ML19329D335
| ML19329D335 | |
| Person / Time | |
|---|---|
| Site: | Perry, Davis Besse  |
| Issue date: | 02/14/1977 |
| From: | Reynolds W, Zahler R CLEVELAND ELECTRIC ILLUMINATING CO., SHAW, PITTMAN, POTTS & TROWBRIDGE, TOLEDO EDISON CO. |
| To: | NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP) |
| References | |
| NUDOCS 8003050907 | |
| Download: ML19329D335 (28) | |
Text
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February 14, 1977
_i UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board In the Matter of
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THE TOLEDO EDISON COMPlud and
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i THE CLEVELAND ELECTRIC ILLUMINATING
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Docket No. 50-346A COMPANY
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(Davis-Besse Nuclear Power Station,
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Unit 1)
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THE CLEVELAND ELECTRIC ILLUMINATING
)
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Docket Nos. 50-440A i
(Perry Nuclear Power Plant,
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50-441A (Units 1 and 2)
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THE TOLEDO EDISON COMPANY, ET AL.
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(Davis-Besse Nuclear Power Station,
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Docket Nos. 50-500A Units 2 and 3)
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50-501A APPLICANTS' RENEUED MOTION FOR AN ORDER STAYING, PENDENTE LITE, THE ATTACHMENT OF ANTITRUST CONDITIONS
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1.
On January 14, 1977, Applicants filed with the Atomic Safety and Licensing Appeal Board
(" Appeal Board")
their motion for a pendente lite stay of the antitrust con-ditions which the January 6, 1977 Initial Decision of the Atomic Safety and Licensing Board
(" Licensing Board") mandated.
By order of January 17, 1977 (ALAB-364), the Appeal Board referred Applicants' motion to the Licensing Board without prejudice to a renewal of the motion before the Appeal Board if it was denied by the Licensing Board.
Applicants' request l
forastayhasbeendenied$bytheLicensingBoard (see " Memo-
)
randum and Order on Applicants' Motion for an. Order staying,
)
e a
8003050.fo[ n
, Pendente Lite, the Attachment of Antitrust Conditions",
docketed February 4, 1977), and Applicants now formally renew that motion before this Appeal Board.
2.
Based upon a review of the Licensing Board's Memorandum and order, Applicants do not believe it necessary to file a point-by-point response; Applicants' position is fully set out in our earlier filing, which, we believe, re-mains essentially unrefuted by the Licensing Board's remarks.-1/
However, certain specific comments by the Licensing Board do warrant a response, not only to underscore the appropriateness of granting the requested stay in the present posture of the proceeding, but also to insure that this Board not be left with a wrong impression as a result of a calculated impre-ciseness of word selection below.
3.
The Licensing Board begins its analysis of Ap-plicants' motion by subscribing to the Department of Justice's
. mistaken notion that issuance of licenses with the Board's conditions temporarily stayed will not preserve the status quo, 1/
While the Licensing Board seemed for some reason to be disturbed that Applicants' motion was "long on polemics", it i
went out of its way, in what we regard as uncharacteristic fashion for a presumably dispassionate trier-of-fact, to sug-gest that "perhaps Applicants should consider revision or abandonment of the CAPCO agreements" (slip op. at 24), and that l
" (i] f (Applicants] do not want the [ nuclear] license, then they need not observe the [ license] conditions" ' (slip op, at 27-28).
L Such contentious statements not only reflect the Licensing Board's callous di* regard for the public interest in these nuclear facilities (particularly in Ohio and Pennsylvania which are among the states hardest hit by the current " energy crisis"),
they are also symptomatic of the prejudicial' attitude displayed by the Licensing Board towards Applicants throughout these proceedings..
, "since power from the nuclear stations will have an immediate impact on competitive conditions" (slip op. at 2-3; emphasis added).
Whatever theoretical appeal such an argument might have, in the practicalities of the real world it is simply inaccurate.
No power from Perry Units 1 and 2 or from Davis-Besse Units 2 and 3 will be available to anyone for several years.
Nor will commercial power flow from Davis-Besse Unit 1 "immediately".
Moreover, even when that unit does begin com-mercial operation -- now anticipated to be not earlier than July, 1977 -- speculation as to its "immediate impact on competitive conditions" is belied by the fact that Applicants have previously offered access to that unit and there have not yet been any commitments by other entities to participate (see also discussion infra at 1 21).
4.
What a stay of the license conditions would in-volve, then, is not any delay associated with the distribution or use of nuclear power, but instead a delay in the implementa-tion of those requirements which bear no meaningful relation i
to operation of the nuclear facilities, i,.e.,
those "other ben-efits" that the Licensing Board determined should be made 2/
available as a general matter to other electric entities.-
2/ The Licensing Board loosely states that Applicants have taken issue with "only one of ten license conditions we ordered" (slip op. at 17). ~This tactic of restating Applicants' position in.somewhat altered form so as to make it easier to refute has been a favorite of-the Licensing Board throughout this proceeding.
- See, e.g.,
n.5, infra.
In fact, Applicants' stay request is premised in part on the fact that they consider all the license (Continued next page) l
. Applicants continue to believe that before such a. wholesale restructuring of the electric utility industry is mandated, a full review should be undertaken by this Board of the under-lying premises on which the Licensing Board elected to require Applicants to become, among other things, a common carrier of electric energy.
Only in that way can the status quo be preserved pending the present appeal.-3/
5.
Now that Applicants' exceptions have been filed, the Appeal Board is obviously better informed as to the full extent of Applicants' conviction that the Initial Decision is fraught with error.
While we are firmly convinced that the exceptions taken can and will be sustained in their en-tirety, we cannot agree with the Licensing Board's statement that our burden on the stay motion requires a demonstration of "a strong probability that no ground of violation will remain 2/ Cont'd conditions objectionable as requiring the provision of services that bear no relationship to participation in the nuclear fa-cilities under application for a license.
To " walk away" from i
that issue simply by inaccurately restating. Applicants' position as being addressed only to a single condition involving future units is as sophomoric as trying to minimize Applicants' dis-agreement with the Initial Decision with the misleading state-ment that Applicants list "only nine possible grounds for re-versal" (slip op. at 6).
3/
The Licensing Board may well hold to the view that pres-ervation of the status quo is undesirable.
However, since l
its attitude derives from a faulty legal analysis as well as a colored " sifting" of the facts, this Board should judiciously hold in abeyance the implementation of the drastic relief set forth in the license conditons until it has determined for itself that there is indeed reason to disturb the status quo.
. upon which to base relief" (slip op. at 4).
The question at this stage is whether wholesale implementation of the Licensing Board's conditions should take place pending appeal.
Even assuming arguendo that Applicants' exceptions should appear well taken only as to some of tne alleged violations, that would still be sufficient reason to grant a stay until this Board can determine, on review of the record as a whole, what relief (if any) would be appropriate in circumstances recognizably different (at the present time) than those found to exist by the Licensing Board.
Thus, the Licensing Board misconceives the very nature of the present inquiry in con-cluding that the Appeal Board need only be satisfied that there arguably exists a basis for applying some relief.
It is the particular relief set forth in the license conditions that we are asking be stayed pending appeal, not some other as yet unarticulated relief.
6.
There is, we submit, strong reason for this Board to grant Applicants' request.
As explicitly stated by the Licensing Board in its Memorandum and Order (slip op. at 8),
its antitrust determinations and the relief formulated on the basis thereof were structured without "any assessment as to whether competition between electric entities in the electric l
utility industry is, in fact, in the public interest."
The l
l statement to this effect is unequivocal (pd. ) :
1 1
l We were unaware that we are empowered to decide this broad policy issue which we would think is better addressed to Congress than to the NRC.
We are aware that this assessment is not the test set forth in Section 105 (c) of the AEC Act.
We are equally certain that the antitrust laws do not re-quire such an appraisal in cases alleging violations of the Sherman Act.
7.
This understanding of the Commission's anti-trust review responsibility is so fundamentally wrong as to render virtually every facet of the Initial Decision fatally suspect.
Antitrust forums inherently have the power, and in fact the obligation, to decide the " broad policy issue" of what sort of market structure and behavior in the indus-trial consext presented best serves the public interest.-4/
Competition for its own sake does not always promote the most i
efficient allocation of resources.
See, e,.g.,
FCC v RCA Com-munications, Inc., 346 U.S.
86, 97 (1953) ("Herely to assume 4/
- See, e.c.,
Petition for Amendment of 18 C.F.R., Part'141, l
DocEet No. RF432, 49 F.P.C.
588, 589 (1973), aff'd sub nom.
Alabama Power Co. v FPC, 511 F.2d 383 (D.C. Cir. 1974) (appli-cation of antitrust policy to public utilities requires a balancing of the public interest since incrdased competition may sacrifice and retard the investment required for orderly l
growth and development and therefore be contrary to the public l
interest); California v FPC, 296 F.2d 348, 353 (D.C. Cir. 1961),
l rev'd on other grounds, 73T U.S.
482 (1962) ("sometimes regu-lated monopoly, or a measure of controlled monopoly, is in the public interest");_ Pennsylvania Water & Power Co. v FPC, 193 F.2d 230, 234 (D.C. Cir. 1951), aff'd,.343 U.S.
414 (1952) ("compe-tition can assure protection of the public interest only in an industrial setting which is conducive to a free market and can have no place in industries which are monopolies because of public' grant, the exigencies of nature or legislative preference for a particular way of doing business").
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that competition is bound to be of advantage, in an industry so regulated and so largely closed as (the communications industry] is not enough").
As Mr. Justice Frankfurter em-phasized in RCA Communications, supra, 346 U.S. at 92:
It is only in a' blunt, undiscrim-inating sense that we speak of com-petition as an ultimate good.
Cer-tainly, even in those areas of economic activity where the play of private forces has been subjected only to the negative prohibitions
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of the Sherman Law * *
- this Court has not held that competition is an absolute.
See Chicago Board of Trade v. United States, 246 U.S.
281 ((1918)}; ***
Prohibitory legislation like the Sherman Law, defining the area within which " competition" may have full play, of course loses its ef-fectiveness as the practical limi-tations increasc; as such consider-ations severely limit the number of separate enterprises that can efficiently, or conveniently, exist, the need for careful qualification of the scope of competition becomes manifest.
Surely it cannot be said in these situations that competition is of itself a national policy.
To do so would disregard not only those areas of economic activity so long j
committed to government monopoly as no longer to be thought open to i
competition, such as the post office,
- *
- and those areas, loosely spoken of as natural monopolies or
-- more broadly -- public utilities, in which active regulation has been found necessary to compensate for the inability of competition to pro-vide adequate regulation.
[ Emphasis
~added.]
i
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. 8.
The Licensing Board's admitted failure to assess the charges of anticompetitive conduct in this pro-ceeding cognizant of "the need for careful qualification of the scope of competition" (pd.) in the " basic natural monopoly structure" of the electric utility industry (Gulf States Utilities Co. v FPC, 411.U.S. 747, 759 (1973)) goes far to explain the error that pervades the entire Initial Decision.
Contrary to the Licensing Board's understanding of its responsibility under Section 105 (c) of the Atomic Energy Act, antitrust review cannot be undertaken in the present context as though this industry is no different from the shoe industry, for example.
Here, we are dealing with "a highly-regulated, natural-monopoly industry wholly dif-ferent from those that have given rise to ordinary antitrust principles."
otter Tail Power Co. v United States, 410 U.S.
366, 382 (1973) (Stewart, J. dissenting).
As pointed out in Hawaiian Telephone Co. v FCC, 498 F.2d 771, 777 (D.C. Cir.
1974):
The whole theory of licensing and regulation by government agencies i: b::cd on the belief that com-petition cannot do the job of regulation in that particular industry which competition does in other sectors of the economy.
9.
This does not mean that the antitrust laws play-no role in a regulated context, and Applicants have f
never sought to defend their challenged behavior on any such
h
. basis.-5/
It does mean, however, that an application of the antitrust laws must take into account those regulatory and economic forces in the marketplace which argue forcefully against the promotion of competition as an end in and of itself.
Just as the existence of government regulation can-not be read so broadly as to immunize Applicants entirely from antitrust scrutiny (see Cantor v Detroit Edison Co.,
U.S.
, 96 S. Ct. 3110 (197 6) ), so, too, the underlying purpose of the antitrust laws to enhance competition cannot be blindly applied to undermine the very market structure that government regulation was. devised to protect.
Hawaiian Telephone Co. v FPC, supra, 498 F.2d at 777.
Yet, by its own account, the latter course is precisely the one taken by the Licensing Board.
10.
The proper approach, of course, would have been the one urged upon the Licensing Board by Applicants from the outset -- i.e.,
to reconcile the competing philoso-phies of the regulatory and antitrust regimes in terms of a careful assessment of the public interest.
- See, e.g., Northern 5/
The Licensing Board, both in its Initial Decision and in Its Memorandum and Order denying a stay of license condi-tions, uses the " straw man" technique of conveniently dis-missing Applicants' arguments relating to the antitrust sig-nificance of government regulation by overstating Applicants' position to be other than as consistently set forth by Appli-cants throughout the proceedings.
Compare Initial Decision at 236 and Memorandum and Order at 7 with Prehearing Legal Brief l
of the Applicants at 67-120 and Applicants' Joint Brief In I
Support Of Their Proposed Findings Of Fact And Conclusions Of I
Law at 108-208.
l l
l t
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1 ;
Natural Gas Co. v FPC, 399 F.2d 953, 959 (D.C. Cir. 1968);
Latin America / Pacific Coast S. S. Conf. v Federal Maritime Commission, 465 F.2d 542, 545 (D.C. Cir. 1972); S.S.W.,
Inc.
v Air Transport Ass'n of America, 191 F.2d 658, 661 (D.C.
Cir. 1957), certiorari denied, 343 U.S. 955 (1952).-6/As the Supreme Court admonished in FCC v RCA Communications, Inc.,
supra, 346 U.S. at 92, "it is not too much to ask that there be ground for reasonable expectation that competition may have some beneficial effect."
To make that assessment, it is well recognized that:
l l
The application of antitrust policy to public utilities requires a bal-t ancing of the public interest in energy supply at a reasonable price so as to achieve the most efficient allocation of our limited resources against the potential anticompetitive effects of the proposed action.
[ Emphasis added.]
Petition for Amendment of 18 C.F.R.,
Part 141, Docket No. R-432, supra, 49 F.P.C. at 589.
See also Cantor v Detroit Edison Co.,
6/
Such a reconciliation of the antitrust laws with the economic and legal barriers to competition in the industry would have required the Licensing Board to give recognition to the following legal principles which were urged by Appli-cants below but ignored:
(a) private action which would otherwise be suspect under the antitrust laws may be entirely permissible when taken in direct furtherance of a regulatory
. policy (see Silver v New York Stock Exchange, 373 U.S.
341 (1963); Gordon v New York Stock Exchange, 422 U.S.
659 (1975));
and (b) private action which would otherwise be suspect under the' antitrust laws may be entirely permissible where its pur-pose and effect is to-ameliorate more restrictive regulatory policy (see United States v Citizens & Southern National Bank, 422 U.S. 86 (1975)).
U.S.
96 S. Ct. 3110, 3120, 3122 (1976); cf,. United States v Marine Bancorporation, 418 U.S.
602, 606 (1974).
11.
The Licensing Board states that such a public policy assessment is not contemplated by Section 105 (c) of the Atomic Energy Act.
This reading of the. statute can only proceed on a miscanception that it was enacted in a vacuum.
Congress was surely mindful of the regulated nature of the electric utility industry at the time it considered this anti-trust legislation.
In instructing the Commission to assess 1
the direct impact of issuance of a nuclear license on the market structure within that regulatory framework, Congress fully contemplated an application of the " antitrust laws" in the same respect as undertaken by the courts.
That this re-quires a comparable assessment at the administrative level of the public interest through a reconciliation of the diver-gent philosophies underlying, in this instance, the Sherman Act, on the one hand, and government regulation, on the other hand (see 11 9 and 10, supra), is confirmed in precise terms l
in the Joint Committee Report accompanying the 1970 amendments.
As there stated (H. R.
REP. NO. 1470, 91st Cong., 2d Sess.,
reprinted in (1970]
U.S. CODE CONG. & AD. NEWS 4981, 5012):
Normally, the committee expects the Commission's actions under paragraphs (105 (c) ] (5) and (6) will harmonize both antitrust and other public r
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. interest considerations as may be involved.
[ Emphasis added.J2/
12.
Equally important -- especially in terms of the present stay application -- is that Congress directed the Commission in Section 105 (c) (6) of the Act to fashion appropriate relief to cure the " inconsistent situations" i
it found to exist with special and separate attention to the public interest factor.
At no time Itas the Licensing Board attempted to assess this factor in the context of appropriate 8/
relief.~
Its error in failing to consider this " broad policy l
issue" in reaching its conclusions on the liability question is thus compounded by ignorning the.public interest in framing a remedy.
And the defect is exacerbated to even a greater degree by disdaining to consider the public interest in con-nection with Applicants' present stay request.
13.
Nor is it any answer in this regard to sweep aside. such concerns with the backhanded statement that "[w] hat-4 7/
Such an understanding of the Commission's responsibility I
under Section 105(c) obviously does not " nullify" Section 105(c) as the Licensing Board appears to suggest (slip op, at 7, n. *).
This suggestion is, in any event, grounded on the Licensing Board's " straw man" argument ascribed to (but in fact never made by) the Applicants "that legal and economic barriers some-how remove the electric utility industry from the application of the antitrust laws" (slip op. at 7).
8/
When it framed the issues and matters in controversy on L
liaEility in Prehearing Conference Order No.
2, dated July 15, 1974, the Licensing Board explicitly declined to address issues relevant to formulating appropriate relief until the inconsistent situation had been established (Prehearing Order No. 2 at 13-14).
Moreover, Applicants' requests to address in advance such issues, including public interest considerations, in the evenu an in-consistent situation was found to exist,,were ignored by the Licensing Board.
. ever the public interest may be, we are certain that it does not lie in the continuation of a pattern of violations which we have.found to be massive in content and oppressive in design" (slip op. at 31),
Such a finding is necessarily predicated at the very least on a faulty legal analysis as to the manner in which the antitrust laws should be applied to the electric utility industry.
Accordingly, the conclu-sion reached under similar circumstances in Hawaiian Telephone Co. v FCC, supra, 498 F.2d at 777, has equal application here:
Without in any way derogating the merits of the competitive free enterprise system in the economy as a whole, we cannot accept the action of the [ agency] here in a tightly regulated industry, sup-ported by an opinion which does no more than automatically equate the public interest with additional competition.
i 14.
In these circumstances, Applicants believe that more than an adequate showing of error below has been demonstrated to warrant a grant of the stay request.
No leg-itimate purpose can be served by precipitous implementation of license conditions framed without regard to the public interest in order to remedy alleged antitrust inconsistencies that are themselves of suspect validity for failure to assess I
the challenged conduct in terms of.the public interest.
We could go on to document the numerous ways in which the Li-censing Board's error impacts directly on its factual findings
1 h
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and legal conclusions, such as its faulty reliance in this 9/
context upon the per se doctrine, to cite but one example.-
In addition, we could prolong this discussion by reference i
to the litany of other equally egregious errors that serve 10/
l to sustain the Licensing Board's Initial Decision."~
Such i
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Courts have routinely recognized that practices normally i
deemed to run afoul of Section 1 of the Sherman Act as unlawful Eer se restraints of trade may be perfectly legitimate, and even competitively desirable, in circumstances where increased competition is not in the public interest.
See, e.c;., United States v Citizens & Southern National Bank, supra, 622 U.S. at 100, 112-14 (alleged price-fixing scheme reflected in similar rates and service charges of correspondent and associate banks il not condemned out of hand as aer se violation, but examined and found to be reasonable in lig3t oT~ Georgia banking regulations);
United States v Pan American World Airways, 193 F.
Supp. 18, 22, 33-34 (S.D.N.Y. 1961), rev'd on other grounds, 371 U.S.
296 (1963) (approving territorial allocation scheme among shipping company, airline and joint venture formed by them); Chastain v American Tel. & Tel. Co.,
351 F. Supp. 1320, 1321 (D.D.C. 1972) l (scope and nature of control over regulated industry may bring ITMS action preventing competition in mobile telephone market within legal boundaries); United States v Morgan, 118 F. Supp.
621, 687-89 (S.D.N.Y. 1953) (syndication agreements containing price maintenance clauses binding on underwriters and resale price maintenance clauses binding on selling groups or selected dealers held permissible because of sui generis situation);
United States v National Football League, 116 F. Supp. 319, 321 (E.D. Pa. 1953) (upheld allocation of marketing territories ac-complished by a prohibition on telecasting of outside games t
l into home territories of other teams playing at home); In re Coca-Cola Co., 3 Trade Reg. Rep. 1 21,010 (FTC, Oct.
8, 1975),
(distribution agreements containing terri,torial allocation clauses which were binding on bottlers held to be reasonable restraints).
10/
The Licensing Board has seen fit in its most recent Memo-randum and Order (slip op. at 15-17) to " supplement" the Initial Decision by commenting on matters that more appropriately should have been treated in the Initial Decision.
Applicants believe such action itself to constitute error.
In any event, suffice it to say that the comments by the Licensing Board on the Penn-sylvania Economy League and the Department of Justice business review clearance are as in error as the previous findings in the Initial Decision.
(Continued next page)
I !
argument is, however, more appropriately left to our Appeal i
11/
Brief.--
'For present purposes, it is, we think, enough to 10/ Cont'd In addition, the Licensing Board has continued the repe-titious error running throughout the Initial Decision of re-ferring to Applicants in the plural when it really means one
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specific Applicant (see, e.g.,
slip op. at 5
(" Applicants' territorial allocations" where there never has been even an allegation that Duquesne Light company entered into " territorial allocations"); slip op. at 15 (contrary to assumption by Li-censing Board, " Applicants" did not offer jointly the testimony
,of Mr. Moran or of the Pennsylvania Economy League; the former was offered by Toledo Edison and the latter by Daquesne, and in each instance separate counsel for each company conducted the direct examination); slip op. 30-31 (alleged customer trades between " Applicants")).
This objection goes, of course, not i
only to the convenient misuse of the plural possessive in cir-cumstances where the evidence requires individual treatment, but also to the failure of the Licensing Board to make separate findings under Section 105 (c) as to each Applicant and to frame separate license conditions for each Applicant tailored to the particular inconsistent situation that the Licensing Board found to exist in each of the respective service areas.
A 11/ We would note in passing, however, that the Licensing Board's assertion that the Waterford decision (Louisiana Power
& Light Co.. (Waterford Steam Generating Station, Unit No. 3),
LBP-74-78, 8 A.E.C. 718 (1974), a? peal dismissed, ALAB-258, 1 N.R.C.
45 (1975)) established tae jurisdictional authority of the Commission to impose license conditions that require relief
).
as to future nuclear units (slip op. 7-8), is not well taken.
In Waterford,.the private utility willingly offered, and in fact itself proposed, imposition of a license condition dealing with l
future nuclear units.
The controversy in that proceeding did not even involve future units; it centered only on the question whether the condition proposed would also include access to the immediate Waterford Unit 3.
The appeal board in Waterford carefully noted that it had not considered any aspect of the licensing board's decision other than that embraced in the appeal (1 N.R.C.
at-48, n.6), which did not raise the jurisdictional question regarding future nuclear units.
l Here, of course, Applicants have readily expressed their j
. willingness to grant access to the subject nuclear facilities l
(App. 44), but have consistently maintained that the Commission ha~s no authority to condition as-yet-unapplied-for nuclear licenses.
Waterford never reached that question, and, in view l
(Continued next page) l l
, 1 know that the Licensing Board failed "to make any assessment as to whether competition between electric entities in the electric utility industry is, in fact, in the public interest" (slip op. at 8) to render the Initial Decision sufficiently suspect to stay temporarily imposition of the license con-ditions pending appeal.
15.
The injury to Applicants if these license con-ditions are allowed to a" tach while the appeal is prosecuted l
has been explained in our earlier filing.
The Licensing Board's failure.to grasp the serious nature of that injury is but t
another reflection of its unfortunate inability to comprehend the most basic operating fundamentals of the electric utility industry.
It is not the mere inconvenience of additional regulatory filings, or the prospect of negotiations with other i
non-Applicant entities, that is the principal cause for Appli-cants' concern.
Far more troublesome is the realization that 4
the license conditions, as now framed, require a disruptive restructuring of-relationships with other electric entities that will have a serious, unsettling' impact on the utilities and their customers.
To require that steps be taken in the direction of implementing license conditions which in all like-lihood will be altered, or even eliminated altogether, on appeal 11/ Cont'd l
of the fact that the Licensing Board Chairman here was a member j
of the Waterford panel, we are, to say the least, astounded at the suggestion to the contrary in the most recent Memorandum and Order filed below.
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, is unnecessarily costly for all concerned -- and the cost is one which cannot ever be recouped.
16.
Moreover, in order for Applicants to accommodate the demands placed on their respective systems by the license conditions, they must reassess all of their planning pro-jections with respect to their existing and prospective gen-eration and transmission facilities.
This involves an ir-retrievable commitment of resources and time, a commitment which could decidedly better serve the public interest if de-ferred until the nature and scope of the license conditions to be affixed were no longer in doubt.
Planning an electric system to insure an adequate and steady supply.of power to the consumer is no easy task.
It already involves enough imponderables to make it an inexact science, and the conse-quences of a miscalculation can be dramatic -- as has been painfully demonstrated in the natural gas industry in recent months.
Once the present license conditions take effect, Ap-plicants will be forced to undertake expensive plans for meeting future demands os their systems.
The third-party wheeling condition alone suggests immediate planning for an by-crease.in. transmission transactions. Nor is it likely that existing generation facilities will be adequate to serve new loads which are outside the CCCT but can, under the Licensing Board's conditions, effectively " tap into" the nuclear power from the
4 12/
subject facilities.--
17.
These considerations cannot be discounted as nothing more than fears based upon conjectural speculation i
about events that might occur at some indefinite time in the The system p'anning and commitment of resources l
future.
1 i
12/
While the Licensing Board stated that it " anticipated" most of the power would stay in the CCCT, obviously system planning cannot be undertaken on the basis of "antleipation".
Moreover,.the anticipations of the Licensing Board below would I'
be a particularly poor yardstick in view of its remarkable l
misconception of industry operations.
For example, the Li-censing Board equates the exportation of nuclear power under its license conditions to " regional power exchange transactions (by Applicants] which involve exports of power fron. the CCCT to neighboring power pools".
What the Licensing Board fails to recognize, however, is that fundamental to the concept of regional power exchanges is that such " exchange" transactions are necessarily mutual.
Applicants do not, and never have i
constructed facilities for the purpose of " exporting" the output of those facilities.
When an individual Applicant sells power to a neighbor, it fully expects that at some time in the future a reciprocal " exchange" transaction will take place.
j This expectation is fully supported by an NRC Staff study con-ducted of Applicants' energy transfers with other systems in 1973 (see App. Exh. 104).
On the other hand, if a non-Applicant entity takes power from a facility designed, constructed and i
operated by an Applicant and sells that power outside the Ap-plicant's service area, there is no guarantee that the non-Applicant exporting entity t#111 ever receive a reciprocci
" exchange" transaction in the future.
Thus, the sale represents L
& pecuanent loss of capncity and enarev.- ehe icng-term result l
of which will be ha*=ful t: Luth the Applicant and CCCT non-l Appi euau entities alika.
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The. chief proponent of this view is the Department of l
Justice (see filing of January 26, 1977 at 9-11).
The cases cited by the Department do not, however,. stand for the broad propositions claimed.
For example, in Connecticut v Massachu-setts, 282 U.S.
660 (1931), the Court held that connecticut could not get an injunction on the basis that Massachusetts might at some time in the future-act in disregard of a War De-partment order.
Applicants do not question the validity of that ruling.
However, the. situation here is significantly different.
Applicants' concern is that entities will act 'in l
(Continued next page)
towards new facilities must take place now.
It is hoped, although not fully expected, that those choosing to par-ticipate in the subject nuclear units will move with care and caution in evaluating their needs for, and then re-questing, services under the license conditions, just as the Department of Justice counselled (DOJ at 10-11, dated 14/
January 26, 1977).
But such deliberateness by others does not remove the urgency of revising long-range system plans to meet future electric needs as soon as the license conditions take effect.
Yet that undertaking is too costly to begin on the uncertain note that all to be done in the j
next year on the basis of the Licensing Board's suspect li-cense conditions may go for naught.
18.
The fact that Applicants' possible injury is measured largely in terms of financial loss is not a legiti-mate reason to minimize it.--15/ Irreparable injury can be 13/
Cont'd accordance with the order of the Licensing Board and as a result Applicants' planning process will be upset, requiring the expenditure of resources for additional facilities that may later be unnecessary.
Applicants know of no case that-stands for the proposition that such an injury is not a present injury justifying a stay.
I 14/
Such a careful evaluation should clearly precede a re-quest for wheeling services in order to insure that the request contains sufficient specifics to make the transaction meaningful and capable of pricing.
This commonsense approach to the wheeling question is, however, one which the Licensing Board surprisingly chose to condemn as unreasonable.
15/
We do note, however, that the disruption to present opirating relationships between Applicants and non-Applicant.
(Continued next page)
t
^
, determined in monetary terms as well as any other, and the contrary statement by the Licensing Board (slip op. 25) is 16/
simply in error.--
Nor does Stop H-3 Association v Volpe, 353 F. Supp. 14 (D. Hawaii 1972), cited by the Department of Justice in its filing opposing Applicants' stay request (DOJ filing of January 26, 1977 at 10), suggest otherwise.
i The court there reached the conclusion that monetary loss was an inadequate indication of " irreparable" injury because the posting of a bond, as required under the Federal Rules of civil Procedure, provided assurance of indemnification i
of such losses in the event an erroneous decision had been reached.
That reasoning is, however, inapposite in the present administrative context where no provision for the posting of l
a bond exists.
15/
Cont'd entities, and the uncertainty introduced by requiring immediate changes to be made which will in all likelihood have to be revised again after this appeal, reflect another measure of injury which is irreparable and cannot be expressed in terms of monetary loss.
16/
The Department of Justice cites Griggs v Cook, 272 F. 349 161-(N. D. Ga.), aff'd, 384 F.2d 705 (5th Cir. 1967)'for the proposition that planning costs do not constitute irreparable injury (filing of January 26, 1977 at 11 & n.5).
There, how-ever, it was not the party seeking the stay unat would have suffered.the planning costs.
In effect the court ruled that the school board could take the risk of continuing planning for.
the challenged school, if it so desired.
The Griggs case would have been applicable to this proceeding if the court had di-rected the school board to build a school it did not want to
. build, and thereafter refused a stay pending appeal of that order.
That was not, however, the ruling of the court.
. 19.
On the other' side; no persuasive argument has been advanced to indicate that issuance of the requested stay will cause substantial harm to the other parties in this proceeding.
To the extent the Licensing Board's con-trary view rests on its assertion that "[t]he adverse con-sequences of. isolated operation continue to be experienced by the maiority of non-Applicant entities within the CCCT" (slip op. at 30), it inexplicably once again seems content to rely on a knowing misrepresentatLxt of the actual facts of record.
In point of fact, there are no isolated electric entities within the CCCT.
20.
Nor is it meaningful to discuss the possible harm to others if the status quo is temporarily maintained on the basis of the Licensing Board's findings of a situation inconsistent with the antitrust laws.
The entire thrust of Applicants' stay request is that such a conclusion is flawed in numerous legal and factual respects.
If we are correct --
and we believe a strong showing of the likelihood of a suc-cessful appeal has been made '(see pp. 4 -16, supra) -- then a precipitous disruption of the status quo, rather than ju-dicious maintenance of it, would be the most harmful course to take insofar as the other parties are concerned.
This is, moreover, especially true in the present instance where the results reached below were admittedly derived without any
. assessment of the public interest in maintaining the status quo.
21.
There is also one other point to consider.
The essential question to be' asked in terms of evaluating the harm to others by granting a stay is whether there is something unique about maintaining.the status quo that would 17/
work to the disadvantage of parties other than Applicants.
i Clearly, with respect to Perry Units 1 and 2 and Davis-Besse Units 2 and 3, the answer is "no".
As far as David-Besse Unit 1 is concerned, that facility may b.agin commercial op-eration by the tail-end of the appeal (assuming no further schedule slippages).
When it does, however, meaningful access to that facility is readily available to non-Applicant i
entities in the CCCT, and, indeed, has been for some time (see_ App. Exh. 44).
Accordingly, maintenance of the status quo will not work to the detriment of the other parties.
While the Department of Justice disputes this by dismissing 17/
The Department of Justice disputes whether this is the proper standard by which to measure the third criterion (see filing of January 26, 1977 at 13).
The cases cited by the Department, however, confirm Applicants' statement of the appropriate standard.
In Fortune v Molpus, 431 F.2d 799, 805 (5th Cir. 1970), the stay was refused oecause, given the uni-versity's calendmr, maintenance of the status quo would require postponement of the challenged speech until the new school
. term, long after the subject matter of the speech had faded from public concern.
And in Kansas City Royal Baseball Corp. v Major League Baseball Players Ass'n., 409 F.
Supp. 233, 268-69 (W.D. Mo. 1976), maintenance of the status quo would have impeded the ability of Andy Messersmith to play the 1976 baseball season.
Measured by these decisions,there is no claim in this case that maintenance of the status quo would l
work a-particular hardship on any party.
I l'
,.---,,- --, - ~,,-
4
, Applicants' offer of access as containing " glaring" defi-ciencies (DOJ filing of January 26, 1977 at 4), the care-fully selected. portions of the record it makes reference to in support of its argument conveniently ignore other relevant testimony contradicting the Department's assertion.
See A-190 (Pace) 23-26; Mozer Tr. 3324-25; Hughes Tr. 3684, 3689, 3697-700, 3822-23, 4147-50.
Taken as a whole, Appli '
cants can confidently state that the record supports the conclusion that App. Exh. 44 does offer meaningful access to nuclear generation.--18/
18/
Apparently, the major concern as to the adequacy of App. Exh. 44 was over the reserve sharing commitment contained therein.
The view that commitment 3a imposes too heavy an obligation on small systems misconceives the terms of Appli-cants' offer.
It is extremely doubtful that a requirement that a system maintain reserves at least equal to its largest single block of nuclear power will ever impose an upper obli-gation on a system's reserve requirements; rather, it will in almost every case set the lower limit.
This is because the reserve requirement in commitment 3a is based on the assumption that entities will make reasonable requests for access to i
nuclear units as is set out in commitment 1.
Since nuclear power is baseload power and economic only when used as base-load power, it is not expected that any entity will seek access to the nuclear unit in excess of its baseload needs (Kampmeier 5887(3-6)).
However, the baseload portion of a system's load curve is not ever likely to ex=eed one-third of the system's peakload (Kampmeier 5887(7-17)).
Thus, if a system were to satisfy 100% of its baseload needs out of a. single nuclear unit it is unlikely that its reserve obligation would exceed 33% of its peakload.
And if the system made the simple decision to take its full baseload needs from two plants its reserves obligation would only be 17% of its peakload.
That is certainly not unreasonable; it is mcst probably a reserve requirement (Continued next page)
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,. 22.
For the foregoing reasons, Applicants re-spectfully submit that a stay of the license conditions should be granted.
The public interest cannot properly be served by implementing conditions formulated without any regard to the public interest.
Nor does it make good sense to sign off on relief which is predicated on antitrust findings made without any assessment of the challenged con-duct in terms of the public interest.
The error in this regard is plain and renders suspect all that was done below.
Until this Appeal Board has the opportunity to review the record and determine for itself whether Applicants should have been faulted for their conduct, every relevant consid-eration points in the direction of maintaining the status quo pending a decision on appeal.
WHEREFORE, Applicants request that their stay motion be granted and that the subject licenses issue without i
l 18/ Cont'd below what the system would prudently set for itself irre-spective of any requirement imposed by the license conditions.
l Moreover, since five nuclear plants are being licensed in i
this proceeding, a system would have the option of taking its baseload needs out of two or more facilities over a period of time to allow for its projected growth.
Under such an ar-rangement the system could reduce even more its reser,e ob-i ligations while providing for itself at the same time a more reliable source of bulk power.
n
.,. the Licensing Board's conditions attached thereto, but 19/
subject to the outcome of the present appeal.--
Respectfully submitted, SHAW, PITTMAN, POTTS & TROWBRIDGE I \\,7Dw M, _ 9 9_.
By:
Hm. Bradford Reynolds Robert E.
Zahler Counsel for Applicants Dated:
February 14, 1977.
4 i
1 l
19/
In this connection, we would expect the stay to apply l
with equal force to the outstanding construction permit for l
Davis-Besse Unit 1, which issued subject to the outcome of l
the instant antitrust proceeding.
Nor do we believe that the NRC Staff's ministerial attachment of the Licensing Board's conditions to that permit while Applicants' stay motion was pending should provide a basis for any different treatment of the suspect conditions in that context.
P
)
. UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board In the Matter of
)
)
THE TOLEDO EDISON COMPANY and
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
Docket No. 50-346A COMPANY
)
(Davis-Besse Nuclear Power Station,
)
Unit 1)
)
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
)
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 CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing
" Applicants' Renewed Motion For An Order Stayit.g, Pendente Lite, The Attachment Of Antitrust Conditions" were served upon each of the persons listed on the attached Service List, by hand delivering copies to those persons in the Wash-
- ington, D.
C.
area, and by mailing copies, postage prepaid, to all others, all on this 14th day of February, 1977.
f l
SHAW, PITTMAN, POTTS & TROWBRILGE n
By.
'. ).
,A a
i / w..
Mm. Bradford Reynolds; Counsel for Applicants
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,--,.--e
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-e
-e
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ii.
UNITED STAI::S OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board In the Matter of
)
)
THE TOLEDO EDISON COMPANY and
)
THE CLEVELAND ELECTRIC ILLUMINATING
)
Docket No. 50-346A COMPANY
)
(Davis-Besse Nuclear Power Station,
)
Unit 1)
),
}
THE CLEVELAND ELECTRIC ILLUMINATING
)
)
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 Alan S.
Rosenthal, Esq.
Ivan W.
Smith, Esq.
Chairman, Atomic Safety and Atomic Safety and Licensing Board Licensing Appeal Board U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, D.
C.
20555 Washington, D.
C.
20555 John M.
Frysiak, Esq.
Jerome E.
Sharfman, Esq.
Atomic Safety and Licensing Board Atomic Safety and Licensing U.S. Nuclear Regulatory Commission Appeal Board Washington, D.
C.
20555 U.S. Nuclear Regulatory Commission Washington, D.
C.
20555 Atomic Safety and Licensing Board Panel Richard S. Salzman, Esq.,
U.S. Nuclear Regulatory Commission Atomic Safety and Licensing Washington, D. C.
20555 Appeal Board U.S. Nuclear Regulatory Commission Docketing & Service Section Washington, D.
C.
20555 Office of the Secretary U.S.
Nuclear Regulatory Commission Atomic Safety and Licensing Appeal Board Panel Washington, D.
C.
20006 U.S.
Nuclear Regulatory Commission Washington, D.
C.
20555 Joseph Rutberg, Esc.
Benjamin H. Vogler,' Esq.
Douglas V.
Rigler, Esc.
Roy P. Lessy, Jr.,
Esq.
Chairman, Atomic Safety and Ofrice of tne Executive Licensing Roard Legal Director U.S. Nuclear Regulatory Commission Foley, Lardner, Hollabaugh and Jacobs Chanin Building - Suite 206 Washington, D.
C.
20555 815 Connecticut Avenue, N.W.
Washington, D.
C..20006
.i..
Joseph J.
Saunders, Esq.
Terence H. Benbow, Esq.
Antitrust Division A. Edward Grashof, Esq.
Dspartment of Justice
. Steven A.
Berger, Esq.
Washington, D.
C.
20530 Steven B. Peri, Esq.
Winthrop, Stimson, Putnam & Roberts Malvin G.
Berger, Esq.
40 Wall Street Janet R.
Urban, Esq.
-Antitrust Division P. O.
Box 7513 Thomas J. Munsch, Esq.
Washington, D.
C.
20044 General Attorney Duquesne Light. Company R3uben Goldberg, Esq.
435 Sixth Avenue David C.
Hjelmfelt, Esq.
Pittsburgh, PA 15219 Michael D.
Oldak, Esq.
Goldberg, Fieldman & Hjelmfelt David McNeil Olds, Esq.
Suite 550 Reed Smith Shaw & McClay 1700 Pennsylvania Ave., N.W.
Union Trust Building Washington, D..C.
20006 Box 2009 Pittsburgh,'P 15230 Vincent C.
Campanella, Esq.
Director of Law Lee A.
Rau, Esq.
Robert D.
Hart, Esq.
Joseph A.
Rieser, Jr., Esq.
1st Ass't Director of Law Reed-Smith Shaw & McClay City of Cleveland Suite 900 213 City Hall.
1150 Connecticut Avenue, N.W.
Cleveland, Ohio 44114 Washington, D.
C.
20035 Frank R. Clokey, Esq.
James R.
Edgerly,.Esq.
Spccial Ass't Attorney General Secretary and General Ccunsel Room 219 Pennsylvania Power Company Towne House Apartments One East Washington Ftreet Harrisburg, PA 17105 New Castle, PA 16103 Donald H.
Hauser, Esq.
John Lansdale, Esq.
Victor F.
Greenslade, Jr., Esq.
Cox, Langford & Brown William J.
Kerner, Esq.
21 Dupont Circle, N.W.,
Tha Cleveland Electric Washington, D.
C.
20036 Illuminating Company 55 Public Square Alan P.
Buchmann, Esq.
Cicveland,_ Ohio 44101 Squire, Sanders & Dempsey 1800. Union Commerce Building Michael M.
Briley, Esq.
Clevela~nd, Ohio 44115 Paul M.
Smart, Esq.
Ec. ward A. Matto, Esq.
Fuller, Henrv, _Hodge & Snyder P. O.
Box 2088 Richard M. Firestone, Esq.
. Toledo, Ohio 43603 Karen H.
Adkins, Esq.
Antitrust Section Russell J.
Spetrino, Esq.
30 E.
Broad Street, 15th Flcor Thomas A.
Kayuha, Esq.
Columbus, Ohio 43215 L
Ohio Edison Company Christocher R.
Schraff, Esc.
76 South Main-Street Assistant Attorney General-l Akron, Ohio 44308 Environmental Law section i
361 E.
Broad Street, 8th Ficor Columbus, Ohio 43215
-