ML19319A825
| ML19319A825 | |
| Person / Time | |
|---|---|
| Site: | Oconee, Mcguire, McGuire  |
| Issue date: | 08/03/1972 |
| From: | Brand W, Leckie D JUSTICE, DEPT. OF |
| To: | US ATOMIC ENERGY COMMISSION (AEC) |
| References | |
| NUDOCS 7912190822 | |
| Download: ML19319A825 (24) | |
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UNITED STATES OF AMERICA BEFORE THE-
/liTI-TEM ATOMIC ENERGY COMMISSION In the Matter of Docket Mos.@-269,Q 50-270A, Duke Power Ccmpany 50-287A,Ci G 0 27 '
(Oconee nuclear-Station Units 1, And 50-370A gg .g,q .,-
2'and 3 and McGuire Nuclear )
Station Units 1 and.2)
REPLY OF THE DEPARTMEUT OF JUSTICE TO APPLICANT 'S LUSWER AND MOTION OF JULY 24, 1972 Pursuant to th5 provisions of 10 CFR Section 2.706, of the Commissicn's Rules .of Practice, the United States Department ,
'of Justice files this Reply to Applicant's July 24, 1972, Answer l to Notice of. Antitrust Hearing and Motion te Reconsider Delegation. .
1 in~the above-captioned proceeding. j i
-I. THE DEPARTMENT TAKES ISSUE WITII APPLICANT 'S l BASIC POSITION The Department of Justice takes issue with Applicant Duke l Power Company's fundamental position in this proceeding "that the activities under the permits in question would not create or maintain a . situation inconsistent with the antitrus t laws. " It is the belief of-the Department that Applicant 's activities under the licenses sought uould maintain, and likely enhance or
~ aggravate, a situation inconsistent Cth the antitrust laws . _ and 7912190 h ,
MTust
that the evidence to.be presented in the forthcoming hearing will require such a finding by the Commission.
1The Department will therefore propose license conditions
" appropriate" to carry out the purposes of Section 105 of the Act, in accordance _ with the policies set forth in Sections 1(b) .
3(d),105(c)(6), and 183 of the Act, as amended. 42 U.S.C.
$52011(b), 2013(d), 2135(c)(6), and 2233. 1/ The legislative
- history of the 1970 Amendment clearly indicates that issuing the 1/ Secsion 1: Atomic energy is capabic of application for peaceful as well as military.purpos;s. It is therefore declared to be the poliev of the United States that -- (b)
L the develocment, use, anc control of atomic enerav shall be directeo so as to promote world peace, improve the general welrare, increase the standard of living, and strenethen free comoetition in private entercrise.
Section 3: It is the ourpose of this chaoter to effectuate the policies set forth acove bv orovidin2 ror -- (a) a procram to ercourace uicesorena carticioation in ene cevelou-ment anc ucio.cacion or etemic en2rev ror paace rut -ourcoses to the maximua extent consistent uita the co==on acfense and security and with the health and safety of the public.
Section 105(c)(6): In the event the Commission's finding under paragraph (5) is in the affirmative, the Commission shall also consider, in determining whether the license should be issued or continued, such other factors , including the need for power in the af fected area, as the Co= mission in its judg=ent deems i necessary to protect the public interest. On the basis of !
its findings the Cc= mission shall-have the authority to issue :
or continue a license as applied for, to. rescind a license or j amend-it, and to issue a license with such conditions as it
-deems anoropriate.
Section 183: Each license shall be in such form and contain such terms and-conoitions as cne Ccamission may, by rule or regulaticn. prescrioe to effectuate ene provisions of this chapter . . . . (emphasis supplied in all instances) 2 l
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license appropriately conditioned would be the usual outcome of '
Section 105(c)(6) consideration following an affirmative Section 105(c)(5) - find'ing. 2,/
.II. APPLICANT MISCONCEIVES .THE SCOPE OF PRELICENSING ANTITRUST REVIEW The Applicant contends in its Answer, pages 2 and 3, that the issues set forth in -the Department 's advice letter of August 2, 1971, "are irrelevant to the inquiry which the statute contemplates and should not be considered in this proceeding." Ap'plicant would
. limit the Commission's scrutiny to "the possible effects of the
' ' activities under the license,' and only those activities ," and this .would, in its view, preclude any concern "with the operation of Applicant's system in a broader context, including o.ther generation or transmission facilities, sales contracts , coordination 1
. arrangements and the like."
In_ taking this position, Applicant has misconstrued the
. statutory test -- the Commission must determine "whether the l
activities under the license would create or maintain a situation-
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2/ "The cemmittee believes that, except in an extraordinary situation, Commission-imposed conditions should be able to eliminate' the ' concerns entailed in any affirmative finding under paragraph (5) while, at the.same time, accezmodating the other public . interest concerns found pursuant to paragraph (6). Normally, the co=mittee e:cpects the Commission's actions under paragraphs (5) and'(6) will harmonize both antitrust and such other public interest considerations as may be involved." H.R. Report No. 91-1470 and S. Report No. 91-1247, Report Enr the -Joint Committee on Atomic Energy, Amending the -
Atomic Energy Act of 1954, etc.- (1970), at 31.
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. r inconsistent with- the antitrust laws." [ Emphasis supplied]
Section-105(c)(5) of the Act; 42 U.S.C. 52135(c)(5). Applicant's
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Lposition flies in .the face of the clear statutory language, the recorded -legislative purpose, and the factual impossibility and lega11 incorrectness of separating the activities under ene
-license from: the system-wide operations, power pooling activities, and other marketing practices of which pcwer from the licensed units.would be a part.
This'questien was previously. discussed in detail in the Department's Reply of June 9,1972, to the Answer of Consumers Power-Ccmpany in a similar proceeding; pagas 1-30 and Appendices A und B of that Reply are incorporated herein by reference. For the convenience of the Eocrd, copies are_ furnished ac Annex A hereto. In add 1 tion, a Supplement to Annen A contains the
_Departm2n't's ccmments 'upon Applicant's detailed discussion cf its position _ (t.ppendix A of Applicent's Answer) . The Department concludes that the Atomic Safety and Licensing Board and the Commission must reject.a erroneous the atemistic approach to the scope of prelicensing antitrust review urged by Applicant.
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. III . APPLICANT?S CLAIM THAT GOVERNMENT REGULATION OF
~THE ELECTRIC POWER INDUSTRY' SUPERSEDES THE ANTITRUST TR S IS BOTH INCORRECT AND-IRRELEVANT Applicant. suggests that pervasive government regulation
< severely limits application.of -the antitrust laws to the electric
- power industry. It maintains that neighboring utilities already have access -to the benefits of large scale generation and. trans-mission through wholesale purchase and are financially viable and competitiva1y viable to the extent .contempisted by federh1 and state law. Further, it charges the States of North and South Carolina with all responsibility for existing impediments to competition and concludes that their pervasive regulation of its activities irmnunizes the practices challenged by the Department
- from rierntiny under the antitrust laws (pages 3 and 4 of the Anower).-
- Applicant's immunity claim auet be rejected. The antitrust laws and their underlying ~policios clearly do apply to the practices of Applicant which the Department challenged in its letter of
~ advice.
Competition is the fundamental economic policy of the nction.
United States v. Philadelphia National Ennk, 374 U.S. 321, 372 l
(1953). Its. preservation and enforcement through the medium of the antitrust . laws is the general rule, and exemption from the applica-tion of those laws is never lightly implied. Even fedaral regulation of an industry does not iu:munize the. activities of its members
. from.. antitrust sanction, for regulation anc' competition are not mutually e::clusive[ schemes 'but rather are rEcogniced as comnicrentarv u
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-means to the same goal of proper resource allocation and distribution. Northern Natural Gas Co. v. F.P.C., 399 F. 2d
-953,_959 f(D.C. Cir. 1968). In fac t , maintaining the play of competition may well prove more important when an industry is
. highly regulated,.not less so. United States v. Philadelphia National-Bank, supra at 372.
The Atcmic Energy Act has explicitly reaffirmed this fundamental national policy by charging the Cocsission to develop the use of atomic energy so as to " strengthen free competicion in private enterprise." Section 1(b), 42 U.S.C. 52011(b). Not only does the Act e:cpress this procompetitive policy, it reouires that a license applicant's practices be scrutinized and pass muster neccrding to the standards of the antitrust laus and their undcri lying policica. -Section 105(c) , 42 U.S.C. $2135(c) . The regulatory
.schecc .specifically incorporates the antitrust laus. It is in the face _ of t'. tis cicar mandate of Congress to apply the basic national economic policy of antitrust to nuclear facility licensing that Applicant -now claims immunity of its practices frca such scrutiny.
Of course, the Atcmic Energy Act is r.ot the only federal regulatory scheme that must be considered in determining whether government regulation has approved and i=muni=ed any of .'ipplicant's anticcmpetitive practices. The Federal Power Cc= mission, under the Federal Power Act, also regulaces certain aspects of Applicant's business. As' alrehdy mentioned, however, the cere fact cf
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regulation cannot deny the antitrust role. Nothing in the Power
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Act, .or-in_ decisional icw interpreting the Act, purports to make its-regime exclusive, although the FPC has proposed such legislation.
S.'3136, 89th Cong. (1966) and S. 1934 and H.R. 10727, 90th Cong.
(1968). ._See FPC Annual Report, 1970.at 7-8. The antitrust laws have long been held to apply to olectric utilities, b-th directly through court actions and through the actions of the Power Commission as ws11.
Praper statutory interpretation will recognize that the Federal.Fower-Act operates side-by-side with the antitrust laws so that both serve as complementary forms of economic control.
Silveg v. New Ycrk Stock Enchange, 373 U.S. 341, 357 (1963);
Weodc_ Eruloraticn and Producine Co. v. Aluminum Co. of America, 430 F. 2d 12S5, (5th Cir. 1971). In harmonizing the two statutory
.regim2nc, the fundamental policy of antitruct must be given effect except in cases where it vould be plainly repugnant to specific provicians of the Pouer Act or to accomplishcont of Congress '
regulatory purpose. Carnation Co. v. Pacific Hostbound Conferance, 383 U.S. 213, 217-218 (1966); Thill Securities Coro. v. New York Steck Enchange, 433 F. 2d 264, 270 (7th Cir.1971); cf. Pan American World Airways v. United States, 371 U.S. 296 (1963).
No such plain repugnancy exists here. Although the Federal Power Commission approves the tiholesale rates of electric utilities, and. regulates some aspects of the integration and cccrdinatien among them, its powers in this area are linited, and there remains l
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~ considerable scope for operation of the antitrust laws. The
-Power Commission may order an electric utility to enter into a-reserve sharing agreement with another; it recently compelled the Florida Power . Corporation to interconnect and share reserves on an equitable basis with the City of Gainesville, and the Supreme Court upheld its jurisdiction to do so. Gainesville Utilities' Department v. Florida Power Cercoration, 402 F. 2d 515 (1971). . However, the FEC is limited in compelling coordination by. a statutory provision restricting a utility's obligation to coordinate to transactions which can be accomplished without increasing its generating capacity. Section 202(b) of the Federal Fouer Act, 16 U.S.C. 3324a(b). This provision renders unavailable from the FFC the type of coordination known as " coordinated
.- dovnicp: rent" in uhich the participating utilities pool load growth to justify installation of larger generating unito and enhance thair ability to-sell low cost power.
.A 1967 cmandment to Section 202(b) uould have made such coordinated . development ccepulsory for all interstate electric utilitics. Section 411 of S.1934, 91st Cong. ,1st Sess. (the proposed bicctric Pcwer Reliability act of 1967). Congress chose, howcVer, not to give the FFC that jurisdiction; instead, in 1970, it provided fer prelicensing review of nuclear facilities in the Atc=ic . Energy Cecmission -- with application of the standards of
- the antitrust laws, and thereby opened the way to compel coordinated development by ceans of appropriate license conditions.
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lFurther, the FPC has Ldisclaimed : jurisdiction to order the -
~ wheeling of electric power for one utility over 'the transmission lines of1another. except in very -limited circumstances. City of Paris. Kentucky v. Kentucky Utilities, 70 PUR 3d 45 (1967) and 80 :PUR 3d 331 (1969).
The very crun of the Department's contentions-in this pro-ceeding ic that Applicant has refused cnd refuses to coordinate its nuclear generation enpansion program with its neighboring competitor utilities on nondiscriminatory terms. The determination of whether Applicant's practices 'creata or maintsin a situation inconsistent with the antitrust laus , -and the framing of license I
conditiens to correct such cituation, if faund to exist, vill in no way werk et crecs purposes with the Federal Power Act. On the contrary, the possibility for compalling Wheeling and coordinated
-development beyend jurisdiction of the FPC can only complement and further its regulatory schema -- Section 202(a) of the Pewar Act makes it the Cc= mission's duty to promote and encourage incer-connection and coordination -- and would not interfere with its rate-making function.
While Applicant men'tions faderal regulatien as a basis' for inapplicability of the antitrust-laus to its activities, .its immunity argument places primary reliance on "a pervasive scheme of state regulation in both North Carolina and _ South Carolina."
Applicont's reliance, hewever, is misplaced.. Its regulation by Nort h and . South Carclina provides no support for the claimed immunity.
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I The1 concept of antitrust tomunity for state action was, of course . enunciated in Parker v. Brown, 317 U.S. 341 (1943), when
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the Supreme Court said that the Sherman Act was directed at private. action and was not intended to restrain "a state or its
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officers or agents from activities directed by its legislature" lin the exerc'ise of its police powers, 317 U.S. at 350-351, and accordingly-held: that California's Agricultural Prorcte Act, which contained restrictions on terms of sale and provided for the setting of~aiminimum price at which prcducers cculd legally cell, did not contravene the antitrust laws. The Court, however, was careful to find, after lengthy discussion, that the California statute harmoni=ed with 'and furthered federal policy on the same sub;1ect, as c::prcased in the Agricultural Adjustmant- Act. 317 U.S. at 352-268.. Absent this federci statuto derogating frcs
'antitiust policy, California's . action would have been ecnstitutionally invalid. .Its validity depended entirely upon Congross's clearly e::prassed ' determination to impose specific agricultural marketing regulation plainly repugnant to the fundementc1 oconceic policy of ontitrust.
The mare fact of state action, then, does not insure antitrust icnunity. The state action cust-also be valid, and it cannot be valid .when in..contravantion of federal lau, or t/nen Congress has
. occupied a Llagislative field. Hecht v. Pro-Football. Inc., 444 F. 2d 931, L935 (D.C. Cir. 1971) .
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- In this~ proceeding, the very activities with which the Department is most concerned -- Applicant's refusals to coordinate
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. i with the neighboring small utilities with which it competes --
necessarily involve wholesale sales of electric energy in inter-state commerce, and such sales have since 1927 been held a forbidden subject for state regulation because of the Commerce Clause of
-the Constitution. .Public Utilities Commission v. Attichoro Steam
& Electric Co., 273 U.S. 83 (1927). It was to fill the juris-dictional gap resulting from Attleboro tnat Congress passed the Federal Power Act in 1935. As the Supreme Court subsequently stated, "[w] hat Congrass did was to adopt the test developed in the Attleboro line which denied state power to regulate a sale
'at wholesale to local distributing companies ' and allowed s tate regulation of a sale at ' local retail rates to ultimate customers.'"
Tedercl 2nwey Ccemiccion v. Southern California Edison Co. , 375 U.S. 205,. 216 (1964) .
With no jurisdiction in the states to regulate uholesale interstate sales (and the Department is not
- aware of any efforts by North and South Carolina to regulate the=)
there clearly can be no antitrust i=munity resulting from such state regulation. Cf. Gas Light Co. of Columbus v. Georeia Pcwer Cemenny, 440 F. 2d 1135 (5th Cir.1971); Unshington Gas Licht Co.
- v. Virginia Electric and Pcuer Co., 438 F. 2d 248 (4th Cir. 1971).
In any. event, the Ccesittee Report on P.L.91-560 makes
- cicar:(p.14) that the statutory test of " inconsistent with the antitrust laws" refers not only to violations of the antitrust 11
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N laws:but:also:cofinconsistency.with " policies clearly underlying theseElaws." Accordingly, it would be a useless exercise to debate
-whether particular acts or practices which are alleged to create
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or maintain a situation inconsistent with- the antitrust laws are technically ' exempt from antitrust prosecution in the courts since-notwithstanding this they =ny be' inconsistent with policies " clearly tunderlying theLantitrust inws." i.e. , avoidance of monopolies and
- restraints' cn -freedom of ccmpetition. 3,/
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3/1 E.g.: "Ihe pur . .-to make . . . a ecmpetitive Vuciness economy," poses was . United States v. South-Eastern Unde- :m'ers.
Ass'n,J322 U.S. 533. 559 (1944): "Ihe~hcarc or cur noc cadt
' -econcaic policy-long has been faith in the value of comectition.
.. In the She=an and Clayton Acts, as well as in tho' R,::bincon-Eatman Act, Congress unsl dealing with competition, which it!
cought tof protect, and conopoly, which it-sought'to-prevent."
LStandard' Oil'Co. v. F.T.C., 340'U.S. 231, 248-49 (1951);~ "Essic
. to cne - faita -chat , ai rree ecenemv best promotes the nublic wealth
-is that goodsHaust stand the cold test of ccmpetition; that the public, acting thrcushithe market 's impersonal' judg .ent. shall.
allocate 1the-nation's resources and thus direct the course its
' economic'developcent vill tche . '. ' Times-Picavune'Publishine Co.
v.4 United States , . 345 U.S. . 594, 60TTH53) .
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. f . IV.-< APPLICANT'S ALLEGATIONS THAT THE DEPARTMENT .
^ WOULD?.COFJEL IT TOLDISCRIMINATE AGAIUST CERTAIN LCUSTOMERS ~ AND PLACE SMALL SYSTEMS -IN A: POSITION - -'
TO COMPETE 1R!?AIRLY UITH APPLICANT ARE GROUNDLESS
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JApplicant expresses concern that.l'icense conditions-to be:
~ ; proposed by the Departmenti"would . grant some of _ its custocers a .
preferential form of ~ access to its generation and transmission -
isystem- [andithereby]1be unfair and discriminatory" to other of
=its customers in violation of federal and state-law.
J (Pages 4.
- and 5 of the Answer)
~ .The Department will show that Applicant,: through its control
..over.: generation and trancmission has the power to exclude actual h or potential competitors from substantial bulk pcwer supply markets g
(cndithereby to dominate and possibly:oxclude -others from retail markets as: well)?and: thct the' power exchanges and other remedies
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the.Dapartnent will reccamend.as-license conditiens wouldLbe c'cepatible.with and co=plement. Applicant's obligations as a public utility under those- regulatoryf statutes to which it may be . subject.
In11ts:inqu'iry and recommendation of license conditions, the DepartmentLuculd certainly _have the intention of prohibiting ,
unraasonable discrimination, rather that promoting it. For' example, M onstspecific subjectiof concern would b'e whether the arrangements-which replaced the?CARVA pool were made with the' purpose of enabling LApplicant to. unreasonably discriminate against smaller utilities, n HApplicant also t argues that " tax andLotherladvantages" enjoyed (byjcertainism'allis'ystems would ; enable. them to compete . unfairly.
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!with itiin tha:everit anticipated license :concitions would. be
$1mp6 sed [ Th~e Departmentjbelieves that.c.ny, tax'orLother. advantages L
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l which may be lawfully enjoyed by municipal and cooperative systems do not excuse anticompetitive conduct on Applicant's part and are
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irrelevant in this proceeding. Applicant must simply take its competitors as it finds them. However, if the Corcnission neverthe- !
less believes consideration of such purported advantages is relevant, it should also inquire fully into comparable competitive advantages that Applicant =ay possess, including the type and
- dollar amount thereof.
V. APPLICAUT'S EF70RTS BEFORE LEGISLATIVE AUD OTIIER GOVERUISITAL ECDIES ARE A PROPER SUBJECT.0F IKQUIRY IN T:IIS 7ROCEEDII!G The Department disagrees with Applicant's contention (pags 5 of the Ansver) that its efforts before legislative and other governetntal bodics roscrding the proposed Elcetric Pouer In Carolinto (EPIC) project may not be introduced as evidence in this proceeding.
I Certain conduct.in attempting to influence governmental action l has undoubtedly been held e::empt from the application of the antitrust laws, and concern with protection of the First A=andment right of petition was a basis for so holding. Eastern Railrced !
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Conference v. 'Noerr Motor Freizht. Inc., 365 U.S. 127 (1961); l 1
United- Mine 17orhers v. Pennington, 381 U.S. 657 (1965). Noerr ,
however, carved out an exception to its rule: The antitrust icws I
we 0.i apply to " situations in which a publicity ecmpaign, ostensibly '
directed toward influencing governmental action, is a mere sham to interfere directly with the business relationships of a ec=petitor."
365~U.S. at 144. Mbst recently, in California Motor Transoort Co.
~v. Trucking Unlimited, 404 U.S. 508 (1972), the Supreme Court gave content to thic " sham" exception by holding that a ecmbination "to harass and deter . .. competitors from having free and unlimited access' to the agencies and courts, to defeat that right by massive, concerted and purposeful activities of the group" would violate the antitrust laws. 404 U.S. at 515. The Court further cautioned that antitrust violations could well result frem other abuses of administrative or judicial processes. 404 U.S. at 512-513. Recent icwcr federal court decisions have reached chnilar results. See Woods Encloration and Prcducing Co. v.
Aluminum Co. cf America, 438 F. 2d 1286 (5th Cir.1971), cert.
dnnied, Jan. 17, 1972, 40 U.S.L.W. 3330; United Sectes-v. Otter Tail Pewer Co. , 331 F. Supp. 54, 62 (D. IIinn.1971), prab. juris.
noted,'Ihy 22, 1972, 40 U.S.L.U. 3553.
Even thoce activitics'which, under Noery and Pennincton, cannot be found to violate the antitrust inws may nevertheless be evidence of such violation or of a situation inconciatent with
.those laws.- A footnote to the Pennincton opinion cada this quite cicar:
It would of course ceill be within the province of the trial judge to admit this evidence, if he deemed it ' probative and not unduly prejudicial, under the established judicial rule of evidence that tecet=cny of-prior or subcoquent transactions, which for some rencon are barred frem forming the basis of a -suit, may nevertheless be introduced if it tends reasonably to show the purpose and charactar of the particui2r transactions under. scrutiny. 381 U.S. at 670 n.'3. See alec tousehold Goods Carrier's Euracu
- v. Torrell, 452 F. 2c 152 (19/1).
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4 The- failure. co 'obtain particular desired action frem a legislature, court of administrative. agency could be an important part of the background ' explaining a decision to resort to other measures
. violating the antitrust lawc or inconsistent with their policies.
' The attempts to influence government may shed light en the. purpose and character of prior and contemporaneous conduct -- and perhaps even give form to an overall plan of menopolization. See [xerican Hedical Ass 'n v. United States,130 F. 2d 233, 250-252 (D.C. Cir.
-1942)
At this point, the Department does not know whether Applicant's
'cetempts to influence governmentc1 action were a " sham" ao as to
.viclate.the antitrust _ laws, or contribute to a situation inconsistent thersuith, or even uhether they ucuE be evidence of the bad
.purpcse -and character of other conduct. Clearly, honover, inquiry
' inte these activities is within the proper ccope of diocevery in this proceeding, and we do not read Applicant's Answer to contend
'otherwise. Even were they ec be deemsd neither violative of the antitruct laws'nor admissible in evidenco such activities are
" relevant to :the subject matter involved in the pending action" an d information concerning them is "recconably calculated to lead
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.to the discovery of admissibla evidence," and the prerequisites i forsdiscovery are satisfied. 10 C.F.R. Section 2.741, of the Commission's Rules of Practice. See Tederal Rule of Civil Procedure'26(,b)(1)... Such' discovery would neither punish, nor
, enjoin (as was cought in! Noerr),_nor indirectly restrain First i
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- Amandment protect'ed speech or conduct. No case holds to the contrary. .See Southwestern Electric Power Co. v. F.P.C., 304
'F. 2d-29, 47'(Sch cir. 1962),-cert. denied, 371'U.S. 924.
- VI . REPLY TO APPLICAHT'S SPECIFICATION OF.
ISSUES-AFD FACTS-The Dapartment has outlined the relevant facts in its lett:cro of advice dated' August 16, 1971, and September 29, 1971. These facts indicate that: (1) Applicant Duke Power Company is culpabic for a situation inconsistent uith the antitrust laws which new exists in the area of the Piedmont Carolinus that it serves, uhich gives Applicant the -power to preclude its smaller cc petitors .
from developing hydroelectric power and installing and using large, low cost thermal generating units and obtaining the benefits of economies of scale therefrom; and (2) that Applicant's proposed activities under the licances cought,- in instc11ing largo nucisar unita and marhating pcwer from then would maintain this cituation end likely enhance or aggravate it. - The Department will propose licence ccnditiens appropriate to remedy the anticc=petitive cituation which Applicanti's activities under the licence uculd maintain.
VII. THE DEPARTIGT TAKES UO PO3ITICN 03 APPLICniz'S OPPOSITION TO DELEGATION O_? REVIEW Auld:ORITT The' Dopartment .of Justice neither opposas nor concurs in Applicant's opposition to, and mstion for reconsideration of, - the ,
Ccm21ssion's . delegation of final authority, including the review
. function, .to the ' Atomic Safety and Licensing Appeala Board.
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However, the' Comission's established procedure, incorporated in-
-its. rules of practice, reserving final authority in'specified cases is believed adequate to deal with this situation. 10 C.F.R.
. 95 2;785-2.786.
Respectfully. submitted ,
/' / . . x / *~
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WALT J.CE EDWM.D 8?dD
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DAVID A. LEUKIE Attornevs Dcoartment of Justice Uaehingi:en, , D'. C. 20530
[
. . August 3, 1972
SUPPLEMENT TO ANNEX A
-COMMENTS:0F THE DEPARTMENT'OF JUSTICE 0N APPENDIX A TO THE ANSWER AND MCfrION OF- APPLICANT ~ DUKE POWER COMPANT
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The Departmentcof Justice supplements its detailed discussion
'of the scope ~ of prelicensing antitrust review (Reply to the
- Answer.'of Consumers Power Company, relevant. portions of which are incorporated by reference herein [ Annex A]) with the following specific comments upon Applicant's detailed discussion of its position .(Appendix A to Applicant 's Answer and Motion):
, 1. -- On. page 2 of Appendix A, Applicant quotes City of La favette l v. S.E.C. to the effect that "there must be a reasonable nexus between the matter cubject to [the agency's] s2rve111ance and those.under attack on anticompetitive grounds." The District of.
' Columbia Circuit'indeed found such a nexus, in the F.P.C. portion of that case -(which -involved Gulf States Utilities), between financing the1 facilities to be constructed and the general system activities of Gulf States -- far less. of a nexus than exists in
-the. present proceeding batueen construction and operation of the
- nuclear facility and Applicant 's overall system operations.
- 12. On~ page 3, Applicant quotes at length from City of Statesville
- v. A.E.C. _concerning the Commission's narrow scope of antitrust -
L review. The material quoted concerns licensing determinations under Section 104' of the- Atomic Energy Act -- noncommercial
-reactors at the construction permit stage. The court warned that
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it would ifind-.a nexus at the operating license stage even under Section 104 review. The present proceeding, however, deals with.
Section 105 review of Section- 103 comercial licenses, which is l
an entirely different. matter, j
- 3. (Page 4, second paragraph) Contrary to-Applicant's contention, the Department's proposed scope of antitrust review would not require the Board to construe Section 105(c) as if the words
" activities under the license" had been deleted. Those words, h'owever, must be considered in the context of the remainder of that' statutory provision -- by relating the activities under the' license to the maintenance of a situation inconcistent with the antitrust laws.
- 4. -(Page 5) Neither the cited page 125 of the Joine Committee l
Hearings nor pages 136-137 of those Hearings (where Mr. Cocagys ;
made his alternate proposal) contains support for Applicant's conclusion here. -Mr. Comegys ' proposal used the language " issuance of the 1"eense or activities for which the license is sought" --
which is. no different than the phrase " activities under the license" which was finally used. His proposal did not vary in scope ;from that enacted; . it differed only in the timing of the l issuance of advice.
l 5. .On pagos 11 and 12,. Applicant quotes Acting Assistant Attorney l-General Comegys, citing page 366 of the Joint Comittee on Atomic
(: Energy? Hearings. The citation is to an out-of-context excerpt of l- ,
j Mr. Comegys ' . testimony, which was' taken from page 142 of the
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Senate Antitrust and Monopoly Subcommittee Hearings on Competitive Aspects of the ' Energy Industry (91st Cong. , 2d Sess. ,
May 197_0).- In context, Mr. Comegys said the following:
We do not consider- such a licensing proceeding as an appropriate forum for wide-ranging scrutiny of general industry affairs -essentially unconnected with the plant'under review.
The principal problem area we foresee is that of access to a plant's output by outside utilities, public and private. To obtain the economies of scale possible under atomic generation, plants must be both very large and very expensive, in most cases too much so for one company to finance or to use wholly in its own system. Accordingly, most plants are organized as joint ventures among several utilities. At the same time, the -reduction in marginal cost of power afforded by an atomic plant is so great that a competing utility, denied participation and without l cn alternative means of acquiring such benefits, is placed at a decisive competitive disadvantage. The problem is made more acute by environ =2ntal considerations, which vill narrow the availability of planesites for those seeking to form their own alternative projects.
In any event, the guidance of-the antitrust laus suggests that ~where companies are acting together to create or control a unique facility, they may be required, by application of- the rule of reason, to grant access on equal and nondiscriminatory terms to others who lach~ a practienl alternative.
The mode and terms of access must, of course, depend on the particular factual context surrounding each individual licensing application.
Under some circumstances, an ownership share may be required for an outside utility who desires to assume the risks .as well as the benefits. In other cases, L contractual arrangements for a portion of the plant 's -
output may be entirely adequate. But in any case we believe that tor =s for adequate access. co, the new facility 4 . require se=ething =cre than the mere equivalent of a u : supplier-customer relationship. Such access ~ implies, in
.our view, the~ sema opportunity to receive low-cost power for the ~came uses as those who control the unique icw-
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- 6. -(Page'13) Senator Aiken's " concession" that the effort "to cut back on the scope of. the AEC consideration of antitrust issues . . . is reflected to some extent in this bill" had reference merely to the elimination of the words " tend to" from the statutory test contained in earlier versions of the~ legis-lation:- "whether the ac tivities under the license would [ tend to] create or maintain a situation inconsistent with the antif trust laws."
- 7. (Pages 17 18) Applicant's system-wide arrangements are indeed necessary to its installation of the Oconee and McGuire units. However, the installation of those units and ancillary transmission also maintains and enhances Applicant's power to deny such arrangemencs to others, thus having an anticompetitive impset.
- 8. (Page 19) The context of the Assistant Attorney General's letter of.ondorsement indicates that his reference to conditioning the license' for a' joint venture nuclear power plant was by way of example only and did not intend to describe the entire scope
. of _ tho' bill.
- 9. . Applicant's . reference '(page 20) to "Eealth and Safety Standards" indicates that it is referring to the Statesville i
case and medical therapy and. experimental licenses which are not involvedcin this.Section 105 proceeding.
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. UNITED STATES OF AMERICA
. i BEFORE THE.
ATOMIC ^ ENERGY C010!ISSION I
In the. Matter of DUKE POWER COMPANY. Docket Nos. 50-269A,-50-270A
'50-287A .
.(Oconee Units;1. 2 & 3, ) 50-369A,-50-370A
.McGuire Units /1 & 2) ) ,
CERTIFICATE OF SERVICE I hereby certify that copies of nEPLY OF THE DEPARTMENT OF JUSTICE:TO APPLICAUT'S ANSUER AND MOTION OF JULY 24, 1972.
dated August:3,1972. in the above captioned matter have been served on .the - following- by deposit in the United States mail, first class or' air cail, this 3rd day of August 1972:
Walter W.:.K. Bennott, Esquire J. O. Tally, Jr., Esquire P. 0.~Eox 185 . P.C. Drawer 1650
-Pinehurst, North' Carolina 28374 Fayetteville, Uorth Carolina-23302'
- Joseph F. Tubridy, Esquire 4100 Cnthedral Avenue. IG. J. A. Ecuknight , Jr. , Esqu:.ra
. Washington, D' C. 20016 Tally, Tally & Bouknight P. O. Drawer 1660
' John B. Farmskides, Esquire Fayetteville, North Carolina Atomi~c Safety and. Licensing: 28302
.-Board Panel Troy B. Connor, Esquire U; S. . Atomic Fnergy Cc=ission.
. Washington,-D -C.. 20545' Reid & Priest 1701 K Street, NW.
Carl' Horn..Esquira- Washington, D. C. 20006:
President, Duke Power. Company
'- - . Charlotte,:N_-th Carolina. 28200- Joseph Rutberg, Esquire Benjamin.H. Vogler, Er,quiro
' William H.LGrigg, Esquire. . . Antitrust Counsel for AEC Vice President and General Counsel Regulatory Staff-Duke"Pcuor Company. U. S. Atomic Energy Commissien L422 South Church Street' .
Washington, D. C. 20545 Charlotta , North Carolina- 28201
- Atomic Safety end . Licensing -
Willice Warfield Ross, Esquire Board Panel
.Wald,cHarkrader;& Ross U. ~ S, Atcmic Energy Ccmissien
'1320Luineteenth>Serant, IN. ,
'Wachington, D. C.. 20545
- Washingt'on,qD'. C. .
20036
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Mr,; Frank.W. Karas- Abraham Braitman, Esquire
-- Chief, Public Proceedings Branch Special Assistant for 0ffice .of the Secretary of the Antitrunt Matters
- Cocaission Office of Antitrust and
. U. S. Atomic Energy Commisaion Indemnity Washington, D. c. - 20545- U. S. Atomic Energy Cettnission Washington, D,-C. 20545 7 _,- ,
.;;? * . . .l l b'GViG Ik . LJCKI3.
Attornef, Antitruct Divicion Departmant of Justica
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Washington,-D. C. 20530
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