ML19317F523

Applicants' Motion for Order Dismissing All Allegations Made by Nrc,Doj & City of Cleveland.Certificate of Svc Encl

ML19317F523
Person / Time
Site:	Davis Besse, Perry
Issue date:	04/20/1976
From:	Reynolds W, Zahler R SHAW, PITTMAN, POTTS & TROWBRIDGE, TOLEDO EDISON CO.
To:	Atomic Safety and Licensing Board Panel
References
NUDOCS 8001150837
Download: ML19317F523 (60)

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, . April 20, 1976 T  %

. UNITED STATES OF AMERICA q,  !

- NUCLEAR REGULATORY COMMISSION l g u nna.. )

Before the Atomic Safety and Licensina Board ggg,7 c4' *' N In the Matter of ) 9 M

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THE TOLEDO EDISON COMPANY and ) __ ./

THE CLEVELAND ELECTRIC ILLUMINATING ) Docket No. 50-346A ,

COMPANY ) l (Davis-Besse Nuclear Power Station, )  !

Unit 1) ) '

)

THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. )  !

(Perry Nuclear Pcwer Plant, ) Docket Nos. 50-400A Units 1 and 2) ) 50-401A

)

THE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A i

J APPLICANTS' MOTION FOR AN ORDER l DISMISSING ALL ALLEGATIONS MADE BY THE NRC STAFF, THE DEPARTMENT OF JUSTICE AND THE CITY OF CLEVELAND

1. On April 5, 1976, the direct cases of che j

, NRC Staff (" Staff"), the Department of Justice (" Department"),

1 and the City of Cleveland (" City") in the instant consol-idated antitrust proceeding were closed but for some minor 1/

matters (Tr. 8134).'- Prior to the commencement of Ap-l_/ The record is closed as to the cases adverse to Ap-

, plicants except to reach agreement on DJ Exhibit 40; to allow the City to introduce documents previously ruled priv-ileged if the Court of Appeals should resolve the privileged .

document question presently before it by requiring the doc-uments to be produced to the City; and to recall Witness Lewis for further cross-examination by counsel for Ohio Edison should that be deemed necessary.

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plicants' cases, which are now scheduled to begin on April 21, 1976, Applicants hereby request the Licensing Board to rule on the sufficiency of the cases presented by parties adverse to Applicants. Applicants submit that the evidence of record fails to prove by a preponderance of the evidence that Applicants' " activities under the

[ nuclear] license would create or maintain a situation in-consistent with the antitrust laws." 42 U.S.C. S 2135 (c)

(1970). In such circumstances, the Commission itself has invited the filing of appropriate motions seeking an early termination of the antitrust review process. See Louisiana Power & Light Co. (Waterford Steam Electric Generating Station, Unit 3), CLI-73-25, 6 A.E.C. 619 '(1973) (herein- .

after "Waterford II"). As stated in the Waterford II de-cision (M. at 621) :

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• if it becomes apparent at any point that no meaningful nexus can be shown, all or part of the pro-

. ceeding should be su=marily disposed of. This can be done under the pro-vision of 10 C.F.R. 2.749 or by any other appropriate means.

2. At this stage in the proceeding a clearly "ap-

)ropriate means" for testing the sufficiency of the evidence

, presented against Applicants is a motion seeking an order from the Licensing Board dismissing in their entirety the allegations made by the Staff, the Department, and the City 9

. e (cf. Tr. 6220-21). In civil antitrust suits dismissal motions of this sort at the close of the plaintiff's case are routine and well-accepted practice. See, e.g., Inde-pendent Iron Works, Inc. v. United States Steel Corp.,

177 F. Supp. 743 (N.D. Cal. 1959), aff'd, 322 F.2d 656 (9th Cir.), cert. denied, 375 U.S. 922 (1963) (motion to dismiss private antitrust action); United States v. Parke, Davis & Co., 164 F. Supp. 827 (D.D.C. 1958), rev'd on other grounds, 362 U.S. 29 (19601 (motion to dismiss civil anti-trust action) ; United States v. Borden Co. , 111 F. Supp.

562 (N.D. Ill. 1953), aff'd in eart and rev'd in eart en other grounds, 347 U.S. 514 (1954) (motion to dismiss civil <

antitrust action); United States v. United States Gvosum Co.,

67 F. Supp. 397, 417 (D.D.C. 1946), rev'd on other grounds, 333 U.S. 364 (1948). )

3.- In a judicial context, when the antitrust action is tried before a court and not a jury, such a dis- l

. missal motion is generally made pursuant to Rule 41(b),

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Fed. R. Civ. P."' See cases cited above. In evaluating i

such a motion, the rule in the federal courts is that, since '

2/ Rule 41(b) provides in part:

After the plaintiff, in an action tried by the court without a jury, has completed the presen- -

tation of his evidence, the defendant, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to

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relief.

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the trial court is the trier of the facts, the court in considering the evidence [is]

not bound to view it in a light most favorable to plaintiff, with all attendant favorable presumptions, but [is] bound to take an unbiased view of all the evidence, direct and circumstantial, and accord it such

, weight as [the court] believed it entitled to receive. .

Allred v. Sasser, 170 F.2d 233, 235 (7th Cir. 1948), cited in, United States v. Borden Co., supra, 111 F. Supp. at 566. See also Ellis v. Carter, 328 F.2d 573, 577 (9th Cir.

1964) ("the trial court was not required to deny the 41(b) 1 motion even if the evidence, viewed in a light most favor-able to the plaintiff, made a prima facie case"). Accord-ingly, if after carefully weighing the evidence the court finds the evidence insufficient to prove the plaintiff's case, it is the duty of the court to render a decision for the defendant on the merits. See United States v. United States Gypsum Co., supra, 67 F. Supp. at 420.

4. By analogy such procedures are fully applicable in the present context. The policy considerations under-lying a Rule 41(b) motion to dismiss in the federal courts have equal application in an antitrust proceeding before the NRC. This Licensing Board should dispose of the present proceeding at the first opportunity which is appropriate

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. -S-under the rules and in accord with the rights of the par-ties. Compare United States v. Chibal States Gypsum Co. ,

supra, 67 F. Supp. at 417-18. .'.fter the Board has heard all the evidence that the Staff, the Department, and the city have proffered, it is in a position properly to de-

. termine whether those parties have " convincingly shown a right to relief." Id. at 418. In this connection, the ap-plicable review standard is not whether the parties adverse to Applicants have made a prima facie showing such as might be required to take a case to a jury in a jury trial. Here the trier of fact is not a jury but rather a Licensing Board. There is in such circumstances no reason why a de-termination cannot now be made by the Licensing Board on this record whether the cases presented against Applicants are sufficient to warrant the relief sought. Id. plainly, it is unnecessary to require Applicants to respond to the charges that have been made -- and indeed would be directly contrary to the public interest in concluding the NRC anti-trust review process in the most efficient and expeditious manner possible (Tr. 8064) -- if this Board upon full con-sideration can determine,, on the basis of the present state of the record and without giving the evidence any favorable l

. presumptions, that the parties adverse to Applicants have i

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. ~6-failed to prove by a preponderance of evidence that the licensed activities would create or maintain a situation inconsistent with the antitrust laws. Cf. Porter v. Wilson, 239 U.S. 170, 172-173 (1915).

5. Applicants' review of the record convinces them that such a finding by the Board at this stage of the proceeding is fully justified. No jc;nt action among Ap-plicants inconsistent with the antitrust laws has been proven. Moreover, even assaming arcuendo that this Board were able at the present time to conclude that such incon-sist< *-'7t action had been proven -- which does not app possible -- clearly no showing has been made, that such joint aciton, or indeed, that any individual action of the Applicants which has also been alleged to be incon-sistent with the antitrust laws, will be created or will be maintained by activities under the nuclear license.

Accordingly, the instant motion seeking an order to dismiss

. the allegations should be granted.

6. Each individual Applicant is filing today separate motions seeking orders from the Board dismissing

,specifically identified allegations. Should the present motion be granted and the antitrust proceeding be dismissed

- in its entirety, there is, of course, no need to rule on t

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Applicants' separate motions. On the other hand, if the present motion is denied, then the Board must consider the separate motions seeking orders to dismiss specific allegations, and pass on the merits of those motions, again determining whether the parties adverse to Applicants

, have proven by a preponderance of the evidence -- as dis-tinguished from simply making a prima facie showing --

that the alleged conduct is indeed inconsistent with the antitrust laws, and, if so, that it is sufficiently linked to activities under the nuclear licenses to satisfy the nexus requirement articulated by the Commission it. Its Waterford decisions.

A. No Joint Action Among Applicants Inconsistent With The Antitrust Laws Has Been Proven

7. While there may have been some conftsion at an earlier date, it now seems to Applicants that the Staff, the Department, and the City all allege some forn of un-3/

lawful concerted action among Applicants.~ To sustain that j i

l 3/ For some unknown reason the Staff contin:es to clain that it neither alleges nor has proven a conspiracy under Section 1 of the Sherman Act (Tr. 8075, lines It-18), while at the same time alleging joint action or action in concert (Tr. 8075, lines 3-5) and claiming to have proven collective ,

refusals to wheel power (Tr. 8081, lines 13-17) and a group -

boycott (Tr. 8082, lines 5-6). As a 6atter of law Applicants see no meaningful distinction between a Shernan 1 conspiracy and a group boycott. But so as to avoid an unrewarding ex-ercise in semantics, and until the Staff refines its own (cont'd p. 8) 9 9

allegation it'is necessary to prove not only concerted action -- that is, contract, combination or conspiracy --

but in addition, to demonstrate that the concerted action so proved operated in restraint of trade. Moreover, ex-cept in those recognized situations where the challenged

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activity comes within the narrow classification of a per se violation, ~ specific proof is required under the " rule of reason" analysis to show that the concerted restraint is impermissible under the antitrust laws because it has no 5/

reasonable business justification.~ An examination of the record here reveals that the parties adverse to Applicants havo failed to prove both the requisite concerted action -

and that such action, even if it had existed, was of a sort that would have unlawfully zestrained trade, either under the ger se approach or the yule-of-reason approach.

8. Throughout the hearing Applicants have re-peatedly been told that a given piece of evidence raises 3/ cont'd from p. 7 thinking on the matter so as to be able to articulate its position in some comprehensible fashion, Applicants will use the term unlawful concerted action and intend by that phrase to cover any and all contracts, combinations on conspiracies in restraint of trade as that language is

. used in Section 1 of the Sherman Act, and also to include the requisite joint action necessary to find a collective violation under Section 2 of the Sherman Act.

4/ See Prehearing Legal Erief On Behalf Of The Appli-cants, at 63-64.

}/ See ,i_d., at 55-67.

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l an inference of impermissible conduct; this Board, so the argument sces, should be in a position to draw reasonable inferences from the evidence -- for example, that it proves concerted action. Applicants do not quarrel with the other parties' basic assertions in this regard insofar as they have general application. Parties can and do prove cases by aircumstantial evidence as well as by direct proof.

In all instances, however, the party carrying the primary burden has the obligation to prove the issue in dispute.

And this must be accomplished by introducing positive proof of some fact which either directly establishes the disputed issue, or is sufficiently probative thereof to afford a -

reasonable inference that the ultimate facts in question do indeed exist. Moreover, in the latter situation, the underlying facts relied upon as indirect evidence are cog-nizable only if the inference to be drawn therefrom is the sole inference that can fairly and reasonably be extrapolated,

, so that any other explanation is fairly and reasonably ex-cluded. Thus, if the underlying facts proved permit of two inferences, one of which supports the issue in dispute 6/ See, e,.g., Tr. 8079, lines 15-18.

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Civil cases I:g.,

70 New (1971York rev.)Pattern Jurv Instructions (general-instruction - for -

circumstantial evidence).

8/ Id.

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- l and the other of which negates the issue in dispute, it cannot be said that the issue has been proved.

9. Courts have frequently been called upon to apply these general evidentiary rules to claims that two or more persons engaged in joint activity contravening the antitrust laws. Similarly, we submit that any claim that Applicants here have engaged in joint action of an anticompetitve riature must meet the standards developed in those cases.

10. Thus, as a starting point it is to be noted that, since Section 1 of the Sherman Act is directed only at joint action (see, e.g., Modern Home Institute, Inc. v. ~

Hartford Accident & Indemnity Co., 513 F.2d 102, 108 (2d Cir. 1975); Ford Motor Co. v. Webster's Auto Sales, Inc.,

361 F.2d 874, 878 (1st Cir. 1966)), the federal courts have generally recognized that "[f]undamental * *

• for any 51' claim is the finding of an agreement, express or otherwise,

. between two or more p,ersons" (Modern Home Institute, suora, 513 F.2d at 108-09) . When the particular conduct under

- scrutiny is an alleged refusal to deal, this requirement

,has been interpreted to mean that even when a party relies on circumstantial evidence to raise an inference of agree-

- ment there mus*. still be sufficient evidence to conclude 9/ Id.

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"on the basis.of reasonable inferences and not mere spec-ulation that (the refusals to deal] were the product of concerted action" (Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309, 1319 (3d Cir.1975)) . Thus, while " business behavior is admissible circumstantial evidence from which the fact finder may infer agreement,"

(Theatre Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 540 (1954) (see Tr. 8086-87)), the Supreme Court has never held that proof of parallel 1 business behavior conclusively estab-  !

lishes agreement or, phrased differently that such behavior itself* constitutes 1 a Sherman Act offense. *

• "(Clon- i scious parallelism" has not yet read I conspiracy out of the Sherman Act en-tirely.

Id. at 541. Accord: Modern Home Institute, Inc. v. Hart-ford Acc. & Ind. Co., supra, 513 F.2d at 110; Kreager v.

General Electric Co., 497 F.2d 468, 471 (2d Cir.), cert.

denied, 419 U.S. 861 (1974); Delaware valley Marine Sucply Co. v. American Tobacco Co., 297 F.2d 199, 202-03, (3d Cir.

l 1961), cert. denied, 369 U.S. 839 (1962); Bogosian v. Gulf oil Co'p.,

r 393 F. Supp.1046,1049 (E.D. Pa.1975) ; Inde-pendent Iron Works, Inc. v. United States Steel Corp., supra, 177 F. Supp. at 746-47.

11. Moreover, besides merely-parallel conduct, -

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"[a]dditional facts or circumstances are needed to show that the decisions were interdependent and thus raise the inference of a tacit agreement to boycott." Modern Home Institute, Inc. v. Hartford Acc. & Ind. Co., supra, 513 F.2d at 110; Independent Iron Works, Inc. v. United States Steel Corp., supra, 177 F. Supp. at 746, 322 F.2d at 661.

This is because reasonable businessmen will act similarly when presented with the same problem (United States v. Borden Co., supra, 111 F. Supp. at 579), and therefore no conclusion as to joint action can reasonably be drawn. See, e.g..,

North Carolina v. Chas. P,fizer & Co., F.2d , 1975-2 Trade Cas. 160,663 (4th Cir. Jan. 12, 1976) ("the antitrust laws were not meant to prohibit businessmen frcm adopting sound business policies merely because competitors had al-ready adopted the same policy"); Souuh Side Drive-In Co. v.

Warner Bros. Pictures Distribution Corp., .30 F.R.D. 32, 35 (E.D. Pa. 1962) (plaintiff must " negate the possibility

, that the uniformity of action is merely a ' common business solution of identical problems in a local competitive area' and show that defendants' conduct is unreasonable");

Fanchon & Marco v. Paramount Pictures, Inc., 100 F. Supp.

84, 91 (S.D. Cal.1951) (" similarity of action, at times may be the result not of previous agreement, but of solving an identical situation in a similar manner") .

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12. Professor Turner has suggested various classes of information logically necessary in addition to parallel conduct to raise an infere.nce of agreement.

(1) Conscious parallelism is meaning-less, and in no way indicates agreement, in the absence of some evidence indi-cating that the parallel decisions of the alleged conspirators were contrary, on the hypothesis of independent indi-vidual decision, to their apparent in-dividual self-interest.

(2) Conscious parallelism contains no element of agreement where what is in-volved is simply the independent re-sponses of a group of competitors to the same set of facts, " independent" decision meaning a decision that would have been taken regardless of what competitors decided to do. q (3) Conscious parallelism may reasonably be said to involve an element of agreement where the decisions of each competitor are dependent upon the others making the same decision, and where (as is virtually certain to be the case) the situation is other than that of a near-monopoly firm l

, or of a perfectly symmetrical oligopoly. l Turner, The Definition of Agreement Under the Sherman Act:

Conscious Parallelism and Refusals to Deal, 75 Harv. L. Rev.

655, 681 (1962).

13. Consistent with this view, it has been held 1

that an inference of conspiracy is permissible only where the conduct was adopted by a competitor in apparent contradiction to its own self-interest. E.g[. , Venzie Corp. v. United States .

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Mineral Products Co., supra, 521 F.2d at 1314; Modern Home Institute, Inc. v. Hartford Acc. & Ind. Co., supra, 513 F.2d at 111;"~11/ Delaware Vallev !!arine Supply Co. v.

10/ Plaintiff brought suit against a manufacturer and its licensee alleging that the two had engaged in a con-certed refusal to deal with plaintiff and thereby prevented plaintiff from obtaining a needed fireproofing material.

Plaintiff alleged that it had been damaged because the con-certed refusal to deal prevented plaintiff from completing a fireproofing contract and resulted in the award of that contract to its competitor, the defendant-licensae of the manufacturer. The refusal to deal allegation was submitted to the jury which found that defendants had engaged in a con-certed refusal to deal. The defendants moved for a judg-ment n.o.v. which the district court granted on the ground that the evidence did not support an inference of concerted action. On appeal the court of appeals ruled that in re-viewing a judgment n.o.v. it was required "to view the evi-dence and all reasonable inferences therefrem in the light most favorable to plaintiffs" (521 F.2d at 1312), a standard significantly more generous than this Board can use in passing on the merits of the present motion. The court of appeals found that the evidence established parallel refusals to deal by defendants, contacts between the defendants during the crucial time period, confidence on the part of the

. defendant-licensee that it alone would be able to secure the needed fireproofing material, defendant-manufacturer's active assistance to its licensee in submitting a bid on the i contract, and the manufacturer's inconsi: tent conduct of informing plaintiff that its licensee might be able to pro-vide the necessary material. 512 F.2d at 1315. Even so, the court held that plaintiff had failed to adduce sufficient evidence on which a concerted rafnaal to deal could be in-ferred. 512 F.2d at 1316.

11 insu/ Plaintiff rance brought companies an antitrust predicated on anaction alleged against defendant-concerted re-

, fusal to purchase from plaintiff a list of policyholder names and expiration dates of their pclicies. The district court granted defendants' motion for summary judgment and plaintiff -

appealed. Because of the procedural posture of the case the court of appeals ruled that plaintiff need "come forward with evidence which, viewed most favorably to them, would permit (Cont'd on p. 15) 9 ,

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American Tobacco Co., supra, 297 F.2d at 206; Independent

. Iron Works, Inc. v. United States Steel Corp., supra, 177 F. Supp. at 747.. As another variant, the courts have re-garded as permissible to raise an inference of agreement evidence of action taken which is in one's self-interest when done in concert with others but not when done alone --

for example, where no one seller can afford to refuse to deal with another unless his competitors do likewise. E.g.,

Interrbit4 Circuit , Inc. v. United States, 306 U.S. 208, 225 (1939); American Tobacco Co., v. United Ststes, 328 U.

781, 798-808 (1946); Modern Home Inst 3 tute, Inc. v. Hartfore Acc. & Ind. Co., supra, 513 F.2d at 111. ,

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an inference of conspiracy." 513 F.2d at 110. However, the court held that assuming the evidence showed that plainfiff's product would have been useful to defendants, that each defendant expressed initial interest but thereafter each defendant turned down the proposal, and that some defendants sent letters to their agents informing them of their deci-sion to reject plaintiff's proposal, which letters came to the attention of other defendants, there was ice'2fficient

. evidence from which to infer conspiracy.

12/ Plaintiff charged that defendant-tobacco companies acted in concert in restraint of trade by refusing to sell to plaintiff tax free cigarettes for resale to ships, thereby preventing plaintiff from entering the sea-storec tobacco business. At the close of all evidence, the case was sub- , I mitted to a jury; it failed to reach a verdict. Defendants then aoved for a directed verdict which was granted and the plaintiff appealed. The court of appeals found that, viewing i the evidence in a light most favorable to plaintiff, the I record would support a conclusion that all defendants had -

denied plaintiff's request for tax free cigarettss and that each defendant was aware of the action taken by each of the other defendants. 297 F.2d at 202, 204. The court held, however, that this showing was insufficient to support a finding that the defendants had acted in concert. 297 F.2d at 205.

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14. Measured under these established precedents, the evidence adduced by the Staff, the Department and the City in'the present proceeding clearly raises no legitimate inference of agreed joint action. The Department perhaps most clearly articulated the " concerted action" theory of the several proponents of that position. Its belief is that the evidence proves "that the members of CAPCO entered into a conspiracy to eliminate competition by denying the benefit; of coordinated operation and development to other entities located within the CCCT" (Tr. 8088, lines 16-19),

and that the conspiracy began "sometime prior to 1967" during the negotiation of the CAPCO agreement, though the Department-is unable to specify with greater detail a particular date (Tr. 8088-89, lines 20-25, 1-4).--14/ On such terms, the 13/ The City adopted the statement of the Department on

- the alleged CAPCO conspiracy (Tr. 8096, lines 21-24; Tr.

8099, lines 14-18). While the Staff was in no position to adopt the Department's position since the Staff spoke prior

. to the Department, the examples of joint action given by counsel for the Staff and the conclusions suggested by Staff to be drawn from such examples indicate that the joint action claimed by Staff is subsumed within the conspiracy allegation of the Department. (Tr. 8080-82).

14 The City also adopted the date of inception of the

'consp/iracy suggested by the Department (Tr. 8096, lines 22-24. To the extent that the Staff suggested the begin-

. nings of the joint action as of the date CAPCO was planned and began operating (Tr. 8083, lines 9-11), it apparently is in agreement with the Department's position. However, -

the Staff also picked September 1, 1965, as the inception of the joint action (Tr. 8084, lines 9-13). If the Staff l can point to evidence linking the September 1, 1965 date to I (Cont'd on p. 17)  ;

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A Department argues that the CAPCO agreements constitute "an agreement and a combination in violation of Section 1" (Tr. 8090, lines 5-6), a " conspiracy in violation of Sec-tion 1" (Tr. 8090, lines 4 5), and "a concerted refusal to deal in violation of Section 1" (Tr. 8090, lines 14-15).

In addition to the alleged violations under Section 1 of the Sherman Act, the Department also claims that the conduct supports a finding of " bottleneck monopolization by the members of CAPCO" (Tr. 8090, lines 13-14) , which allegedly constitutes a shared monopoly in violation of Section 2 of the Sherman Act (Tr. 8090, lines 23-25).

15. On their face the CAPCO agreements--15/ do not evidence any contract, combination or conspiracy to elim-inate competition by denying the benefits of coordination 14/ cont'd from p. 16 the planning and operation of CAPCO, specifying that par-ticular date raises no inconsistency in Staff's position.

. However, if that date was specified merely because the Board set September 1,1965, as the cut-off date for discovery (as counsel's statement at 8084 implies) , there is no rational relationship between that particular date and any joint action alleged. Applicants can find nothing in the record to support the contention that the planning and operation of CAPCO began

. . as of September 1,1955, and therefore Applicants see no basis

' whatsoever for Staff's reference to that date as the inception of the alleged joint action.

, 15/ The CAPCO agreements executed among the Applicants include: Memorandum of Understanding (Staff Exhibit 184); -

Transmission Facilities Agreement (Staff Exhibit 185) ; Ad-ministration Agreement (Staff Exhibit 186); and Basis Oper-ating Agreement (Staff Exhibit 202). A planned Basic Gener-ating Capacity Agreement has not yet been executed (Witness Mozer; Staff Exhibit 205, at p. 23).

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f to non-CAPCO, CCCT entities. The Department's economic expert testified that the various forms of coordination and joint ownership of generating facilities, which are all that the CAPCO agreements establish, do not have any necessarily anticompetitive effects (Witness Wein; DJ Ex-hibit 587, at p. 15, lines 17-20). And the Staff's eco-nomic expert testified that increased coordination among electric utilities and the formation of regional power pools like CAPCO, contrary to having antitrust implications, was in fact in harmony with the urgings of the Federal Power Commission throughout the 1960's (Witness Hughes; Tr. 3649, lines 15-21). Thus, the mere coming together by Applicants to form CAPCO cannot even arguably begin 16/ The Department did claim that it was the CAPCO agreements specifically that constitute the agr :ement rather than an agreement reached through the general course

, of dealing (Tr. 8090, lines 11-12). However, there is no provision in any of the CAPCO agreements, either standing alone or read in conjunction with others, which would sup-

, port the Department's position; nor dit. the Department or any other party point to such a provision which could even arguably be said to constitute an agreement in restraint of trade.

17/ On recross-examination by the Department, Witness Hughes stated that CAPCO was a step forward but would have been a bigger step forward if CAPCO had been more inclusive, including provisions for coordination with other investor-owned utilities and small entities in the area (Tr. 4090, lines 11-18). However, provisions for such coordination with small entities do not mean pool _ membership, but might -

include " satellite dependency on a nearby large system" (Tr. 3801, lines 9-10), or reliance on wholesale power sales under a regime of wholesale-retail specialization (Tr. 3809, lines 15-18).

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to provide s basis for an inference of unlawful contract, combination or conspiracy. See Kline v. Coldwell, Banker

& Co., 508 F.2d 226, 231 (9th Cir. 1974); Metropolitan Bag & Paper Distribution Association v. FTC, 240 F.2d 341, 344 (2d Cir.), cert. denied, 355 U.S. 817 (1957); Phelps Dodge Refining Corp. v. FTC, 139 F.2d 393, 396 (2d Cir.

1943).

16. The parties adverse to Applicants seem to recognize as much, for they suggest that it is necessary to their Section 1 case to go beyond the words of the agree-ments and look to the negotiations leading to the execution of the CAPCO agreements and to the course of dealing among

• Applicants folicwing execution. The Department thus claims that DJ Exhibit 568, the Lindseth Deposition, proves that "during the negotiation of the CAPCO agreement thete was l discussion of the exclusion of municipal systems from the  ;

then contemplated CAPCO agreement" (Tr. 8088, lines 23-25).

1 Such an assertion totally mischaracterizes the deposition  !

testimony of Mr. Lindseth. The question to which Mr. Lindseth's 1 referenced comments were directed was whether consideration  ;

was given to the inclusion of muni,tipal systems in CAPCO (DJ Exhibit 568, at p. 27, lines 2-4). To this he responded that he did not recall there being consideration given to e e J

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When the definition of municipal systems was broadened to include cooperatively owned systems, e.g,. , rural elec-tric cooperatives, Mr. Lindseth testified that such en-tities were not invited to participate in CAPCO (pi.,

p. 23, lines 1-2). That is the extent of the discussion.

It requires no prolonged analysis to point out to this Board that the fact no consideration may have been given to including other entities in CAPCO, and no invitations were extended to other entities to participate in CAPCO, is a far cry from having discussions on the matter of af-firmatively excluding other entities. The former supports <

no inference whatsoever as to the latter.

17. In this regard, it is important to keep in mind that the antitrust laws impose no affirmative obli-gation on Applicants to seek out new members for CAPCO, either at the time of the pool's inception or thereafter.

No matter what entities formed CAPCO, that very act b'y definition necessarily will have an exclusionary effect on those who, for whatever reasons, are non-participants.

Surely the antitrust laws are not intended to condemn pooling arrangements on the basis of such tautological reasoning. Compare Chicago Board of Trade v. United States, O

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246 U.S. 231, 238 (1918) ("[elvery agreement concerning trade, every regulation of tradt: restrains. To bind, to restrain, is of their very essence"). In any event, to fault Applicants in this case for failing to invite rural electric cooperatives to join the CAPCO pool would border on the ridiculous. At the time of the CAPCO negotiations, the rural electric cooperatives had already formed Buckeye Power, Inc., and had reached agreement with Ohio Power and the other Ohio utilities on a plan to provide their own  !

source of bulk power. There was thus no real reason to look to these entities as possible participants. On any fair reading of the referenced testimony, therefore, the Lindseth Deposition simply provides no support for the i

proposition advanced thereunder by the Department.

18. Nor is there anything else in the record to sustain the assertion that during the negotiation of the CAPCO agreements there was a conspiracy to eliminate com-i petition by denying the benefits of coordination to systems not included as CAPCO members. The Department and the City list as further support for this position a group of doc-

, uments that chronicle the studies and discussions that im-mediately preceded and immediately followed the execution I of the Mamorandum of Understanding. These documents do

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b nothing to advance the contention of impermissible con-certed action.

19. Reference is made, for example, to City Ex-hibits C-46 and C-47, which report the findings of an Ohio Edison investigation into the proposed method for allocating generating capacity. These Exhibits indicate 19/

that if a small system patterned after the MELP system were to join the CAPCO pool, that system would be assigned 30 mw of pool capacity so as to " reduce its number of in-terruptions to that corresponding to the pool as a whole."

It was the author's conclusion that "[t]his general ap-proach is probably the most equitable that could be de- <

veloped," although the author also volunteered that, in his opinion, the result might be at variance with what the FPC would consider to be equitable (City Exhibit C-47).

But see New England Power Pool Agreement, No. E-7690, slip op, at 21-24 (FPC, Nov. 24, 1975) (equalized reserves 8

not necessarily required in comprehensive multi-party pool) .

It is difficult to understand what probative value the jl8 City Exhibit C-47 is the same document as DJ Ex-

. hibit 278 referred to by the Department at page 8089, line 23, of the transcript.

. 19/ While the documents purport to model the City sys-tem, it is clear from the record that neither the gener-ating configuration nor the estimate'd peak load used in -

the model accurately describe the City system.

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City would have the Board attach to this study. The Ohio Edison investigation was undertaken "[t]o develop an equitable allocation technique so that each party's contribution to reserves is in the same proportion to his dependence on reserves." (City Exhibit C-46, at

p. 6755). The particular analysis of a small hypothetical system was but one part of a larger investigation into various other hypothetical situations. To fail to in-vestigate all the variables as they impact on large and small systems alike in attempting to arrive at the optimum allocation technique for the pool as a whole (whatever the nature of its membership) would ha.e been irresponsible and the height of folly. There is absolutely no evidence that the particular technique chosen was selected because it impacted adversely on small systems -- nor is this sur-prising, since it has no such effect. Nor is there any evidence to suggest that the particular technique under study was altered so as to produce a more burdensome result on certain sized systems. In sum, nothing of record sup-ports any inference other than that the referenced inves-

, tigation was merely made as part of an overall study to ascertain what the impact of such an allocation technique wc tid be in a number of different situctions.

i l

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. 20. Reliance is also placed on City Exhibits C-48, C-49, C-51, and C-52. These Exhibits are Mr. Munsch's personal minutes of four meetings that took place among the CAPCO-company presidents in June, August, September and October, 1967. As such, they are probative evidence only against Duquesne Light and are not admissible against any other Applicant unless and until other independent evidence admissible against the particular Applicant under scrutiny establishes that that Applicant joined in the al-leged conspiracy.--20/ But setting that objection to one 20/ E.g., Riss & Co. v. Association of American Rail-roads, 187 F. Supp. 306, 312 (D.D.C. 1960):

It is, of course, elementary in con-spiracy cases of this nature that until the participation of an individual de-fendant has been established by competent evidence admissible against it, evidence of acts of other alleged co-conspirators

, will not be admitted 'o c establish the particular defendant's participation

, in the alleged conspiracy (citing United States v. United States Gvosun Co.,

supra, 67 F. Supp. at 452; Flintkote Co.

v. Lysfiord, 246 F.2d 368, 379-87 (9th Cir.), cert. denied, 355 U.S. 835 (1957).

See also Klein v. American Luggage Works, Inc., 206 F. Supp.

924, 939 n.55 (D. Del. 1962), rev'd on other grounds, 323 F.2d 787 (3d Cir. 1963).

Applicants would also note that their worst fears about use of evidence properly admissible against only one Applicant being used in an attempt to prove the alleged ,

ccnspiracy itself and thereafter bootstrapping the evidence in against all Applicants as statements by a co-conspirator, seems to be coming true. Moreover, while City Exhibit C-52 and DJ Exhibit 280 appear to be notes of the same meeting, the documents do differ indicating the unofficial status of Mr. Munsch's notes.

-- .n 9

- a side, these four exhibits no more raise an inference of joint activity in res*.raint of trade than do the Lindseth Deposition or the Ohio Edison investigation.

21. City Exhibit C-48 merely reports Mr. Diss-meyer's opinion that if CAPCO adopted a formula it would be more difficult for a municipality to " demand prefer-ential treatment" from the Applicants (C-48 at p. 27391) .

Even assuming arguendo that Applicants might have had such an attitude at the time in question, such evidence raises no inference of a conspiracy to eliminate competi-tion; it merely indicates sound business judgment on how .

to avoid penalizing Applicants' own customers and stock-holders. Nor is City Exhibit C-49 any more probative of a conspiracy. The City characterizes this document as

" expressing concern that municipals would try to join the CAPCO pool" (Tr. 8098, lines 17-18). Even if that were  !

what the document indicated -- and it is not -- the.present record contains testimony to the effect that the admis- ,

l sion of municipal systems to the CArCo pool might, even I on a' selective basis, be detrimental to pool operations,

. since such systems might not be willing or able to as-sume their share of the necessary pool responsibilities.-21~/

Moreover, the blanket admission of all municipal systems 21/

1 See, e_.g,., Tr. 3817-19.

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in the CCCT area to CAPCO membership was considered by 22/

some to be disastrous.--

22. Thus, a " concern" over municipal membership is understandable. Such a reaction is neither conduct in apparent contradiction to an individual Applicant's own self-interest, nor is it conduct in an individual Applicant's self-interest only if done in concert with others. Moreover, a careful reading of pages 68397-99 of Exhibit C-49 in the context of the ongoing discussion about Duquesne's " latest possible time for signing" in-dicates that the concern expressed was over municipal -

intervention into FPC proceedings relating to the approval of the CAPCO arrangement. That anxiety related to possible delays as a result of such intervention which cocid per-haps make it impossible to have an executed agreement ap-proved by the FPC prior to Duquesne's planning deadline, a

Certainly concern of this sort over meeting a planning deadline raises no anticompetitive inferences.

23. Similarly, the City's characterizatior. of City Exhibit C-51 as expressing "the belief that munici- j l

palities should not be in CAPCO" (Tr. 7 098, lines 19-21),

fails to support any inference that CAPCO was formed as part of a conspiracy to eliminate competition by denying I 1

i 22/ See Tr. 3805-06 (characterizing such a turn of events as " Alice in Wonderland").

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27-to non-members the benefits of coordination. Rather, the document expresses a conclusion similar to Witness

. Hughes' conclusion that the individual municipal systems in the CCCT are not of sufficient size to have a signif-

, icant impact on reliability or economy in the CCCT, and even as a group their size is only sufficient to consider affiliation with CAPCO as dependent satellite members.

(C-51, at p. 28278).--23/ Moreover,' City Exhibit C-52 dem-onstrates that even assuming a resistance on the part of CAPCO members to allowing membership to municipalities, such a conclusion is in no manner probative of a finding -

i that Applicants were seeking to deny the benefits of co-ordination to municipal systems. To the coe 'mi y, the evidence indicates that Applicants believed that whole-sale sales under FPC rates were the most appropriate manner to share the benefits of coordination with munici-pals; they clearly planned to and did enter into such trans-actions (C-52, at pp. 72951-52; see also Tr. 5796, lines.

14-20) . ~ Furthermnre, -s this last-mentioned document re-fle: cts, admission of municipa,1s to CASCO at that time I

wo'21d have prevented CAPCO from getting started (Id,.).

j23 See Tr. 3803 (as a group it would not be " efficient to have them (the municipal systems-in Ohio] in a major -

planning role for the region").

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. Nothing in the record contradicts this obvious conclusion; and it certainly must be viewed as a legitimate disincentive to opening the CAPCO doors wide to membership of other systems. For all of these reasons, Applicants are per-plexed as to how these documents support an inference of conspiracy in restraint of trade.

24. Finally, the City points to City Exhibit C-54 as support for the inference of unlawful conspiracy (Tr. 8099, lines 1-4) . That document reports that a Mr.

Roland made several suggestions on how CAPCO should deter-mine reserve obligations. There is, however, no evidence in the record indicating who Mr. Roland is, whether any of his suggestions ,were ever implemented by CAPCO, or whether the CAPCO reserve obligation formula was ever al-tered to incorporate the ideas suggested by Mr. Roland.

Any conclusions based on exhibit C-54 would be mere spec-ulation and without foundation in the record.

25. Turning from activities contemporaneous with the formation of CAPCO, the Staff asserts that conduct following the formation of CAPCO evidences the unlawful joint activitt engaged in by Applicants. Thus, the Staff claims that since there are no participants other than CAPCO members in the five nuclear facilities currently 4

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-d being licensed there is a clear inconsistency "with the policy of the United States and the purposes of t:te Atomic Energy'Act as set forth in Sections 1b and 3d of the Act" (Tr. 8079-80). It is also true, of course, that there are many other nuclear facilities without municipal or cooperative participants. Assuming for the moment that denying access to nuclear facilities is inconsistent with the antitrust laws, the inconsistency comes about not be-cause there are no municipal participants but because participation was unreasonably denied. Whether or not there are participants in the nuclear facilities other than CAPCO

~

members sheds no light on that issue. It is necessary to determine whether participation was sought, whether par-ticipation was offered after being requested, and if par-ticipation was denied, whether there is any evidence to support a findisg . that the denial of participation raises a fair and reasonable inference of unlawful joint activity.

26. The record does indicate that the City re-quested participation in some of the nuclear units now being licensed. The record does not, however, indicate

, that the request was "in effect denied" (Tr. 8080, line 5).

Rather the record shova that CEI offered the City access to the nuclear units in the amount requested by the City i

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(DJ Exhibit 188; 191-192), and that the City has not yet accepted that offer because it is waiting until it settles all disputes with CEI before accepting CEI's offer of participation. (Witness Mayben, Tr'. 7805, lines 11-18) .

Similarly, while the record does not indicate that Paines-ville has yet made a formal request to CEI for partici-pation in the nuclear facilities, the record does show that CEI has provided information about those units when requested (Applicants Exhibit 43 (CEI)). And if Paines-ville does at some future date make a request for access, based on the evidence of record there is no reason to assume that CEI will not make an offer to Painesville similar to the offer made to the City.

27. With regard to the Staff's claim that Pitcairn l

requested access to the nuclear facilities being licensed j in this proceeding (Tr. 8080, line 3), that is simply  !

noi . rue. The letters sent by McCabe to Applicants' l presidents on December 5, 1967, (Staff Exhibits 1-5) did 1

not request participation in any nuclear facilities; nor did any of the responses to that letter, or indeed any 24/ Applicants are at a loss to explain the Staff's claim that Painesville requested participation in nuclear facilities (Tr. 8080, line 3). The record shows that Painesville expressed an interest in nuclear power (Staff -

l Exhibit 136a), which interest was promptly responded to by CEI (Staff Exhibit 136b), but not pursued further by Paines- 1 l

ville. In fact, Witness Pandy testified that the ball is now in Painesville's court and it would be up to Tcinesville to request further discussions on the subject (Tr. 3160, lines 4-11) .

5

l 1

i of the other follow-up correspondence, deal with the issue of participation in nuclear facilities. While McCabe testified of an oral request for participation in one of the CAPCO units at Beaver Valley, it is not clear as to which unit at Beaver Valley he was request-ing access to, or even whether it was a fossil or nu-clear facility. For example, Witness McCabe testified that he had no knowledge that the Beaver Valley #2 plant was a nuclear facility (Tr.1638, 1836-40).--25/ More-over, none of the facilities at Beaver Valley involve units being licensed in the present proceeding. In the absence of a request for participation in a specified amount in a given plant, Applicants cannot be said to have "in effect denied access."

281 Similarly, the record does not support the conclusion that the Wholesale Consumers of Ohio Edison

("WCOE" ) were denied access to nuclear facilities. As a part of a rate settlement hafore the FPC, Ohio Edison and the WCOE agreed to concuct a bulk power supply study (Applicants Exhibit 7 (OE-PP), at Exhibit C). That study

, was conducted and a report issued (Staff Exhibit 44) .

The report evaluated various alternative sources of bulk power supply. Apparently the WCOE has not determined I

25/ See also Motion of Duquesne Light Company, filed this date.

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n which specific alternative it intends definitely to pursue (Witness Lyren, Tr. 2295, lines 14-18; Tr. 2306-07), and discussion between the WCOE and Ohio Edison are continuing. Ohio Edison has, however, agreed in principle with the conclusions of the study (Tr. 1992, lines 17-23), and counsel for UCOE is preparing a letter of intent for execution by the parties (Applicants Ex-hibits 15-16 (OE-PP)). Included within the study is ac-cess to nuclear facilities. Again there is simply no basis on the present record for concluding, even infer-entially, that access to nuclear facilities has been de-nied by Applicants. '

28. Moreover, as the above discussion illustratns these facts do not support a finding of concerted activity.

There is not even a parallel course of dealing from which such a conclusion could be inferred. Ohio Edison sepa-rately negotiated with the WCOE following an FPC settle-

. ment. There is nothing in the record that indicates that Applicants other than Ohio Edison knew anything about those negotiations. CEI's offers of access to the City

, and Painesville also were separately negotiated and dif-fered in substantial respects from Ohio Edison's offers.

, Neither Toledo Edison or Duquesne Light were ever asked 9

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by municipal systems or cooperatives in their service

~

areas (or elsewhere) about access to nuclear facilities.

Even if one were to assume, however, that each Applicant received requests for access and turned them all down in a similar manner, none of Professor Turner's three criteria for inferring concerted activity would be met.

The record does not show that denying such requests would be contrary to Applicants' apparent self-interests or that such denials would be in an Applicant's self-interest only 1. all other Applicants refused similar requests. Absent those tacts, inferences as to concerted action are mere speculation. '

29. Application of this analysis to the other acts of alleged joint conduct lead to similar conclusions.

For example, the Staff claims that in response to Pitcairn's request for membership in CAPCO "(e]ach ccmpany denied the request in nearly identical language and jointly ar-rived at a consensus" (Tr. 8081, lines 21-22), and that such " evidence establishes a clear group boycott" (Tr. 8082, lines 5-6). First, the responses by each of the Appli-26 cants did not deny Pitcairn's request for membership.-~/

26/ The correspondence between Pitcairn and the Appli-cants other than Duquesne Light is found in the following -

exhibits: (1) CEI (Staff Exhibits 5, 10; Applicants Ex-hibits 59 (CEI) , 60 (CEI) ; DJ Exhibit 223); (2) OE & PP (Staff Exhibits 3, 4, 8, 9; Applicants Exhibit 52 (OE-PP),

53 (OE-PP), 54 (OE-PP); DJ Exhibit 230); (3) TE (Staff Ex-

• hibits 2, 7; Applicants Exhibits 56 (TE), 57 (TE), 58 (TE);

DJ Exhibit 127).

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That correspondence does show that each company other than Duquesne Light believed for various reaons, not all of which were identical, that membership in CAPCO for Pitcairn was impractical, but all offered to dis-cuss the matter further if Pitcairn so desired. In each instance it was Pitcairn who failed to follow-up with further discussions.. Duquesne Light also felt membership was impractical; a response which Wit-ness McCabe construed to be a turndown (Tr. 1636; 1346-47).

Even assuming McCabe is correct in so characterizing Duquesne's response -- and Applicants do not believe there is any basis for such a characterization -- every expert witness queried about the practicality of including a system the size of Pitcairn in CAPCO agreed with Duquesne's assessment. That being the case it is no wonder that each Applicant also reached a similar conclusion. To say that Applicants " jointly arrived" at that conclusion is l

mere speculation. As Professor Turner notes, the simi-larity of conclusion is in such a situation " meaningless, and in no way indicates agreement."

30. Furthermore, since the record does show that Pitcairn's request for membership was properly rejected, J27 See, e.g., Tr. 3808, lincs 3-7 (Witness Hughes); Tr.

71B, lines Il-18 (Witness Wein). See also motion of Duquesne Light Company, filed this date.

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. ~35-even if one posits that such a conclusion was jointly reached by concerted action among Applicants, it is not ccaduct in restraint of trade. Under any rule-of-reason analysis it cannot be said that denying membership to Pitcairn would " suppress or even destroy competition."

Chicago Board of Trade v. United States, supra, 246 U.S.

at 238.--28/

31. Likewise, the City's 1973 request for mem-bership in CAPCO does not provide a basis to infer joint action. On April 4, 1973, Herbert Whiting, Cleveland Director of Law, wrote to Karl Rudolph, President of CEI, requesting " admission to and participation in the CAPCO Power Pool" (DJ Exhibit 181). On April 17, 1973, Rudolph wrote back suggesting that Whiting arrange a meeting with Lee Howley to discuss the request (DJ Exhibit 183). On that date Rudolph also wrote to the other CAPCO presidents informing them of the City's request, sending them copies i of his reply, and suggesting that the matter be discussed at an April 27 meeting (DJ Exhibit 97) . The sequence of events clearly indicates that CEI's response of April 17 4

was formulated unilaterally and only after the response was drafted was it sent to the other Applicants. The

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28/ See also Prehearing Legal Brief On Behalf Of The AppTicants, at 215-222 (rule of reason analysis applied to alleged group boycotts).

minutes of the April 27 meeting (DJ Exhibit 98) show only that Rudolph again explained the nature of CEI's response to the City and commented on the status of the meeting suggested in that response. There is ao evidence that anything further was discussed. That the other CAPCO members should be informed of such infor-mation is obvious. For example, such information is necessary if the other Applicants are to make full and adequate disclosure of relevant information in filings before the Securities and Exchange Commission, and Du-quesne Light, for one, sought even further information from CEI for that very purpose (DJ Exhibit 264). As of June, 1973, therefore, there is no evidence to support a finding of joint action.

32. On August 3, 1973, Whiting wrote Rudolph again proposing that the City and CEI meet and including a " Pro-posal for Membership in Central Area Power Coordination Group and Participation in Nuclear Units" (DJ Exhibit 185).

Whiting also sent a copy of his letter, with the enclosure, to each of the other CAPCO companies and specifically in-

. vited each of the CAPCO companies to attend the planned meeting because the City thought it " desirable that other members of CAPCO or their representatives be present."

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

, Whiting sent another letter requesting CAPCO membership to Rudolph on September 10, 1973,.again forwarding copies to all CAPCO companies (Applicants Exhibit 61 (CEI) ) . Thus, it was at the urging of the City that all CAPCO companies became involved in the City's request 29 for membership.~~/ It is not too hard to understand why that was the City's wish. The City was requesting mem-bership to a pool of five utilities and common sense indicates that all five utilities should pass on such a request. However, the mere fact that five companies  ;

need pass on the City's request is not the same as saying that the five companies acted in concert in considering the request. Each company could have individually reached a conclusion on the desirability of admitting the City.

It is the other side's burden of proving the joint nature  !

of the consideration, and that burden is all the more l difficult to meet since the record shows that it was.the City itself which separately contacted the CAPCO companies.  !

33. In the fall of 1973 CEI and the City met  !

to consider the request for membership. Following that meeting, Rudolph suggested that the CAPCO companies meet to consider the request (DJ Exhibit 103). The very nature 29/ Rudolph wrote to Whiting on August 13, 1973, pointing out that at least for the purpose of initiating discussions, it would be advisable for the City to meet with CEI (Applicants Exhibit 25 (CEI)).

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• of Whiting's letters of August 3 and September 10 re-quired such a meeting. A meeting was held on December 7, 1973, to consider the matter. The result of that meeting was that representatives from each of DL, OE and TE agreed to communicate to Mr. Rudolph, by December 10, 1973, s their oosition as to whether mem-

. bership in the pool should be offered to the City. Mr. Rudolph in turn agreed to communicate each of these views to the City at a meeting be-tween CEI and City representatives 1

scheduled for December 13, 1973.

[DJ Exhibit 104 (emphasis added)]

[ It is therefore clear that no position, no consensus, was reached at the December 7 meeting. Each company left to formulate its individual position on the matter and com-municate that position to Mr. Rudolph so that he could  ;

inform the City of the individual views of the respective companies.

l

34. At this point the record is incomplete. With i

the exception of Duquesne Light, there is no proof that the other companies did in fact go back and formulate a position, or ccumunicate that position to Rudolph, or that

, Rudolph thereafter communicated that position to the City.

Thus, as to Toledo Edison and 2hio Edison there is insuf-ficient proof t'o base any finding of joint action. As to

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Duquesne Light, the evidence of record proves that there G

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was no joint action. Duquesne Light did go back and formulate a position which was expressed in a December 10, 1973 letter from John Arthur to Mayor Ralph Perk (DJ Exhibit 187) . Copies of that letter were sent to the other CAPCO companies (DJ Exhibit 105), but again only after Duquesne Light's position had been formulated and sent to the City, thus negating any inference of joint action. Moreover, the Arthur letter explicitly states that Duquesne was responding "only for itself and not for any other CAPCO company."

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35. In addition, the record shows that the con-

~

, tent of the Arthur letter was dictated to a CEI employee, but only after the letter had been sent to the City; the dictation was subsequently put into typewritten form (DJ Exhibit 106; Tr. 7433) . It is not clear whether the City and CEI discussed the content of the Arthur letter a

at the time it was hand-delivered to the City (Witness Hart, Tr. 5430-32), although it may well have in fact been so discussed. Whether or not there was actual dis-cussion by CEI and the City of this dictated version of

, the Duquesne Light letter is of no consequence, however;

- such action by CEI and the City merely would have been in conformity with Rudolph's prior statement that he would 4

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a communicate the individual views of each of the CAPCO companies to the City. Certainly, the act of delivering a dictated version of Duquesne Light's position on mem-bership does not raise an inference of joint activity, but simply shows the good faith of CEI in attempting to speed up the communication process.

36. CEI and the City met on December 13, 1973, to discuss the question of membership further. At that meeting a letter from Howley to Whiting stating CEI's position was given to the City (DJ Exhibit 188). That letter stated CEI's individual conclusions. The events

, leading up to that letter show that CEI's position was unilateral and did not express the views of any other CAPCO company. The only inference to be drawn from the facts is that all CAPCO companies acted alone and not in concert. Following the December 13, 1973 meeting, CEI and the City have been continually negotiating the City's

. request (DJ Exhibits 189-92, 315; Applicants Exhibits 63-86, 94-98). Not once during this time has there been any indication that CEI is acting in concert with anybody.

37. Even if this Board were to find that the responses to the City of CEI and Ducuesne Liche consti-

, tuted an absolute. denial of membership in CAPCO, and that 9

, cd a

, somehow those responses could be imputed to Toledo Edison, Ohio Edison, and Pennsylvania Power, and that this series of refusals were col . 'tively arrived at so as to support a finding of joint action, there would still be no inconsistency with the antitrust laws. This is because the parties adverse to Applicants have failed to produce any evidence that would prove that a joint refusal of CAPCO membership to the City is ar unr'ason-30 /

able restraint of trade. The reasons why CEI and Duquesne Light reached unfavorable conclusions as to the desirability of admitting the City to CAPCO are set forth in the correspondence referenced above. The testimony in this proceeJ.ing adequately supports those reasons.

Given the physical and financial condition of the Munic-31/

ipal Electric Light Plant ("MELP"),-~ the responsibilities attendant with pool membership and MELP's inability to 32/

satisfy those responsibilities,-- and the high trans-

' 33/

action costs that would result if the City joined CAPCO,~~

a decision to refuse membership is amply justified.

30/ See material cited at n.28, supra.

31/ See, e.g., Tr. 3288-90, 3292-95, 3543-60 (Witness Mozer) ;

Applicants Exhibit 45; DJ Exhibit 190 (attachment); Tr. 4645-56 (Witness Mayben).

32/ See, e.g., Tr. 5873-75 (Witness Kampmeier); Tr. 3817-19 ~

(Witness Huglies) .

33/ See, e.g., Tr. 3811-16 (Witness Hughes).

oc

38. Finally, the Staff claims that much of the individual conduct of each Applicant alleged to be in-consistent with dm. antitrust laws represent the policies of CAPCO as a group (Tr. 8080-81), and thus, for example, alleged refusals to wheel power establish "a collective refusal to wheel, which is exercised by individua.'. CAPCO members pursuant to some joint prior understanding" (Tr. 8081, lines 13-17). From all that Applicants can discern, the sole basis for this charge is that Appli-cants' alleged refusals exhibit some parallel course of

.' conduct from which the Board can infer joint action.

,' 39. There is not one scintilla of evidence on

~

which such an inference can be based. Even if it is as-sumed arguendo that there is evidence to support all of l the refusals listed by the Staff at page 8090 -- and we know, just by way of example, that CEI has not absolutely refused to wheel power for the City (Applicants Exhibits

. 75 (CEI) -76 (CEI) , 78 (CEI) -81 (CEI) , 8 3 (CEI) -84 (CEI) , 8 6 (CEI) ,

94 (CEI) , 96 (CEI)-97 (CEI) ) -- the evidence of record proves only that such conduct is unilateral action. There is nothing in the reccrd to indicate that any of the conduct

• specified by the Staff was ever discussed among the CAPCO

. companies, either at a CAPCO meeting or elsewhere. Thus, S

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a the Staff cannot even establish conscious parallelism since there is no evidence to prove that any Applicant knew of the dealings of any other Applicant. Further-more, the evidence completely fails to meet any of the required criteria listed by Professor Turner in order to establish joint action. To the contrary, as a hypo-thetical posed to the Department's expert witness in-dicates, one would not expect a wheeling transaction to

'f,te place in an open and compatitive market (Tr. 7123).

Thus, even if it could be shown that each Applicant ac-tually refused to wheel power -- which cannot be supported even marginally on this record -- there would be nothing anomalous about such a set of circumstances, and certainly -

there would be no basis for drawing an inference therefrom of joint action.

i

40. In the limited time available to Applicants to prepare this motion, Applicants attempted to make an

. independent review of the entire record and discuss -11 situations that might possibly give rise to a charge of joint action among all Applicants. As the above discussion indicates, there is no basis in the record for this Board to find that Applicants have contracted, combined or con-spired among themselves in any manner inconsistent with W e

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the antitrust laws, and Applicants request at this time a ruling from the Board to that effect.

B. No Activity Of The Applicants Alleged To Ba Incon-sistent With The Antitrust Laws Will Be Created Or Will Be Maintained By Activities Under The Nuclear License

41. Applicants have from the outset insisted thac the present proceeding be limited by the jurisdic-tional requirement enbodied in Section 105(c) of the Atomic Energy Act which authorizes the Commission to de-termine only whether " activities under the (nuclear 1 license will create or maintain a situation inconsistent with the antitrust laws" (42 U.S.C. S2135 (c) ; emphasis added). As the Commission observed in its Waterford II decision,this limitation means that " alleged anticompet-itive practices -- however serious -- which have no sub-stantial connection with the nuclear facility, are beyond

, the scope of antitrust review under the Atomic Energy Act."

6 A.E.C. at 621. If this Licensing Board is to follow the directive of the Commission, and not just pay lip-service

. to the nexus requirement, "the question of nexus * *

• must be resolved as to each alleced antico.-petitive prac-tice." Consumers Power Co. (Midland Plant, Units 1 and 2),

LBP-75-39, NRCI-75/7, 29, 51 (July 18, 1975) (emphasis -

9 0 t

added). To approach the question of nexus on any other basis, such as under the " bundling" analysis suggested by the parties adverse to Applicants, would essentially emasculate the review standard mandated by Congress.

For, if nexus is not considered except in connection with the totality of all conduct alleged to be incon-sistent with the antitrust laws, this Board cannot, at the time it finally examines the " bundle," differentiate between conduct which is cognizable by this Board as within its jurisdiction and conduct which should never be considered by this Board because it falls outside the Commission's jurisdiction. In short, the practical effect of resolving nexus only as to the totality of the conduct

. challenged is that this Board never really faces up to its jurisdictional responsibility, as articulated by the Commission in Waterford II (6 A.E.C. at 621), and explic-itly recognized by the Licensing Board in Consumers, supra, at 51, to assess each specific charge to determine whether that charge is so remote as to bear "no substantial con-nection with the nuclear facility."

42. Applicants have heretofore urged on the Board their interpretation of the phrase " activities under the license." Now that the parties adverse to Applicants 34/ See gener411y Prehearing Legal Brief On Behalf Of The Applicants, at 121-43.

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s have closed their cases, this Board is in a position to evaluate the question of nexus in light of a spe-cific factual pattern and not just in the abstract.

Whether this Board adopts Applicants' position and holds that the requisite nexus must be proven for each alleged anticompetitive practice or adopts the position of the Staff, the Departnent and the City and holds that nexus need be proven only as to the totality of practices al-leged to be inconsistent with the antitrust laws, the evidence presently of record does not support a finding of nexus. As with the finding required to be made on the issue of joint action, thcs scard should view the evi-dence objectively, without naking any favorable assump-tions, and determine whether a preponderance of the evi-dence supports the conclusion that a substantial connec-i tion with the nuclear facilities has been shown. Prior

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w I to making that analysis, hcwever, the Board might find l

. it useful to step back for a minute and consider frcm a

' broader perspective the nature of the cases presented against Acolicants.

43. As was pointed out earlier, there is no basis

- for concluding that Applicants conspired among themselves to eliminate competition by denying to other electric' e

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, perwer systems the benefits of coordination at either the deve;1opment or operr. tion levels. The record re-vee.ls nothiag more than a number of isolated and un-related examples of varying "disput'es." For the most part, the evidence focuses only on negotiations be-tween Applicants and one or more municipal or coopera-tive systems for new or different types of electric

s. vice. These negotiations have largely concentrated on matters relating to the cost of providing the desig-nated service. Applicants would submit such negotiating differences as may have existed from time to time do not even begin to rise to the level of an antitrust in-consistency, much less involve conduct that is remotely connected to any activities under the nuclear license.

These separate instances do not establish any parallel course of dealing, nor even shed much 11'lumination on a

the individual policies of the App.'.icants. Moreover, in the face of Applicants' unquestioned offer of access to the nuclear facilities, any argument that Applicants' prac-tices -- even assuming arquendo that they had been shown j to be inconsistent with the antitrust laws -- will be j l

" maintained" by activities under the nuclear license stoply I cannot be sustained. Certainly the record before this Board does not suggest otherwise.

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. 44. Applicants pointed out in the Introduction to their "Prehearing Legal Brief On Behalf Of The Appli-l cants" that the only issue in dispute among the parties is the question of general third-party wheeling. A quick inspection of the license conditions proposed by the var-35/

ious parties confirms this view.-- Now that the other parties have closed their cases, there remains no room for doubt in this regard. Applicants have offered to 1

wheel power in certain circumstances -- i.e,., when the l

nuclear plant is out of service -- in order to make ac-cess to the nuclear facility meaningful. This leaves as l

the only real issue remaining in this proceeding whether an unwillingness by Applicants to commit to a license con-dition requiring them otherwise to wheel unlimited amounts of power from unspecified sources to unspecified load -

centers whenever called upon to do so by entities in their service areas -- assuming arguendo thnt such an attitude is inconsistent with the antitrust laws -- is a matter suf-ficiently related to the nuclear facilities to meet the nexus standard of Section 105 (c) , as explained in the Com-mission's Waterford decisions. Applicants think not.

45. Turning to the general nexus issue and exam-ining it first in the terms ad anced by the parties adverse to Applicants -- i.e_., that nexus is to be judged in relatien 35/ See also City Exhibit C-161, at p. 22, lines 14-17 (Mayben Testimony).

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to the totality of the practices alleged -- Applicants do not understand there to be any allegation that li-censing of the nuclear facilities will create a situa-tion ine nsistent with the antitrust laws. Moreover, a reviet ;f 'h.e record by Applicants indicates no evi-dence t such a position.

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46 ., the question remaining is whether li-censing these facilities, on terms which afford access but do not contemplate a commitment to unlimited third-party wheeling, will maintain a situation inconsistent with the antitrust laws. The response must be "no." The parties adverse to Applicants have failed to prove that access to the nuclear facilities on such terms will give Applicants any competitive advantage over other electric entities in the CCCT. As the colloquy during cross-exami-nation with Witness Kampmeier indicates, for example, given a municipal or cooperative system's lower cost of money, due to both tax and financing advantages conferred on such systems, a single system or a small group of such systems may well be able to build a small coal-fired plant in Ohio or Pennsylvania and get power at a total cost not sig-nificantly different that the cost of power Applicants 36 will get from the nuclear faciliss being licensed. - / l If that is the case, municipal and cooperative entities cannot be heard. to complain that they are without viable 36/ See Tr. 5894-5921. l l

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competitive alternatives to nuclear participation in

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the event that they conclude (for whatever reasons) that Applicants' offer of access is unattractive.

47. Moreover, the availability to these munic-ipal and cooperative entities of firm wholesale power sales by Applicants provides them with yet another al-ternative to nuclear participation that negates any sug-gestion that Applicants gain a competitive advantage by virtue of the nuclear licenses. The record shows that at the present time wholesale power sold at Applicants' systemwide average embedded costs is below the cost of nuclear power. So long as costs continue to rise the -

incremental cost of installing neu baseload nuclear generation will be above the then existing wholesale ,

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-/ l rate. In such circumstances, t.te disparity between wholesale costs and new nuclear generation will grow 3v  !

rather than narrow.- / Therefore, the ability of Appli- '

cants to install nuclear generation will not allow Ap-plicants to maintain any situation inconsistent with the j antitrust laws so long as Applicants offer municipal and 37/ See Tr. 3660-61 (Witness Hughes).

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38/ See Tr. 7268, lines 1-9 (Witness Wein).

39/ See Applicants Exhibit 105; Tr. 7286, lines 9-14; compare,Tr. 7270-72.

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cooperative entitias the option of .<holesale power --

which the evidence reveals Applicants have done and are willing to continue to do.

48. While Witness Wein disagreed with this conclusion, his reservation was due to his assumption that given a municipal's or cooperative's low cost of money, an ownership interest in new nuclear generation would cost less than the costs of purchasing wholesale power. However, if the municipal or cooperative sys-tem which is a wholesale customer were to make a pre-purchase centribution of capital towards those facilities allocated to the genration of wholesale power, it cou?d <

obtain the full benefits of its lower cost of money.

Indeed, this particular option was specifically studied l

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and recommended by the consultants retained by the WCCE.

4 Ohio Edison has indicated a willingness to accept such i . 42/

a an arrangement,-- and there is nothing in the record to suggest that other Applicants would be opposed to su'ch an option.

49. In any evett, since it is clear that the municipal and cooperative entities in the CCCT can take 40/ See Tr. 7286, lines 16-17.

41/ See Tr. 2000-01 (Witness Lyren).

42/ See Applicants Exhibit 15 (OE-pP).

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advantage of the wholesale power option discussed above ,

, as well as (not in lieu of) obtaining- at their choice, either ownership or unit power access to the nuclear facilities (Applicants Exhibit 44) , the " maintenance" argument is entitled to little weight. Compare Municipal Electric Association v. FPC, 414 F.2d 1206, 1209 (D.C.

Cir. 1969) (provisicns for access to hydroelectric plant "sufficiently guarantee that [the] project will not be used as part of (a group boycott]") . This becomes mani-fest when it is observed that, in addition to access to the nuclear units, Applicants have agreed to provide i

sufficient transmission services to back-up the nuclear -

power during maintenance periods or an emergency. This transmission commitment will allow entities participating in the units to enga ge in coordinated operation and de-43/

velopment with respect to those units.-- Any other trans-mission services being sought in this proceeding bear no relationship to the nuclear participation, and there-fore consideration of such matters by this Board is an improper exercise of 'ts jurisdictional authority.

50. During the hearing, some witnesses expressed concern over the, reserve sharing co=mitment contained in l -

Applicants' offer as imposing too heavy an obligation on i

43/ See Tr. 7601, lines 4-8 (Witness Mayben).

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small systems seeking access to the nuclear plants.

This understanding misconceives the terms of Applict<ts' offer. In point of fact it is extremely doubtful that a requirement that a system maintain reserves at least equal to its largest single block of nuclear power will ever impose an upper obligation on a system's reserve requirements; rather, it will in almost every case set the lower limit. This is because the reserve requirement in commitment 3a is based on the assumption that entities will make reasonable requests for access to nuclear units as is set out in commitment 1. Since ni2 clear power is baseload power and economic only when used as baseload power it is not expected that any entity will seek access AL/

to the nuclear unit in excess of its baseload needs.

However, as Witness Kampmeier recognized, the baseload portion of a system's load ' curve is not every lik:aly to 45/

exceed one-third of the system's peakload.~- T'lus , if a system were to satisfy 100% of its baseload needs out of a single nuclear unit it is unlikely that its reserve obligation would exceed 33% of its peakload. And if t'e i

1

, system made the simple decision to take its full base-load needs from two plants its reserves obligation would 14/ See Tr. 5887, lines 3-6 (Witness Kampmeier).

45] See Tr. 5887, lines 7-17.

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only be 17% of its peakload. That is certainly not unreasonable; it is most probably a reserve require-ment below what the sygtem would prudently set for l'tself irrespective of any requirement imposed by the license conditions. Moreover, since five nuclear plants are being licensed in this proceeding, a system would .

have the option of taking its baseload needs out of two or more facilities over a period cf time to allow for its projected growth. Under such an arrangement the system co:t'.d reduce even more its reserve obligations while providing for itself at the same time a more re-liable source of bulk power.

51. On che basis of the foregoing, it is ap-parent to Applicants that the opposing parties have 1

failed entirely to demonstrate a nexus between the ac-l tivities under the license and the totality of the situ-ation which they allege to be inconsistent with the l antitrust laws. It therefore must fol_ow that they have similarly failed to prove the requisite nexus with respect t, each separate practice alleged to be inconsis-

, tent with the antitrust laws. Some of the ;jecific charges -- for example, the alleged refusals of Pennsyl-trania Power to file a tariff for 69 kv service or the

,, - , . , .,v,, --,,, +,r- -~w-^~-- , ='

. e charges relating tv the Buckeye Agreements -- are so remote from the activities under the license that it is not possible to conceive of any factual circumstances that would be sufficient to satisfy the nexus requirement as to such matters. Other charges may bear a marginal relationship to the nuclear facilities, but even as to them, as we have already indicated, the licensed activ-ities will neither create nor maintain conduct alleged to be inconsistent with the antitrust laws.

CONCLUSION

52. During the past four months the parties adverse to Applicants have compiled what is already a very lengthy record consisting of more than 8,000 pages of transcript and almost 1100 documentary exhibits. Now is an appropriate time for this Licensing Board to take a hard look at this record and determine whether the evidence adduced is as conclusive of wrongdoing by the Applicants as the Staff, the Department and the City would like one to believe.

53. On a previous occasion Applienats argued to this Beard that "[i] f conspiracy is indeed alleged in this case, the charge is well camouflaged." While the -

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charge may no longer be camouflaged, the evidence sup-porting the charge still remains obscure. For this Board to draw the types of inferences being suggested by the other parties from the evidence of record is akin te asking this Board to find an inconsistency with l

the antitrust laws and a violation of Section 105(c) '

on the basis of mere speculation at best. The Board should properly reject such an invitation.

54. Nor should this Board be led to a finding that the requisite nexus between the conduct alleged to be inconsistent with the antitrust laws and the ac-tivities under the nuclear license has been proven merely because Applicants are seeking licenses to construct and operate five nuclear plants. Compare Waterford II, supra, 6 A.E.C. at 621 ("a finding (that power from the plant will be mingled with other power] should not be utilized to support the view that an application to construct one nuclear plant somehow authorizes an inquiry into all alleged anticompetitive practices in the elec-l tric utility industry"). In the absence of any independent l l

. evidence demonstrating the jurisdictional link required under the Waterford II nexus standard -- and in'this regard the record here is barren -- the " truism" that l

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4 Applicants' nuclear power will be commingled with other power on its system is an insufficient predicate for finding a Section 105 (c) vioiation. The Commission has already so held, and there is every reason in this proceeding for the Licensing Board to follow that lead.

55. Accordingly, for all of the foregoing reasons, Applicants' motion seeking an order dismissing all allegations made by the Staff, the Department and the City should be granted.

Respectfully submitted, SHAW, PITTMA.N, POTTS & TROWBRIDGE By: . d m C.k,. \ .

f. _

Wm. Bradford Reynolds i Robert E. Zahler Counsel for Applicants Dated: April 20, 1976.

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-UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atemic Safety and Licensing Board In the Matter of )

)

THE TOLEDO EDISON COMPANY and )

THE CLEVELAND ELECTRIC ILLUMINATING ) Docket No. 50-346A COMPANY -)

(Davis-Besse Nuclear Power Station, )

Unit 1) )

)

THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. )

(Perry Nuclear Power Plant, ) Docket Nos. 50-400A Units 1 and 2) ) 50-401A

)

THE TOLEDO EDIS0N COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A CERTIFICATE OF SERVICE ,

I hereby certify that copies of the foregoing

" Applicants' Motion For An Order Dismissing All Allegations Made By The NRC Staff, The Department Of Justice And The City Of Cleveland" were served upon each of the persons listed on the attached Service List, by hand deliverin-J a copy to those persons in the Washington, D. C. area and i by mailing a copy, postage prepaid, to all others, all on this 20th day of April, 1976.

SHAW, PITTMAN, POTTS & TROWBRIDGE 7

By: \ . 9.k . A d _s L -

Wm. BradfordsReynolds \

Counsel for Applicants Y

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. . - . . . _ -x I UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board 4

In the Matter of )

)

THE TOLEDO EDISON COMPANY and )

THE CLEVELAND ELECORIC ILLUMINATING ) Docket No. s0-346A COMPANY )

(Davis-Besse Nuclear Power Station, )

Unit 1) )

)

THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

)

' THE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A SERVICE LIST Douglas V. Rigler, Esq. Docketing & Service Section Chair in, Atomic Safety and Office of the Secretary Licensing Board U.S. Nuclear Regulatory Commission Foley, Lardner, Hollabaugh Washington, D. C. 20555 and Jacobs Chanin Building - Suite 206 Benjamin H. Vogler, Esq.

815 Connecticut Avenue, N.W. Roy P. Lessy, Jr., Esq.

Washington, D. C. 20006 Jack R. Goldberg, Esq.

Office of the Executive Legal Direct-Ivan W. Smith, Esq. U.S. Nuclear Regulatory Commission Atomic Safety and Licensing Board Washington, D. C. 20555 U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Joseph J. Saunders, Esq.

Antitrust Division John M. Frysiak, Esq. Department of Justice Atomic Safety and Licensing Board Washington, D. C. 20530 U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Steven M. Charno, Esq.

Melvin G. Berger, Esq. j Atomic Safety and Licensing Janet R. Urban, Esq. j

. Board Panel Antitrust Division U.S. Nuclear Regulatory Commission Department of Justice Washington, D. C. 20555 P. O. Box 7513 -

Washington, D. C. 20044 I l

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Reuben Goldberg, Esq. Thomas J. Munsch, Esq.

David C. Hjelmfelt, Esq. General Attorney Michael D. Oldak, Esq. Duquesne Light Ccmpany Goldberg, Fieldman & Hj elmfelt 435 Sixth Avenue Suite 550 .Pittsburgh, PA 15219 1700 Pennsylvania Ave., N.W.

Washington, D. C. 20006 David McNeil Olds, Esc.

James B. Davis, Esq. Reed Smith Shaw & McClay Director of Law Union Trust Building Robert D. Hart, Esq. Box 2009 lst Assistant Director of Law Pittsburgh, PA 15230 City of Cleveland 213 City Hall Lee A. Rau, Esq.

Cleveland, Ohio 44114 Joseph A. Rieser, Jr., Esq.

1. Reed Smith Shaw & McClay Frank R. Clokey, Esq. Madison Building - Rm. 404 Special Assistant 1155 15th Street, N.W.

Attorney General Washington, D. C. 20005 Room 219 Towne House Apartments Edward A. Matto, Esq.

Harrisburg, PA 17105 Richard M. Firestone, Esq.

Karen H. Adkins, Esq. -

Donald H. Hauser, Esq. Antitrust Section Victor A. Greenslade, Jr., Esq. 30 E. Broad Street, 15th Floor The Cleveland Electric Columbus, Ohio.43215 Illuminating Company 55 Public Square Christopher R. Schraff, Esq.

Cleveland, Ohio 44101 Assistant Attorney General Environmental Law Section 361 E. Broad Street, Eth F'loor Michael M. Briley, Esq. Columbus, Ohio 43215 Roger P. Klee, Esq.

Paul M. Smart,.Esq. James R. Edgerly, Esq.

Fuller, Henry, Hodge & Snyder Secretary and General Counsel P. O. Box 2088 Pennsylvania Power Company Toledo, Ohio 43603 One East Washington Street New Castle, PA 16103 Russell J. Spetrino, Esq.

Thomas A. Kayuha, Esq. John Lansdale, Esq.

Ohio Edison Company Cox, Langford & Brown

47. North Main Street 21 Dupont Circle, N.W.

Akron, Ohio 44308 Washington, D. C. 20036 Terence H. Benbow, Esq. Alan P. Buchmann, Esq.

A. Edward Grashof, Esq. Squire, Sanders & Dempsey Steven A. Berger, Esq. 1800 Union Commerce Building -

Steven B. Peri, Esq. Cleveland, Ohio 44115 Winthrop, Stimson, Putnam I

& Roberts- i 40 Wall Street .

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. New York, New York 10005 . 1 l

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