ML19329D316
| ML19329D316 | |
| Person / Time | |
|---|---|
| Site: | Perry, Davis Besse  |
| Issue date: | 04/20/1976 |
| From: | Buchmann A CLEVELAND ELECTRIC ILLUMINATING CO., SQUIRE, SANDERS & DEMPSEY |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| NUDOCS 8002270908 | |
| Download: ML19329D316 (33) | |
Text
April 20, 1976 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board In the Matter of
)
)
THE TOLEDO EDISON COMPANY and
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
Docket No. 50-346A COMPANY
)
(Davis-Besse Nuclear Power Station,
)
Unit 1)
)
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
)
d (Perry Nuclear Power Plant,
)
Docket Nos. 50-400A Units 1 and 2)
)
50-401A
)
THE TOLEDO EDISON COMPANY, ET AL.
)
(Davis-Besse Nuclear Power Station,
)
Docket Nos. 50-500A Units 2 and 3)
)
50-501A DISMISSAL MOTION OF THE CLEVELAND ELECTRIC ILLUMINATING COMPANY WITH RESPECT TO THE ALLEGATIONS FULLY LITIGATED BEFORE AND FINALLY DECIDED BY THE FPC 1.
The Cleveland Electric Illuminating Company
.,("CEI") files thic motion requesting the Licensing Board to strike from the record certain documentary and testi-monial evidence and to dismiss the specific allegations referenced he' rein.
The basis for seeking such relief is that the fact issues raised in said allegations, and to which the evidence subject to the present motion relates, were fully litigated before the Federal Power Ccmmission ("FPC")
by the parties to this proceeding, or their privies, and 8002'270 70 8 d
were finally adjudicated by that agency, as affirmed by the United States Court of Appeals for the District of Co,lumbia circuit.
Accordingly, the doctrine of collateral estoppel precludes a relitigation of the same matters by the parties now before the Nuclear Regulatory Commission in the present antitrust review proceeding associated with the construction and operation of the captioned nuclear facilities.
2.
Collateral estoppel, like its companion doc-trine of res judicata, is a judicia]'y formulated principle grounded upon ' considerations of ecvnomy of judicial time and (the] public policy favoring the establishment of cor-tainty in legal relations."
Commissioner v Sunnen, 333 U.S.
,591, 597 (1948).
Historically, it has been applied to insure that "those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties."
Baldwin v Iowa State Traveling Men's Association, 283 U.S.
522, 525 (1931).
As such, the doctrine operates as "a rea-sonable measure calculated to save individuals and the courts from the waste and burden of relitigating old issues."
13 J. Moore, Federal Practice and Procedure 10.441(2], at 3779 (2d ed. 1974).
It is, as Professor Moore so aptly stated,
- *
- a rule of fundamental repose for both society and litigants
- The doctrine prevents an encore and l
l l
. ~.
reflects the refusal of law to tol-erate needless litigation.
And subsequent litigation is needless if, by fair process, a party over whom the court had jurisdiction raised or had an opportunity to raise issues that were a part of the cause of action previously dealt with.
(lB J. Moore, Federal Practice and Procedure 10.405, at 628.]
3.
Nor is judicial economy and efficiency-the sole sustaining force behind the doctrine of collateral estoppel.
Equally compelling as a reason for insisting on finality with respect to issues already tried and deter-mined is the strong public policy in favor of protecting the integrity of the fact-finding process and the dignity of the tribunal rendering the final judgment.
It hardly need be said that the law cannot function as a mechanism
,for settling disputes unless properly rendered judgments are held to be binding on the parties thereto and their
,, privies.
The Supreme Court of the United States removed all doubts in this regard more than seventy-five years ago in Southern Pacific RR Co. v United States, 168 U.S.
1, 49 (1897), declaring:
This general rule is demanded by the very object for which civil courts have been established, which is to secure the peace and repose of society by the settlement of matters capable of judicial deter-mination.
Its enforcement is es-sential to the maintenance of social l'
l
. ~.
5;.
order:
for the aid of judicial tri-bunals would not be invoked for the vindication of rights of persons and property, if, as between parties and their privies, conclusiveness did not attend the judgments of such tribunals in respect of all matters properly put in issue and actually litigated by them.
4.
Mindful of these basic underpinnings, we must, for purposes of the presant motion, examine first the ele-ments that have emerged as essential to an application of collateral estoppel, and then demonstrate that those ele-ments require this Board to invoke the doctrine as a bar to relitigation of the specific matters set forth below.
5.
With regard to the first inquiry, it is now well settled that a necessary precondition to collateral
. estoppel is the existence of a final adjudication of the merits of a particular cause of action, claim or demand by a tribunal of competent jurisdiction.
The doctrine then comes into play where one of the parties to that adjudica-tion -- or a person in privity with such party -- subsequently seeks in a separate action. involving the same parties or their privies to advance or defeat issues of law or fact which were finally decided in the earlier litigatien.
In such circumstances, the prior adjudication serves to conclude "those matters in issue or points controverted, upon the de-termination of which the (earlier] finding or verdict was
1 l
i..
rendered."
Cromwell v County of Sac, 94 U.S. 351, 353 (1877).
6.
In ascertaining whether or not an issue has previously been "actually litigated," the test is not based upon how strenuously a particular argument was made or upon how much evidence was introduced to substantiate the al-legation.
Rather, the applicable standard is whether the asserting party formerly had a full and fair opportunity to litigate an allegation which was placed in issue by the
~
earlier pleadings and decided by the trier of fact.
Pro-fessor Moore made the point quite well:
Like a cause of action, "an issue may not be * *
- split into pieces.
If it has been determined in a former action, it is binding not-withstanding the parties litigant may have omitted to urge for or against it matters which, if urged, would have produced an opposite result." [13 J. Moore, Federal Practice and Procedure, 'J0.443(2],
at 3903-3904; citations omitted.]
7.
This principle was clearly enunciated in United States v Silliman, 167 F.2d 602 (3d Cir. ), certiorari denied, 335 U.S.
825 (1948), where the United States was barred from relitigating in federal court an award of at-torney's fees to Silliman by the New York Surrogate Court, notwithstanding the government's assertion that no evidence
had been introduced on the issue in the prior proceeding.
The Third circuit there declared (167 F.2d at 617):
It actually does not matter whether such evidence was presented or not.
If an issue is raised and the party who has the burden fails in his proof and the issue is decided against him, he is just as much bound by collateral estoppel as though he had presented a barrel of testimony.
Indeed, on this point there appears to be no real disagree-ment.
- See, e.g., Partmar Corp. v Paramount Pictures Theatre Corp., 347 U.S.
89, 101 (1954); Brightheart v McKay, 470 F.2d 242 (D.C. Cir. 1969) ; James Ialcott, Inc. v Allahabad Bank, Ltd., 444 F.2d 451, 459-460 (D.C. Cir. 1971); Mancuso v United States, 464 F.2d 1273 (8th Cir.1972) ; overseas Motors, Inc. v Import Motor, Ltd., 375 F. Supp. 499, 516 i
i (E.D. Mich. 1974), affirmed on other grounds, 519 F.2d 119 (6th Cir. 1975).
~
~
8.
While the doctrine of collateral estoppel had its genesis in the context of judicial proceedings, its ap-4 plication to the administrative adjudicatory process is now an established fact.
As recognized by the Fifth Circuit Court of Appeals in Painters District Counsel No. 38 v Edge-wood Contra: ting Co.,
416 F.2d 1081, 1084 (1969), the same policy considerations "-- finality to' litigation, prevention l
- ~.
of needless litigation, avoidance of unnecessary burdens of time and expense -- are as relevant to the administrative process as to the judicial."
See also Safir v Gibson, 432 F.2d 137, 143 (2d Cir. 1970), certiorari denied, 400 U.S.
850, 942 11970).
Indeed, the Supreme Court made it clear in United States v Utah Construction and Minine Co.,
384 U.S.
394, 421 (1966), that the determinations of an administrative agency are entitled to collateral estoppel effect in sub-sequent court actions where the agency is acting in a ju-dicial capacity and the tenets of the do'ctrine are otherwise met.
See also Tipler v E.
I. duPont de Nemours and Co.,
1/
443 F.2d 125 (6th Cir. 1973);
International Wire v Local 38, Electrical Workers, 357 F. Supp. 1018 (N.D. Ohio 1972),
affirmed, 475 F.2d 1078 (6th Cir. 1973), certiorari denied, 414 U.S.
867 (1973); overseas Motors, Inc. v Import Motors, Ltd., supra; Transport Systems v Local 150, Chauffeurs, 436 F.2d 1064 (9th Cir. 1971); and see Fiberboard Paper Products Corp. v East Bay Union of Machinists, Local 1304, 344 F.2d 300.(9th Cir. 1965).
And on the same reasoning, the District of Columbia Circuit recently applied the doctrine to estop the Federal Trade Commission from relitigating 1/
In Tipler, the Sixth Circuit accepted the principle that res judicata and collateral estoppel were applicable to administrative agency determinations, but refused to in-l vake the doctrine under the' facts of that case because the issues sought to be precluded had not been actually litigated.
443 F.2d at 129-129; and see Texaco, Inc. v Hickel, 437 F.2d 636 (D.C. Cir. 1970).
1
factual determinations made in an earlier FPC proceeding.
Federal ~-Trade Commission v Texaco, Inc., 517 F.2d 137 (D.C. Cir. 1975).
9.
CEI submits that this Board should follow a i
similar course here with respect to the issues advanced by the City of Cleveland, the NRC Staff and the Department of Justice which were raised and earlier adjudicated by the FPC.
In this regard, we think there can be little doubt that the same parties, or their privies, are, seeking a re-litigation of identical issues.
The City of Cleveland in fact initiated the FPC proceeding in question, and the FPC Staff was a party to and an active participant therein.
It has long been recognized that the involvement in liti-gation of representatives of one government agency is con-clusive for collateral estoppel purposes on other govern-ment representatives.
The Supreme Court anrsmured the ap-plicable principle in discussing the doctrine of res judicata in Sunshine Anthracite Coal Co. v Adkins, 310 U.S. 381 (1940).
As there stated (310 U.S. at 402) :
There is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in every litigation of the same issue between that party and another officer of the government.
The crucial point is whether or not in the earlier litigatico the representative of the i
s
~
O
-9_
United States had authority to rep-resent its interests in a final adjudic: tion of the issue in contro-versy. * *
- There can be no question that it (the Bituminous Coal Com-mi5dion] was authorized to make the dstermination of the status of ap-pellant's coal under the Act.
It represented the United States in that determination and the delegation of 4
that power to the Commission was valid, as we have said.
That suit therefore bound the United States as well as the appellant.
10.
Like reasoning has been applied by the courts in a collateral estoppel context to bar the government from relitigating through another representative the same issue or issues that were adjudicated for or against the govern-2 ment in a prior proceeding.
See Federal Trade Commission v Texaco, Inc., supra; and see United States v Willard Tablet Co., 141 F.2d 141 (7th'Cir. 1944); Georce H. Lee Co. v 2/
Federal Trade Commission, 113 F.2d 583 (Sth Cir. 1940).
,,This is, of course, as it should be.
The doctrine of govern-meital privity as announced by the Supreme Court in the Sunshine Anthracite Coal'Co. case operates against the United States as a whole.
It spares private citizens the harassment and expense of repetitious litigation of the same issue by dif-2/
Indeed, in the Sunshine Anthracite Coal case, the i
Supreme Court, while using the term res judicata, actually i
ap,slied collateral estoppel principles to bar relitigation in federal court of issues previously adjudicated before the administrative body.
i L
. ~.
L
% ~.
forent governmental officials who might otherwise seek out other administrative or judicial forums which they feel may be more sympathetic to the government's arguments.
For this protection to be meaningful, the privity concept neces-sarily is designed to blanket not simply the government personnel of the particular agency that first adjudicates
.the contested issue; it applies as a bar against all gov-ernment personnel, whether they be affiliated with the staff of some other administrative agency or with the Department of Justice.
Accordingly, the United States cannot through the NRC Staff or Department of Justice lawyers relitigate in the present proceedings issues actually litigated in earlier administrative proceedings in which the FPC Staff 2/
participated.
11.
It remains then to examine what issues were fully adjudicated before the FPC by these same parties or their privies and to determine whether an effort is being made to resurrect those same issues for relitigation here.
As a proper frame of reference, we would refer preliminarily 3,/
The defending party in the FPC litigation was, as here, CEI.
As to the issues which this motion seeks to have barred by reason of collateral estoppel, they relate exclusively to matters relevant only to the historical competitive re-lationship between CEI and the City of Cleveland's municipal electric light plant.
To the extent that these issues impact at all on the other App'_icants to this proceeding, it is only by virtue of this Board's ruling on certain evidentiary ques-tions.. In such circumstances, it can hardly be disputed that the other Applicants are in privity with CEI for purposes of the issues subject to tha b : of collateral estoppel.
to the Sixth Circuit's decision in Paine & William Co.
v Baldwin P.ubber Co.,
113 F.2d 840, 843 (6th Cir. 1940),
wherein the term " issue" was defined in the following manner:
- *
- a single, certain and material point arising out of the allegations and contentions of the parties.
The issue may normally be ascertained by an inspection of the pleadings.
In the freer modern practice, an issue sometimes arises from the affirmation on one aide and the denial on the other of some material point of law or fact as developed by the evidence, though not presented by the pleadings.
12.
For collateral estoppel purposes, it is im-portant to differentiate between fact issues, law issues and those isses which embrace a mixed question of fact and law.
As noted by Professor Moore:
Frequently a judgment involves questions both of fact and law or a certain rule of law is decided to apply to a certain set of facts.
The reason for catego-rizing the cases is that the courts are more likely to apply the doctrine of collateral estoppel to conclude an issue of fact or of mixed fact and law than to conclude an issue purely of law.
[13 J. Moore, Federal Practice and Pro-codure (0.442[1], at 3851.]
While no simple demarcation line can be drawn, the distinction between a mixed question of fact and law, on the one hand, and a question of pure fact, on the other hand, appears to rest on whether a different legal conclusion arises from some operative fact due to the application of an external c: a-l
~; ~.
sideration or whether the legal conclusion to be drawn re-mains unchanged because the significance of the operative fact does not depend on any external consideration.
For example, a statute which renders a particular fact of dif-ferent significance than it would have either at common law or in the context.of some other legislation would present a mixed question of fact and law.
13.
The significance of this analysis for pur-poses of ascertaining the identity of issues as a basis for invoking the doctrine of collateral estoppel can be seen in Pacific Seafarer's,Inc. v Pacific Far East Line, Inc., 404 F.2d 804, 810 (D.C. Cir. 19 68), certiorari denied, 393 U.S.
1093 (1969),.where the court held that the determination in an earlier proceeding that ships were not engaged in
" foreign commerce," as the quoted term is used in the Ship-ping'Act, does not bar a'later adjudication of a similar
~
issue regarding foreign commerce under the Sherman Act.
4/
Thus, the negligence of a carrier imposing liability under the Federal Employees Liability Act differs from active l
i negligence which precludes indemnity.
See Security Insurance l
Comeany of New Haven v Johnson, 276 F.2d 182, 188 (10th Cir.
i 1960).
Similarly, whether the death of an insurance ~ccmpany's employee is accidental under the Workman's Compensation Act may be different from whether it is accidental in terms or life insurance policies issued by the company.
See Embry v Ecuitable Life Assurance Society of the United States, 451 F.2d 472, 477 (10th Cir. 1971).
In these cases, a finding of.
" negligence" or of " accidental" death would involve a mixed question of fact and law because the significance of the finding would vary according to the statutory or common law standard applied.
l
Similarly, in United Shoe Machinery Corp. v United States, 258 U.S. 451, 460 (1922), the prior determination that a lease was a valid and binding agreement within the rights of holders of patents under the Sherman Act (a mixed ques-tion of fact and law) was not considered to resolve the issue subsequently presented whether such a lease violated the Clayton Act, which applies to goods, wares, machinery, etc.,
whether patented or unpat'ented.
14.
By contrast, a pure question of fact stands or falls on its own terms, unaffected by possible differences in the common law or statutory standards that govern the
~
litigation.
Thus, in Federal Trade Ccmmission v Texaco, Inc.,
suora, for example, the FTC was collaterally estopped from examining the accuracy of proved reserves reported by the American Gas Association since the FPC, in an earlier pro-ceeding setting area rate ceilings, had found that the "AGA
" reserve data is reasonably reliable for the purposes used herein."
46 FPC 86,115, cuoted in 517 F.2d at 145.
The FPC adjudication was conclusive as to that fact issue irrespective of the statutory review standard in the FTC hearing.
15.
In terms of the present motion, there are both fact issues and mixed fact-and-law issues that should be barred frcm the present litigation-by operation of collateral estoppel.
Each issue which is discussed below, was explicitly i
n
~.
addressed in the decision of the Administrative Law Judge as essential and necessary to his ruling; that decision was adopted by the Commission as its own.
City of Cleveland, Ohio v The Cleveland Electric Illuminating Company, FPC Docket Nos. E-7631, E-7633 and E-7713.-5/
The appeal to the District of Columbia Circuit resulted in the affirmance of the Commission on all grounds except one which is not rele-vant to this motion.
City of Cleveland v Federal Power Com-mission, 525 F.2d 846 (D.C. Cir. 197 6).
Accordingly, the judgment of the Federal Power Commission is a final, valid judgment.
And plainly the finality of the FPC matters in-volved here is unaffected by the prospect of further review 6/
on the other isolated issue.-
"The federal rule is that
. the pendency of an appeal does not suspend the operation of an otherwise final judgment as res judicata or collateral estoppel, unless the appeal removes the entire case to the appellate court and constitutes a proceeding det novo." 13 J. Moore, Federal Practice and Procedure 10.416(3], at 2252.
16.
Turning first, then, to the pure fact issues not entitled to relitigation here because they were adjudi-5/
The FPC orders are part of the record in this proceed-ing, having been introduced into evidence by CEI as Appli-cants' (CEI) Exhibits Nos. 18-24.
6/
The case was remanded for further proceedings to de-termine only whether the rate specified in the agreement be-tween the parties of January 20, 1970, contravened a pre-existing agreement.
525 F.2d 846.
,,-,,-e r
v~-,
1--.-------
w
.m-.
cated in the FPC proceeding involving the same parties or their privies, allegations have been made and denied in this proceeding that CEI individually engaged in certain described conduct.
Thus, the NRC Staff has sought to show through the testimony of Warren D. Hinchee, former Commis-sioner of Light and Power for the City of Cleveland, (1) that CEI historically opposed a synchronous interconnection which would have allowed CEI to operate in parallel with the Municipal Electric Light Plant ( "MELP"); (2) that, i
instead, CEI ultimately agreed to provide power to MELP through five 11 kv transfer points, and later through a non-synchronous 69 kv intertie since such arrangements would permit CEI to prevent MELP customers from obtaining more reliable electric service; (3) that CEI employees then in-
. tentionally delayed energizing the load transfer points when-ever MELP requested emergency service from CEI in order to a
" highlight MELP's reliability problems, and (4) tnat CEI ex-ploited the unreliability of MELP's electric service to so-licit MELP-customers to' change to CEI service, thereby causing numerous customer conversions.
Tr. 2626-2627; 2693, 2698-2699.
Similar allegations were made by the City of Cleveland in its September 5, 1975 filing (City's September 5 Statement, at pp. 10, 15, 16, 17), and by the Department of Justice in its
s.
Interrogatory Responses of September 5, 1975 (DOJ September 5 filing, p. 6).
In addition, Mr. Hinchee testified that CEI was responsible for MELP's failure to maintain its gener-ating units in good operating condition (Tr. 2797-2801).
17.
These are precisely the same arguments ad-vanced by the City of Cleveland in the FPC proceeding.
As reflected in the City's FPC Motion to Consolidate, which is 7/
in the nature of a ecmplaint, it was there contended that CEI sought to impede MELP from obtaining system reliability by delaying its participation in any arr'angements with MELP (15, at 3-4); by creating conditions conducive to blackouts and brownouts (17, at 5);'and by generally rendering it more difficult for MELP to supply the needs of its power users (ibid.).
18.
Following an evidentiary hearing on the alle-gations, the Administrative Law Judge issued findings which
.. categorically rejected each of these assertions (Applicants ' (CEI)
Exhibit 20).
Insofar as is-relevant to the present motion, he found :
1.
This record indicates that the City's past inability to furnish reliable, dependable service on the MELP system to its own customers has been due primarily to incompetent management and inefficient operations.
(Initial Decision at 16. )
7/
The Motion to consolidate is part of the record of this proceeding as Applicants' (CEI) Exhibit 18.
.1 i
2.
The relief provided in this proceeding should eliminate any continuing threat to MELP's ability to provide dependable service, if the City moves effectively i
to restore its 206 megawatts of in-stalled capacity to full production on a dependable operating basis.
(Initial Decision at 16-17.)
1 3.
The customers who switched from MELP to CEI * *
- did so because of poor services and outages on the MELP system, occasioned, as the record discloses, by MELP's incompetent management and inefficient operations rather than any action by CEI.
(Initial Decision at 15.).7_g 4.
The charge of CEI refusal to build a parallel line as an anticompetitive practice is ironic in the light of this record which shows clearly that the City repeatedly turned down such proposals in an effort to remain self-sufficient and independent of the CEI system.
(Initial Decision at 15.)
5.
Since 1942, when the City rejected FPC's
' urging very strenuously that an inter-connection * *
- be set up,'
the City has rejected all proposals for inter-
/
connection on the ground that it would result in a loss of ' independence' and put the City 'at the mercy' of CEI.
(Initial Decision at 15.)
6.
CEI has expressed its willingness to interconnect since 1942.
(Initial Decision at 15.)
7.
- *
- the existing icw voltage de-liveries currently being provided to the City by CEI should be continued along with the temporary emergency 69 Kv ocen-switch nonsynchronous interconnection provided for in the Commission's crder issued March 3, 1972.
(Initial Decision at 17 (emphasis added).)
7a/
This finding has been reaffirm 3d 's7 the FPC in subsequent proceedings ber<een CEI and 'ELP.
See Applicants' (CEI)
J Exhibit No. 2MEl-
l
~
8.
A open switch intertie (on the 69 KV interconnection) protects the CEI system from any outage occasioned by operation of the emergency intertie.
(Initial Decision at 12.)
9.
Closed switch or synchronous operation subjects CEI's Lake Shore 69 Kv cable switchhouse to severe overloading during any CEI outage on the Lake Shore-Newburgh line.
This would diminish the reliability of service to CEI's own customers in the area served by the Lake Shore switchhouse.
(Initial Decision at 12.)
10.
CEI and Staff concern respecting pos-sible detriment to CEI's system from a closed swith 69 Kv line to MELP is legitimate in the light of the City's past record of incompetent and inef-ficient operation.
(Initial Decision at 12.)
11.
The public interest does not require that the City's customers be protected from temporary blackouts at the expense of CEI's customers.
Particularly, since Gunderson's (Staff witness] testimony shows that " operation of the 69 KV tie in the normally open * *
- mode can be implemented to avoid any risk of an outage to MELP beyond two or three minutes." (Initial Decision at 12. )
12.
The Administrative Law Judge determined that a 138 Kv intertie should be es-tablished and set forth the terms and conditions thereof.
(Initial Decision at 4-6.)
19.
It is these findings with regard to.the fact issues presented in the FPC hearing which CEI submits are entitled to collateral estoppel effect here.
The entire question concerning CEI's attitude toward entering into an interconnection arrangement with MELP, the formulation and implementation of such an arrangement, and the impact thereof i
~
on the competitive situation in the retail power market in the City of Cleveland, was fully adjudicated and finally determined by the FpC.
As to each fact finding rendered by the Administrative Law Judge in that earlier proceeding, the doctrine of collateral estoppel should foreclose the City of Cleveland (as the same party) and the NRC Staff and Department of Justice- (as privies to another active government participant the FPC Staff) from rehasing the same matters in this forum.
Similarly, in view of the fact that the rates for emergency service which CEI has provided to MELP since 1970 were set and approved by the FPC af ter full hearings (See Applicants' (CEI)
Exhibit Nos. 21 (CEI) and 23' (CEI)), the City is barred by collateral estoppel from contesting those rates here as being
" designed by CEI to bleed the financial viability of the Cleveland System" (City September 5 Statement, p.
18),
20.
The same conclusion is required with respect
, to the mixed fact-and-law issues that were adjudicated in the FPC proceeding and are raised once again here.
It was maintained by the City in the FPC proceeding -- primarily 8/
on the basis of the so-called " Bridges Memorandum"
-- that CEI had engaged in a carefully orchestrated plan to eliminate the. Municipal Electric Light Plant of Cleveland as a viable competitor in the electric power market in and around the Cleveland area, contrary to antitrust law and policy, with the ultima e objective under this plan to acquire S/
The "3 ridges Memorandum" is a CEI internal memorandum from E.
H. Bridges to L. C. Eowley, dated October 9, 1970.
It was introduced into evidence in this proceeding as NRC Staff Excibit No. 143.
k ~.
the MELP system.. The relief sought was "a thorough staff investigation of the anticompetitive aspects of CEI's conduct in relation to Cleveland."
See City's FPC Motion to Consolidate of December 6, 1971, as renewed on December 9/
22, 1971.
- 21..The Commission reviewed the request for a staff investigation and by order issued January 10, 1972 (Appli-cants' (CEI) Exhibit No.
20, at 13-14) ruled as follows:
Upon review of the City's antitrust allega-tions contained in the above-mentioned motions, it appears that the relief sought is essentially the same as that requested by the City in its original complaint filed in this Docket on May 13, 1971--namely, a permanent interconnection between the fa-cilities of the City and the Company in order to sell energy to or exchange energy with each other.
The claims regarding the Company's anti-competitive conduct toward the City are essentially an mmendment to the complaint and are, therefore, cognizable in the present proceeding.
The City, of course, as complainant herein has the burden of proving its allegations and, therefore, will be required to submit its evidence in support thereof as a part of its case-in-chief, which has been ordered 9/
On December 16, 1971, the FPC issued an order in which it consolidated Docket Nos. E-7631 and E-7633, suspended CEI's proposed termination of the load transfer service until May 17, 1972, denied the City's request ~for an emergency intercon-nection pursuant to section 202 (c) of the Federal Power Act and declined to consider at that time the City's request for an investigation of the antitrust allegations (Applicants' (CEI) Exhibit No.
20, at 3).
'The City renewed its request for an emergency -interconnection and an investigation into CEI's alleged anticompetitive practices in its December 22, 1971 motion.
1
to be served on or before January 26, 1971.
Likewise, any evidence in opposition to such contentions which the Company desires to present should be filed as a part of the Company's case-in-chief, which is also due on January 26.
Our determination that the antitrust issues are encompassed in the amended complaint makes it unnecessary to grant the City's request for an investigation, because the Commission's Staff may develop any evidence deemed relevant to a complaint proceeding.
In addition, the Commission affirmed that the City's allega-tions.of anticompetitive conduct were proper matters for con-sideration under the Federal Power Act in the section 202 (b) interconnection proceeding (0.rder of Jan.uary 10, 1972, at 2) :
It is necessary and appropriate in the proper exercise of the Commission's responsibilities under'the Federal Power Act that the above-described allegations regarding anticompetitive conduct made by the City in its above-mentioned motions of December 6 and December 22, 1971, be treated as an amendment to the City's com-plaint in this proceeding.
(emphasis added) 22.
"The City did not present any testimony at the hearing on CEI's alleged anticompetitive practices nor did it cross-examine CEI's witnesses on this issue" (Applicants '
(CEI) Exhibit No.
21, at 14).
However, the City did intro-duce documentary evidence including the Bridges Memorandum.
Af ter hearing all the evidence, the Administrative Law Judge made the following findings with regard to the claims of anti-competitive behavior:
1.
The City's allegations that its dif-ficulties in maintaining service to its customers.are due in whole or in part to CEI's anticcmpetitive practices are not supported by the record in this consolidated proceeding.
(Initial Decision at :16.)'
2.
The Bridges Memorandum does disclose a public relations campaign to encourage the sale of MELP to CEI by cointing out the benefits of investor ownership.
(Initial Decision at 15; emphasis added.)
3.
(The Bridges Memorandum] also discloses that "during this period
[of MELP operating difficulties] the company has taken the position not to join or attempt to strengthen the attacks on the Muny system." (Initial Decision at 15; em-phasis added.)
4.
The Bridges Memorandum does not support a finding of anticompetitive practices or antitrust violations.
(Initial De-cision at 15.)
23.
These decisions on the antitrust issues were
~
clearly a necessary ingredient'to the Commission's judgment.
,.It is no longer open to debate that the Federal Power Commission, in deciding whether an interconnection pursuant to section 202(b) of the Federal Power Act would be in the public in-2 terest,. muste by reference to the policies embodied in the federal antitrust laws, adjudicate claims that a utility's operation is being impaired by another utility's anticompet-j itive conduct.
Indeed, the question of the Commission's anti-l trust review responsibility in such circumstances was squarely l
1 1
' e
~
~
presented to the Supreme Court in Gulf States Utilities Co.
v Federal Power Commission, 411 U.S. 747 (1973).
The matter there concerned FPC approval of a utility's application to issue bonds to refinance its debt pursuant to section 204 of the Federal Power Act (16 U.S.C. S824c).
The Commission and Gulf States argued that antitrust allegations should not be considered in connection with bond refinancing applications since " allegations of anticompetitive conduct properly may 4
be raised and fully considered in other proceedings (such as those] related to interconnections under section 202 of the Act * * * " (411 U.S.
at 757).
The Court recognized that the FPC was already considering antitrust issues in section 202 interconnection proceedings, but concluded that this did not obviate the need to hear and determine such allegations in the. context of bond refinacings.
The Federal Power Act, it declared, (411 U.S. at 758-759) :
ce'tainly did not preclude the operation r
of the antitrust laws, and it vested the Federal Power Commission with important and broad regulatory power in the areas described above.
This power clearly carries with it the responsibility to consider, in appropriate circumstances, the-anticompetitive effects of regulated aspects of interstate utility operations pursuant to SS202'and 203 and under like j-directive contained in SS205, 206 and 207.
The Act did not render antitrust policy irrelevant to the commission's reg-ulation of the electric power industry.
Indeed within the confines of a basic l
natural monopoly structure, limited com-petition of the sort protected by the antitrust laws seems to have been antic-1 pated.
(Citations omitted.]
l
24.
The Court's decision in Gulf States was that the public interest standard in section 204 of the Act re-quired consideration of antitrust allegations.
- However, the real significance of the opinion for present purposes is the Supreme Court's recognition that it is necessary and appropriate for the Federal Power Commission to consider,
.in a section 202 interconnection proceeding, whether a utility's actions have been anticompetitive, and the further recognition that the Commission has in fact regularly been performing this function in section 202 proceedings.
25.
This has also been the understanding of the lower federal courts.
Thus, in Northern Natural Gas Co.
v Federal Power Commission, 399 F.2d 953, 958 (D.C. Cir. 1968),
the D. C. Circuit stated:
Although the Commission is not bound by the dictates of the antitrust laws, it is clear that antitrust concepts are in-timately involved in a determination of what action is in the public interest and therefore the Commission is obliged to weigh antitrust policy.
And in City of Huntingburg, Indiana v Federal Power Commission, 498 F.2d 778, 783 (D.C. Cir. 1974), the court, citing Northern Natural Gas and Gulf States Utilities, further observed:
The commission is charged with the general responsibility of carrying out its regu-latory tasks in a manner that will advance the public interest.
Courts have long recognized that careful assessment of the i
potential effects of a proposed action on l
competition in the regulated industry is an integral aspect of any application of the public interest standard.
In the case at Bar, the Interconnection Agreement was properly filed as an inter-state rate schedule * *
- and was there-fore subject to the regulatory authority vested in the Commission by sections 205 and 206 of the Federal Power Act.
Gulf States made it clear that this regulatory authority ' carries with it the responsi-bility to consider * *
- the anticompeti-tive effects' of any proposed action by a public utility.
Accord: Northern California Power Agency v FPC, 514 F.2d 184 (D.C. Cir. 1975); Conway Corp. v Federal Power Commission, 510 F.2d 1264 (D.C. Cir. 1975), certiorari granted, 96 S.Ct.
355 ; City of Pittsburgh v Federal Power Commission, 237 F.2d 741 (D.C. Cir. 1956).
26.
It is, therefore, m'nifest that the Commission a
- in thd discharge of its section 202 review responsibilities had no choice but to examine and decide the City of Cleve-land's antitrust allegations.
And in point of fact, it plainly did so.
Having reviewed the evidence before it and finally concluded that no antitrust law or policy had been contra-vened by CEI in the respects alleged, any further inquiry into the same mixed fact-and-law questions by this Commission at the behest of the same parties or their privies is foreclosed by operation of the doctrine of collateral estoppel.
And l
l
,. ~ - -
1.
this is true not only with respect to the Bridges Memorandum, but also with respect to any other evidence that arguably could have been introduced in the FPC proceeding in support of the antitrust. charges but was not.
- See, e.c., United States v Silliman, supra, 167 F.2d at 617.
As the Supreme Court admonished in Yates v United States, 354 U.S.
- 298, 335-336 (1957):
l
- *
- the nonexistence of a fact may be established by a judgment no less than its existence, * *
- in other words, a party may be precluded under the doctrine of collateral estoppel from attempting to prove a fact that he sought unsuccessfully to prove in a prior action.
27.
Nor can this conclusion be avoided on the basis that the standard of review here under the " inconsistent
- with" language of Section 105c of the Atomic Energy Act is not embraced within the pbulic interest inquiry undertaken
<by the Federal Power Commission in proceedings under Section 202 of the Federal Power Act.
To the extent that Section 105c contemplates something more than actual violations of the antitrust laws as a measure of inpermissible behavior, its-i l
outer limits are marked by the incipiency concept embodied in Section 5 of the Federal Trade Commission Act.
As the Joint Committee Report accompanying Section 105c made clear, the objective of the statutory language icoking to situations
m
% ~.
" inconsistent with" the antitrust laws was to " nip in the bud any incipient antitrust situation."
3 U.S. Code Cong.
& Admin. New's, at 4944 (1970).
In this regard, Congress intended to reach under Section 105c all activities which either in fact violated the antitrust laws and policies or presented a reasonable probability of doing so.
Id.
28.
As spelled out in considerable detail in Ap-plicants' Prehearing Legal Brief, at pp. 24-54, which is incorporated herein by reference, this review standard is in essence synonymous with the standard applicable under Section 5 of the Federal Trade Commission Act.
The statu-tory provision is designed to reach all trade practices "which conflict with the basic policies of the Sherman and Clayton Acts even though such practices may not actually violate these laws" (Federal Trade Commission v Brown Shoe Co.,
384 U.S.
316, 321 (1966))., and thus "to stop in their j
incipiency acts and practices which, when full blown, would violate those acts" (Federal Trade Commission v Motion Picture Advertising Services Co.,
344 U.S.
392, 394-395 (1953)).
29.
The antirrust review responsibility of the FPC is plainly no less comprehensive.
That agency is also charged i
under its public interest standard with enforcing in section 202 (b) interconnection proceedings not only the antitrus' l
laws, but also "the policy expressed in the federal antitrust i
l
o.
-28.
statutes."
City of Huntingburg, Indiana v Federal Power Commission, supra, 498 F.2d at 788; and see Southern Louisiana Area Rate Cases v Federal Power Ccmmission, 428 F.2d 407, 422 n.ll2 (5th Cir. 1970), certiorari denied, 400 U.S. 950 (1971).
As the Supreme Court declared in Gulf States, supra, 411 U.S. at 759, the FPC's deliberations must take into ac-count "both the broad purposes of the (Federal Power] Act and the fundamental natural economic policy expressed in the antitrust law."
30.
In this connection, it is noteworthy that the courts in articulating the FPC's review rasponsibility in this area have used the same general reference to " antitrust laws" as employed by Congress in Section 105c of the Atomic Energy Act.
It is thus not just the Sherman Act or the Clay-ton Act which the FPC is to consider; in addition, Section 5 of the Federal Trade Commission Act is equally relevant to
~~
Section 202 proceedings before the FPC.
Accordingly, the 4
prohibition against practices that run counter to the under-lying policies of the Sherman and Clayton Acts, whether they be actual or incipient violations, is no less applicable to an evaluation of the antitrust implications in the context of a Section 202 review of interconnection arrangements by the FPC than to an evaluation of the antitrust implications in the context of a Section 105c review of nuclear license L
~; '.
applications by the NRC.
The basic standard for measuring alleged anticompetitive behavior is thus in each instance the same.
And once one of the two administrative agencies has made a final adjudication with regard to such matters, it is binding on the same parties and their privies in subseqvsnt litigation before the other agency.
31.
That is the situation here with respect to the allegations discussed above, and the referenced rulings by the FPC are entitled to collateral estoppel effect.
It mat-ters not that the FPC may have made other findings unrelated to its antitrust rulings and on the basis of those other findings ordered certain relief.
As Professor Moore points out:
- *
- the mere existence of another pos-sible ground for judgment, even though it abrogates the strict necessity of an adjudication upon a material issue, does not deprive the judgment of conclusive effect upon the issue if it was in fact detennined.
[13 J. Moore, Federal Practice and Procedure 10.443[5] at 3920-21.]
Indeed, this Commission operates on just such a basis.
The Licensing Board is obliged to make an antitrust finding under Section 105c (5).
If it makes an affirmative finding, it is still obliged under Section 105c (6) of the Act to consider other factors before fashioning appropriate relief, i e.,
license conditions.
But the latter determination under
,-,.3
.---_...-,,mm_..
,y_v_~...-
.. ~,. -.,
m Section 105c(6) plainly does not alter the import or effec-tiveness of the Licensing Board's adjudication under Sec-tion 105c(5).
Similarly, the obligation of the FPC to re-view other factors before fashioning relief which is in the public interest provides no basis for attaching less weight to the FPC's separate and independent antitrust judgment.
32.
For all of these reasons,CEI submits that the present motion should be granted.
The City of Cleveland, the NRC Staff and the Department of Justice, as parties, or privies to parties, in the FPC proceeding, Docket Nos. E-7631, E-7633 and E-7713, should be collaterally estopped from re-litigating here the issues relating to CEI's practices in the Cleveland area impacting on the CEI-MELP interconnection arrangements, possible acquisition by CEI of the MELP system, and customer conversions attributable to the,unreliability of MELP's electric power service.
To the extent that tes-timony and documentary evidence has been received into the record on such matters, it should be struck.
Respectfully submitted, SQUIRE, SANDERS & DEMPSEY By
_B_
--*' _*
- 1 -
Alan P.
Buchmann Counsel for The Cleveland Electric Illuminating Company 1
l I
Dated:
April 20, 1976.
w UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board In the Matter of
)
)
THE TOLEDO EDISON COMPANY and
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
Docket No. 50-346A COMPANY
)
(Davis-Besse Nuclear Power Station,
)
Unit 1)
)
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
)
(Perry Nuclear Power Plant,
)
Docket Nos. 50-400A Units 1 and 2)
)
50-401A
)
THE TOLEDO EDISON COMPANY, ET AL.
)
(Divis-Besse Nuclear Power Station,
)
Docket Nos. 50-500A Units 2 and 3)
)
50-501A
\\
l CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing
" Dismissal Motion Of The Cleveland Electric Illuminating Company With Respect To The Allegations Fully Litigated Before And Finally Decided By The FPC" were served upon
<<each of the persons listed on the attached Service List, by hand delivering a copy to those in the Washington, D.
C.
area and by mailing a copy, postage prepaid, to all others, l
all on this 20th day of April, 1976.
I l
SQUIRE, SANDERS & DEMPSEY A L__ _ _Maf_Ssese. _
By AIEn P.
Buchmann Counsel for The Cleveland Electric Illuminating Company
.m UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board In the Matter of
)
)
THE TOLEDO EDISON COMPANY and
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
Docket No. 50-346A COMPANY
)
(Davis-Besse Nuclear Power Station,
)
Unit 1)
)
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
)
Docket Nos. 50-440A (Perry Nuclear Power Plant,
)
50-441A Units 1 and 2)
)
)
' THE TOLEDO EDISON COMPANY,. ET AL.
)
(Davis-Besse Nuclear Power Station,
)
Docket Nos. 50-500A Units 2 and 3)
)
50-501A SERVICE LIST Douglas V.
Rigler, Esq.
Docketing & Service Section Chairman, Atomic Safety and Office of the Secretary Licensing 3oard U.S. Nuclear Regulatory Ccmmission Foley, Lardner, Hollabaugh Washington, D.
C.
20555
. and Jacobs Chanin Building - Suite 206 Benjamin H.
Vogler, Esq.
815 Connecticut Avenue, N.W..
'Roy P. Lessy, Jr., Esq.
Washington, D.
C.
20006 Jack R. Goldberg, Esq.
Office of the Executive Legal Di' recto Ivan W.
Smith, Esq.
U.S. Nuclear Regulatory Commission Atomic Safety and Licensing Board Washington, D.
C.
20555 U.S. Nuclear Regulatory Commission Washington, D. C.
20555 Joseph J.
Saunders, Esq.
Antitrust Division l
John M. Frysiak, Esq.
Department of Justice Atomic Safety and Licensing Board Washington, D.
C.
20530 U.S.
Nuclear Regulatory Commission Washington, D.
C.
20555 Steven M. Charno, Esq.
Melvin G.
Berger, Esq.
Atomic Safety and Licensing Janet R.
Urban, Esq.
Board Panel Antitrust Division U.S.
Nuclear Regulatory Commission Department of Justice Washington, D.
C.
20555 P. O. Box 7513 Washington, D.
C.
20044
m
-Reuben Goldberg, Esq.
' Thomas J. Munsch, Esq.
David C. Hjelmfelt, Esq.
General Attorney Michael D. Oldak, Esq.
Duquesne Light Company Goldberg, Fieldman & Hjelmfelt 435 Sixth Avenue Suite 550 Pittsburgh, PA 15219 1700 Pennsylvania Ave., N.W.
Washington, D.
C.
20006 David Olds, Esq.
William S. Lerach, Esq.
James B.
Davis, Esq.
Reed Smith Shaw & McClay Director of Law Union Trust Building Robert D. Hart, Esq.
Box 2009 1st Assistant Director of Law Pittsburgh, PA 15230 City of Cleveland 213 City Hall Lee A. Rau, Esq.
Cleveland, Ohio 44114 Joseph A. Rieser, Jr., Esq.
Reed Smith Shaw & McClay Frank R. Clokey, Esq.
Madison Building - Rm. 404 Special Assistant 1155 15th Street, N.W.
Attorney General Washington, D.
C.
20005 Room 219 Towne House Apartments Edward A. Matto, Esq.
Harrisburg, PA 17105 Richard M. Firestone, Esq.
Karen H. Adkins, Esq.
Donald H. Hauser, Esq.
Antitrust Secrion Victor A. Greenslade, Jr., Esq.
30 E.
Broad Street, 15th Floor The Cleveland Electric Columbus, Ohio,43215 Illuminating Company 55 Public Square Christopher R.
Schraff, Esq.
Cleveland, Ohio 44101 Assistant Attorney General Environmental Law Section Leslie Henry, Esq.
361 E. Broad Street, 8th Floor Michael M. Briley, Esq.
Columbus, Ohio 43215 Roger P.-Klee, Esq.
Pahl M.
Smart, Esq.
James R. Edgerly, Esq.
Fuller,-Henry, Hodge & Snyder Secretary and General Counsel P. O.
Box 2088 Pennsylvania Power Company Toledo, Ohio 43603 One East Washington Street New Castle, PA 16103 Russell J.
Spetrino, Esq.
Thomas A. Kayuha, Esq.
John Lansdale, Esq.
Ohio Edison Company Cox, Langford & Brown 47 North Main Street 21 Dupont Circle, N.W.
Akron, Ohio.44308 Washington, D.
C.
20036
[
Terence H. Benbow, Esq.
Alan P. Buchmann, Esq.
l A. Edward Grashof. Esq.
Squire, Sanders & Dempsey Steven A.
Berger, Esq.
1800 Union Commerce Building
' Steven B. Peri, Esq.
Cleveland, Ohio 44115
_ Winth. rop, Stims.on,_.Putnart.
& Roberts
_40_ Wall. Street New York, New York 10005
.g.
. -