ML19329E208
| ML19329E208 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 01/15/1972 |
| From: | Cowan B, David Williams ECKERT, SEAMANS, CHERIN & MELLOTT, WESTINGHOUSE ELECTRIC COMPANY, DIV OF CBS CORP. |
| To: | |
| Shared Package | |
| ML19329E203 | List: |
| References | |
| NUDOCS 8006110582 | |
| Download: ML19329E208 (1) | |
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DCFOlti: T!!M UNITUD STATI:S ATOMIC I:NEttCY COMMISSION In the Matter of )
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CONSUMERS POWCR COMPANY ) Docket Nos. 50-329
) 50-330 Midland Plant, Units 1 and 2 )
BRIEF OF WESTINGHOUSE ELECTRIC CORPORATION IN SUPPORT OF MOTION FOR RECONSIDERATION OF ORDER DENYING WESTINGHOUSE MOTION TO QUASH SUDPOENA INTRODUCTION This brief is submitted by Westinghouse Electric Corporation (" Westinghouse") in support of its Motion for Reconsideration of Order Denying Westinghouse Motion to Quash Subpoena. The facts are as follows:
On November 23, 1971, the Atomic Safety and Licensing Board (the " Licensing Board") hearing the application of Consumcrs Power Company for a license to construct Midland Plant Units 1 and 2 (the " Midland pro-
< ding") issued an oral order or subpoena to Westing-house requiring the production of three Westinghouso 80 06110
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. a proprictary reports (the " Reports") (Tr. 5020-5030) .1 In response to this subpoena, Westinghouse on December 7, 1971 filed a Motion to Quash Subpoena (the " Motion") ,
setting forth therein a variety of reasons for said Motion. The Motion was accompanied by a letter to Chair-man Arthur W. Murphy of the Licensing Board, requesting permission to filo a brief and an opportunity to present oral argument in support of the Motion. The Licensing Board initially did not respond to these requests.
Rather, on December 22, 1971, the Licensing Board issued an " Order with Respect to Various Motions Filed in this Proceeding", in which, inter alia, it denied the Motion and requested Westinghouse to file and serve arguments and supporting data "to sustain the claim that the infor-mation in question is proprietary". The procedure being followed was clarified by Chairman Murphy on December 27, 1971 and Westinghouse was requested to submit a brief 1
The reports are: (1) westinghouse Report WCAP 7153-L " Investigation of Chemical Additives for Reactor Containment Sprays" (Propricta ry) ; (2) Westinghouse Report WCAP 7190-L " Evaluation of Protective Coatings for Use in Rcactor Containment" (Proprietary); and (3) Westinghouco Report WCAP 7499-L " Topical Report - Elemental Iodino Rc-moval by Reactivo Sprays" (Proprie ta ry) .
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by January 15, 1972 in support of the points raised in the McLion. In adoition, the Chairman suggested that Westinghouse might file a motion to reconsider the Licensing Board Order of December 22, 1971 denying the Motion. This brief and accompanying Motion for Reconsideration of Order Denying Motion to Quash Subpoena (the " Motion for Reconsidera-tion") are filed in response to that request.
The Midland proceeding involves the application of Consumers Power Company for a construction license.
The Babcock & Wilcox Manufacturing Company (B&W), a com-petitor of Westinghouse, has contracted to supply the nuclear steam supply system for the plant. In consider-ing this brief and motion, it must always be recalled that Westinghouse is not a party to the Midland proceeding nor is Westinghouse the vendor whose nuclear equipment is being purchased for use in the proposed Midland plant.
Rather, Westinghouse is an outside, third person to the proceedings, and an attempt is being made to drag West-inghouse reports into a proceeding in which Westinghouse is not othorwiso involved.
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u StEMAftY OF AltCtHCF3T The basic position of Westinghouse, as more fully explained in the Argument below (pp. 5-33) can be summarized as follows:
(1) The Licensing Board has determined that the reports are not needed in the Midland proceeding, a..d in the absence of a finding of need and relevance, the re-ports need not be produced.
(2) Even if the threshold finding of need and relevance were made, the reports are proprietary to
, Westinghouse and should not be required to be produced in a proceeding in which Westinghouse is not a party and is not a vendar of nuclear equipment to the applicant.
If inquiry is to se made into the proprietsry nature of the reports, the test to be applied is whether the material is customarily held in confidence by the 1
originator, and a plying that test, the reports are cicarly proprietary under applicable law and regulations.
(3) As a matter of public policy, duo process and the orderly conduct of administrativo proceed-ings, the reports should not be requi* od to bo produced.
Production of these and similar reports in this and other b
hearings by a non-party competitor would constituto an unreasonabic burden on Westinghouse, when taken in the context of requiring a person not otherwisc involved in certain proceedings to appear and defend in each of such proceedings its right not to disclose trado secrets or commercial, privileged or confidential information.
ARGliMENT I. The Absence of a Required Showing of Need and Relevance Regarding the Reports Requires That the Subrocna Be Quashed This Licensing Board determined at least as early as June 25, 1971, that one prerequisite to the production of the Westinghous? reports was a demonstra-tion of "nced" for such reports (Tr. 2303) , and that no such need existed (Tr. 2301). In this analysis the Board was clearly correct.
Initially, the reports under consideration woro requested by the Saginaw valley Intervenors (the
- Inter-venors") from the Atomic Energy Commission (the "AEC# or
the " Commission") under 5 2.744 of the Regulations of the ACC. (10 C.P.R. $ 2.744) (Tr. 1417; 1549).2 That section states, in rolovant part:
" (a) ACC records and documents, excent internal working papers and other records of the tyne which are exemnt from nublic disclosure under Sect ion 9. 5 of this chaptor, will be produced upon request for inspection and copying or photograph-ing.
- (b) An application by a party to a proceeding for the prod sction of Commission inspection reports and other records or documents, the basic purpose of which is to record matters of fact relating to license applications or licensed activities, shall be addressed to the presiding officar in writing and shall set forth the need of the party for such documents and the rele-vancy thereof to the issues in the oro-ceeding . . . "
(Emphasis added.)
Further, inder 5 2.744 the requested information will be authorized for prcduction only (1) after a deter-mination of nood and relevance, and (2) if the facts are
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not otherwise availabic to the moving party, and even then such production is subject to the deletion of pro-2 The reports in qacstion waro filed with the AEC for use only in connection with applications involving Westinghouse reactors, and wcro submitted with an applica-tion for withholding from public disclosure. The AEC thus received the reports in confidence, and the request for non-dicciosure has been honored. (Sco attached affidavit of H. A. Wiesem. inn.)
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- prietary information. The pertinent language of S 2.744 (b) roads:
"Upon a dotorminat ion of need arid roleb vancy by tho. prosiding of ficer, such inspection reports and such records and documents will be produced _if the facts recorded therein are not otherwise ava il-abic to the movin<r party. Production of such reports, records and documents will be subiect to the deletion oft (4) information of a proorietary nature."
(Emphasis added.)
Thus, the language of 5 2.744 makes it clear that as a threshold matter the Licensing Board is required to find that the reports are both relevant to and needed in the proceeding. Acting under 5 2.744, the Licensing Board found no need for the production of those reports and hence initially denied their requested production.
(Tr. 2301).
The subpoena to Westinghouse, of course, sub-sequently was issued under 5 2.720 of the Regulations (10 C.P.R. 9 2.720), since that section relates to subpoenas to non-parties. For a subpoena issued under 5 2.720 to wit hut.and challenge, it must require material which is
k5 relevant t o the he. ring and munt not be unreasonable.
Not only is the Licensing Doard authorized to requiro a showing of rolovnnco ($ 2.720(a)), but the subpoena may be quashed ". . . if it is unroasonable or requires evi-donco not relevant to any matter in issue" (S 2.720(f)) .
Since this requirement of need is clearly present when documents are being sought from the AEC under S 2.744 of the Regulations, and since a requirement of good cause is also present when documents are sought from a party to the proccoding under S 2.741 of the Regulations (10 C. F. R. $ 2.741),'it would indeed be a strained and incongruous reading of S 2.720 not to require a threshold datorminatien of need and relevance where documents are sought from a strangor to the hearing.3 In the ruling of the Atomic Safety and Licensing Appeal Board (the " Appeal Board") involving the Mi.dland 3
In connection with an analogous legal prcblem, the Atemic Safety and Licensing Appeal Board has hold that the standarde for dotormining whether information is proprietary do not vary depending on whether 5 2.720 or S 2.744 is utilized for production of inf ormation.
In the Matter of consumers Power Comnany (Midland Plant.
Units 1 and ?). Docket Nos. 50-329, 50-330, Memorandum of Atomic Safety and Licensing Appeal Board, dated September 21, 1971, p. n. sco discussion inf ra, p. 19. j
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proceeding,4 the Appeal Board hold that with respect to the request to the AEC under S 2.744 for production of the documents in question, a threshold showing of need and rolovance was required, and that the finding of the Licensing Board of no need for the documents was within its discretionary authority. The Appeal Board went on to discuss in Question Number 3 whether, despite the conclusion that no need has been shown, an inquiry nood be mado into the basis for the assertion that the reports are proprietary. The language of the Appeal Board on this subject has been a matter of some confusion and interpretation. In its Order dated December 22, 1971, the Licensing Board stated its understanding of the Appeal Board ruling as follows (a t p. 9) :
"As the- Board understands the ruling of the Appeal Board, unless there is a finding by the Atomic Safety and Licensing Board that the claim that the information sought is proprictary the documents must be made available to intervonors. We had not in fact mado such a finding because wo felt that the absence of nood relieved the Board of the obligation to do so."
In~ the Matter of Connnmers Pnwor company (Mid-land Plant, trni t n 1 and 21, Docket Nos. 50-329, 50-330, l .
Memorandum of Atomic Safety and Licensing Appeal Board, dated coptember 21, 1971, p. 8.
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Westinghouse respectfully submits that this is not a proper or necessary interpretation of the Appeal Board decision. Question Number 3 considorod by the Appeal Board was whether inquiry must be made into the basis for the assertion that information is proprietary wharc no nood for the information is found. This ques-tion was answered by the Appeal Board only in the con-text of S 2.744.' Thus, the Appeal Board began its con-sideration of Question 3 with the statement:
"As noted in the answer to Question 2, it is our opinion that Section 2.744 is the appropriate rule for disposition of inter-venor's request."
Thoreafter, the entiro consideration of Question 3 '
related to the test under 5 2.744. The Appeal Board in this cont'oxt said that:
"Whether the -information is, in fact, proprietary is initially for the Licensing Doard to decido based on all rolovant factors available."
Wo submit that when road in context, this moroly means that if tn> requisito nood and rolovanco are found by the Licensing neard, then the Licensing Board in the first instance mal:os a determination of propriotary w w 4
h (as opposed, for examplo, to such a determination being made by the Commission itself) . In other words, the word " initially" as used by the Appeal Board in its ruling did not mean that the first inquiry is into the proprietary nature of the documents, but rather that the Licensing Board, as opposed to other possible re-viewers, gets the first opportunity to review Cac claim of proprietary.
If the Licensing Board's view of the holding of the Appeal Board remains the same, despite the above argument, then Westinghouse respectfully submits that such an interpretation is erroneous and the matter should be resubmitted to the Appeal Board for further consideration and clarification.
Furthcr, as indicated above (pp. 7-8, supra),
both in the case of a request for production of documents from a party under 5 2.741 and from the AEC under S 2.744, there is a requirement of good cause and relevance.5 The Cpinion of the Atomic Safety and Licensing Appeal Board In the Matter of Northern States Power Comnany (Monticello Nuclear concratinq Plant fin i t 1), Dockot No.
50-263, decided August 20, 1970, held, with respect to pro-duction of a narty's documents requested by another party pursuant to S 2.741, that the initial dctormination of the Licensinq lioard must be " good causc a and " relevancy". Only thereaf ter does a Licensing Board approach the question of privilego.
Surely if the protection of good cause and reicvance are a f forded a party to a proceeding, the same protection should not be denied, and a greator burden should not be placed on, one not a party to the prococding but whose documents are requcsted. The proposition that a non-party like Westinghouse should be required to produce documents and materials where those documents and materials are not needed simply because the documents and materials may be of a non-proprietary nature, is so incredible an interpretation of the regulations as hardly to demand an answer. Such an interpretation would allow any party to an Atomic Safety and Licensing Board hearing, without the limitation of a finding of need, relevance, or good cause, to force any strangor to the hearing to produco documents, regardless of expense or inconvenience. We respectfully submit such a proceduro cannot be contemplated under any fair reading of the regulations, and indecd would violato
~a fundamental standards of fairness and due process.0 As previously indicated (p. 5, s upra) , the Board has dotormined that no nood oxists for production of the Westinghouso reports. We also submit that the use by Intervenors of the reports in a hearing in-volving a reactor to be manufactured by B&W, a competitor of Westinghouso, where Westinghouse has no responsibility or relationship with or. to the plant under consideration, would be irrelevant. The intended use of the reports in tha Midland proceeding, as announced by Intervenors, was to allow a comparison of the reagents used by Westinghouse and B&W in iodine removal systems in order to determine the best available t'echnology. Counsel for Intervenors 6
- p.26-245 (2d Sco Ed 41971)
Moore's Federal Practice 1 26.50(4] at
(". . . courts are loath to order disclosure of trade secrets absent a clear showing of an immediato need for the information requested."); Hartlev Pen Comnany v. United States District Court for the.
Southern District of Cali fornia, Central Division, 287 F. 2d 324, 331 (9 Cir.1961) (" . . . the requiremonts of relevaneo and necessity must be established where disclosure of a trade secret is sought . . .") ; United
_ States v. Sorta Associates, Inc., 29 F.R.D. 136, 138 (N.D. Ill. 1961) (where the court quashed a subpoona l "because it is not convinced of the rolovancy of ' the documents sought, and additionally because it would be most reluctant to forco a non-party compctitor to divulgo
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confidential information"); Sco also Korman v. shull, 184 F. Supp. 928 - (W.D. Mich. 19GO) : United states v. nevnolds, 345 U. s.1 (1952). .
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urged that a comparison of all availabic reactor techno-logy be made. (Tr. 1549-1552).7 That a comparison of competing systems is not relevant to a licensing board prococding is now beyond argument. As this Licensing Doard specifically stated P?r. 2114):
". . . I think the Board is satisfied on that aspect of it, that this hearing can-not get into the question of whether the particular feature is better in one reactor than in another reactor."
This position has been adopted by the Appeal Board in its Memorandum in the proceeding In the Matter of Wisconsin Electric Power conoany and Wisconsin-Michican Power Comnanv. (Point Beach Nuclear Plant, Unit 2), Docket No. 50-301, where the Appeal Board said (at page 8) :
"We wish to make it clear that, in a given caso, the only question to be considered is whether the proposed reactor satisfies applicable licensing requirements. If so, the fact that other systems were used with respect to other reactors at other sites is not relevant. Since the intervenors 7
Also see letter dated August 10, 1971 from Myron M. Cherry, Esq. to Chairman Murphy. For the posi-tion of the AEC Regulatory Staff on this mattcr, sco Tr.
2111-2113.
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- 4 have not related their contentions to whether the proposed plant in this pro-cceding will mect the requisite licensing requirements, it was not an abuse of dis-cretion for the Licensing Board to refuse to considor contentions involving other reactors."
Westinghouse respoetfully submits that any assertion subsequently mado by the Intervonors that they do not in fact intend to utilize the Westingh:uso pro-prietary reports to test the adequacy of the competitive reagent is not convincing and that the reason now asserted by Intervenor for the relevance of the reports is still fundamentally for purpcses of comparison of different systems. The very examination of sudh reports and utilization therecf by the Intervenor in the Midland pro-coedings necessarily contemplates a comparison of reactor technology. Interveners, in a document dated December 10, 1971 and entitled "Saginaw Valloy, et al., Responso to Westinghouse Cloctric Corporation's Motion to Quash Subpoena", made the following argument with respect to relevance of the Westinghouso reports (at p. 5):
"In point (1) westinghouse argues that the subpoena is unreasonable and requires evidenco not relevant jn any matter A
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"It is quito clear that Babcock & Wilcox and Westinghouse have taken positions not dissimilar but in opposition to each other with regard to the reagent appro-priate to use in an iodine spray removal system. Accordingly, and the questien of best technoloav aside, wo are deal-ing here with the issue of whether the analysis by Babcock & Wilcox is in accordance with the Rules and Regula-tions of the Commission; and it is obviously proper to demonstrate that another vendor in the nuclear field, namely Westinghouse, has examined the same technology, and has come to a different conclusion." (Emphasis in original)
To argue that one is putti g aside the question of best technology and then to stero, as Intervonors have donc, that another vendor has come to a differ conclusion with regard ,to the same technology is, wc suggest, sophistry.
The Westinghouse conclusion to uso a different reagent than that used by B&W is net relevant to an inquiry into whether the reageit chosen by B&W will be adequate to moet the commission criteria, and inquiry into that conclusion inevitably involves ecmparison of the technology of Westinghouse and Dsw.
Further, with respect to the claim by Intervenors e
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4 that they cannot examine intu the question of adequacy of the P.6W cystem unicss they are froo to use the reports in question- the Licensing Board, after reading the Westinghouse reports, the B&W reports and various articles in the published literaturo (soo Tr. 2301) concluded that use of the Westinghouse reports was not necessary to such an examination. See Cortification of Questions to the Appeal Board, dated August 18, 1971, p. 2.
In summary, a finding of need for and rele-vance of the Westinghouse reports must be demonstrated prior to the production thereof and irrespective of whether such reports are proprietary. The Licensing Board has already made a determination that no need exists for production of the reports. The Intervenors i
have indicated that their intended use of the reports is to assist in making a comparison of reactor systems technology. Under applicablo Appeal Board rulings, such comparison would bo irrolovant to the Midland proceedings.
Accordingly, neither need nor relevance is present and the Licensing Board should quash the subpoena to
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II. The Westinghouse Rcports Arc Propriotary and Therefore Arc Not Required to be Produced in Rosponso to the subpoena Even assuming that need and relevance had been found by the Licensing Board, we respectfully submit that Westinghouse should not be required to produce the reports since the reports are proprietary. The factual basis for establishing the proprietary nature of the reports is contaira. 'in the affidavit of Robert A. Wiesemann of Westinghsuso, submitted with'this brief. That affidavit sets forth in detail the methods and procedures utilized and the criteria applied by Westinghouse in establishing these reports as propriotary. Further, this Licensing Board has already made a prima facio dotormination that thoro is a suf ficient basis for the Westinghouse pos.ition that the rcports are proprietary (Tr. 2302).
O It should be noted that in the Atomic Safety and I.icensin.J Board hearing involving the application of the Wisconsin Electric Powcr Co. for a licenso for its Point Deach Unit #2 where Westinghouse is the vendor, a similar situation aroso involving a subpoena to B&W to pro-duce D&N proprietary reports and a witness relating to the reagent used in D&W iodino removal systems. The T.icensing Boa rd in that casc quashed the subpoena to B&W. Point Deach Transcript, p. 1043.
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The legal staridard for determining whether in forma t ion is proprietary does not depend upon whether production of the reports is sought under S 2.720 or S 2.744 of the AEC Regulations. As the Appeal Board said in its Memorandum in this proceeding dated September 21, 1971 (at p. 8):
" Generally speaking, we perceive of no reason why the standards for deter-mining whether information is proprietary should be different depending upon whether Section 2.720 or Section 2.744 is utilized for production of the information."
This being the case, it is clear that the oxemptions from public disclosure set forth in S 9.5 (10 C.F.R. S 9.5),
as referenced- in S 2.744, are applicable to a request for documents under S 2.720, since otherwise disparate and inconsistent standards would arise.
The basic statutory provisions governing dis-closure of information by a fedoral agency, and exemptions from such disclosure, are containcd in the Freedom of Information Act, as ombodied in the Administrative Procedure Act, 5 USCA S 552.9 The Freedom of Information 9
An order by the Licensing Board granting a subpoena forcing production of documents would clearly be the act of an ngency making records available to the public. Sec 5 USCA S 552 (a) (3) .
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Act, }usned in l'J67, recognized t hat valid grounds exist for withholding of infornation from public dis-closure, and accordingly that act provides for a number of exemptions from disclosure. 5 USCA S 552 (b) .
Among catagorics of information as to which disclosure is not to be mado arc (5 USCA 5 552(b)):
" (4) trado secrets and commercial or financial information obtained from a person and privileged or confiden-tial."
The legislativo history of the Freedom of Information Act makes it clear that both the House and Senate in-tended in this exemption No. 4 to exempt from dis-closure material which would not customarily be made public by the originator.10 General Se rvices Administra-tion v. Penso3, 415 F. 2d 878, 881 (9 Cir. 1969).
To implement the provisions of 5 USCA 5 552, the AEC adopted Part 9 of its Regulations (10 C.F.R. 9) .
1011 . R. Report No. 1497, 89th Cong. 2d Sess.
(1966) p. 10 ("I t exempts such material if it would not customarily be made public by the person from whom it was obtained by the Government"); S. Report No. 813, 89th Cong. Ist Sess. (1965) p. 9 ("This exemption is necessary to protect the confidentiality of information . . . which would cuntomarily not be relcased to the public by the person from whom it was obtained"). For a general dis-cuscion of the Freedom of Information Act, sco Note, Freedom of informa t ion: The Statute and the Regulations, 56 cco. L.J. 18 (1967).
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b L Sec 10 C.F.R. S 9.1. Section 9.5 (a) of the Rcqulations exemptu from public disclosurc various catagories of records, including:
" (4) trade secrets and commercial or financial information obtained from a person and privileged or confidon-t ia l . '* ll Thus the Commission in its Regulation tracks the word-ing of the Freedom of Information Act in exempting the above mentioned reports from public disclosure.
Section 9.5(a) (4) goes on to provido the standards for determining matters which are subjcet to the exemptien, as follows:
"(a) The following t;' pes of records
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arc exempt from pub..ic disclosure under Section 9.4:
(4) Trade secrets and commercial or financial information obtained from a peraen and privileged or con-fidential. Matter subiect to this exemetien is that which is custom-arily held in confidence by the originator. It includes, but is not limited to 11 1t should be noted that information falling in the catagories montioned in S 9.5(a) (4) is generally referred to as " proprietary" information. Technically, proprietary information is only one type of such infor-mation. See, c.q. S 9.5 (a) (1) (i) . Iloweve r, as used in this brief and by most persons in this arca, pro-
! prictary information is understood to encompass all informat ion of the typo identified in S 9. 5 (n) (4) ,
untenn nr.eit ically noted otherwise.
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(i) InformaLion roccived in Con-fidence, such as trado secrets, inventions and discovarios and proprietary data; (ii) Technical reports ar.d data, designs, drawings, specifications, formulae, or other types of pro-prietary information which are generated or developed by the AEC or for the AEC under contract; (iii) Statistical data or infor-mation concerning contract per-formance, income, profits, losses, andexpendityOes, if received in confidence from a contractor or potential contractor (iv) Information withheld pursuant to Sec. 2.790# of this chapter."
(Emphasis adddd)
Thus, the Commission has adopted by regulation the test of "propriotary" which clearly was intended by Congress when it enacted the Freedom of Infcrmation Act, to wit:
whether the material is customarily hold in confidence by the originator.
In applying the forogoing legal standard to the Westinghouso reports here involved, we direct the attention of the Licensing Doard to the affidavit of Robert A. Wicsemann of Westinghouso submitted with this brief. That affidavit, in addition to setting forth l
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the pt .ci < hi reu used by Wentjnyhouse in clasuifying docu-mentr an pr<>prietary and the criteria and standards utilized in such deternination, specifically states, with respect to the documents, "cach of the documents is cus t oma r i l y held in confidence by Westinghouse and is not
_customarilv made available to the nublic". (Emphasis added.) See also In the Matter of Consolidated Edison Com-pany of New York, Inc. (Indian Point Plant Unit No. 2), Docket No.00-247, Transcript pp. 2898-2904. Thus, the reports fit squarely within the exemptions and protection afforded by the Freedom of Information Act and the AEC Regulations.
Three other points should be made with regard to a consideration of the above reports as proprj ary:
(1) the inappropriateness of reviewing each statement within or section of a document as to which a claim of proprietary has been asserted to determine whether the document is proprietary: (2) the fact that certain inforuation in the generally availabic literature may nonc-thc1 css be proprictary to Westinghouse in a specific timo and situation context when and as also represented in a Westinghouse report; and (3) the implications of the fact that the reports were cubmitted to the AEC.
With respect to the first point, it would be i
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inappropriate for this Licensing Board to requiro West-inghouco to defend the prcprietary status of the docu-ments by an examination and comparison of particular statements within the documents to sco if they are known or otherwisc available to Westinghouso competitors.
Such a procoelure would requiro knowledge on the part of Westinghouse of all of the information known to its competitors, including propriotary information of such competitors. To requiro such an exercise would defeat the very principle at issue -- namely, the right to preserve as secret and ecnfidential valuablo proprietary information. See example No. 2, infra, p. 26. Further, the value to a competitor of the information contained in a report is p function not only of the information itself but also of the other knowledge and experience availabic to such competitor. Thus, the question of whether the reports are proprictary should be resolved solely by examination of whether the documents are cus-tomarily hold in confidence by Westinghouse, and not by a procedure whereby the Licensing Board requires proof that others do not have availabic the material t
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With respect to the second point, it is possible that within the framework of a particular time and situa-tion context, material may bo propriotary to a person despite the fact that it is available in the general litera-turo. Two examplos illustrate this point:
Examplo 1: In 1967, Vendor X, in connection with an application for a license, submits a report on the adequacy of the grease which it proposes to use to lubricate a compenent. The report is not then sdbmitted with a request to the AEC to keep it in confidence, and hence is not then considered propriotary. In 1971, Verdor X, having had four years of experience in actual use of the grease, submits the same report in connection with an appli-cation f or a different license. That second submission could be accompanied by a request to keep the report in confidence and accord it propriotary treatment. What is proprio-tary is the fact that after four years of operating experience on a Vcndor X plant, no chango was nooded in the greas. to be used as a lubricant. Thus, although the information in the report is public by virtue of the
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firct submittal, the fact that no change has been made after four years of operation can only be protected by classi f ying the second submitted copy of the report as propriet ary.
Example 2: vendor X establishes, after a re-scarch projcet involving an expenditure of many dollars, that for the paramotors of interest a simple textbook formula can be used to solve a difficult analytical problem for one of its plant systems. Prior to that time, vendor X had used a complex, timely and costly computer codo analysis to solve the problem each time it wanted to license a plant, and its competitors had dono likewise. The submission by Vendor X of its re-port and the inclusion of the simple textbook formula as the way to solve the problem would be proprietcry, notwithstanding the fact that the formula is in the public literature. The key is that competitors of Vendor X would have to expend similar energy, time and money to determino that the formula is applicable and hence to save the costly computer code analysis which they otherwise must run each time they wish to solve the problem.
Thus, it can be scen that determination of
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proprietary as being that customarily hold in confidence by the orig'nator rests on a sound practical basis, since other tests, such as whether the fact is or is not pub-lically available, will not suffice to protect information which may be commercially valuable.
The fact that Westinghouse submitted the reports to the Ccmmission does not change the result. They were submitted and received in confidence for use in connection with applications involving Westinghouse reacto s. See attached af fidavit. Under S 9. 5 (a) (4) , such information, when received in confidence by the Commission, is not to be disclosed. IIence , the Commission properly would have been required to refuse disclosure under 5 2.744 if the issue cf proprietary had been reached in cennec-tion with the requcst to the AEC for the reports. Since no need for the documents was found when this matter was
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considered under 5 2.744, this point is, of course, moot.12 In summary, the test of whether reports are pro-prietary is whether they arc customarily held in confidence by the originator. Applying this test in conjunction with the facts set forth in the attached affidavit, it is clear that the reports here are proprietary to Westinghousc.13 12 A corollary follows from the above discussicn.
Westinghouse should not be required to release the reports to anyone other than dho Licensing Board, and then only for the . limited purpose of determining need, relevance and, when necessary, the proprietary character of the reports.
Sco, e. g. 5 2.744. To require Westinghouse to give up the reports to any person, including the Intervenors prior to their proprietary charactor having been determined, would violate the right of Westinghouse to maintain the secret and confidential nature of the reports to which it is presumptively entitled as the originator of the report.
13 If the result is other than as indicated above, Westinghcuse will want to present a brief and arguments as to the need for an in camera session to determine the pro-prietary nature of the reports and the nced for in cancra discussion of any material contained in the reports. De-cause this point has not been reached in the Midland pro-cceding, and should not be reached, the matter is not pre-sented in this brief. Westinghouso also might desire to present evidence in such a hearing with respect to the damage which would result from disclosuro. For a dis-cussion of the irl camera-proceduros in administrativo hearings, sco Cohn and Zuckman, FCC v. Schrcibor: In Camera and the Administrative Ancncv, SG Cco. L.J., 451 (1968).
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III. As a Matter of Public Policy, the Reports of a Non-party Competitor Should not be Required to be Produced in the Prcsont !!ca ring Wes'tinghouse respectfully submits that at issue here is more than the production of threc proprietary reports. Rather, there is involved in this "atter such questiens as (1) whether it is proper in our competitive society to forco one who is not involved in any manner in a Scaring and who is a competitor to someone involved in that hcaring to divulge trade secrets or commercial, privileged or confidential information, especially where the need for the information has been found not to exist; and (2) whether due process is found in a pro-cedure whereby, without any finding of good cause, need or relevance, a non-party is put to the considerable burden of justifying why material which it customarily holds in confidonce should not be released, especially where good cause, need and relevance must be established
. at the threshold if the documents involved are thoso of a party to the procccding. Thoro is overy reason to belicyc that if the Intervenors obtain pro-i
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--ed-4 duction of those reports, they thercaf ter will scck production of similar reports on an over-expanding scalc.
Indcod, in their letter to the Licensing Board dated August 10, 1971 the Intervonors moved for the following order:
". . . Intervenors herewith move the Board, pursuant to the Rules of Prac-tice, for an Order issuing Subpoenas to Westinghouse Electric Corporation, General Electric Corporation and Com-bustion Engineering requiring each of them to produce, for use in connec-tien with these dockets, all documents and reports, including patent applica-tions and patent filings, whether claimed proprietary or not, dealing with each of their emergency core cooling systems, including but not limited to documents which make comparative analyses of any ECCS system with another."
This is in linc with Intervonors position that all com-parative technology should be reviewed. Sec suora, pp. 13-14.I4 The prospect of such an expanded discovery process clearly would constitute an unreasonable 14 Further, other intervonors in the Midland procce, ling have requested the production of all docu-mants which were consulted or relied upon by inter alia, the staff in its environmental analysis. Similar requests could be expected to follow regarding areas in which Woutinghouse has documents on file.
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burden on Westinghouso, as well as other reactor vendors, which shculd not be permitted.
Thore is, moreover, the prorocct of rcactor vendors being required to produce vartous documents, both proprietary and ncn-proprietary, in other hearir gs in which they have no legal interest whatsoever. As the number of compicx AEC licensing proceedings continues to increase, the impossibility of producing, monitoring and protecting the dissemination of proprietary materials become apparent. Westinghouse readily makes available to all parties to hearings involving the licensing of Westinghouse reactors purchased by customers of Westing-house, relevant information in the possession of Westing-house relating to such reactors. Where this material is proprietary it is made available under suitable protec-tive orders or agreements. Thoro should not be allowed to develop, hcwever, licensing proceedings in which several vendors and their documents are involved, because the end result will inevitably be to cause disclosure of proprietary information of onc rendor to its competi-tors, and a comparison of the systems of different vendors.
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A further unfortunato result which could follow from ordering production of the reports by the Board is that of discouraging research and limiting the knowledge of the existence of such reports. It is merely stating the obvious to note that the competitive incontive by a reactor vender to undertake research is chilled by the prospect that such research can and will be made avail-able to competitors. Moreover, it follows that making such a report known to the AEC, is inevitably discouraged if that report is thereafter made available to competitors or unauthorized persons.15 Finally, if vendors are re-quired to exchange technology via releasc of information in the context urder discussion, this would appear to be contrary to the basic policies underlying the anti-1 trust laws. See Tr. 1560.
In summary, there are sound reasons of public policy not to require production and disclosure to a 15 For this reason, also, the protections a f forded by S 2.720 should not be dif ferent from those set forth in S 2.741 or S 2.744.
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compet itor of the W .stinghouce informa t ion in the present situation, in addition to the unduo burden which would bo placed on a non-party to the proceeding where no need or relevanco has been found.
Conclusion Westinghouse respectfully submits that the Licensing Board should grant the Motion for Reconsidera-tion and, on reconsideration of the Motion to Quash Subpoena, should grant said Motion for the reasons that (1) no need or relevance has been found for requiring production of the documents in question; (2) the
- documents are prcprietary to Westinghouse and under applicable law and regulations n>cd not be produced; and (3) sound public policy reason <, exist for not requiring a competitor-stranger to a hearing to disclose docu-ments, especially where such disclosure will cause undue burden.
Respectfully submitted, h Yu Af14 p
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h M y Eckc r t ,', Scamans, Chcrin & McIlott 10th Floor, Porter Building Pittsburgh, Pennsylvania 15219 Attorneys for Westinghouse Electric Corporation Of Counsel:
Alfred W. Vadnais, Esq.
Westinghouse Electric Corporation Law Department - 17th Floor Westinghouse Building Gateway 6 Pittsburgh, Pennsylvania 15230 Date Filed: January 15, 1972
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AFFIDAVIT OP ItOBEltT A. WIESUMANff COft40?NEALTI! OF PENNSYLVANIA +
ss COUNTY Of ALLEGI!ENY :
Bofore me, the undersigned authority, personally appeared Robert A. Wiesemann, who being by me duly sworn according to law, deposes and says that the averments of fact set forth in this Affidavit are true and correct to the best of his knowledge, information and belief:
(1) I am Manager, Special Licensing Projects for the Pressurized Water Reactor Systems Divisien, Westinghouse Nuclear Energy Systems, Westinghouse Power Systems Company, Westinghouse Electric Cor-poratign, ("Wes tinghouse") and as such I am author-ized to exc:ute this Af fidavit.
(2) I am familiar with the procedures uti-lized by Westinghouse for the classification of certain information as proprietary by Westing-house and in particular by Westinghouse Nuclear Energy Systems, and the critoria and standards applied by Westinghouso and Westinghouso Nuclear i
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- L Energy Systems in determining whether infor-mation is proprictary. I also am familiar with the documents listed on Exhibit "1" to this Af fidavit and designated as proprietary by Westinghouse.
(3) Each of the documents listed on Exhibit "1" has been classified by Westing-house as proprietary in accordance with normal Westinghouse proc 2dures with respect to such classification.
(4) Each of the documents listed on Exhibit "1" contains information consti-tuting trade secrets or commercial infor-mation or privileged or confidential infor-mation, including proprietary data.
(5) Each of the documents listed on Exhibit "1" and matters set forth in each l
of said documents is customarily held in i confidence by Westit}ghouse and is not customarily made available to the public.
l (6) Each of the documents listed l
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on Exhibit "1" ha:: been made available to the United States Atomic Energy Commission, in confidence with a request that the documents be withheld from public disclosure and each of the documents were received in confidence by the commission.
(7) In determining whether documents are to be classified as proprietary the following procedure is used by Westinghouse:
An initial determination as to whether a document or report should be classified as proprietary is nade by the author of the report as the person most knowledgeable with respect to the cohtent of its report, the nature of the sensitivity of informa-tion contained in the report, the state of the art and knowledge in the industry with respect to the subject matter of the report, and the usefulness of the informa-tion conLained in the report with respect to the assisting competitors or giving l
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Westinghouse a competitive advantage relating thoroto. Thereafter, if a preliminary detor-mination has bcon mado to classify a report as proprietary, that determination is reviewed by the management lovel supervisors of the originator of the report, and if such deter-mination is approved upon review the report is classf iled as proprietary. In the event the preliminary determination of proprietary is not approved by the management level super-visors or in the event the preliminary deter-mination is that a report is non-proprietary, the report is further reviewed by the cognizant managers, including the general manager of the division, where appropriate, and if upon such review the report is determined to be pro-prietary it is either classified as proprio-tary or returned to the author for modifica-tion to make it non-proprietary.
(8) In dctormining whether information
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is proprietary the following criteria and standards are utilized by Westinghousc.
Information is proprictory if any one of the following are met:
(a) It reveals the distinguishing aspects of a process (or component, structure, tool, method, etc.) whose exclusivo use by Westinghouse con-stitutes a competitive economic advantage over other companies.
(b) It consists of supporting data, including test data, relative to a process (or component, structure, tool, method, etc. ) , the applica-tion of which data securos a com-petitivo economic advantage, e.g.,
by cptimization or improved market-ability.
(c) Its use by a competitor would reduce his expenditure or resources in the design, manufacture, shipment,
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installation, assurance of quality, or licensing a similar product.
(d) It reveal's cost or prico informa-tion, production capacitics, budget levels, or commercial strategios of Westinghouse, its customers or suppliers.
(e) It reveals aspects of past, present or future Westinghouse - or customer-funded development plans and programs of potential commercial value to Westinghouse.
(f) It contains patentable ideas, for which patent protection may be desirable.
(9) Each of the documents listed on Exhibit "1" contains information in one or more of the categories listed in item 8 above.
(10) Each of the documents listed on Exhibit
" 1" is considered proprietary by Westinghouse be-cause it contains information customarily held in confidence by Westinghouse. Each such document reports on research and development programs Oo ,
including experiments, tests, analysis and develop-ment of analytical techniques, conducted by Westinghouse with respect to the subject matter of those reports, and cach document sets forth in detail equipment, procedures, results and/or conclusions of such experiments conducted with Westinghouse nonics and for its exclusive benefit.
Further, the reports comprise information utilized by Westinghouse in its business which af ford West-inghouse an opportunity to obtain a competitive
. advantage over its competitors who do or may not know or use the information contained in the reports.
Further the deponent sayeth not.
/s/ Robert A. Wiesemann Robert A. Wiesemann Sworn to and subscribed before me this 14th day of January, 1972.
/s/ Rebecca A. Lorince Notary Public
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EXIIIDIT 1 to AFFIDAVIT OF ROBERT A. WIESEMANN (List of Westinghouse Proprietary Reports)
- 1. WCAP-7153L, " Investigation of Chemical Additives for Reactor Containment Sprays"
- 2. WCAP-7198L, " Evaluation of Protective Coatings for Use in Reactor Containment"
- 3. WCAP-7499L, " Topical Report - Elemental Iodine Removal by Reactive Sprays" Exhibit "1"
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