ML19329D227

Transcript of 740430 Preconference Hearing in Washington,Dc. Pp 303-339

ML19329D227
Person / Time
Site:	Davis Besse, Perry
Issue date:	04/30/1974
From:	Farmakides J Atomic Safety and Licensing Board Panel
To:
References
NUDOCS 8002260798
Download: ML19329D227 (38)

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303 CR 5165 1 UNITED STATES OF AMERICA SPARKS: ro 2 ATOMIC ENERGY COMMISSION 3 ___________________g 4 In the matter of: 5 TOLEDO EDISON COMPANY and Docket Nos. 50-346A CLEVELAND ELECTRIC ILLUMINATING 6 COMPANY 7 (Davis-Eesse Nuclear Power JStation) 8 and 9 CLEVELAND ELECTRIC ILLUMINATING Docket Nos.' 50-440A 10 COMPANY, et al. 50-441A II (Perry Nuclear Generating Station, ~ - Units 1 and 2) I2 ANTITRUST ___________________g 13 I4 U. S. Tax Court ~ Courtroom No. 2 15 1111 Constitution Avenue, N.W. Washington, D. C. Tuesday, 30 April.1974 A prehearing conference in the above-entitled 18 . matter was convened, pursuant to notice, at 9:30 a.m. ~ BEFORE: 20 ~ JOHN FARMAKIDES, Chairman, 21 Atomic Safety and Licensing Board Panel 22 JOHN BREBBIA, Esq., Member 23 DR. GEORGE R. HALL, Member 24 Acs Federal Reporters. lac. 25 4 )

304 ro 1 GERALD CHARNOFF, Esq. and W. BRADFORD REYNOLDS, Esq., Shaw, Pittman, Potts & Trowbridge, 910 17th Street, 2 N. W., Washington, D. C.; on behalf of Applicants. 3 REUBEN GOLDBERG, Esq., 1700 Pennsylvania. Avenue, N. W., Washington, n. C.; on behalf of the City of 4 Cleveland, Ohio. 5 CHRISTOPHER R. SCHRAFF, Assistant Attorney General, 361 East Broad Street, 800 Seneca Towers, Columbus, 6 Ohio 43215; on behalf of the State of Ohio. 7 JON T. BROWN, Esq., Duncan, Brown & Palmer, 1700 Pennsylvania Avenue, N. W., Washington, D. C. 20006; 8 on behalf of American Municipal Power-Ohio, Inc. 9 STEVEN M. CHARNO, Esq., Antitrust Division, United States Department of Justice, Washington, D. C. 20530; 10 on behalf of Department of Justice. Il BENJAMIN'H. VCGLER, Esq., Office of the General Counsel, United States Atomic Energy Commission, Washington, 12 D. C. 20545; and ANDREW POPPER, Esq., 7920 Norfolk Avenue, Phillips 13 Building, Bethesda, Maryler.d; on behalf of the ~ Regulatory Staff, Atomic Energy Commission. 14 15 16 17 18 19 20 21 22 23 24 AoFdera! Rgottep. Inc. 25 o 9 e r ~ v w

305 I EEEEEEEEEEE 5165 Al 2 CHAIRMAN FARMAKIDES: It is 9:30. This hearing will 3 be in order. We will proceed. This is the first Prehearing 4 Conference with respect to the consolidated proceeding involvinc 5 the Davis-Besse Nuclear Power Station and the Perry N.uclear 6 Power Station. 7 We have been discussing this proceeding in the 8 past. I agree with the parties that we consolidate these 9 proceedings correctly, and.I would like to note for the record 10 the docket number of these two proceedings. It will be each of 11 the three numbers, 50-34 6A, 50-440A,. and 50-441A,..Those three 12 numbers will be the docket number for this proceeding. That 13 will eliminate duplication of -copies and double transcripts 14 and so forth. 15 We called this prehearing conference initially 16 for April 25th, and then by a misunderstanding as to dates, 17 by agreement to parties we postponed it to April 30th, today. 18 We issued a notice dated 24 April, 1974, designating this 19 location. In that notice, we indicated an agenda, and I would 20' like to follow that agenda. 21 I would like to ask the parties one thing. I went 22 over the transcripts both of the previous two hearings in-23 volving the first phase of the Board's effort, and that was the 24 motions board phase, if you will allow me, and I truly believe Aes-Feder' l Reporters. Inc. o 25 that we can save tremendous time if we do not repeat the

300 t Reb 2 1 arguments once made. I notice several different points where 2 counsel for the parties in fact were repeating the same 3 arguments as before. 4 I did not control the programs as strictly as I 5 should, but I wanted each person to say what he wanted to say 6 on the record hoping that perhaps new and additional infor- ~ 7 mation vould come out, but in fact it did not. 8 So today, I urge you please.to limit yourselves 9 to whatever point that you want to make, and make that point, 10 and you don't have to repeat it. We don't need that type of 11 reiteration.. It is a waste of your time and our time. 12 Going back again to the agenda,.the first item 13. is contentions vi.th respect to the Nexus. The State of Ohio 14 is participating -- incidentally, under.2.751(c), the State of 15 Ohio is participating, with additional commitments made by 16 the_ Applicant and Staff. 17 They still have not come in. I think it would be 18 proper to give them an additional period of time. Let's recess 19 for five minutes, until 20 minutes to ten. 20 _He is here now, so it will not be necessary to recess 21 so we will go off'the record. 22 (Discussion off the record.) 23 CHAIRMAki FAR14AKIDES: Let's proceed. All the 24 counsel are in the room now. All parties are represented. Ace-Federal Reporters, Inc. 25 State of Ohio, City of Cleveland, Applicants, Department of 9 e e

a . 307 Reb 3 1 Justice, and AMP-O, so we can proceed. 2 On the first contention during a telephone conferencc 3 call,.Mr. Goldberg requested that he be given until today 4 to advise the Board with respect to why he feels that the 5 ruling of the Board requiring him to show a nexus should be 6 deferred temporarily or'perhaps permanently, and we would like 7 to hear from Mr. Goldberg. 8 Mr..Goldberg? 9 MR. GOLDBERG: Mr. Chairman, and Members of the 10 Board, I have in mind your admonition that you don't care to 11 hear repetition of arguments previously made on this subject. 12 CHAIRMAN PARMAKIDES: Unless there is sc:nthing new, 13 sir, that you think can develop the record. .That would be.most 14 helpful. 15 MR. GOLDBERG: Well, originally we requested the 16 ma'tter of a further statement with respect to nexus in these 17 proceedings be deferred because of the application we were 18 planning to file for reconsid'eration of the Board's ruling, ~ 19 and for certification either to the Appeals. Board or to the 20 Commission as appropriate. 21 I had understood that that request was granted. 22 Now the Board subsequently --- 23 CHAIRMAN FARMAKIDES: Which request was that? 24 MR. GOLDBERG: That we not be required to meet the AcFFederal Reporteis,.inc. 25 . twenty-day' specifications of the Board's original ruling. 1

308 Reb 4 1 CHAIRMAN FARMAKIDES: You are correct. That is 2 correct. 3 MR. GOLDBERG: Subsequently, we did file the request 4 for reconsideration and request for certification, and both 5 were denied. I would think that sometime'today, as a matter 6 of fact, I am sure that sometime today an appeal to the Appeals 7 Board will be filed, and it is our feeling that any request 8 for any clarification, any additional statements with respect 9 to nexus, should be deferred until that decision has been 10 rendered by the Appeals Board. 11 But in any case, it is our view that the allegations 12 with respect to nexus that appear in the petitions and related 13 pleadings in. Davis,Besse, and..in Perry, are.as clear and 14 adequate a statement as can possibly be made with respect to 15 the matter of nexus, and I would say to the Board frankly that 16 I am at a loss to understand why our allegations with respect 17 to nexus were, in the view of the Board, only carginally 18 adequate. 19 Now I started out by saying that I am mindful of ~ 20 the Board's admonition that it does not wish a repetition, and yet if I am going to argue that our allegations with 21 22 respect to nexus are clear and adequate,'and.n6t only marginall t 23 adequate, I am simply going to'have to go into the whole thing. 24 CHAIRMAN FARMAKIDES: Well, sir, let's understand AcOFederal Reporters. Inc. 25 one thing, Mr..Goldberg. I think all the parties should be

g,_; 309 Reb 5 i very clear. The Board considered really, that.the motions, 2 the petitions to intervene, and the ruling of the Board with 3 respect to the petitions to intervene', was really a function 4 of a motions board. 5 That was phase 1. We talked to the petitioners 6 and resolved those issues. That was phase 1. Let me go to 7 the next phase. That is the beginning of the. formulation of 8 the issues, if you will, to permit discovery. We are now 9 in the next phase, Mr. Goldberg. We are at the point where we 10 need to know what your contentions are with specificity so wo 11 can permit discovery and resolve issues in dispute on 12 discovery. 13 The.next phase is, then, the pleading phase, if 14 you will, the brief-writing, and then we will go to the eviden-15 tiary session. This is a progression going to that. I am 16 sure you have gone through this many, many tim.es, perhaps more 17 than I. j. 18 MR. GOLDBERG: I.would submit respectfully that 19 the Chairman is now really talking about number 2 on the 20 agenda.of the notice, which is a prerequisite, as I understand 21 the Board, to discovery. 22 CHAIRMAN FARMAKIDES: Mr. Goldberg, I would accept 23 that. It is perfectly all right with the Board to go to the 24 two so long as we understand you to have said to us.that your Aco FWerol Repoders. Inc. 25 nexus, the nexus that you have articulated in the past, is the l [ ~ l

il 310 Reb 6 1 only nexus that you intend to pursue, which is the nexus 2 that the Board identified in the final Memorandum and Order 3 of thu Board, with respect to Besse and with respect to Perry. 4 If that is the case, certainly I agree with you 5 that we could very easily go to number 2, and begin to clarify 6 and specify the issues. 7 Now I also understand you to say, Mr. Goldberg, 8 that you would suggest the Board defer. action with respect 9 to any request you further specify on nexus until after the 10 Appeals Board acts. 11 J!R. GOLDBERG: Yes, I did say that. 12 CHAIRIGN FARMAI; IDES : Is there anything else 13 on 1,- sir,. before -we go to 2? 14 MR. GOLDBERG: I would say if the Board desires 15 a further statement on the matter of nexus that we be per-16 mitted at the appropriate time after the Appeals Board has 17 acted to file a written supplemental statement of nexus. 18 CHAIRMAN FARMAKIDES: All right, sir. Let's go 19 to 2. Zorgive me. Forgive me. I beg your pardon. Does anyone d 20 clse have anything on 1, agenda item number 1? 2i Mr. Cha'rnoff? 22 MR. CHARNOFF: Very briefly, sir, it would be our 23 posit. ion unequivocably that a deferral such as requested 24 by Mr. Goldberg is unnecessary and irrelevant. The appeal that Acc>Federol Reporters. Inc. '25 may be filed today has to do with the reactor named Beaver

311 Reb 7 i Valley Number 2. It has nothing to do with the Perry and 2 ! the Davis-Besse proceedings, and it seems to us that if we i 3 are to get started at some time in this process, we ought to 4 get started now in connection with those two facilities that .5 are at issue in this proceeding, and hence we would very 6 strongly oppose any deferral. 7 It is our view that the Board was quite correct 8 in requiring a clear statement of the causal relationships I 9 betwecn that facility that is at issue in the hearing, and i 10 any situations that are alleged to be inconsistent with the 11 antitrust laws. That is what the Board had written in its March 12 15th letter. We think that is required in. order to confine and 13.definn nubcequent-cuents in this pa:-ticular proceeding, and 14 I would agree that if Mr. Goldberg is limiting himself to the 15 one area of nexus found by the Board, we can move on. I 16 If there is still an issue on that, then it seems 17 to me the Board would have to rely on the record asiit-stands-18 and identify the nexus issue 'cus being the one it found. 19 CHAIRMAN FARMAKIDES: Thank you. Mr. Brown? 20 MR. BROWN: Nothing. 21' CHAIRMAN FARMAKIDES: Mr. Charno? ~ 22 MR. CHARNO: Nothing. 23 CHAIRMAN FARMAKIDES: Mr. Popper? 24 MR. POPPER: Yes, Mr. Chairman. Three very brief j Ace-FWeral Reporters, Inc. { '25 points: First of all, the Staff's position on the question of l 4

312 Rob 8 1 nexus regarding the Davis-Besse and Perry facility is similar 2 to that stated by Mr. Goldberg. We feel there is no further-3 reason fcr additional pleadings regarding the point nexus at 4 this point in the proceeding, that the issue of nexus he.s been 5 sufficiently plead. 6 CHAIRMAN FARMAKIDES: You are saying in effect that 7 all that is needed is to allege sufficient nexus to get into 8 the case. From then on, you don't need.further nexus? 9 MR. POPPER: That is correct, your Honor, and I 10 further feel there is a second point that any pleading with 11 greater factual particularity on the issue of nexus at this 12 point would be an unnecessary exercise, that we will get in 13 pretrial.hr.icf s.su.Eficient. fectral dete=r.inations of -what-ne::us 14 is, and that will be best done after discovery, and not prior 15 to. 16 Nexus is in the most part a factual issue. 17 CHAIRMAN FARMAKIDES: So you think you can properly 18 go into phase 2 by looking at item 2 on the agenda? 19 MR. POPPER: Yes. ' 20 CHAIRMAN FARMAKIDES: Mr. Schraff? 21 MR. SCHRAFF: Nothing. 22 MR. CHARNOFF: I would like to raise-a point. Maybe 23 it is better number 2 than number 1. I was pu== led by Mr. 24 Erown's position on item 1, which as I understood it was only Ace-Fede.ol Repor+ers, Inc. 25 with respect to Mr. Goldberg's request for a deferral.

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the Board did with~ respect to AMP-0, in its Order require 2 it would require further clarification from AMP-0, -before we 3 get into discovery, and I don't know whethat the Board proposes 4 to handle that as an introductory matter insofar as AMP-O is 5 concerned, or as part of item 1. 6 CHAIRMAM FARMAKIDES: I think in view of the 7 develop:aent here this morning, it seems we can get into the 8 issues on item 2, and that is really what we are g'etting at. 9 We want to get to the point where you fellows join issues. 10 The Board would be delighted if you would sit down together 11 and come up with a joint statement of issues. 12. That would be the very best way, a ~ joint. statement 13 of. issues rea13y-for-discovery. 'You don't huve to finalize 14 your issues. You can have a joint issue for discovery purposes, 15 and after you have had discovery, a lot of those issues will 16 dissolve, and some will be amended. 17 I hope that would be the best procedure for you and 18 for us. I would be most happy to accept that kind of effort 19 if you people will put a deadline on yourselves. Mr. Popper? 20 MR. POPPER: Mr. Chairman, the parties did meet on 21 the 25th of this month, all the parties to this proceeding 22 with the exception of the State of Ohio. On the 29th the 23 Staff and the Department of Justice met, and pursuant to those 24 meetings we have come up with a joint statement of the Staff Ao Fedcol Reporters, Inc. 25 and the Justice Department. l l

314 Reb 10 1 I would add that on the first day we discussed in great deail many of the issues that could be considered as being subject matter for a joint statement of issues and matters in controversy in this proceeding. Now, the Staff, the Regulatory Staff --- CHAIRMAN FARMAKIDES: I beg your pardon. You did this with the Department of Justice? 7 MR. POPPER: Yes. 8. ~ CHAIRMAN FAR*!AKIDES : Did you talk to the other parties? MR. POPPER: Yes, your Honor, I did. All the jj parties met on the 25th. CHAIRMAN FARMAKIDES: But tiiis is a joint statement only of two of the parties? MR. POPPER: That is correct. The initial work product that went into this was of all five parties.

However, we were only able to get through about half of the material 4

18 MR. CHARNOFF: The initial work product was not g the work product of all five parties. 20 MR. POPPER: I am sorry. That which occurred on the ~ 25th of April was a meeting of all five parties, a meeting of couh3el, and at that time we discussed matters in con-troversy. Some points were obviously in disagreement, and on 24 AcOFederal Reporters, Inc. some point we were able to agree. 25

315. Reb 11 j Let me complete my statement, please. 2 CHAIRMAN FARMAKIDES: Mr. Charnoff, please from tsow 3 on, no gratuitous comments. Let's continue, Mr. Popper. l MR. POPPER: What had resulted from the meeting of 4 5 the 29th is a joint statement of issues by the Department and 6 by the Staff. These have gone out in a formal mailing, and 7 they went out this morning, I think. I have copies'of that 8 statement for the parties, for all the parties and the Board 9 this morning. 10 CHAIRMAN FARMAKIDES: I don't know if the Board 11 would like to have those at this time. I think it would be 12 far.more useful if you would get back together and meet with 13 I all the partio.s and see if.ycu can't ccme up with a final 14 statement. I don't want the Board to be part of your nego'- 15 tiations, and I dont see that it would be.useful.for the Board 16 to have this, which is a statement between two parties. ~ 17 Look. How much time do the parties need to talk 18 to each other again? I am very encouraged that you in fact 19 have been meeting like this. How much additional' time do you 20 need to get together to come up with a joint statement of the 21l issues to which all parties agree now? There may be areas 22, in which you disagree. Then as to those areas, simply articulate: 23 those areas of disagreement. How much time, Mr. Popper? 24 MR. PCPPER: Your Honor, that is very difficult Ace-Federal Reperters, Inc. 25 to say. e e

316' Reb 12 1 CHAIRMAN PARMAKIDES: How about 20 days? Would tLat 2 be convenient with you? 3 MR. POPPER: Could we take tuo minutes and discuss 4 this' morning ourselves? 5 CHAIRMAN FARMAKIDES: We are off the record. We 6 are in recess for five minutes. 7 (Recess) 8 CHAIRMAN FARMAKIDES: Back on the record. Mr. Popper? 9 MR.. POPPER: Your Honor, it appears that it is 10 going to be rather difficult to come up with a joint statement 11 of issues in this proceeding, and perhaps it would be the 12 position of the Staff at this time that the parties submit 13 issues to the Board and that we.have argument on the issues. 14 There seems to be complete disagreement accng the 15 parties as to what the scope of the issues are, and as the 16 Board is well aware there are still legal disputes on the ju'isdictional reach of these proceedings. Perhaps we can 17 r 18 agree to a certain extent on~'some of the issues, but I have 19 a feeling that coming up with a joint statement of all the 20 issues will be an impossibility. 21 MR. GOLDBERG: May I say --- ~ 22 CHAIRMAN FARMAKIDES: Hold off a minute. Mr. 23 Popper? 24 MR. POPPER: If we could set a time limit'for Acs-Federal Reporters, Inc. 25 delivery.of issues to the Eoard'by the parties, we can argue e e

~ 317 Reb 13 I the issues before the Board and as.has been done in other 2 cases, the Board can evaluate this and determine what the issues 3 are in these proceedings. 4 That appears to be the only way we can proceed at 5 this time. 6 CIIAIRMAN FARMAKIDES: I an sorry to hear that, 7 Mr. Popper. If timt-is the only way, of course,'that is the 8 only way. Mr. Goldberg? 9 MR. GOLDBERG: I was simply going to say that I 10 did not want the record to have any misconceptions about our Il position on this. We met on the 25th with the representatives 12 of Justice and the AEC, and we met with the intention of seeing 13 if we could work out a joint statement.of issues, and we ran I4 out of time that day and that is why today you find only a 15 joint statement by t'wo parties to.the proceeding, because they' 16 met alone on the 29th. '7 I could not meet with them on the 29th, hnd it is -18 my recollection that Mr. Reynolds was unable to meet on the 19 29th, either. But I went with that meeting, with the idea of 20 trying to work out a joint statement. I feel -- my feeling 2l was that to the extent we could agree, fine. To the extent we [ 22 fell short, we would present to the Board our additions that 23 we would like to see on the Board would make its decision. 2d Wo.still feel that way about that. I wanted it Acc. Federal Reporters, Inc. 25 clear today that we are willing to try to work out a joint 6 e e 6 en w-

l 310 Reb 14 1 , statement, and if we can persuade them to include some items 2 that we think ought to be included, we would then submit it 3 at a specified time to the Board. 4 CHAIRMAN FARMAKIDES: That is the right procedure, 5 Mr. Goldberg. That is the proccudre I think should be followed 6 if at all possible. If we end early today, and it appears' thero 7 is.a good chance we will cnd ecrly, I don't see why counsel 8 can't use the rest of the day to come up with, ho'pefully, a 9 further discussion of joint statement. 10' If you cannot reach agreement, then you think what 11 Mr. Goldberg says is the posture of this Board as well, and 12 that is on those issues on which you agree, fine, or articulate 13 those issues in a joint statement, and then file your separate 14 issues on which you disagree. 15 We want both. The Board will then evaluate and 16 come up with a final statement of the issues for purposes of 17 discovery. Mr. Charnoff? 18 MR. CHARNOFF: I would like to make a proposal, sir, 19 and first, I think that it is. perfectly clear that to the 20 extent we can sit down and negotiate an agreed-upon contention 21 that would be acceptable procedure to us. 22 I think, however, that much time has gone by, and 23 we do need to get started. We have, or had hoped, and we read 2' into the rulings of the Licensing Board, that there would be A2-Federal Reporters. Inc. 25 two prerequisites to this process that would give us an ability e a e ..e. ..m e h e^ -=AW-e**

319 Reb 15 1 to then understand contentions, if you will, and incidently,. 2 we have not seen proposed cententions by AMP-O or the City 3 of Cleveland. 4 We wanted to see what it was that Justice and AEC 5 were proposing. As we understand it, the Board has ruled both 6 in Davis-Besse and in Perry that there ought to be a clear 7 statement of nexus. The Board has ruled with respect to AMP-O 8 that there ought to be a clarification of the technical, economic i 9 and marketing relationships that underlie the AMP-O asscrtions, 10 and I would assume that we ought to have from the Department 11 of Justice and the AEC Staff, either together or separate, 12 allegations that, at least insofar as the Department of Justice 13.is concerned, would relate'comehow or other to the letter of 14 advice that was written by the Department of Justice to the AEC 15 in December, I guess. 16 We recognize that they wrote a different letter 17 in the Davis-Besse proceeding. Based upon those documents, 18 we are perfectly prepared to' sit down and talk contentions. 19 To shorten things up, what I would propose is the following, 20 Mr. Chairman: That the Department of Justice and AEC separately 21 or together, the City of Cleveland and AMP-0, in, say, 10 22 days from today, file their prcposed specific contentions 23 together with the statement of nexus that supports those 24 particular allegations that they.wish to make. Ac} Federal Reporters, Inc. 25 Thct would apply as well to my judgment to AEC

320 Reb 17 j and Justice as it does to the other parties, and insofar.as 2 AMP-O is concerned, let AMP-O file the kind of statement 3 that was requested on -- by the Board on page 5 of the April 4 16, 1974 letter in support of its contentions. 5 During this period of time, we will be available to 6 meet with one or all of the other parties, and perhaps we can 7 agree upon a joint statement with one or all of those parties, 8 and perhaps we will not. But in any event, we ought to have 9 a deadline of, say, ten days for that filing. 10 Following that, we ought to have ten days to respond 11 to that filing. After all, they are the contentions of the 1 12 other parties, that we are supposed to respond to, and we don'tl 13 have to develop contentions and make allegations against 14 ourselves, but we are prepared and anxious to cooperate in tern.9 j 15 of shortening this up. 16 In any event, I would propose that a schedule 17 be established now, ten days following for the contentions 18 on nexus by all the three other parties, ten days for us to 19 reply to that, and shortly thereafter, the Board rules on the 20 papers that are presented before it as to what those principal 21 matters in controversy are that define discovery, and then we 22 can set a discovery schedule of perhaps two or three or four 23 months and we can get going on this process, 24 As I said, we are willing to meet with these folks Aco Federal Reporters, Inc. 25 anytime in the next ten days to do this, but I think we need

te hnar or undarstand cither the informal discussions or if wa R5b 12 1 2 can't get it there in the formal submittal those elements that 3 define the'proprietyr if you will, of the inquiry they wish 4 to make in the centext of an AEC licensing procedure. 5 CIIAIRMAN FARMAKIDES: Mr. Charnoff, there must be 6 a couple of perhaps semantic problems here, perhaps more sub-7 stantive, but I for one, and I am.not speaking'for the board nov. 8 I for one feel that nexus is shown through contentions. Nexus 9 is not something additional-to contentions. 2.714 as clarified 10 by Waterford really is still two point 714, which requires Il contentions. 12 There is no doubt about it. In that sense you 13 are right, sir. At least, I would expect the parties to come. 14 up with contentions, and I think that is what we.are going to 15 have, either as a joint statement or as individual statements. 16 No doubt about that. 17' We are going to'have contentions. But I don't 18 follow your thought that there should be an additional 19 pleading of nexus along with the contentions. That, to me, 20 is unnecessary. 21 In fact, I don't see the logic of it. Point two, 22 it would seem to me that perhaps one of the things that the 23 3 card could do later this morning is to arciculate in greater-24 detail on the record its concerns with respect to the con-Acelederal Reparters. Inc. 25 tentions, if you will, or the nexus shown by 'iu'JP-0, as well A

322 as whatever additional concerns we think might now state.on Reb 19 1 2 the record for Mr. Goldberg, hoping we can help you all to 3 better formulate and articulate your contentions. 4 We will do that, but I don't think we should get 5 nexus and contentions as two separate items. Perhaps the 6 other members of the Board may want to discuss opinions on 7 this, too. 8 George, have you given that thought? 9 DR. HALL: Well, I think the only thought I would 10 express is that contentions are usually phrased in terms of 11 l,the question, whether something has happened, what is whatever 12 and so on. 13 The nexus question, or it isn't even nexus, but I 14 will call it nexus, or you can call it anything else, is 15 essentially the articulation of the causal relationships 16 which are involved in the factual situation which gives rise 17 to the nexus. 18 That is, the plant is going to come on line at 19 such-and-such a time, something is going to happen and something 20 else is going to happen, and this is the reason that it is 21 going to happen, and such-and-such. Now it seems to me this 22 in order to understand contentions or deal with contentions, 23 one has to have some kind of picture of the broader framework l 24 which is involved in the functional or causal relationships i Ace-Feder'o! Reporters, Inc. 25 inherent in the market with which we are dealing, and that l 9

325 20 1 is my. general frame of reference with which I approach the 2 questions that we are discussing, and so I would associat'e 3 myself with Chairman Farmakides' views on this. 4 CHAIR'AN FARMAKIDES: Mr. Brebbia, did you have 5 anything further you would like to add? 6 MR. BREBBIA: No. 7 CHAIRMA!! FARMAKIDES : Mr. Charnoff? 8 MR. CHARNOFF: I don't necessarily say the statement 9 on nexus has been separate from the contentions. They could 10 be inherent in the contentions, but it is perfectly clear 11 to me that the antitrust inquiry authorized by Section 105 (c) 12 is not a broad inquiry into how utilities generally do business. 13 It ib related in some way to the activitics of 14 the -- under the license -- and the alleged anticompetitive 15 activities. It is perfectly plausible for,me to believe that 16 a contention coul,d be written that demonstrates the nexus con-17 cept in it, but I do believe after looking at what'I have '18 received, and I don't propose to debate it, what I have ~ 19 received from the staff the 1.ast thing last night, and the first 20 thing this morning reflecting the meeting last week, that 21 those are general, broad, far-reaching points that go beyond 22 the nexus as beyond the letter. 23 I want to move this process along. We want to 24 get going, and certainly we are looking at an end of' year Acs-Federal Reporters, Inc. 25 type of decision date, we hope, in this case. O

324 Reb 21 1 What~,we are anxious to do is get to that contentions 2 phase. We are also anxious, however, not to neglect that 3 important jurisdictional limit inherent in the concept of 4 nexus, which the Board itself recognized when it suggested 5 or directed in effect this showing of nexus in some clarificatica 6 by the City of Cleveland as a limitation to defining con-7 tentions and discovery. 8 I don't care whether it comes first or together, 9 but it has to be inherent in that, or we are going to be 10 debating the process for a very long time, and don't want 11 to do this. 12 My own suggestion is that we set a schedule of the 13 aort ~1 have talreG to, but I am going to say that the nexus 14 concept has to be inherent in what is a-lleged. 15 CHAIRMAN FARMAF. IDES: Dr. Hall had something else. 16 DR. HALL: Well, I think that it is certainly true, 17 as the Commission instructed in the Waterford decisions, that 18 the question of nexus is an ongoing one, and it operates now 19 throughouu the proceedings simply in the sense that, as you 20 said, any contentions which are raised and anything which ~ 21 happens has something to do with the plants, but on the other 22 hand, I think it is also true, as we have tried to express 23 this mcrning, I believe, that the job is to get to contentions, 24 as'you get to defining the structure of these proceedings, Ac& Federal Repoders, Inc. '25 and that is simply what.needs to be done, and the Board's G 6 s

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325 Reb 22 1 concern is that in the process that we have a little bit, or 2 that we don't forget the structure within which the legal 3 questions, or to which the legal questions pertain. 4 MR. CHARNOFF: I don't think we disagree, sir. 5 I think we are saying from our standpoint that the contentions 6 cannot be so far-reaching that they ignore the question of 7 nexus, even at the outset, and that there has'to be sone 8 showing, allegation of some sort, with regard to the activities 9 under the license to support the general inquiry that might 10 otherwise be made, or else the general inquiry is too broad. 11 CHAIRMAN FARMAKIDES: Mr. Goldberg? 12 MR. GOLDBERG: Mr. Chairman, the Board has indicated 13 that it is going to provide-seme-clarification for the 14' benefit of the City of Cleveland and AMP-0. I would hope.that 15 Mr. Charnoff right new can try to articulate how he would 16 try to revise, for example, one of these issue's to meet the 17 objections he seems to be! raising. '18 I am left with the feeling that even before 19 discovery, he is.looking for contentions that are particular 20 and specific. I really don't think you can have that before 21 discovery. I would be loath to permit myself to be put in 22 that kind of a corner. 23 CHAIRMAN FARMAKIDES: Well, you don't think there 24 is any need for that at this point in time. Look, let's pro-Aes Federel Reporters, Inc. 25 ceed a little bit. Let's note one thing, Mr. Charnoff. We e h

326 Reb 23 I have. completed item 1 on the agenda, and both the City of. 2 Cleveland and AMP-O have nothing further to say with respect. 3 to their nexus contentions which they have raised earlier. 4 However, that is their nexus. We had some contentior s 5 and some questions. For example, we felt, our understanding, 6 of what AMP-O had suggested in their petition to intervene was 7 that related to the impact of the Perry facility on CEI's -8 transmission system and the ability to provide t'he City of 9 Cleveland with an alternative source of bulk electr,ic power, 10 from, I assume, PASNY. 11 As'we have said also earlier, we are not at all 12 certain what this means in terms of the economic relationships 13 of the relevant market, and we would like AMP-Q today to 14 clarify that. We will request, as you said, clarification. 15 Now, we thought we would do it under Item 2, and now is the 16 time, for example, to do that. 17 All right. If we can get that clarification on the 18 record for the purpose of the Board's information, incidentallya 19 in evaluating what will be the final issues, we are also 20 going to ask Mr. Goldberg to clarify in terms of where the 21 Board might ask specific questions, contentions that we 22 think he-in fact is suggesting, but we are not sure that he 23 is. 24 We want to be sure that we understand where you Aco Fdere! Reportert ine. 25 people have joined issue. It is as simple as that. I don't 9 e 4 4

327 I understand the problem. And certainly it is your responsibility 2 as counsel here to help this Board underr.tand what the issues, 3 and to join.those issues.

are, 4

If you don't join the issues, we are whistling. 5 All right. Now perhaps I think Dr. Hall has comments here, too, 6 and perhaps he can express those, and perhaps, Mr. Brebbia, 7 you might do the same. 8 DR. HALL: My problem was this: The Perry plant 9 is going to go online in what, 1976? 10 MR. CHARNOFF: In 1979, sir. II DR. HALL: 1979. Okay. When this goes online, how 12 is the AMP-O going to be damaged? Ycu have said that AMP-O 13 would be hurt, would be hurt because of what? The hurt, as I4 I understand it, has something to do with the capacity of the 15 transmission systems. What we would like to have is a little, ^ 16 clearer understanding of exactly how this comes about, a 17 primer if you like,,which tells us about, or which goes from 18 the engineering relationships involved to some of the marketing I9 relationships involved and some of the economic relationships 20 involved, in your opinion. 2I We understand, of course, that this is a matter of 22 contention, and that you are simply expressing your resurgence 23 with respect to this. CHAIRMAN FARMAKIDES: I would like to add one more AoFederal Reporters. Inc. 25 thought to that. We would like to be completely clear what il

f i 328 ab Reb 25 1 your position is, sir, either on the record today or, if 2 you wish an additional period of five days to file your 3 contentions, we would welecce.it -- either on the record today 4 or in a very short period of time. 5 We want to know what your contentions are. 6 MR. BROWN: If I might respond to that, I think part of this is apart from nexus, which has already been deter-8 mined and which is a matter of pleading and not a matter of 9 proof. I certainly want to make that clear for the, record. 10 Second, we were somewhat confused, frankly, by 11 virtue of the Board's earlier memorandum and final order as 12 to when and what would be recuired with respect to the marketint and economic relationships and so forth. 14 We were under"the assumption that this prehearing 15' conference would naturally be the time at which, not that those 16 would all be clarified, but the time at which a schedule of dates would be set for all parties to submit contentions to the 18 Board for purposes of determining precisely what the issues are. We would certainly feel somewhat, you might say, under 20 the gun to be put in a position of within five days of the 'l ^ present time we develop precisely all of the issues which AMP-O 22.is contending. 23 I Certainly that would be true.if the other parties 24 Aes.d.roi reponen ine. don't have to do the scme thing. He think that would be sometir e 25 precipitate. e

329 Reb 26 1 CHAIRMAN FARMAKIDES: How much time do you need? 2 I threw out five days, and I was hoping you would throw something 3 back. 4 MR. BROWN: I think we need precisely the amount 5 of time either parties have to submit their contentions. 6 CHAIRMAN FARMAKIDES: How about twenty days, sir? 7 MR. BROWN: I think within twenty days we could 8 submit our contentions and in that regard it would be my suggesti@ 9 just as in a judicial proceeding, that not only what amounts 10 to the plaintiffs in the proceeding, but also the applicants be 11 r equired to submit their contentions so.t, hat the Board can 12 have_a complete overview -- not their contentions vis-a-vis 13 their colatentions, against the parties, but a statement of what 14 their conceptions of the issues are. 15 It does not seem to me beyond --- 16 CHAIRMAN PARMAKIDES: You are the ones, you and 17 the Department of Justice ahd,the AEC, Staff, and,the State of' 18 Ohio, and the City of Cleveland; you are the people who are 19 raising the issues. 20 MR. BROWN: My only point is that if we use the 21 analogy of the judicial proceeding, both the Defendant and the 22 Plaintiff are required to submit a statement'of contentions. 23 This,.it seems to me, would give the Board a more complete 24 overview of what all the parties' contentions are, and AOFederal Reponers. Inc. [25 issues.

330 Reb 27 1 MR. BREBBIA: Speaking as one Board Member, I don't 2 think that the Board is required to sit and watch people' spar-3 as far as the issues are concerned. Those who contend that 4 there may be a situation inconsistent with the antitrust la s 5 are required to articulate their position. 6 They are to articulate the position without the ~ 7 benefit of discovery, of course, and all of us are familiar 8 with the fact that in discovery, facts may be disgorged which 9 may even expand the issues, but it is certainly proper for 10 this Board to require that to the extent, the best extent of 11 your knowledge, that you, AMP-o, articulate what you think are 12 the problems with this application in that it might provoke - 13 a situation inconsistent with the antitrust laws. We don't 14 have to sit here and have three or.four more prehearing con-15 ferences while these issues fly back and f. orth between the 16 parties. 17 We are entitled within a reasonable time for you 'l 0 to set forth what you think 'is going to happen with regard 19 to this application if it is. granted on the basis'of the know-20 ledge _that you now have. 21 Naturally, after discovery, we will then frame our 22 discovery, then, in terms of those contentions, if you want 23 to use the broad based contentions', and in terms of the 24 extent of your present knowledge. Ac} Federal Reporters, Inc. 25 I don't think the Board is precluded. if discovery I e i D

331 reb 28 1 produces issues, expanded issues, is precluded from expanding 2 the scope of discovery or of the issues as they are now framed. 3 But we want to frame the issues here, and get 4 started. 5 CHAIRMAN PARMAKIDES: You feel 20 days might be 6 sufficient? 7 MR. BROWN: I think it would be sufficient for our 8 purposes. If I have misstated myself or was misinterpreted, 9 I didn't mean to imply that we did not feel a statement of 10 the issues was necessary. We simply felt it would be helpful 11 perhaps for the Board as well as the parties if the Applicants 12 were required to frame the issues as well. 13 CHAIRMAN FARMAKIDES: The Board will consider that 14 and rule on that. Your suggestion has been made, sir, for the 15 record. Mr. Charno', now, so far as I understand it, the 16 Department of Justice has met with the AEC and you people have 17 in' fact articulated a joint statemer.t of contentions. 18 Is that corrcet, sir? 19 MR. CHARNO: That is correct, Mr. Chairman. 20 CHAIRMAN FARMAKIDES: And those would be the sum 21 totel of your p'ositions? 22 MR. CHARNO: Yes. 23 CHAIRMAN FARMAKIDES: Mr. Popper, the same could be 24 said of yourself, that you have articulated the sum total of AoFWeref Reporters, Inc. 25 contentions in the agreement with the Department of Justice? i R. i )

332-Reb 29 1 MR'. POPPER: That is correct. 2 CHAIRMAN FARMAKIDES: And you might get 1 or 2 or 3 perhaps all of the parties to join you in that rendition or 4 some other rendition? 5 I was thinking of issues. 6 MR. POPPER: I would say that is possible. 7 CHAIREN FARMAKIDES: But not probable? 8 MR. POPPER: I would not want to comment on how 9 probable that is. I would say in regard to the contentions 10 we have submitted, there are other parties who in viewing them 11 have commented that they indicate that they don't have the 12 factual particularity that the parties would desire. 13 I think in the next twenty days the Commission could 14 perhaps in the form of explanation give greater particularity 15 to these contentions. 16 CHAIR!1AN FARMAKIDES: You mean the Regulatory Staff 17 woi:ld do that? '18 MR. POPPER: That is correct. We would take it 19 upon the Staff to clarify these in some detail. But I want 20 to make it very elsar-that I don' t feel this is the time 21 for a pretrial brief. I don't feel this is the time for factua: 22 delineations of all the issues. 23 The Applicant would just believe that the ultimate 24 questions in the case are supposed to be decided before dis-Ace-FWeral Reporters, lec. 25 covery begins, and I want to make it very clear on the record 6 ,amee, mu

333 Reb 30 I thut the Staff does not feel that is the purpose of a pretrial 2 conference like this. 3 CHAIRMAN FARMAKIDES: Mr. Popper, certainly you are 4 entitled to be heard, and the Applicant is entitled to bc 5 heard. You are expressing your positions. 6 Mr. Goldberg, is twenty days sufficient for you? 7 MR. GOLDBERG: Yes. I would anticipate from the 8l meeting on the 25th that there is a high degree of p'robability 9 that we will be able to agree with atileast some of the 10 statements of contentions in the joint statement of the Depart-II ment of Justice and the AEC Staff. 12 We may.want to see it expanded and may suggest 13 expansion within that time. 148 CHAIRMAN FARMAKIDES: All right. Mr. Charnoff? 15 I beg your pardon. I would like to make another note for the 16 record. Mr. Schraff, you don't have to participate. You do I7 have the right to cross-examine and discover. I would 18 appreciate it if you would participate in the creation of I9 these issues. 20 Since you do have rights of discovery, you might 21 want to be involved in the drafting of the issues. 22 MR. SCHRAFF: I understand, Mr. Chairman. 23 CHAIRMAN FARMAKIDES: So twenty days would be 24 sufficient for you? Ao Federal Reporters, Inc. 25 MR. SCHRAFF: Yes.

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334 Rob 31 1 CHAIRMAN FARMAKIDES: Mr. Charnoff? 2 MR. CHARNOFF: I was hoping the two-day period 3 could be shorter. But if you allow twenty days, could you 4 allow the Applicants 15 days to respond to the submittals 5 that are put in 20 days, with our comments either indicating 6l agreement or disagreement and why with some of those con-7 tentiens? 8 CHAIRMAN FARMAKIDES: A lot of time would be saved, I 9 Mr. Charnoff, if you could sit down with the other parties 10 and come up with a joint statement. 11 . MR. CHARNOFF : Mr. Chairman, it was at my' suggestion 12 that the Staff called such a meeting. I am perfectly willing 13 to do that. I think until we get sotae of those background 14 materials or clarification that you say you are going to get 15 from AMP-O and the City of Cleveland and that we are hoping 16 to get from the staff, we are not going to make much progress. 17 The shoe is on their feet. 18 We are prepared to sit down and cooperate as much 19 as possible'during the next few weeks to see if we can reach 4 20 agreement, but we are not going to initiate any contentions. 2I That ought to be very clear. 22 MR. GOLDBERG: May I understand what the request 23 is? 24 MR. CHARNOFF: I have asked for 15 days following Ace Federal Reporters, Inc. '25 the 20-day period if that is the period set for reply by the O e e

335 R0b 32 1 Applicants to the submittals put in. 2 MR. GOLDBERG: The Applicant is not going to submit 3 anything in tho,se twenty days? 4 MR. CHARNOFF : Unless the Applicant reaches an 5 agreement with the other parties we would not submit 'ontentions c 6 of our own in the twenty days. 7 MR. GOLDBERG: If the parties are submitting separato 8 papers, I think each party should hase an opportunity to respond 9 to whatever else is filed. 10 MR. CHARNOFF: We are responding, but not putting 11 anything forward. 12 MR. GOLDBERG: We might want to rebut what they are 13 saying. I think there should be an oppprtunity to respond j 14 to that. 15 CHAIRMAN FARMAKIDES: I might say this, look, as 16 to that, we are going to adhere to the rules strictly, very 17 strictly. You can file any papers you want outside the rules 18 and they will come in, and they will sit on my desk. If they 19 are filed under the rules, I will look at them. 20 Incidentally, when you file a motion for leave to 21 file with your document appended to it, I am not sure that that 22 meets the merits of the rules. If you want to file a motion 23 for leave to file, file separately, and then file your document, 24 and certainly you may take a little bit more time, but I think Ac> Federal Reporters, Inc. 25 it would be more fair to all parties.

336 Reb 33 I I would like again to state something that I think 2 is apparent. The Board feels.strongly that the best way to get 3 a case moving and get it tried is where counsel cooperate with 4 each other. That is the very cest way. You can save so 5 torribly much time. So while we are taking more time. initially, 6 I think if you can get counsel to work together, and they have 7 been, I must say, and I would like to see that continue more -- 8 why, we are home free. 9 Excuse me just a minute. All right, we will-take 10 this under consideration, and we will issue our prehearing Il conference order on this very quickly. All right. Number 3, 12 then, we really can't address that this morning. I think the 13 Board has been encouraged that the parties are part of the 14 way home toward formulating the issues. 15 We are going to delay item 3 a little longer. I 16 noted one thing this morning, which I think all of you picked 17 up, the docket number for the consolidated case, and also I 18 want to be sure that the parties have in fact discussed among 19 themselves how they would like to propose to the Board cross-20 examination should be conducted. 21 What party or parties shall cross? Are the parties 22 limited, for example, to the issues which they have alleged 23 in the case, or may they cross on other parties' issues? It 24 is an important factor that you ought to look at. Now if you AeJederal Reporters. Inc. 25 come back to us with the proposed schedule of actions to be W .m e .a.-ee

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• 337 Reb 34 1 taken, procedure leading up to the evidentiary hearing, we.would 2 be happy ~to have that.

3 If you don't we will set it. Number two, if yot'. 4 can come up with an agreement on the conduct, we will appreciate 5 it. I think it is important that you know the rules of the 6 ballgame initially. It helps you in your discovery process. ~ 7 MR. GOLDBERG: Mr.' Chairman, I missed your reference 8 after the word " conduct" when you started out. I1 missed.that. 9 Did you say conduct of the proceeding? 10 CHAIRMAN FARMAKIDES: Conduct of the proceeding. 11 I am not sure that there is anything elco. 12 MR. GOLDBERG: All right. 13 CHAIRMAN FARMAr. IDES: Also, this question of briefs, 14 how many briefs shall be filed, by whom, and when? It would 15 seem to me the proper course here, and the_ Board will rule on ' 16 this, but we would like to have your thoughts again, whatever 17 thoughts you can agree to would be helpful to the B'oard. ~18 I keep stressing we wculd like to have that. So whilo a 19 I received your joint memorandum on consolidation' procedures, 20 I was not really quite happy. It did not go into the detail tha; 21 you might have articulated. 22 I think you understand that those procedures are 23 intended to conduct -- sorry. Those procedures are intended to 24 bind each party during the course of the hearing. We are al. lowing Ace. Federal Reporters, Inc. 25 you the opportunity of coming up with rules that you feel are e

338 Reb 35 1 fair. Now we have moved a lot faster than we thought because 2 of the obvious efforts to corce up with either a joint statement 3 of issues by two parties or three parties, and I think'we a:;e 4 prepared now to take whatever else any party would like to state 5 at this time for the record. 6 Do you have anything further? 7 MR. CHARNOFF: I thought you had indicated that you 8 were going to inquire of Mr. Goldberg or make observations ~ 9 with regard to the nexus problems. 10 CHAIRMAN FARMAKIDES: I think the Board discussed Il them, Mr. Charnoff, and we feel it is proper to writ until we 12 get the contentions from the parties. 13 I.think it is going to be those contentions, and 14 hopefully it is a joint stipulation of all the parties, and 15 I keep going back to this, and if.it is, that will help all of~ 16 us. That is what we decided to do during our latter recess. 17 Is there anything else? Mr. Brown? 18 MR. BROWN: No, sir, l9 CHAIRMAN PARMAfC. DES: Mr. Charno? o 20 MR. CHARNO: No, Mr. Chairman. 21 CHAIRMAN FARMAKIDES: Mr. Charnoff? 22 MR. CHARNOFF: No. 23 CHAIRMAN FARMAKIDES: Mr. Popper? ,24 MR. POPPER: No. ActFWeral Reporters. Inc. 25 CHAIRMAN FARMAKIDES: Mr. Goldberg? e e .n a w a

i J: 339 Reb 36 1 MR. GOLDBERG: No. Mr. Schraff,7 MR. SCHRAFF: No. 2 3 CHAIRMAN FARMAKIDES: Thank you very much, gentlemen. ~ 4 We are going to issue a preharing order, and we hope to haye it 5 out tomorrow or the day after.- 6 Off the record. ~ 7 (Discussion off the record.) 8 CHAIRMAN FARMAKIDES: On the record. Thank you very-e. 9 much. This prehearing confernece is over. 10 (Whereupon, at 10:35 a.m., the Prehearing Conference 11 in the above-entitled matter was concluded.) cnd 36 12 5: 1 13 14 15 16 17 18 19 e 20 l 21 .s 22 23 24 Ace-Federal Reporters. Inc. 25 O}}