Text

Brief on Behalf of Applicants in Opposition to Exceptions Filed by City of Cleveland.Board Should Dismiss Appeal from Initial Decision Due to Inadequate Exceptions Raised by City.Certifies of Svc Encl
	ML19329A871
Person / Time
Site:	Davis Besse, Perry
Issue date:	06/30/1977
From:	Reynolds W, Zahler R; SHAW, PITTMAN, POTTS & TROWBRIDGE, TOLEDO EDISON CO.
To:	;
References
	NUDOCS 8001150764
	Download: ML19329A871 (50)
	v • d • e

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[ UNITED STATES OF AMERICA N'0 CLEAR REGULRTORY COMMISSION Before the Atomic Safety and Licensing Appeal 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. ) 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 BRIEF ON BEHALF OF APPLICANTS IN OPPOSITION TO EXCEPTIONS FILED BY THE CITY OF CLEVELAND Of Counsel:

ALAN P. BUCHMANN WM. BRADFORD 'EYNOLDS SQUIRE, SANDERS & DEMPSEY ROBERT E. ZAHLER DONALD H. HAUSER SHAW, PITTMAN, POTTS & TROWBRIDGE VICTOR F. GREENSLADE, JR. 1800 M Street, N. W.

The Cleveland Electric

. Washington, D. C. 20036 Illuminating Company Counsel for Applicants

, MICHAEL M. BRILEY '

PAUL M. SMART FULLER, HENRY, HODGE & SNYDER The Toledo Edison Company DAVID McN. OLDS JOSEPH A. RIESER, JR.

REED SMITH SHAW & McCLAY Duquesne Light Company TERENCE H. BENBOW STEVEN A. BERGER STEVEN B. PERI WINTHROP, STIMSON, PUTNAM

& ROBERTS Ohio Edison Company and Pennsylvania Power Company 8001150 g

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TABLE OF CONTENTS Page

. Introduction . . . . . . . . . . . . . . . . . . . . 1 Argument . . . . . . . . . . . . . . . . . . . . . . 3 A- NO ERROR EXISTS IN THE REFUSAL BELOW TO CONDITION THE NUCLEAR LICENSES ON A REQUIREMENT TO PROVIDE WHOLESALE POWER SALES ON REQUEST . . . . . . . . . . . 3 B. NO ERROR EXISTS IN THE IMPOSITION QF A SYSTEM CAPABILITY LIMITATION ON THE RIGHT OF PARTICIPANTS TO

" VOTE" ON POOL-RELATED MATTERS . . . . . . . 12 C. NO ERROR EXISTS IN THE REFUSAL BELOW TO ORDER LICENSE CONDITIONS FOR THE BEAVER VALLEY 2 NUCLEAR FACILITY . . . . . . . . . . . . . . . . . . 19 Conclusion . . . . . . . . . . . . . . . . . . . . . 28 Exhibit A Exhibit B Exhibit C i

LEGAL CITATIONS Page CASES:

O City of Cleveland v Cleveland Electric Illuminating Co., No. C75-560 (N.D. Ohio, filed April 27, 1977) . . . . . . . . . . . . . . . . . 27 2

City of Mishawaka v American Electric Power Co.,

Docket Nos. E-9548 & E-9549 (FPC, filed May 10, 1977) . . . . . . . . . . . . . . . . . . . . . 4 Consumers Power Company (Midland Plant, Units 1 and 2),

. ALAB-282, 2 N.R.C. 9 (1975) . . . . . . . . . . . . . . 3 O

Duquesne Light Company (Beaver Valley Power Station, Unit No. 2), LBP-74-13, 7 A.E.C. 282, aff'd, LBP-74-24, 7 A.E.C. 705, aff'd, ALAB-208, 7 A.E.C. 959, aff'd, CLI-74-24, 7 A.E.C. 953 (1974) . . . . . . . . . . . . . 19, 20, 21, 24 First State Bank & Trust Co. V Sand Springs State Bank, 528 F.2d 350 (10th Cir. 1976) . . . . . . . 22 Florida Power & Light Co. (St. Lucie Plant, Units 1 & 2 and Turkey Point, Units 3 & 4),

Docket Nos. 50-338A, 50-389A, 50-250A & 50-251A (April 5, 1977) . . . . . . . . . . . . . . . . . . . . 21 0 Houston Lighting & Power Co. (South Texas Project, Unit Nos. 1& 2), ALAB-381, 5 N.R.C i32 (1977) . . . . 21 Louisiana Power & Light Co. (Waterford Steam Generating Station, Unit 3), CLI-73-7, 6 A.E.C. 48 (1973) ("Waterford I") and CLI-73-25, 6 A.E.C. 619 (1973) ("Waterford II") . . . . 24 Potomac Passengers Assoc. v Chesapeake

& Ohio Ry., 520 F.2d 91 (D.C. Cir. 1975) . . . . . . . 22 Northern States Power Co. (Prairie Island Nuclear Generating Plant, Units 1 and 2),

j ALAB-244, 8 A.E.C. 857 (1974) . . . . . . . . . . . . . 3 l

0 Sonsna v Iowa, 419 U.S. 393 (1975) . . . . . . . . . . . . . 22 United States v Concentrated Phosphate Export Association, 383 U.S. 199 (1968) . . . . . . . . . . . 9 I

l

, Page United States v Insurance Board of Cleve3r.nd, 144 F. Supp. 684 (N.D. Ohio 1968) . . . . . . . . . . . 9 United States v Oregon State Bar, 405 F. Supp. 1102 (D. Ore. 1975) . . . . . . . . . . 9, 12 United States v Oregon State Medical Society, 343 U.S. 326 (1952) . . . . . . . . . . . . . . . . . . 9 United States v San Diego County Veterinary Medical Association, 1976-2 Trade Cas. t 16,131 4

(S.D. Cal. 1976) . . . . . . . . . . . . . . . . . . . 9

United States v W. T. Grant Co.,

345 U.S. 629 (1953) . . . . . . . . . . . . . . . . . 9, 12 STATUTES AND REGULATIONS:

Administrative Procedure Act S 10 (a) , 5 U.S.C. S 702 . . . . . . . . . . . . . . . . 3

Federal Power Act S 202, 16 U.S.C. S 824a . . . . . . . . . . . . . . . . 7 S 205, 16 U.S.C. S 824d . . . . . . . . . . . . . . . . 4 18 '; . F . R. S 35.15 . . . . . . . . . . . . . . . . . . . . . 4 MISCELLANEOUS:

Breyer and MacAvoy, Energy Regulation by The Federal Power Commission (1974)_

. . . . . . . . . . 13 FPC, National Power Survey (1970). . . . . . . . . . . . . . 13 NRC, Safetv Evaluation Report Related to Operation of Davis-Besse Nuclear Power Station, Unit 1 (Supp. No. 1, April 1977) (NUREG-0136) . . . . . . . . 27

Cases or authorities chiefly relied upon are marked by asterisks.

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal 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. ) Docket Hos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

)

HE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A BRIEF ON BEHALF OF APPLICANTS IN OPPOSITION TO EXCEPTIONS FILED BY THE CITY OF CLEVELAND Introduction On April 14, 1977, the City of Cleveland (" Cleveland")

I filed its brief in support of its exceptions to the Licensing Board's Initial Decision in this consolidated antitrust proceeding.1/ Cleve-a 1/

The brief filed by Cleveland is hereinafter cited as "C-Br. at

. ***"; Applicants' Appeal Brief In Support Of Their Individual and Common Exceptions To The Initial Decision, filed April 14, 1977, will be cited as "A-Br. at ***". All other references to the Initial Decision and to the record below will be cited in the following i manner:

1 Initial Decision "I.D. at ***"

NRC Staff Exhibit "S ***"

DOJ Exhibit "D ***"

Cleveland Exhibit "C ***"

Applicants Exhibit "A ***"

Transcript references are indicated either by a "Tr." prefix (when a lawyer is speaking) or the name of the witness testifying fol-lowed by the transcript page number. Numbers within parentheses which follow the page reference refer to the particular lines on that page relied upon.

1

A e

_2_

land rests its case on broad factual genera 11:ations which conveniently lose sight of the actual state of the record below. Moreover, the City fails to come to grips with the central legal standards that should apply under Section 105c of the Atomic Energy Act in evaluating what antitrust con-sequences (if any) might result from licensing the subject nuclear fac111 tics. As a result, the discussion in Cleve-land's brief is particularly unpersuasive and merely serves to underscore the clear conclusion that the three exceptions raised by Cleveland are not well taken.

As we have already pointed out to the Appeal Board in Applicants' Appeal Brief, this antitrust proceeding raises complex and fundamental questions as to the structure and operation of the electric utility industry in northern Ohio and western Pennsylvania. The Initial Decision con-tains a number of disturbing findings with respect to the individual and joint conduct of these Applicants -- find-ings which Applicants believe are legally unsound and have no legitimate support in the factual record. While Cleve-1and seems content to rest largely on certain pronouncements by the Licensing Board to sustain its position, this un-analytic approach blinks at the economic and institutional realities in the relevant market that were essentially ignored below, but require recognition by this Appeal Board in arriving at a proper resolution of the antitrust issues before it. The three exceptions filed by Cleveland provide a useful framework for demonstrating this fundamental point.

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Argument A. NO ERROR EXISTS IN THE REFUSAL BELOW TO i

CONDITION THE NUCLEAR LICENSES ON A REQUIREMENT TO PROVIDE WHOLESALE POWER SALES ON REQUEST Cleveland's first exception is addressed to the failure of the Licensing Board to order Applicants, as a condition to ob-taining the Davis-Besse and Perry nuclear licenses, to make avail-able full and partial requirements wholesale power to requesting entities (C-Br. at 5, 6-10). Perhaps the most immediate response to this complaint is that Cleveland has no legitimate interest in raising it and therefore the issue is not properly here on appeal.2/

There is, in any event, no substance to Cleveland's " wholesale power" exception.

As to Cleveland's lack of standing, the matter is clear-cut.

Pursuant to the terms of a firm power schedule negotiated between Cleveland and The Cleveland Electric Illuminating Company ("CEI"),

Cleveland already receives wholesale power on the basis of a Federal Power Commission ("FPC") regulated price (see A-271). CEI cannot cease providing such power without subjecting its decision to FPC

-2/

While the Appeal Board has held that an intervenor may file pro-posed findings of fact and conclusions of law on matters not within

, the ambit of its contentions, and may seek appellate redress of asserted errors similarly unencumbered by the confines of its con-tentions (see Northern States Power Co. (Prairie Island Nuclear Gen-erating Plant, Units 1 and 2), ALAB-244, 8 A.E.C. 857, 863 (1974)),

those rulings are expressly limited to "any party whose interest might be thereby affected" (id.). Thus, at a ninimum, the intervenor must show some cognizable interest for pursuing the appeal. Normally, an intervenor could establish the requisite interest by asserting that it has been adversely affected or aggrieved by the decision of a 11cen-i sing board (compare Consumers Power Company (Midland Plant, Units 1 and 2), ALAB-282, 2 N.R.C. 9 (1975) (exceptions to be filed by party deeming itself aggrieved by result); cf. Administrative Procedure Act 5 10(a), 5 U.S.C. S 702). But as the text which follows indicates,

Cleveland has not been adversely affected or aggrieved by the failure l to include a license condition o'n wholesale power. Since Cleveland has failed to assert any other basis on which this Appeal Board could find the requisite interest, Cleveland's exception on wholesale l power should be dismissed as not properly presented for review.

scrutiny.3/ Nor has the company expressed any intention of doing so. To the contrary, CEI just recently consented to a Cleveland request that CEI waive the thirty-day nctice provision in the firm power schedule and increase the wholesale contract demand from 70 mw to 90 mw (see verified report of April 15, 1977, from CEI to the F

-3/

Section 205(d) of the Federal Power Act, 16 U.S.C. S 824d(d),

i prohibits any change in service rendered except after thirty days' notice to the FPC and the public. A decision to terminate or can-cel wholesale service would be a change in the service rendered, and the rules of the FPC therefore require the filing of a notice of termination or cancellation (see 18 C.F.R. S 35 15). Thereafter, either upon its own motion, or upon complaint, the FPC may hold a hearing on the lawfulness of the p."oposed termination, and pending such hearing, suspend the effective date of the termination for up to five months (see Federal Power Act S 205(e), 16 U.S.C. S 824d(e)).

The full scope and authority of the FPC in this area was recently highlighted in City of Mishawaka v. American Electric Power Co.,

Docket Nos. E-9540 & E-9549 (Initial Decision on Investigation of Complaint Relating to Threat of Cutting Off Electric Power Service for Wholesale Customers, filed May 10, 1977). There the FPC under-took an investigation of the policies and practices of an investor-owned utility relating ;o the continued availability of wholesale power. Finding that th-. utility under investigation had begun the

" initial steps in a program leading toward an attempt to withdraw from wholesale service" (slip op. at 19), the administrative law judge ordered the utility to ' breat all classes of customers equi-tably and fairly and [to] cease and desist from any actions which will have the effect of singling out any class of customers for the purpose of indicating directly or indirectly that the continuity 4 of service for only that class of customers may be in jeopardy" (slip op. at 20).

Facts of record in this proceeding underscore the practical effect of FPC regulation with respect to wholesale power. For example, as a result of Cleveland's refusal to pay for load transfer service, CEI filed with the FPC on May 21, 1971, a notice of termination and cancellation (see A-20, p. 2). The effective date of this termina-tion notice was extended until December 16, 1971, at which time the FPC issued an order suspending the notice of termination and can-cellation until May 17, 1972 (id.). By order of March 8, 1972, the FPC prohibited termination of service, and directed CEI, until further order by the FPC, to continue providing load transfer ser-vice to Cleveland subsequent to May 17, 1972 (see A-19, p. 7). See also A-37 (TECO notice of cancellation of service to Liberty Center).

l-l

FPC, attached hereto as Exhibit A). In this connection, Cleveland notified CEI that it was ceasing all coal-fired generation as of April 6, 1977 (id.). Henceforth, if Cleveland's demand should ex-ceed 90 mw, the City may, at its option, meet that demand by run-ning its own combustion turbines or by purchasing from CEI under FPC-regulated rates an appropriate quantity of Class I (emergency),

Class II (limited-term) or Class III (short-term) power (see S-204; A-Br. at 140). Nowhere does Cleveland contend that this service which CEI has agreed to provide is somehow inadequate -- it obviously cannot do so. Accordingly, Cleveland simply has no cognizable interest in a license condition requiring wholesale power sales and should not be heard to raise the matter on this appeal.

Cleveland's argument is a weak one in any event. Not sur-prisingly, it received no support from the Department of Justice

("DOJ") or from the Staff of the Nuclear Regulatory Commission

(" Staff"), both of whom claimed throughout the proceeding that they were representing the interests of the other non-Applicant CCCT en-tities.4/ Those entities, and Cleveland as well, have the ab$lity under the Licensing Board's conditions to require Applicants to soll to them maintenance power (license condition 5), emergency power (license condition 6), economy energy (license condition 7) and nuclear power (license condition 9). In addition, Applicants have been directed by the Licensing Board to offer parallel interconnec-tions upon request (license condition 2), to share reserves with interconnected entities (license condition 8) -- which implicitly

~4/

By Order of this Appeal Board issued on February 15, 1977, as modified on March 25, 1977, any party desiring to file a brief in support of the exceptions taken by Cleveland should have done so on or before April 14, 1977.

requires Applicants to sell electric energy to entities unable to meet their own load demands (see A-Br. at 114, n.131), to wheel

. third-party power to interconnected entities (11 cent.,e' condition 3),

r and to make available " membership in CAPCO" to entities with a I system capability of 10 mw or greater (license condition 4). As a f'

j result, all of the non-Applicant entities in the CCCT have unques-tionably been afforded access to electric energy. See also Memo-i

)

randum of the Board Relating to the City of Cleveland's Motion for Clarification of License Conditions, at 4-5, filed February 3, 1977 l

1 (hereinafter "L.B. Clarification Order").

While we disagree strongly with the nature and scope of the relief formulated below -- for the several reasons already set i

forth in Applicants' Appeal Brief (see, e.E., A-Br. at 2vj-97) --

]

our point here is that Cleveland's request is not one for electric energy that the Licensing Board has somehow failed to provide. It is, instead, a demand that the energy already made available to Cleveland under the Board's license conditions be packaged in a I specific way, i.e., in the form of a full or partial requirements wholesale contract priced according to FPC accounting principles.

Such a wholesale contract does not call for a different commodity; after all, electric energy is fungible. Rather, it brings into play only a pricing technique which differs from the pricing tech-nique used in other forms of electric energy contracts providing for the sale of emergency power, maintenance power, economy power, and the like (see Firestone 9219-20(16-25 & 1-4)). This Commission should not be using its antitrust review responsibility as a means of requiring Applicants to enter into one or another of those pric-ing arrangements; that is peculiarly within the province of the FPC

(see Federal Power Act S 202, 16 U.S.C. $ 824a; A-Br. at 78-79; and see n.3, supra).

Rather, the antitrust focus before this Commission should be on nuclear access and those interrelated services needed to make that access " meaningful" to participating entities. Cleveland has chosen to ignore this essential aspect of the inquiry. Nowhere has it tied the alleged need for a condition concerning full or partial requirements wholesale power to the access question. Indeed, Cleve-land disregards entirely the fact that, under the Licensing Board's conditions and under A-44, both emergency and maintenance power are readily available to all participating entities in sufficient amounts to back up the nuclear power when any of the designated plants are down. Nothing in the record below suggests that more is required in order to afford participants meaningful access. Nor is Cleveland's proposed condition bottomed on a contrary view of the evidence. In fact, Cleveland does not even limit its wholesale power request to entities which have elected to participate in the Davis-Besse or Perry units; it applies equally to non-participating entities. There is no legitimate reason for this Appeal Board to entertain such a request.

Moreover, the argument for relief of this sort is particu-larly strained in the present case since every non-Applicant entity in the CCCT, including Cleveland, is presently receiving full or par-tial requirements bulk power, or shortly will be upon completion of an agreed-to interconnection facility.5/ The Licensing Board ex-

-5/

There are fifty-seven non-Applicant entities in the CCCT. Eleven i are Buckeye member rural electric cooperatives who receive full requirements wholesale power pursuant to a long-term (i.e., thirty-five year) contract with Buckeye Power, Inc. (see S-18E, Appendix B).

(Continued next page) l'

plicitly found (L.B. Clarification Order at 5-8) that the policy and practice of each Applicant is to provide such service to enti-ties located within that Applicant's service area under a whole-sale power schedule on file with the FPC. Cleveland acknowledges as much but seeks to raise the spectre of a possible change in attitude sometime in tne future regcrding Applicants' current willingness to enter into wholesale power arrangements with neigh-boring entities. Such groundless speculation provides no basis for ordering the relief requested.

What Cleveland appears to want is some affirmative action by the Commission in the nature of a mandatory injunction directing Applicants to offer full and partial requirements bulk power. In i order to obtain such extraordinary relief in the context of anti-trust review, the United States Supreme Court has declared that "the moving party must satisfy the court that relief is needed.

The necessary determination is that there exists some cognizable danger of recurrent violation, something more than the mere possi-5/ (Cont'd)

Thirty-seven additional entities are distribution-only municipal systems receiving their full requirements from one or another of the Applicants -- twelve from TECO (see S-114 through S-117, S-122, S-124, A-35, A-38, A-40, A-41, A-42, A-259, A-260), nineteen from OE (see S-86 through S-99, S-101 through S-105), five from PP (see A-243 through A-247), and one from DL (see S-126). Two distribu-tion-only municipal systems receive their full requirements from a non-Applicant source -- one (Tontogany) from Bowling Green, a full requirements customer of TECO, and the other (Marshallv111e) from Orrv111e (see S-85). One entity -- Newton Falls -- will become a full requirements customer of OE once the interconnection between the two is completed (see A-231). Of the six remaining systems, Cleveland (see S-204, A-271), Oberlin (see S-100), Bryan (see A-36),

and Napoleon (see A-39) receive partial requirements wholesale power from an Applicant; Painesville (see S-203) has an interconnec-tion with an Applicant and the right to receive the full range of services oser the interconnection; and Orrv111e (see A-186) has chosen to interconnect with Ohio Power, a non-Applicant system.

bility which serves to keep the case alive." United States v. W.T.

Grant Co., 345 U.S. 629, 633, 635-36 (1953) (emphasis added).5/

The applicable standard was clearly articulated in United States

v. Oregon State Medical Society, 343 U.S. 326, 333 (1952), in the following terms:

The sole function for an action for injunction is to forestall future violations. * *

All it takes to make the cause of action for relief by injunction is c real threat of future viola-tion or a contemporary violation of a nature likely to continue or recur. * *

Even where relief is mandatory in form, it is to undo existing conditions * * * * [ emphasis added].7/

Measured by these criteria, Cleveland's argument has a particularly hollow ring. It rests on the general assertion that,

-6/

In W.T. Grant Co., the Court held that, although the underlying actions were not moot, the trial court had not abused its discretion in granting summary judgment for the defendants and refusing to award injunctive relief since subsequent actions had rendered the likelihood of future violations minimal (345 U.S. at 635-36).

~7/

Cleveland seeks to avoid an application of this legal standard in the present context by referring instead to a line of Federal Trade Commission ce~es dealing with false, misleading or deceptive advertising (C-Br. at 8-9). Those decisions -- which are directed to the somewhat different concern as to the need for a cease-and-

, desist order (even when the challenged advertisement has been voluntarily discontinued) -- have not been regarded by the courts as controlling on the separate inquiry in the antitrust area as to the need for mandatory injunctive relief. See United States

v. W.T. Grant Co., supra, 345 U.S. at 632, and the cases cited therein. In the latter context, while voluntary cessation of alleged illegal conduct will rarely be a basis for terminating antitrust review altogether (see United States v. Concentrated Phosphate Export Association, 383 U.S. 199, 203 (1966); but see United States v. San Diego County Veterinary Medical Association, 1976-2 Trade Cas. 1 61,131 (S.D. Cal. 1976); United States v. :

Oregon State Bar, 405 F. Supp. 1102 (D. Ore. 1975); United States ,

v. Insurance Board of Cleveland, 144 F. Supp. 684 (N.D. Ohio 1966)), i it will be taken into account in determining whether there does l indeed exist a "real threat" of future violation sufficient to j warrant relief by mandatory injunction. See United States v. W.T. j Grant Co., supra, 345 U.S. at 633, 635-36.

)

because certain of the Applicants continue to insist that their un-willingness some years ago to * ~de wholesale power to a par-ticular requesting entity was entirely lawful, it can be expected

. that unlawful refusals may occur in the future. Even on its own

~

terms, C1eveland's syllogism is imperfect. The refusal of Duquesne Light Company ("DL") more than 10 years ago to sell wholesale power to the Boroughs of Aspinwall and Pitcairn (C-Br. at 10), when con-i sidered in light of the circumstances prevailing at that time, raises no inference that DL will behave unlawfully in the future.8/

The same conclusion must be reached with respect to Cleveland's misplaced reliance on the unwillingness long ago of The Toledo

> Edison Company ("TEC0") to sell wholesale power to the City of Waterville (id.).9/ Similarly, the past negotiating history between Ohio Edison Company ("0E") and the City of Newton Falls provides no better foil for Cleveland's vague speculation as to

-S/

As we have previously pointed out, the evidence simply does not support the findings of the Licensing Board in this natter (see A-Br.

- at 269-74), and Cleveland has not even attempted to support the Board's inaccurate findings by reference to the record.

9/

i While TECO admittedly was not enthusiastic about the prospect of l selling wholesale power to Waterville, the two documents cited by l

Cleveland (D-504 and D-506) provide no basis on which any inference could be drawn that the failure to sell wholesale power at thtr.

l time and in the given circumstances was in any respect unlawful or j even remotely resulted in the demise of the Waterville system. Nor ,

does any other part of the record dealing with Waterville -- which consists of but three additional documents (D-505; D-615; D-619) --

support such a thesis. Rather, the record shows that Waterv111e's problems were entirely the result of its own small, inefficient size and gross mismanagement (see A-Br. at 185-89).

that company's future behavior (id.).1S! Nor is the reference to a 4

possible bulk power arrangement between OE and rural electric coopera-tives adjacent to it (C-Br. at 9) any more convincing.11/ In short, 1

12/

Although it took Newton Falls two years to negotiate both a whole-sale power contract and an agreement on who would bear the costs of the new interconnection necessary to effect the wholesale trans-action, there is not a single bit of evidence which shows either that the two-year period was unreasonably long or that Newton Falls suffered any adverse consequences during the two years. Instead,

'the testimony of William Craig, city manager of Newton Falls, indi-

cates that OE desired to sell wholesale power to Newton Falls from the very outset (Craig 2851(1-5)). The documentary record further shows that while OE and Newton Falls had some differences over con-tract terms -- which certainly must be expected -- successful and good faith negotiations were undertaken by both parties (see S-71 through S-83; A-28 through A-34; A-229 through A-233). In addi-tion, there is no record support for the proposition that OE's negotiating positions with respect to a prepayment deposit (see A-Br. at 243 45) or with respect to a notice provision involving capacity obligations (see A-Br. at 248-50) were unreasonable.

11/

Because the rural e: .ctric distribution systems are already locked into 35-year full requirements contracts with Buckeye Power, Inc.

i (see n.5, supra), oE has no plans to serve such loads (White 9558 (7-8)) and, therefore, is not now presently constructing capacity for that purpose. Parenthetically, we would note that the charge advanced by DOJ in this proceeding was not concerned with the pos-sibility of a future refusal to serve the cooperatives, but to the contrary, with a claim that OE and Ohio Power Company agreed that, should the Buckeye Project dissolve, each company would serve its former customers once again (see DOJ September 5 Filing at 9). In responding to that charge, John White testified that it was diffi-cult to visualize Buckeye dissolving, that if that occurred it

~

would most likely be the result of some catastrophe at the Cardinal Plant, and that OE would, as it had previously done in the past, pro-vide assistance to the cooperatives on a short-term basis (White 9557-58(20-25 & 1-6)). With respect to long-term commitments, Mr.

White replied that CE would have to look at its own loads and generat-j ing resources at the time to determine if the new and unplanned load could be supplied (White 95S8(7-12)). This testimony, which is en-tirely consistent with the approach OE would take to a new wholesale customer even if a license condition mandating wholesale sales were ordered, is what Cleveland distorts into the possibility of a refusal.

A similar distortion occurs with respect to Mr. White's testimony that for a long time he thought OE had no public service obligation to serve the cooperatives (White 981-12(23-25 & 1)); Cleveland misreads this j statement as indicating that Mr. White currently continues to hold to such a belief. Conveniently ignored is Mr. White's follow-up remarks noting that the FPC could, in any event, order such sales (White 9812(1-3)).

l

I the record permits no inference of future misconduct by any Ap-plicant which would warrant a license condition of the sort pro-posed by Cleveland.

Nor did the Licensing Board see any "real threat" of pos-sible improprieties in this area, notwithstanding its misguided view of the evidence below regarding the referenced wholesale power discussions of past years. As it correctly pointed out, Applicants' present practice (L.B. Clarification Order at 8), the current bulk power relationships that exist (id. at 6), and the " good faith" representation by Applicants to continue such arrangements in the future (id. at 8), all serve to undermine Cleveland's contrary thesis. And see United States v. W.T. Grant Co., supra, 345 U.S.

at 633; compare United States v. Oregon State Bar, supra, 405 i

i F. Supp. at 1104. Moreover, if a request for wholesale power should ever be refused by one of the Applicants, there always exists a ready forum in which to test the propriety of such a response under the antitrust laws. Thus, there is no legitimate reason for the Commission to impose as a condition to licensing these particular nuclear facilities the additional general obli-gation on Applicants to provide full and partial requirements wholesale power to requesting entities, irrespective of any P

interent they . lay or may not have in participating in the subject i

i units.

i .. NO ERROR EXISTS IN THE IMPOSITION OF A SYSTEM CAPABILITY LIMITATION ON THE

, RIGrIT OF PARTICIPANTS TO " VOTE" ON POOL-RELATED MATTERS l

Cleveland's second exception takes issue with that part of the relief fashioned by the Licensing Board which limits the

y " voting rights" of new CAPCO participants to those entities having a system capability equal to, or in excess of, the system capa-bility of the smallest existing participant in the CAPCO multi-party contracts (see C-Br. at 10-13). Cleveland would prefer the conditions to direct that systems possessing some fixed quantity of capacity, which Cleveland arbitrarily sets at 50 mw, be per-mitted to " vote". Such a random alternative, however, provides no rational answer to Applicants' legitimate concerns which the Licens-ing Board recognized as sufficient justification for the particular limitation 4.t formulated (see I.D. at 261, n.*).

Throughout this proceeding Applicants have emphasized the exceedingly fragile nature of pooling transactions -- a circumstance which arises from conflicting forces, some of which pull the parties together towards joint action and others of which push the parties apart towards individual action (see A-Br. at 102-03).12/ -

If even one member of the pool is unwilling to shoulder its equitable share of the responsibilities that are required for participation, or does not have the ability to do so (either in terms of system capability i

or qualified personnel), the entire arrangement suffers (see A-121 12/

-- Perhaps the classic example of how fragile the pool relationship is was the break-up and demise of the Carolinas-Virginia Power Pool i ("CARVA"), terminated on October 20, 1970. See generally Kampmeier 5743-52; FPC, National Power Survey I-17-2, n.2 & I-17-32, n.18 (1970). In 1974, following an intensive study of the electric utility industry, Professors Breyer and MacAvoy concluded (Energy ,

Regulation by the Federal Power Commission 111-12):

[A] variety of managerial, regulatory, and social factors may have weakened the incentives toward

, rationalization [1.e., increased coordination].

Of these, perhaps the most serious consisted of the problems in running a pooling organization by a committee, combined with the problems in shar-ing gains of location and scale among firms. In any case, the movement toward rationalization did not proceed very rapidly in the 1960s.

i l

vmre- w- r --=r -- -

t- - - rw '

(Slemmer) 9(4-20)). Similarly, if so much as a single member system harbours notions of retaining for itself a disproportion-ate share of pool benefits, rather than sharing the benefits with others on an equitable basis, coordination will not remain a viable concept (see id. at 10-11(17-26 & 1-11); Slemmer 9044 (11-25)). Thus, imperative to every pool arrangement is the over-riding need for mutuality of interest and a willingness of each participant to surrender some degree of autonomy in order to ac-commodate the other members of the pool (see A-121(Slemmer) 9-10 (21-26 & 1-12); A-122(Firestone) 6-9). Only in this way can the pool achieve advantages whica exceed isolated operation.

While many of the factors which impact on the ability of a pool to function are objective -- i.e., size of generating re-sources, financial capability, quality of management (see A-Br. at 104, 108-11) -- there is also an important subjective evaluation each pool member must make of the other participants. Fcr, as part of a utility's individual calculation of 'he net benefit to be derived from pooling, it must satisfy itself that its fellow pool participants are not of a mind to veto pool actions irration-ally, and are sufficiently committed to the joint planning and l operating philosophy to make the prospect of an exercise of the veto power exceedingly remote (compare A-121(Slemmer) 12-13).

The evidence in this proceeding highlights the inherent differences between Applicants' respective systems, on the one hand, and the small systems of the non-Applicant entities in CCCT, like l

Cleveland, on the other hand, and thus underscores their fundamental incompatability with respect to most, if not all, of the major

\

pooling objectives under the CAPCO multiparty contracts. As a con-

. sequence, an unqualified incorporation of the latter entities '.nto the CAPCO contractual arrangements, without any meaningful limita-tion on " voting rights", for example, would predictably frustrate the entire pooling effort. The testimony in this area was very specific and has at no time been called into question. Mr. Williams pointed out that, since municipal systems have different tax and financing costs, their fixed charge rate is not at all similar to that of Applicants; thus, the municipalities operate on the basis of markedly different economic objectives (Williams 10383(9-12)).

Because of the very small size of such systems, moreover, their economic objectives would have little impact on the CAPCO one-system plan, i.e., the course of action which produces that result which is in the best interests of the entire group and not just in the best interest of a particular individual system (Williams 10382-83 (16-25 & 1 4)). Nor does there appear to be cny realistic prospect that the optimum one-system plan for the CAPCO companies as a whole (including municipalities) would ever be in the best interest of the smaller participating systems (Williams 10383(2-4), 10384(2-22)).

i Accordirgly, the present CAPCO ?.ompanies are legitimately concerned that municipalities would balk when called upon to agree to capacity additions under-the one-system plan (Williams 10385 (1-14), 10386-87(7-25 & 1-5)). And, if these small systems were permitted to dictate the course of events on such matters, as Cleve-land would prefer, the pool would soon be confronted with a capacity

! shortage that would impair the reliability of the entire intercon-nected network (Williams 10401-02(20-25 & 1-12)). Moreover, given l

l

the political constraints under which these small systems operate, the inevitable delay in the decision-making process required by the need for approval from both a city administration and a city council could alone jeopardize the overall program (Williams 10402-03(13-25 & 1-12)).

Cleveland, therefore, simply errs in stating that "[t]here is no evidence to support a finding that the size of a member has any relationship to its c.bility to respond or make necessary plan-ning commitments" (C-Br. at 13).13/ Nor is it accurate to suggest, as Cleveland has done (C-Er. at 12-13), that size was not viewed as an important criterion in selecting tne original participants in the CAPCO contractual arrangements. To the contrary, in attempt-ing to establish new means of coordination to take better advantage of scale economies in generation and transmission, Applicants very definitely looked to those large, similarly-sized systems which could assist in that endeavor by conferring scale-related benefits on the other participants -- and properly so (see A-Br. at 16-21).

While Cleveland makes reference to the deposition testimony of L

~

1_3/

Cleveland is correct in its assertion that Applicants often take several months to reach agreement on specific issues and, in fact, have not yet had final approval of a Generating Agreement (C-Br. at 13). But such a history merely highlights the complexities involved, even when the various participants' economic objectives are quite similar. What is important, however,'is that the failure to con-clude a Generating Agreement has not stymied pool action since the i parties have been willing to operate under the general principles of the Memorandum of Understanding (S-184) as implemented by ad l hoc agreements (e.g. , D-372, S-191, S-193, S-194, S-196 through 3-201). The very point of Applicants' position is that, if small L systems participated in CAPCO, it would, for the reasons articu- !

i lated above, be highly unlikely that this needed flexibility could 1

be maintained.

i l

1

_ 17 _

Messrs. Lindseth, Besse and Mansfield as somehow suggesting otner-wise (C-Br. at 13), the transcript pages relied upon provide no support for such a thesis.1S/

There tnus exists ample business justification for the Licensing Board's imposition of a limitation on the " voting rights" of new participants in a power pool which is neasured by the system capability of the smallest current participant. Nor does such a requirement have the effect of denying non-Applicant entities reasonable access to the benefits of pooling, as Cleveland has asserted (C-Br. at 12).1E! The unsubstantiated premise of 14/

-- The mischaracterization of Elmer Lindseth's testimony has been discussed earlier (see A-Br. at 18, n.23). Review of the Besse and Mansfield testimony reflects a similar mischaracterization on the part of Cleveland. Neither reference deals with the formation of CAPCO in 1967 or with the criteria used to select participants. Ralph Besse's testimony relates to his personal, and CEI's corporate, opposition to further federal regulation, while Bruce Mansfield's testimony relates primarily to the views of Philip Sporn of AEP on the general issue of cooperative and municipal involvement in coordination.

~~15/

We would note in passing that Cleveland's proposed formula offers no different prospect to the small CCCT systems than the one set

forth in the Licensing Board's conditions. Because of factual errors (see C-Br. at 12-13). Cleveland grossly overstates the number of non-Applicant entities which could conceivably have a " vote" in CAPCO under its arbitrary 50 mw requirement. In fact, based on past

. history, it is doubtful.that any such entity will have a generating capacity in excess of the needed 50 mw. Thus, in spite of the Mayben testimony which states that Cleveland has a net demonstrated capacity of 180 mw (C-161(Mayben) 8(14)), the current system capa-bility of Cleveland, after ceasing all coal-fired generation (see Exhibit A, infra), is less than 50 mw. And even when he testified in these proceedings, Mayben had to admit that the Cleveland system was only able to generate between 10 and 15 mw of power (Mayben 7650 (10-16), 7677(15-23)). Similarly, while Cleveland represents on the basis of a chart prepared by Dr. Wein that Orrv111e has 89 mw of generating capability, Dr. Wein's back-up material shows that Orrvil.le itself reported to the FPC that its net dependable capacity 4

in 1973 was 39.2 mw (see D-593, schedule 16). Napoleon and Bryan would not meet Cleveland's standard. While each of those cities has some generating capability, Dr. Wein's testimony made it clear that both systems have ceased all generation and are now taking full (Continued next page) l . _ _ _ ._. _ _ __ ._ _ _ _ _

Cleveland's argument is that non-Applicant entities must partici-pate directly and. fully in CAPCO to enjoy such benefits. This is simply untrue, as we have heretofore explained in some detail (see A-Br. at 104-05, 127-34). Cleveland would have this Appeal Board read as a suggestion to the contrary the testimony of Wilbur Slemmer to the effect that small, publicly-owned systems should not be denied opportunities to serve customers at lower prices (Slemmer 9053(21-25)). But it plainly is not Lb. Slemmer's view that such a result can be accomplished only through pooling. In fact, during his testimony, Mr. Slemmer noted that in the PJM Pool small systems have associate membership status entitling them to sit in on meet-ings as observers but not to vote; as he pointed out, such systems receive the benefits of pooling indirectly through bilateral con-tracts with full members (Slemmer 8972(1-10)).15/

15/ (Cont'd) r

! requirements wholesale power from TECO (see D-587(Wein) 121-22 (25-26 & 1-4)). Finally, Cleveland's reference to the WCOE com-bined demand is irrelevant and misleading. The only generating resources available to the WCOE group are those of Oberlin and Newton Falls which Cleveland already counted. Furthermore, the 20 mw owned by those two systems will be reduced to 12 mw once the interconnection to Newton Falls is completed and that system becomes a full requirements customer of OE. Thus, WCOE, either

individually or as a group, does not have generation even ap-proaching 50 mw. Nor is the reference to Cuyahoga Falls, a mem-ber of WCOE, accurate, since that system does not own any gen-erating resources, but is, instead, a full requirements whole-sale customer of OE (see S-90).

16/

~~

At the close of the proceedings in this docket, the opposition parties introduced a mass of documentary material on the New England Power Pool ("NEP00L") in an attempt to show that small municipal l

systems can directly participate in a pool. Applicants' objection to this material as having no probative value without testimony on what the provisions mean, how they were arrived at, how they are implemented, what state law is and how it impacts on the agreement, and in what ways the New England experience is appropriate for con-l ducting a pool in Ohio and Pennsylvania (see Tr. 12491-93), was over-l ruled. In NEPOOL, voting is on the basis of annual peak load l (Continued next page) l

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

_ 19 _

Similarly, in the instant situation, the non-Applicant CCCT systems are presently receiving the benefits that flow from the pooling arrangement among the CAPCO companies through their bilateral contracts with one or another of the Applicants (A-Br.

at 104-05; see n.5, supra). In addition, each can participate in the subj ect nuclear facilities, either through an ownership interest or a unit power purchase, irrespective of pool membership.

There is thus no substance to Cleveland's unsupported assertion that, without full " voting rights", a small non-Applicant CCCT entity is deprived of the benefits of pooling. Not even the Licensing Board,

,. which was overly sensitive to such allegations, attached credence to such a proposition. Cleveland has advanced no arguments requir-ing a different conclusion on this appeal.

i

C. NO ERROR EXISTS IN THE REFUSAL BELOW TO ORDER LICENSE CONDITIONS FOR THE BEAVER VALLEY 2 NUCLEAR FACILITY Cleveland's third exception challenges the Licensing Board's failure to attach license conditions to Beaver Valley 2, a nuclear unit not involved in the present consolidated docket (C-Br. at 14-18).

This argument should be recognized for what it really is: Cleveland is once again attempting to relitigate its unsuccessful effort to

. intervene in the prelicensing antitrust review proceeding for the Beaver Valley 2 unit (see Duauesne Light Company (Beaver Valley j

Power Station, Unit 2), Docket No. 50-412A). It does se despite the i

l fact that its untimely and inadequate petition to intervene in that l lb/ (Cont'd) l D-635, 5 5 3}; actions of the Management Committee require a 75 percent affirmative vote, although two members having at least 15 percent of the vote can veto any action (id. at 5 5.4; see also A-270, pp. 14-15). The practical effect of these provisions is l to preclude the " vote" of small systems from ever having any im-pact on NEPOOL decisions.

?

proceeding was properly denied by the Licensing Board;17/ -

its motion to reconsider that decision was also denied by the 18/

Licensing Board;-- its appeal from these decisions was denied by the Appeal Board 1E! and by the full Commission;g0/ and its time for any further appeals has long since expired.

The construction permit for Beaver Valley 2 was issued on May 3, 1974 (see CPPR-105).21/ At that point, subject only to Cleveland's rights of direct appeal, the Beaver Valley 2

--17/

Memorandwn and Order, LBP-74-13, 7 A.E.C. 282 (March 15, 1974).

--18/

Final Memorandum and Order on Petitions to Intervene and Requests for Hearing, LBP-74-24, 7 A.E.C. 705 (April 15, 1974).

--19/

Decision, ALAB-208, 7 A.E.C. 959 (June 10, 1974).

--20/

Memorandum and Order, CLI-74-24, 7 A.E.C. 953 (June 28, 1974).

--21/

The permit as issued contained the following condition with respect to antitrust review:

The Attorney General of the United States has advised that an antitrust hearing is not required in this matter. The Regulatory Staff does not believe that an antitrust hearing is required in this matter. The City of Cleveland raised antitrust issues in a petition to intervene, and an Atomic Safety and Licensing Board on April 15, 1974 denied the City's petition and determined that a hearing on antitrust issues was not neces-sary or otherwise required. On April 25, 1974 the City filed a Notice of Intent to Appeal. In view of the advice of the Attorney General, the position of the Regulatory Staff and the decision of the Atomic Safety and Licensing Board, anti-trust review of the application for this construc-tion permit under section 105c of the Atomic Energy Act of 1954, as amended, has been completed and a hearing thereon determined to be unnecessary.

LEmphasis added.]

I

' ~

proceeding was clearly terminated (see Houston Lighting & Power '

Co. (South Texas Project, Unit Nos. 1 & 2), ALAB-381, 5 N.R.C.

582, 594 (1977)).22/ Moreover, upon the exhaustion of all appeals and the issuance of a fin 11 agency decision, the Appeal Board's decision in Houston leaves ao doubt that a licensing board has no authority to reopen a construction permit proceeding (id. at 590-91). Nor does it have any jurisdiction to direct that a hear-ing be held on antitrust matters in the absence of a pending con-struction permit or operating license proceeding (id. at 592-94).23/

There is thus no conceivable basis upon which the Licensing Board below, or the Appeal Board here, could issue an order directing that conditions now be attached to the Beaver Valley 2 construction permit.21/

--22/

The finality of the Beaver Valley 2 proceeding following issuance of the construction permit was specifically noted by the Commission in responding to Cleveland's futile attempt to have the permit re-voked. The Commission stated therein (7 A.E.C. at 954):

[T]he antitrust review has been completed under any notion. This result is in no way altered by the fact that the Appeal Board has noted here that the City is entitled to litigate essentially the same antitrust considerations in other pend-ing Com:aission proceedings to which it is a party (ALAB-208, supra, p. 969). The finality of a pro-ceeding -- where, as here, no good cause has been shown for seeking to intervene out of time -- is not changed by the theoretical possibility that the same relief requested may be granted through cther proceedings.

23/

See also Florida Power & Light C1 (St. Lucie Plant, Unita 1 & 2 and Turkey Point, Units 3 & 4), Docket Mos. 50-338A, 50-389A, 50-250A & 50-251A, slip op. at 4 (April 5, 1977).

24/

-- Interestingly, Cleveland did not discuss .the jurisdictional considerations relevant to the question of the Licensing Board's ability to impose in this proceeding license conditions on Beaver Valley 2. It implicitly asserts that the Licensing Board could, in a proceeding solely to license the Perry and Davis-Besse units, (Continued next page)

Cleveland seeks to avoid this clear conclusion on the basis of a waiver theory of some sort, i.e., that Applicants waived their right to object to the conditioning of the Beaver Valley 2 permit in the present proceeding. We would observe preliminar11y that the law does not permit parties to a proceeding to waive jurisdictional limitations of the sort described above. See Sonsna

v. Iowa, 419 U.S. 393, 398 (1975); First State Bank &: Trust Co. v.

Sand Springs State Bank, 528 F.2d 350, 354 (10th Cir. 1976);

Potomac Passengers Assoc. v. Chesapeake & Ohio Ry., 520 F.2d 91, 95 n.22 (D.C. Cir. 1975).

In any event, the waiver argument is not well taken. It is premised on the proposition that Cleveland's petition to inter-vene in Beaver Valley 2 was denied because of a stipulation by Applicants that license conditions wcald be imposed automatically with respect to that unit in the Perry and Davis-Besse proceedings.

I Such was not the case. To be sure, Applicants proposed, before the question of Cleveland's intervention in Beaver Valley 2 was decided, that the permit for Beaver Valley 2 be issued with a condition that any license conditions ordered in the Perry proceedings would be included in the Beaver Valley 2 permit as well (see Tr. 11-12, 14, 17-29, 42-43, 122-23, 168-70, 234).25/ However, Cleveland declined 21/ (Cont'd) amend the permit for Beaver Valley 2 issued previously in a pro-ceeding long since completed. Under Cleveland's position, deci-sions of this agency can never be final since they could be un-done, even thirty years from now, in a later proceeding involving different units. Certainly, such a novel proposition, directly contrary to established Appeal Board precedent, deserved at the very least some discussion by Cleveland.

25/

-- Applicants were attempting to avoid the delay in the construction of Beaver Valley 2 which would be occasioned if Cleveland's petition i to intervene were granted (see Tr. 149-53, 235-40). In that event, (Continued next page)

/

_ , _m__ . _ _ . _

to accept such a condition (see, e.g., Tr. 12-13, 40). Instead, it pressed for a decision on its petition to intervene. That pe-tition, of course, was denied. Thereafter, the permit for Beaver Valley 2 was issued, without any such condition (see n.21, supra).

Applicants never indicated that they would apply to BeLver Valley 2 the results of any other proceeding in the absence of such an express condition in the Beaver Valley 2 permit (see, e.E., Tr. 122-23). Nor do the remarks of Applicants' counsel to which Cleveland makes reference (see C-Br. at 15-16) suggest anything to the contrary.2{/

25/ (cont'd) the license could be issued only upon the completion of antitrust review, which would have been well after construction was scheduled to begin (see Tr. 272-76). Applicants urged that, if Cleveland's petition to intervene were denied (thus permitting construction to begin immediately), Cleveland's interest could still be protected if the license for Beaver Valley 2 contained a condition that the license would include whatever conditions were ordered in the Perry and Davis-Besse antitrust reviews. Applicants indicated that they would not obj ect if the Board, although denying Cleveland's peti-tion to intervene and terminating the proceeding, still included such a condition in the license for Beaver Valley 2, even though there would have been no evidentiary hearings proving the need therefor. Cleveland unequivocally opposed Applicants' suggestion (Tr. 42-44, 238-39, 241-43, 244-45).

' 26/

, Neither the Licensing Board nor the Appeal Board premised its denial of Cleveland's Beaver Valley 2 petition on the suppositien that the Licensing Board could later attach whatever conditions might be fashioned in the Perry and Davis-Besse proceedings to the earlier-issued Beaver Valley 2 permit. The Licensing Board did indicate that Cleveland could try the same legal and factual anti-trust issues in the instant consolidated proceeding as it had desired to litigate in the Beaver Valley 2 proceeding (see LBP-74-24, supra, 7 A.E.C. at 707), and the Appeal Board similarly recognized that the relief being sought by Cleveland in its Beaver Valley 2 petition, e.g., access to nuclear power, wheeling services, reserve sharing, etc., could also be obtained in the Perry and Davis-Besse hearing (see ALAB-208, supra, 7 A.E.C. at 968-69). But, neither the Licensing Board nor the Appeal Board proposed that the Beaver j Valley 2 permit be conditioned on the basis of other proceedings,

! or even attempted to predetermine that access to Beaver Valley 2 would be appropriate following a hearing in the Davis-Besse and Perry (Continued next page)

Arguably, there still remains to be decided whether con-ditions in the Davis-Besse and Perry licenses should address the matter of access to Beaver Valley 2.27/ For jurisdictional reasons that are tied to the nexus standard articulated by the Commission in its Waterford decisions,28/ Applicants think not (see A-Br. at 297). Moreover, the record established below, which, pursuant to discussions that,took place at prehearing conferences in this con-solidated proceeding, was to, and,did, embrace this question, pro-vides no factual basis for granting access to Beaver Valley 2.

4 26/ (Cont'd) proceedings. In fact, the Appeal Board went so far as to note (ALAB-208, supra, 7 A.E.C. at 969):

[I]t is far from certain that a meaningful remedy for the rectification of any anti-competitive situaticn which might be found would necessarily entail accbss to, specifi-cally, Beaver Valley Unit 2 generated power.

Electricity to be generated by the three facilities (assuming their operation) will

. be indistinguishable after it enters the CAPCO system. Moreover, the Beaver Valley facility is located at the greatest distance from Cleveland and, in all likelihood, will not be the first to commence operation.

27/ Obviously there is no need to discuss further any of the non-nuclear conditions since the attachment of those conditions to the Perry construction permits ensures that, should they survive the present appeal, they will be applicable throughout the life of the Beaver Valley 2 permit. With respect to the question of nuclear access to Beaver Valley 2, we note that Cleveland has never re-quested either the Licensing Board or the Appeal Board to condition l j the Davis-Besse or Perry licenses to include access to Beaver Valley l 2, but has, instead, only asked that the Beaver Valley 2 license be 1

amended (see C-Br. at 14). In these circumstances, we do not believe that the separate issue regarding a possible change in the Davis- l Besse and Perry licenses to require access to Beaver Valley 2 is ;

properly presented for review. As the following discussion shows, however, there is in any event no basis for so conditioning the Davis-Besse and Perry licenses.

28/

-- See Louisiana Power & Light Co. (Waterford Steam Generating Sta-tion, Unit 3), CLI-73-7, 6 A.E.C. 48 (1973) ("Waterford I") and CLI-73-25, 6 A.E.C. 619 (1973) ("Waterford II").

l l l

Cleveland's argument to the contrary rests on the asser-tion that there have been several requests for access to Beaver Valley 2 that have been denied by Applicants (C-Br. at 27). The evidence belies this characterisation of the facts. Thus, while Cleveland makes reference to an alleged refusal by DL to afford Pitcairn access to Beaver Valley 2, the conversation giving rise to this contention took place in 1968, years before Applicants even applied for the Beaver Valley 2 license. At that time, the Borough Solicitor, Mr. McCabe, made a passing remark about the

" Beaver Valley unit" during the course of a discussion with representatives of DL on other matters (see S-17, pp. 5-6). Cleve-land seeks to elevate this chance comment to a separate and cognis-able request for access to a nuclear unit that had not yet even been contemplated. The absurdity of such a fabricated position has al-ready been dealt with in Applicants' Appeal Brief (see A-Br. at 280-81) and requires no further amplification here. !

Cleveland also claims that AMP-O was denied access to Beaver Valley 2. The basis of that claim is the testimony of Mr.

H111 wig, a transmission and distribution engineer employed by the City of Bowling Green. He stated that AMP-O " wrote" and requested access to a plant in the "Duquesne area" (H111 wig 2435(11-18)).

2V

- It should be remembered that, at the time of the signing of the CAPCO Memorandum of Understanding (barely five months prior to the relevant conversation with McCabe), the CAPCO companies had commit-ted for construction only four units, one of which was a nuclear unit to be operated by DL on the Ohio River at Beaver Valley (S-184, p. 2). Obviously, this is the unit to which McCabe alluded five months later, in February, 1968. Just as obviously, this unit is what is now denominated Beaver Valley 1. In 1968, it was re-ferred to merely as the " Beaver Valley unit", with no identifying number, for the simple reason that the second unit, Beaver Valley 2, was not yet in the works.

l l

However, Mr. H111 wig was not clear as to the " details" (Hillwig 2436(18)), did not know the name of the facility (Hillwig 2436(2-9),

2546(18-24)), and conceded on cross-examination that, since he had no personal knowledge of the communication, he really did not know if it was made by letter, telegraph or telephone (H111 wig 2456(8-17)).

That such unsubstantiated gossip was admitted over objection (see Tr. 2436(7-8), 2462-63(15-25 & 1-5)) was clear error; that Cleve-land has found it necessary to rely on such incompetent testimony only serves to highlight the weakness of its position; and that Mr. H111 wig's speculation is totally unreliable is confirmed by the failure of the opposition parties to introduce any correspondence or other evidence indicating that such a request was ever made.

Finally, Cleveland claims that it, too, has been denied access to Beaver Valley 2. Here it relies on the Licensing Board's arroneous attempt to equate CEI's negotiating position with DOJ over license conditions for Perry, on the one hand, with CEI's attitude towards Cleveland's August, 1973 request for access to Beaver Valley 2, on the other hand. The frailty of that analysis has already been exposed by Applicants (see A-Br. at 148-49 & n.175).

Cleveland has always been offered access to Beaver Valley 2 (see D-192), and in the exact amounts it requested (see Mayben 7797(16-22)). However, Cleveland has yet to commit to taking any amount of power out of Beaver Valley 2, and has carefully avoided nego-t1ating a binding contract with CEI with respect to the acquisition of such power (see Hauser 10587(2-17)).

The general reasons for Cleveland's equivocation have been previously discussed (see A-Br. at 141 45, 153-54 & n.180).

In addition, it is now clear that Cleveland cannot afford to

B I

participate in Davis-Besse or Perry, let alone Beaver Valley 2.3E!

i Equally apparent is the fact that the amounts of nuclear power j originally requested by Cleveland were based on lond projections

, (see Mayben 7734-35(21-25 & 1-15); A-107, p. 5) that were off by some 60 percent in just one year's time (see Mayben 7766(9-13)).

i

} Moreover, in 11E ht of the amount of power Cleveland is presently

, taking over the 138 kv interconnection, those pr'jections are even more inaccurate today (compare A-107, p. 5 witn Exhibit A, infra, i pp. 6-10). Finally, Applicante cannot help but observe that the rate at which CEI currently sells wholesale power to Cleveland is so low in comparison to the anticipated cost of nuclear power, l that there is no realistic prospect that Clevcland will hence-forth ever desire to participate in Beaver Valley 2.11/ F r all i

3_0/

The federal district court judge hsaring Cleveland's antitrust i action has now completed an evidentiary hearing on Cleveland's fi-i nancial situation and has issued a Memorandum and Order reporting his findings (see City of Cleveland v. Cleveland Electric Illuminat-

ing Co., No. C75-560 (N.D. Ohio, filed April 27, 1977); a copy of the decision is attached hereto as Exhibit B). Among other things,

Judge Krupansky explicitly found Cleveland's municipal electric

system to be virtually bankrupt and totally incapable of satisfying i

both its existing indebtedness to CEI and its current operating expenses, including payments for the electric service which CEI is now providing (see slip op. at 16, 20-23).

~~31/

Exhibit A, infra, shows that during the month of March, 1977, CEI supplied Cleveland with wholesale power at an average cost of 19.66 mills /kwh (i.e, 43,868,200 kwh composed of 43,576,000 kwh of firm power, 207,V00 kwh of Class II power, and 291,600 kwh of Class I power, at a total cost of $862,611 59) (see Exhibit A, infr2, p . 5). By comparison the most recent estimates of the average cost of power from Davis-Besse 1, which will be substan-tially less than the cost of power from Beaver VL11ey 2 because of the earlier in-service date of the former unit, is 30.0 mills /kwh

for the five-year period from 1977 to 1981 (see NRC, Safety Evaluation

Report Related to Operation of Davis-Besse Nuclear Power Station Unit 1 at 20-2 (Supp. No. 1, April 1977 ) (NUREG-0136); attached hereto as Exhibit C).

-.- _ . . - - _ - . - _ _ , - - . _ - . .- . - _ . _ - - _ - . _ + _ - - _ - , -- .

of these reasons, Cleveland's ostensible interest on this appeal t

in securing a condition requiring Applicants to afford it access i

to Beaver Valley 2 nuclear power strains credulity. In any event, there is neither authority nor cause for the Appeal Board to en-l tertain such a request.

Conclusion For the foregoing reasons, the exceptions raised by the f

! City of Cleveland are not well taken and its appeal from the Initial l

1 Decision should be dismissed.

i

) Respectfully submitted, SHAW, PITTMAN, POTTS & TROWBRIDGE J

i x.LWm.d3_ta Bradford Reynoldsi s i ._ex Robert E. Zahler Counsel for Applicants

=-

Of Counsel:

SQUIRE, SANDERS & DEMPSEY

! FULLER, HENRY, HODGE & SNYDER REED SMITH SHAW & McCLAY WINTHROP, STIMSON, PUTNAM & ROBERTS Dated: June 30, 1977 l

4

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.. mammrn ^

APR 2 01977

' ' " ~~ ~ '

T il F. C l P V. F. I. A. M D.

Fi'Ci n i'"'

r. " " i ' Y.

ILLUMIN ATING BLOG e PUBLIC ,50VARE e CLtvEt AND OHIO 44101 , TELEPHONE 2161 6231350 e M All ADORESS PO Box 5000 April 15, 1977 ' '

Mr. Kenneth F. Plu 2 , Secretary Federal Pomr Ccmaission 825 N. Capitol Street, N.E. -

Washingten, D.C. 20426 Be: Docket'Nos. E-7631, E-7633 ard E-7713 - Report of Ancunts and Interest Charged for Billing Period 3-1-77 Through 3-31 138 kV Interconnec* den -

Ib @ rary 69 kV Emergency Non-Syrrhronous Inter-cennection .L1 kV Irad Transfer Service

Dear Mr. Secretary:

Pursuant to orders of the Ccarission in the abt.ve proceedings, we are re-porting the aucunts charged for service ard intecest over the 138 kV inur-connecticn, the tem @ rary 69 kV emergency ron-synchronous interconnection, and the 11 kV load transfer service.

MELP has taken service over the 138 kV interconnection continuously since May 4,1975, except for 26 minutes on bbnday, September 22, 1975.

By a letter dated durch 23, 1977, MELP notified CEI of a change in contract demand for fi=n power fran 70 Mi to 90 M4 on April 1,1977, ard requested a walver of the required thirty (30) day written nedce. CEI, by letter of March 30, 1977 agreed to waive the thirty (30) day written no-dce ard affirmed that it would provide the 90 Mi of finn pcwer under Schsiule B and the Intercer.nection Agreement.

Consistent with this change, MELP has adv2. sed that it has ceased all coal-fired generation as of April 6, 1977.

During the month of March, CEI delivered 43,576,600 kilowatt-hours of Firn Ecwer Service, O kilcwatt-irurs of Class III cargency service, 202,400 kilowatt-hours of Class II emergency service, and 89,200 kilowatt-hours of Class I emruercy service.

. The attached biHing me:rorandum was delivered to MELP for the billing turied 3-1-77 through 3-31-77. Following is a su:nrary:

Terscrary 11 kV Icad 138 kV Inter- 69 kV Inter- Transfer connectica connection Service Total

'Ibtal Charge for S 862,611.59 $ 862,611.59 Deliveries During March 1977

Mr. Fenneth F. Pltrt, Secretary April 15, 1977 Federal Power Camission Page 2 Tw g ary 11 kV Icad 138 kV Inter- 69 kV Inter- Transfer connection connection Service Total Interest Added S 174,675.25 S 14,443.85 S 17,357.60 S 206,476.70 Between 3-8-77 .

and 4-11-77

'Ibtal Due CEI $ 15,162,840.81 S 1,065,949.72 S 1,862,928.45 $18,091,718.98 Frcn Previous Bill less Payment for S (1,039,007.53) $ 0.00 $ 0.00 S(1,039,007.53)

January 1977 Plus Correction S 1,005.68 $ 0.00 $ 0.00 $ 1,005.68 Febn:ary 1977 Bill Total Artount CMed for Service S 15,162,125.80 $ 1,080,393.57 $ 1,880,286.05 S19,122,805.42 Artetmt CNed for 138 kV Installation Costs Incurred S 15,241.00 Thru July 31, 1975 Arrount Owed for 138 kV Right-of-Way Fantal Charge S 18,000.00 Artcunt Owed for 1.s8 kV Maintenance Work in January 1977 $ 17,379.00

'Ibtal Amount Owed $18,173,425.42 As the surtrary shows, the a:tount billed for service during March was

$862,611.59.

. As indicated above, a payment for sedice in Janua y,1976 was received on March 23,1977 in the amount of $1,039,007.53. This was the full amount billed for service during that period.

Interest cha.mged during the period 3-8-77 through 4-11-77 totaled S206,476.70.

Sincerely,

~DrDW-Donald H. Hauser General Attorney DHH:jc Encl. .

__ x . _ . . . - .

~.

Mr. Kenneth F. Plumb, Secretary April 15, 1977 Federal Power Ccmnission Page 3 S'IATE OF CHIO )

) SS.

COUNIY OF CUGHOGA )

DCHALD H. HAUSER, being first duly sworn, says that the statements contained in the foregoing letter and the attached billing necrandum which is made a part thereof," set forth ti.e amounts charged under the rates ordered by the Federal Power Ccmnission for the billing period 3-1-77 +Jtm.gh 3-31-77.

%.0 oa m e. exUsEs

% h, SWE4 to and subscriled before me this 15th day of April,1977.

f

/

/ b ,. _.

m

/,' Notary Public

' JUDITH A. COLL cc: Joseph W. Bartunek, Esq. natu Ium.e ror coin.eea county, m Alan P. Buchmann, Esq. t Nr. :::en Emn:: fet.u, mg Malcolm Douglas, Esq.

Steven M. Chaw , Esq.

Bernard A. Crcraes, Esq.

Edward Fowlkes 142o E. Forquer, Esq.

Beuben Goldberg, Esq.

Robert Hall, Esq.

Fabert Hart, Esq.

John Lan Ma1e, Esq.

Harry A. Poth, Esq. ,

- Wu. Bradford Reynolds, Esq. I

Steven A. Taube, Esq.

l

Bobert J. Verdisco, Esq.

l Benjamin H. Vogler, Esq.

7 i

i I

f

TH E C LEV EL AN D ELECT RIC ILLU MIN .~m Art N G CO M PA NY g s...i.,1 c ara.iw i;;eia ait.cus w,rtot

4. i.... ........ c.....,

APR '2 0 b/ 7 ec soxs oo e t t v a t a n o. o w s o 4 4 toi ictu ui= Avis o s uit oin c . e u n u c s ou a n t . co s t o April n, i. 77 -

S=E* .

I CQ4PTROLIER UfILITIES FISCAL CONTROL ro Ur.d" ITIES BUIIDING 1201 IAIESIDE AVENtE CIEVEIAND, CEIO Mn4 ATTERTION: FRANK J. CARUSO

_l L ^;it"; S 18,173,425 4 FOR SERVICES: Frca 3-1-77 To 3-31-77 Temporary 11 kV Load 69 kV Inter- Transfer 138 kV Inter- Service connectien connection Total

.tal Charge for eliverics D C ng - $ 862,6n.59 862,6n.59 $

reh 1977 $

ster:st u w W en 3-8-77 174,675 25(a) $ ik,43.85 Cb) $ 17,357.60(") $ 206,476.70 d h-n-77 $

total Due CEI

' cm Prarious

$1,065,949 72 $1,862,928.45 $18,091,718 98 3.1 $15,162,840.81 Casa Paynent for 0.00 0.00 $(1,039,007 53'

$(1,039,007.53) $ $

Luuary 1977 Plus Correction for 4 0.00 & 1,005.68' t 1,005.68_ t 0.00 Sbruary 1977 sin

.atal A= cunt $1,880,286.05 $18,122,805.42l

$15,162,125.80 $1,080,393 57 Owed for Service 31, 1975 $ 15,241.00 l acunt Owed for 138 kV instanstics costa incurred thru July 18,000.00!

Amount Owed for 138 kV Hight-of-way rental charge l l

8 17,379 00 l mcunt Owed fcr 138 kV Maintenance Werk in Jammy 1977 i Total Amou=t Owed

$18,173,425.42 l

cts Es:d

8ctivered: April 11, 1977

(. See Erhihit A c) ^

!(b) See Exhibit B

c),

See Exhibit C

THE CLEVELAND ELECTRIC uuumuma mc. . ru uc sou Ri . CuvR4uo. OsiO miraout <2ie) .22 isso ILLUMINATING C0MPANY MAIL ADDRESS: POST OFFICE .OX 5000 e CUVRAND. CHIO 44201 Serving The Best Location on the Nation April 11, 1977 BILLDIG MDioRANDLH To DEPARDfENT OF PUBLIC twTTNR, CITI 0F CIEVEIAND 138 kV Service March 1, 1977 To March 31, 1977 Summary Firm Power Service 500.00 Dama s Charge $ 269,608.89 Energy Charge (43,576,600 m ) 616,626.96 46, Fuel Adjustment Charge

$ 839,481 93 Total Firm Power Charges Emergency Service i

Class III Power Supply $ - l Demand Charges - l out-of-Pocket Costs (o M )

Total Class III Charges Exclusive of Excise Tax $

Class II Power Supply 14,266.67 D = m1 Charges 4,215.66 out-of-Pocket costs (202,400 M )

$ 18,'482.33 Total Class II charges Exclusive of Excise Tax Class I Power Supply

, out-of-Pocks Costa (89,200 m ) $ ~3,722.14 TStal Class I Charges Exclusive of Excise Tax

$ 22,204.47 Total of Class I, II, and III. (291,600 m)

Adjustment for chio Excise Tax on Gross Receipts 8 925 19 22,204.47 - 22,204.47 (1 .04) & 23,129.66 Total Emergency Service Charges 8 839,481 93 Total Firm Power Service Charges

$ 862,611 59 Total charges for March 1977 APPROVED: k

. W. Fankar - Manager em operation and Test Department g/h ,

Date Hand Delivered: April 11, 1977

FIRM PolfER SUPPLY Harch 1977 Continued for Entire month Hours _M, Date 24 1,583,600 3- 1-77 " 1,564,400 3- 2-77 24 1,539,400 3- 3-77 24 1,523,000 3 4-77 24 1,453,800 3- 5-77 24 1,300,200 3- 6-77 24 1,518,800 3- 7-77 24 1,482 600 3- B-77 24 1,467 600 3- 9-77 24 1,408 600 3-10-77 24 1,343,000 3-11-77 24 1,291,400 3-12-77 24 1,245,200 3-13-77 24 1,492,400 3-14-77 24 1,390,200 3-15-77 24 1,404,600 3-16-77 24 1,348,200 3-17-77 24 1,402,800 3-18-77 24 1,266,800 3-19-77 24 1,249,800 3-20-77 1,337,800 24 3-21-77 24 1,426,200 3-22-77 24 1,430,000 3-23-77 1,493,000 24 3-24-77 24 1,586,400 3-25-77 24 1,319,400 3-26-77 24 1,283,000 3-27-77 1,452,800 24 3-28-77 24 1,317,600 3-29-77 24 1,303,200 3-30-77 24 1,350,800 3-31-77 Totals 43,576,600 1

cAICUIATION:

Energy Charge: = $ 616,608.89 Total Use 43,576,600 m x 1.415p D =ana charge: 269,500.00

=

M-* == Demand 70,000 DT x $3 85 Fuel kyustment: 46,626.96 43,576,600 m x .107,/ s

=

Total charge $ 839,481 93

CIASS I POWER SUPPLY March 1977 Imrgency No. 2 (Continued from February 1977) 5 MWH Scheduled Commenced 3- 1-77 at oooo hour Ended 3- 2-77 at 1700 hour0.0197 days 0.472 hours 0.00281 weeks 6.4685e-4 months Did Exceed 48 Hours (See Class II Exhibit)

EWH Chargeable To Emergency Subsequent To 110%

Date Firm Power out-of-Pocket Costs 3- 1-77 1,400 $ 26.39 Emergency No. 1 12 MWH Scheduled Cecmenced 3-14-77 at 1800 hour0.0208 days 0.5 hours 0.00298 weeks 6.849e-4 months Ended 3-16-77 at 1800 hour0.0208 days 0.5 hours 0.00298 weeks 6.849e-4 months Did Exceed 48 Hours (See Class II Exhibit)

EWH Chargeable To Emergency Subsequent To llc $

Date Firm Power out-of-Pocket Costa 3-114-77 15,800 $ 391.17 3-15-77 1,200 27 90 17,000 $ 419 07 Emergency No. 2 15 MWH Scheduled Comenced 3-24-77 at 1800 hcur ,

Ended 3-26-77 at 1800 hour0.0208 days 0.5 hours 0.00298 weeks 6.849e-4 months Did Exceed 48 Hours (See Class II Exhibit) 1 EWH Chargeable To Emergency Subsequent To llo%

Date Firm Power out-of-Pocket Costs 3-24-77 200 $ 1,789 19 39,600 31, 1,487.49 3-25-77 70,800 $ 3,276.68 I

l l

(wEMOoNQMFWnrAN March 1977 Emergency No.1 (Continued from February 1977) 10 NWH Scheduled Continued 3- 1-77 at 0000 hour0 days 0 hours 0 weeks 0 months Ended 3-n-77 at 1645 hour0.019 days 0.457 hours 0.00272 weeks 6.259225e-4 months DiH Chargeable To Emergency Subsequent To 100%

Date Firm Power out-of-Pocket Costa 3- 1-77 35,400 $ 681.o8 3- 2-77 400 -

386.61 20,400 27, 523 02 3- 3-77 3- 4-77 26,800 546.41 3- 5-77 9,800 219 67 3- 6-77 4,600 80 34 3- 7-77 36,200 906.53 3- 8-77 18,800 400.26 3- 9-77 15,600 301 52 195,000 $ 4,045.44 Emergency No. 2 (Continued from February 1977) 5 HWH Scheduled %

Continued 3- 2-77 at 1700 hour0.0197 days 0.472 hours 0.00281 weeks 6.4685e-4 months Ended 3-11-77 at 1645 hour0.019 days 0.457 hours 0.00272 weeks 6.259225e-4 months DiH Chargeable To ,

Emergency Subsequent To 110%

i Date Firm Power Out-of-Pocket Costs f 3- 7-77 2,200 $ 52 99 l

l l

March 1977

I Emergency No. 1 12 m Scheduled Continued 3-26-77 at 1800 hour0.0208 days 0.5 hours 0.00298 weeks 6.849e-4 months Ended 3~17-77 at 1415 hour0.0164 days 0.393 hours 0.00234 weeks 5.384075e-4 months M Chargeable To Emergency Subsequent To 110%

Date Firm Power out-of-Pocket Costa No M Associated with Emergency No.1 Emergency No. 2 15 M Scheduled Continued 3-26-77 at 1800 hour0.0208 days 0.5 hours 0.00298 weeks 6.849e-4 months Ended 3-29-77 at 1430 hour0.0166 days 0.397 hours 0.00236 weeks 5.44115e-4 months M Chargeable To Emergency Subsequent To llo%

Date Firm Power out-of-Pocket Cssts 3-26-77 4,600 $ 106 92 3-27-77 600 10.31 5,200 $ 117 23

- 1

- CIASS II PCWER March 1977 Emergency No.1 (Continued frem February 1977)

From 3-1-77 at 0000 to 3- n-77 at 1645 Calculation of Demand Charges i

M=v4 == Demand 10,000 M Scheduled x$0.40 per M - week

< no/6 Demand Charge $6,666.67 Emergency No. 2 (Contfnued from February 1977)

From 3-2-77 at 1700 to 3-11-77 at 1645 Calculation of D=ami Charges M=v4== Demand 5,000 M Scheduled I$0.40 per M - week 19/6 Demarvi Charge $3,000.00 Emergency No. 1 From 3-16-77 at 1800 to 3-17-77 at 1415 Calculation of Demand Charges P=v4 == Demand 12,000 M SchMn1 4 X$0.40 per M - week x2/6 Demand Charge $1,600.00 ,

Emergency No. 2 From 3-26-77 at 1800 to 3-29-77 at 1430 Calculation of Demand Charges Marimm Demmi 15,000 M Schdn1 M

%$0.40 per M - week x3/6 Demand Charge $3,000.00

. . EXHIBIT B FILED THE UNITED STATES DISTRICT CO . O C3 I'1'N THENORTHERNDISTRICTOFCHMN[$i2~[ek[ih {

EASTERN DIVISION i

CITY OF CLEVELAND, ) CIVIL ACTION No. C75-560

) :

Plaintift )

) i v.

) j

)

CLEVELAND ELECTRIC ILLU!iINATING ) *>

COMPANY, et al., )

)

Defendants ) MEMORANDUM AND ORDER KRUPANSKY, J.

On August 4, 1976, the Court granted judgment to j defendant Cleveland Electric Illuminating Company (CEI) on Counts 2 and 3 of its Second Counterclain. The entry of judgment in the amount of $9,525,067.50 plus interest, was filed on September 21, 1976. Thereafter, en October 21, 1976, plaintiff filed its Notice of Appeal of the Order granting judgment. In addition, on A;.:ll 7, 1977 the Court entered judgment in favor of defendant in the amount of

$3,925,460.98 on Count 4 of CEI's Second Counterclaim. No Notice of Appeal has yet been filed on this latter judgment.

Presently before the Court is the Motion of CEI' for Mandatory Order to Pay Judgment, and two Applications for orders in Aid of Execution on the judgment heretofore ordered. Plaintiff has responded in opposition to these ,

Motions and has filed a Motion for Stay of Execution without !

supersedeas bond. Defendant CEI opposes this latter Motion. .

* - " ~ . . . . . ...

l h 3

A hearing was conducted on February 1, 1977 to entertain cral argument on the foregoing motions and to devise a schedule of orderly proceedings directed towara the ultimate resolution of the issues presented by the current pleadings. The schedule was formalized by an Crder dated l February 2, 1977. Pursuant thereto, plaintiff was to pre- t pare and present to the Court, in writing, by not later than f

February 16, 1977, a definitive attainable proposal to ,

immediately liquidate its accrued indebtedness to defendant CEI, and ensure its future payments for electric energy supplied by CEI via the 138 KV interconnection pursuant to an order of the Federal Power Commission dated January 11, 1973. Production of financial statements and the proposal was ordered to assist the Court in the resolution of pending motions presently before it.

i Pursuant to the Order of February 2 and a sub- i sequent Order of February 24, 1977, the following documents were presented to the Court:

1. City of Cleveland, Department of Public Utilities, Division of Utilities Fiscal Control.

a.) Income and Expense Statement and Balance Sheet - For Year Ended December 31, 1976 (unaudited).

b.) Comparative Income and Expense Statement and Balance Sheet - Nine Months Ended September 30, 1976 and 1975.

c.) Light & Power Financial Report, 1975, (unaudited).

2. Audited Financial Statements, City of Cleveland, Department of Public Utilities - Division of Light & Power, for December 31, 1974, December 31, 1973 and December 31, 1972. (Ernst & Ernst).

3. Financial Analysis, Division of Light & Power, '

Department of Public Utilities, City of Cleveland, May, 1975 (Ernst & Ernst). .

t a

9 Peeb5 . .- ow. .. e.se es..

I

. . 3-

4. Appraisal of the Trade and Business Value of the .

Municipal Electric Light Plant, Cleveland, Ohio.

(R.W. Beck & Associates), December 2, 1976.

5. A Description and Analysis of Four Alternative Plans to Provide Bulk Power to the Division of I Light & Power, Cleveland, Ohio. R. W. Beck &

Associates, December 10, 1976.

l

6. Report to Cleveland City Council on a Reconnaissance -

of the Municipal Electric Light Plant. Cresap, McCormick and Paget, Inc. April, 1976 and updated, December 17, 1976.

In addition, the following pleadings have been filed herein: i

l. Response of City of Cleveland to Order of February 1, 1977, with exhibits attached thereto. Filed February 16, 1977, (a proposal).

2. Further Submission of Plaintiff City of Cleveland.

Filed February 23, 1977, (a proposed municipal ordinance enacting a special tax levy).

3. Proposal of City of Cleveland in Response to Order of February 24, 1977. Filed March 10, 1977.

4. Comments of CEI Concerning the Response of City ,

of Cleveland to Order of February 24, 1977.

I Filed March 14, 1977.

A hearing was subsequently held on March 18, 1977 to determine the viability and acceptability of the proposal of the City of Cle'veland for the amortization of its accrued debt to CEI, and to further examine the fiscal responsibility of both the Municipal Light Plant and the City of Cleveland with respect to their individual and collective ability to.

respond to the judgment on account rendered by this Court.

At the hearing, the City presented the testimony of the following witnesses: Marx L. Driscoll, Director of the

? Office Budget and Management, City of Cleveland; Warren D. .

Riebe, Director of Finance, City of Cleveland Peter J.

Kenny of the law firm of Willkie, Farr & Gallagher, bond counsel for the City of Cleveland; William L. Porter,

Executive Engineer, R. W. Beck & Associates. Defendant presented no witnesses. l The controversy between the City and CEI was initiated on May 13, 1971 when the City filed a complaint with the Federal Power Commission (FPC) seeking a permanent {

electric interconnection with CEI pursuant to Section 202(b) of the Federal Power Act, 16 U.S.C. $824(a). Those pro-ceedings culminated on January 11, 1973 with FPC Opinion and Order No. 644 which was later affirmed on rehearing, (Order No. 644-A). Order No. 644 generally adopted, with minor modification, the July 12, 1972 decision of the administra-tive law judge, wherein it was determined and ordered that:

1. 'A permanent 138 KV synchronous intercon-nection, with a capacity of 100 MVA, connecting the City's Lake Road Light Plant and CEI's Lake Shore Plant shall be established to supply ,

emergency service to the City . . . ." l e

2. The City s' 211, at specified intervals, compensate CEI for energy consumed, at specified rttes with specified interest and penalties for late-payment.

On April 8, 1974 the FPC issued a supplemental order directing tae City to satisfy, in full, its delinquent account to CEI for electric energy received by the City via an existing 69 KV interconnection and subsequently sold to the City's customers. On April 17, 1975, in compliance with .

Orders Nos. 644 and 644-A, CEI executed a contract with the City incorporating the terms and conditions of the aforesaid orders. Thereafter, on May 4, 1975, the 138 KV interconnection was energized and service to the City initiated.

The City, in the interim, appealed Orders Nos. 644 1

(

and 644-A to the Court of Appeals for the District of l l

l l

9 9

.ma memes...oe....

e

I I

Columbia. On January 9,1976 the Court of Appeals affirmed Federal FPC Order Nos. 644 and 644-A. City of Cleveland v.

Power Commission, 520 F.2d 845 (D.C. Cir. 1976) . 3 Disregarding the FPC orders attd the subsequent af firmance thereof by the District of Columbia Court of s Appeals, the City continued to meter electric energy f rom CEI without payment therefor, precipitating CEI's counter-claims in these proceedings.

The Counterclaim which was the subject of this ,

Court's Order of August 4,1976, presented an action on account, one that was founded in contract or quantum meruit, and was presented in the context of a civil action filed by the City on July 1,1975, therein charging CEI and others with Sherman and Clayton Act anti-competitive practices, i Pleading in response to the Counterclaim, the City conceded its ultimata liability for the electric energy supplied by l defendant CEI. In its December 22, 1975 Reply to Count 2 of CEI's Second Counterclaim in the amount of $5,823,834.11 plus interest, th: City admitted:

1. That "the federal Power Commission ordered the establishment of a permanent 138 KV synchronous interconnection (between CEI and MELP] to be used, however, only to provide emergency servico . . ."

to the City.

2. That "the rates for such service were prescribed by the Commission in Opinion No. 644.'

3. That "a contract dated April 17, 1975, for emer-gency service over the interconnection was entered into between Plaintiff'and CEI; . . . ."

i l )

1 l

l l

, l l l l l l

. -s- l l

l I

That a "138 KV synchronous interconnection was ;

4.

energized on May 4, 1975; ....

5. That the City "has not paid all the costs of the {

interconnection and all of the bills submitted by CEI for 138 KV service and avers that the pro- i priety of some of the billings are in controversy before the United States Court of Appeals for the District of Columbia . . . .

(As previously ,

" observed, the Court of Appeals for the District of ,

Columbia subsequently, on Jandary 9, 1976, affirmed the Orders of the FPC.

6. That'"a small amount of the total cost of the 138 KV interconnection has not been paid by Plaintiff." ,

The City did not reply to or otherwise deny the allegations of Count 3 of CEI's Second Counterclaim which demanded .

judgment in the amount of $4,701,233.39 plus interest. Nor ,

did plaintiff respond in any fashion to CII's Motion for Summary Judgment to this latter Counterclaim. In summary, plaintiff's payments to CEI for electric energ',e consumed by the City have been erratic, at best, and insufficient in the amount of 39,525,067.50 plus interest.

As determined by this Court in its order granting judgment, defendant CEI has fully complied with the Orders of the TPC and has fulfilled its contractual obligations to the City by implementing the 138 7 interconnection, and in supplying to the City electric energy over that ino t:onnec-t tion and the previously existing 69 KV interconnection at rates and under conditions mandated by the FPC. The City, on the other hand, has ignored and evaded its contract ,

1 l

obligations as well as several FPC Orders, including the g April 8,1974 Order directing the City to make full payment to CEI in compliance with previous FPC Orders. This l practice has continued through December 31, 1976 and resulted in the April 7,1977 Order granting su= mary judg2ent to j def endant CEI on Count 4 of its Second Counterclaim in the amount of $3,925,460.98.

Confronting, in the first instance, the City's requested Stay of Execution, the Court directs its attention to Rule 62(d), Fed. R. Civ. P., which provides:

When an appeal is taken the appellant by given a supersedeas bond may obtain a stay subject to the exceptions contained in subdivision (a) of this rule. The bond may be given at or after the time of filing ,

the notice of appeal or of procuring the order allowing the appeal, as the case may ,

be. The stay is effective when the super- l sedeas bond is approved by the Court.

A stay of enforcement of a money judgment on appeal is a !

matter of.right, but only upon posting a supersedeas bond approved by the Court. American Manufacturers Mutual Insurance C3. v. American-Paramount Theatres, Inc., S7 S.Ct.

1 (Harlan, Circuit Judge 1966); Goddard v. Ordway, 94 U.S.

672 (1876); In Re Federal Facilities Realty Trust, 227 T.2d 651 (7th Cir.1955) .

In its brief supporting the Motion for Stay of Execution, the City asserts that pursuant to Rule 62(C),

Ohio R. Civ. P., (and 52505.12, 0.R.C.), a municipality is excepted from posting bond on appeal. Plaintiff further asserts that the Ohio rule is analogous to Rule 62(e), Fed.

R. Civ. P. , which exempts the United States from posting security on appeal. Plaintiff urges that Rule 62(f), Fed. i I

.g.

I R. Civ. P., and the principles announced in Erie v. Tomokins, j i

304 U.S. 64 (1938), mandate this Court to adopt the Ohio l

l i

rule and permit a stay of execution to issue without a supersedeas bond.

Rule 62(f), Fed. R. Civ. P. , states:

i In any state in which a judgment is a lien upon the property of the judgment debtor and in which the judgment debtor is entitled to a stay of execution, a judgment debtor is entitled, in the district court held herein, to such stay as would be accorded him had the action been maintained in the courts of that state.

As a condition prscedent to invoking the law of Ohio re-specting supersedeas bonds on appeal the Court must deter-mine, pursuant to Rule 62 (f) , if its judgments herein are in fact liens under the law of this state.

That determination is guided by the following {

federal and state statutes. Section 1962 of *itle 28, i United States Code, provides:

Every judgment rendered by a district court within a State shall be lien on the property located in such State in the same manner, to the same extent and under the same conditions as a judgment of a court of general jurisdiction in such State, and shall cease to be a lien in the same manner and time.

Whenever the law of any State requires a jud ment 7

of a State court to be registered, recorded, docketed or indexed, or any other act to be done, in a particular manner, or in a certain office or county or parish before such lien attaches, such requirements shall apply only if the law -f such State authorizes the judg-ment of a J. art of the United States to be registered, secorded, docketed, indexed or otherwise conformed to rules and requirements

, relsting to judgments of the courts of the S tate. 9 Reference to the Ohio statute controlling the creation of judgment liens discloses the conditions upon which a judgment !

becomes a lien in Ohio, and, in conformity with 51962 above, J, i

s

?

specifically imposes those prercquisites upon judgments of the district courts of the United States. Section 2929.02,.

O.R.C., reads in pertinent parts Any judgment or decree rendered by any court of general jurisdiction, including h{ district courts of the United States, within this state shall be a lien upon lands and tenements of each judgment debtor within any county of this state from the time there is filed in the office of the clerk of the court of common pleas of such county a certificate of such judgment, setting forth the court in 1

which the same was rendered, the title and number of the action, the names of the judgment '

creditors and judgment debtors, the amount of the judgment and costs, the rate of interest, if the judgment provides for interest, and the date from which such interest accrues, the date of rendition of the judgment, and the volume and page of the journal entry thereof.

No such judgment or decree shall be a lien

upon any lands whether or not situated within the county in which such judgment is rendered, registered under sections 5309.02 to 5309.98, ,

i inclusive, and 5310.01 to 5310.21, inclusive, t of the Revised Code, until a certificate under the hand and official seal of the clerk of the .

court in which the same is entered or of record, stating the date and purport of the judgment, giving the number of the case, the full names of the parties, claintiff and defendant, and the volume and page of the journal or record in which it is entered, or a certified copy of such judgment, stating such fact, is filed and noted in the office of the county recorder of the county in which the land is situated, and a memorial of the same is entered upon the register of the last certificates of title to the land to be affected.

Judgment liens are the creations, of positive law, without which they cannot exist. See, Jeffrev v. Moran, 101 U.S. 285 (1879); Linslev v. Locan, 33 Ohio St. 376 (1878);

Boerner v. Hullinoer, 34 Chio App. 51 (1952). It is patent from the foregoing statutory provisions that unless and I until certificates of the judgments of this Cor:t or certi- .

fled copies of those judgments are filed in the office of 4

t the clerk of the court of common pleas and the of fice of the l county recorder for Cuyahoga County, the judgments herein l I

ren'ered are not liens upon the property of the judgment debtor, City of Cleveland. Plaintiff has failed to plead or prove compliance with $2329.02, O.R.C. , and becausc the j judgment of this Court dated September 21, 1976 is not a lien, plaintiff may not invoke the law of Ohio, particularly, 52505.12, O.R.C., which exempts political subdivisions of E the state from the supersedeas bond requirement of*S2505.09, 1 0.R.C. Accordingly, Rule 62(f), Fed. R. Civ. P., is in-apposite and any determination regarding the supersedeas bond to be posted herein, must proceed in accordance with 8

Rule 62 (d) , Fed. R. Civ. P.

Moreover, even if the Court were to determine that i the exemption provisions of S2505.12, O.R.C. were here applicable, the Court must nonetheless find, under the facts ?

and circumstances presented, that the City of Cleveland is ,

not exempt from the supersedeas bond requirements of S2505.09, O.R.C., and Rule 62(d), Fed. R. Civ. P.

Section 2505.12, O.R.C., exempts "the state and any political subdivision thereof authorized to sue and be sued," from posting a supersedeas bond to stay execution of a money judgment during the pendency of an appeal. It is true that a municipal corporation is a political subdivision of the r. tate, in the governmental sense of the term. Sharon Rea:tv Ca. v. Westlake, 114 Chio App. 421 (1961); Wolf v.

City of Columbus, 98 Ohio App. 333, (1954); 72 C.J.S.

i Political, at 223 (1951). However, a municipal corporation I

has a dual capacity, the one public or governmental, the i 4

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other privato or proprietary. See, e.g., State v. LeBlond, 103 Chio St. 41 (1923): Cincinnati v. Cameron, 33 Chio St. -

336 (1878); Pierce v. City of Hamilton, 40 Ohio App. 338 (1931). As a result, the duties and privileges with which a political subdivision is vested differ in tneir relation to ,

the municipal corporation's governmental and proprietary ,

roles.

The dual capacity of a municipal corporation's legal character, as well as the effect on the exercise of its authority, is summarized in cincinnati v. Cameron, supra at 367:

The corporation af a city possesses two kinds of powers, ene 9overnmental and public, and, to the extent they are held and exercised, is clothed with sovereignty; the other private, and, to the extent they are held and exercised, is a legal individual. The former are given '

and used for public purposes, the latter for private purposes. While in the exercise of the former, the corporation is a municipal government, and while in the exercise of the latter is a corporate legal entity.

(citation omitted).

See, The Traveler's Insurance Co. v. Village of Wadsworth, 109 Ohio St. 440, 447 (1924).

It is well settled that municipalities are authorized by the constitution and laws of Ohio to establish, maintain and operate lighting and heating plants and to furnish the municipality and the inhabitants thereof light, power and heat; and that the municipality acts in its proprietary capacity in the exercise of those functions.

The Travelers Insurance Co. v. Villace of Wadsworth, supra:

Butler v. Karb, 96 Chio St. 472 (1917): Columbus v. Lynn, 17 Chio L. Abs. 658 (1934). Accordingly, in the exercise of .

I its proprietary function, the city of cleveland, by and 1 I

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through the Division of Light and Power and the Municipal Electric Light Plant, acts as a corporate legal entity. ,

This distincition, in the context of the issue sub

$udice, was brug.st home in Wolf v. City of Columbus, supra, wherein it was concluded that "in their public capacity (municipal corporations) function as agents or instrumentalities of the state government and therefore constitute political subdivisions," supra at 336; the

" negative pregnant therein being that in their private ,

or proprietary capacity, municipal corporations do not function as agents or instrumentalities of the state govern-ment, but rather as private legal entities, and as such, do not constitute political subdivisions.

The Court finds further support for this proposi-tion in Marce11etti & Son Construction Co. v. Millereek i I

Township Sewer Authoritv, 313 F. Supp. 920 (W.D. Pa. 1970). e There, under circumstances similar to those presented here, the court determined that a municipal sewer authority, as a municipal corporation, could not avail itself of the muni-cipal exemption regarding supersedeas bonds, because, among other reasons, the municipal authority was engaged in a proprietary function where the governmental immunity of municipal corporations had been denied. That a municipal corporation in Ohio, acting in its proprietary capacity, sheds its governmental immunity is borne out by each of the u

afore-cited Ohio cases.

The obvious requirement for the s'upersedeas bond is to preserve the status quo and to secure all rights and property pending appeal; to guarantee payment of the ,

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judgment in the event the appeal is denied.

Cutierrez, 66 T.R.D. 548 (D. D.C. 1975). "With respect to :

i' j udgments awarding money or property, it was early held that a supersedeas bond should be in a sum suf ficient to inaemnify but the appellec not only for costs, damages and interest, for the value of the judgment 1.tself." 9 Moore's Fe deral McCarter, 88 Practice 1208.06(2), at 1418; see, Jerome v.

Brodie, 22 U.S. (9 U.S. (21 Wall.) 17 (1874); catlett v.

Wheat.) 553 (1824).

Tne accepted practice was codified in former Rule 73(d), Fed. R. Civ. P. The Rule was subsequently abrogated, however the principles set forth therein survive in the j

discretionary provision of Rule 62 (d), Fed. R. Civ. P.,

investing the Court with authority to determine the amount i*

The continuing effect of the supersedeas bond to be posted.

i of former Rule 73(d) is summarized at 9 Moore's Federal Practice 1208.06(1], at 1416:

The result is that the amount and conditions of the bond are now subject to the determination of the district court in the first instance in all cases. This does not repressent a significant departure from prior practice. Under former Civil Rule 73(d) an appellant could request f3e district court to fix a bond other than that de-scribed by the rule or to order the giving of security other than a bond. The result of the abrogation of former Civil Rule 73(d) is that the posting of a bond "at such sum as will cover the whole amount of the judgment remaining unsatisfied, costs on the appeal, interest and damages for dalay" is no longer " ordinary and necessary" as a matter of routine. Such a bond is always adequate, and its offer should continue to entitle a party to a stay as of right. And in appropriate casec, its offer should be required as a condition for grant of a stay. But the court may fix a different amount. Indeed, it would seem that the court may stay execution of a judgment without re-i quiring a bond.

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Accordingly, the requirements of Rule 62(d) , mandate the court, within the exercise of its discretion, to provide for j the form and amount of security, premised upon the facts and circumstances presented to the Court. Trans World Airlines, Inc. v. Huches, 515 P.2d 173 (2d Cir. 1975), cert. denied, a 424 U.S. 934 (1976); see 9 Moore's Federal Practice 1208.06[1]. ,

l In considering the necessity for and amount of a supersedeas bond, the Court seeks guidance from the criteria generally dispositive of analogous issues incident to motions for preliminary injunction and motions for stay of further proceedings pending appeal, which are summarized as follows:

i (1) the moving party must make a strong showing that success on the merits of the appeal is likely; (2) the party must establish that unless a stay is granted '

irreparable harm will result; (3) no substantial harm will come to otner interested parties; and (4) the granting e of a stay wculd do no harm to the public interest. North Central Truck Lines, Inc.

v. United States, 364 r. Supp. 1188, 1190-1191 (W.D. Mo. 1974), aff'd, 420 U.S. 901 (1975).

Accord, Adams v. Walker, 488 F.2d 1064 (7th Cir.1973);

Beverly v. United States, 468 T.2d 732 (5th Cir. 1972);

Lono v. Rob _fnson, 432 F.2d 977 (4th Cir.1970); Belcher

v. Birminoham Trust National Bank, 395 F.2d 685 (5th Cir.

1968).

A Rule 62(d) motion for a stay of enforcement of judgment pending appeal is of the same genre as a motion for a preliminary injunction or a motion for a stay of pro- ,

ceedings. Consequently, absent other definitive guidelines, the four criteria enunciated above become relevant indicators of the forn- and necessity of a supersedeas bond in the ,

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matter now before the Court. Indeed, the Court of Appeals i for the Tenth Circuit has deemed the likelihood of harm l resulting from a preliminary injunction a relevant factor to l the determination of the requisite bond upe' a Rule 62(c) j motion for an injunction pending appeal. Continental oil I Comoany v. Frontier Refinine comoany, 338 F.2d 780 (10th t cir. 1964).

For the reasons heretofore presented in the dis- .,

cussion of the chronology of these procr,cdings, including i the admissions of the City, the Court views with serious doubt the likelihood of plaintiff's success on the merits of the appeal of this Court's Order granting judgment on defendant's Counterclaims. This first of the four relevant 1 criteria does not merit further recitatie "4 the unusual j facts and circumstances of this case or the law applied to judgments on account.

Secondly, with regard to the irreparable harm that may be cast upon plaintiff should this Court require a proper and sufficient supersedeas bond, the Court determines that it is not inequitable to require the City to pay for electric energy furnished to MELP by CEI, especially in light of the subsequent resale of that energy by MELP to its industrial, commercial and residential consumers. Moreover, the potential harm to plaintiff arising from the supersedeas bond requirement, is overshadowed by the potential harm to defendant COI and the interests of the public in general, t

The absurdity confronting CEI is mirrored by the dilemha of ,1) deactivating the 138 KV interconnection ordered by the FPC and denying the City its electrical (

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I energy demand, thereby risking imposition of sanctions by the FPC, or 2) standing silent while the City continues to take its property without compensation, in the face of what appears to be concessions by the City of its rapidly erroding fiscal responsibility. The foregoing alternatives, ,

in light of the due process clauses of the Constitution of the United States, give rise to critical implications of constitutional magnitude.

The Fifth Amendment to the Constitution of the United States provides that private property shall not be taken for public use, "without just compensation." Not-withstanding the romantic symbols of justice evoked by this time-honored phrase, the Court recognia.as thati this clause acts exclusively in restricting the power of the United ,

I States government and affords no ground for relief against a state or its political subdivisions. Fa11 brook Irrigation .

District v. Bradley, 164 U.S. 112 (1896); Thorington v.

City Council of Montcomery, 147 U.S. 490 (1893); Gulf & S.I.R.

Co. v. Ducksworth, 296 F. 645 (5th Cir. 1923). However, without pausing to consider the role of tb4 federal govern-ment, through the exercises of the Fede;al Power Commission, in mandating the sale of energy here, the Court advsnees to

' more viable theories invoking principles of due process directly from the Fourteenth Amendment.

- The Fourteenth Amendment dictates, that no State shall " deprive any person of life, liberty, or property, without due process of law." Implicit in the "due process" clause of the Fourteenth Amendment is the principle of "just t

' compensation" found also in the Fifth Amendment. This g e

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i essentially equitable requirement is not simply drawn from the Fif th Amendment and imposed upon the States through the Fourteenth, but eminates directly from the meaning of the Grices v.

words "due process" in the Fourteenth Amendment.

County of Allecheny, Pennsylvania, 369 U.S. 84 (1962); t Applebv v. City of Buffalo, 221 U.S. 524 (1911); villace of Norwood v. Baker, 172 U.S. 269 (1898); Chicaco B&O R.

Co. v. City of Chicaco, 166 U.S. 226 (1897); Ballard Fish

& Oyster comoany v. Glaser Construction comoany, 424 F.2d 473 (4th Cir. 1970); Scott v. City of Toledo, 36 F. 385 (C.C. N.D. Ohio 1888). The distinction was thoroughly explored by Judge Howell E. Jacksen, Circuit Judge of the Sixth Circuit, in Scott v. City of Toledo, suora. Therein e

Judge Jackson explained: }

The fifth amendment, providing that private property should not be taken for public use without just compensation, was accordingly required for the better security of private property against the power of government. This amendment to the constitution, which recognized and secured to the citizen, as a fundamental principle, the right to compensation for private property taken for public use, was intended as a limitation upon the federal power. The first 10 amendments to the constitution recognized and secured to all citizens certain rights, privileges, and immunities essen'.ial to their security. The fifth amendment, operating only as a limitation fell upon the powers of the general government, short of giving to the citizen the full protection to which he we.s entitled in respect to his life, liberty, and property, so far as state action was concerned. It imposed no prohibition or limitation upon the power and authority of the states in dealing with the life, liberty, and property of the citizen. They were lef*. to the restraints of their several constitutions and So far as respective laws on these subjects.

the states were concerned, citizens of the United States were thus lef t without adequate protection and security in their persons and property. The fourteenth amendment was adopted to remedy and correct this defect in the supreme organic law ,

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of the land. It involves no forced or unreason-abic construction to hold that this fourteenth '

amendment, as applied to the appropriation of private property for public uses, was clearly ,

intended to place the same limitatien upon the power cf the states which the fif th amendment had placed upon the authority of the federal .

government.

Whatever may have been the power of the states on this subject prior to the adoption of the fourteenth amendment to the constitution, it seems clear that, since that amendment went into effect, such limitations and restraints have been placed upon their power in dealing with individual rights that the states cannot now lawfully appro-priate private property for the public benefit or to public uses without compensation to the owner; and that any attempt so to do, whether done in

, pursuance of a constitutional provision or legis-lative enactment, whether done by the legislature itself or under delegated authority by one of the subordinate agencies of the state, and whether +

done directly, by taking the property of one persen

' and vesting it in another or the public or indi- ,

rectly through the forms of law, by appropriating j

' the property and requiring the owner thereof to

compensate himself, or to refund to another the '

compensation to whien he is entitled, would be wanting in that "due process of law" required by said amendment. The conclusion of the court on this question is that since the adoption of the fourteenth amendment compensation for private property taken for public uses constitutes an essential element in "due process of law," and that without suca compensation the appropriation of private property to public uses, no matter under what form of procedure it is taken, would violate the provisions of the federal constitution.

_Id_. at 395-396.

These profound considerations of due process plumb the very depths of the constitutional foundations of our form of government and remain ever-present in the mind of the Court as a prospect of the law inherent to the pending motions.

Plaintiff's. ability to render full payment on the ,

judgment entered against the City, is the gravamen of the issue at hand. This f actor ' touches not only the rights of defendant CEI and the substantial harm that may result from ,

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a plaintiff's inability to make full payment, but also (

invol es the greater .public interest in preserving the ;

fiscal integrity of the City of Cleveland.

In principle, a sovereign such as the United States government or perhaps even a municipal corporation ,

such as the city of Cleveland, is excepted from furnishing bond on appeal, primarily because its financial integrity is assumed and the sovereign is presumed capable of satisfying its obligations and ce=mitments. Moreover, the sovereign, as parens oatriae, is characteristically possessed of an element of fiscal responsibility not generally attributed to the common judgment debtor. The presumption in favor of the sovereign is, however, rebuttable. Accordingly, when, as here, the financial integrity of the sovereign has, by ,

admission, pleading, or otherwise been properly joined as an l

issue of fact, its resolution rests upon a preponderance of the evidence.

A successful challenge to the sovereign's fiscal responsibility strips it of the exemption to furnish bond and the Court thereupon must maintain the status quo by protecting the rights and property of the judgment creditor and to guarantee satisfaction of the judgment. The solvency of the judgment debtor therefore becomes the key for de-termining the necessity for and the amount of a supersedeas Joseoh Skillken and Co. v. City of Toledo, bond. See, e.a.,

523 F.2d 867, 870, n.1 (6th Cir.1975), cert. denied, 96 S.Ct. 3162 (1976); Blankenshin v. Boyle, 337 F. Supp. 296, 303 (D.D.C. 1972); Sharon Realtv Co. v. Westlake, _suora.

In the case at bar, the solvency of MEI.P and the fiscal intecri.ty of the City has been properly placed in (*

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I issue, not only by defendant CEI, but also by the City itself. The solvency or insolvency of MELP, as the case may be, has a definite impact upon the financial perspective of the City and in particular, its general operating fund.

Upon thorough examination and analysis of the detailed financial data submitted to the Court by the City of Cleveland, together with the testimony of plaintiff's witnesses at the March 18, 1977 hearing, the Court concludes 9

that MELP does not hsve the financial ability to satisfy within a reasonable period of time the outstanding judgment of this Court in the amount of $9,525,067.50 plus interest, and to maintain on a current basis its monthly payments to CEI for electric power supplied in the present and future.

Plaintiff's financial integrity is further impacted by the i April 7, 1977 entry of judgment on Count 4 of defendant's Second Counterclain in the amount of $3,925,460.98. While I this amount is not an element of . plaintiff's Hotion for Stay of Execution, it raises to S13,450,528.48, plaintiff's out-standing judgment debt to CEI as of December 31, 1976.

Over the past six years, MELP has suffered a rapidly escalating annual net loss, reaching a peak of

$8,079,384 in fiscal year 1975. The 1976 stabalization at a net loss of 56,453,418, was marginal in comparison to the preceeding annual deficits. Moreover, the potential for stabilized annual losses in excess of 6 million dollars on total annual revenues of only 21 million dollars bespeaks economic instability of incomparable proportion. To further dramatize the declining financial condition of MELP, the neoative cash flow from operations escalated from $12,910 i

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fo,r 1972 to S4,106,147 for 1976.

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l As a result of the devastating financial losses ,

incurred in the last five years, MELP's equity base has been

seriously eroded. Total current liabilities rose from !

55,425,507 in 1971 to $35,296,223 in 1976. For that entire period, current assets were insufficient to meet current ,

liabilities on a dollar for dollar basis. In fact, the current ratio, (i.e., the ratio of current assets to current liabilities), plummeted from .86/1 in 1971 to .26/1 in 1976.

In short, MELP is virtually, if not actually, bankrupt.

The City's proposal to amortize the existing debt over a fourteen year period is as unrealistic as it is unacceptable. Not only does the City's pro-forma " Income and Expense Statement" for that fourteen year period reflect f avorable accounting treatment, but it is also founded upon I

a series of speculations.

The pro-forma statement speculates, for example, i that profits will be generated upon the following contin-gencies:

1. The City will continue to assume the responsi-bility of retiring the street lighting bonds, and would also forgive, any money owed to other City departments by HELP (approximately $14,000,000);

2. CEI would agree to lower the interest rate on MELP's outstanding debt from 12% per annum to 74 per annum;

3. HELP would raise its rates for electric power supplied to residential commercial and industrial customers; and

4. MELP would increase its rates for street lighting.

by 254.

Assuming, areuendo, that the foregoing conjectured events do occur, the City's projected net loss, based upon figures presented in the R. W. Beck & Associates Report, increases a

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annually to reach $1,757,000 in 1985. At the same time, I

total projected principal payments to CEI, to the City, on ;

mortgage bonds and for capital improvements increase to e S7,000,000 by 1985, rendering plaintiff's proposed gradual payment plan unrealistic and wholly untenable. Even assuming :

that the outstanding debt to CEI could be amortized over a fourteen year period, another decade and a half is an un-reasonable period of time for a judgment creditor to await payment on such a burgeoning debt. ,

Moreover, plaintiff's proposed plan of payment and its contemplated contingencies act in derogation of the Orders of the ' Federal Power Commission, as'well as the resulting contract between the parties, which set forth with specificity the payment period and interest charges for the i 8'

sale of electric power to MELP. As stated earlier, those orders of the FPC were affirmed by the Court of Appeals for ,

the District of Columbia (City of Cleveland v. Federal Power Commission, suora). Therefore, this Court's sanction of the City's proposed payment plan would be tantamount to a reversal of the order of the FPC and the decision of the Court of Appeals, and would require this Court to overrule the decision of the latter. Such a proposal contradicts all known precepts of stare decisis and is repugnant to this Court.

The reluctance of the City to satisfy the out-standing judgment is apparent from its proposal to extend payment over a fourteen year period. This reluctance is due, in the main, from its patent inability to satisfy this 1 obligation, as MELP's financial s,tatements so accurately l reflect. The testimony of plaintiff's witnesses at the -

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t March 18, 1977 hearing confirm this conclusion. In his testimony on direct examination, Mark L. Driscoll, Director '

of the Office of Budget and Management for the City of Cleveland, . admitted that the City had made no provision in its 1977 oudget for the payment of the outstanding judgment of this Court, (Record at 7). As elicited on cross examina-tion, this omission was due to the City's inability to pay, i.e. the City simply does not have the requisite funds, (Record at 18). To demonstrate the City's inability to pay, Driscoll testified on direct examination that without 4

considering any provision in the budget of the Division of "the Light and Power for payment of the judgment debt, budget as it exists indicates that with payment of debt charges and current operating expenses, the indicated l

deficit is about 2.9 million dollars." (Record at 14).

The Court therefore concludes that plaintiff is financially unable to amortize its existing debt to de-fendant CEI over a reasonable period of time and concurrently remain current on its monthly payments for electric power supplied by defendant CEI. It is manifest that the City and HELP are financially incapable of guaranteeing the satis-faction of the Court's judgment and the Court is compelled to preserve the status quo and to protect the rights and property of the judgment creditor by denying plaintiff's Motion for Stay of Execution without supersedeas bond.

Accordingly, supersedeas bond on appeal is hereby fixec in the amount of $9,525,067.50. The Court furthermore observes that judgment in favor of def endant CEI having been entered on April 7,1977 in the amoun't of $3,925,460.98, l

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should plaintiff seek to appeal that final judgment, super- .

sedeas bond on appeal of that judgment is hereby fixed in s

~ the amount of $3,925,460.98.

T Next, the Court confronts the various Motions of

' defendant CCI for execution on the judgment of September ;

4 21, 1976. In the first of two Applications for Order in Aid of Execution, CEI announces that through deposition, it has discovered the existence of two funds, one a bank account, the other a certificate of deposit, both on deposit with the Union Commerce Bank of Cleveland, Ohio. Defendant seeks an order directing the Union Commerce Bank, presumably through some unidentified representative, to appear before the Court "to make answer to all such questions as may be put to them respecting any money, property or credits in the .

I aforementioned accounts and certificate of deposit."

Defendant further requests this Court to order the Union Commerce Bank to " hold and safely keep, subject to the Order of this Court, sufficient of such money, property, or credits" to satisfy the judgment of this Court. In the second Application for Order in Aid of Execution, CEI requests an order directing the City to pay directly to CEI 7

all monies received on its accounts receivable, in satis-faction of the judgment against the City.

In its Motion for Mandatory Order to Pay Judgment, CEI seeks an order directing any of the following alterna-

tive remedies in satisfaction of the judgment: 1

1. the appropriation of money fram the funds of the City Treasury:

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2. the application of all MELP operating income to all outstanding debts through the Union I

Bank of Commerce Company, as trustee;. ,

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3. an increase in rates charged for electricity sold by MELP, and also an increase in rates chargcd for the services of ot;.er utility or proprietary interests of the City;

4. the levy of an ad valorem tax on all property in the City.

Most, if not all, of the foregoing emedial alternatives rest within the power and authertty of the judgment court, although it is non necessary to determine here which, if any, of the several alternatives will be employed herein, or their order of priority, in proceedings to protect and enforce the judgment of this Court. None-theless, the Court must proceed, in the interests of the judgment creditor, in a manner calculated to the immediate i

spayment of the outstanding judgment, always mindful of the public interest. .

A review of the mandamus authority of the Court discloses that a federal district court is vested with jurisdiction and authority to issue an extraordinary writ of mandamus directing a municipality to perfor= ncn-discretionary acts in satisfaction of a judgment. See, e.c., Huddleston v.

Dwyer, 322 U.S. 232 (1944); Arkansas v. St. Louis-San Francisco Rv. Co., 269 U.S. 172 (1925); Board of Count'y Commissionc*s v. New Mexico, 215 U.S. 296 (1909); City of Chanute v. Trader, 132 U.S. 210 (1889); United States v.

County Court of Knox County, 122 U.S. 306 (1887); Rosenbaum

v. Bauer, 120 U.S. 450 (1887); Defoe v. Town of Rutherfordton, 122 F.2d 342 (4 th Cir. 1941) ; Couch v. City of Villa Rica, 203 F. Supp.'897 (N.D. Ga. 1962).

Mandamus, when thus invoked, is not an innovative remedy, nor need it be a separate independant action, but is i

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in the nature of an oxecution and attaches to the Court s See, jurisdiction pursuant to its order granting judgment.

roard of County Commissioners v. New Mexico, supra; City ,

of Chanute v. Trader, suora; United States v. County Court of Knox County, suora: Defoe v. Town of Rutherfordton, supra. Although the old writ of mandamus provided by Rule Bl(b), Fed. R. Civ. P. , has bee'n abolished by the abrogation of that Rule, this Court retains jurisdiction in aid of execution to enforce its judgments, pursuant to Rule 69 (a),

Fed. R. Civ. P. Defoe v. Town of Rutherfordton, supra; To that end, a district Couch v. City of Villa Rica, supra.

i court must look to the law of the state in which it resides, and, pursuant to Rule 69(a), must proceed in aid of execution according full faith and credit to the practice and procedure of the state in which the court resides--in this case the Dwyer, supra; Defoe v.

State of Ohio. See Huddleston v.

Town of Rutherfordton, supra.

A review of the relevant statutory law of Ohio discloses that, indeed, provision is made for the issuance of the extraordinary writ of mandamus. O.R.C. 552731.01 el e

s_eg.

However, the extraordinary writ may only issue upon exhaustion of all remedies at law. O.R.C. 52731.05.

That the Court may direct the City, by reandamus, to levy a tax, for example, sufficient to satisfy the out-standing judgment, is certain beyond peradventure. Village of Kent v. United States, 113 F. 232 (6th Cir.1902);

City of Cleveland v. United States, l? '. F . 341 (6th Cir.

1901); State, ex rel. Baxter v. Village of Manchester, 143 Chio St. 48 (1944); State, ex rel. Huntington National Bank v. Putnam, 121 Ohio St. 109 (1929); State, ex rel.

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Turner v. Villace of Dremen, 117 Chio St. 186 (1927);

' State, ex rel. Turner v. Villace of Bremen, 116 Ohio St.

294 (1927). The Court recognizes, however, that it may, by writ of mandamus, compel a governmental body through its duly elected or appointed officials to perform only those acts specially enjoined as a duty resulting from an office, trust, or station. O.R.C. 52731.01; see, State, ex rel.

Perkins v. Ross, 109 Ohio St. 461 (1924); State, ex rel.

Robertson v. Board of Education, 27 Chio St. 96 (1875).

The certification of judgment to the taxing authority is a non-discretionary duty, as the term is employed in 52731.01, 0.R.C., which is imposed upon the fiscal officer of a municipal corporation. State, ex rel.

Turner v. Villace of Bremen, 116 Chio St. at 297; Eckfield ,

v. State, ex rel. Stone, 23 Ohio App. 150, 159 (1926).

Section 5705.08, O.R.C. provides:

On or before the first !!cnday in May

. of each year the fiscal officer of each subdivision shall certify to its taxing authority the amount necessary to provide.

for the payment of final judgments against the subdivision, except in condemnation of property cases. The taxing authority shall place such certified amount in each budget and in the annual appropriation measure for the full amount certified.

(emphasis added).

As a result of the non-discretionary character of the fiscal officer's duty to certify to the taxing authority the amount necessary to provide for the payment of a final judgment, the Court may direct the fiscal officer, by writ of mandamus, to perform said duty. State, ex rel. Turner v. Villace of Bremen, supra, Eckfield v. State, ex rel. Stone, supra.

Upon consideration, the Court finds it appropriate to exercise its authority, as set forth above, directing the t

l

9 fiscal officer of the City of Cleveland to perform his duty in accordance with 55705.08, O.R.C. The Court furthermore i

finds that Warren D. Riebe, Director of Finance for the City of Cleveland, is, by his own admission under oath at the March 18, 1977 hearing, (Record at 21), the chief fiscal officer of the City of Cleveland. Accordingly, in accordance with the non-discretionary duty imposed upon him by 55705.08, O.R.C. , the chief fiscal of ficer of the City of Cleveland, Warren D. Riebe, shall, by not later than May 2, 1977, the first lionday in May, certify to the Council of the City of Cleveland the amount necessary to provide for payment of the final judgments of this Court against the City of Cleveland, dated September 21, 1976 and April 7,1977, and in the event that no funds are availabl'e in the Treasury of the ,

I City of Cleveland to satisfy the judgment, the chief fiscal 1

officer of the City of Cleveland, Warren D. Riebe, shall so certify that f act to the Council of the City of Cleveland.

Once the fiscal officer has certified a judgment to the taxing authority, 55705.08, O.R.C. mandates that the I

taxing authority place such certified amount in each budget and in the annual appropriation measure. Because the taxing authority must so act out of a non-discretionary duty specially enjoined by law, (0.R.C. 52731.01)', the taxing authority, in this case, the Council of the City of Cleveland, may be compelled by writ of mandamus to include the certified amount in the City's annual budget and appropriation measure.

Accordingly, upon certification of the final judgments i i

entered by this Court on September 21, 1976 and April 7, ; ;

i 1977, the Council of the City of Cleveland, in accordance , !

i

g

i

- I with the non-discretionary duty imposed upon the Council by 55705.08, O.R.C., shall place such certified amounts in each 4 budget and in the annual appropriation measure for the full _ l l

amount certified by not later than May 31, 1977.

Furthermore as held by the Supreme Court of Ohio :

in State, ex rel. Turner v. Villace of Bremen, 117 Ohio St.

j at 189-190, the Court may, by writ of mandamus, compel the I Council of the City of Cleveland to appropriate the money to pay such judgment, 4

if any there be in the treasury of said

[ city) available under the statutes for such purpose, or, if there is no such fund in the treasury that can be so appropriated and employed, to levy a proper and sufficient tax according to law upon all the taxable property of the said [ city] to pay the said judgment with the interest thereon,. cr to enact the necessary legislation to issue bonds of the said [ city) according to law ,

in an amount not exceeding the amount of the

I judgment, and carrying interest not to exceed 6 per cent., and to issue such bonds accord-ing to law, and that a writ of peremptory mandamus [shall] issue commanding the treasurer of the said village to receive the money collected from such tax or from such bond issue for the payment of said final judgment, and to disburse said funds in the manner provided by law.

See also, State, ex rel. Baxter v. Villace of Manchester, suora; State, ex rel. Huntincton National Bank v. Putnam, supra.

As noticed by this Court, an additional hearing shall be held to determine the most efficacious manner of enforcing and guaranteeing the satisfaction of the judg-ments of this Court heretofore issued. To that end, the -

Court shall, at future hearings, consider and determine the necessity for a court-appointed conservator to supervise and monitor the collection and dispotilon of the revenues of /

. t MELP which are obtained from its customers for the sale of .

i i e i I

d

electric power, and their subsequent application to the outstanding judgments of the Court. The Court shall there-after proceed apace to institute, by writ of mandamus, those the final judg-measures necessary to preserve and protect ment of the Court and to ensure immediate and total satis-f action thereof.

Accordingly, plaintif f's Motion for Stay of Execution without supersedeas bond is hereby denied and IT IS ORDERED that supersedeas bond on appeal of the final judgment of September 21, 1976 be, and the same is hereby, fixed in the amount of $9,525,067.50. IT IS FURTHER ORDERED in the event that an appeal of the judgment of April 7,1977 is properly filed herein, that supersedeas bond on appeal of the final judgment of April 7,1977 be, and the same is l

hereby, fixed in the amount of $3,925,460.98. IT IS FURTHER t ORDERED that in accordance with the non-discretionary duty [

imposed upon him by $5705.08, O.R.C. , the chief fiscal officer of the City of Cleveland, Warren D. Riebe, shall, by not later than May 2,1977, the first Monday in May, certify to the Council of the City of Cleveland the amount necessary to provide for payment of the final judgments of this Court 1976, and against the City of Cleveland, dated September 21, April 7,1977, and in the event that no funds are available in the Treasury of the City of Cleveland to satisfy the judgment, the chief fiscal officer of the City of Cleveland, Warren D. Riebe, shall so certify that f act to the Council of the City of Cleveland. IT IS FURTHER ORDERED that upon certification of the final judgments entered by this Court on September 21, 1976 and April 7, 1977, the Council of the .

i l

l 1,

i

u. vu I

' . 31 e City of Cleveland shall, in accordance with the non-dis- !

cretionary duty imposed upon the Council by 55705.08, l 0.R.C., place such certified amounts in each budget and in the annual appropriation measure for the full amount certified, by not later than May 31, 1977. The Court shall further proceed to act upon defendant's Applications for Orders in Aid of Execution and Motion for Mandatory Order to Pay Judgment in accordance with tile procedures outlined by this Order ar,d as established by future proceedings herein.

IT IS SO ORDERED.

/W '

l

'Wnited States D1' strict Ju t

e S

5 l

1

- .a o

EXHIBIT C 20.2 Estimated coeratine and Snutdown Costs For the purpose of estimating the unit's annual operating costs, the Toledo Edison Company and the Cleveland Electric Illuminating Company assumed July 1977 as the startup date for comercial operation of the facility. The estimate of the Toledo Edison Company and the Cleveland Electric Illuminating Company for the total annual cost of operating the unit during each of the first five years of operation is pre-sented in Table 20.2. Tne unit costs (mills per kilowatt-hour) are based on a net electrical capacity of 906 megawatts e,lectrical. Tne five year average costs were calculated by annualizing the estimated costs for 1977 in combination with the annual estimates for 1978 through 1981.

, Table 20.2 Operating Cost Estimate (First Five Years of Commercial Operation) plant Capacity Operating Ccst Estimate Mills / Kilowatt-hour j (thousands)

. (July-Dec.)1977 60% $ 68,473 28.8 1978 70% $ 168,950 30.4 1979 62: $ 164,940 33.5 1980 73% $ 163.973 28.3 1981 70% $ 163,952 29.5 5-year average 67% 5 159,752 30.0

! In estimating the costs of permanently shutting down the facility, the Toledo Edison Company and'the Cleveland Electric Illuminating Company assumed that the plant would be entombed and no longer used as a comercial nuclear power facility. Expenditures for entombment are projected to be $10 million initially, with an annual surveillance expense of $90,000 thereafter. Entombment consi:,ts of sealing all remaining highly radioactive components within a biologically secure structure after hav*ng removed all fuel assemblies and radioactive fluids and waste.

20.3 Source of Funds The Toledo Edison Company and the Cleveland Electric Illuminating Compa,y expect to cover all operating expenses, including taxes, and interest payments through revenues generated from their system-wide sales of electricity. The applicants have con-sistt:ntly exhibited the ability to cover all tperating expenses as evidenced by the ratio of operating revenue to operating and interest expenses as shown in Table 20.3.

The staff assumes that shutdown and subsequent maintenance costs will either be expensed in the year incurred or amortized over a p riod of years, depending on the rate-making policy of the regulatory authorities.

20-2

. , . . _.m --- - - - - , . - - - - - - - - - - - - - - - - - -

Y NUREG b il UBild4DHI Reisepid aesuiatory do*mmYsio"n' ralated to operation of Office of Nuclear DAVIS-BESSE NUCLEAR POWER STATION Docket No. 50-346 UNIT 1 _

April 1977 The Toledo Edison Company and j Tha Cleveland Electric liluminating Company S

BE JE 4

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W A ,'

Q= ,i-h

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal 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. ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

)

THE TOLEDC EDISON 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 "Brief On Behalf sf Applicants In Opposition To Exceptions Filed By The City Of Cleveland" were served upon each of the persons listed on the attached Service List, by hand delivering ccpies to those persons in the Washington, D. C. area, and by

_ mailing copies, pottage prepail, to all others, all on this 30th day of June, 1977.

SHAW, PITTMAN, POTTS & TROWBRIDGE b

By: _

A M d rv&Q Robert F. Zahler Counsel for Applicants

a

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os . D .,.~.n.cS Cz ,.,A. r.

,..s. .a

t0CLIAR KICULA CRY C::M.".23EICN 3efore the At==ic Safet.* and *.icensine A::eal 2:ard 4

In the Matter of )

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TEI C ,IVI A:ro e' C ?.:C -- -:::c: TAT *:tG. ) Cceket Nc. 50-346A C",.,MP ANY )

. (Davis-Basse Nuclear Pcwer Statier., )

Ur.it 1) ) .

)

TEI C .Ivr* _ A:tc ILIC a:C : ;c:cNA:_NC )

C".M7A:tY, IT AL.

. ) ::ceket Nes. 50-440A (Ferrf Nc= lea: Pcwer Plan , ) 50-441A Uni s 1 and 2) )

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(Cavis-5 esse Nuclea.: Pcwer Statien, ) Cccket Ncs. 50-500A

)

50-501A Units 2 a:d 2)

Sr.RV CI L:sT Alan 5, Resenthal, Isq. Ivan.W. S=ith, Isq. .

Chai==an, A---'- ca fety and At==ic Safety and Licensing 3 card Licensing Appeal scard U.S. Nuclear Re7: late:y C: 'ssi:n m U.S. Ucclear Regulat :7 Cc--'ssi n Washingt:n, C. C. 2C155 Washings:n, 3. C. 2G555 John M. Trysiak, Izq.

Jer==a I. Sharf=a=, I.s q . At==ic Safety a.d Li=ensing 3:ard At==i= Safety i;d Licensin7 U.S. Nuclea.: Regula:: y C: 'ssi:n Appeal Ecard Was"* gt n, D. C. 20!!!

U.S. Nuclear Regulaterf C 'ssicr. .

Washington, O. C. 20555 A- 'c Safety and

ice.a..

sing scard Panel Richard 5. Sal ==an, Isq. C.S. Nuclear Regulat 7 C::=issien At==i: Safa:f and Licensing Washingt:r., D. C. 20555 Appeal Heard U.S. Nuclear Rey 1 lat::7 C *ssi:n

.C cketing & Service Se:.ica Washing :n, D. C. 20555 Cffice ef the Secretary U.'s Ndelaar Regula ::v C . .issien At:=ic Safety and Licensisy - Washing =n, C. C. 2000ii Appeal 3 card Panel U.S. Nuclear Regulat=ry C:-'ssion Jose:h Ruther?, Isc.

Washingt:n, D. C. 20!!s Zenja=is I. vcyler," Isq.

Roy P. Lessy, Jr., Isq.

Cffica cf the I:tecu.ive

- Legal Directe:

U.S. Nuclear Requize:r/ C--issi: .

Was' 8 y .:n, 2. C. 20535 D* 0 oo m - - -

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Jcseph J. Saunders, Isq. Ce:Ence I. Eenh=w, Isq.

A~ tit::s: CLv:.s L:n A. Idwa:d C:ashc5, Isq.

Cepa :=ent cf Justice Steven A. Eerper, Isq. '

Washing n, C. C. 20530 5teven 3. Peri, Isq.

Winch ep, 'sti=sen, Putna= & 7:her s

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'"h::as J. Mensch, Ise..

7. C. Sex 7513 Washinsten, D. C. 20044- General Att::ney Cuquesne Light C:=pany Rechen Ccidhery, Isq. 425 513th Avenue Cavid C. Ijelefelt, Esq. Pit:shu:7h, 7A 15219

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Direct : c' Law Lee A. Rac, Esq.

Jcseph A. Rieser, Jr., Isq.

20he,r: D. Zart, Isq.

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Cleveland, Chic 44114 Nash' 7 n, D. C. 20026 J'-as 1. Ide.eriv., Is e. .

Iran *< K. C1cke.r, Ise. .

Special Ass't A :::ney Caneral Secretary and General C:;nse*

Rec = 219 Pennsviva.ia ?cwer C:=:a../

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Wi1112.2 J. Ierner, Isq. 21 C=;cn: Circle, U.W.

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ML19329A871

Text

Dear Mr. Secretary:

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