ML19319C335

Response to Applicants' Argument Supporting Its Proposal for Expediting Antitrust Hearing Process.Motion Should Be Denied.Certificate of Svc Encl

ML19319C335
Person / Time
Site:	Davis Besse, Perry
Issue date:	05/05/1975
From:	Goldberg R, Hjelmfelt D CLEVELAND, OH, GOLDBERG, FIELDMAN & LETHAM, P.C.
To:	Atomic Safety and Licensing Board Panel
References
NUDOCS 8002130853
Download: ML19319C335 (12)

Text

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UNITED STATES OF AMERICA NUCLEAR REGULA TORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

The Toledo Edison Company and )

The Cleveland Electric nb inating )

Company ) Docket No. 50-346A (Davis-Bes se Nuclear Power Station, )

Unit 1) )

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The Cleveland Electric Illuminating )

Company, et al. , ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

RESPONSE OF THE CITY OF CLEVELAND TO APPLICANTS' ARGUMENT IN SUPPOR T OF ITS PROPOSAL FOR EXPEDITING THE ANTITRUST HEARING PROCESS On March 14, 1975, Applicants once again sought an opportunity to reargue the nexus issue under the rubric of a Proposal For Expediting the Antitrust Hearing Proces s. The City of Cleveland (City) filed its answer in opposition on March 21, 1975. Nuclear Regulatory Commission (Staff) j and Department of Justice (Department) filed answers in opposition on April 7,1975. At a prehearing conference held on April 21, 1975, in l these proceedings, Applicant filed a written argurnent in support of its proposal for expediting the antitrust hearing process. The Board established !

the date of May 5,1975, for City, Staff and Department to file written re-sponses to Applicants written argument.

I 8002 130$h

Applicants make much of the statement in Waterford that "if it becomes apparent at any point that no meaningful nexus can be shown, all or part of the y roceeding should be summarily disposed of" (RAI-73-9 at p. 621). Applicants rely on the words "at any point" as a predicate for its heads-I-win-tails-you-lose proposal. First it should be noted that the language is "at any point" not at point after point. Applicants have had several opportunities to argue nexus and on each occasion the Board has found that sufficient nexus exists. Now Applicants seek once again to argue nexus in what appears to be a last ditch effort to forestall a hearing on anti-trust issues which will result in the imposition of license conditions much more comprehensive than those proposed by Applicants, i. e. , license conditions which will truly remedy the existing anticompetitive situation.

Moreover, Applicants completely ignore the statement of the Commission in Waterford that if it is apparent that there is no nexus, the ,

" proceeding should be summarily disoosed of" (emphasis added). The Commission in its rules of procedure, Section 2. 749, established a specific procedure for summary disposition. A s Cleveland pointed out in its answer to Applicants' proposal, Applicants have failed to comply with the requirements of Section 2. 749. Inasmuch as the Commission in the Waterford decision chose to refer to summary disposition of the matter, it must be inferred l 1

that what the Commission had in mind was the summary disposition procedure of Section 2. 749. Had the Commission meant something else it would have l

chosen other language.

Applicants attempt to avoid the summary disposition procedure by coupling the Commissions reference to nexus on page 621 of Waterford with other language from page 622 dealing with an altogether different pro-cedure. At page 622, the Commission was dealing with the assumption arguendo method of proceeding directly to the remedies phase of the hearing.

In saying at page 622 that the parties should "be alert to any initiatives which could efficiently advance the proceeding to a proper and satisfactory con-clusion", the Commission did not by that vague and general language over-ride its earlier specific references to testing the nexus question by way of a motion for summary disposition.

Applicants argue at pages 4 and 5 that the procedures they have proposed is the equivalent of the Waterford assumption arguendo proposal.

The Board in this case previously refused to accept an earlier attempt by Applicants to offer a modified assumption arguendo approach because Applicants' refusal to assume all of the matters in issue were true but for remedies. Applicant is trying again to slip a modified assumption arguendo plan by the Board. No matter how Applicants attempt to style their Pro-posal for Expediting, it remains a warmed over version of their offer of an incomplete assumption arguendo which the Board has previously rejected.

It most certainly is not the equivalent of the Waterfoni procedure. There is a great deal of difference in permitting Applicants ao in effect concede liability and go to trial on remedies only and to permit Applicants to offer in effect a bare bones outline of the liability case against them and then

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challenge the other parties to complete the proof of liability without putting in their proof.

In fact Applicants admit at page 6 that their proposal would deny City, Staff and Department the right to put in evidence to prove the case on liability. This is fair say Applicants because the assumptions cover the issues in controversy set by the Board. The purpose of the statement of matters in controversy is to put Applicants on notice of the allegations of the parties and to define and limit the scope of the hearing. It was for that purpose that City, Staff and Department undertook to formulate matters in controversy. Had the parties intended the statement of matters in con-troversy to be a substitute for their case-in-chief on liability, the parties would have offered a lengthy and detailed statement of facts to be proved.

The statement of matters in controversy of course is merely a statement of issues to be tried not a stipulation of facts.

Ironically at the prehearing conference on April 21, 1975, the very same proceeding at which Applicants suggested that a partial assumption that the statement of matters in controversy were true would be a fair basis on which to deny City, Staff and Department the right to present their cases on liability, Applicants' counsel argued to the Board that those very same matters in controversy were so vague as to fail even to put his clients on notice of what the issues in the proceeding were. While it is logical to say as does City that the matters in controversy are sufficiently stated to accord Applicants fair notice of the issues, but are not sufficient to be substituted

for proof of facts, it is completely illogical to argue as do Applicants that the matters in controversy are sufficient to rely upon in lieu of facts but are so vague as to fail to give notice of the issues.

At page 8, Applicants make the astonishing statement that there is no cause for concern that Applicants will withdraw their assumption arguendo if the Board rules against them and then go on to make clear that that is precisely what will happen. It may be of no concern to Applicants that the parties and the Board waste a substantial amount of time and money and delay the licensing of the Perry plant in a fruitless exercise. The City would assure the Board 4

that it is of great concern to the City and to the people of Cleveland that Applicants engage the Board's time and prolong the existence of the anti-competitive situation for naught.

Applicants argue that nexus is a matter of jurisdiction. The existence of nexus is not a prerequisite to jurisdiction to conduct an inquiry into whether 1

the licensed activities would create or maintain a situation under the antitrust laws. The jurisdiction of the Commission stems from Section 105 of the Atomic Energy Act. Section 105 will be searched in vain for any statement that the presence of nexus is a prerequisite to jurisdiction to conduct an inquiry into the existence of a situation inconsistent with the antitrust laws.

It may be that lack of proof of nexus would render the Commission powerless to condition the license to remedy a situation inconsistent with the antitrust laws. It would not mean that the conduct of the hearing was beyond the juris-diction of the Commission anymore than it would if the Commission found that

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there was no situation inconsistent with the antitrust laws. Nexus is simply an ultimate fact to be determined after hearing as is the ultimate fact of the existence of a situation inconsistent with the antitrust laws.

Reference to City of Lafayette v. Securities Exchange Commission, 454 F. 2d 941 affirmed, Gulf States Utilities Co. v. Federal Power Commission, 411 U.S. 747 (1973) and Northern California Power Agency v. FPC, D. C. Cir. ,

-- F. 2d - , No . 7 3 - 17 6 5, decided March 6,1975, does not suppo. t Applicants' argument that nexus is jurisdictional. Neither case involved statutes specif-ically conferring antitrust jurisdiction on the agency. In Gulf States the Court was concerned with the extent to which the agency was required to consider antitrust allegations under its general duty to protect the public interest.

The Court was not construing the outer limits of the agencies jurisdiction but the narrow limits within which the agency must act. In NCPA, the Court considered whether the FPC was required to hear antitrust allegations when the remedy sought exceeded the power of the agency to order the remedy if the allegations were true. Such issues are not presently before this Board.

In addition to precluding City, Staff and Department from offering evidence on liability, Applicants would also preclude them from offering evidence even on the nexus issue' An important factor in proving nexus is an examination of the activities under the license which must be related to the situation inconsistent with the antitrust laws. Applicants, however, claim to have defined their activities under the license through the device of proposed license conditions. Having defined both the situation and the

activities under the license to their liking and advantage, Applicants now cha11ange City, Staff and Department to make a nexus argument. Such a procedure is obviously unfair to Cleveland.

In fact the proposed license conditions do not define Applicants' activities under the license. For example, the proposed conditions say nothing at all about the Applicants' anticompetitive activities designed to maximize the benefits of their nuclear power licenses while denying the full benefits of nuclear power to others. Moreover, even if the proposed license conditions did define activities under the license they do not and cannot eliminate the need for inquiry into whether the access referred to in the proposed conditions is a grant of access in any meaningful sense.

Applicants have argued that the proposed conditions define the activities under the license in the same manner in which conditions in an environmental hearing limit activities under a license or in the sense that application for an 800 Mw unit rather than an 1100 Mw unit limits the activities under the license. There is just enough truth in Applicants' argument to be deceptive. Such conditions may limit the activities under the license but they do not define the activities under the license.

Applicants' argument that the proposed license conditions are not remedies is sheer sophistry. In essence, Applicants' argument is simply that the proposed license conditions eliminate the anticompetitive activities and any anticompetitive activities not so remedied have no nexus to activities under the license.

Applicants' tactical purpose is clear. The purpose of the proposal to expedite is to isolate a single issue -- third party wheeling -- and then dismiss it on the grounds that it lacks nexus. This explains Applicants' refusal to admit that the proposed license conditions are remedies because the proposed conditions do not provide a remedy for Applicants' refusal to wheel. Applicants as much as admit that this is their purpose at pages 12-15.1/

During the course of the hearing, it will be shown that third party wheeling is an essential condition if the anticompetitive situation is to be remedied. So long as Applicants a re able to devise a strategy which will prevent City and others from gaining access to that unique resource trans-mission, Applicants.v,111 be able to preserve their anticompetitive advantages.

The importance of third party wheeling is made evident by the desperate lengths to which Applicants will go to avoid the possibility that the Commission will impose third party wheeling as a licensing condition.

Applicants argue at page 13 that refusals to wheel may be anticom-petitive but standing alone has no nexus to activities under the license.

Even if this were true, which City does not agree, Applicants overlook the fact that it is the situation inconsistent with the antitrust laws which must have a nexus to the activities not each anticompetitive action of Applican'.s_

The refusal to wheel does not exist in isolation hence Applicants scheme to isolate it.

1/ Although at the prehearing conference on April 21, 1975, counsel for the Applicants professed ignorance as to the issues in these proceedings, Applicants here assert that there is only one issue and they know what it is -- third party wheeling.

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9 WHEREFORE, for the foregoing reasons Applicants' motion should be denied.

i Resp ctfully submitted, (p

>JnJC Reuben Goldberg David C. Hjelmfelt 1700 Pennsylvania Avenue, N. W.

] Washington, D. C. 20006 Telephone (202) 659-2333

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Attorneys for City of Cleveland, Ohio James B. Davis Director of Law i

Robert D. Hart Assist. nt Director of Law City of Cleveland 213 City Hall Cleveland, Ohio 44114 t

i May 5,1975 i

CERTIFICATE OF SERVICE I hereby certify that service of the foregoing Response Of The City Of Cleveland To Applicants' Argument In Support Of Its Proposal For Expediting The Antitrust Hearing Process has been made on the following parties listed on the attachment hereto this 5th day of May,1975, by depositing copies thereof in the United States mail, first class or air mail, postage prepaid.

Lv%l{ 5; d David C. Hjelsfifelt /

f A ttachment j

ATTACHMENT Atomic Safety and Licensing Board Jon T. Brown, Esq.

U. S. Nuclear Regulatory Commission Duncan, Brown, Weinberg & Palmer Washington, D. C. 20555 Suite 777 1700 Pennsylvania Avenue, N. W.

Mr. Frank W. Karas, Chief Washington, D. C. 20006 Public Proceedings Branch Office of the Secretary John C. Engle, President U. S. Nuclear Regulatory Commission AMP-O, Inc.

Washington, D. C. 20555 Municipal Building 20 High Street Douglas V. Rigler, Esq. Chairman Hamilton, Ohio 45012 Atomic Safety and Licensing Board Foley, Lardner, Honabaugh Melvin C. Berger, Esq.

and Jacobs Joseph J. Saunders, Esq.

Schanin Building Steven Charno, Esq.

815 Connecticut Avenue, N. W. Antitrust Division Washington, D. C. 20006 Department of Justice Post Office Box 7513 John H. Brebbia, Esq. Washington, D. C. 20044 Atomic Safety and Licensing Board Alston, Miller & Gaines William T. Clabault, Esq.

1776 K Street, N. W. David A. Leckie, Esq.

Washington, D. C. 20006 Department of Justice Post Office Box 7513 John M. Frysiak, Esq. Washington, D. C. 20.044 Atomic Safety and Licensing Board U. S. Nuclear Regulatory Commissic, i Gerald Charnoff, Esq.

Washington, D. C. 20555 Shaw, Pittman, Potts & Trowbridge 910 17th Street, N. W.

Benjamin H. Vogler, Esq. Washington, D. C. 20006 Joseph Rutberg, Esq.

Office of the General Counsel Frank R. C1okey, Esq.

Regulation Special Assistant Attorney General U. S. Nuc1 car Regulatory Commission Room 219 - Towne House Apartments Washington, D. C. 20555 Harrisburg, Pennsylvania 17105 l Robert J. Verdisco, Esq. Thomas J. Munsch, Jr. , Esq.

Roy P. Les sy, Jr. , Esq. General Attorney ,

Office of the General Counsel Duquesne Light Company j Regulation 435 Sixth Avenue U. S. Nuclear Regulatory Commission Pittsburgh, Pennsylvania 15219 Washington, D. C. 20555 David McNeil Olds, Esq.

Abraham Braitman, Esq. John McN. Cramer, Esq.

Office of Antitrust and Indemnity Reed, Smith, Shaw & McClay U. S. Nuclear Regulatory Commission 747 Union Trust Building Washington, D. C. 20555 Pittsburgh, Pennsylvania 15219 l

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Page 2 ATTACHMENT (Continued)

John R. White, Esq. Leslie Henry, Esq.

Vice President and General Counsel Fuller, Henry, Hodge & Snyder Ohio Edison Company 300 Madison Avenue 47 North Main Street Toledo, Ohio 43604 Akron, Ohio 44308 John Lansdale, Jr. , Esq.

Pennsylvania Power Company Cox, Langford & Brown 1 East Washington Street 21 Dupont Circle, N. W.

New Castle, Pennsylvania 16103 Washington, D. C. 20036 Lee C. Howley, Esq. Donald H. Hauser, Esq.

Vice President and General Counsel Corporate Solicitor The Cleveland Electric Illuminating Co. The Cleveland Electric Illuminating Co.

Post Office Box 5000 Post Office Box 5000 Cleveland, Olilo 44101 Cleveland, Ohio 44101 Alan S. Rosenthal, Chairman Richard S. Sal man, Chairman e Atomic Safety and Licensing Appeals Board Atomic Safety and Licensing Appeals Bd.

U. S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Washington, D. C. 20555 Dr. John H. Buck William C. Parler Atomic Safety and Licensing Appeals Board Atomic Safety and Licensing Appeals Bd.

U. S. Nuclear Regulatory Commission U. S. Nuclear Regulatory Commission Washington, D. C. 20555 Washington, D. C. 20555 Dr. Lawrence K. Quarles Dr. W. Reed Johnson Atomic Safety and Licensin, Appeals Board Atomic Safety and Licensing Appeals Bd.

U.S. Nuclear Regulatory Commission U. S. Nuclea r Regulatory Commission Washington, D. C. 20555 Washington, D. C. 20555 Edward A. Matto Deborah Power Highsmith Assistant Attorney General Richard M. Firestone Chief, Antitrust Section Assistant Attorneys General 30 East B road Street, 15th floor Antitrust Section Columbus, Ohio 43215 30 East Broad Street, 15th floor Columbus, Ohio 43215 Howard K. Shapar, Esq.

Executive Legal Director U. S. Nuclear Regulatory Commission Wa shington, D. C. 20555

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