Thus, the acting Assistant Attorney General testified that under his proposal the Commission would not "have to make an express conclusory finding that the license or the transac-tion upon which the license was based" might be inconsisrent with the antitrust laws, but could condition the license -- in the light of the Attorney General's advice -- without limita-tions as to the area of antitrust scrutiny. Prelicensinc Antitrust Review of Nuclear Powerplants, Hearings before the Joint Cct.nittee on Atomic Energy, 91st Cong., 1st Sess.

(November, 1969 and April, 1970) 125. [ Hereinafter cited as

" Hearings").

The Justice Department's proposal was not adopted by Congress; instead, Congress rejected an unlimited and open-ended scope of review and inserted the phrase " activities under the license" in place of the pre-1970 standard in order to establish the principles and parameters of the review pro-ceedings. This conclusively demonstrates that, not only did Congress focus its attention on the question of the scope of ,

the Commission's inquiry in antitrust progeedings, it explicitly restricted the inquiry to an applicant's activities under the license.

i f

i

1 3

B. Legislative History Confirms Congressional Intent to Limit Cctmission's Antitrust Review

1. Prior Antitrust Review Standards The legislative history of the antitrust provisions of the Atomic Energy Act confirms the clear meaning of Section  :

105(c), i.e., that the Commission's antitrust inquiry must be i

confined to activities under the license. See Power Reactor 4

Development Co. v. International Union of Electrical Workers, 367 U.S. 396, 408-411 (1961).

The original Atcmic Energy Act of 1946 provided:

i Where activities under any license might serve to maintain or to foster the growth of monopoly, restraint of trade, unlawful competition, or other trade position in-imical to the entry of new, freely com-petitive enterprises in the field, the Commission is authorized and directed to refuse to issue such license or to estab-lish such conditions to prevent these 4

results as the Commission, in consulta-tion with the Attorney General, may determine. 57 (c) , 60 Stat. 724.

1 j The' Cc= mission was thus required by this section not only to condition every license so as to prevent anticompetitive consequences, but also to deny a license altogether if it a

! determined that conditioning would not be effective. The prac-i tical operation of such a requirement was never experienced, ,

however, because no licensing proceedings under the 1946 Act i ever arose.

! A substantially different regime was established by the Atomic Energy Act of 1954. The sratutory revision first

propoced in that year by the Joint Committee on Atomic Energy (JCAE) would have eliminated entirely the obligation of the Commission to consider or apply antitrust policy in licensing proceedings. --2/ Upon the protest of several JCAE members and the Department of Justice, an alternative proposal was advanced under which antitrust considerations would have continued to be controlling, but with the power to make the requisite antitrust determinations removed from the AEC and given to 3/

the Federal Trade Commission. The version initially passed by the Senate was similar but would have made the Attorney General the final antitrust arbiter.

The common thread in all these proposals was extin-guishment of this Commission's authority to decide antitrust issues. But, as finally enacted, the 1954 statute neverthe-less preserved an antitrust role for the Commission. While eliminating the prior provision which made antitrust con-siderations dispositive, the new statute required the Commis-sien in commercial-licensing cases to obtain the views of the Attorney General as to "whether, insofar as ha can deter-mine, the proposed license would tend to create or maintain a situation inconsistent with the antitrust laws. . . .

68 Stat. 938. However, as previously observed, the 1954

_2/ H.R. 8362, 83d Cong.; S. 3323, 83d Cong.

_3/ H.R. 9757, 83d Cong.: S. 3690, 83d Cong.

legislation established no principles or parameters to guide the Commission in its antitrust review. i Like the original 1946 statute establishing an i 4

i antitrust rule for licensing proceedings, however, the 1954 antitrust provision never came to be applied. All applica-tions filed under the 1954 Act were for research and develop-ment licenses rather than for commercial licenses, and, as the Court of Appeals held in the Statesville case, the Ccm-

' mission was neither obligated nor permitted to consider antitrust issues when only a research license was sought.

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

(en banc).

l 2. The 1970 Amendments Following the Statesville case, supra, increasing dissatisf action with the research-cc=mercial dichotomy, and with the lack of any role for antitrust in research licensing, eventually resulted in the 1970 amendments to Section 105 (c) .

These amend.~enta were enacted only after numerous Committee hearings and conferences in which interested parties, including the Antitrust Division of the Justice Department, participated extensively. The legislativ,e process began in late 1969, when the JCAE Committee initiated hearings te con-i sider three bills which proposed changes in the Atomic Energy Ccmmission's antitrust review precedures: S. 212 (the Anderson-

Aikon bill); H.R. 8289 (the Holifield-Price bill) ; and the I Atomic Energy Commission's bill, H.R. 9647 (also introduced in the Senato as S. 1883).

Each of these bills proposed changes to the language of Section 10 5 (c) concerning the scope of the antitrust review by the Attorney General and the Commission in nuclear facility 4 licensing proceedings. --4/ But, H.R. 9647 failed to set forth principles or parameters to guide the Commission in its anti-trust restew functions. Despite, or perhaps because of, such lack of guidance, the Antitrust Division of the Justice Depart-ment endorsed H.R. 9647, since the bill "would assure the applicability of the antitrust standard to all significant nuclear utilization and production facilities", inc uding supply arrangements for the proposed licensed units. Hearines,

, pp. 119, 121. (Testimony of acting Assistant Attorney General).

1  :

The lack of guidance to the Commission in the pro-

~

posed legislation troubled the Committee. One member of the Committee staff warned:

- l l

4/ S. 212 and H.R. 8289 authorized the Attorney General to advisc and the Commission to consider whether " activities under any license would tend to create a situation in-consistent with the antitrust laws." H.R. 9647, the Commission's bill, provided that the Attorney General

! woul-1 advise the Commission whether " issuance of such license or activities for which the license is sought would tend to create or maintain a situation inconsistent with the antitrust laws. . . ."

I I

l I

J

d

"[T]here apparently are no other statutes , and '

no court dacisions based thereon, to which the 4

1 AEC could look for guidance in implementing and interpreting Section 105(c). The only analogous statute as far as I am aware, is the one you (the acting Assistant Attorney General]

mentioned, the Federal Property and Administra-tive Services Act. For the reasons indicated earlier, it prcbably would not afford much guidance." Hearings, p. 125.

The Association of the Bar of the City of New York expressed a similar concern. Commenting upon the proposed bills, the Association warned that: ,

l "Unless Congress establishes some perimeters j *** presumably the Commission will feel obli-f gated to pursue at least the following ques-tions as to the following activities of each license applicant:

1

" Activities of applicent in disposing of electrical energy frc. the facility. Is the facility part of a pool whicn is inconcistent i with the antitrust laws? Are there i'  ;;per agreements between the applicant and cc..ars as to :he parties to whom and the areas in l l

which the applicant will sell the electricity?

Is there a joint venture from which other parties have been improperly excluded? Even if there is no joint venture or joint under-i standing, does the applicant occupy such a i position of dominance that he is akin to a j monopolist? If so, is his refasal to sell to some parties inconsistent with the anti-trust laws? Does the applicant charge dis-criminatory prices, utili:e deceptive adver-tising, or engage in unfair sales pract ces which are inconsistent with the antitrust laws?" Hearings, pp. 595, 612, 613.

One of the " perimeters" recommended by the Bar Association was that the supply industry be entirely excluded from consideraticn. It also proposed that "[t]he [ antitrust]

review should also be limited to the activitie.1 of the appli-cant directly associated with activities under the proposed license in order to preclude the possibility of Commission investigations into unrelated matters . . . ." Id. at 625.

This concern was also reflected in the testimony of Donald G. Allen, President of the Yankee Atomic Electric Co., who concluded that:

". . . the AEC will need guidance in determin-ing what antitrust issues can appropriately be resolved in licensing proceedings, and should be given express authority to exclude issues which are not directly related to the proposed project, which it cannot dispose of because all necessary parties are not before it, or which for other reasons can more appropriately be resolved in another forum." Hearings, p. 532.

The hearings on the bills concluded in April 1970, but discussions continued in other forums, including informal conferences between interested parti.es and the Ccmmittee mem-bers and staff. In June 1970, the question of the scope of antitrust review in the proposed legislation arose during hear-ings before the Senate Antitrust & Monopoly Subcommittee.

There, the acting Assistant Attorney General testified that while

. . . antitrust review would consider the con-tractual arrangements and other factors govern-ing how the propcsed plant would be cwned and

~

1 i

l I

)

i its output used . . . (, n]o broader scope of review is contemolated . . . . 1 We do not consider such a licensing proceed-ing as an appropriate forun for wide-ranging scrutiny of general industry aff airs essen-tially unconnected with the plant under i review." Hearings, p. 366.

a This testimony was put into the JCAE hearing record 1

l by the American Public Power Association, as part of its written response to questions propounded by the JCAE. Hearines, p. 366.

It is of value not merely as evidence of what the JCAE was led to believe the Justice Department's interpretation of the Act should be, but also as a contemporaneous opinion of a principal participant in the development of the legislation.

The bill, H.R. 18679, which finally emerged from the Committee and was enacted as PL 91-560 in December 1970, i

clearly took account of the concerns of certain Committee mem-i l bers and other parties, such as the Bar Association of the City of New York, ,that the scope of the Commission's antitrust review as proposed was too vague and open-ended. The final Committee report which accompanied PL 91-560 emphasized that the new antitrust standard to be applied by the Commission did not encompass industries supplying the. construction and operation of the proposed unit "unless the license .

applicant is culpably involved in activities of others that fall within the ambit of the standard." House Report 91-1470, Joint Committee on Atomic Energy to Accompany l

1

- ~

13-J H.R. 18679, p. 31. In additien, the new Act itself explicitly j

restricted the Ccemission's inquiry to " activities under the

. license" -- a much more defined and limited standard than originally found in the proposed legislation of the Atomic Energy Commission and the Justice Department. Even Senator f

i Aiken, an advocate of broad review authority, conceded that the effort "to cut back on the scope of the AEC consideration of antitrust issues . . . is reflected to some extent in this bill" (emphasis in the original). (Dissenting views on H.R.

18679.)

• The clearest indication of the Congressional decision 2

to define and limit the Commission's antitrust authority is l.

contained in the Committee Report, supra, at 14, which states:

"The committee is recctmending the enact-ment of prelicensing review provisions which

-- as in the proposed Atomic Energy Act of 7

1954 that the Joint Committee originally reported out, and as is in the version of subsection 105c, that the Senate passed on July 27, 1954 -- do not stop at the point of the Attorney General's advice, but go on to describe the role of the Ccemission with re-i spect to potential antitrust situations.

i * **

It is intended that, in effect, the Cc mission vill conclude wnether, in its Judcrent, it is reasonably prchable that the

! activities under the license would, when tne license is issued or enereafter, be inconsis-tent witn any of One antitrust laus or the l

policies clearly underlyinc these laws." ,

l (Emphasis adcec.) 1 4

4

,&-m. - ~ ~,v-- , , - , ,

Although several industry spokesmen preferred a more narrow standard, while others sought a broader scope of review, such views merely confirm that the legislation ultimately enacted was a compromise. As Senator Pastore, the floor manager of the bill in the Senate, told his colleagues:

"The committee and its staff spent many, many hours on this (antitrust] aspect of the bill, and I can assure the Senate that we consider (sic]

very carefully the considerable testimony, comments and opinions we received from inter-ested agencies, associations, companies and individuals, including representatives from the Antitrust Division of the Justice Depart-ment, from privately owned utilities, and from public and cooperative power interests. The end product, as delineated in H.R. 18679, is a carefully perfected comprcmise by the com-mittee itself; I want to emphasize that it does not represent the position, the prefer-ence or the input of any of the special pleaders inside or outside of the Government. In the committee's judgment, revised subsection 10 5 (c) ,

which the committee carefully put together to the satisfaction of all of its members, con-stitutes a balanced, mcderate framework for a reasonable licensing review procedure."

Congressional Record, S. 19253 (December 2,

1970).

4 The " balanced, moderate" approach is reflected in the bill and in the Committee report which adopted it. For example, the Committee report, supra, stated:

"Of course, the cc=mittee is intensely aware that around the subject df prelicensing review and the provisiens of subsection 105c, hover opinions and emotions ranging from one extreme to the other pole. At one extremity is'the view that no crelicensinc antitrust review is either necessary or advisable and that the first two subsections of section 105

concerned with violation of the antitrust laws and the information which the Commissicn is obliged to report to the Attorney General are wholly adequate to deal with antitrust con-siderations. Additionally, there are those who point cut that it is unreascnable and unwise to inflict on the construction or ep-eration of nuclear pcwerplants and the AEC licensing process any antitrust review mech-anism that is not required in connection with other types of generating facilities. At the opposite pole is the view that the licensing process should be used not only to nip in the bud any incipient antitrust situation but also to further such competitive postures, outside of the ambit of the provisicns and established policies of the antitrust laws, as the Com-mission might consider beneficial to the free enterprise system. The Joint Committee does not favor, and the bill does not satisfy, either extreme view." Committee Report, supra, p. 14.

It is well settled that where the langunge of an act in its final form represents a compromise, the views of those who sought different wording, "cannot control interpretation of the compromise version." Hardin v. Kentucky Utilities Co.,

390 U.S. 1, 1,1 (1968). Similarly, the " legislative history of a bill that was not adcpted cannot be resorted to to con-strue a bill that was." Interstate Natural Gas Co. v. FPC, 156 F.2d 949, 952 (5th Cir. 1946), aff'd, 331 U.S. 682 (1947).

Thus, Senator Aiken's threatened dissent and the failure of Congress to enact the abortive Aiken-Kennedy bill (S. 2564 and H.R. 13823) contribute nothing to the interpretation of the 1970 amendments of the Atomic Energy Act.

What emerges from the foregoing review of the legis-

' lative history of the 1970 amendments is the desire of Congress to give the Atomic Energy Commission some power of antitrust review, but to limit the scope of that review. Congress made clear that the Act does not foreclose Jus tice Department en-forcement of the antitrust laws in federal court. See Section 10 5 (a) and Remarks of Representative Price, Concressional Record, J H. 9449 (September 30, 1970). Thus, the narrow scope of the j Commission's antitrust review does not leave the public un-

)

protected against allegedly unlawful conduct since enforcement

{

of antitrust violations unrelated to an applicant's proposed 1 activities under the license is left to the traditional forums.

j During consideration of the legislation, spokesmen for the public power interests, the Atomic Energy Commission, f and the Justice Department recognized that the Commission's antitrust review should be limited and that general antitrust I enforcement should be left to the courts. A representative for

- the American Public Power Association wrote the JCAE and quoted g with approval the testimony of the Atomic Energy Commission's General Counsel that "the antitrust authority of [ sic] Commis-sion will be an appropriate complement to, the authority of the Attorney General, and, it would seem, should not be used by the Commission to duplicate authority already held by the Attorney l

1 1

General." Hearings, pp. 365-363. Finally, a restrictive inter-protation of the scope of the Cerrission's review cc= ports uith the Justice Department's testimony that the fortuity of a nuclear license application should not be used to initiate a

" wide-ranging scrutiny of general industry affairs essentially .

unconnected with the plant under review." Hearings, p. 366.

C. Issues Raised by Justice and Petitioners are Beyond the Scope of Review Provided in the Act Applicant's view of the Act is entirely consistent with the standard applied by the Justice Department in reviewing the disposal of prcperty under Section 207 of the Federal Property and Administrative Services Act of 1949, 40 U.S.C. 5483, whose applicable statutory language was adepted b, the 1970 amendments.

The analysis Lader the Property Act is whether an anticompetitive

" situation" could be created or maintained as a result of the contemplated disposal of government property. By analegy, therefore, the test here should be whether an anticompetitive situation would be created or maintained as a result of Appli-cant's construction or operation of the Cconee and/or McGuire units.

Limiting this proceeding to issues proximately related to the construction and operation of the. bconee and McGuire units in this instance precludes inquiry into the nature and  ;

l use of Ac..clicant's transmission systen, intercennection arrange-1 l

l ments, and other areas of Applicant's conduct which relate to l l

l l

i 1

l

its system-wide operations as an electric utility. Any other conclusion would turn the applicable standard on its head:

the test is not whether the overall system has an impact on

! the Oconee or McGuire units, but rather whether an anticompeti-f tive impact will result from the variation in the method of supplying a part of Applicant's bulk power supply. Hence, the

" activity" of generating power in the Oconee or McGuire station could not rationally be said to " maintain" a situation incon-sistent with the antitrust laws, and hence is not the sort of event calling for antitrust scrutiny by this Commission as I

a precondition to a license.

Such an interpretation of Section 105(c) in no way i precludes Cc= mission review of the kind of activities under a power reactor license which did concern the JCAE Committee and the Department of Justice. Commenting upon " issues which are of particular concern to the electric utility industry at this time," the acting Assistant Attorney General testified:

"Specifically, the industry is now going through a censiderable controversy over the extent to which, and the means by which, small systems should have access to large new generation and transmission facilities. As to this, I think antitruct law provides some general guidance.

Compani.3 acting together to create or control a unique facility may be required by application of the rule of reason, to grant access on equal and nondiscriminatory terms to others who lack a practical alternative." Hearines, pp. 127-128.

f 4

A

, ..g. ,.,. - , , - + v- .-..r , , , , , , - , , , - - -

Similarly, when the Justice Department was asked to comment en the bill which was enacted, the Assistant Attorney General endorsed the bill and observed that it would enable the Commission to condition a license for a " joint venture" nuclear 4

power plant -- that is, one owned by two or more companies.

_5/

i Congressional Record, S. 19254 (December 2, 1970).

Thus, it is clear that the 1970 amendments sought principally to deal with the exclusion of small utilities from joint ventures owning and operating nuclear power reactors.

The ownership and operation of such reactors would raise i

l questions directly and immediately under Section 1 of the Sherman Act without need for appraisal of an entire utility system operation, and thus are appropriate for AEC review under the statutory standard. There is no suggestion in the I legislative history that where, as here, the proposed units will be cwned.by a single utility, Section 105 (c) was intended to trigger an antitrust review of an applicant's general activities as an electric utility.

i --5/ The acting Assistant Attorney General made clear in his

! JCAE testimony that if the licensed ' unit were owned by i a sing,e uti_3 ty I whic.. was w a member of a pool, such mem-

! bership per se would not cause the unit to be considered a joint venture. Hearines, p. 134.

l

Finally, even assuming arcuendo that there could be shown a sufficient nexus between the Cc= mission activity in licensing the Oconee and McGuire units according to health and safety standards and the competitive " situation" in Applicant's service area, that nexus could not extend to the wide range of demands and issues raised by the Antitrust Division and the Petitioners. While questions regarding Petitioners' participation in the licensed fr ilities might be can'idered arguendo within the statutory ambit, issues as to =cnopoly, joint ventures, interconnection, wheeling and pooling arrangements (all posed on a system-wide basis) ,

are plainly too remote to the operation of the Oconee and McGuire plants to require scrutiny in this licensing pro-ceeding. Rather, if the overall competitive condition of Applicant's system is to be examined, it can only be done in antitrust enforcement proceedings, the availability of which is carefully preserved by the 1970 amendments to the Atomic Energy Act.

It is significant that following passage of the final version of the 1970 amendments-in the House, the Anti-trust Divisien of the Justice Department , wrote several letters offering an expansive interpretation of~the antitrust pro-visions of the bill. After'these letters were introduced into 1 the Congressional Record during the Senate debate by Senator J

. e 21-i Aiken anu other proponentslof a broader scope of antitrust review than enacted, Representative Hosmer, co-author of the bill, rose on the House floor to set the record straight.

He noted that the language of the legislation was a compro-mise and warned: "Thus , the views and opinions expressed

} in the letters from the Antitrust Division of the Department i

of Justice are not necessarily authoritative, and may or may not accurately represent the intent" of the bill. Concres-sional Record, H. 11087 (December 3, 1970).

In this procteding, the Justice Department and the Petitioners basically seek to cchieve what Congress refused

to sanction, i.e., an unlimited antitrust review of every i facet of Applicant's activities as an electric utility.

j Section 105(c) does not permit such review. Accordingly, Applicant urges the Board to find that Applicant's activities which are unrelated to the Oconee and McGuire units are beyond the scope of this proceeding.

e i

t.

es- - - - =-v tr-rte =r -T + g m 1 P-'*-e  ? e - - - =

• ~ - " -

~'

v-- v-*v--

UNITED STATES OF AMERICA BEFORE T:IE ATOMIC ENERGY COMMISSION In the Matter of ) Docket Nos. 50-269A,

) 50-270A, Duke Power Company ) 50-287A, (Oconee Nuclear Station Units 1, ) 50-369A 2 and 3 and McGuire Nuclear ) and 50-370A Station Units 1 and 2 )

CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing

" Answer to Notice of Hearing and Opposition to, and Motion to Reconsider Delegation of Review Authori cy" in the captioned matte.: have been served upon the followir.; by deposit in the  !

United States mail, first class or air .1, this 24 th day l of July, 1972: l Walter K. Bennett, Esq. Honorable Reese A. Hubbard Atomic Safety and Licensing Board County Supervisor of Oconee Ccun l Atomic Energy Commission Walhalla, South Carolina 29621 J j Washington, D. C. 20545

, Mr. Joseph Knotts, Jr.

J Joseph F. Tubridy , Esq. Counsel for AEC Regulatory Staf f Atcmic Safety and Licensing Board U.S. Atomic Energy Commissica Atcmic Energy Commission Washington, D. C. 20545 i Washington , D. C. 20545 Josech Rutberc, Esc.

John B. Farmakides, Esq. Antitrust Counsel 5cr AEC Atomic Safety and Licensing Board Regulatory Staff Atomic Energy Commission U.S. Atomic Energy Commission Washington, D. C. 20545 Washington, D. C. 20545 Mr. Stanley T. Robinson , Jr. Benjamin H. Vogler, Esq.

Chi af, Public Proceedings Branch Antitrus t Counsel for AEC Office of the Secretary Regulatory Staff of the Ccmmission U.S. Atomic Energy Commission U.S. Atcmic Energy Ccrmission Washingtcn, D. C. 20545 Washington, D. C. 20545 Wallace E. Brand, Esq.

J.O. Tally, Jr., Esquire Antitrust Public Counsel Section P.O. Drawer 1660 Department of Justice Fayetteville, North Carolina P.O. Bo:c 7513 Washington, D. C. 20044 Mr. Dayne H. Brown, Direct]r State Radiation Protection Prcgram Jack R. Harris, Esquire North Carolina State Board of Health Suite 207 Raleigh, North Carolina 27602 Stimpscn Wagner Building Statesville, North Carolina 256~~

Dr. W.C. Bell State Planning Task Force P.O. Box 1351 Raleigh,:Iorth Carolina 27602 Mr. J. Bonner Manly, Director State Cevelopment Board Hampton Office Building Columbia, South Carolina 29202 Algie A. Wells, Esquire, Chairman Atomic Safety and Licensing Board Panel U.S. Atomic Energy Commission Washington, D. C. 20545 1

l l

vws 1

r,- CdW.-

<- - j Toni K. Golden Wald, Harkrader & Ross Attorneys for Applicant l

1 i

l l

1