ML19329E978

Answers Appeal by Nonparty Municipalities from Adverse Orders Granting Subpoenas in Favor of Util.Urges Aslab to Affirm Orders Re Subpoenas & Depositions on Written Interrogatories to Municipalities.Certificate of Svc Encl

ML19329E978
Person / Time
Site:	Midland
Issue date:	04/02/1973
From:	Golden T, Ross W, Watson K CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), WALD, HARKRADER & ROSS
To:	NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
References
NUDOCS 8006190756
Download: ML19329E978 (56)

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TABLE OF CONTENTS i

Page

Introduction:

Nature of

, the Proceeding 3 I. The Twenty-One Municipals are Not

~

Immune from Full Discovery under the Commission's Rules 5 i

, A. The Municipals are not ,

" Strangers" 8 l B. The Interest of the Municipals is More than " Tangential" 12 l II. The Hearing Board did not Abuse its Discretion in Holding Applicant's l Discovery to the Twenty-One .

Municipals to be Relevant 15  !

i A. The-Discovery is Relevant to .

Elucidate Issues Plainly Raised I in this Proceeding 16 B. The Applicant's Discovery is I

-Not improperly Cumulative or Repetitive 26 C. The Discovery has not been Sought

. on a Discriminatory Basis 27 III.There is Nothing in the Record to .

Support Municipal's Contradictory I Claims that Applicant's Requests are

" Unreasonably Burdensome" or that Responses are " Easily Obtainable"

, by the Applicant ' 29 l

IV. There is no Basis for-Reversing the

~ Hearing Board's Order Denyi".g Con-fidential Treatment of Applicant's Discovery 37 A. The Law Regarding Confidentiality 38 B. Applicant's Need 42 V. -Requiring Compliance with Applicant's

'- Discovery will not Threaten the JCommission's Regulatory Role 45 i

, CONCLUSION 48 l O

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-. 1

- 1 UNITED STATES OF AMERICA I r, BEFORE THE i ATOMIC ENERGY COMMISSION In.the Matter of. )

(- ) Docket Nos. 50-329A CONSUMERS POWER COMPANY ) and 50-330A (Midland Units 1 and 2) )

To the Atomic Safety and Licensing Appeals Board:

APPLICANT'S ANSWER TO APPEAL BY "NON-PARTIES"

~

Consumers Power Company (" Applicant") hereby files its l

Answer to an " Appeal by Non-Parties from Adverse Orders Grant-a ing Subpoenas in Favor of Consumers Power Company," filed on March 16, 1973 (" Appeal"), by twenty-one municipal entities-1/

which operate electric systems in the lower peninsula of Michigan

(" twenty-one municipals").

This pro'ceeding arises under the 1970 amendments to Section 105 (c) of the Atomic Energy.Act, 42 U.S.C. 2135(c),

-1/ Bay City, Charlevoix, Chelsea, Clinton, Croswell, Dowagiac, Hart, Hillsdale, Lansing, Lowell, Marshall, Niles, Paw Paw, Petosky, Portland, Saint Louis, Sebewaing, South Haven, Sturgis, Union City, and Wyandotte, all in Michigan.

2/- Applicant confines its answer to the relevant issues raised by the Appeal and does not join issue with the Appeals' multitude of characterizations relating to the merits-of this proceeding, motivations of the various

. parties and other matters extraneous to the issues in

, -this. interlocutory appeal. Thus, e.g., this Answer's

failure to rebut the Appeal's statement (pp. 25-26) that "except for. Consumers Power's interconnection with Detroit Edison' and indirectly with other private companies , it would not be feasible for it to build and operate the Midland plants,"'does not mean that Applicant concurs in tt 3 statement.

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and a Notice of Antitrust Hearing on-Application for Construction

.-s Permits,. issued by the . Commission on April 11, 1972. Thr.t Notice

,t1 established a three-man Atomic Safety and Licensing Board ("hearine F' Board") to conduct a hearing and to consider, inter alia, "whe ther N the activities under the permits in question would create or maintain ~a situation inconsistent with the antitrust laws. ...

(Notice, p. 3). In addition to the Applicant and the Commission staff, the other parties to this proceeding are the Department of Justice ("the Department"), the Michigan Municipal Electric i

Association ("the Association") and seven cooperatives and municipal electric systems located in the lower peninsula of Michigan ("other Intervenors") . Each of the appellant twenty-one municipals is a member of the Association, is represented in this

. proceeding by the same counsel as the Association, and together constitute a majority of the Association's membership.

During the third week of December, 1972, Applicant served upon appropriate officials of the twenty-one municipals subpoenas duces tecum and notices of depositions upon written interrogatories.

Although counsel for Applicant offered to do so, the twenty-one municipals' counsel refused to negotiate with the Applicant con-cerning the scope of its discovery requests. Rather, in a Motion 1

to Quash,-filed January 9, 1973, and in. subsequent pleadings and oral. arguments described more fully below, ths. twenty-one municipals objec'ted to this discovery in its entirety. All of the arguments

' presented by the Appeal-were briefed and argued by the twenty-one J

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, municipals and the Applicant and were considered by the hearing r' Board at a Prehearing Conference on _abruary 12, 1973.

Following these hearings, the Board substantially modified g

and narrowed the scope of Applicant's discovery. It ordered the municipals to comply with the document requests and written in-

, terrogatories, as revised to reflect the hearing Board's modifi-cations. (These documents requests and written interrogatories are included in " Appendices A" of the Appeal and cre hereinaf ter referred to as " Applicant's discovery") .

This appeal followed.

INTRODUCTION: THE NATURE OF THIS PROCEEDING The issues presented by this unusual appeal from an inter-locutory, procedural order of a hearing Board must be viewed in the light of the nature of this proceeding. This is, of course, the first case to be heard by a Commission hearing Board under

.the 1970 Amendments of the Atomic Energy Act which require that the : advice of the Attorney General be obtained as to the antitrust aspects of all Commission nuclear power reactor license applications.

- In the proceedings before the Board, the Applicant seeks a license to construct and operate two nuclear power reactors to be located in an electric generating facility at Midland, Michigan.

! The Attorney General, in a letter dated June 28, 1971, recommended that a hearing be held on antitrust questions which

, he considered to be raised by the applications. In this letter, as 'well as ~in further and greatly _ amplified statements made on

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the record, the Department of-Justice has'in effect charged

Applicant with monopolization under Section 2 of the Sherman Act.

The line of commerce . alleged is bulk power generation and transmission, and the geographical area alleged includes not w

only all of that portion of Michigan in which the Applicant is franchised to serve, but a much r wider multistate area including portions of Indiana, Ohio and

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the Province of Ontario. Commencing with the filing of the application, the Department has conducted the most sweeping and extensive discovery against the Applicant, which has resulted thus far in the production of more than 20,000 manuscript pages

of documents following a manual file search of virtually every file within Applicant's central office and 38 field offices t

(excluding only such materials as purchase invoices and billing records ) .

. In the Department's view, the scope of this proceeding is fully comparable to that of a major Sherman Act civil action against -a large-scale industrial company, charging monopolization of all markets served by the company. The intervenor Michigan Municipal Electric . Association and the municipal and cooperative intervenors have agreed to and pressed for this broad scope of issues.

,. Applicant has argued for a far narrower permissible scope of inquiry under the 1970 Amendments , but the Board, while deferring h ruling, .has directed that discovery proceed on the Department of l ' Justice theory as. to the appropriate scope of issues. Accordingly, e

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.the Applicant must be prepared to defend itself against charges

.c of monopolization over an extremely broad geographical area .and lmr extended time' period involving, inter alia, dealings or refusals

'to deal with any and all of the utilities located within the Department of Justice's asserted three state geographical market.

f t It is' submitted that the hearing Board, following detailed

, .and' careful consideration, correctly perceived the scope of dis-

\

covery required in order to permit Applicant to prepare both its affirmative and defensive cases. While it greatly reduced the extent of Applicant's discovery in order to minimize the burden on the non party municipalities, it recognized that' their non-

, party status was not controlling in evaluating the need for the i_

data sought to permit development of a full and adequate record.

j The municipals have challenged the hearing Board's ruling s

on at least seven bases. We will show that the Board's ruling

• was sound in all respects, and that the appeal must be denied in y i

its entirety. 1 l

I.

THE~ TWENTY-ONE MUNICIPALS ARE NOT IMMUNE FROM FULL DISCOVERY UNDER THE COMMISSION'S RULES.

Contrary to~the frequent suggestions in their Appeal, the fact that the twenty-one'municipals have not chosen to intervene

'as named parties in this proceeding does not-immunize them from l

.the-Commission's discovery processes, or shield them JPom dis- l Leovery_to the full extent necessary to compile an adequate 1 recor'd. LThe hearing Board was-clearly justified in ordering dis-covery from non-parties through issuance of subpoenas duces tecum

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since Section 2.740(f)(3) . provides that a subpoena may be directed

,.., "to a' person not a party for production of documents" and since 5

the Board's' subpoena g power under Section 2.720 is fashioned af ter

'~ Rule 45, Fed.-_R. Civ. P. , which is of ten utilized to obtain docu-ments from non parties. See, e.g., Dart ndustries, Inc_. v. Liquid Nitrogen Processing Corp., 50 F.R.D. 286, 292 (D. Del. 1970). As for depositions upon written interrogatories, Section 2.740a(a) of the L Commission's Rules explicitly permits "any party" to take such 1/

- depositions from "any party or other person" (emphasis supplied) .-

When Applicant sought to secure discovery of the twenty-one

} municipals through the Association, of which each is a member, the Association opposed the effort, inter alia, because " Applicant

)

L has available to it an adequate procedural means to obtain the i relief it seeks. " (" Intervener Answer in Opposition to Applicant

)

Motion . . - . , filed November 3, 19 72, p . 2). The Association's pleading continued (pp. 2-3) :

Section 2. 720 priivides that upon application by any party to the presiding officer, subpoenas '

may be issued req 2 iring the production of evi-dence, which includes " documents and things".

While a showing of relevance may be required,

a determination of admissibility of such evidence r

i 1/ Similarly, it is well-settled that the scope of discovery under compulsory : process or through depositions is no less broad. than other methods of discovery which may apply.only to parties. See Advisory Committee Notes to 1970 Amendments, 48 F.R.D. 487, 543 (subpoenas for pro-duction of_ documents); Section 2. 740 (b) of the Commis-  :

)

sion's Rules (general discovery provisions apply to  ;

depositions upon written interrogatories). '

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r, sought is not requisite to obtaining subpoenas.

. These standards equate to those of Section 2.740

. (General Provisions Governing Discovery) . . . .

-( Further, Section 2.740f(3) provides expressly that

'" an independent request for issuance of a subpoena e-directed to a person not a party for the production ,

of documents and things" is not precluded. Further yet, Section 2.740a provides that any person may take " testimony of any person ~or other person" (including written interrogatories) without leave

- of the presiding officer. S ubparagraph (f) of Section 2. 740a expressly provides that where

/ written interrogatories are the form of discovery

] sought the Applicant need only serve copies of the interrogatories on the other parties with "a notice

.j- stating the name and address of the person who f

is to answer them, and the name, description, title and address of - the officer before whom they are to be taken. The fact [is] that the Commission Rules

, recognize the distinction between parties and non-parties and provide discovery of either. . . .

(emphasis in the original) (footnote; omitted) .

C

( The hearing Board accepted this position in its order of

, November 15, 1972. Although denying the relief against the

)

Association sought by Applicant, the order explicitly stated '

that the Board was "not foreclosing the Applicant from-appropriate A

discovery" against the twenty-one municipals individually (p. 5)

.; and in this regard noted specifically the availability of depositions

. pursuant-to Section 2.740a. Thus, under the Commission's Rules of

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s. Practice and by the municipals ' counsel's own admission , Applicant is entitled to pursue full discovery against the twenty-one municipals

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through subpoena and deposition upon written interrogatories --

g subje'ct only to the established principles which govern all discovery.

In ' the instant case, such discovery is particularly i . appropriate since the operations of twenty-one municipals ' electric 9

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4, systems are central issues in this proceeding and because the r municipals are represented in this proceeding by the Association, of which they constitute a majority of the membership. The e

twenty-one municipals claim to be (a) " strangers" to this proceed-1 ing, with (b) only a " tangential interest" in the matter (Appeal, 4 pp. 19, 66). But. a review of the record in this proceeding belies

, these statements as wholly without basis in fact.

N

,. A. The Municipals Are Not " Strangers. "

! Prior to the hearing notice, the Commission received an

- advice letter, dated June 28, 1971, from the Antitrust Division of the Department of Justice concerning the above-

/

. captioned application. That letter stated that " Applicant's l

smaller competitors include a number of municipal electric

)

i utilities and rural electric cooperative systems distributing electric power and energy in the general area served by Applicant"

(.

and indicated that the Department's antitrust review " focussed v

! principally upon the effects which granting the present application would have upon [these] competing utilities" ( Advice Letter, pp. 3, 4).

l The Department's advice letter then concluded that an anti- 1 trust hearing. should be _ conducted by the Commission because Applicant "has substantial market power vis-a-vis its smaller competitors

. .' and may be exercising that power to deny to.those competitors par-ticipation in coordinated bulk power supply to the extent necessary tn

(, - maintain their long-term competitive viability" ( Advice Letter, pp. 5, 6) ~ (emphasis . supplied) .

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Several months later, the Association and the other Inter-

venors filed a " Joint Petition to Intervene and Request for Hear-ing," dated October 4, 1971. The Association and- the other Intervenors endorsed and repeated the allegations set forth in

,, the Department's advice letter and requested the right "to I \

's participate in the Midland Plant, secure rights to wheel such l

'~' entitlements across Applicant's system and seek equitable inter-  ;

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\ " i connection arrangements to effect an integrated power pool. . . .

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(Petition of November 1,1971, p. 4; see also Joint Petition, p. 7).

Clearly, the Association's sole interest and purpose in l

.). intervening is to act as a litigating agent for its members --

i including the twenty-one municipals. Indeed, the statements and j

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actions of the Association in this proceeding have confirmed its  !

status as a spokesman for these municipals. In the Joint Petition (p. 2), the Association justified its participation in this pro-i ceeding in the following manner

The Michigan Municipal Electric Association g

(" Association") is an organization comprised of of ficials of thirty-four (34) municipal electric l

,. departments or utility boards in the State of 1

) Michigan. The Association's objective, among

' o thers , is that of assisting member utilities in the production, distribution and use of electricity

', for public service and resisting any pressures t brought that are harmful to its members' mutual well-being or that encourage the sale of municipal e utility systens.

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i 1/ On November 1,1971, an additional cooperative system s- also filed a petition to intervene.

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f . r-(h I At ltdub Prehearing Conference' . called to consider- the inter-

.A . - vention petitions of the Association and the other Intervenors, 5- Jcounsel.for-the Association' explained its proposed role'in

~'" these.prm '< lings : '

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![T]he-approval of the Municipal Electric Associ--

-f ~ ation was:obtained by vote at'their annual meet-( .ing to seek ; intervention in this proceeding and to represent the interests of all of the municipal

,. . s systems in the state of Michigan who are members u of that association.

I th k that Justice Department letter makes it clear that the interests of these small systems

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. \. is the thing which is one of the key parts to '

this-hearing (Tr. 13) (emphasis supplied) .

) Counsel for the Department, in supporting the Association's

. petition t'o intervene, also outlined the importance of this pro-4b ceeding to..the Michigan municipal systems generally. He stated:

F

(" Here one question is whether or not small systems

, -! in Michigan's lower peninsula are being restrained

from entering into the business of constructing, r operating and selling bulk power supply. from an

- integrated or coordinated system.

\.

And I' think i t would be very helpful to the pro-ceedings -of the .' Board t.c have these small systems j - t represented by their own attorney in this. proceed-

.ing (Tr. 15) .(emphasis supplied).

-l At the Prehearing Conference, the hearing Board admitted

, the AssociationL (and other Iatervenors) as full parties to this

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- proceeding. ItsDdecision to ' allow intervention of the Association ct wasi predicated 'upon the substantial interest which the Board deemed its member systems-to have in the outcome in this proceeding.

[, The-Board concluded at that time

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'We also believe Lthat the Department- of Justice j ' ' ([' ,

represents : the^ interests of the' public at

.. large andidoes" not ne'cessarily represent the interests of: small municipal: utilities, and

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?that 'is.- another basis for our ruling -permitting intervention _ by the _' petitioners ' (Tr.- - 34) . -

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3. . We f also believe, . based on the : advisory letter of the--Department of; Justice,- that the central p?

e - figures in this - case = are ' the local ~ municipal utilAties, and consequently since they are the Q x parties really being discussed in this proceed-

.,_ h they should have full right of intervention i in this proceeding-(Tr. 34-35) (emphasis supplied) .

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The foregoing belies the assertion that the twenty-one -

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I f. ..municipals _ are " strangers." to.this proceeding and makes clear that. they are. participating in this proceeding through their-

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-- Association. The Association does not engage in or propose to d

[ engage 'in the generation, transmission, distribution or purchase of electric power. It has no employees; it.is not itself a cus-1 f tomer loripotential customer of' Applicant; in fact, it has-no

,- present or potential relationship to Applicant or to this pro-N -. cee ding. . Significantly, the relief requested by the Association,.

' inter alia, in its petition :to intervene of October 4, 1971,

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'.would accrue not- to its benefit, but only to the benefit of its 4 member- sys tems , fincluding the twenty-one municipals here who con- ,

g. stitute _- a majority of its . membership. Therefore, to' characterize 1.thh twenty-one aunicipals'as " strangers" to this action flies in

$- :thefface-ofithe-record.

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B. The Interest.Of The'Municipals

.- . -Is MoreLThan " Tangential."

The record in this proceeding also demonstrates that the L

interests of th'e Ltwenty-one municipals in this proceeding are z, '.not " tangen tial. " The twenty-one municipalsTrecognized as much c Lin Jthe 'following passages from their Association's Newsletter of

( October,'1971: '

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[A] t issue in the action before the Atomic Energy.

. ,(, Commission is the - right to buy _ a part of a nu-clear power facility; the right (o wheel power v over ma"or transmission facilities;:and fair and It

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' equitable' wholesale power rates.

Attorney Fairman [has] suggested that the affected q companies should ; consider each utility's five or ten

-< year = future needs, reliability of' service, and the

.effect of Consumers Power ~ policy'on future operations-

< The possible dateEfor pre-trial hearings is estimated

[ .as January, 1972.,

'In their report to the MMEA Board of Directors,.

-) Mr. Riemersma and Mr. Hief tje pointed out that .

the positive effects of this intervention would accrue to every municipal electric operation in I, the state, - regardless of whether they were

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actual intervenors.

, The cost of' this suit will not be small, but

! ,_ the issues involved should be obvious to everyone i j- who is interested.in municipal electric owner-

'~ ship. To put -the - matter on the line, this is one-case that'municipals and-co-ops cannot i afford' to lose - (emphasis added) .

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f j-  ; More importantly, the hearing Board itself ~has recognized a 4 '

the significant interesti which these twenty-one municipals have q

in the' instant proceeding. - One of the issues in controversy in this proceeding, as set forth in the Board's order of August 7, :1972, is whether the Applicant has' used its alleged

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t, monopoly power in an .anticompetitive manner against " smaller utilities r,

7 sys tems " =,(p. 3) .

And, as noted above, the hearing Board admitted ,

the Association ~ as a full party- to this proceeding because "the

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central figures in this case are the local municipal utilities" (Tr. 35) _ (emphasis supplied) .

}. The interest.of these twenty-one municipals was reaffirmed

..-s by the Board at_ a recent Prehearing Conference. When asked by Board member Clark whether the Justice Departmant would "be willing to exclude g evidence with regard to g small municipality or'small power company who is not an intervonor ar

(, in this case," the Department's . counsel replied, "No, your honor,.

I would not" -(Tr. 217) (emphasis supplied) . At the same Conference, V

the Chairman of the' hearing Board observed to the counsel for the t

. twenty-one municipals that "the members of your association, whether -they are intervenors or not, obviously will get some

[;. _ benefits out of' a- favorable decision to your intervenors. . . .

[I] t is the association that i.s doing the representing for these L ~ people ;[the twenty-one municipals] and . . . in ef fect, they are

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also' assisting _ the other-member.s of that association" (Tr. 215-215) w

- (emphasis supplied) .

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t .,.

(- Thus , the hearing Board hr.s found, and the record amply g ~ affirms, that the twenty-one municipals who claim in their Appeal V to bee " strangers" te this proceeding ^are, in fact, significant figures in the action and have' a significant interest in

( ~

which ;is represented by their Association -- a party to this

' proceeding. In light' of their significant interest and the

, partlcipation.of the Association on their behalf, discovery r

s. againsh ~ the twenty-one municipals is particularly appropriate.

~'

This Appeal Board should, therefore, not permit these municipals I to avoid relevant discovery demands required under the Commis-f sion's ERules of Practice simply because they have chosen not to become named parties to this proceeding. Simper v. Trimble, 9 1

1/

F.R.D. 598 (W.D. Mo. 1949).-

5 S

1/. See, also,-Natta v. Hogan, 392 F.2d 686 (10th Cir. 1968);

Parre tt v. . Ford Motor - Co. , 47 F.R.D. 22 (W . D . Mo. 1968);

.and Firemen's Mutual Insurance Co. v. Erie-Lackawanna '

R. R. Co., 35 F.R.D. 297, 299 (N . D. Ohio 19 6 4) , where the court held:

O It would not be just,. in that plaintiff would l be entitled to obtain from. defendant informa-t L tion which the ' defendant might possess as to the operative facts of the action, whereas

-i defendant would be denied'the same opportunity t..

of inquiry"to the plaintiff.

4

' I.

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II. THE HEARING BOARD DID NOT ABUSS ITS DISCRETION IN HOLDING APPLICANT'S DISCOVERY .TO THE 'IWENTY-ONE MUNICIPALS TO BE RELEVANT.

\

In their Motion to Quash of January 9,1973, and in their oral argument. to the Board at a subsequent Prehearing. Conference,

,. 'tte twenty-one municipals argued that virtually all of Applicant's t

i discovery requests are not relevant. At the aforementioned Con-ference,- the . hearing Board considered the municipals ' objections u

on an item-by-item basis and sustained several objections on the r; l/

ground of alleged irrelevancy (Tr. 219-320). Although the

{

,. Board's item-by-item review consumed several hours, it later 1

t' reconsidered the relevancy issue 'at the request of the municipals

( and ruled as follows:

i Although relevancy had already been ruled

, . upon by the Board, both individually by item (Tr. pp. 219-320) and as a whole (Tr. p. 323),

and the Third Prehearing Conference Order (pp. 2-5) ordered the discovery to be complied with as relevant, this point was further argued

\- by the Municipalities in the Supplemental Motion (page 5 line 9 to page 9 line 9) . The Applicant

'~

made its argument as to relevancy in its answer

( to Motion to Quash, January 19, 1973 (page 5 lines 1-18) , and elaborated on at page 5 line 19 i

to page 7 line 17. As to the discovery allowed by the Board, the showing by Applicant is deemed adequate.- The Board adheres to its ruling as to relevancy. 2/

i

\

1/ Subsequently,- these requests were either deleted from

( Applicant's -discovery which is here under review or modified to the satisfaction of the hearing Board.

-s 2/ " Order Denying Supplemental Motion . . ., filed March 5, 1973, p.'3.

L

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~

r-T In view of the hearing Board's ' close f amiliarity with the

. proceeding and its exhaustive consideration of the relevance of Applicant's discovery, it is submitted that the Appeals Board

. should give great weight to its determination. Particularly

{ as to issues as to the relevance of discovery, "the trial judge has considerable discretion and his order should not be disturbed unless there has been'an abuse of discretion. . . . In Re

' Surety- Associ' tion of America, 388 F.2d 412, 414 (2nd Cir. 1967)

(subpoena duces tecum to non party) ;. De Wagenknecht v. Stinnes ,

r 243 F.2d 413 (D.C. Cir. 1957) (deposition).-1/ In light of the

[

expansive scope of the issues raised, the record in this case

~

supports the hearing Board's determination that Applicant's dis-

.)

covery of the twenty-one municipals is relevant to this proceeding.

A. The Discovery Is Relevant To Elucidate Issues Plainly Raised In This Proceeding.

According to the Department, the Association, and the other

In te rvenors , Section 105 (c) of the Act requires a detailed exami-i.

nation o?. Applicant's system and its operations vis-a-vis other

( electric systems -in order to assess. the competitive " situation"

_ , in the. Michigan area. Thus, the Department has argued that A

" Applicant's position that the Commission's inquiry must focus

( exclusively on Applicant's activities to construct and ultimately t

to operate the Midland units 'and only those activities' is clearly iL erroneous" ' (" Reply of . the . Department of Justice . . .,

filed June 9, _1972, pp.-4-5).

The twenty-one municipals' Association

- L.

i fl/ It is recognized that the Appeals Board, standing in the

.... ' role lof- the Commission, may have a broader review than a federal court of appeals , but it is submitted that the principle is - sound, and should be applied here,

.4

l ..

(

i V and the other Intervenors have endorsed the Department's expansive j' view as to scope and have asserted that the Commission's antitrust

\_

review under Section 105(c) should be " coextensive with the inter-

/*

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related problems of concentrated control over nuclear power plants for electric. power production and the concern of conduct in the

s. planning, ' coordination and arrangements required to integrate these massive plants into' regional or area programs to benefit all electric

)'~ ~

systems and the consumers they serve" (" Statement of Petitioners c, . . ., " filed June 9, 1972, p. 15).

W t

In its order dated August 7, 1972, the hearing Board " deferred"

f. ruling whether the views as to scope of the Department, the Associa-tion, and the other Intervenors , are correct, but directed that j

these views would govern the scope of the " relevant matters in controversy" for discovery and evidentiary purposes ("Prehearing Conference Order . . ., " August 7, 1972, p. 3) .

\. The general provisions of the Commission's discovery rules provide that " parties may obtain discovery" regarding any relevant matter "whether it relates to the claim or defense of the party

. seeking discovent or to 'the claim or defense of any other party

(

. . . ." (Section 2.740 (b)(1) of the Rules of Practice) (emphasis

(. supplied) . Similarly, according to Section 2.720 (f) (1) of the Rules of Practice, a subpoena may be quashed only upon a showing i 1/ Thus , the suggestion in the Appeal (p. 64) that Applicant t favors " expanding the scope" of this proceeding is obviously

' inaccurate. See Part -V ' of this pleading, ' infra.

i' O

'i 7.

}

s 4

- r-( that it is " unreasonable" or that it seeks evidence "not relevant 1/

,~ to any matter in issue" (emphasis supplied) .-

J\

Among the Applicant's principal claims and defenses to f the matters raised by the De'partment, the Association, and the

~\.

-other Intervenors are that (1) Applicant's wholesale service to J'

area municipal and cooperative systems provides adequate " access"

,. to the benefits of nuclear generation or coordination, (2) that this service permits these systems to be financially an ! com-

- (- petitively viable to the extent permitted by law, and ( 3) that

(

hence, Applicant has not " denied access" to its coordinated r

q system and no situation inconcistent with the antitrust laws is presented. Since the hearing Board's order of August 7,1972, specifically identified " access to coordination" as the " basic

. thrus t" of the Depart. ment's case (p. 3) ,. Applicant's foregoing claimsf and defense with regard to the " access" issue are clearly

\ ..

i -1/ The scope of discovery permitted by subpoena is no less broad than that permitted under other discovery vehicles.

It is .well-sectled that subpoenas should not be quashed absent a strong showing that the information sought can

( have "no possible bearing upon the issues." Dart Industries Inc. v. Liquid Nitrogen Processing Corp. , 50 F.R.D. 286, 292'(D. Del. 1970). Further, since the twenty-one municipals i

\. seek to quash the subpoenas in their entirety, not simply to' modify them, they must satisfy a "particularly heavy

. burden" in support of their allegations of unreasonableness.

Horizons Titanium Corporation v. Norton Co. , 290 F.2d 421,

( 425 (1st Cir. 1961). -Here, the twenty-one municipals' have not satisfied this burden in view of the hearing Board's

c. finding that the requested data and documents are germane to .this proceeding and essential to Applicant's case.

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j relevant to this proceeding and appropriate for discovery under the Commission's Rules. .

In their Appeal', the twenty-one municipals insist that Applicant's discovery concerning their systems ' financial and

(.

competitive viability is beyond the permissible scope of dis .

, covery because they deem the viability issue to be an irrelevant

, " red herring" ( Appeal, pp. 27, 67). This view ignores both the law and facts of this proceeding. As to the law, the Commission's Rules permit the Applicant to pursue discovery relevant to its claims and defenses, whether or not another party deems such claim or defense to be relevant. See Section 2.740 (b)(1) .

In a like manner, the municipals ignore the fact that the competitive viability of these systems has been put in issue by the Department and the Association, as well as by the Applicant.

As noted in Part I, supra, in the Department's " advice" letter

, of June 28, 1971, the Department alleged that Applicant "may be exercising that (market] power to deny to those competitors s

participation in coordinated bulk power supply to the extent

-f necessary to maintain their long-term competitive viability" h

/ (pp. 5, 6). Similarly, the Department has supported its document

( demands , - inter alia, with the rationale that the requested ma-

, terial shows "particularly well the effect of cost-price squeeze on a- small system which, lacking access to coordination, is ' om- c

. pelled to deal with its vertically integrated competitor for its

.~

bulk power supply" (" Answer of the Department . . ., " filed November 2, 1972, p. 34) (emphasis supplied) .

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' Thus , 'the record supports the Board's . finding, compelling the conclusion that data bearing on the twenty-one municipals '

(~ " competitive viability" and the " cost-price squeeze" are relevant p to - this - proceeding.

Competitive viability can be demonstrated -in some instances by a~ showing that' a municipal system's retail rates compare

, favorably with Applicant's, and that at these rates the system t

(, has grown, has ~ maintained a reasonable rate of return, and will p continue to grow and prosper after the licensed units become 1-

operational. Where a municipal system's retail rates do not

'f ;

i presently. compare favorably with Applicant's , Applicant's discovery seeks to ascertain whether these rates could be lowered to a com-petitive level, without jeopardizing the financial viability of

, the sys tem. Such a financial viability analysis, of course, requires an examination of the. system's revenues and costs --

I including , : for example, the value of services that the electric

- \,

system provides to non paying sources such as the municipal gov-ernment, and the extent to which revenues produced by the electric

~

system are used for. non-electric system purposes.

The information which Applicant seeks through its discovery I of the twenty-one municipals is essential for the- preparation of l

F the aforementioned competitive and financial viability analyses

( :in this' proceeding. The requests deal with documents and data required for such an analysis of competition, e.g. , comparative b

rates, ' customer data, bill analyses '(document requests 1(c) and l-u l'

u_ ~

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_.21 -

- . (d) ', 2,.3.an'd 4(b); interrogatories 1 to 6, 45 and i

46), efforts and ability to compete (document requests 4 (a) ,-

i (c), and (d) , 5 (b) and (c) , 7 (d) , . and 9 ; interrogatories 7-12, r- 47-49, 51-55,-57-60, and 74-79), legal or other factors affecting compe tition (document requests 4 (a) , 12, and 13; interrogatory 56) .

F Other requests are necessary in order to analyze the financial t

and operating characteristics of each system which affect its competitive viability and its ability to coordinate with others,

~ e.g., income and balance sheet data (document requests 1(a) and (b), .3, 5 (a) and 8 (b) ; interrogatories 16-38 and 50), and its

[ customer growth patterns by class (interrogatories 39-46) .

(

Finally, the remaining discovery sought by Applicant deals directly with-issues raised by the other parties herein concerning f

, each municipal system's bulk power supply (including self-generation)

- characteristics and - the impact upon these systems of the relief

[ which the Department, the Association, and the other Intervenor.s L .

have proposed, e.g., joint planning, reserve sharing, unit cales ,

and wheeling (document requests 6-9; interrogatories 64-70, 73 and 80).

In addition to the question of " access ," the Department, i l :the Association, and other Intervenors have raised issues and l

i have sought discovery concerning Applicant's allegedly anticompetitive

(' conduct concerning, inter alia,- bulk power supply, interconnection i

l arrangements, and competition for retail customers.-1/ Many.

g.

i. 'l/- See, e.g., Department of Justice advice letter in this pro-

-ceeding:of June 28, 1971, pp. 3, 5-8; Joint Petition to In-l tervene and Request for Hearing, filed October 4, 1971, L. _ pp. 7-9.

1

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of Applicant's document requests and interrogatories are also 7

relevant to these issues and to Applicant's claim that it has engaged in no anticompetitive conduct (see document request f~ l to 9; interrogatories 10 to 12 and 56 to 81) .

Applicant's need for full discovery against the 21 municipals r

is underlined by the extensive-1/discovery requests by the Department,

. the Association, and other parties which have sought the details of Applicant's relations with other utilities -- including the

^

2/

twenty-one municipals.- These demands raise the distinct possibility that Applicant will be confronted with evidence t

{ respecting such relationships which it will be handicapped in rebutting absent full discovery. Thus , in the Joint Document

[

1/ To date, Applicant has been served with the following

,- discovery demands in this proceeding: Nineteen in-l terrogatories from the Commission at the behest of the t

Department (February 25, 1971); four interrogatories from the Department (June 4, 1971); four document requests by

[ the Department (October 29, 1971); twenty-five interro-i gatories from the Commission staff (November 8, 1971);

thirty Joint Document Requests from the Department, the e

Staff, the Association, and other Intervenors (July 26,

( 1972); four document requests from the Department (August 16, 1972); seven document requests from the Association and other Intervenors (September 21, 1972);

i and 235 requests for admission and interrogatories from L the Department (February 12, 1973).

2/ This discovery also inquires into such matters as rates -

( and promotional activities; the details of Applicant's generation , transndssion and distribution facilities ;

r its operating and planning characteristics, including

! its pooling and interconnection arrangements; and its financial condition - and accounting methods.

/

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., Reques t, filed July 26, 1972, Applicant's adversary parties herein 7 (including the Association) defined a " utility" to include all electric systems in the United States and the Province of Ontario I (p. 4) and sougnt (and have received) extensive information about T

Applicant's conduct vis-a-vis these systems -- without regard to 3

j whether they are intervenors in this proceeding or wholesale

- customers of Applicant.-1/

For example, one item from the nearly 150 subsections of

" 2/

the Joint Request seeks all " documents" relating to "cos t I

( 1/ In response to this Request alone, Applicant has reviewed

3. 8 million document pages and has supplied 20,000 pages of material to the Department, the Association, and to j

f other parties to this proceeding.

-2/ Although the Appeal complains (p. 41) about the Applicant's (1 definition of the word " document," unlike the Joint i - Document Request filed, inter alia, by the Association, most of Applicant's requests do not call for all documents, 7: but- rather confine the request to curtain specified cate-(' gories, e.g., studies and reports. Also, the definition of document contained in the Joint Document Request is at  ;

,.. least as broad as Applicant's definition. The Associa-  !

tion's definition reads (p. 3) :

L.

2. " Documents" (except "ECAR Documents")

means all writings and records of every type

i. in the possession, control or custody of the company, its directors , officers , employees or . agents, iracluding but not limited to memo-I randa, correspondence, reports , s urveys , tabu-lations, charts , books , pamphlets , photographs ,

, maps , bulletins , minutes , notes , diaries , log

! sheets, ledgers, transcripts , microfilm, com-l puter printouts, vouchers, accounting state-ments, engineering diagrams ("one-line" dia-

[ grams), mechanical and electrical recordings, L telephone and telegraphic communication, speeches, and all other records , written, l< electrical, mechanical or otherwise.

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0 -- 24'-

-,. ~ analyses- or estimates of other Michigan electric utilities' f system operations" and " comparisons of costs, rctes or services of the Company vis-a-vis other electric utilities serving or-Male to serve in contiguous ~ areas of Michigan at wholesale or

.'~,

re tail" (Joint Document Request, s upra , item 5 (j ) ) . In defense

(

[ of -the breath of the Joint Document Request, the Department,

, the Association, and the other Intervenors have asserted their i

V need to discover "Ehe entire record of [ Applicant's] day to day relationships" with other electric utilities, including the s

twenty-one municipals (" Answer of the Department,"

filed November 2', 1972, p. 26; see also " Answer of Intervenors

. . ., filed November 1, 1972, p. 5).

h It should also be noted that the Department has not con-f~ fined its discovery to named parties in this proceeding. Several l

months ago, at the behest of the Department, the Chairman. of the 7-

[ hearing Board issued subpoenas directed to five of Applicant's

,_ . neighboring investor-owned utilities (and to the City of Lansing's 1/

1 electric system, one of the twenty-one municipal systems) . -

Through these subpoenas, for example, the Department has obtained .

documents relating to Applicant's relationship- wi.th the City of 9

t Paw Paw, which is one of the twenty-one municipals herein and

(

L These subpoenas were issued to the Lansing Board of Water

~1/

and; Light and Edison Sault Electric Company (per the De-

' partment's Application of December 13, 1972); and to Detroit s Edison Co.,.American Electric Power Co., Northern Indiana Public: Service Co. , and Toledo Edison Co. (per the Depart-z ment's ~ application of November 10, 1972).

f Yn>

1 4

is not a wholesale customer of Applicant or located within its franchise ~ territory.

Thus , contrary to suggestions in the Appeal, neither the Department, the Association, nor the other parties have confined the issues or their discovery to the five intervening electric systems or to Applicant's wholesale customers. Rather, the other parties have sought information about, and from, systems located throughout Michigan and contiguous states. To permit the inter-vening parties and the Department to press broad allegations and to pursue extensive discovery against Applicant (and others) with regard to electric utilities throughout Michigan and beyond while at the same time to confine Applicant's discovery to the five intervening municipals systems would clearly be inequitable and improper.- As the hearing Board has held:-1/

If it is found that a situation inconsistent with 1 the antitrust laws will be maintained by issuance of the license sought by Applicant, then such license, if issued, could be subject to conditions deemed by Applicant to be economically severe.

Applicant has a right to contest the contentions of the other parties 'to this proceeding by every lawful means , including relevant discovery.

.% It is clear, there fore , that the hearing Board did not abuse

~

p its discretion in finding that Applicant's discovery requests are

(

relevant to controverted issues of this proceeding.

I i-1/ " Order Denying Supplemental Motion . . ,, " dated March 5,

. l 1973, pp. 4, 5.

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, .B. The-Applicant's' Discovery Is Not Im-properly. Cumulative - Or Repetitive.

~

There :is also substantial support .in the record for. the Board's ruling . that ' Applicant's discovery against each of the I. twenty-one municipals is non-repetitive and' essential to the

- 1/

i ' elucidation ofl .these ' iss ues .- ~ The twenty-one municipals ' sug-

-(

gestion that Applicant does not need information about each sys tem '. ( Appeal, p. 46) has no basis in fact.

, The information that Applicant seeks from the twenty-

~

u one'municipals will not be duplicative or cumulative. The

.c l parties have not as yet defined the relevant geographic markets and sub-markets in this proceeding, but 'such markets may well I-

'l . include each electric system located in the lower peninsula of Michigan. ,0f course,. a thorough market analysis cannot be made until compliance with Applicant's discovery is . achieved.

.e In addition to requiring the data in order to formulate

. its relevant market analysis, Applicant needs . data from each municipal,- since each system has different operating, fin ancial, and competitive characteristics. For example, the limited data f

.{; presently available-2/suggests that, while in 1971 both the South I t

• 1/ -The hearing Board found that " Applicant's need and right

, , - to self ' defense" ' justifies discovery of these sys tems. .

! (" Order Denying Supplemental Motion . . ., " filed March 5, d 19 73, p. 5).

( :. 2/ . Thel data ' have, been gleaned from reports filed at the.

'('

~

'Pederal1 Power Commission. For the reasons set ' forth in

'Part. IV,finfra, ' these sources are Jinadequate for Appli-

.t.

icant's-needs-in the proceeding.

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' _( B..'The Applicant's. Discovery Is Not Im-properly-Cumulative Or Repetitive.

ETherafis als'o ' substantial ^ support in the record for the-

~

Board's. ruling that Applicant's discovery against each of the j'

( itwenty-one municipals 'is non-repetitive and essential to the 1/

'm . elucidation' of these issues.~ - The-twenty-one municipals' sug-

. gestion that' Applicant does not nee'd information about each ,

. sys tem -( Appeal, 'p. 46) has no basis in fact.

The'information that 2 Applicant seeks from the twenty-

. one municipals will not be duplicative or cumulative. The t

. parties have not' as yet defined the relevant geographic markets 1, and sub'-markets in this. proceeding, but such markets may well r

~ include each electric -system located in the lower peninsula of Michigan. Of course, a thorough market analysis cannot be made r ;f . :

i . ,C until . compliance with Applicant's discovery is achieved.

p-  ;

, - r: .In. addition to requiring the data in order to formulate F "

its ' relevant market analysis, Applicant needs data from each l municipal, since 'each system has different operating, financial,

s. E and - compe titive ~ characteris tics'. For example, the limited data

-f.' . , 2/

presently availableEsuggests ' that, .while in 1971 both the South 7(;

,The chearing Board -found_ that " Applicant's need and right

1/

toiself defense" ~ justifies discovery of these" systems.  ;

. 1.. .(" Order. Denying Supplemental. Motion . .. . ., filed March 5, I

'T 9- j1973, p.'5)~. '

, t- -

52/i The ' data 'have been. gleaned froml reports filed at the

' Federal ~ Power Commission. . For the reasons' set forth in -

i.

, c _ e Part 'IV, . infra, ;theselsources are ' inadequate for . Appli-

g. cant's needs:in-the proceeding.

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Haven and Bay City municipal systems charged lower rates than Applicant, South Haven earned a return which was 20 percentage points higher than Bay City's return during this period.

~

Similarly, Applicant's limited data reveals a disparity of 40 '

L.

percentage points between the 1970-1971 profit rates of the cr

{ Portland and Petoskey municipal systems. These examples compel the conclusion that each municipal system has different financial and competitive characteristics which must be individually examined.

C. The Discovery Has Not Been Sought On A Discriminatory Basis.

Lastly, this Appeal Board should reject the twenty-cr.e municipals' allegation that Applicant's discovery is " blatantly dis criminatory" (Appeal, p. 46). The Appeal's complaint in this e

regard seems to be that Applicant has engaged in too little dis-covery. "Why hasn't Alpena been' subpoenaed?" the Appeal asks (p. 47).

Conceding arguendo the relevance of this charge to the

~

propriety of Applicant's efforts to secure information from the twenty-one municipals, it is groundless. Firs t , Applicant has 1

confir.ed its discovery to systems in the lower peninsula of Michigan,/

i

}

l J/ The. lower peninsula contains four large investor-owned i utilities , .'ncluding Applicant. Applicant pools with one (Detrott Edison), and is interconnected with the

.J other two. All of the twenty-one municipals are lo-t cated in the lower peninaula of Michigan. Sixteen are located within or adjacent to Applicant's service area; of these sixteen systems, ten (including Lansing) are l'

wholesale customers of Applicant; two (Hart and Lowell) are interconnected with intervening parties to this i .

L (Cont'd. on p. 28)

'f g , , , - '*

(-

(

( since it regards this as the most probable area of market analysis. Extensive formal discovery against non-party

- invester-owned utilities and rural electric cooperative dis-tribution systems has not been necessary since these systems are subject to the iurisdiction of the Federal Power Commission, i the Rural Electrification Administration, and/or the Michigan

(

Public Service Commission and are required to file detailed l

reports with these bodies. These reports have been obtained, and have proved an adequate source of data, in most instances.

Since Michigan municipals are not subject to federal cc state jurisdiction, their reporting practices are sporadic and' inadequate for Applicant's purposes. Accordingly, Applicant is compelled to seek extensive information from all twenty-eight lower Michigan municipal electric systsms which sell power at retail.

I 1/ (Con t' d. from p. 27) proceeding which are, in. turn, interconnected with l I

, Applican c; one (Lansing) is directly interconnected with Applicant. Three systems (Croswell, Clinton and Wyandotte) are served by Detroit Edison, which, together with Applicant, form the Michigan pool. Five systems l (Dowagiac, Niles, South Haven, Sturgis and Paw Paw) i are wholesale customars of other lower Michigan utilities l

]s with whom Applicant is interconnected and to whom the Department has issued subpoenas.

)

1 i 1/. Examples of the inadequacies are set forth in Part III, infra.

t 2/ The Detroit Public Lighting Commission to which the j Appeal refers (p. 47) does not sell power at retali

. or wholesale and, therefore, could not be deemed a

" competitor" of Applicant.

7 ,

t l I Two small systems have voluntarily supplied date to Applicant, s

while the five intervening municipal systems have agreed to

,. comply with discovery comparable in scope to that here sought.

Thus, Applicant has been forced to seek information only from the twenty-one municipals because Applicant needs the informa-tion they alone possess and because they alone have resisted Applicant's discovery efforts.

In view of the foregoing, it is clear that the hearing 4

Board was justified in finding discovery of the twenty-one to be essential to " Applicant's need and right to self defense" and that the Appeal's complaint about discrimination must be rejected.

III. THERE IS NOTHING IN THE RECORD TO SUPPORT MUNICIPALS' CONTRADICTORY CLAIMS THAT AP-PLICANT'S REQUESTS ARE " UNREASONABLY BURDEN-SOME" OR THAT RESPONSES ARE " EASILY OBTAIN-ABLE" BY THE APPLICANT.

The Appeals Board can quickly dispose of the twenty-one municipals' contradictory and unsupported claims that (1) Applicant's discovery would " place an unconscionable burden" on them, and that (2) Applicant "can obtain virtually all information that it seeks" from public documents (Appeal, pp. 39, 59).

i At the most recent Prehearing Conference in this proceeding, the hearing Board considered the municipals' allegations as to burden on an item-by-item basis. Following such consideration, the Board significantly reduced the scope of Applicant's discovery k

, 30 -

against them, by deleting or requiring modification of more than i 1/

o one-half of the document requests and interrogatories. At the behest of the twenty-one municipals, the hearing Board again considered allegations of burden with regard to the Applicant's revised, more narrowly drawn discovery. The Board denied the objections because the municipals had failed to adduce any

" convincing evidence" concerning burden (" Order Denying Sup-plemental Motion . . ., filed March 5,1973, p. 4) .

• The Commission's Rules of Practice do not preclude dis-covery which causes inconvenience or puts a party "to some trouble and expense." Cf. Klausen v. Sidney Printing and Publishing Co., 271 F. Supp. 783, 784 (D. Kan. 1967). Rather ,

aggrieved parties must seek a protective order and prove " undue burden or expense" -- a matter that "is clearly within the discretion of the trial judge." Section 2. 740(c) . Chemical

, and Industrial Corp. v. Druffel, 301 F.2d 126, 129 (6th Cir.

1962) . (emphasis supplied) .

l t

' 1/ The Board assumed in its rulings that the scope of the discovery against the twenty-one municipals should be narrower b, than that against- the named parties (Tr. 216) (a view la with which Applicant ' disagrees. See p. 6, footnote 1, supra) . The hearing Board's modifications are contained

, in the transcript record (Tr. 219-320), in the " Third

_j Prehearing Order . . ., " filed February 16, 1973, pp. 2-4, and in the " Order Granting Applicant's Motion . . ., "

filed February :27, 1973, pp. 2, 3.

9 Wholly apart from other considerations, the claim of burden

, must be rejected because the twenty-one municipals signally offered no evidence whatsoever about the burden of responding to any par-

~

ticular item in Applicant's discovery. (For example, item 1 of the document request requests the municipals' rate schedules and financial statements. Since Applicant seeks only to inspect such

__ socuments, Applicant cannot fathom what burden would reault from i compliance with this item.) Since the municipals have never iden-tified which items they deem burdensome, there is no evidence in the record to support their conclusory allegations about burden.

White v. Wirtz, 402 F.2d 145 (10th Cir. 1968). -

The only support offered for the claim of burden is a list which purports to contain the time and money requited by each municipal to respond to Applicant's discovery (Appeal, p. 44).

The list, which was considered by the hearing Board (Motion to

, . , i

- Quash, filed January 9, 1973, p. 23), is unpersuasive and inade-L.

quate in at least four essential respects.

_ In the first place, the list is internally inconsistent and lacking in credibility on its face. For example, the City of Lowell estimates that the effort to respond to Applicant's )

. discovery will consume only 50 manhours of time while Paw Paw --

whose system is smaller than Lowell's -- claims the effort will 1

_ take 20 times longer. Similarly, the City of Hart states that the effort will cost between $3,000 and $5,000 to complete, while w

s

Chelsea -- whose system is. smaller than Hart's -- claims that its discovery expenses will be more than $50,000.

~

These and i

other discrepancies reveal the estimates to be self-serving

, ' speculation without basis in fact.

In the' second place, although more extensive data and document requests have been' served upon the five intervening 1

'~ '

municipals~/ (whose system sizes compare with those or the twenty-one municipals), these five have made no objection as to burden (or as to any other alleged infirmity) . Indeed, subject only to modifications negotiated by counsel, these five municipals have agreed to supply the requested information and have never alleged compliance to be expensive or time-consuming. This experience verifies the hearing Board's finding 4

that the effort required of the twenty-one municipals will not be unreasonably burdensome.

.  : Third, the list included in the Appeal is identical to the list presented to the hearing Board prior to' the Board's substantial modifications narrowing the scope 1 of the discovery (see pp. 29-30, supra) . The municipals fail to- explain why no revision of their alleged estimates 3

1/ " Applicant's. Initial ~ Interrogatories . . . , " filed Augus t 4, 1972. The Appeal's . allegations that this discovery is

" virtually identical" - (p. 13) in . scope to that against

'. the twenty-one municipals is incorrect since~ the hearing Board ' substantively modified and reduced the

- later discovery, as noted above. See also p. 36, infra.

~

I 6

+

. . ~ . - _ . - , . .

'33- ,

were made in light of these modifications. They also fail to

, explain why Applicant's discovery. will' be more burdensome to

smalle'r systems. The hearing. Board's observation in this regard 4

seems irrefutable: "In.the absence of convincing' evidence-to the i

contrary, the Board has difficulty in believing that these few

employees could have-produced unlimited quantities of documents i .

_c which,must be' searched." Order of March 5, 1973, supra, p. 4.

Finally,.the municipals' list of time and expense required to respond to the interrogatories is belied by the statement in

.the Appeal- (p. 59) that:

[M]ost of-the information [ sought by Applicant) is

.a matter of public record and easily obtainable by

, Consumers Power. . . . .Th us, for the asking, Con-

. sumers Power has available to it a m2ss of public reports which fully detail cities costs. (emphasis

supplied).

If the information is a~vailable to them "for tae asking" i

, as the'municipals suggest,.it~is understandable that the hearing

. l l  ;

Board found. "no convincing evidence" of undue' burden.

It should be noted, however, that reports reflecting costs ,

If which these' twenty-one municipals'are said to possess frequently are not all available at public depositories. For example, although

~

FPC Form 1-M calls'for data that is essential to Applicant's defense, the FPC depository contains 1-M reports from only eleven of the twenty-one municipals-for 1971'and only four of twenty-one for 1961. l l-  !

. 1

.. l

.1/ In !the Appeal (pp. 60-61),.the. twenty-one municipals make-refer-l 4

.ance_for the first' time to certain reports filed, e.g., by the

. City of. Lansing's: electric system with the Michigan Public Ser-

vice Commission :(NTSC) and the-State Treasury Office. Applicant.

', . has examine.d municipal: filings att the MPSC and' has. found them as lincomplete~and inadequate as the FPC filings referenced in the text, infra. - Similarly, Applicant has sampled municipal audit 6

wv+- ~ ~ N,~' ~- *- 'c4 +-w~e ww ~1 o' w= * '-'w- -*- M ~v.=

r-In addition, even where filings were made, the submitted data

~

is' of ten obviously deficient. For example, in 1965 the Marshall Form I-M rcports_that, contrary to the FPC instr:uctions, sales p ,

taxes are included in the revenue figures given. However, the amount of ,these taxes is not provided, so that it is impossible to segregate utility revenues. The 1970 Hillsdale Form I-M pro-

~

videg another example of obviously inadequate reporting. Its income statement indicates interest on long-term debt to be

$9,281.25, while the long-term debt schedule shows the year's interest'to be $7,087.50.

Such discrepancies may not be revealed at all on publicly-filed forms. For example, Applicant has recently learned by chance that the Sturgis municipal system's 1970 Form I-M understated its net income by $120,000, or 27.2%, thus grossly ndsrepresenting the true extent of the system's com-petitive and financial viability. Examples of such dis-crepancies are widespread and could be easily multiplied.

~

Further, even where a Form I-M is filed and completed correctly, it does not provide all the information which Applicant needs. For example, the Form I-M does not require that " contributions in aid of construction" be segregated according to type of. plant. Thus, for Lansing'rc, system in

~

1/~ (cont.) reports filed at the State Treasury Office and has

_ found them less comprehensive and less complete than the com-parable-FPC Forms 1-M and.12, discussed in the text. (In addition, material filed with the State Treasury Office may be inspected but not copied). The rate schedules and board minutes which the Appeal states are found in the City Clerk's office do not provide information about costs and are, of course, not adequate for Applicant's needs.

e r

>.. L, m

_.35 -

11965 and 1970, - one cannot determine what portion of contributions in aid ofi constructi' were contributions in aid of electric cons truction ..

The only other readily-available source of information, the ' Federal. Power Commission Forms 12 and 12a filed annually by each of the- twenty-one municipals , is also -inadequate for Appli-cant's purposes . - Although these forms purport to provide sales and customer data by customer class, no uniform guidelines have been-' established by the FPC for the classification of customers, eg. , residential, commercial, or industrial. Thus, what one

~

x ,

municipality classifies as industrial customer may be considered a commercial customer by another..

In. addition, a review of their Form 12's which are avail-able reveal that given municipals 1 appear to change their individual customer classification system from year to year, even though no a explicit reference is made to this fact on the forms which they 4

file. For example, in 1961, -the Form 12 filed by St. Louis shows one industrial custoner (with sales of 965,900 kwh), while in the

{

Efollowing year-St. Louis reports 18 such customers (with sales Dof 11,927,316'kwh). Possibly, but not certainly, this mysterious

,. ' development may be explained _by the fact that St. Louis reported la decrease in ' commercial customers from 201 to 182 between 1961 Land-1962 (and decreased -commercial sales from 2,601,846 to

~

1,750,693 kwh). In any event, the public reports do not provide an adequate basis for establishing the degree of uniform data

~

which -isf essential to Applicant's case herein.

4

/*

! The twenty-one municipals implicitly concede that their

~

public reporting is inadequate, but assert that the foregoing discrepancies "are of a nature that they could have been easily resolved had Consumers Powe; merely telephoned the individual systems" (Appeal, p. 62). In point of fact, the municipals have rejected this approach and have forced Arnlicant to proceed formally. As noted above (Part I, supra) , nine months ago Applicant sought to secure the data here sought through the twenty-one municipals' Association in the hopes of minimizing its own burden and avoiding any inconvenience to the individual municipals. The Association successfully resisted this effort on the technical grounds that the Association itself, as opposed to its municipal members, did not possess the requested data.

Last December, after serving its discovery requests upon the municipals, Applicant offered to meet with counsel for- the twenty-one municipals to narrow the scope or burden of particular discovery items. This procedure had previously proven successful in Applicant's discovery against the intervening municipal and cooperative systems (represented by the same counsel as the twenty-one municipals); there the discovery was considerably narrowed and no objections were filed. In this instance, however, counsel for the municipals refused - to discuss the discovery on an item-by-item basis, but rather insisted that Applicant's  !

discovery did not lie at all against the municipals. j

. l I

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37 -

Finally, Applicant-proposed to the municipals and later

( ~

-r.o the hearing Board (Tr..207-210) that its -discovery proceed c

- under a two-step process: .

Applicant would examine the document '

,- production and a' few interrogatory responses and, on the basis

'of such examination, would_ pursue a'second round of interrogatories..

2 The twenty-one' municipals rejected this' approach also, thus leaving

~ ~

i' the Applicant no_ alternative but to proceed formally with its

~

. . discovery under the . Rules of Practice.

The foregoing ' demonstrates' that the information is not i

e L available to Applicant without resort to the Commission's Rules

- of. Practice. There is also no evidence that compliance by the I twenty-one municipals with the Rules will require an -unreasonable effort. Consequently, Applicant submits that the hearing Board

~

- was amply justified in finding Applicant's discovery against the twenty-one :municipals not to be unduly burdensome.

, IV. .THERE IS NO BASIS FOR REVERSING THE HEARING

! BOARD'S ORDER DENYING CONFIDENTIAL TREAT-

-- MENT OF APDLICANT'S DISCOVERY.

4 In contrast to tNir assertions that "most of the in-formation [ sought by - Applicant] is a matter of public record" and that "municipals must report on the costs of their operations" (Appeal, p._59), the twenty-one municipals seek a reversal of the hearing ' Board's order denying confidential treatment to their " cost and competitive information concerning present operations and future I sqo i

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The hearing planning" (Appeal,.p. 52) (emphasis - supplied) .

Board: considered these allegations, but concluded that (1) "the spirit and the -letter of the law oppose the _ granting of con-fidential status to the [ municipal] records," and that (2) the

~ " desire of the Manicipalities to maintain confidentiality of competitive information must give way to Applicant's need and

(" Order Denying Supplemental Motion right'to self defense"

-l

. . . ., " filed March 5, 1973, pp. 5, 6). Applicant submits that these rulings are amply supported by the record and that

,. the hearing Board did not abuse its discretion in denying

' Applicant's discovery confidential treatment.

e A. The Law Regarding Confidentiality.

r- The twenty-one municipals have conceded (see Order, supra,

p. - 4) that trade secrets and other commercial information are not privileged. See also 8 Wright and Miller Federal Practice i and Procedure, S2043 (1970 ed. ) . (stating that lack of privilege is. "well-settled"; esp. cases cited therein at fn. 16, p. 300).

-. To be _sure the Rules of this Commission provide that "for good

~

cause shown," a person may seek a protective order that "a trade i 1_/ As the Appeal concedes (p. 52) ', . the only discovery objections grounded on a confidentiality claim and presented to the hearing Board are document requests 4 and 5 and interrogatories 7, 8, 45, 46, 59 and 60.

To the extent that the Appeal seeks to raise a more general objection not raised below, elementary principles of appellate practice require that such

, matter not be considered here.

9 W

,y- - -..

1. .

secret or other confidential research, development, or com-mercial information not be disclosed or be disclosed only in a desi'gnated way. " (Section 2.740 (c) (6) . But this rule, which is identical to Rule 26(c) (7) of the Federal Rules of Civil Procedure, requires the person resisting discovery to show good cause, i.e., to show that the information sought is, in

~

fact, secret or confidential, that such person will be harmed 2/

by the disclosure of such information, and that the harm out-weighs the need of the tribunal and the discoverer to obtain the information for an adequate record. That requisite showing of good cause was not made to the hearing Bczrd and has not been made in the Appeal.

The discovery requests challenged by the twenty-one municipals seek to ascertain various relevant characteristics about their largest customers , the efforts utilized to attract and serve such customers , and the reasons why the number of such customers has changed during the past decade. Although

, their precise claim is ambiguous , the municipals appear to suggest that disclosure of this .information may reveal the identity of its retail customers (Tr. 296-297).

1/ E.g., Singer Manuf acturing Co. v. Brother International Corr., 191 F.Supp. 322 (S.D.N.Y. 1960) (sales and price

. data or a competitor is not " trade secret") .

2/ E ., Essex Mire Corp. v. Eastern Electric Sales Co.,

J.

48 F.R.D. 308 (E . D. Pa. 1969) (no showing of competitive disadvantage resulting from disclosure) .

f.

(

However, Applicant has offered on the record to accept

^

responses to the challenged requests in coded form (Tr. 290).

AJ though pressed to do so by the hearing Board Chairman (Tr.

2 9 '. , the municipals have failed to offer any " specific" reasons why this approach will not adequately protect them.

Rather, their Appeal ignores this offer and simply repeats the unsupported allegation that the information is privileged (Appeal, p. 54). Unsupported statements by counsel do not constitute the requisite showing of good cause which the Com-mission's Rules demand. See Sacks v. Frank H. Lee Co., 18 F.R.D. 500 (S . D.N .Y . 1955); Essex Wire Corp., supra.

In any event, the identity and characteristics of the municipals' customers do not constitute a trade secret or other confidential information. There is no question that the municipals' large customers use electricity; since the area in

. . . which they are located is usually served at most by Applicant and one municipal system, the identity of a customer's electric supplier can hardly be considered confidential or secret to the other supplier.

In addition, as the hearing Board concluded (Order, supra,

p. 5), Michigan law requires that the municipals grant any person (including .the Applicant) access to the type of information it

~

seeks here. The . Appeal quotes the Michigan Constitution but makes no reference to the fact that Michigan statutes declare that all' " books, papers or records created or received in any a

s see

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_i

( office 'or agency" of any political subdivision of the State of

. Michigan to be "public property, belonging to the people of the 9

State of lichigan." Michigan' Code of Laws, S28.759. Moreover,

-as the hearing Board noted in the aforementioned Order, it is a

,, misdemeanor for. the official custodian of "any county, city, or township records" to fail to permit examination of the " records and files in his office" by "g person having . . . any lawful purpose." Michigan Code of Laws, S28.760. (Emphasis supplied) . l By this legislation, the StatG of Michigan " intended to  !

r l r assert the right of all citizens, in the pursuit of a lawful 4

business , to make such examinations of the public records in public offices as the necessity of their business might require

. . . ." B'urton'v. Tuite,-44 N.W. 282, 285 (Mich. Sup. Ct. 1889). l Even as to the records in those subdivisions not specified in

~

17 the statute, Micnigan common law affords citizens who demonstrate

.. a requisite interest to inspect public records. Nowack v. Fuller, 219 N.W. 749 (Mich. Sup. Ct. 1928) (newspaper editor is interested

~~

person -in public information) . Thus, for example, the Michigan l

-. l

' Attorney. General has recently interpreted this statute to require i

.. I public access to documents showing the identity and salary of county 2_/

employees.

l 1/, All but three of the twenty-one municipals herein are cities.

Three (Clinton, Paw Paw, and Chelsea) are villages.

2/ See Michigan Attorney General's Opinion No. 2786 and a very recent, unpublished Attomey General's opinion, each attached hereto as Attachment A.

-c -

~

F. .

(

'~

The municipais claim that most of *he information which

/

. Applicant seeks is a matter of "public record" (Appeal, p. 59).

As to the remainder, Michigac. law gives the public access to

, such information. There fore , the municipals have clearly not sustained their burden of demonstration that the information sought in the manner set forth by Applicant constitute trade secrets or other confidential information.

Even should the information which Applicant seeks be

, deemed non public or confidential, the municipals have made no showing that they will be competitively affected in any adverse way. by its disclosure. As the Department observed in its afore-mentioned advice letter in this proceeding (p. 3) , " competition P*

in regulated industries is not the hour by hour competition of the marketplace." For example, Applicant's rates are regulated

' and are uniform throughout its service area, so thcL it cannot

~

reduce its rates to attract a particular customer. Thus, the ,

l twenty-one municipals do not explain, and Applicant cannot fathom, what competitive disadvantage would accrue to the 1

.. municipals, even if the information which Applicant seeks did in fact reveal the identity of their larger customers.

B. Applicant's Need.

Assuming arguendo that the municipals might be disad-vantaged by disclosure of the requested information, the hearing Board was justified in denying the municipals' request for con-fidential treatment in light of Applicant's great need for the i .:

F. .

7 I= ,.

' Where, as here, the relevance of the information information.

' - sought has been established, there is ample case law-1/supporting 1

the hearing Board's decision to require the disclosure of customer e-information -- including such information from non-party competitors in antitrust cases.

Particularly 'in point is Covey Oil Company v. Continental Oil Company, 340 F.2d 993 (10th Cir. 1965), cert. denied, 380 U.S. 964 (1965).

There, several large, integrated oil companies (including Continental Oil) were charged with violations of Sections 1 and 2 of the Sherman Act, inter alia, for " controlling cources of- supply, by fixing and maintaining wholesale and retail gasoline prices, and by suppressing competition (by small com-petitors]." 340 F.2d at 995. The defendant companies caused subpoenas duces tecum to be served on many of their small non-party competitors; these subpoenas required production of in-

. formation relating to the non parties' purchase price of gasoline, their sale prices and gallonage of gasoline sold other than at retail, and the number and location of their competitors' retail customers. I f

,_ f l/'

United States v. American Optical Company, 10 F.R. Serv.

,/ 2d 26a.32, case 1 TN.D. Cal. 1966) (non-party's sales and

,/ profit data); United States v. Aluminum Company of America, 193 F.Supp.-251 (N . D.N . Y . 1960) (non party com-petitor's production figures) ; United States v. Lever Bros.

Co., 193 F.Supp. 254 (S . D.N.Y. 1961) (sales and production Hata of non party competitors) ; VonWitte v. American~ Elite, ,

__ 20 F.R.D. 221 (S . D.N .Y . 1957) (customer list of  !

competitors) .

M 1 - - - - , r e -

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'4 r-

.The Tenth Circuit affirmed the district court's refusal to ' quash these subpoenas on grounds of confidentiality. The

. holding of the Court is equally applicable to the instant case:

. [W]e believe that the showing [for production]

is sufficient under the Sherman Act charges of restraint of-trade and monopoly by fixing gas-oline prices and suppressing competition of independent jobbers. Exploration into the businesses of admitted rivals may well reveal the validity or invalidity of the charge of ,

competition suppression. . . .

The cases relied on by appellants are not '

~

apposite. In neither Hartley Pen Co. v.

United States District Court, 9 Cir., 287 F.2d 324, nor United States v. Serta Associates, Inc. , N. D. Ill., 29 F.R.D. 136, was relevancy established. [1/]

Appellants contend that general relevancy is not sufficient to require a nonparty wit-ness to divulge trade secrets. The claimed trade secrets do not relate to processes,

~

formulas, or methods but rather to price, cost, and volume of sales . . . .

'~

The position is based on the fact that Con-tinental and appellants compete in the whole-

__ sale market. No absolute privilege protects the information scught here from disclosure in discovery proceedings. The claim of ir-reparable competitive injury must be balanced against the need for the information in the

-preparation of the defense. Judicial inquiry should not be unduly hampered. Inconvenience to third parties may be outweighed by the pub-lic interest in seeking the truth in every

' litigated case. [ Footnotes omitted) . 340 F.2d at 998,.999.

, 1/ [These two cases were also relied upon by the municipals (Appeal, . pp. 5 7, 5 8) . ]

-

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7. ..

( Similarly, as the court held in Service Liquor Distributors

'[ v. Calvert Distillers Corporation, 16 F.R.D. 507 (S . D .N .Y . 1954):

L

[I]n an action under the antitrust laws, based on

c. alleged abuse of competition, competitor's business records, where good cause has been shown, are not only not immune from inquiry, but are

,_ precisely the source of the most relevant evidence.

16 F.R.D. at 507, 508. (emphasis supplied).

The hearing Board's holding against the twenty-one municipals in this regard adopts.the foregoing principles and concludes:

,. Applicant has a right to contest the contentions of the other parties to this proceeding by every lawful means, including relevant discovery. The desire of the Municipalities to maintain con-fidentiality of competitive information must give way to Applicant's need and right to self defense.

The twenty-one municipals utterly fail to explain why this holding must be reversed. Applicant submits that the hearing Board's denial of confidenti al treatment of Applicant's discovery should be affirmed.

+

V. REQUIRING COMPLIANCE WITH APPLICANT'S DISCOVERY WILL NOT THREATEN THE COM-MISSION'S REGULATORY ROLE.

s This' 2ppeal Board should reject the wholly fanciful allegations of the twenty-one municipals that compliance with Applicant's dis-covery will " threaten the regulatory role" of the Con: mission

'(Appeal,'p. 31).

~

The municipals . argue that the Commiscion should have

" broader" ' antitrust jurisdiction than other agencies (such as -

1/ " Order Denying Supplemental Motion . . ,, " filed March 5, 1973, pp. 4-5.

, . _. ,.e -. . ,,

m t e i

the Federal Power Cocmission), but they also insist (unlike the

,_. Department of Justica and the municipal Intervenors) that the 1

Commission should not attempt to try " rates cases" or a "Sherman

-r Act" case, such as would be tried in a District Court (Appeal, pp. 34, 38) . However, the Department of Justice clearly con-c.

templates such a broad scope of review.

For example, a Justice Department official, representing dne section charged with enforcing Section 105(c), has stated

(~ that "these [AEC nuclear facility] applications involve issues i

just as complex and difficult as those which we encounter in a '

l major antitrust investigation under the Sherman Act. . . ."

(Remarks of Milton Grossman, " Antitrust Aspects of Nuclear Licensing," November 12, 1971, Washington, D.C., p. 3) . The Department has also argued to another AEC hearing Board that issues tried and resolved in rate cases before the Federal Power Commission are not only relevant for review under Section 105 (c) ,

but should be retried in this forum.-1/

, Under the Board's order deferring ruling on scope, Applicant must take these issues as it finds them, at this point in time.

Thus, the twenty-one municipals ' complaints about the " size" l 1/ " Reply Brief of the Department of Justice . . ., " Duke Power Company - (Oconee and McGuire Units , Docket Nos .

50-269A,'et seq.), filed February 2 6, 19 73, pp . 1-2 0.

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, , ,, ,-.9,.- + -. ,

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of the case are misdirected.

~ ~ ~

_ Finally, the municipals assert (Appeal, p. 64) that Applicant's " interest is very much furthered by expanding the scope of the issues to be tried" because Applicant "could operate the (Midland] plants throughout the pendency of this action." The contention ignores the fact that Applicant has 2

continually sought to narrow the scope of this proceeding, /

as the excerpt from its pleadings which appears in the Appeal (p. 20) amply illustrates (see also Part II, supra). The factual premise is also inaccurate since the Midland units only recently received a construction permit, operations of the plant are not scheduled to begin until 1978, and conditions have been included in the permit which preclude any action by Applicant to I the prejudice of any party during the pendency of the antitrust proceedings.

1/ The municipals appear to contend (Appeal, p. 32) that the Supreme Court's recent Otter Tail decision (93 S.Ct.

~

1022) somehow simplifies this case, and obviates the need for the discovery here sought. Otter Tail, a dominant utility which refused to sell at wholesale or wheel Federal project power, contended that its l activities were wholly immunized under the antitrust laws. Four Supreme Court justices (out of seven who  ;

considered the case) felt otherwise, noting that repeals '

of the antitrust laws. by implications are not favored.  !

Unfortunately, Otter Tail does little to simplify this case since 7pplicant has not made such claims here. i

'2/ The twenty-one municipals would require the Applicant to concede its opponent's theories as to scope in order

_ to obtain discovery under the Board's order directing that the broadest possible theory govern all discovery, pending a later ruling (Appeal, p. 19). This would appear to require no answer.

~;

1

s . ,

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..i 1- CONCLUSION t > WHEREFORE, Applicant urges the Appeals Board to sustain r and affirm the hearing Board's orders with respect to subpoenas duces tecum and depositions upon written interrogatories to

'^

officials of the appellant twenty-one municipals.

Respectfully submitted, P.

Wm. Warfield Ross

- Keith S. Watson Toni K. Golden Attorneys for Consumers Power Company

.. WALD, HARKRADER & ROSS 1320 Nineteenth Street, N. W.

Washington, D. C. 20036

~

(202) 296-2121 Of Counsel:

Harold _P. Graves, Esquire Consumers Power Company 212 West Michigan Avenue Jackson, Michigan -49201

. April 2, 1973

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. ATTACHMENT A 4

- ' Report No'. 2786 of the

.-_. Attorney General of Michigan I and l Unpublished Attorney General's

!- Opinion dated February 3, 1972' i

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t ItcPostT or TIIE AT'tvitNEY GENERAL 645 STATI' TORY CONSTRL'CTION-l)EFINITION DIP TER)IG--Within the nicaning of Section 192. Art 328, Public Arts of ID31. (Mec. W60. .TI.S.A.),

the terin "public records" includes lists of county road commission em-ployeesi *lauful purpose" means such purpose as nuinertes any letitimate interest; "any person" means all perso;is, whether or not citizens or

" taxpayers of the community.

, No. 2786 Noteniber 7,1956.

Ma.W.CaAnus Krscsur, r- Prosecuting .Litorney, i branch County Builling, Coldsceler, Michigan.

Dr.Aa Ma. K!30suT t In your letter of 8eptember 10. 1036 referrlur to the refusal of the Branch County Itond Cotutul**l m to permit in*rection of a llat of its employees, you

, asked the meaning of the terms "public records.** "lastful purpose." and "any person." within the meaning e.f 8ection 402. Act 005. Pub!!c Acts of 1001, the applicable language of which is as follows t I " Inspection attd use of puNie recorde- Any omver havine the custody

.I

L of any muuty, city or ton'teh!p records in this state trho An!! when re-stuested fall or neglect to furntah proter nud rea onid le facilities for the inspection and examinstion of the records and filce in his omce and for

,_. making niemorauda of traperipts therefrom during the usual business hours, which shall not be le*. thin 4 hours4.62963e-5 days <br />0.00111 hours <br />6.613757e-6 weeks <br />1.522e-6 months <br /> per day. to any person having

," occasion to make examination of them for any lawful purinse shall be guilty of a misdemeanor. * * * "I

' ~ ~

Definitions of the tertu. "public records." relied upon in other jurisdictions rary in degree of liberality as to both fairly include and fairly etelude the record here involved, though no case inrotting precisely a record of this s _. nature has been discovered.

"A public record 15. str!ctly speaking, one made by the public oScer in

-- performance of a duty. the Iturnedtate purpose of which is to disseminate information to the public. or to Serre as a memorint of omelat transactions

. for public reference,"2 "Whenever a scritten record of a transaction of a public omeer in bla OMce is a cearenlent, and ttsspropriate ainde of dischargisc the duties of i- his omte. and is kept by him as such, wl. ether re.ptired by express pro-vision of law or not. such a record is a public record."3

'"' The Michigan court han treated this anatter on numerous occasions.4 but has not furnished a definition of the terus public records /' Ilowever, the Xoereck3 case recognized that the comrunn 1.tw right of in*pection of pubile records stetus from the public interest in the inatter to which the records re-late.s speelfying that the proper mann;tement of a publie o1Tice is of pitbite

" interest and records ret.iting thereto are public records. This clearly lorottes ponnewhat tuore than a strict denultion of the tertu public records.

It would vcem reumouabic to en:teest. therefore that n valid inquiry tutt.

the tunnagement of a public ottice may invoire a ronuideration of the o! Bee ensployees; that the public intere*t fairly extcuds to knowledce of identities

_ of employees; that a list of such etuployees is a public record subject to in-spection by the public.

Neither laissible abuse nor offica inconvenleute may be presuplesed. In the event the right of inspection is recognized, because the stature authorizes the

~- BC.I.194:8.18ce. 738.432 : Mkh. Mt.at. Ann. Sec. 293M.

el*eeple er ret. stenetram e. IIertnett. ::G 5.Y.S. . Tim.

' aCeasere c. 54. et Of. et A rbo M%# J.retrict. I (*tah :t73. WT P. LI TCs.

Werare e. 4m.teter tiemmt. 243 Mkh. 2hn t tenrtoo e. Tuite. 74 3tich. *.*Et : 3rore r.

Keepp. a4 Mkh. I':2: Keleme.w t;e ct8r r. Keleme.*'so Comary t.*lerk, t45 Mich. 460.

• beareek e A uditor Ue mmt. Lbkt.

'A.O.O. 2713. Oct.12.133G.

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64G REPORT OF THE ATTURNEY GENERAL r,

, oScer in question to tanke reasonable rules and regulations with reference to the inspection.f In respect to the statutory phrase ** lawful purpose." our murt has said:

, * * *

• It is no answer to say * *

• that the purpose intended * *

• le not a commendsble or proper one, so long as it is not criminal * * * **s

" * *

• It is utse contended tbst the relator's business is disreputable; that he is a

• tax-title shark ' and is therefore not entitled to the esami-nation of this book for a

• lawful purpose.'

,- ~eeo "Ibe relator's business is lawful, and recognized and encouraged by the tax laws; * * *"*

" * *

• Ills business is a fare /ml one. the same as is the lawyer *a, and

" why has he not the right to inspect and esamine public records in his liusiness as w ell an any other person? * * *"

• * *

• It is platu to sne that the Isglstature intended to assert the right of all citizens, in the pursuit of a lawful business. to make such examluatious of the public records in public offlas as the necessity of their business might require, subject to such rules and restrictions as are reasonable and proper under the circumstances. * * *"18 m The wurt has indicated, then, that where the purpose of the inspector in, votres a pursuit of his busluess interests. such business being lawful, the

~

qualification of " lawful purwe" is met. The word " business" la this contest refers not only to commercial enterprise. but includes any legitimate interest.

Finally, we must consider whether the right of instwtlou applies to a party

, , , who is not a citizen of the community where the records are kept. The statute provides that "nuy permn" may inspect. It does m t limit such right to citi-

~ sens or taslinyers of the locality where the records are kept. and no good ren on to so interpret the plain lanzunge of the statute presents itself.

It remains only to be pointed out that this particular question is further

_ compil(ated by the nature of the remely which serves to euforce the right.

)!!chigan has adopted the policy of denying umndatnus in the absence of a special interest. anandamus being a dlwretionary writ. But, cases refusing the writ are rare, and. In the Notcuck enw. the snurt held that where refusal would hamper and injure lietitioner's bu*iness interest, that was sufficient to

'~ warrant relief.

We conclude as follow :

• Within the meaning o' 8ec. 492. Art 3:!9. I'ublic Acts of 1D31 (Sec. 28.700.

)!!ch. Stat. Ann.). the term .**public reierd" forindes a list of county road commleston employees: " lawful purlo.e" means such purpose as subserves

," any legitimate interest: and. "any person" mearts all persons whether or not they are citizens or taxpayers of the community.

Very truly yours, TITO)! Aft 31. KAVANAGH.

_ 3fLB:dcr:mls Attorney General.

'Amrtes v. Taffe. is Mich. 375

'#reers r. Eness. G4 Web.1s3.

'Attchrees r. Authner. 90 Mich. 643.

"Aurton e. Twitt, laid.

r F,

r-1 l . .

. . February . 3,1972 i Mr. Thomas Ki ce, Jr.

~ ' ~

Prosec'uting Attorney 2 '

634 h'est Grand Hivor llowell, Michican

, , 48843 -

Dear Mr. Ki=er:

. . . Re: City Employees' Galary, Disclosure of Answerinc your let'cr concerninv. disclosure s~ individual

~

t

- salary figures of city employees to a nouspap.r reportor, you state that the reporter has been refused access to such figures.. Pron the enclosures it appears that the city council-

~ at one timo voted unanimously to uithhold the fi:'.ures fron the press. The city is described as contending,that furnish-ing a salary schedulo or plan showin: various categories and

~

steps without disc 1csing the identity of occupants thorcor is sufficient. Protection of the privacy of the individual employuu in also a concern of the city. ,

Tho press, on tae other hand, contends that individual salary fir,ures are public informat' a under the law and should bc

'availabic, uith other city records, for public inspection, to' permit analysis of existing and proposed budcots.

Review of'the coverning statutes does not reveal any basis for excludin;; fron public records thoso pertaining to the individual salaries of indivicual public caployces. Since these are public records of public cuploycos paid from public funds, it is my conclusion that the press is clearly en. titled to see said records. -

i..

In Nowack v Auditor Gener.il. 243 .'!ich 200 (1928), it uns hel that a newspaper ccitor, wishine, to inspect records of the auditor Kencral relating to entertainment expensos incurred M

r-- -

. nr. Thomas Ki:cr, Jr. ,

reco

( ,

7

! in an' annual Gov.ernor's conference is a citizen having a

,special interest in the natorial and has a common-law right to. inspect said records, which right is enforceable by man-

- damus. At p. 208, the court said: ,

. .. ....He in the manager and editor of a news- .,

. . paper. It is published and circulated in Michi 6an....In a proper and lawful manner,

. he has a right to publish matters of public interest. The citizens and taxpayers of .

this state are interested in knowing whether -

r the public business is being properly .

m'maged. By denying him access to the *

.,public records for the purpose of securing .

y ,

such information, he is deprived of legal rights for which he is enti'; led to redress l .

i by ,the writ of mandamus...." .

F The ruling was recently re-emphasized in Booth Neusonne,rs, Inc.

< y Muskegon Probate Jud.~e, 15 Mich App 203 (1968), holding that

% newspaper has the right to inspect the will of a deccdent 1.'Ted in the probate court. At p. 205, citing the Nowack case, ,

th9 court said: .

"The fundamental rule in Michigan on the matter before us...is that citf' ens have the general right of free access to, and public inspection of, public records...." ,

' ~

I would add, however, that requests to review individual salary

,. records should be made at reasonable times during business

)

hours in such a manner as not to interfere with the conduct of public business, and that further, the private dossier of individual employees containing personal and family infornation should not be disclosed, where such disclosure might inflict harm or injury to the employee, unless the employee has given permission, except upon court order. .

i .

. . The amount.of salary paid to each employee of the city, in short, is a legitimate concern of the public which pays his sala,ry , constitutes a part of the city 's public records , and

, when requested to be viewed by a member of the press, must be made available. ,

-3

,' .- Yours sincerely,

i. s. . . .

,. s- .

m- . . PRANK J. KELLEY l

(

A'ttorney General

~

ttisV:ss' -

y. . . .

(. .

! UNITED STATES OF AMERICA

-ATOMIC ENERGY COMMISSION In the Matter of )

7. ) Docket Nos. 50-329A CONSUMERS POWER COMPANY ) and 50-330A

{ (Midland Units 'l and 2) )

[ CERTIFICATE OF SERVICE t --

I hereby certify that copies of APPLICANT's r~~ ANSWER TO APPEAL BY "NON-PARTIES", dated April 2, 1973, l'

in the above-captioned matter have been served on the following by deposit in the United States mail, this

_ 2nd day of April, 1973:

I Jerome Garfinkel, Esq., Chairman Dr. J. V. Leeds, Jr.

-Atomic Safety and Licensing Board P. O. Box 941 Atomic Energy Commission Houston, Texas 77001

-t

{ Washington, D. C. 20545 William T. Clabault, Esq.

r Hugh K. Clark, Esq. Joseph J. Saunders, Esq.

! P. O. Box 127A David A. Leckie, Esq.

' - Kennedyville, Maryland 21645 Public Counsel Section

,, Antitrust Division James Carl Pollock, Esq. Department of Justice

- 2600 Virginia Avenue, N. W. Washington, D. C. 20530 Washington, D. C. 20037 F' Alan S. Rosenthal, Esq., Chairraan L Joseph Rutberg, Jr., Esq. Atomic Safety & Licensing Antitrust Counsel for Appeals Board

' r-- AEC Regulatory Staff Atomic Energy Commission

.' Atomic Energy Commission Washington, D. C. 20545 L Washington, D. C. 20545 William C. Parler, Esq.

Wallace E. Brand, Esq. Atomic Safety & Licensing zu Antitrust Public Counsel-Section Appeals Board P. O. Box 7513 Atomic Energy Commission

-~

Washington, D. C. 20044 Washington, D. C. 20545

~~

Atomic Safety and Licensing Board Michael C. Farran, Esq.

Atomic Energy Commission Atomic Safety & Licensing Washington, D. C. 20545 Appeals Board Atomic Energy Commission Washington, D. C. 20545 Keith S. Watson

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