ML20039B132
| ML20039B132 | |
| Person / Time | |
|---|---|
| Site: | Saint Lucie  |
| Issue date: | 12/17/1981 |
| From: | Jablon R FLORIDA CITIES (FLORIDA MUNICIPAL UTILITIES ASSOCIATE, JABLON, R.A. |
| To: | NRC COMMISSION (OCM) |
| References | |
| ISSUANCES-A, NUDOCS 8112220322 | |
| Download: ML20039B132 (9) | |
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Florida Cities:12/17/81 CXKETED BEFORE THE UNITED STATES NUCLEAR REGULATORY COMgSSdD7 P3:42 q c;
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In The Matter Of )
) .
Florida Power & Light Company ) Docket No. 50-389-A
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(St. Lucie Plant, Unit No. 2) Florida Cities b if 5S11
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) * 'E O,2f(r . 9 ti DEC ANSWER OF FLORIDA CITIES Os /$g7 TO FLORIDA POWER & LIGHT COMPANY'E i - '*-2,.,, -
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{h MOTION TO LODGE DECISION OF FIFTH CIRCUIT. A:. ' 1 f' 4 .~
q - lU On December 2, 1981, Florida Power & Light Company ('"FPI/$
moved to lodge a Fifth Circuit decision with the Commission in these dockets. Florida Power & Light Company v. Federal Energy Regulatory Commission, CA5 No. 80-5259. Florida Cities do not object to the lodging of the decision, but they oppose FPL's erroneous interpretation of it.
FPL does not request that the Commission consider the l decision for its holding. FPL v. FERC, supra, holds that the Federal Energy Regulatory Commission ("FERC") has limited, if any, authority under the Federal Power Act to order one system to transmit electricity for another. 1/ Rather, FPL seeks to lodge l_/ The decision is subject to rehearing applications or certiorari review. Ironically, FPL has argued strenuously in these dockets against giving weight to non-final decisions. E.g., " Reply Memorandum for Florida Power & Light Company" (September 5, 1978, pp. 11-13),
psog S
1 8112220322 811217 PDR ADOCK 05000389
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. the decision in order to convince the Commission that it should not give consideration to the FERC's findings in another proceeding, Florida Power & Light Company, Opinions 57 and 57-A, when this Conanission determines Whether to institute a Section 105(a) proceeding against FPL, which is the issue in these dockets. 1/
FPL lc dges the FPL v. FERC decision in purported support of FPL's argument that the Commission should not to hold a Section 105(a) hearing. FPL v. FERC states:
"There can be little doubt that FPL's business conduct in the past has not been exemplary in that it has been found to have engaged in a conspiracy with Florida Power Corporation to divide the wholesale power markets in Florida.
Gainesville Utilities Department v. Florida Power & Light Co., 573 F.2d 292 (5th Cir.),
cert. denied, 439 U.S. 966, 99 S. Ct. 454, 58 L.Ed 2d 424 (1978). But the Commission neither relied upon the anticompetitive findings in Gainesville, nor did it make any findings of 1,/ Opinions 57 and 57-A found that "FP&L's proposals [to limit the availability of its firm Wholesale requirements service] were unjust and unreasonable under the standards of Sections 205 and 206
, of the Federal Power Act, particularly because of their l anticompetitive effects." " Opinion and Order Denying Rehearing" l (October 4, 1979, p. 1). Opinions 57 and 57-A were not under
! review before the Court in the Florida Power & Light case Which FPL l proposes to lodge; those opinions are final and no longer I
appealable. Opinion 57 concerned FPL's proposed limitations on the availability of Wholesale service; the FERC decided against FPL in Phase I of a bifurcated FERC proceeding. Florida Power & Light Co., Opinion 57, FERC Docket No. ER78-19, et al., 32 PUR 4th 313 (August 3, 1979), rehearing denied, Opinion 57-A, " Opinion and Order Denying Rehearing" issued (October 4, 1979), appeal dismissed sub l
nom. Florida Power & Light Co. v. FERC, No. 79-2414 (D.C. Cir.,
April 25, 1980). The transmission orders under review in FPL v.
FERC, supra, are described by the Court as "not assential parts of l either Phase I or Phase II, and touch on matters subsidiary to the
! questions of those Phases." I d, . , p. 12810, n.3.
anticompetitive activities or violations in the orders on review. Instead, it relied upon the fact that FPL possessed nonopoly power over wholesale and retail markets in Florida, and that filing the tariff would have
" pro-competitive effects".
Florida Power & Light Co. v. FERC, supra, pp. 12819-12820 of Slip Opinion. Thus, the Fifth Circuit's decision recognizes the force of its earlier Gainesville holding but rules that the FERC may not order FPL to file a transmissiori tariff because the FERC did not make transmission-related antitrust findings in the orders under review. 1/ Moreover, the Court recognizes the availability of "an appropriate antitrust action" to obtain transmission "if FPL's actions warrant such." Slip Opinion, supra, p. 12817, n. 20. The absence or limitation of an FERC remedy makes more important that appropriate NRC jurisdiction be exercised to insure that NRC licensed plants are not used anticompetitively. See Consumers Power Company (Midland Plant, Units 1 and 2), 6 NRC 892, 1005-1009 (1977); Otter Tail Power Co. v. United States, 410 U.S. 366 (1973),
holding that Congress ' rejection of "a pervasive regulatory scheme" under the Federal Power Act provided no basis to
" immunize Otter Tail from antitrust regulation for refusing to deal with municipal corporations." Otter Tail, supra, 374-375; i
l see, generally, 372-376.
i 1/ Of course, the Company could have done so voluntarily or acceded to- the FERC's order that it file a transmission tariff setting forth its transmission policies. Compare Otter Tail Power 366 (1973).
Co. v. United States, 410 U.S.
i l
t
. In its motion, FPL quotes language from the Fifth Circuit opinion that Opinion 57 did not make specific findings of "an 4 f
antitrust violation," that is "an attempt to restrain trade or an attempt to monopolite." FPL infers that this quoted language defines the_ scope of Opinion 57. FPL Motion, page 2. The Fifth Circuit in no way restricts the findings of that case, nor could it, since those findings were not under review. Of course, the FERC does not have the authority to enforce the antitrust laws as such:
... [W]e do not make findings that violations of antitrust laws have occurred. Instead, it is our obligation to evaluate the public policies expressed in the federal antitrust laws and to reflect those policies in the conduct of our responsibilities under the Federal Power Act." 1/
1/ It is now beyond question that antitrust law and policies do relate to this commission's responsibilities under the Federal Power Act. See Gulf States Utilities
- v. Federal Power Commission (1973), 411 U.S.
747 (1973) ...." Florida Power & Light Co.,
Opinion No. 57, 32 PUR 4th 313, 315, (1979).
However, in Opinion 57 the Federal Energy Regulatory Commission makes numerous findings which establish at a minimum an inconsistency between Florida Power & Light Company's actions and proposed actions and antitrust policy.1/ The FERC concluded as 1/ Opinion No. 57 expressly found that FPL engaged in "anticompetitive conduct." 32 PUR 4th at 326, slip op. at 18
(" voluminous evidence .. relating to anticompetitive conduct")
and at 34, slip op. at 40 ("In spite of the anticompetitive FOOTNOTE CONTINUED ON NEXT PAGE
> , follows:
"On the basis of our analysis of the record before us, we conclude that FEPL's proposed tariff restrictions would eliminate the only practical source of base-load power or energy to competing utilities within the markets dominated by the company." Supra, at p. 314.
As stated above, on rehearing the Commission found dhat FPL's proposal to avoid sale of wholesale power illegal under the Federal Power Act "particularly because of their anticompetitive effects." Such findings confirm the need for Commission action here. 1/
FOOTNOTE CONTINUED FROM PREVIOUS PAGE conduct recounted above"). Florida Power & Light Company v.
FERC, states that a reference in a Commission order to Opinion No. 57 "did not amount to a finding [in the order under review]
of any specific anticompetitive activity or of any antitrust violation" so as to justify the remedy in the order under review.
Order, pp. 12820-12821. Whether or not Opinion No. arguably justified the particular transmission remedy in the subsequent order -- the FERC's powers to require transmission are circumscribed -- there can be no dispute that Opinion No. 57 expressly found a broad array of "anticompetitive conduct."
Transmission relief is more generally left to antitrust courts (see FPL v. FERC, at 12817) and to the NRC under Section 105 of the Atomic Energy Act, 42 U.S.C. {2135 (see Toledo Edison Company and. Cleveland Electric Illuminating Company (Davis-Besse Nuclear Power Station, Units 1, 2, and 3; Perry Nuclear Power Plant, Units 1 and 2), ALAB-560, 10 NRC 265, 287-295 including item 3 in footnote 60 at 288-289 (1979)).
1/ After full briefing and 6ral argument to an Atomic Safety and Licensing Board in Florida Power & Light Company (St. Lucie Plant, Unit No. 2), Docket No. 50-389A, in a " Memorandum and Order Concerning Florida Cities' Motion for Summary Disposition on the Merits" (December 11, 1981, pp. 8-15), which we attach hereto, the Licensing Board found a situation inconsistent with the antitrust laws. Opinion 57 is extensively analyzed and
' discussed.
- FPL implies that because the FERC is "not a Court of competent jurisdiction," its decision is irrelevant under Section 105(a) here. FPL Motion, p.1. At the least, the FERC 's findings
-- alone or together with the Fif th Circuit's Gainesville decision -- make mandatory that the Commission exercise its Section 105(a) jurisdiction to protect against competitive abuse by its licensees. Indeed, the limitation of FERC's transmission jurisdiction which has been found by the Fifth Circuit and that Court's recognition of the less than " exemplary" conduct of FPL combined with the findings in opinion 57 and Gainesville itself require that the Commission exercise its discretion in light of Gainesville to institute a Section 105(a) proceeding.
Finally, while the decision of the recent Licensing Board in St. Lucie is not final and, therefore, not ripe for review 1/,
the St. Lucie Licensing Board will be considering questions of relief in connection with St. Lucie Unit 2 relatively soon.
That Board has " devised procedures designed to bring this case to i
a reasonably expeditious conclusion." Memorandum and Order, supra, p.2. The Board now has before it only the question of St.
l Lucie Unit 2 license conditions. However, Florida Cities have t
suggested that the obvically interrelated questions of Section l
l 105(a) and 105(c) relief should be consolidated. In view of the procedural status of the St. Lucie 2 case, Florida Cities again l
l 1/ However, it provides a reascned analysis that a situation inconsistent with the antitrust laws exist.
suggest that the matters be consolidated. If In any event, after all these years, it is time to deal with the matter on its merits.
Respectfully submitted, Robert A. Jablon Alan J. Roth Attorneys for Florida Cities By f d^ [6*
r December 17, 1981 Law Offices Of Spiegel & McDiarmid 2600 Virginia Avenue, N. W.
Washington, D. C. 20037 (202) 333-4500 1/ In the event that the Commission should delay procedures further, then certainly a balance of the interests requires that procedures be established to consider interim relief as a condition to the granting of further delay. Such entitlement could be addressed by the St. Lucie Licensing Board. Florida Cities note that they have requested such interim relief as long ago as August 28, 1978. " Florida Cities Response to Commission's July 28, 1978 Order".
Florida Citiestl2/17/81 BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION
)
In Th'e Matter Of )
)
Florida Power & Light Company ) Docket No. 50-389-A
) .
(St. Lucie Plant, Unit No. 2) ) Florida Cities:12/17/81
)
CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing was served upon the following persons by hand delivery (*) or by deposit in the
, U.S. Mail, first class, postage prepaid this 17th day of December, 1981:
Peter B. Bloch, Esq. Stephen F. Eilperin Administrative Judge Atomic Safety and Licensing 4
Atomic Safety and Licensing Board Board Nuclear Regulatory Commission Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.C. 20555 Christine N. Kohl Michael A. Duggan, Esq. Atomic Safety and Licensing Administrative Judge t Board College of Business Nuclear Regulatory Commission Administration Washington, D.C. 20555 University of Texas Austin, Texas 78712 Donald A. Kaplan, Esq.
Robert Fabrikant, Esq.
Robert M. Laco, Esq. Antitrust Division Administrative Judge Department of Justice Atomic Safety and Licensing Washington, D.C. 20530 Board j Nuclear Regulatory Commission J.A. Bouknight, Jr., Esq.
Washington, D.C. 20555 Steven P. Frantz, Esq.
Lowenstein, Newman, Reis Alan S. Rosenthal, Chairman & Axelrad Atomic Safety and Licensing 1025 Connecticut Avenue-N.W.
Board Washington, D.C. 20036 Nuclear Regulatory Commission Washington, D.C. 20555
I John E. Mathews, Jr., Esq. Robert R. Nordhaus Ma thews , Osborne, Ehrlich, Van Ness, Feldman, Sutcliffe, McNatt,.Gobelman & Cobb Curtis & Levenberg 1500 American Heritage Life 7th Floor Bldg. 1050 Thomas Jefferson St. N.W.
Jacksonville, Florida 32202 Washington, D.C. 20007 Reubin O.D. Askew Janet Urban, Esq.
Greenberg, Traurig, Askew, Department of Justice Hoffman, Lipoff, Quentel P.O. Box 14141
& Wolff, P.A. Washington, D.C. 20044 1401 Brickell Avenue Miami, Florida 33131
- Chase Stephens, Chief Docketing & Service Section Herbert Dym, Esq. Nuclear Regulatory Commission Daniel Gribbon, Esq. Washington, D.C. 20555 Covington & Burling 1201 Pennsylvania Ave. N.W. George R. Kucik Washington, D.C. 20044 Ellen E. Sward Arent, Fox, Kintner, Plotkin William C. Wise, Esq. & Kahn Suite 500 Suite 900 1200 18th Street N.W. 1815 H Street N.W.
Washington, D.C. 20036 Washington, D.C. 20006 Dr. Robert E. Uhrig William H. Chandler, Esq.
Vice President Chandler, O'Neal, Avera, Advanced Systems & Gray, Lang & Stripling Technology P.O. Drawer O Florida Power & Light Co. Gainesville, Florida 32602 P.O. Box 529100 Miami, Florida 33152 Benjamin H. Vogler, Esq.
Ann P. Hodgdon, Esq.
Counsel for NRC Staff Nuclear Regulatory Comm.
Washington, D.C. 20555 WJf&
Robert A. Ja"blon Attorney for Florida Cities Law offices of:
Spiegel & McDiarmid 2600 Virginia Avenue N.W.
Washington, D.C. 20037
, :.**-~
UNITED STATES OF AMERICA ,
NUCLEAR REGULATORY COMMISSION 81DEC 11 P4:04 ATOMIC SAFETY AND LICENSING BOARD -
- w. , .. {
Before Administrative Judges: -
~ :i Peter B. Bloch, Chairman Michael A. Duggan Robert M. Lazo Ivan W. Smith, Alternate *e--
L* " - - _ --- -
In the Matter of Docket No. 50-389A FLORIDA POWER & LIGHT COMPANY (St. Lucie Plant, Unit No. 2) December 11, 1581 MEMORANDUM AND ORDER CONCERNING FLORIDA CITIES' MOTION FOR
SUMMARY
DISPOSITION ON THE MERITS On May 28, 1981, Florida Cities (Cities) requested summary disposi-tion on the merits of its claim that the construction of St. Lucie Plant, Unit No. 2, would maintain a situation inconsistent with the antitrust laws.
If Cities prevails, the Comission wuld be required to remedy the situation inconsistent with the antitrust laws by imposing appropriate conditions on the construction permit issued to Florida Power and Light Company (FPL), the plant's owner and operator.
The Cities' request is based largely on an argument that three prior decisions, one by the Fifth Circuit and two by the Federal Energy Regulatory Commission (FERC), should be given collateral estoppel effect. In addition, Florida Cities has filed documentary evidence and has argued that some key f acts are not genuinely in dispute.
Florida Power and Light Company (FPL) opposes Cities' motion. It argues that the Cities' precedents are not entitled to collateral estopoel h ~ M (j p -=
i Summary Disposition: 2 effect but that a recent decision of a federal district court, adverse to Cities' position, is entitled to such effect. In addition, it argues that the cited cases do not establish the existence of a situation incensistent with the antitrust laws, that many of Cities' documents are inadmissible and do not support the propositions for which Cities advances them or that the documents lack definitiveness because of contrary evidence offered by FPL.
We have decided, for reasons discussed below, to grant collateral estoppel effect to two of the decisions which Cities cites. We deny granting collateral estoppel effect to the decision FPL cites, but we accept all but one of the findings reached in that case. In addition, our review of the documents persuades us to reject some of Cities' arguments but to make limited factual findings that are helpful to Cities' case. The net effect of these decisions is a determination that a situation inconsistent with the antitrust laws does exist. We also discuss some of the implica-tions of this finding for relief in this case.
Because of the complexity and lack of organization of the record, we do not consider. this to be our last word on this motion. Instead, we are implementing a special objection proceeding in which the parties may persuade us to alter our decision. We also have devised procedures designed to bring this case to a reasonably expeditious conclusion. -
This memorandum will analyze the collateral estoppel arguments, summarize the facts determined as the result of application of collateral estoppel, decide what facts are not in genuine dispute and reach a conclusion about the resulting status of this case and the procedures necessary for a f air and efficient detennination of the remaining issues.
Sumary Disposition: 3 I BACKGROUND AND APPLICABLE LAW In August 1976 Florida Cities filed a petition to intervene in the construction permit proceeding for St. Lucie Unit 2. The proceeding had begun 31 munths previously. However, the Comission affirmed the granting of the petition for late intervention. Florida Power & Light Company (St.
Lucie Plant, Unit No. 2), CLI-78-12, 7 NRC 939 (1978).
A. Standards for Determining the Merits This case arises under the licensing authority granted to the Comission by the Atomic Energy Act of 1954, particularly 2135(c). The applicable law was recently explicated in Alabama Power Company (Joseph M.
Farley Nuclear Plant, Units 1 and 2), ALAB-646, June 30,1981. As that opinion explains, it was the third case in sich the Appeals Board was called on to interpret the applicability of antitrust provisions to Comission licensing proceedings. In this section of our opinion, we set forth the applicable law by paraphrasing the Farley opinion, particularly
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pp. 6-7 ' and 27-29. The purpose of our discussion is as a guide for readers who are not f amiliar with Comission precedent. The legal scholar may prefer to read Farley directly.
Congress has directed the Comission to ennsider the antitrust ramifications of its licensing actions. It must review applicati;ons for permits to construct comercial nuclear power facilities to determine if the activities sought to be licensed would create or maintain situations inconsistent witn the antitrust laws or their underlying policies.
If the Comission finds that the granting of a license would create or maintain a situation inconsistent with the antitrust laws, it may refuse or rescind a license or may condition the license so that the prohibited result will not occur. Tnese provisions reflect a basic Congressional concern over access to power produced by nuclear f acilities and represent recognition that the nuclear industry, which originated as a Government 1
(
i l
Summary Disposition: 4 monopoly and was established in large measure with public funds, should not be permitted to develop into a private monopoly through the licensing process.
The existence of a situation inconsistent with the antitrust laws does not require a finding of a violation of those laws. Proof of conditions which run counter to the policies underlying those laws is sufficient to warrant renedial license conditions.
In addition, if applicant (or licensee) is a dominant business enterprise, its actions have to be tested against a more stringent standard than applies to actions of snaller concerns in highly competitive markets.
Electric utilities are subject to these principles, particularly where they voluntarily enter into commercial relatic'nships governed in the first ,
instance by business judgment and not regulatory coercion. ,
B. Procedural Setting Cities' motion for .sunnary disposition arises under 10 CFR 2.749.
The relevant standard for determination of its motion appears in subsection (d), which follows:
The presiding officer shall render the decision sought if the filings in the proceeding, depositions, answers to interrogatories, and admissions on file, together with the statements of the parties and the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entiticd to a decision as a matter of law.
II APPLICA' ION OF COLLATERAL ESTOPPEL The parties agreed at the argument conducted on August 17-18, 1981, that the controlling precedents on collateral estoppel are Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979), Blonder Ton tue Laboratories, Inc. v.
University of Illinois Foundation, 402 U.S. 313 (1971), and United States v.
Utah Construction & Mining Co., 384 U.S. 394 (1966). See Response of Florida Power and Light Co. (FPL Response) at 93-94 and Tr.1218. Cities
Sumary Disposition: 5
! also relies on Cities of Anaheim, et. al., California v. Southern California Edison Company, C.D. Cal . No. CV-78-810-MML (May 19,1981).
l Cities argues that collateral estoppel effect should be given to Gainesville Utilities Oeoartment v. Florida Power & Light Company, 573 F.2d 292 (5th Cir.), cert. denied, 439 U.S. 966 (1978), Florida Power & Light I Co., Opinion Nos. 57 and 57-A, 32 PUR 4th 313, Florida Power and Light Company, Docket No. ER78-19 (orders of December 21, 1979 and February 6, 1980), and Florida Power and Light Co., Opinion No. 517, 37 FPC 544 (1967).-
FPL would deny cellateral estoppel effect to these cases. It argues-that cities cculd easily have joined in the Gainesville litigation and that the application of the Parklane standaro would preclude Cities from enjoying the fruits of that litigation because it was not willing to expose itself to the risk of an adverse outcome. FPL would deny collateral estoppel effect to FERC 57 because the Comission's opinion expressly denied any intent to bind another forum, because FERC's antitrust concerns are different from ours, because the burden of proof was different in that proceeding and because that proceeding was hurried and that the NRC should give FPL a more complete opportunity to contest its case than FERC gave it. FPL also argues that FERC ER78-19 is irrelevant to this case and that Opinion No. 517 was first reversed and then affirmed on different grounds than those for W1ich Cities seeks collateral estoppel effect.
Cities has argued, without contradiction by FPL, that it is accepted federal law that prior determinations by an administrative agency may estop the parties from litigating issues resolved earlier. Cities cites United States v. Utah Construction & Mining Co., 384 U.S. 394 (1966) and City of Anaheim v. Southern California Edison Co., C.D. Cal . No. CV-78-810-MML (May 19, 1981, slio oo., in support of this position.
A. Gainesville Parklane involved offensive collateral estoppel -- tne use of
Sumary Disposition: 6 collateral estoppel as a sword rather than a shield. The " general rule" of Parklane, on which FPL relies heavily, was stated by the Court as follows:
The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or dere, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.
Parklane, 439 U.S., at 331 (emphasis supplied).
Whether this case involves " offensive" collateral estoppel, as in Parklane, is unclear. The license has been applied for by FPL. An affirma-tive defense has been presented by Cities. The prior cases never categoriz-ed this situation as either offensive or defensive.
If we assume, nevertheless, that Parklane applies, we must consider whether Cities "could easily have joined in the earlier 3ction." FPL has not persuaded us that Cities could have joined the Gainesville litigation or that they could have done so easily. Had Cities applied for intervention in that litigation, Rule 24(b) of the Federal Rules of Civil Procedure would have dictated denial of their application if the intervention would " unduly delay or prejudice the adjudication of the rights of the original parties."
FRCP 24(b). It is not clear that a trial court hearing an already compli-cated antitrust case would have exercised its discretion to admit additional parties, at least not where intervention would have broadened the, issues.
See Comonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 315 F.2d 564 (7th Cir.1963), cert. den., 375 U.S. 834, 84 S. Ct. 64,11 L. Ed. 2d 64 (1963).
See also GAF Coro. v. Eastman Kodak Co. (S.D.N.Y.) 1981-2 Trade Cases l 564,205 at 73,751 (in which collateral estoppel applied even though GAF specifically requested a separate trial; weight was given to the complexity l
of each of these cases plus other factors in deciding whether GAF could
" easily have joined in"). Cities asserts without contradition that j intervention by Cities in the Gainesville proceedings would have broadened the issues of that l itigation . Tr. 1144 l
i
l l
1 I
Sumary Disposition: 7 l
Even if we were convinced that Cities could have joined the Gaines-ville litigation, we muld not consider that joining would have been accomplished " easily", in the sense of the Parklane " general rule". We do not interpret Parklane to require a party to join in complex litigation with antitrust overtones in order to invoke collateral estoppel based on the decision in the case. For Cities to have joined in the Gainesville case would undoubtedly have been very expensive, and we do not think it appropriate for us to second-guess whether Cities, which have now sued FPL i
in an antitrust suit, should have sued at the early date that Gainesville was brought. We do not believe Cities needed to take that action, or that a substantial judicial economy should be forfeited in this proceeding because they did not.
In any event, the " general rule" of Parklane is just that -- a general rule. The Supreme Court made clear that federal trial courts -- and
. by extension, federal agencies -- ultimately exercise " broad discretion" in determining whether to permit offensive collateral estoppel. 439 U.S. at 331. We look, therefore, to all relevant considerations, and not merely to the matter of whether the proponent of collateral estoppel "could easily have joined in the earlier action."
Here, in our view, the relevant considerations weigh in favor of applying collateral estoppel. This is not one of those situations discussed in Parklane, 439 U.S. at 330, dere a defendant first suffers an adverse result in litigation for relatively small stakes and then experiences an attempt by a new opponent to use the first result offensively where much larger stakes are involved. The Court considered it unf air to hold a defendant to the result of a case where "he may have (had] little incentive to defend vigorously." I d_. But Gainesville was serious litigation and there is every indication that FPL defended itself with vigor.
Another imoortant factor in f avor of collateral estoppel is that the evidence of conspiracy, consisting primarily of letters written by company
. Sunnary Disposition: 8 officials, was set forth in the Fifth Circuit's opinion and was found to be overwhelming. The Circuit Court reversed a jury verdict, necessarily concluding that the evidence was so strong as to admit of only one reasonable conclusion. Yet in our proceeding FPL does not suggest that it has any highly probative evidence which was excluded from the prior record or not available at that time. It merely t aggests that we might reach a conclusion different from the Fifth Circuit's based on essentially the same evidence. Tr. 1167-70. But in view of the evidence detailed in Gainesville
-- including patently " incriminating correspondence", 573 F.2d at 303 -- FPL has failed to persuade us that re-litigation of the Gainesville issues would be a fruitful exercise.
For all of the reasons stated in this section of the menorandum, we conclude that Gainesville should be given collateral estoppel effect.
B. FERC 57 and 57-A
_ 1. Different Legal Standards FPL alleges that the standards used by FERC 'in Ooinion 57 and 57A are different standards than those applied by the NRC in its antitrust proceedings and that, consequently, collateral estoppel is inappropriate.
We disagree. FERC must consider whether proposed tariffs are just l
l and reasonable. As part of that determination, it must reflect the policies expressed in the antitrust laws. This is the way FERC expressed its responsibility in FERC Ooinion 57,, 32 PUR4th (1979) at 315:
The allegations and evidence of staff and the intervenors together with the associated responses of the company have coalesced into issues typically examined in tne context of a monopolization case under @2 of the Sherman Act. . . . [W]e wish to emphasize that in evaluating the anticompetitive effects of a proposed rate change and in making findings with respect thereto, we do not make findings that violations of the antitrust laws have occurred. Instead, it is our ooligation to evaluate the public poiicies expressed in federal antitrust laws and to reflect those policies in the conduct of our responsibilities under the Federal Power Act. This we have done in the instant case.
l
Sumary Disposition: 9.
(Emphasis in origint .]i
[See Gulf States Utilities Co. v. federal Power-Comission (1973) 411 US 747 . . .; and Federal Power Comission v. Conway ,
Coro. (1976) 426 US 271 . . . .] ,
FERC's standard is remarkably similar to our own, as it has been explained in Consumers Power Co. (Midland Units 1 and 2), LBP-75-39, 2 NRC, 29 (1975) at 908-09 and cited in Alabama Power Company (Joseph M. Farley Nuclear Plant, Units 1 and 2), ALAB-646 (1981), slip op. at 27-28:
[P] roof of an actual violation of the antitrust laws is not required to show the existence of a situation " inconsistent with" C" 7 them for Section 105c purposes. The Congressional framers of the ,
section (the members of the Joint Congressional .Comittee on Atomic Energy) were originally divided between those who favored proof of an antitrust violation before allowing Section 105c remedies to be imposed and those who thought a showing of circumstances merely
" tending" to such a violation should suffice to allow that relief.
4 An accennodation between the two views was eventually reached. The '
members of the Joint Comittee agreed that proof of conditions *ich run counter to the policies underlying those laws, even,where no actual violation of statute was made out, would warrant remedial license conditions under Section 105c. We need not:lfoger over the , -
matter; this compromise is expressly manifested in the' report of thej .
Joint Comittee and is reflected in the Commission's decisions. ., ,
[ Emphasis in original.]
Hence, we find that both agencies have similar functio (s concerning ' } , ,
administration of the policies of the antitrust laws. However, we? consider this issue a red herring. Y If we accord collateral estoppel effect to a
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l finding, that factual or legal finding is accepted in our proceeding. To' , e '
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l the extent that the finding is relevant, it can be given appropriate effect. :9 j l ' = '
If it is irrelevant, it is of no help. The only proper procedure to /
determine relevance is to consider each finding entitled to coll ateral estoppel effect and to consider how it affects this proceeding. ./
- 2. Different Burdens of Proof - w 7F FPL argues that in FERC p oceedings it has the burden of persuasion .
y l
[
k
Sumary Disposition: 10 but that in an antitrust proceeding before the NRC, intervenor has the burden of persuasion. FPL would have us conclude that this alleged change in the burden of persuasion deprives the FERC decision of collateral estoppel effect.
We disagree completely.
First, we find that FPL has the burden of persuasion in this proceed-ing, notwithstanding contrary dicta by our bretheren in Toledo Edison Co.,
(Davis-Besse Units 1,2, and 3), LBP-77-1, 5 NRC 133, 253-54 (1977) and Midland at 45. These conclusions on burden of proof were not affirmed by the Atomic Safety and Licensing Appeal Panel, and we have concluded that there is a better view.
The burden of proof is allocated by 10 CFR 2.732, sich states:
Unless otherwise ordered by the presiding officer, the applicant or the proponent of an order has the burden of proof.
That section is interpreted by Appendix A to Part II, at V.(d)(1) to mean simply "the applicant has the burden of proof."
Antitrust issues are just one set of issues which must be determined in the licensing process. Tney are covered by Part II. The required antitrust review is set in motion by 10 CFR 2.102, in which the antitrust review provisions are subsections parallel to the subsections providing for other staff reviews.
Although antitrust issues are, as our brethren have remark'ed, tra-ditionally serious civil or criminal charges on which defendant would not have the burden of persuasion, we do not believe that factor to be relevant to the interpretation of 52.732. As with safety issues, the proponent of antitrust licensing conditions has the burden of coming forward and of making a prima f acie case. However, the ultimate burden of persuasien rests with Applicant, who seeks a licensing order.
1 . x Sumary Disposition: 11 FPL argues that it is not the proponent of an Order. Tr. 1164-1193.
However, we are not convinced. In the course of argument, FPL admitted that it must either have an order estopping Cities from objecting to the issuance of a license or an order terminating this proceeding without a finding that there is a situation inconsistent with the antitrust laws. Tr. 1192-1193.
'Regardless, we consider FPL to be the proponent of the licensing order.
Intervenors merely seek conditions to that order, just as they would do for safety or environmental issues. The fact that this is an ongoing proceeding with respect to a construction permit that has already been granted is incidental and should not affect the burden of persuasion.
We also disagree with Applicant's contention that shifts in the burden of proof preclude collateral estopopel effect. Applicant relies on cases in which the standard of proof is different. For example, acquittal of a criminal defendant does not absolve the defendant of potential civil liability. Similarly, a loss of a civil action for damages from an injury does not preclude pursuit of an administrative claim before an agency whose standards are more lenient than those applicable to a tort action. (See Response of Florida Power and Light at 92-93.)
Applicant considers a shift in the burden of proof to be a greater change than a shift in the standard of proof. Consequently, it argues that it follows a fortiori that a change in the burden of proof precludes collateral estoppel. With this we disagree.
The precise analytical question involved is sharply highlighted by both FPL and Cities. FPL relies on Restatement (2d) of Judgments, 68.1 (Tent. Oraft No.1,1973), which states that collateral estoppel should be precluded when the burden of proof has shifted. The Restatement cites for authority the dissenting opinion in Harding v. Carr, 79 R.I. 32, 83 A.2d 79 (1951). The Restatement merely says that "the reasoning of the dissent in the case is believed to be more persuasive."
As
t Sumary Disposition: 12 We agree with the majority in the Harding case and with Cities.
Ordinarily, the apportionment of the burden of persuasion does not affect the outcome of the case. That explains, in part, why the Appeal Board has not yet found it necessary to apportion that burden in NRC antitrust cases.
Differences in the burden of persuasion are unlike differences in the standard of proof, which may often affect the outcome--particularly where the difference is between proof beyond a reasonable doubt and proof by a preponderance of the evidence. We approve of the sentence in Cities' Supplemental Memorandun in Response to Board Questions at 10, stating that "the possibility of equipoise seems so slight that it should not counter-balance the sound public policy in favor of collateral estoppel and against rel itig ation."
Were we convinced that the portion of the FERC opinion dealing with antitrust issues rested on the burden of persuasion, we might decline to give its opinion collateral estoppel effect. See United States Fire Insurance Ccmoany v. Adirondack Power & Light Corporation, 201 N.Y.S. 643 (App. Div., 3rd Dept. 1923). However, FERC's antitrust conclusions are stated in positive terms. For exanple, Opinion 57 states at 323 that:
Although there is a potential for competition in the wholesale market, actual competition has been inhibited by FP&L, as we discuss below. ... This opinion reflects our concern that wholesale monopoly power not be used to maintain or enhance a utility's retail market position.
We find that FP&L has monopoly power in these relevant markets, as determined by Dr. Taylor in unrebutted testimony.
Similarly, at 324, FERC finds that:
Although the record does not contain precise statistical indicia of FP&L's share of the wholesal power market, it is clear that the company has monopoly power over bulk power transactions as well.
(Emphasis added.]
In addition, as FPL pointed out at the conference, Tr.1178, FERC knows how to indicate when its findings are based on the burden of
Sunnary Disposition: 13 persuasior. . At 314-15, it stated that utilities could move to amend general tariffs to limit service availability but that FP&L "has failed to carry its burden of justification." However, we do not agree with FP&L that this language indicates that the entire opinion hinges on the burden of proof.
To the contrary, we conclude from FERC's use of language that the antitrust conclusions were unequivocal and that the result was that FPL had to shoulder the burden of proof in justifying limitations of service av ail abil ity. It is this burden, which arose from a prior finding of monopoly power, that FPL could not meet.
- 3. Full and Fair Oooortunity to Litigate FPL also argues, citing the FERC administrative law judge whose opinion was reversed by that Commission, that it was denied a full and f air attempt to litigate the issues in that forum. FPL argues that a hearing began only 2.5 months after the FERC commenced its proceeding, depriving the parties of an adequate time for discovery and preparation for a hearing.
It grieves because the administrative law judge found that the time constraints prevented him from adequately exploring whether specific antitrust violations have occurred. FPL Response at 95. And it even cites lax standards for admission of evidence as a possible source of prejudice.
(
We find this argument of FPL without merit. Parklane indicated, at pp. 561-62, that it might be unf air to apply offensive collateral estoppel to a party who lacked the " incentive to defend vigorously", citing a case where an attempt was made to estop a 57 million suit because of a $35,000 judgment. However, we find no indication that Parklane would require judges to inquire into the procedures of other forums, after the close of earlier l itigation. We do not consider that aopropriate. Such questions are more appropriately settled by appeal in the prior case.
Sumary Disposition: 14 It is clear that FERC concluded that FPL had its day in court. It reversed the administrative law judge after studying his record for a full year. The lack of time to consider specific antitrust violations did not work against FPL's interests, but against its customers. Despite few specific findings of antitrust violations, the FERC wss able to cenclude that FPL had monopoly power in specified markets. It also indicated that its proceeding may have been "too elaborate". It concluded its opinion, FERC No. 57, at 340, as follows:
Finally, we note that FP&L has matters pending before us in over 30 dockets, most involving interchange transmission service filings in which antitrust allegations have been made. We see little need in those cases for the kind of elaborate presentation made in this one.
It would be helpful to the comission for the parties to pinpoint the competitive problems and defenses relating to the filings in each of these cases.
To be sure, the FERC did insert in its opinion language that its decision should not bind "other forums." See id. at 315. However, this restrictive language occurs imediately following an explanation that the FERC had not found " violations" such as would be required in a civil
'ntitrust suit. We do not interpret this language to extend to the NRC, whose proceedings apply a standard more similar to FERC's than do the civil courts.
On the same page as this limiting language, FERC states its belief that "our evaluation of the anticompetitive effects of the proposal is correct and supported by the record." Furthermore, FERC expressed no reservations at all about the use of this finding in the 30 other docket's then pending involving FPL. We consider these indications of the serious-ness of the FERC findings to be more important than the limiting language.
Furthermore, we do not consider these limitations binding on us, as we alone have the jurisdiction to determine the application of collateral estoppel to our proceedings.
I L
Summary Disposition: 15 We believe that deference is due to FERC opinions by the NRC. We come to antitrust issues involving public utilities as a sidelight of our more commen efforts to evaluate the safety and environmental effects of nuclear energy. For the FERC, the economics of public utilities are their
+ bread and butter. Its staff comes to public utilities issues with acquired expertise and it may therefore be able to telescope issues which would take
- us longer because of our need to learn about the practical aspects of utility regulation. ,
j 4. Conclusion For all the reasons stated in this section of the memorandum, we conclude that FERC Opinion 57 and FERC Opinion 57A should be given collateral estoppel effect.
C. Other FERC Opinions l Cities argue that ER78-19 should be ar. corded collateral estoppel effect. However, ER78-19 was reversed by Florida Power & Light Company v.
Federal Energy Regulatory Commission (5th Cir. No. 80-5259, Nov. 5,1981) .
Consequently, nothing in that case is now relevant here.
With respect to FERC Opinion 517, we find ourself in agreement with FPL. Cities seeks to use this case as determinative of the fact that:
FPL receives substantial benefits from its participation in the Florida Pool in the coordination of spinning reserves, the arrange-ment of plant maintenance schedules, and the assurance of the reliability of frequency control and from both the Florida Pool and ISG in the form of automatic assistance in the case of emergen-cies.
i l [ Florida Power & Light Comoany, 37 FPC 544, 551-552 (1967), reversed 430 F.2d 1377 (5th Cir.1970), reversed, Florida Power and Light Comoany v. FPC, 404 U.S. 453 (1972)(FPC Case), as cited in Cities' Motion to Establish Procedures at 34.] However, this case does not stand for as much as Cities wishes.
l
Sunnary Disposition: '16 First, we note that FPL correctly argues that the case was reversed and then affirmed on only one of the FERC's two initial grounds. The issue in the case was whether FPL was subject to FERC jurisdiction because it transmitted electrical energy in interstate cannerce. Technical issues concerning how electrical energy is generated and how it travels along interconnected transmission lines were in center stage. This issue of whether FPL derived a benefit from coordination was at best a fringe concern, irrelevant to the outcome of that case. Footnote 5 of Parklane Hosiery Co. v. Shore 439 U.S. (1979) at 326, citing 1B J. Moore's Federal Practice 50.405[i], pp. 622-624 (2d Ed.1974) and cases cited in that reference, states that issues are precluded by collateral estoppel only if they are "r.ecessary to the outcome of the first action." Hence, Cities cannot use the FPC case for the suggested proposition.
We do think that the Supreme Court opinion in the FPC Case contains a few findings of marginal assistance to Cities and, applying principles discussed more fully above, we would apply collateral estoppel to those findings. These findings include FPL's membership in the Florida Pool and its interconnection to four named utilities, with which it " coordinates activities" and exchanges power. However, we will not infer much from the phrase " coordinates activities" since the decision does not discuss the nature of the coordination, which was not an issue necessary to the decision of the case.
III FINDINGS RESULTING FROM COLLATERAL ESTOPPEL Deciding to apply collateral estoppel only starts our consideration of how prior cases affect this case. The next step in this process, reflected in this section of the memorandum, is to decide which findings of prior cases are binding here.
The cases relied on in this section are those cited on pp. 2-3 of tnis memorandum. For convenience, they shall be cited merely as Gaines-l
4 Sunnary Disposition: 17 ville, FERCS7, and FPC (referring to the Supreme Court opinion we have referred to above as "FPC Case") . In adopting the findings of these decisions, we liberally borrow language without direct citation. We are grateful for the language composed by others but have not used direct citation because it would make our own findings more cluttered and confusing.
A. Background Background material derivable from the opinions relates primarily to the size of FPL and of Florida Power Corporation (Corp.). Generally, this material merely shows that FPL and Corp. are large companies. It also shows that they have some interconnections with other companies. Although there is a finding on " coordination," we have already discussed above the ambiguity in the use of this word by the Supreme Court. The rest of this subsection cites as fact the findings we rely on.
FPL is Florida's largest electric utility. It serves about one million customers and is roughly the ninth largest utility nationally and 14th largest in investment in gross utility electric plant. Despite this significant size, the peninsular nature of Florida, the concentration of the company's sales in the southern part of the state, and the recurrent threat i of hurricanes which might sever power lines, the operations of th,e company are unusually insular and independent of the operations of like companies in other States. FPC at 605.
FPL was a member of the Florida Pool and is interconnected with Corp., the Tanpa Electric Co., the Orlando Utilities Commission, and the
! City of Jacksonville. These interconnected utilities and authorities coordinate their activities and exchange power as circumstances require.
A purpose of the energy interchanges is to take care of temocrary needs.
Ibid., including footnote 4.
Corp., FPL, and the other Florida Pool participants are members of i the Interconnected Systems Group (ISG), a national interlocking of utilities that automatically provides power in case of emergencies. FPC at 606.
Sumary Olsposition: 18 FPL operates generally in the eastern and southern parts of Florida from Jacksonville in the north to the Miami area in the south. Corp., al so privately owned, is the second largest electric utility in the state.
Corp.'s predominant service area is the western and central portions of Florida from the Panhandle in the north to the St. Petersburg area in the south. Gainesville a+ 294.
B. Relevant Markets FPL operates in two broadly defined product markets. FERC57 at 321.
The retail market involves sales of capacity and energy to ultimate consumers by vertically integrated utilities such as FPL and by distribution utilities. The bulk power market involves sales of wholesale power and energy to retail distributors (including the captive retail distribution centers af vertically integrated systems) by bulk power producers and supoliers. Id. at 321.
The bulk power market may be separated into submarkets for discrete fir n requirements and for coordination. H. at 322. Firm services are noninterruptible; priced on the basis of average system costs; designated to meet a customer's base, intermediate, and/or peak-load requirements; and continuously available over the indefinite future. Conversely, interchange or coordination services are interruptible; incrementally priced on the basis of oil-fired generation costs; ancillary to bulk power supply and not l practicable sources of base-load power; and of limited duration. Ibid.
l l FPL sells electric power and energy to most of the heavily populated areas along the eastern and western coasts of peninsular Florida and portions of central and north-central Florida. Within or adjacent to this i service territory are 22 smaller areas served by municipal and cooperative utilities. This composite area, comprised of some 35 Florida counties, is l the relevant geographic market for both retail and wholesale product l
markets. Ibid.
l
Sumary Disposition: 19 The wholesale bulk power market has a similar area to the retail market because there are relatively few wholesale transactions across its boundaries. This geographic limitation applies as well to the bulk power submarkets, particularly the firm requirements submarket. M. at 323.
C. Monoccly Power FPL has monopoly power in retail and bulk power markets within its geographic market or " composite area". M. at 324. Included in FPL's bulk power resources are virtually all of ti e nuclear generating capacity and
- /bstantially all of the gas-fired generation available within the relevant mark at . Each of these forms of generation give the company a significant edge in the production of low cost power for base-load requirements. Three of the four operating nuclear plants in the state of Florida are owned by FPL, except for some small interests that New Smyrna Beach has in Florida Power Corporation's nuclear plant and for interests dich it was required to sell pursuant to the partial settlement reached in this case. Id. at 324.
FPL also enjoys an advantage over municipal generating systems because it has contracted for long-term, noncurtailable supplies of natural gas. Ibid.
By comparison, municipal generating units are small capacity, oil-fired steam or internal combustion machines which characteristically have high operating costs and are ill-suited to provide base-load requirem5nts. Id.
at 325.
FPL owns 81 percent of the transmission lines within the relevant market with operating voltages of 69 kv or above. These are the f acilities over which bulk power is transported within the relevant markets and FPL's ownership share gives it " strategic dominance" over transmission. Id. at 325.
D. Wholesale Market Division FPL has engaged in a per se violation of the Sherman Act by con-
Sennary Disposition: 20 spiring with Florida Power Corporation to divide the Florida wholesale power market by not selling wholesale power to customers in each other's service territories. FERC57 at 326-327; Gainesville at 294.
Robert Fite and Ben Fuqua, acting in an official capacity for FPL, wrote a series of letters indicating the existence of a market division and implementing that division in several specific instances. Gainesville passim. A letter of February 17, 1965, implemented the division with respect to Gainesville. Id. at 295. Other letters concerning Gainesville were written by FPL officials. One was written between August 2 and August 30, 1966. Id. at 296. Another was written on October 24, 1966. Ibid.
Prior to its dealings with Gainesville, FPL-officials had implemented the market division with respect to other entities. They refused to provide retail service to the town of Chiefland. Id. at 297. They thanked Florida Power Corporation for refusing to sell wholesale power to the City of Arcadia in 1956. Ibid. They learned by telephone and memorandum of reciprocal action Florida Power Corporation had taken in 1955 with respect to Lake City, which sought either wholesale or retail service. Ibid. They also were informed that Florida Power Corporation had refused in 1954 to serve Starke, which was not even served by FPL but was located in an area generally served by it. Ibid.
FPL refused to offer power to Lake Helen <n November 1956, even though Lake Helen, which was generally within Florida Power Corporation's area, was not served by Florida Power Corporation. Id. at 298. It reminded Flordia Power Corporation of this action and wished it well in buying Lake Helen's electric f acilities. Ibid. In another incident, in 1962, before FPL agreed to an interconnection with the City of Orlando's municipal system, it first cbtained Florida Power Corporation's assent and agreed to the construction of a cross-state transmission line. Ibid.
In 1963, Florida Power Corporation's customer, the City of Winter Garden, was considering switching to a municipally-owned system. Pursuing
Sumary Disposition: 21 this option, citizens asked FPL for wholesale power. FPL responded that "the company did not supply municipal systems with wholesale power" and that Winter Garden was beyond its " economic service area." M.,at298.
In 1965, FPL learned from Florida Power that the City of Jackson-ville, which was already intertied with FPL and within its territory, sought an interconnection with Florida Power Corporation. Florida Power Corpora-tion inquired whether FPL would let Jacksonville go through its territory for this purpose. Florida Power Corporation then met with FPL to discuss the matter; and Jacksonville never intertied with Florida Power Corpora-tion. Id. at 299.
The Gainesville case also makes some positive findings about FPL and we agree with FPL that when Cities requests collateral estoppel effect it must accept the good with the bad. Although the relevancr. of thosc favor-able findings is not altogether clear, we find that there was no agreement, understanding or concert of action between FPL and Florida Power Corporation to refuse to interconnect with Gainseville unless that city would enter into a territorial agreement. We also find that FPL's refusal to interconnect with Gainesville was not an act in furtherance of an attempt to monopolize.
Id. at 303-305.
~
E. Existence of Retail Competition For twenty years, FPL has competed with municipal utilities within its service territory to serve entire communities. FERC57 at 327, 330. At various times FPL has promoted acquisition or willingly received municipal proposals. Most, if not all, of those incidents occurred when the municipal systems were arranging new bulk power supplies from the options of self-gen-eration, wholesale purchase from FPL, and retail purchase from FPL after franchise disposition. Id. at 330. The company has not succeeded in many acquisitions, because the municipal candidates solved their supply problems by adding generation. However, self-generation is becoming less and less
Sumnary Disposition: 22 attractive. Ibid. Since FPL controls the remaining two options, we conclude that its wholesale monopoly power can only increase, and, thereafter, its retail power as well. Ibid.
Twice (in 1958 and 1968), FPL sought to equire the Lake Worth utility. Id. at 327-328. FPL offered to furnisn firm power to New Smyrna Beach in 1958, if that utility would not order additional generating equipment and would enact an ordinance making it easier to dispose of its assets. Id. at 328. From 1965 to 1975 FPL took various steps and made internal plans directed at acquiring the New Smyrna Beach utility. Ibid.
In 1975 FPL sought to buy or acquire a 30 year lease on the Fort Pierce utility, which had approached it for an interconnection. Ibid.
In 1976, the Fort Pierce Utility had concluded that it was too inefficient to compete with FPL and it unsuccessfully sought to purchase 30 mw of base-load firm power from FPL. Id. at 329.
In 1976, FPL proposed a sale or lease of the Homestead utility.
Ibid. A serious effort to acquire the Vero Beach system was undertaken in 1976. Ibid. FPL management considered the attempt to acquire Homestead to be related to the possible acquisition of Daytona Seach, Fort Pierce, Homstead and other municipal utilities. Ibid.
~
F. Imoortance of Retail Comoetition .
There is an important relationship between FPL's wholesale sales and its ability to retain existing retail franchises. FERC5/at330.
Between 1976 and 1985, franchises covering retail sales to 41.8 percent of FPL's customers were scheduled to expire. In addition, FPL served another 93 communities at retail with no franchise agreement. Ibid.
Franchise competition can be a positive force to encourage better service and lower rates; thus, a utility should not be allowed to tilt the balance by artificially making wholesale service unattractive to potential retail market entrants. Id . at 330-331.
Sunnary Disposition: 23 Due to the continuing expirations of retail franchises, we conclude that vigorous franchise competition exists within the retail market which FPL can influence through its wholesale sales policies. Id. at 331.
G. Policies on Sales to Municioalities Traditionally, FPL has demonstrated considerable reluctance to en-gage in firm power transactions with municipal utilities, even within its own service territory. Ibid. During the 1950's and 1960's this anounted to an unqualified refusal. Ibid. Rate Schedule RC under which firm service was provided to cooperatives required that capacity and energy not be resold or distributed by the customer to any municipality or unincorporated connunity for resale. Ibid. For example, there were six separate instances over a period of thirteen years when the Clewiston municipal utility requested and was refused wholesale service by FPL. Ibid.
While FPL has been discouraging purchases by self-sufficient municipals it has adopted a marketing strategy which promotes high load f actor usage as a means of improving its declining system load factor. Id.
at 336, footnote 55. In addition, FPL's RP rate is intended to promote high load f actors. Id. at 336.
FPL proposed to FERC that its Schedule PR should be withdrawn. Id.
at 309. Had it succeeded in this request, it would have final'y' concluded the efforts of the municipalities over ten years to obtain a source of economically priced, base-load power. Ibid. Some utilities would have been more likely to leave the utility business. Ibid. Furthermore, this would have assured that electric service from municipalities would be more expensive than FPL and would have enabled FPL to exploit its scale economies in future franchise renewal contests. Ibid.
The FERC, in Opinion No. 57, set forth its conclusions concerning several individual situations involving FPL and requests by municisalities l
Swanary Disposition: 24 for wholesale or retail power. The rest of this subsection of the Memorandum sets forth some of FERC's findings, often in FERC's own words.
In 1972, Homestead unsuccessfully attempted to purchase firm wholesale power. Id. at 332. Finally, in 1973 FPL agreed to sell Homstead firm interchange power providing that the city would agree to install additional generation capable of carrying its electrical load. Id. at 333.
FPL's motivation for this offer was to reduce the chance that Homestead would request that power be wheeled from other municipalities and to avoid a long-term firm power commitment. Ibid. FPL made the demand for installa-tion of additional generation c&pacity despite its knowledge that the size of the city would deprive it of the economies of scale available to large utilities. Ibid.
In January 1974, FPL agreed in writing to prcvide Homestead with electric power for 36 months after it completed new interconnection facilities. The rate was not to exceed the canpany's approved wholesale rate schedule in effect at the time. Ibid. However, after the intercon-nection was completed in October 1977, FPL attempted to terminate the rate schedule referred to in the agreement and to tenninate this service to Homestead. Id,. at 333-334 Fort Pierce's efforts to obtain wholesale service from FPL;found a simil ar response. Ibid. Indeed, it was not until after an FPL witness admitted under oath that Fort Pierce was eligible to purchase firm service under the SR-1 tariff that FPL delivered a draft service agreement to the city and ccmnenced service. Id,.at 334-335.
H. Nuclear Plant Ownershio It is FPL's policy to retain full ownership of the nuclear generating plants wnich it constructs, except when the United States Justice Geoartment and the staff of the Commission obtained a settlement agreement recuiring it to divest part of its ownership. Ijl. at 355. Joint ownership
Summary Disposition: 25 of nuclear generating facilities would provide municipal and cooperative utilities (as well as other utilities in the region) with access to the less expensive energy wnich these large nuclear f acilities produce (economies of scale) . Ibid.
I. Transmission Services The four wheeling services made available by FPL offer only surplus transmission capacity on an as-available basis. M . at 336.
J. FPL's Sucoly Situation FPL has greatly reduced its demand and load forecasts in recent (prior to 1979) years, with the actual rate of growth averaging at most around 4 percent annually. M. at 338. FPL has experienced significant improvement in earnings and related market factors. (Ibid.) FPL has been reporting lower, more manageable growth; greater internal generation of funds; improved earnings and coverage ratios; and increased dividends.
Ibid.
l
l The parties have filed briefs concerning the effect on this
~
proceeding of an " Order . . . Granting Defendant's Summary Judgment Motion on Plaintiff's Nuclear Access Claim," Florida Cities v. Florida Power &
Licht Co., (U.S.O.C. Southern District of Florida), October 13, 1981.
That judgment applied to the City of Tallahassee. It was cased on a record that is virtually identical to our own. (Uncontroverted assertion of .'PL.)
FPL argues that this decision should be granted collateral estoppel l
effect in this litigation against Tallahassee and against all other cities.
In particular, it argues that we are precluded from finding that any lack of access to FPL's nuclear f acilities evidences a " situation inconsistent with I the antitrust laws."
Summ ary Di sposit ion : 26 FPL bases its argument on a sound understanding of the applicable legal criteria. It states that collateral estoppel is applicable in our proceedings, citing Toledo Edison Comoany (Davis-Besse Nuclear Pcwer Station !
Units 1, 2 and 3), ALAB-378, 5 NRC 557, 561 (1977) . It also correctly states the criteria for application of collateral estoppel (cited in Parklane and in other cases). The two criteria in dispute in this proceeding are: (1) the party against whom collateral estoppel is asserted must have been a party, or in privity with a party, to the prior action, and (2) there must have been a final determination of the issues on which collateral estoppel is sought.
A. Arguments About Privity FPL argues that privity is established because "FPL's sumary judgment motion was opposed by plaintiffs as a group." Furthermore, it argues that parties to this proceeding who were not parties in the district court proceeding should be foreclosed from challenging the decision because the attorney .n that case is the same as the attorney in this case. It cites Pinto Trucking Service, Inc. v. Motor Dispatch, Inc.,1981-1 Trade Cas.164,028 at 76,325 (7th Cir.1981) and Montana v. United States, 440 U.S. 147 (1979).
Cities argues that there is no authority entitling a winning party to estop different adversary parties. It also argues that Sherman Act proceedings apply more rigorous standards of antitrust than do NRC oroceedings. Hence, it is logically possible for their to be a situation inconsistent with the antitrust laws without there being a violation of the Sherman Act and it would be improper to apply estoppel to preclude all claims in this case.
We conclude that the requirement of privity was met only with respect to Tall ahassee. The cases cited by FPL do not demonstrate that privity stretches as f ar as they would have it. Pinto held that plaintiffs
Summary Disposition: 27 could not be estopped because they were not in privity with the "Apaloosa defendants" and because they had been deprived of an opportunity to participate in the first trial because a directed verdict had been granted prior to the holding of the trial. Montana involved estoppel against the United States, which had " directed and financed" its contractor's participation in the prior case, which was granted collateral estoppel effect.
Although Pinto says, at 76,325, that collateral estoppel is applicable against parties which have "a substantial interest in the outcome of the lawsuit and . . . participated in a significant way in the litigation", we have no evidence of any direct participation in the district court sumary judgment motion by any party other than Tallahassee. Of even greater importance is the fact that the District Court opinion applies only to Tallahassee--although it could have applied to other parties as well.
Hence, the District Court has yet to :pply its decision to any other party and we are sufficiently unfamiliar with that docket to be willing to extend the court's opinion further than it did. We are particularly loathe to extend that opinion to parties to our case that are not also parties to that case, solely on the ground that they have hired the same lawyer. -
B. Finality ,
Cities have argued that Judge King's decision in Florida Cities v.
Florida Power & Licht is not a final judgment, under Federal Rules of Civil Procedure Rule 54(b) and that it can not give rise to collateral estoppel for that reason. According to Rule 54(b) the Order is " subject to revision at any time before the entry of a judgment adjudicating all the claims and all the rights and liabilities of all the parties."
It is FPL's position that the decision is " adequately deliberated and firm a and should be oiven collateral estoppel effect. It cites Lummus Co.
Summary Disposition: 28
- v. Commonwealth 011 Refining Co., 297 F.2d 80, 87-90 (2d Cir.1961); Zdanok
- v. Glidden, 327 F.2d 944, 955 (2d Cir.), cert. denied, 377 U.S. 934 (1964);
and GAF Coro. v. Eastman Kodak Co.,1981 Trade Cas. 164,205, at 73,749 (S.D.N.Y. August 3, 1981). However, a simple analysis of the facts of these cases indicates that they do not establish FPL's position. Both Lummus and Zdannok are scholarly opinions by Hon. Henry Friendly. They establish that an opinion of a circuit court of appeals becomes binding as the law of the case. GAF merely applies Zdanok. None of these case directly addresses the question of whether a summary judgment on one issue against a single plaintiff should be considered final.
C. Conclusions We have carefully read Judge King's opinion. It was offered to us by FPL for its preclusive effect on this hearing. However, we have concluded that Judge King's opinicn should not be given collateral estoppel effect.
Although our conclusions, based on our record, are similar to Judge King's in many respects, his opinion was tailored to the stage of the case before him and did not need to reflect the kind of legal and factual analysis that is more typical of a final judicial opinion. Necessarily, in an opinion of this type, which may be explained further before the case is concluded, many of the judge's statements are conclusory in nature.
The nature of Judge King's opinion makes it difficult for us to determine whether to rely on his conclusions. First, he does not discuss the evidentiary basis for his conclusions. This makes it difficult for us to satisfy ourselves or the Appeals Board that the conclusions are satis-factory. Second, part of his underlying rationale, sich appears not yet to have been fully explained, may be related to Sherman Act concepts that are not fully applicable under the Atomic Energy Act. Hence, we cannot determine whether his conclusions, in the context of a treble damages action, are suitable in our proceeding.
Summary Disposition: 29 In any event, were we to have applied collateral estoppel we would have applied the privity requirement to limits its effect to the single litigant, Tallahassee, to whom the decision was issued.
Nevertheless, FPL offered this opinion for its preclusive effect on this litigation. Although we do not accept it for that purpose, we accept it for the lesser included purpose of considering it as relevant evidence pursuant to the public records exception to the hearsay rule. Federal Rules of Civil Procedure, Rule 803(8). (Cities brought our attention to this rule when it argued that court decisions on which it relies could, even if not given collateral estoppel effect, be given evidentiary effect.) It seems even more appropriate to accept a judge's conclusions from his' record than it doe <: to accept in evidence the conclusions of a investigator prepared in the course of his employment, and this latter category of evidence is expressly admissible pursuant to a subsection of the public records and reports rule of evidence. Additionally, principles of judicial economy support the interpretation of the public records exception as extending to the admissibility of the conclusions of a fellow judge in the course of his duties.
On examining Judge King's opinion in light of our record, we have decided to accept most of his findings as appropriate conclusions in this case. Some of Judge King's findings are simple conclusions on well known subjects, such as the efficiency of currently operating nuclear power generation facilities. When sucn findings are not contradicted by any evidence in our record, we have every reason to accept them. Another category of Judge King's findings are generalizations about his entire record. With respect to such global findings, we have examined our own record and have independently corroborated those findings, presenting the findings as Judge King's only because of the added weight which his judgment lends to our own.
J Summary Disposition: 30 Two of Judge King's findings, one relating to the economic risks of nuclear generation, could also be adopted by taking official notice. 10 CFR 2.743(i)(1). We therefore advise the parties that we are adopting Judge King's findings (3) and (5) pursuant to official notice.
In the process of adopting Judge King's findings, we have reached some conclusions that are adverse to the position of Cities. Indeed, the resulting findings are occasionally so adverse to some of Cities' positions that we conclude there is no remaining genuine issue of fact. Under that
- circumstance, even where Cities has " reserved" the right to introduce
! evidence (as it has for its contention concerning a separate market for nuclear energy), we think it appropriate to grant partial summary disposition against Cities, which is the party moving for sumary disposition. After all, when a party attempts to persuade us through documents that an opposing party has not raised a genuine issue of fact, the moving party introduces all the evidence and legal argument it can. If we decide that it has not even gotten to first base, it will have had a full and f air opportunity to bat and there is no equity to the proposition that the responding party bats once but the moving party bats twice. Missouri Pacific RR Co. v. National Milling Co., 409 F2d 882 (3rd Cir.1969); 6 J.
Moore's Federal Practice 156.12(1976).
D. Findings We Accept We have paraphrased and underlined findings of Judge King's that we accept, and we have added some brief comments of our ~own, as follows:
(1) FPL's three operating units plus St. Lucie No. 2 provide 29% of the total amount of electricity generated by it. These units are extremely cost efficient producers of electricity. We note that this finding is on a narrow evidentiary issue and is the kind of iudicial conclusion that fits most comfortably under the public records
Summary Disposition: 31 exception to the hearsay rule. It is particularly credible because FPL urged us to accept Judge King's findings without any reservations about specific facts found by him.
(2) FPL had sold nuclear energy only to its own customers until it was recuired by its settlement [in this case] to sell nuclear power to certain cities located within its " territory" or adjacent to it, and these sales do not demonstrate the existence of a conspiracy not to sell power to outside cities such as Tallahassee. In addition, a sale to some existing customers and a concurrent refusal to sell nuclear energy to outside cities that were not customers does not by itself suoport a Section 1 claim. The position of both parties is consistent with this finding. We see no logic to Cities' claim that FPL's settlement with certain cities " discriminated" against outside cities in a way which constituted a violation of the antitrust laws.
Nor do any of the precedents cited by Cities in this proceeding support that allegation. There certainly has been no illegal subgrouping of customers, such as existed in United States v. Borden, l
370 U.S. 460 (1962). We accept Judge King's finding and grant partial summary disposition on this issue against Cities because there is no genuine issue of fact in support of its allegation.
I (3) Although nuclear power may be more cost-efficient than other methods of electricity generation, the interchangeability of nuclear generated electricity with other electricity recuires, cursuant to l the principles set forth in U.S. v. E.I. duPont de Nemours & Co., 351 U.S. 377, 396 (1956), that the generation of electricity be treated as a market that is not subdivided into separate markets related to the way the electricity was generated. Indeed, since both forms of
( electricity are physically indistinguishable to users and have
- exactly the same value to them, it would be ludicrous for us to hold E
Summary Disposition: 32 that there are separate markets for electricity depending on the manner in which it is generated.
This is not a case of product differentiation, where even identical produ:ts may be more acceptable to some customers because of marketing pizzaz. There is no evidence even suggesting that there is any substantial group of individuals that would feel better or pay more in order to receive nuclear generated electricity as opposed to identical electricity generated some other way. We accept Judge King's finding and grant partial sumary disposition on this issue against Cities because there is no genuine issue of fact in support of its allegation.
(4) With resoect to Tallahasee and other "outside cities" there is no
~
evidence that FPL oossesses monocoly cower in a relevant market for electricity. Indeed, it is clear that cities operating within those parts of Florida Power's traditional territory which have not been added by FERC to FPL's territory, are not affected by any alleged
" monopoly power" possessed by FPL within its territory. Nor do we consider there to be any merit to Cities argument that indirect effects, such as " yardstick competition", on inside cities support relief for outside cities.
The cases relied on by Cities, United States v. Griffith, 334 U.S. 100 (1948) and South Carolina Council of Milk Producers, Inc. v.
Newton, 360 F.2d 414 (4th Cir.), cert denied, 385 U.S. 934 (1966),
are simply inapposite. In particular, there is no showing that the exercise of monopoly power within FPL's territory caused any harm to outside cities, with which FPL has steadf astly refused to compete.
The only evidence in our case concerning monopoly is with i
respect to FPL's monopoly power within its own territory. We have accepted a finding on that issue as a result of the application of collateral estoppel, discussed above, but that finding in no way
Summary Disposition: 33 extends to outside cities. We accept Judge King's finding as precluding sunnary disposition in Cities' f avor.
(We do not grant summary disposition on this issue against
. Cities, however. Our record establishes that FPL and Florida Cities, the two largest utilities in Florida, conspired to divide markets.
The existence of the conspiracy suggests but does not prove the existence of a peninsula-wide market and Cities should be permitted, because it may be relevant to the extent of appropriate relief, to attempt to prove both the existence of a peninsula-wide market and the market power of the two largest participants in that market, if it exists.)
(5) FPL assumed substantial business risks in constructing and operating nuclear facilit'es. The extensive outlay of capital recuired to construct a nuclear facility, combined with the uncertain acceptance of nuclear generated power, indicates that the risks assumed were substantial. Examination of recent experiance in the nuclear industry indicates that companies (such as General Public Utilities, operator of Three Mile Island) can suffer substantial, adverse financial consequences from constructing and operating nuclear facilities. Furthermore, companies have experienced delays ,
in being able to use their facilities due to backfit requirements and, to an indeterminate extent, to regulatory ^ elays. A consequence of these risks is that the financial community has shown concern about the relative safety of bonds issued by companies that are constructing or operating nuclear plants and the entire future of the domestic nuclear generation industry is in doubt.
(6) There is no evidence that defendant took affirmative action to block Tallahassee or other outside cities from participating in nuclear oower generation. Similarly, Defendant's 1976 rafusal of 1
Summary Disposition: 34 Tallahassee's recuest to participate in defendant's nuclear power production has not been shown to be anything but a sound business decision. The only persuasive evidence in our record concerning arguably improper practices with respect to outside cities relate t
generally to coordinated planning among Florida's major utilities and to the conspiracy found to exist in the Gainesville case. Neither of these incidents was directly related to nuclear access, as contrasted to the general operation of the markets for wholesale and retail electricity. Indeed, we have no evidence of any conspiracy addressed directly to the construction of nuclear power reactors of the kind now operated by FPL. The only evidence of a conspiracy addressed to nuclear generation relates to an earlier generation of reactors, none
_ of which was ever built in the State of Florida. We are not
_ convinced that cooperative studies of those reactors gave FPL an unf air advantage in building larger power reactors. The fact that
_ FPL cited this prior experience in license applicationr does not establish a sufficient causal link to attribute its nuclear power plant licensing activities to the earlier joint research activities.
(7) Although the following finding does not seem relevant to our proceeding, we accept it as a credible conclusion en a matter directly before Judge King: Tallahassee's 1976 reouest for access to nt. clear oower raises ouestions concerning its earnestness in seeking nuclear power. Plaintiff's recuest came well after defendant had begun operation of a nuclear power f acility. The reauest only I
consisted of an "cocortunity to consider" ourchasing a share of defendant's facilities or unit oower from defendant. There is no indication that claintiff had a specific olan or even had the necessary acoroval of the coverning board of the Tallahassee City Commission. Without such accroval, an aoreement of sale would not 1
have been final .
Summary Disposition: 35 (8) In 1966, Tallahassee unsuccessfully attemoted to join the Florida Operating Committee, which it was invited to join in 1971.
E. The Finding }ie Reject The one finding of Judge King that we cannot accept for purposes of this proceeding is the finding that " plaintiff's evidence does not reasonably allow an inference of joint effort."
Our principal reason for rejecting this finding relates to our prior study of the record. In this case, we had already undertaken a detailed study of the exhibits before we were made aware of Judge King's decision.
In the course of that study, we have firmly concluded just the opposite of what Judge King has concluded on this one issue. Furthermore, due to the preliminary nature of Judge King's opinion, we have several reasons for rejecting his finding on this issue. First, our standard for finding a situation inconsistent with the antitrust laws is different from that applied by district courts, which apply more rigorous statutory standards.
We may look to the purposes of the antitrust laws and may balance antitrust concerns with other public interest factors. Alabama Power Company (Joseph M. Farley Nuclear Plant, Units 1 and 2), ALAB-646, June 30,1961 at 142-145.
Third, Commission precedent suggests to us that the ordinary pattern in the electric utility industry is the existence of a market for coordination services. Farley at 38-39 and Consumers Power Co. (Midland Units 1 and 2), ALAB-452, 6 NRC 892 (1977) at 949-74 These precedents inform us that generally the function of coordination arrangements is that
- " utilities interact with each other in planning for and constructing the necessary transmission and distribution facilities and in operating them."
Farley at 39. With this framework in mind, we have concluded--as the Appeal Board did in Farley--that there is no compelling reason to reach a different conclusion here.
Summary Disposition: 36 Indeed, in the next section of this opinion, we analyze the evidence and find that it compels the conclusion that the major utilities in Florida cooperated in jointly planning their generating and transmission f acilities and that they thereby placed their competitors at a disadvantage. These coordination efforts were undertaken in order to realize important joint economies of operation and it would be unreasonable for us to conclude that these economies were not realized. Hence, we find that these coordination efforts created a situation inconsistent with the antitrust laws and that these conditions should be weighed in deciding whether to impose license restrictions.
V JOINT PLANNING OF COORDINATION OF GENERATION AND TRANSMISSION We have already found, as a result of granting collateral estoppel effect to FERC57, that there is a market for coordination services. In this section of the memorandum, we discuss how five of the largest utilities in the State of Florida coordinated their activities.
Our review of these materials persuades us, contrary to the assertions of FPL, that coordination amounted to far more than just "research" or " studies". These were not academic studies conducted to slake a thirst for knowledge. They were hard-headed operational studies planned by companies interested in improving their individual efficiency by generating information concerning advantages they all could enjoy by coordinating their efforts. We note that these efforts were expensive and that they continued without any protestations that the studies were useless j or overly expensive. In addition, we have examined the " study" documents and related letters, which describe these studies as " guides", not just as academic studies.
Under the circumstances, there is a strong presumption that FPL used this expensive and potentially useful information in its planning process.
Although there is no direct evidence that the information was used, it would l
. . . - . - - .._.n ......,. .- . . - , *. - . - , .-- ,,,
v .
- w. .
Summ ary ' 01 s po s i t i on : 37 have been as unnatural for it to be ignored as it .would be for an oyster lover to ignore a shucked oyster on a bed of crushed ice. In the circum-stances, we would have skepticall xamincd ~pidnning documents that purported to show ' hat these data wer'[ ignored. However, none of the important planning documents are still'in existence.
Consequently, we conclude, for reasons explained further below, that the participants derived real benefits, giving them an advantage not enjoyed by their competition and that this created a situation inconsistent with the antitrust laws. In particular, the participants benefitted from their ability to plan to their mutual advantage for additions to generating and transmission facilities.
A. The Fite Letter On November 3,1964, Robert H. Fite, President & General Manager of FPL, invited the City of Jacksonville to to join with four other utilities in a study which would "be used as a guide for generating and transmission additions, as we grow with Florida." (Exhibit 15.) The planning period l involved extended from 1967 through 1980, which includes the period during which the St. Lucie nucL2ar power plant Unit 2 was planned and a large part I of the period during which it is being constructed. Exhibit 15 to Cities l Motion to Establish Procedures. (Hereinafter all such exhibits will be referred to by number, without reference to the motion to which they were att ached. )
The letter is sufficiently important to this proceeding to quote in full its first two paragraphs:
Our company, along with Tampa Electric Company, Florida Power Corporation and Orlando utilities Connission, is preparing to make a ,
long range power supply study to be used as a guide for generating and transmission additions, as we grow with Florida. Knowing your interest in these matters, we are writing this letter to invite you -
to participate with us.
Summary Disposition: 38 a.a n
/ This will be a digital computer study to be made using the f acilities of General Electric Company and data furnished by each O'1' - participant. It will cover the period beginning 1967 and extending
, , through 1980, or from tne 1967 load level of approximately 6600 mw to 4, a projected load level of 24000 mw for the combined systems. It will develop the transmission system required to coordinate to mutual advantage, the present and projected plans of each participant fo*
generating unit additions, and will point the way for lowered reserves and resultant savings in capital costs. It will also determine how long a 240 kV grid will serve the requirements of the several systems, and if and when by 1980, the transmission systems must be strengthened by superimposing extra high voltage lines, of say, 500 kv.
[ Emphasis supplied]
B. Long Range Generation--Transmission Planning Study In July 1966, the Long Range Study Group of the Florida Operating Comittee published an " interim report" called "Long Range Generation--
Transmission Planning Study." (Exhibit 16.) One of the signers of the study was its chairman, K.S. Buchanan.
FPL objects to the admissibility of this and similar documents. It questions the ground offered by Cities for the admissibility of this document, stating that it is not an admission by a party since it was signed by several parties only one of whom was a representative of FPL. FPL argues, therefore that this could not be the views of an agent expressed within the scope of his authority. We find this view to be correct, as far
-l as it goes; but the document is nevertheless admissible. FPL admits to being a member of the Florida Operating Comittee. K.S. Buchanan was its representative. Hence, this report, and similar reports by the Conmittee and its groups, constitute direct evidence of joint activities in which FPL was a participant, over an extended period of time.
The Interim Report had two stated objectives. Cities' Motion to
, Establish Procedures at 8395. One was to cresent alternative generation and transmission options "for the 1968-1982 period, treating the util.ities as a single unit." We think it significant that this analysis treated the participants as a single unit and suggested generation option of benefit to i
e
.-r,. ,,,, . , , - - . , ._ _ - - . - -
Summary Disposition: 39 the unit. It had the additional objective of providing a state transmission design to accommodate the generation options. In this way, the mutual advantages of the utilities, for both generation and transmission, could be laid bare for all to see. Under the circumstances, it was unnecessary for the parties to agree to implement the conclusions.
An important criterion for the generation plans was the use of "a systen risk level index" which calculated the combined risk being taken by the utilities under each of the generation options. Ibid. The results of the study sucinarize "the unit sizes and time of addition for the various plans investigated." [ Emphasis added.] Id_. at B397. A yariety of power options
' involving nuclear . energy were considered and the group recommended further
-study for a plan calling for "50% of the additional units being nuclear."
Ibid. The study also concluded that tnere was a "possible need for defining a plan with somewhat larger units which would indicate some kind of turn up in the total cost curve." Ibid. In addition, we note from our overall examination of the report that it contains several tables and charts examining in detail data related to the addition of nuclear capacity. Hence, we conclude that the report concentrated on the efficient joint planning of generating capacity but that it dealt thoroughly with an important subissue, how nuclear power could be used to mutual advantage. .
C. Confirmation of Coordinated Planning in National Power Survey Occument 13 is a cover letter and a report, " National Power Survey 1963-1980 State of Florida (Federal Power Commission Study Area 24) February 1963." The cover letter is from a Senior Vice President of Florida Power Corporation to a Vice President of Florida Power & Light Company. The letter states that Florida Power Corporation is submitting the report to the Federal Power Commission for the National Power Survey. The report "was
Summary Disposition: 40 compiled by engineers of the Florida Power & Light Company, Tampa Electric Company and Florida Power Company."
s Since FPL has not submitted any documents indicating that it sought to correct items in the report or made any contrary filing with the Federal Power Comission, and since the document apparently was intended to inform that Comission in its official capacity, we find its factual assertions to be binding on FPL. This document confirms our interpretation of other docunents about which we have already comented.
The following is an excerpt from the beginning of the report. It describes the joint planning process which was in effect:
General: Coordinated planning of the generating and transmission facilities of the four major utilities in the study area has been carried on by planning comittees made up of personnel from Florida Power and Light Company, Florida Power Corporation and Tampa Electric Company. At the present, there is a general plan in effect which is serving as a guide for expansion up to the year 1970. This p1an is based upon the " single system" approach, taking into consideration factors such as pooling of reserves, the sharing of units, area protection with inter-area transmission ties so that the expansion pattern would be one that is well coordinated among the participating companies.
The expansion plan described in this report is a projection of this joint plan to the year 1980, based upon the same criteria which has [ sic] been applied to the plan in the past. The study area has been subdivided into six natural load areas as indicated on the maps being presented as Exhibits 8 through 11 in this report. Using this load area approach, coordinated generator schedules may be applied on a unit sharing basis. Some of the future generators are therefore identified by area only, rather than by exact locations in existing or new sites.
D. Similar Report Published in 1960 Document 12 is similar to later reports. It is signed by K.S.
Buchanan of FPL, who subscribed to a cover letter stating:
Attached herto is a report er; titled, "A Coordinated Plan for the 1970 Generation and Transmission Requirements for the Electric Utilities of Florida." The entire state east of the Apalachicola River is treated as if it were served by one fully integrated electric company.
Summary Disposition: 41 l
This is a bold undertaking . . . that is a basic step toward reducing the cost of electric service in this area. There are a great many other facets of this objective which in time and by other groups will surely be wrked out. We are happy to have had a part in this endeavor.
(This report was subscribed *to only by Tanpa Electric Company, Florida Power
& Light Company and Florida Power Company, through its representatives. Mr.
E.L. Sivans is listed as FPL's representative on the planning comittee.)
We note that the document candidly states, Id. at 8114, the follow-ing advantage from planning:
The major savings accruing through integrated planning will be in the field of bulk power supply - new generating equipment. The staggered installation of larger and more efficient units can become a reality only if participation in each unit is on an "equallized reserve" basis. . . . In short, each company's net income picture must improve under coordinated planning and integrated operation; otherwise, there would be no incentive for participation.
The plan then sets forth a variety of options, specifying the number, size and location of generators required for each option.
E. The Power Pool.ing Task Force Characterizes the " Committee" On December 11, 1974, the Power Pooling Task Force of the Florida Operating Comittee issued a report on Electric Power Pooling in Peninsula Florida. Mr. Buchanan of FPL is listed as a member of the Task Force.
(Document 26.)
At C199 and C191, the report characterizes the Florida Operating Comittee as an " Informal Power Pool ." The report also contains two sections informing us about " Power Pooling Concepts" and " Types of Power Pools." Id.. at C192-199. Excerpts from these sections (with emphasis added) tell us that:
In the beginning, power pooling consisted primarily of mutual assistance arrangements which, together with the growing ability to transmit bulk power over considerable distances, made it possible for interconnected utilities to share reserves. This sharing reduced the burden of capital cost that the individual utilities had to invest for the same degree of reliability. As power pooling arrangements
Summary Disposition: 42 became generally accepted and the number of power pools grew, the concepts of power pooling broadened to include other areas dere cooperation and coordination proved to be economically beneficial.
Joint studies of forecasted short and long range power requirements for large geographical areas allowed utilities to coordinate efforts in constructing bulk power transmission systems that provided greater benefits to pool members at a lower cost.
Transmission systems planned and constructed to provide for the flow of oulk power from one area to another enaoled pool memoers to coorcinate the construction of generating f acilities. This was accomplisneo principally by staggering power plant construction or by the joint ownershio of power generating facilities. By staggering construction, a member of a power cool builds a generating f acility with greater Capacity than required for its own needs. Through prior agreement, the building pool memoer then sell excess capacity to other memoer systems for a specified period of time. The process is repeated in turn by other pool members.... Both concepts, staggered construction ano joint ownersnip, allow the various pool members to _
! share in the " economies of scale" and the associated risks of larger units which can be constructed at a cheaper cost per kilowatt . ..
Both Formal and Informal Power Pools provide the economic benefits that become available through performance of one or more of the following basic functions of interconnections:
- 1. Firm power sales and purchases
- 2. Reduction of generating reserve requirements
- 3. Economic loading of generating units
- 4. Provision of short-term capacity to compensate for unanti-cipated capacity deficiencies
- 5. Utilization of load diversity to reduce generating capacity requirments
- 6. Greater flexibility in scheduling maintenance
- 7. Staggered construction to make possible installation of larger generating units with attendant sharing of financial risk.
[ Emphasis added.] H. at C192, C194-5.
Section 5 of the report contains a draft agreement for the formation of a Florida Electric Power Pool. Although the agreement has not been executed, the introduction drafted by the Power Pooling Task Force is instructive. It says:
Some of the unique features of the existing informal Florida Pool, Florida Electric Power Coordinating Group (FCG), and its history of good operating and planning functional relationships f acilitates an easy transition into a more formal pool structure with additional adv ant ages. The FCG oresently achieves five (5) of the seven (7) basic functions tenumerated in Section 3 land ouoted versatim aoove])
or an interconnected system to some aegree.
Summary Oisposition: 43
[ Emphasis added.](Id. at C210.)
F. FP&L's Planning Documents Have Not Been Introduced
- Florida Cities, in its Supplemental Memorandum in Response to Board Questions, at Appendix A, p.1.1, asserts that Exhibit 1, the Deposition of Robert J. Gardner, determines:
Mr. Gardner's deposition proves that FPL's specific coordina-tion assumptions in planning its nuclear units cannot be determined because, he testified, . . . either FPL never wrote down its final plans for constructing its nuclear units, nor the assumptions used in planning the units, or that it has lost many of its planning docu-ments.
Cities note that in September,1981, following their request
> in connection with the Gardner deposition, FPL provideo Cities with additional documents, some of which appear to be planning documents.
. Cities have not yet analyzed these fully, nor have they had an oppor-tunity to examine Mr. Gardner or other FPL officials in deposition concerning the newly received documents.
We have read Exhibit l' and consider Cities characterization of it to be correct. FPL has not introduced any planning documents from which we could directly examine the assumptions used in its planning of generator l capacity and transmission. Nor has FPL argued that the additional planning documents it gave to Cities create a genuine issue concerning the existence 4 of joint planning. What FPL relies on are affidavits of two top officials, Mr. Bivans and Mr. Fite. See Reply Memorandum of Florida Power & Light Company (October 13, 1981), Appendix A at 6-7.
FPL characterizes Mr. Fite's testimony as supporting the propositiun that FPL did not rely upon its interconnection with other systems to post-pone bringing generating units on line, and that FPL did not want other sys-tems to rely upon interconnections with FPL as a basis for postponing units.
It quotes the following two passages from Mr. Bivan's testimony; A planning subcomittee was appointed to study the transmission plans of the member utilit es and to identify potential weaknesses. In or-t der to test the transmission systems in hypothetical studies, it was necessary to factor into the studies generation plans of the
! individual interconnected systems. These studies always took the
Summary Disposition: 44 individual generation plans of the members as given, took account of planned transmission additions and then studied the effect of postulated events on the reliability of the interconnected transmission system. The FOC never engaged in joint planning of generation.
" Joint" as used in the planning subcommittee reports refers 'to the fact that the FOC members cooperated in providing individual system data, personnel, and in sharing the costs of studies to determine whether individual transmission plans would be adequate for and com-patible with interconnected operations. Transmission planning was
" joint" only in the sense that studies were performed, based on the individual systems' generating plans, to consider possible transmis-sion configurations to accomodate this planned generation. The results were not binding on any *ystem, and simply served as a useful beginning point for transmission planning by the individual systems.
We accept FPL's characterization of the Bivans and Fite testimony for purposes of this decision. We find it illuminating that neither Mr. Fite nor Mr. Bivans have denied that FPL derived competitive advantage from the joint planning studies. Fite says that FPL's interconnections did not cause it to " postpone" bringing generating units on line. However, if others had postponed bringing their units on'line, their demand for a portion of FPL's capacity would have benefitted FPL. Furthermore, Fite said that FPL "did not want" other systems to rely on interconnections in order to postpone l
units. However, he has not denied that FPL created conditions--through joint planning--that permitted competitors to implement mutually-advantageous delays in installing units.
- To the extent that Mr. Fite's testimony could be interpreted as l
l contradicting our inferences concerning the " oyster theory", we simply reject it. The weight of the evidence, which includes documents of the Florida Coordinating Group itself, persuades us that there is no genuine issue of fact concerning the use of the studies for economic benefit.
Direct evidence, consisting of planning documents themselves, is not available because it acparently no longer can be found. Hence, we must l reach our conclusions from secondary sources.
r
i Summary Disposition: 45 Mr. Bivans statement also does not create a genuine issue of fact.
We accept his statement that the "results were not binding on any system."
However, that is not the mischief we find in the arrangement. The system was " informal" but we cannot reach any other conclusion that it produced important benefits for its members, who were thereby advantaged with r'spect e to their competitors.
One inference FPL might like us to derive from the Bivans testimony can not legitimately be drawn. Mr. Bivans states that individual generation plans of members were taken as a given. In a sense that is correct.
However, the plans explored various generation options and this would have been very useful to members in solidifying their plans. Hence, we conclude that these studies did serve as guides by which members decided what mutual generation and transmission additions would best serve them.
We consider our factual findings consistent with Judge King's findings that there was no conspiracy directed at excluding Cities from acquiring nuclear capacity. However, the Florida Coordinating Committee produced planning advantages which made it more attractive for its members to plan for nuclear generation. Hence, our findings concerning joint coordination necessarily imply that Committee members acquired an advantage with respect to nuclear power that was not enjoyed by cities which were not
~
members.
G. Dates Other Cities Joined the Florida Operatino Committee FPL has asserted that Tallahassee and Lakeland joined the Florida Operating Connittee by 1971. Furthermore, in July 1972 a Florida Electric Power Coordinating Group, comprised of 40 utilities, was formed. This group included all electric utilities in Florida that accepted an invitation to attend a meeting and to join. Since this assertion is not refuted by Cities, it is accepted.
- _ _ _ - _ _ _ _ _ _ _ _ l
Summary Disposition: 46 We note that the construction permit for St. Lucie No. 2 was docketed September 4, 1973. See 5 NRC 789. We presume that the economic and engin-eering studies needed prior to docketing must have been well under way prior to 1971.
VI ADDITIONAL EVIDENCE OF MARKET DIVISION Cities Exhibit 20, is a remarkable series of documents showing that Armour and Company approached FPL in 1976 with a proposition that it supply it with firm baseload power equal to 325,000 k.w., with loads during seven months et,ualling 400,000 k.w. FPL turned this deal down because the proposed plant was within Tampa Electric Power's territory. Tampa Electric Power sent FPL's chairman a note expressing its gratitude fo' this referral .
VII
SUMMARY
AND CONCLUSIONS A. Summary In the course of this decision we adopted each of the following findings, many of which have been accompanied by supporting or corroborating findings:
- 1. FPL operates in the retail market for electricity within a geographic area along the eastern and wes+.ern coasts of Florida.
Within or adjacent to this service territory are 22 smaller areas served by municipal and cooperative utilities. This composite area constitutes the retail market served by FPL. FPL has monopoly power in this market.
- 2. FPL also operates in a firm bulk power market within its composite area. Firm bulk power sales generally occur only within the composite area. FPL has monopoly power in this market.
- 3. FPL enjoys competitive advantages which flow from its joint activities with other utilities.
- a. As a member of the Florida Pool, it enjoys advantages from its interconnection with Florida Power Corporation, the Tampa Electric Company, the Or1ando Utilities Commission and the City of Jacksonville. These interconnected utilities and authorities coordinate their activities and exchange power as circumstances require.
Swnnary Disposition: 47
- b. FPL participates in the Interconnected Systems Group, a national interlocking of utilities that automatically provides power in case of emergencies.
- c. From the early 1960s to 1972, FPL jointly participated with four other of the largest utilities in Florida in hard-headed, expensive studies of generating and transmission options.
These studies were used by the participating utilities as guides for making generating and transmission choices. They produced substantial economic benefits for the participants.
f
- 4. FPL conspired with Florida Power Corporation to divide Florida into mutually exclusive territories. This is a per se violation of the Sherman Act.
- 5. For 20 years, FPL has competed with municipal utilities within its service territory to serve entire communities. There is an important relationship between FPL's wholesale sales and its ability to retain existing retail franchises. Since self-generation by municipalities is becoming less and less attractive, FPL's wholesale monopoly and its retail power are likely to increase.
- 6. FPL has demonstrated considerable reluctance to engage in firm power transactions with municipal utilities, even within its own service territory. During the 1950s and 1960s this amounted to an unqualified refusal to serve. Simultaneously, FPL adopted a marketing strategy which promoted usage of electricity as a means of improving its declining system load factor.
- 7. FPL's policy of refusing to sell firm wholesale power'to muncipals was pursued through tariff litigation before the FERC.
Its opposition to selling firm wholesale power to municipals was pursued until 1979, when its position was rejected in FERC Opinion No. 57. .
- 8. FPL's three nuclear power units, including St. Lucie Unit No. 2, are extremely cost efficient producers of electricity.
Nevertheless, FPL sold nuclear energy only to its own customers until it was required by its settlement in this case to sell nuclear power to certain cities located within its composite area.
- 9. The advantages FPL enjoyed from its joint planning of generating capacity and transmission assisted it in its planning for the addition of nuclear generating capacity.
- 3. Conclusions For each of the reasons we have just summarized, as supported by
Sumary Disposition: 48 additional reasons contained in this opinion, we conclude that the unrestricted operation of St. Lucie Nuclear Power Plant Unit 2 would maintain a situation inconsistent with the antitrust laws.
It follows from our reasoning that the inside and adjacent cities should be permitted to purchase a portion of St. Lucie Unit 2 or to buy unit power from it in order to share some of the attendant cost advantages and to offset some of the disadvantages suffered by the cit s. as a result of the situation inconsistent with the antitrust laws. We have not decided whether the license conditions benefitting inside Cities would be any more severe thaii the terms of the settlement agreement executed in this case. We also have not decided whether there is any reason in this proceeding to require sales of interests in previously licensed nuclear power plants, as urged by Cities.
With respect to "putside" Cities, we have concluded that relief is appropriate because the division of markets effectuated by FPL and Flor?da Power Corporation affects the existing territorial division 21ch FPL asks the Commission to recognize. As a result, FPL should not be permitted to deny firm wholesale service (or any other form of available service) to any entity based solely on its geographical location. Cities has represented that "outside" cities can obtain deeling so that they can pick up power from FPL's power net. Since that is possible, it should make no difference to FPL whether it is serving an "inside" city or an "outside" city. In either case, it generates electricity and makes it available on its transmission system.
FPL has argued that its rates to existing customers would have to be increased if it were required to serve outside cities. We reject this argument as irrelevant and we consider that whatever effects are felt by customers must be accepted because a portion of the rate advantage was produced through monopolistic practices and illegal conspiracy. FPL is arguing that because it never has served entities outside of its
i Sumary Disposition: 49 geographical area, as that area has recently been defined by the FERC, that area should now be recognized by this Commission and ratified as the area within which FPL must serve.
Evei were there substantial adverse economic effects for customers of FPL, we would consider those offset by the advantages accruing to customers of outside Cities, which have been deprived of a competitive environment because of the existence of a situation inconsistent with the antitrust laws. The marketplace is indifferent to which consumers are benefitted and which hurt through its operation, and we must be equally blind.
FPL has, at our request, provided us with statistics on the extent of the impact on its customers. Based on its expectation that it might have to provide 500 mw of additional power, it estimates a 3 percent increase in revenues paid by existing customers. (Memorandun of Florida Power & Light Company on Matters Relating to August 17 and 18,1981, Conference of Counsel at Attachment C to Attachment C, which is the " Supplemental Howard Affid av it" . ) Furtnermore, Florida Cities has stated that the amount of power cities need is about 200 mw of finn baseload power. Tr.1062. Hence, the total impact on consumers would be 40 percent of FPL's estimate or less than 1.2% of utility bills. While the total amount of impact in dollars might over many years exceed $2 billion because of FPL's large size, the magnitude of the effect is not sufficient to give concern about massive economic reprecussions.
In addition, we find FPL's concern about servicing additional municipal customers to be inconsistent with its continuing efforts to add industrial and cooperative customers. (See Exhibit 57, demonstrating talks within the last three years with Siemens and the existence of an economic development division within FPL.)
Our views are consistent with those of FERC in Opinion 57. In that opinion, FPL's obligation to deliver firm wholesale power was limited to its ccmoosite service area, which represented an extension of the traditional
Sunnary Disposition: 50 service area. FERC also found that wheeling was not available to "outside" cities, which were therefore excluded from consideration for receiving firm wholesale power from FPL. The FERC opinion is silent on what FPL's obligation would be when wheeling becomes available for cities W11ch are not contiguous to its power lines. There is nothing in the FERC opinion which is inconsistent with our decisiGr Furthermore, we recognize the special features of the public utility industry, including the need to provide reliable service. For that reason, we will not preclude FPL from denying service to outside cities if it can demonstrate to the FERC that " compelling public interests justify the service conditions" and that it has selected "the least anticompetitive method of obtaining legitimate planning or other objectives." FERC Opinion 57 at 314. In addition, FPL could assert any other bona fide defense to providing service which may subsequently become available under FERC regulations or precedent, providing that it does not rely on concepts of geographic territoriality.
We have not decided whether, in addition, outside cities should be permitted to purchase a share in St. Lucie Unit 2 or in other existing nuclear power plants.
Although we have expressly left open the issue of requiring a sale of interests in other nuclear power plants, we are highly skeptical about whether such a requirement would be appropriate. Those licenses have been issued without such conditions and we would need to be shown why it is appropriate to reopen questions which could have been raised in those prior cases. We also would need to be shown why the sale of a portion of St.
Lucie would not provide sufficient relief.
VII FURTHER PROCEEDINGS We have analyzed a complex and somewhat disorganized record and
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reached many conclusions. Under the circumstances, it is appropriate for the parties to obtain serious consideration for objections they may have to this decision. On the other hand, duplication of the already voluminous briefs and documents already in our files is not desireable.
We have decided to require the filing of objections. The briefs will be limited to 40 double-spaced pages. They shall contain the following sections: (1) a concise statement of objections for which oral argument is desired, including a statement of reasons why these particular issues have not already been fully aired and the precise grounds for alleging error; and (2) a concise, abbreviated statement of all other objections reserved for appeal, including citations to already filed documents and sections of briefs. Objections not raised will be waived.
Case citations in all renaining briefs in this case must either state that they rely on dicta or must state the holding and its applicability.
When multiple case citations are used, the Board will examins the first citation and will conclude that if the first case is not applicable the other cases supposedly in the same line of precedent also are not applicable. Failure to comply with case citation principles established here will result in waiver of the right to argue the applicability of the cited case, unless there is a showing of good cause for the failure.
The briefs containing objections shall be served and filed by January 13, 1982. Reply briefs of no more than 20 double-spaced pages may be served and filed by no later than January 22.
Along with its objections, Cities shall file proposed license conditions to effectuate the Board's conclusions and to grant relief permitted under this order, subject to further proof by Cities.
Accompanying the proposed license conditions shall be a brief of up to 20 douole-spaced pages outlining Cities trial plan, including the nanes and qualifications of witnesses, an outline of their testimony ar;d identifica-tion of documentary evidence. (File only new documents.) For the purpose f
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Summary Disposition: 52 of this filing, Cities shall assume that no objections of the parties will be granted. If it chooses, it may submit an Appendix of no more than ten double spaced pages addressing proof it would submit if particular ,
objections were granted.
FPL shall submit a brief of up to 20 double-spaced pages in response to the proposed license conditions and trial plan submitted by Cities. This brief shall contain FPL's trial plan, containing information analogous to that required of Cities. FPL also may submit an Appendix of .io more then ten double-spaced pages outlining its case if certain objections are granted.
A hearing is scheduled to convene on February 9 in Fort Lauderdale, Florida, at a location to be ar.nounced. Cities shall have one hour to present cral argument concerning relief, but it may reserve up to 15 minutes for rebuttal . cDL shall have one hour for response. Additional subjects for the hearing may include oral argument on specified objections and an evidentiary h6aring on remaining issues. A subsequent order shall establish rules for the prefiling of testimony and exhibits.
Discovery shall henceforth be limited to issues determined in this decision, or by subsequent decision, to be legitimate issues in this case.
OR0ER For all the foregoing reasons and based on consideration of the entire record in this matter, it is this lith day of December 1981 ORDERED (1) We adopt the factual findings and legal conclusions in this Memorandum, including the summary and conclusions contained in Section VI.
(2) We conclude that the licensing of St. Lucie Nuclear Plant, Unit 2, would maintain a situation inconsistent with the antitrust laws unless the license is appropriately conditioned.
Sumary Disposition: 53 (3) Parties must file objections to this decision pursuant to procedures established in Section VII. Failure to file an objection will result in waiver of that ground for appeal.
(4) For all subsequent filings in this case, parties shall follow the case citation requirements established in this decision. Failure to follow these requirements may waive the right for cited materials to be considered in this proceeding.
(5) Parties shall file pretrial briefs pursuant to the requirements set forth in Section VII of this Memorandum.
(6) Discovery shall be limited to matters still in controversy.
(7) This is an interlocutory decision and is not subject to appeal.
With the concurrence of Judge Michael A. Duggan, FOR THE ATOMIC SAFETY AND LICENSING BOARD,
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Peter S. Sloch', Chairman ADMINISTRATIVE JUDGE
- %k Robert'M. Lazo g
ADMINISTRATIVE JUDGE December 11, 1981 Bethesda, Maryland l
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