ML20010B239
| ML20010B239 | |
| Person / Time | |
|---|---|
| Site: | Farley  |
| Issue date: | 08/11/1981 |
| From: | Blume M, Lewis S NRC OFFICE OF THE EXECUTIVE LEGAL DIRECTOR (OELD) |
| To: | NRC COMMISSION (OCM) |
| References | |
| ISSUANCES-A, NUDOCS 8108140256 | |
| Download: ML20010B239 (11) | |
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UNITED STATES OF AMERICA j 99 3
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NUCLEAR REGULATORY COMMISSION j.f a:.s.
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BEFORE THE COMMISSION t\\ u.s.gg" In the Matter of
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y ALABA!!A POWER COMPANY Docket Nos. 50-348A E
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50-364A (Joseph M. Farley Nuclear Units 1 and 2)
ANSWER OF THE NRC STAFF IN OPPOSITION TO PETITION FOR C0!1 MISSION REVIEW BY ALABAMA POWER COMPANY Joseph Rutberg Michael B. Blume z
Assistant Chief Hearing Counsel for NRC Staff Counsel / Antitrust Counsel Stephen H. Lewis Counsel for NRC Staff August 11, 1981 5g k 9 )0\\
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a 0108140256 810811 }
DP. ADOCK 05000
8/11/81 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION In the Matter of ALA8AllA POWER COMPANY Docket Nos. 50-348A 50-364A (Joseph M. Farley Nuclear Units 1and2)
ANSWER OF THE NRC STAFF IN OPPOSITION TO PETITION FOR COMMISSION REVIEW BY ALABAMA POWER COMPANY I.
INTRODUCTION Alabama Power Compc,y [ hereinafter APC0] on Jub 27,1981 filed, pursuant to 10 C.F.R. 6 2.786(b), a Petition for Review of a June 30, 1981 antitrust decision of the Atomic Safety and Licensing Appeal Board, ALAB-646.
In 10 C.F.R. 5 2.786(b)1/ the Commission has set forth the procedures and criteria for review of Appeal Board decisions.
The Staff has reviewed the petition filed by APC0 and believes that it fails to raise any issues rceeting the standards for Commission review under 10 C.F.R. 9 2.786.
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That section is set forth in relevant part in Staff's " Answer in Opposition to Petition for Commission Review by Municipal Electric Utility Association", filed today with the Commission. Staff also incorporates by reference the procedural history of this proceeding set forth in that pleading.
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II. THE PETITION In its petition for review APC0 raises five assignments of error as bases for Commission review:
the scope of the review by the Appeal Board; the determination by the Appeal Board of the appropriate relevant product and geographic markets; the determination that APC0 nad monopoly power; the finding that APC0 abused its monopoly power; and the Appeal Board's detennination of relief in this matter. These grounds for review are addressed below.
A.
The scope of review by the Appeal Board APC0 in its Petition for Review first argues that the Appeal Board exceeded Commission antitrust jurisdiction when it considered past pricing activities in determining whether the issuance of an unconditioned license would create or maintain a situation inconsistent with the antitrust laws. APC0 Petition at 4.
As the Appeal Board explained, however, Section 105c requires de Cummission to find whether the activities under the license will maintain as well as create a sit;ation inconsistent with the antitrust laws. ALAB-646, slip opinion at R3-24 (hereinofter cited as ALAB-646).
In order to determine whether a " situation" exists that could be maintained, it is of course necessary to examine an applicant's past conduct.
Similar arguments for a narrow antitrust review have been rejected in the past.
In Kansas Gas l
and Electric Company,E or instance, the Appeal Board stated:
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(Wolf Creek Generating Station, Unit No.1), ALAB-279,1 NRC 559 (1975) (hereinafter cited as Wolf Creek).
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... the Coamission's statutory obligation is to weigh the anticompetitive situation--which to us means that operation 3 in an " airtight chamber" were not intended. A review conducted under the artificial restraints suggested by the applicant would allow long understood and well recognized patterns of anticompetitive conduct to evade Commission notice.E Based on the foregoing, it is clear that the Appeal Board's decision was based upon the proper scope of considerations in a manner totally consistent with the Act and prior Commission decisions. Therefore Commission review of this issue is not warranted.
B.
The relevant product and geographic markets APC0 next argues that the Appeal Board erred in its designation of the relevant product and geographic markets.
AP!T Petition at 4.
The determination of a market in antitrust litigation is a necessary factual detenaination in analyzing whether certain activities involve antitrust problems.4/ As it is a factual determination, there should be no I
Comission review unless the factual issue was resolved in a clearly erroneous manner contrary to the resolution of that issue by the Atomic Safety and Licensing Board.E i
y Id_. 1 NRC at 572-73. See also, Consumers Power Co. (Midland Plant, Units 1 and 2), ALAB-452, 6 NRC 892, 1094-98 (hereinafter cited as Midland); Toledo Edison (Davis-Besse Nuclear Power Station, Units 1, l
2 and 3), ALAB-560,10 NRC 265 (1979) (hereint ter cited as i
Davis-Besse).
y See, e.g., United States v. General Dynamics Corp., 415 U.S. 486, 491-492 (1974) [ held:
relevant market determinations in antitrust proceedings are factual determinations].
y 10 C.F.R. 9 2.786(b)(4)(ii).
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In this case the Appeal Board and the Licensing Board agreed on the finding that there was a market lor wholesale power in APCO's service area, and that it was relevant for analysis in this proceeding. ALAB-646 at 30.
But the Appeal Board found, contrary to the Licensing Board, that there are also other markets relevant to this proceeding, namely the markets for coordination services and retail sales. The finding of these two additional markets comports with Commission precedentO and established casela,M and is supported by the record of this proceeding. See ALAB-646 at 30-73.
These circumstances demonstrate fully that the Appeal Board's determination of the relevant product and geographic markets does not constitute a situation where the Appeal Board resolved a factual issue necessary for decision in a clearly erroneous manner. Accordingly, Commission review of this issue is not warranted.
C.
The finding that APCC ha;.nonopoly power The decisions of the Appeal Board and the Licensing Board are in agreement with respect to the finding that APC0 has monopoly power in the wholesale market. ALAB-646 at 74. Sir.ce the Licensing Board did not, 6/
Midland, Davis-Besse, supra.
M. United States v. Philadelphia National Bank, 374 U.S. 321, 326, 7f
- n. i, (1963); United States v. Grinnell Corp., 384 U.S. 563 (1966);
Otter Tail Power Co. v. United States, 410 U.S. 366 (1973).
It should be noted that the Licensing Board in determining what it believed to be the relevant product and geographic markets in this case did not have the guidance of the Appeal Board's antitrust decisions in Midland and Davis-Besse.
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however, find that there was any other relevant market, it of course limited its finding of APC0's monopoly power to the wholesale market.
The Appeal soard, however, additionally found that APC0 has monopoly power in the markets for coordination services and retail sales of electricity.
Id. at 74-85. The Appeal Board in so doing rejected APCO's argument that because it was subject to " pervasive regulation" it could not possess monopoly power.
_I_d.. a t 14-2 L The Appeal Board rejected this argument after a thorough analysis of APC0's argument and of the relevant case law. Other electric utilities have made similar arguments to obtain exemption from the antitrust laws, but the courts since _0tter E ave consistently held that the regulation to which electric Tail h
utilities are subject does not excuse them from complying with the antitrustlaws.E 1
l APC0 asserts that the Appeal Board erred by concluding that APC0 had control over transmission, noting in support of this position that the Licensing Board found that Alabama Electric Cooperative (AEC) owned approximately one-thousand miles of transmission lines. APC0 Petition at 6.
As the Licensing Board found and the Appeal Board affirmed, however, AEC's transmission consisted totally of facilities of 115 Ky or less and constituted only 15% of the transmission mileage owned by APC0.
ALAB-646 at 76.
In addition, APC0 was the only system in the relevant 8]
Supra, n. 7.
y See, e.g., Cantor v. Detroit Edison Co., 428 U.S. 366 (1976); Ci',
of Mishawaka v. Indiana & Michigan Electric Co., 560 F.2d 1314 (1977), cert. den., 436 U.S. 922 (1978).
market having facilities over 115 Kv, and owned the only transmission facilities providing access to systems outside that market.
Id. at 76, and note 134.
APC0 also argues that the Appeal Board erroneously concluded that APC0 had monopol,v power based upon its predominant share of sales and generation. However, APC0 does net explain, contrary to the requirement of 10 C.F.R. s 2.786(b)(2)(iii), why this factual conclusion silould form a basis for Commission review.E In this regard, APC0 neither argues that this decision reflects oifferences between the Appeal Board and Licensing Board nor that it is clearly erroneous. The Appeal Board meticulously examined the market shares of all the parties in the relevant markets and supported its conclusion with reccrd citations.
M.at74-85.
Based on the above it is clear that the Appeal Board's conclusion regarding APC0's monopoly power is supported by the record, does not reflect differences between the Licensing Board and the Appeal Board, and is not clearly erroneous.
It should not, therefore, be reviewed by the Commission.
D.
The abuse of monopoly power APC0 contends that the Appeal Board also crred when it concluded that APC0 abused its " alleged" monopoly power. APC0 Petition at 6.
In support of its position APC0 relies upon a number o.' factual conclusions 10/ Cf.10 C.F.R. 5 2.732, which requires the proponent of any order to Fear the burden of establishing the basis for the relief sought, i
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7-agreed upon by the Licensing Board and the Appeal Board, and one alleged area of disagreement. Jd.at6-8.
APC0 asserts that its rate decreases came about as the result of requests by and negotiations with the Rural Electrification Administration (REA), and that the Appeal Board erred in using the price decreases as examples of abuse of monopoly power. M.at7. We do not believe that the record supports APC0's assertion that the rate decreases were "in response to requests by and negotiations with" federal authorities.
The Licensing Board found that AEC had applied for loans to build a generating plant and that APC0 contacted the REA to infonn it that APC0 wished to continue to sell energy to AEC.1II REA did not discourage APC0 from lowering its rates, for to do so would have made no sense - every customer desires a lower price for its purchases.
But the Licensing Board concluded that APCV purpose in lowering the rates was to avoid losing AEC as a wholesale customer by dissuading AEC from proceeding with its plans to construct a 23-MW steam plant and associated transmission.E The Appeal Board agreed with the Licensing Board and concluded that the rate reductions did not occur in isolation but were part of an overall effort in agencies, courts, and legislatures to prevent AEC from engaging in self-generation. ALAB-646 at 96-99.
APC0 also argues that it was error for the Appeal Board to affirm the Licensing Board's conclusion that certain conduct engaged in by APC0 was anticompetitive, but gives no reason why it believes that these 11f 5 NRC 804, 910 (1977).
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findings were erroneous. APC0 Petition at 7-8.
The Commission's rules are quite clear that a petitioner must make a concise statement as to why in its view a decision is erroncous. E This APC0 has failed to do. E In view of the above, there is no basis for Commission review.
t E.
The Appropriateriess of the License Conditions The purpose of relief in the fom of antitrust license conditions is to remedy the situation found to be inconsistent with the antitrust laws under section 105(c)(5) of the Act.
ALAB-646 at 135.
In the Staff's view, the Appeal Board correctly and appropriately modified the operating licenses by imposing antitrust license conditions dealing with the situation that it found to be inconsistent with the antitrust laws. APC0 contends that the Appeal Board erred in framing appropriate relief.
Specifically, APC0 claims that it was error to require it to engage in wheelug at the request of "any municipally owned distribution system." APC0 Petition at 8, No. Sa. The Appeal Board founo that this 13/ 10 C.F.R. 9 2.786(b)(2)(iii).
,1_4f At p. 7 of the APC0 Petition, reference is made to terms of a 4
contract tendered by Southeastern Power Administration. While APC0 does not state that the Appeal Board affinned the Licensing Board on its conclusions with respect to this issue, the decision on its face at the pages cited by APC0 reflect such an affirmance.
Findings that litigants have engaged in conduct for anticompetitive purposes are findings of fact (see, e.g., United States v. Yellow Cab, 338 U.S. 338, 340-41; Poster Exchange, Inc. v. National Screen Service Corp., 431 F.2d 334, 338-39 (5th Cir.1970), _ cert, den.
401 U.S. 912 (1971)). As both boards below agreed on this matter based upon careful consideration of the record, Staff believes that in the absence of a finding of clear error, 10 C.F.R.
$ 2.786(b)(4)(ii) precludes Commission review of this finding as well as those regarding APC0's participation in the formation of the Southeastern Reliability Council (Petition at 7) and APC0's enticompetitive contracts with municipal and electric distribution systems.
Id. at 8.
condition was necessary, however, to cure the situation inconsistent with the antitrust laws reflected in APC0's dealings with the municipal systems comprising the Municipal Electric Utility Association of Alabama (MEUA). The findings were that APC0 competes with MEUA at the retail level (ALAB-646 at 162) and that APC0 had placed anticompetitive restraints on MEUA which inhibited the latter's ability to purchase energy from sources other than APC0.
_Id. at 127,159-162.
In these circumstances, wheeling under this condition for the members of MEUA is a necessary means to enable them to deal with systems other than APC0..Id.
at 162.
Furthermore, the requirement to wheel would apply or.ly to unused capacity on the transmission lines, and APC0 would be compensated in a manner consistent with Federal Energy Regulatory Commission procedures.
Ihere is no error in the imposition of this condition.
APC0 also asserts that it was error to require it to offer ownership in the Farley Plant to AEC. APC0 Petition at 8.
The Appeal Board, however, explained in great detail its basis for concluding that ownership access was, in the context of this record, necessary to correct the disadvantaged position in which AEC had been placed by APCO's anticompetitive actions toward it.E 15/
Id_. at 147-53. As the Appeal Board stated:
No less than a proportionate sharing of the ownership of the Farley Plant by the applicant and AEC will suffice to accommodate the objectives of strengthening free competition in private enterprise and eliminating the concerns which arise from our adverse antitrust findings related to the applicant's nast conduct.
Id. at 152-53.
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Thus, the Staff believes that the relief ordered by the Appeal Board was appropriate in this proceeding and that Commission review of this issue is not warranted.
III.
CONCLUSION For all of the reasons stated abcVe, the Staff believes that APC0's petition fails to raise an; important matters which warrant Commission review under 10 C.F.R. 9 2.786. The Staff thus respectfully requests that APC0's petition and its request for oral argument be denied.
Respectfully submitted, m8%
Joseph Rutberg Michael Blume Assistant Chief Hearing Counsel for NRC Staff Counsel / Antitrust Counsel
.M Steph n H. Lewis Counsel for NRC Staff Dated at Bethesda, Maryland, this lith day of August,1981 9
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