ML20040A011
| ML20040A011 | |
| Person / Time | |
|---|---|
| Site: | Saint Lucie  |
| Issue date: | 01/13/1982 |
| From: | Dym H COVINGTON & BURLING, FLORIDA POWER & LIGHT CO. |
| To: | Atomic Safety and Licensing Board Panel |
| Shared Package | |
| ML20040A010 | List: |
| References | |
| ISSUANCES-A, NUDOCS 8201200168 | |
| Download: ML20040A011 (46) | |
Text
'
FPL:
1/13'/82 EEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION
{,
c.. : : ;,
BEFORE THE ATOMIC SAFETY AND LICENSING BOARD
)
In the Matter of
)
FLORIDA POWER & LIGHT COMPANY
)
Docket No. 50-389A
)
(St. Lucie Plant, Unit No. 2)
)
January 13, 1982
)
OBJECTIONS OF FLORIDA POWER & LIGHT COMPANY TO THE BOARD'S MEMORANDUM AND ORDER OF DECEMBER 11, 1981 Herbert Dym Covington & Burling 1201 Pennsylvania Avenue, N.W.
P.O. Box 7566 Washington, D.C.
20044 (202) 662-5520 J.A. Bouknight, Jr.
~
Lowenstein, Newman, Reis & Aexlrad 1025 Connecticut Avenue, N.W.
Washington, D.C.
20036 Attorneys for Florida Power &
Light Company January 13, 1982 8201200168 820118 PDR ADOCK 05000389 M
l TABLE OF CONTENTS Page Table of Authorities.
iii I.
OBJECTIONS ON WHICH FPL SEEKS ORAL ARGUMENT 1
A.
The Gainesville Decision Provides No Basis for Finding a Situation Inconsistent With the Antitrust Laws 4
1.
Cessation of the Conspiracy.
4 2.
The Absence of Any Showing of Impact 7
B.
FERC Opinion No. 57 Provides No Basis for Finding a Situation Inconsistent With the Antitrust Laws 9
1.
FERC's Failure to Find That FPL Acted Anticompetitively.
10 2.
The Inapplicability of Collateral Estoppel to the " Evidentiary" Facts Found by FERC 14 3.
The Present Availability of Wholesale Services 15 C.
The Evidence of " Joint" Activity on Which the Board Relies Provides No Basis for Finding a Situation Inconsistent With the Antitrust Laws 16 1.
The Contrary Conclusions of Judge King 17 2.
The Testimony of FPL Employees 18 3.
The Legal Insufficiency of the Board's Analysis 24 D.
FERC's Conclusions Concerning Monopoly Power Are Contrary to the Findings of Judge King and, Hence, Summary Disposition of This Issue Was Inappropriate 27 t.
s Page E.
An Evidentiary Hearing Is Necessary to Determine Whether There Is a " Nexus" Between the Board's Findings of Anti-competitive Conduct and the Activities to Be Carried Out Under the License for St. Lucie No. 2 30 II.
ADDITIONAL OBJECTIONS TO THE BOARD'S DECISION.
32 A.
Settlement License Conditions 32 4
B.
Collateral Estoppel Issues 33 j
1.
Gainesville 33 1
2.
FERC Opinion No. 57.
34 3.
Florida Cities v. Florida Power &
j Light Co.
35 i
C.
The Admissibility of the Joint Planning Documents Cited by the Board.
36 D.
Conclusions Relating to Relief.
37 i
CONCLUSION.
40 1
m i
I
)
- ii -
TABLE OF AUTHORITIES 1
Page Cases Adickes v.
S.H.
Kress & Co.,
398 U.S. 144 (1970) 23 Alabama Power Company (Joseph M. Farley Nuclear Plants, Units 1 and 2) ALAB-646 (decided June 30, 1981) 9, 29 California Computer Products, Inc. v.
Inter-national Business Machines Corp., 613 F.2d 727 12 (9th Cir. 1979)
City Gas Co. v. Peoples Gas System, Inc.,
6 182 So.2d 429 (Fla. 1965)
The Evergreens v. Nunaj, 141 F.2d 927 14 (2d Cir. 1944)
Florida Cities v. Florida Power & Light Co.,
(S.D. Fla., October 13, 1981) 2, 3,
4, 17, 18, 35 Florida Power & Light Co. v. FERC, No. 80-5259 (5th Cir. November 6, 1981) 12 Florida Power & Light Co.,
Opinion Nos. 57 and 57-A, 32 PUR 4th 313 (1979) 2, 3, 9, 10 12, 13, 15, 16, 34, 35, 39 Fortner Enterprises v. United States Steel, 13 394 U.S. 495 (1969)
Gainesville Utilities Department v. Florida Power & Light Company, 573 F.2d 292 (5th Cir.), cert. denied, 439 U.S. 966 (1978) 1, 2,
3, 4,
6, 7, 8,
17, 18, 31, 33, 34, 38 George C.
Frey Ready-Mixed Concrete, Inc. v.
Pine Hill Concrete Mix Corp., 554 F.2d 551 13 (2d Cir. 1977)
Jaroslawicz v.
S_eedman, 428 F.2d 727 23 (2d Cir. 1975)
- iii -
l Page
,l Cases Levin v. Joint Commission on Accreditation of Hospitals, 354 F.2d 515 (D.C. Cir. 1965) 13 Littlejohn v.
Shell Oil Co.,
483 F.2d 1140 (5th Cir. 1973), cert. denied, 414 U.S. 1116 (1973) 13 Louisiana Power and Light Company (Waterford Steam Electric Generating Station, Unit 3),
30 CCI-73-7, 6 AEC 48 (1973)
Mid-Texas Communications Systems, Inc. v. American Telephone & Telegraph Company, 615 F.2d 1372 (5th Cir. 1980), cert. denied sub nom. Woodlands Telecommunications Corp. v. Southwestern Bell Telephone Co.,
101 S. Ct. 286 (1980) 14 Norfolk Monument Co. v. Woodlawn Memorial Gardens, Inc. 394 U.S. 700 (1969) 13 Official Airline Guides, Inc. v.
- ETC, 12 630 F.2d 920 (2d Cir. 1980)
Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) 33, 34 Penn Galvanizing Co. v. Lukens Steel Co.,
13 59 FRD 74 (E.D. Pa. 1973)
Poller v. Columbia Broadcasting System, Inc.,
13 358 U.S. 464 (1962)
Unlaub Co.,
Inc. v. Sexton, 568 F.2d 72 24 (8th Cir. 1977)
United States v. Diebold, Inc., 359 U.S.
654 23 (1962)
United States v. Florida Power Corp.,
1971 Trade Cas. 1 73,637 (M.D. Fla.)
4 United States v, Gypsum Co.,
438 U.S. 422 (1978) 5 Yates v. United States, 354 U.S. 298 (1957) 15 Miscellaneous J. Von Kalinowski, Antitrust Laws and Trade 29 Regulation (1979 ed.)
- iv -
e i
Miscellaneous Page Atomic Energy Act, 5 105 30, 31, 34, 38 Federal Power Act, 55 205 and 206.
10, 11 Federal Power Act, 65 205, 209.
27 4
Florida Statutes, 5 366.04.
6 Moore's Federal Practice (2d ed. 1976) 23 Restatement, Judgments, 15 1
I 4
l
-V
FPL:
1/13/82 BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of
)
)
Florida Power & Light Company )
Docket No. 50-389A
)
(St. Lucie Plant, Unit No. 2) )
January 13, 1982 OBJECTIONS OF FLORIDA POWER & LIGHT COMPANY TO THE BOARD'S MEMORANDUM AND ORDER OF DECEMBER 11, 1981 These objections to the Board's Memorandum and Order of December 11, 1981, are submitted by Florida Power & Light Company ("FPL").
In accordance with the Board's instructions, FPL's objections are divided into two parts.
Part I relates to those issues that have not been fully addressed in prior briefs and are sufficiently important to warrant consideration at oral argument.
Part II relates to those issues that either have already been addressed in the briefing process or require less detailed analysis at the current stage of the proceeding.1 I.
OBJECTIONS ON WHICH FPL SEEKS ORAL ARGUMENT In its Memorandum and Order, the Board gave collat-eral estoppel effect to Gainesville Utilities Department v.
2 In accordance with the Board's instructions, EPL's discus-sion of the cases on which it relies will include a description of each case's holding and its applicability to this proceed-ing.
Where the text of these Objections does not provide such a description, a brief statement of the holding of the case in question will appear in a footnote accompanying the text.
l
- i Florida Power & Light Co.,
573 F.2d 292 (5th Cir.), cert.
denied, 439 U.S.
966 (1978), and Florida Power & Light Co.,
Opinion Nos. 57 and 57-A, 32 PUR 4th 313 (1979).
At the same time, the Board refused to give collateral estoppel effect to Judge King's recent decision in Florida Cities v. Florida Power
& Li_ght Co.,
(S.D. Fla., October 13, 1981).
The Board went on to summarize the legal and factual determinations that it was i
adopting from these decisions and made certain additional I
findings based on various documents submitted by the Cities.
According to the Board, the cumulative impact of its findings was to establish that issuance of an unconditioned license for St. Lucie Unit No. 2 would " maintain a situation inconsistent with the antitrust laws. "
FPL believes that the Board erred by according col-lateral estoppel effect to Gainesville and Opinion No. 57 and by not according such effect to Judge King's decision.
It also believes that the documents cited by the Board were not admis-sible into evidence.1 Even if the Board's rulings on these issues were correct, however, there would still be no basis for the Board's determination of a " situation inconsistent with the antitrust laws."
Gainesville and Opinion No. 57 do not address 4
i several critical issues on which the record before the Board is f
clearly in dispute.
There must be a full evidentiary hearing to resolve these issues before the Board can determine whether the Cities are entitled to any relief.
FPL's objections to the Board's rulings on collateral 2
estoppel and admissibility are presented in Part II of this brief.
. Below FPL identifies several key issues that remain c
to be resolved at an evidentiary hearing.2 As FPL shows:
1.
Even if the Board adopts the Fifth Circuit's findings in Gainesville, there would be no basis for con-cluding that the conspiracy between FPL and Florida Power Corporation is still continuing or that the conspiracy has had an adverse impact on the Cities.
An evidentiary hear-ing must be held to resolve both issues before the Board can determine whether Gainesville demonstrates a "situa-tion inconsistent."
2.
Even if accorded collateral estoppel effect, FERC Opinion No. 57 is insufficient to support a determi-nation of a " situation inconsistent" for three reasons:
(i) since opinion No. 57 made no finding that FPL had vio-lated the antitrust laws or engaged in anticompetitive conduct, the Board cannot resolve these issues against FPL without an evidentiary hearing; (ii) FERC's account of FPL's dealings with municipal systems in the 1950s and 1960s consists merely of " evidentiary" facts, to which the courts have consistently refused to give collateral estoppel effect; and (iii) since FERC made no findings about the competitive impact of FPL's performance under its wholesale tariffs, FPL must have an opportunity to present evidence about its current policies for selling wholesale power, including the services it in oiC.igated to provide under the settlement license conditions in this proceeding.
3.
The Board's reliance on " joint activities" by EPL and other Florida utilities to establish a " situation inconsistent" is in direct conflict with Judge King's decision, which found that the same activities were not anticompetitive.
Equally important, the explicit testi-mony of FPL employees contradicts the Board's finding that FPL relied on studies with other utilities in plan-ning new generation.
For both reasons, an evidentiary hearing is necessary before the Board can make findings about the impact of coordination activities on FPL's own planning process.
4.
Even if it is assumed that FPL benefited from planning studies with other utilities, the record before the Board is insufficient to support a conclusion that FPL excluded the Cities from coordination activities, that these activities had anticompetitive purposes or FPL did not address these issues at length earlier in the 1
briefing process because it did not anticipate the legal and factual conclusions that the Board would reach based on its decision to accord collateral estoppel effect to Gainesville and Opinion No. 57.
. effects, or that FPL possesses monopoly power in any market for coordination services.
Thus, even if the Board's determinations about " joint activities" were correct, the present record would still provide no basis for concluding that FPL's conduct was " inconsistent with the antitrust laws."
5.
The Board's finding that FPL possesses monopoly power in the relevant wholesale power market is inconsis-tent with Judge King's contrary conclusion.
Under the Board's own approach of giving evidentiary effect to Judge King's determinations, FPL's possession of monopoly power must be considered a triable issue of fact that can only be resolved at an evidentiary hearing.
6.
The Board made no effort to determine whether a
" nexus" exists between the " situation inconsistent" that it identified and the activities to be conducted under FPL's license for St. Lucie Unit No.
2.
Moreover, it is undisputed that the conduct described in the Board's decision is no longer occurring, and both Judge King and the Board have expressly determined that FPL has not engaged in any anticompetitive behavior in constructing or operating its nuclear units.
Under such circumstances, the existence of a " nexus" cannot simply be presumed but, at the very least, is a triable issue of fact to be re-solved at an evidentiary hearing.
A.
The Gainesville Decision Provides No Basis for Finding a Situation Inconsistent with the Antitrust Laws 1.
Cessation of the Conspiracy.
The events de-scribed in the Fifth Circuit's Gainesville opinion occurred in the mid 1960s; the most recent evidence cited by the Fifth Circuit is a letter dated October 24, 1966.
573 F.2d at 296.
Moreover, in 1971, as a result of an antitrust action filed by the Justice Department against Florida Power Corporation ("FPC")
and Tampa Electric Co., FPC entered into a consent decree en-joining it from participating in any agreement with other utility systems to allocate wholesale customers or territories.
United States v. Florida Power Corp., 1971 Trade Cas. 1 73,637 (M.D.
Fla.).1 Indeed, the Cities themselves have effectively conceded that any conspiracy between FPL and FPC was abandoned years ago.8 The evidence before the Board confirms that FPL's present policies for selling wholesale power are strictly the product of unilateral action.
While FPL has been reluctant to expand its wholesale sales to non-adjacent areas, the sworn testimony of FPL officials demonstrates that FPL has adopted this policy because the addition of new wholesale loads to its system would increase the costs borne by all other customers.'
FPL's practices in this regard are hardly unusual; evidence Agreement to a consent decree qualifies as an "[a]ffirm-1 ative [act) inconsistent with the object of the conspiracy and communicated in a manner reasonably calculated to reach co-conspirators
" which the Supreme Court has held to be suf-ficient to establish abandonment of a conspiracy.
United States
- v. United States Gypsum Co.,
438 U.S.
422, 464 (1978).
2 The Cities stated, for example, in their 1976 Joint Petition to intervene in the NRC proceeding with respect to EPL's then-proposed South Dade plant:
" Cities do not allege any current violations of antitrust law or policy by Florida Power
[ Corporation], nor does counsel for Cities have any reason for believing that such con-duct is taking place.
Florida Power has affirmatively agreed to actions that would avoid anticompetitive situations.
E.g.,
see license conditions to Florida Power Corp.
(Crystal River Unit No. 3), NRC Docket No.
50-302A; Florida Power Corp., FPC Electric Tari ff. "
For several years, FPC has offered service under its whole-sale tarriff to municipal systems located within FPL's service territory (although no municipal system has taken such service).
See correspondence contained in Appendix N to the Reply Mema-randum of Florida Power & Light Company, October 13, 1981.
8 Affidavit of Ernest L. Bivans, 11 14-22, 36 [ Appendix B to FPL's Response ( August 7, 1981)]; Supplemental Affidavit ef Joe L. Howard, 12 [ Attachment C to EPL's Memorandum (Septem-ber 14, 1981)].
before the Board indicates that it is rare for electric utili-ties to sell wholesale power to other utilities that are not adjacent to the seller's facilities.1 The purpose of this proceeding is not to award damages for FPL's past conduct, but to assess the competitive impact of FPL's future activities under its license for St. Lucie No.
2.
Thus, the Board cannot rely on past behavior by FPL which has no discernible bearing on the Company's present or future practices.2 Since the record before the Board demonstrates that any conspiracy between FPL and FPC ceased long ago and that FPL's current relationship with "outside" Cities reflects strictly unilateral considerations, the Board erred in concluding that Gainesville establishes "a situation inconsistent with J
the antitrust laws."
1 Affidavit of Martin Fullenbaum, Appendix B to FPL's Reply Memorandum of October 13, 1981.
On page 46 of its Memorandum and Order, under the heading 2
" Additional Evidence of Market Division," the Board character-izes as " remarkable" a set of documents indicating that FPL was uninterested in serving a retail customer that proposed to lo-cate in Tampa Electric Company's retail service territory.
The Memorandum and Order refers to 1976 as the date of these events, i
while the documents bear the date 1966.
No finding appears to have been based on these documents.
Nonetheless, the inference implicitly drawn by the Board -- that the documents support a finding that FPL was party to a wholesale market division -- is baseless.
Not even the Cities have asserted that any relation-ship exists between any retail territorial agreements that FPL has with other utilities and the wholesale market division found in the Gainesville case.
Nor is there any reason to conclude that such retail territorial agreements are otherwise improper.
Indeed, overlapping retail service territories are clearly repugnant to the public policy of the State of Florida, and Florida law explicitly sanctions and provides for active regu-lation of retail territorial agreements between electric utili-ties.
Fla. Stat. 5 366.04; City Gas Co. v. Peoplea Gas System, Inc., 182 So.2d 429 (Fla. 1965) (holding that territorial agreements approved by state regulatory bodies are not improper under the antitrust laws).
. 2.
The Absence of Any Showing of Impact.
Another reason why the Board's reliance on Gainesville was unwarranted is the absence of evidence demonstrating the " impact" of any conspiracy between FPL and FPC.
The Fifth Circuit held only that a conspiracy existed and remanded for a trial on the issues of impact and damages; because the case was settled, these issues were never resolved.
Moreover, none of the other Cities was a party to Gainesville.
Thus, neither the District Court nor the Fifth Circuit had any occasion to consider any impact of the' conspiracy on them.
The Board's Memorandum and Order is based on the premise that the "outside" Cities have suffered competitive harm because of the conspiracy described by the Fif th Circuit and that FPL should be now be compelled to provide wholesale power to those Cities in order to rectify that harm.
See Memorandum and Order at 48-49.
Yet there is no evidence in the record before the Board which demonstrates that (1) legit-imate business considerations would have motivated FPL to sell wholesale power to the "outside" Cities in the absence of a conspiracy, (2) these Cities would have approached FPL to purchase wholesale power, (3) competition exists between FPL and any "outside" City, or (4) without access to wholesale power from FPL, the "outside" Cities' ability to compete was impaired.
In fact, what evidence exists on these issues casts serious doubt on the Cities' ability to prevail.
For example, Mr. Ernest Bivans, an FPL Vice President, has testified that, f
, wholly apart from any division of territories, FPL was disin-clined to sell wholesale power outside its service area because of other demands on its system:
I
[F] rom the time I joined FPL until the i
early 1970's, load on FPL's system grew at an extremely rapid rate, and it was a difficult task to.inntall generation and other facili-ties rapidly enough to keep pace with this growth.
FPL was reluctant to take on responsibility for any loads other than its service area, particularly areas which were
)
already being adequately served by others."1 Supporting this testimony is other evidence demonstrating the infrequency with which utilities elsewhere in the country enter into wholesale power transactions with electric systems outside i
their service areas.2 Such evidence confirms that FPL would have had little independent business incentive to engage in significant wholesale power sales outside its service area.
Of equal importance, there is serious reason to doubt whether the "outside" Cities had any interest in purchasing i
1 wholesale power from EPL.
In the Gainesville district court trial, the jury specifically found that Gainesville had not sought an interconnection from FPL and the Court of Appeals expressly refused to overturn this finding.
See 573 F.2d at 303.8 If the issue were to be tried, similar conclusions might be reached about the few other "outside" Cities which purportedly sought interconnections or wholesale power from Affidavit of Ernest Bivans, 1 15.
See Affidavit of Martin Fullenbaum, Appendix B to FPL's Reply Memorandum of October 13, 1981.
8 The Board has indicated that it will accord collateral estoppel effect to this portion of the Fifth Circuit's Opinion.
Memorandum and Order, 21.
_g_
FPL.
Moreover, there is no evidence in the record that the remaining "outside" Cities have ever approached FPL to obtain interconnections, wholesale power or any other service.
The Appeal Board's recent decision in the Farley pro-ceeding emphasizes that, before an entity will qualify for re-lief under Section 105c, there must be some showing that it was harmed by the alleged anticompetitive practices that create a
" situation inconsistent."2 Here, the Board has simply assumed
-- in disregard of evidence to the contrary -- that the "out-side" Cities' suffered competitive injury because of the conspir-i acy found in Gainesville.
Accordingly, summary disposition was i
inappropriate, and an evidentiary hearing is necessary to deter-1 mine the alleged conspiracy's impact on the "outside" Cities.
B.
FERC Opinion No. 57 Provides No Basis for Finding a Situation Inconsistent with the Antitrust Laws.
I The Board's Memorandum and Order does not explain why the findings made by FERC in Opinion No. 57 establish a
" situation inconsistent with the antitrust laws."
It would appear, however, that the Board concluded that FERC had found that FPL acted anticompetitively in the 1950s and 1960s by failing to provide certain Cities with wholesale power, inter-connections and transmission service.
If in fact the Board was relying on Opinion No. 57 for this purpose, its reasoning is flawed"in three respects:
(1) since FERC did not find that 1
Alabama Power Company (Joseph M.
Earley Nuclear Plants, Units 1 and 2), ALAB-646 (decided June 30, 1981).
In Farley, the Appeal Board substantially upheld the Licensing's Board's finding that certain municipal systems were not entitled to relief because they "were not harmed by any of applicant's anticompetitive practices."
Slip Opinion, 128-129.
. FPL had violated the antitrust laws or acted anticompetitively, the Board cannot resolve these issues against FPL without an evidentiary hearing; (2) FERC's description of FPL's conduct merely consists of " evidentiary" facts, to which the courts have traditionally refused to give collateral estoppel effect; and (3) Opinion No. 57 makes no findings about the wholesale services that FPL presently makes available to municipalities in its service area, and it is FPL's current conduct that is most critical in determining whether a " situation inconsistent" would be maintained by issuance of a license for St. Lucie No. 2.
1.
FERC's Failure to Find That FPL Acted Anti-competitively.
The principal issue that FERC addressed in Opinion No. 57 was whether certain proposed modifications in FPL's wholesale electric tarriff, Schedule SR-1, were "just and reasonable" under Sections 205 and 206 of the Federal Power Act.
FERC found that FPL had " failed to carry its burden of justification" for these tarriff modifications.
32 PUR 4th at 315.
As the basis for this conclusion, the Commission voiced its " concern" that the proposed modifications might have " anti-competitive effects" and stated that FPL had failed to show that these effects were offset by " overriding public policy objectives."
Id.,
315.
Because of FERC's decision, the pro-posed modifications -- which would have limited the availability of wholesale power to certain municipalities in FPL's service area -- never took effect.
In the course of evaluating the proposed tarriff mod-ifications, FERC determined that FPL possessed " monopoly power" in wholesale and retail markets within its service territory.
. 32 PUR 4th at 323-325.
In addition, FERC presented what it described as a " fairly elaborate account of FP&L's past conduct in its marketplace."
Id.,
315.
This account disclosed a his-tory of friction between FPL and certain municipal systems over the availability of wholesale power, interconnections and l
transmicaion service.
Id., 325-336.
After reviewing FPL's dealings with municipals during the 1950s and 1960s, FERC observed that FPL's "past conduct casts a shadow over [its] claimed need to restrict service."
32 PUR 4th at 315.
However, FERC was careful to avoid any de-termination that FPL had violated the antitrust laws or acted anticompetitively.
FERC specifically cautioned that (1) it was not making any " findings that violations of the antitrust laws have occurred" (id., 315) (emphasis in original), (2) its ac-count of FPL's past conduct was "not intended by this Commission l
to be a determination of factual disputes" which might arise in other forums (id.), and (3) it did not possess "an extensive record on the past conduct of [FPL) towards its customers or its intent in establishing or maintaining a restrictive rate provi-sion" (id., 326).
In Florida Power & Light Co. v.
FERC, No. 80-5259 (5th Cir. November 6, 1981), the Fifth Circuit confirmed the
^
limited scope of Opinion No. 57.
In its decision, the Court pointed out that Section 2 of the Sherman Act required proef not just of the possession of monopoly power but of conduct t
constituting "an attempt to restrain trade or an attempt to monopolize."
Slip Op. at 12820 n.27.
The Court stressed that Opinion No. 57 did not find "any specific anticompetitive l
. activities or.
any antitrust violations."
Slip Op. at 12820.
This holding of the Fifth Circuit, in a case arising out of the same FERC docket in which Opinion No. 57 was is ued, is conclusive in defining that Opinion's scope.
The Second Circuit recently held that refusals to deal are permissible by "even a monopolist, as long as he has no purpose to restrain competition or to enhance or expand his monopoly, and does not act coercively."
Official Airline Guides, Inc. v.
FTC, 630 F.2d 920, 927-28 (2d Cir. 1980).
The Ninth Circuit has adopted similar principles, holding that a firm with menapely power is entitled to refuse to deal with competitors unless that refusal is " unreasonably restrictive of competition" and lacks legitimate business justification.
California Computer Products, Inc. v.
International Business Machines Corp., 613 F.2d 727, 736 (9th Cir. 1979).2 In Opinion No. 57, FERC made no effort to consider whether FPL's alleged refusals to deal with municipal systems derived from a " purpose to restrain competition" or whether, instead, FPL's actions were justified by legitimate business considerations.
Indeed, FPL lacked a meaningful opportunity to offer testimony about the business justifications for its conduct.
Since FERC made no determination that FPL's conduct toward municipal systems was motivated by anticompetitive purposes, the Board could not properly grant summary disposition on the basis of Opinion No. 57 -- even if FERC's other findings were entitled to collateral estoppel effect.
1 Pages 12-13 and 33-49 of FPL's August 7, 1981 Response discuss more fully the case law regarding a monopolist's obli-gations vis a vis asserted competitors.
The Supreme Court has held that " summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles Poller v. Columbia Broadcasting System, Inc., 368 U.S.
464, 473 (1962).1 The record before the Board contains extensive evidence that FPL's dealings with municipalities during the 1950s and 1960s were motivated by legitimate business considerations and not by anticompetitive objectives.2 Faced with such evidence, the Board must afford FPL an opportunity to present testimony at an evidentiary hearing concerning the business purposes for the activities described by FERC in Opinion No. 57.
)
Numerous other cases hold that summary judgment is improper in antitrust cases in which motive and intent are at issue.
E.g.,
Fortner Enterprises v. United States Steel, 394 U.S.
495, 500 (1969); Norfolk Monument Co. v. Woodlawn Memorial Gardens, Inc., 394 U.S.
700, 704 (1969); Levin v. Joint Com-mission on Accreditation of Hospitals, 354 F.2d 515, 518 (D.C.
Cir. 1965) (per curiam); George C.
Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 555 (2d Cir. 1977); Littlejohn v. Shell Oil Co., 483 F.2d 1140 (5th Cir. 1973), cert. denied, 414 U.S.
1116 (1973); Penn Galvaniz-ing Co. v.
Lukens Steel Co.,
59 FRD 74, 80 (E.D. Pa. 1973).
FPL has identified the available evidence relating to the business purposes for its alleged refusals to deal in Appendix A to its August 7, 1981 Response to the Cities Motion for Summary Disposition.
As these materials indicate, FPL has been reluctant to provide wholesale service on an unlimited basis because FERC regulations require a utility's wholesale rates to be based on its average system costs rather than the marginal costs of generating additional power.
Given EERC's method of computing wholesale rates, it was uneconomic for FPL to provide unlimited wholesale power.
The Fifth Circuit has held that regulatory requirements should be taken into account in determining whether a utility's conduct was anticompetitive.
Mid-Texas Communica-tions Systems, Inc. v.
American Telephone & Telegraph Company, 615 F.2d 1372 (5th Cir.), cert. denied sub nom. Woodlands Telecommunications Corp. v. Southwestern Bell Telephone Co.,
101 S. Ct. 286 (1980).
, 2.
The Inapplicability of Collateral Estoppel to the " Evidentiary" Facts Found By FERC.
Even though FERC never concluded that FPL had engaged in anticompetitive behavior, the Board's Memorandum and Order adopted FERC's narrative account i
of FPL's dealings with municipalities during the 1950s and 1960s.1 It is established, however, that, in the absence of i
any conclusions about the ultimate facts in issue, such a re-cital of merely " evidentiary" facts is not entitled to collateral estoppel effect.
4 In The Evergreens v.
Nunan, 141 F.2d 927, 928 (2d Cir. 1944), Judge Learned Hand differentiated between " ultimate" facts, which directly support conclusions of law, and " mediate" data, which are merely the basis for further factual findings.
I The court held that " mediate" data determined in one suit cannot be binding in a second suit.
The Supreme Court adopted this principle in Yates v. United States, 354 U.S.
298, 337-338 1
(1957), holding that:
the doctrine of collateral estoppel does not establish any such concept of ' conclusive evidence' as that contended for by petitioner.
The normal rule is that a prior judgment need be given no conclusive effect at all unless it establishes one of the ultimate facts in issue in the subsequent proceeding.
So far as merely evidentiary or ' mediate' facts are concerned, the doctrine of collateral estoppel is inoper-ative."
See also Restatement, Judgments, 9 68, comment p.
It is clear that FERC's account of FPL's dealings with municipalities in Opinion No. 57 falls within the category 1
Memorandum and Order, 21-25.
l
. of " evidentiary" or " mediate" facts to which collateral estop-pel does not apply.
Thus, the Board cannot adopt FERC's description of FPL's conduct in order to reach conclusions about ultimate factual issues that FERC did not resolve.
The Board must therefore afford FPL a full opportunity to present testimony at an evidentiary hearing about the activities and events described in Opinion No. 57.
3.
The Present Availability of Wholesale Services.
FERC's findings in Opinion No. 57 are insufficient to establish a " situation inconsistent" in another fundamental respect.
FPL never implemented the proposed tariff modifications that were at issue in Opinion No. 57, and FERC did not address the competitive impact of the policies for selling wholesale power that FPL was in fact following under its tariff.
Since Opinion No. 57 was issued, moreover, FPL has continued to provide wholesale power to all municipal systems located in its service area in accordance with the terms of the tariffs it has filed with FERC.
The settlement license conditions in effect in this proceeding reaffirm FPL's respon-sibility to sell power at wholesale to all small utilities located in or adjacent to its service area.
The settlement license conditions also impose comprehensive interconnection obligations upon FPL; FPL is in fact interconnected with every generating municipal utility which operates adjacent to its system except for the City of Starke.*
Moreover, FPL's i
i l
1 See Affidavit of Ernest Bivans, 1 36.
The Board is thus in error in implying (Memorandum and Order, 17, 46) that FPL is interconnected solely with FPC, Tampa Electric Company, the Orlando Utilities Commission and the City of Jacksonville.
transmission system is currently being used for scores of transactions involving numerous utilities, and the settlement license conditions contain comprehensive conditions relating to FPL's provision of transmission service.
Since this proceeding involves FPL's future activi-ties under its license for St. Lucie No. 2, the Board's focus must necessarily be on the antitrust impact of the wholesale and other services that FPL is now providing.
Opinion No. 57 is of limited relevance to this issue since it evaluates the possible anticompetitive effects of modifications in FPL's wholesale tariff that were never implamented.
Thus, the Board must hold an evidentiary hearing to determine whether FPL's current terms for providing wholesale service are " inconsistent with the antitrust laws."
C.
The Evidence of " Joint" Activity on Which the Board Relies Provides No Basis for Finding a Situation Inconsistent with the Antitrust Laws.
In addition to relying on Gainesville and Opinion No. 57, the Board based its finding of a " situation inconsis-tent" on a series of documents concerning planning activities by EPL and other Florida utilities.
According to the Board, these documents demonstrated that the participating utilities
" benefitted from their ability to plan to their mutual advan-tage for additions to generating and transmission facilities."
Memorandum and Order, 37.
The Board stated that these benefits were "not enjoyed by [FPL's] competition" and then concluded that "this created a situation inconsistent with the antitrust laws."
Id.
FPL believes that the Board's analysis is erroneous in three separate respects:
(1) faced with virtually the same evidence that was before the Board, Judge King reached pre-cisely the opposite conclusion in the Cities' pending treble damage action against FPL; (2) testimony by knowledgeable FPL employees shows that, contrary to the Board's findings, FPL's planning activities with other utilities played no part in its decisions concerning new generating capacity; and (3) even if it is assumed that FPL benefitted from these planning activi-ties, the record before the Board provides no basis for con-cluding that FPL's conduct was anticompetitive or otherwise
" inconsistent with the antitrust laws."
1.
The Contrary Conclusions of Judge Ki,ng.
In l
opposing FPL's summary judgment motion on Tallahassee's nuclear access claim, the Cities relied on virtually the same evidence of " concerted activity" that they submitted to this Board.
Judge King, however, concluded that this evidence was insuffi-l cient to support an inference of anticompetitive conduct on FPL's part.
As he explained:
" Plaintiff supports its assertion that defen-dant did not 'go it alone' in developing nuclear facilities by pointing to the existence of a joint study group of which defendant was a mem-ber, and the contention that defendant's units were _' effected by coordination.'
The Court be-lieves that plaintiff's evidence does not rea-sonably allow an inference of joint effort.
Plaintiff's attempts in its Answer to describe other concerted activities participated in by defendant also do not warrant the conclusion of joint development of nuclear facilities.
It is to be expected that an entity as large as defen-dant, in a business as interconnected as elec-tric power production, would interact with other power producers and even seek out advice.
It is
. improbable that defendant would be able to, or would want to, literally 'go it alone.'
It thus is unfair to look upon the interactions pre-sented to the Court as evidence of concerted activity, particularly given the size and com-plexity of a project such as a nuclear generat-ing facility."
Decision, 8-9 (emphasis added).
While the Board accepted all of Judge King's other conclusions, it impermissibly chose to reject these findings.
Memorandum and Order, 35.
The Board expressly recognized dhat a " judge's con-clusions from his record" constitute " relevant evidence" that cannot be ignored.
Id.,
29.
Having adopted this principle, the Board was not free to disregard Judge King's conclusions about concerted activity simply because its own review of the record indicated "just the opposite of what Judge King has concluded."
Memorandum and Order, 35.
Rather, the Board should have recognized that, at a minimum, Judge King's find-ings demonstrated that the available evidence could support conflicting inferences and, thus, created a triable issue of fact that only an evidentiary hearing could resolve.
2.
The Testimony of FPL Employees.
According to the Board, the " joint" planning efforts in which FPL partici-pated " permitted competitors to implement mutually advantagous delays in installing units,"1 served as " guides by which (those utilities) decided what mutual generation and transmis-sion additions would best serve them,"2 and " produced planning advantages which made it more attractive for its members to 1
Memorandum and Order, 44.
8 Id.,
45.
plan for nuclear generation."1 None of these conclusions can e'
be squared with the sworn statements of FPL officials that planning studies with other utilities played no part in FPL's decisions concerning new generating capacity.2 In an affidavit filed with the Board, Ernest Bivans, FPL's Vice President for System Planning, has described the purposes and activities of the Florida Operating Committee
("FOC") and its successor organization, the Florida Electric Power Coordinating Group ("FCG").
According to Mr. Bivans, the utilities that belonged to these bodies engaged in three kinds of cooperative activity:
(1) regulation of tie-line power flows to minimize operating disturbances on interconnected systems, (2) development of policies for sharing operating reserves in order to assure adequate availability of emergency power, and (3) evaluation and improvement of the reliability of the inter-connected transmission system in order to prevent cascading system disturbances.'
As Mr. Bivans explained, participating utilities ex-changed a considerable amount of information, including indivi-dual plans for new generation, in order to facilitate informed decisions on these subjects.
However, Mr. Bivans categorically stated that individual generation plans were neither modified 1
Id.
8 Also unsupported by the record is the Board's finding (Memorandum and Order, 17, 47) that FPL and certain other Florida utilities are members of a national organization called the Interconnected Systems Group.
The Board does not refer to any basis for this finding in the Memorandum and Order.
8 Affidavit of Ernest L. Bivans, August 5, 1981, Appendix B to FPL's Response of August 7, 1981.
See 11 9-11.
nor even discussed in the course of the joint studies:
"These studies always took the individual gen-j eration 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 trans-mission system.
The FOC never engaged in joint planning of generation.
To the contrary, I am not aware of any instance in which any FOC mem-ber ever commented on the generation plans of another member.
It was understood that such decisions were solely within the province of the individual members."'
The Board's Memorandum and Order asserts that, even if partici-pating utilities did not jointly formulate generation plans, FPL
" derived competitive advantage" from its knowledge of other utili-ties' projected timetables for constructing new generating units.
Memorandum and Order, 44.
However, this assertion is not on13 un-supported by any evidence, but is contradicted by the explicit testimony of Mr. Bivans.
As Mr. Bivans emphasized in his affidavit:
"I believe that the fact that FPL has several I
interconnections with other utilities was never a significant consideration in selecting the
]
size or type of FPL generating units.
To the l
best of my knowledge, the existence of inter-j ccnnections was not a factor in the decisions to construct the Turkey Point and St. Lucie i
nuclear units or in selection of the size of
_these units, and I believe those units would have been constructed in the absence of any interconnection.
In making decisions to build l
these plants, we did not rely on the actions or commitments of any other utility, and we made no commitments to any other utility.
I, as an engineer intimately involved in FPL's genera-i tion planning process, did not consider the existence of interconnections as a major factor I
J 1
Id.,
1 11 (emphasis added).
Mr. Bivens elaborates on the nature of the study process in his Supplemental Affidavit at 11 12-13 and 17.
He explains there that, in order to study reliability, the power production plans already formulated by the utilities involved had to be used as a data input.
There were alternative plans developed, and the purpose of the studies i
was to assess transmission reliability, not to modify the utili-ties' plans for power production facilities.
. when formulating recormendations as to genera-tion expansion, and interconnections were never explicitly considered in our planning.
We did not, at the time our four nuclear units were planned, regard the interconnections as permitting FPL to build bigger or fewer generating units.
."1 This testimony has been confirmed both by Mr. Robert Fite, l
FPL's former President, and by Mr. Robert Gardner, FPL's l
Senior Vice President.2 Even if they constitute admissible evidence,' the documents cited by the Board in its decision cannot justify dis-regarding the explicit testimony of EPL employees.
As the Board itself has acknowledged," the documents nowhere state that EPL in fact utilized information obtained from other utilities to plan new generating units.
Hence, the documents cannot negate the direct testimony of FPL officials that FPL's generating decisions were based strictly on unilateral considerations.
As the Board's decision notes, although many of the planning documents for FPL's nuclear units can no longer be located, a number of these documents were in fact produced during discovery.'
FPL is submitting them to the Board for its 1
Id.,
1 14 (emphasis added).
8 Fite Deposition (May 6, 1981), pp. 128-29 [ Appendix F to FPL's Response of August 7, 1981, pp. 879-80]; Gardner Affidavit, 8 [ Appendix C to FPL's Response of August 7, 1981).
Mr. Bivans' Supplemental Affidavit (11 15-16, 19-20) provides further con-firmation of this fact and explains that EPL experienced no
" economic benefit" from the studies as regards any of its power production facilities.
8 FPL's objections to the admissibility of the documents are reiterated on pages 36-37 infra.
Metaorandum and Order, 36.
Memorandum and Order. 43.
review.1 None of the documents makes mention of the generation and transmission activities of other Florida utilities.
The l
omission of such references further reinforces the testimony of FPL officials that its generation decisions were based strictly on unilateral considerations.
It should be stressed that, while some of the docu-ments cited by the Board discuss the purported benefits of co-ordinating new generation, these statements do not represent the position of FPL's management.
As Mr. Bivans states in his affidavit, although FPL representatives participated in task-forces studying power pooling among Florida utilities, FPL's management was unpersuaded "that economies would necessarily be realized through single-system planning or operation" and ulti-mately concluded that "such an arrangement offered no benefits and substantial disadvantages to FPL."2 Thus, the documents cited by the Board may perhaps express the opinions of isolated FPL employees, but they cannot support an inference that FPL was committed to joint planning of generation by the major Florida utilities.'
Most importantly, to the extent that the testimony of FPL officials is in conflict with the documents cited by the Board, it was inappropriate for the Board to reject that testi-8 The documents are being submitted as attachments to the Affidavit of Robert M.
Sussman.
2 Bivans Affidavit, 11 29-30.
Mr. Bivans' Supplemental Affidavit discusses in some detail 8
the study documents cited by the board and demonstrates that FPL did not engage in the joint construction or planning of any of its power production facilities.
Supplemental Affidavit of Ernest F.
Bivans at 11 4-15, 20.
mony based on its own assessment of the " weight of the evi-dence."
The Supreme Court has held that, on a motion for sum-mary disposition, any doubt as to the existence of a material iscue must be resolved against the moving party and all the evidence submitted "must be viewed in the light most favorable to the opposing party."
Adickes v.
S.H.
Kress & Co.,
398 U.S.
144, 157 (1970).
See 6 Moore's Federal Practice 1 56.15]3), at 56-463 et seg.
1976).
Moreover, even if there is no dispute as to the evidentiary facts, the Supreme Court has held that summary disposition is inappropriate if there can be dis-agreement about the inferences which might be drawn from those facts.
United-States v. Diebold, Inc 369 U.S.
654, 655 s,
(1962) (per curiam).
As the Second Circuit held in Jaroslawicz v.
Seedman, 528 F.2d 727, 731 (2d Cir. 1975):
"The responsibility of the district judge on a motion for summary judgment is merely to deter-mine whether th'ere are issues to be tried, rather than to try the issues himself.
See also Unlaub Co.,
Inc. v'.
Sexton, 568 F.2d 72, 76 (8th Cir.
I 1977).1 The Board departed from these principles when it chose to rely exclusively on planning documents submitted by the' Cities-and to reject the testimony of FPL officials that FPL'hadnotuti)izedtheresultsofthejoint studies in plan-ning its own generating units.
The Board was not free to choose among the different inferences that might be drawn from these two bodies of evidence, but was obligated to conduct an 1
4 This, case holds that summary judgment is an extreme remedy that should be,Vithheld unless the moving party has convinc-ingly demonstrated its appropriateness.
s
. evidentiary hearing at which any conflicts in the evidence could be aired and resolved.
The impropriety of the Board's exclusive reliance on the planning documents is confirmed by the Supplemental Affi-davit of Ernest L.
Bivans that accompanies this submission.
As this Supplemental Affidavit makes clear, the Board simply misinterpreted Mr. Bivans' prior affidavit and the documents on which the Board relied.
Moreover, as Mr. Bivans emphasizes, the factual recitation in some of these documents does not accurately reflect the activities of the utilities involved.
Such errors by the Board were all but inevitable, since it attempted to resolve disputed factual issues without the benefit of " live" testimony under oath and cross-examination, essential elements of any adequate fact-finding process.
3.
The Legal Insufficiency of the Board's Analysis.
Even if FPL derived " economic benefits" from coordinating with certain other utilities, it hardly follows that these coordination activities evidence a " situation inconcistent with the antitrust laws."
The Board has made no finding that the joint studies under-taken by FPL and other Florida utilities were anticompetitive, and no such finding could be justified by the record before the Board.
In evaluating the antitrust significance of the coordination activities of FPL and other utilities, the fol-lowing factors cannot be ignored:
1.
As Judge King found and the Board agreed, there was no link between the nuclear research projects that were jointly proposed by FPL and other Florida utilities in the 1950s and FPL's later success in constructing and operating its nuclear units.2 2
Memorandum and Order, 34.
__ 2.
As Judge King found and the Board agreed, FPL assumed substantial business risks in construct-ing and operating its nuclear facilities.2
[
3.
FPL alone financed its nuclear units and assumed sole responsibility for overseeing their construction.2 4.
As the Board recognized, the coordinated planning which occurred among Florida's major utilities was not "directly related to nuclear access."8 5.
As Judge King found and the Board agreed, there is no evidence of a conspiracy between FPL and other utilities to exclude any of the Cities from participating 4.n nuclear power generation.'
6.
As Judge King found and the Board agreed, there is no evidence cz any unilateral action by FPL to exclude any of the Cities from nuclear power generation.'
7.
Knowledgeable FPL officials have testified that there was no instance in which a municipal elec-tric system sought to join the FOC and was denied membership, and there were no discussions between FPL and other utilities to limit membership by muni-cipal systems in the FOC.'
8.
By 1971, several municipal electrical systems had joined the FOC.
In 1972, the FCG, comprised of 40 utilities, was formed.
According to the Board',s Memorandum and Order,' all electric systems in Florida were invited to become FCG mem-bers.
The power pooling documents cited in the Board's decision were prepared by the FCG in 1974 and, hence, originated after a full opportunity to participate in joint activities had been extended to all the electric utilities in Florida.
Id.,
33.
8 Affidavit of Robert J. Gardner, 11 8-12 [ Appendix C to FPL's Response (August 7, 1981)]
Memorandum and Order, 34.
Id.,
34, 45.
Id.,
33-34.
Bivans Affidavit, 1 13.
Memorandum and Order, 45.
i l
1 9.
According to the Board, there is no evi-dence that FPL possesses monopoly power in a Penin-l sular Florida market for " coordination services" i
and the record is insufficient to conclude that l
such a market even exists.1 4
When the planning studies relied on by the Board are
]
examined against this background, there can be no discernible
)
rationale for finding a " situation inconsistent with the anti-trust laws."
The record provides no basis for concluding that, I
in engaging in " joint" planning activities, FPL (1) was exer-cising monopoly power, (2) sought to cause competitive injury to municipal electric systems, (3) took affirmative steps to deny the benefits of coordination to municipal systems, (4) engaged in joint planning, financing or construction of its nuclear units, or (5) impeded the ability of mdnicipal systems
-i l
to obtain the advantages of nuclear generation.
I The Board has itself recognized that "the ordinary pattern in the electric utility industry is the existence of a i
market for coordination services."8 Moreover, the Federal Power Act reflects a national policy in favor of coordination among i
utilities' and, pursuant to thic policy, FERC has encouraged joint studies of the very kind that FPL and other Florida utili-ties have conducted.
In the absence of any evidence of anticom-petitive conduct, there is no reason to conclude that the " joint" i
activities in which FPL engaged were any different in purpose or effect from those which prevail elsewhere in the United States.
1 Id.,
32-33.
2 Id.,
35.
l 8
Federal Power Act, 69 205, 209; 16 U.S.C.
D.
FERC's Conclusions Concerning Monopoly Power Are Contrary to the Findings of Judge King and, Hence, Summary Disposition of This Issue Was Inappropriate.
Among the findings included in the Board's Memorandum and Order is that FPL possesses monopoly power in a " bulk power market" geographically coextensive with FPL's retail service territory.
In making this finding, the Board relied on the analysis of FERC in Opinion No. 57.1 l
The Board recognized that Judge King reached differ-l ent conclusions from FERC with respect to FPL's monopoly power.
I It concluded, however, that there was no conflict between these i
two sets of findings because Judge King's conclusions applied solely to a market that included Tallahassee and other "out-side" Cities.8 FPL does not believe that Judge King's decision can be construed so narrowly.
Judge King's conclusions about the lack of monopoly power were not limited to a market which in-cluded the "outside" Cities, but were framed far more broadly:
"The Court finds that the relevant market for purposes of Section 2 analysis is not nuclear generated electricity, but elec-tricity generated from all sources, including such fuels as gas, coal and oil.
" Examination of the electricity market reveals that nuclear generated facilities produce but a small share of the total amount I
of electricity generated.
Even defendant, which operates three nuclear facilities, obtains only 29% of its electricity from nuclear power.
Moreover, defendant does not 1
Memorandum and Order, 18-19.
2 Id.,
32.
l
i
' control all the nuclear facilities in close proximity to plaintiff.
The Crystal River facility and Georgia Power's Vogtle nuclear units are two examples of facilities now (sic) owned by defendant.
"Under du Pont and Grinnell, monopoly power exists if an entity controls the price or competition in the relevant market, or owns a predominant share of the relevant market.
The Court does not find that defen-dant has monopoly power as defined by du Pont and Grinnell."
- Decision, 7-8.
As this passage demonstrates, Judge King relied on the avail-ability of numerous alternative sources of bulk power supplies, including nuclear facilities owned by other utilities, to muni-cipal electric systems in Florida.
This rationale cannot be limited to the "outside" Cities; rather, it is equally applic-able to all Florida municipal systems which have access to power generated by utilities other than FPL.
The Board has indicated that, while not entitled to collateral estoppel effect, Judge King's findinga constitute
" relevant evidence" that must be weighed along with all other portions of the record.
Since Judge King's conclusions concern-ing FPL's monopoly power are in conflict with those of FERC, a triable issue of fact exists which could not be resolved by summary disposition.
Accordingly, an evidentiary hearing is necessary to determine the proper definition of the relevant market and to assess the significance of FPL's share of that market.
The Appeal Board has held that, in Section 105c pro-ceedings, it is necessary to " focus on that market area, within the overall market, to which the smaller utilities
. can
- _ _ _ _ _ _ _ _ _ _ _ practically turn for suppliers."1 If the relevant market for bulk power sales is defined in this manner, it is highly doubtful whether FPL would have monopoly power.
It has been estimated that FPL's bulk power production represented about 45 percent of all bulk power generated in Peninsular Florida in 1980.2 More-over, it is undisputed that municipal utility systems in Florida including both "inside" and "outside" Cities -- have access to bulk power sources outside Florida.'
In a bulk power market consisting of producers both inside and outside Florida, FPL's share of total wholesale power production would be far lower than 40 percent.
The courts have held on numerous occasions that
" control of less than 50 percent of the relevant market is by itself sufficient evidence that monopoly power does not exist."'
By finding that FPL possesses monopoly power, the Board disregarded the contrary conclusions of Judge King and refused to consider evidence that squarely confirms Judge King's conclusions.
Accordingly, the Board should vacate its findings on monopoly power and, at a minimum,' permit the pres-entation of evidence on this issue at an evidentiary hearing.
Alabama Power Co. (Joseph M.
Farley Nuclear Plant, Units 1 and 2), ALAB-646, (decided June 30, 1981), Slip Op. at 53.
See Appendix F, pp. 1201-1204 to FPL's Response of August 7, 1981.
For example, one of the options being considered by the Florida Municipal Power Agency on behalf of Cities is the purchase of capacity shares of Georgia Power Company's Vogtle nuclear units.
See FPL's Response of August 7, 1981 at 21.
3 Von Kalinowski, Antitrust Laws and Trade Regulation l
1 8.02[2], pp. 8-34 and 8-34.1 (1979 ed.).
See also the dis-cussion of relevant decisions at pages 56-60 of FPL's August 7, 1981 Response.
E.
An Evidentiary Hearing Is Necessary to Determine Whether There Is a " Nexus" Between the Board's Findings of Anticompetitive Conduct and the Activities to Be Carried Out Under the License for St. Lucie No.
2.
Section 105c of the Atomic Energy Act requires that "a meaningful nexus must be established between the situation
[ inconsistent with the antitrust laws] and the ' activities under the license'" before antitrust license conditions may be imposed.
Louisiana Power and Light Company (Waterford Steam Electric Generating Station, Unit 3), CCI-73-7, 6 AEC 48, 49 (1973).
As the Commission has held:
[Section 105c] does not authorize an unlimited inquiry into all alleged anti-competitive practices in the utility industry.
The statute involves licensed activities, and not the electric utility industry as a whole.
If Congress had intended to enact a broad remedy against all anticompetitive practices throughout the electric utility industry, it would have been anomalous to assign review responsibility to the Atomic Energy Commis-sion, whose regulatory jurisdiction is limited to nuclear facilities.
It is the status and role of these facilities which lie at the heart of antitrust proceedings under the Atomic Energy Act."
Louisiana Power and Light Company (Waterford Steam Electric Generating Station, Unit 3), CLI-73-25, 6 AEC 619, 620 (1973) (emphasis in original).
The Board's Memorandum and Order does not identify any " nexus" between FPL's allegedly anticompetitive conduct and the activities it will carry out under its license for St. Lucie No. 2.
Moreover, no such " nexus" can be established on the basis of the record before the Board.
The Board's finding of a " situation inconsistent" is based on (1) FERC's description in Opinion No. 57 of FPL's alleged reluctance to enter into certain wholesale power trans-actions during the 1950s and 1960s, (2) the Fifth Circuit's finding in Gainesville of a conspiracy between FPC and FPL to divide the Florida wholesale market in the 1960s, and (3)
" joint" planning activities undertaken by FPL and other Florida utilities in the 1960s and early 1970s for the purpose of assuring the reliability of their interconnected transmission systems.
All of the practices that the Board found objection-able in its Memorandum and Order were discontinued years ago.
Hence, they are of limited relevance in determining the anti-trust consequences of future activities that FPL will carry out under its license for St. Lucie Unit No.
2.
Moreover, none of the practices condemned by the Board relates directly to the construction or operation of FPL's nuclear units -- the focus of a Section 105c proceeding.
Indeed, the Board's Memorandum and Order affirmatively endorses Judge King's findings that FPL did not engage in anticompetitive acts in acquiring or main-taining its nuclear facilities and that FPL's unwillingness 1
to permit the Cities to participate in its nuclear units has "not been shown to be anything but a sound business decision."2 Under these circumstances, the record presently before the Board provides no basis for finding a " nexus" between FPL's alleged anticompetitive conduct and its activities under its 1
Decision at 10; Memorandum and Order, 33-34.
8 Id.,
34.
license for St. Lucie Unit No. 2.
Accordingly, the evidentiary hearing conducted by the Board must include the presentation of evidence on the existence of a " nexus" along with all other matters in dispute.
II.
ADDITIONAL OBJECTIONS TO THE BOARD'S DECISION In addition to the objections presented above, FPL believes that the Board's Memorandum and Order contains a number of other unjustified conclusions.
FPL does not seek oral argu-ment on these additional objections since they either relate to issues addressed in earlier briefs filed by the parties or otherwise do not require further elaboration at this time.
In accordance with the Board's instructions, FPL's additional objections are summarized briefly below:
A.
Settlement License Conditions In considering the Cities' motion for summary dispo-sition, the Board failed to take into account the settlement license conditions that were approved on April 24, 1981 and are presently in effect.
These license conditions impose legally binding obligations on FPL regarding interconnections, reserve coordination and emergency power, maintenance power and energy, economy energy, access to St. Lucie Unit No. 2 and future FPL nuclear plants, wholesale power sales, transmission services and access to pooling arrangements.
FPL believes that the Board should have determined whether the licensing of St. Lucie No. 2 under these conditions will create or maintain a situation inconsistent with the antitrust laws.
The Board's refusal to consider the settlement license conditions except
. during the remedy phase of this proceeding was erroneous as a matter of law.1 B.
Collateral Estoppel Issues 1.
Gainesville.
In Parklane Hosiery Co. v. Shore, 439 U.S.
322, 331 (1979), the Supreme Court held that offensive collateral estoppel may not be allowed where a plaintiff could easily have joined in the earlier action but failed to do so.
FPL believes that the Board erred in declining to find that the Cities are disqualified from seeking collateral estoppel for Gainesville under this standard.
Contrary to the Board's reasoning, the Cities' inter-vention in Gainesville would not have significantly broadened the issues before the district court.
The basic claim asserted by the additional Cities -- that FPC and FPL had conspired to divide the wholesale electricity market in Florida -- would have been essentially the same as the claim advanced by Gaines-ville.
Moreover, if the Cities were concerned about broadening the issues presented by Gainesville, they could have filed a new suit against FPL; instead, they chose to sit on the side-lines and wait for a favorable outcome in Gainesville.
As the Board noted, intervening in Gainesville or filing a new suit would have imposed some costs on the Cities.
The Board's emphasis on this factor, however, was misplaced.
Nothing in The precise nature of the settlement license conditions, 3
and the bearing of those conditions on the Cities' motion, are discussed at length on pages 3-80 of FPL's Response of August 7, 1981.
. Parklane implies that a party's unwillingness to incur litiga-tion expenses can excuse its failure to intervene in an action for which it later seeks collateral estoppel effect.
Parklane nowhere suggests that, in its discretion, a court or agency may overlook a party's failure to join in an earlier action and, instead, base the application of collateral estoppel on other factors.
Thus, the Board erred insofar as it held that, notwithstanding the Cities' failure to participate in.Gainesville, collateral estoppel could still be granted in an exercise of the Board's discretion.
2.
FERC Opinion No. 57.
The Board also erred in giving collateral estoppel effect to FERC Opinion No. 57.
The application of collateral estoppel to Opinion No. 57 was unjus-tified for the following reasons:
(1) the legal standards applied by FERC are different from those applicable in antitrust review proceedings under Section 105c; (2) FPL had the burden of justifying the proposed tarriff modifications at issue in opinion No. 57, whereas the burden is on the Cities in this proceeding to demonstrate that FPL's activities under the license for St. Lucie No. 2 would create or maintain a situa-tion inconsistent with the antitrust laws; (3) as the Fifth Circuit has recognized, FERC did not find that FPL had violated the antitrust laws or engaged in anticompetitive conduct, but merely determined that FPL's proposed tarriff modifications might have "anticompetitive effects" and FPL had failed to demonstrate that those modifications were fair and reasonable; 1
(4) FPL lacked a full and fair opportunity to present evidence on the antitrust issues that FERC addressed in Opinion No. 57; (5) PERC explicitly disclaimed any intention to foreclose litigation concerning the legality of FPL's conduct in other fo rums; and (6) insofar as Opinion No. 57 is in conflict with Judge King's decision, the inconsistent determinations embodied in the two decisions precluded the application of collateral estoppel to Opinion No. 57.2 3.
Florida Cities v. Florida Power & Light Co.
While according binding effect to Gainesville and Opinion No. 57, the Board refused to apply collateral estoppel princi-ples to Judge King's recent decision granting summary judgment for FPL on Tallahassee's nuclear access claim.
The Board's refusal to accord collateral estoppel effect to Judge King's decision was erroneous in two respects.
First, the Board incorrectly found that Judge King's decision was only binding on Tallahassee.
This conclusion over-looks the fact that FPL's summary judgment motion was opposed not juct by Tallahassee, but by all of the Cities, who recognized that the motion was "obviously intended to reach other Cities' claims."2 Since all the Cities participated actively in the briefing and argument of FPL's motion, they should now be bound by its disposition.
l 1
FPL has previously addressed the collateral estoppel issues presented by Opinion No. 57 at pages 87-98 of its August 7, 1981 Response, at pages 14-16 of its Memorandum of September 14, 1981, and at pages 13-16 of FPL's Reply Memo-randum of October 13, 1981.
8 Florida Cities' Answer to " Motion of FPL for Summary Judgment of City of Tallahassee's Nuclear Access Claim",
May 15, 1981, at 1.
l 1 -
Second, the Board incorrectly determined that Judge King's decision is tentative and preliminary.
In fact, by granting summary judgment for FPL, that decision constitutes a definitive ruling on Tallahassee's nuclear access claim.
More-over, neither Tallahassee nor any of the other plaintiff Cities has asked Judge King to reconsider his ruling.
Under these cir-
)
cumstances, Judge King's decision plainly possesses sufficient
" finality" to justify the application of collateral estoppel.2 C.
The Admissibility of the " Joint" Planning Documents Cited by the Board The Board's Memorandum and Order relies on a series 4
of documents filed by the Cities as evidence of coordination between FPL and other Florida utilities.*
FPL believes that, 1
in two separate respects, the Cities have failed to establish the admissibility of any of these documents and, hence, they could not properly be relied upon by the Board as a basis for summary dispostion:
First, the Cities have not established the authen-1 ticity of any of the documents despite the clear authentication i
requirement of Rule 901 of the Federal Rules of Evidence.
1 2
FPL discussed the application of collateral estoppel to Judge King's decision in its Supplemental Memorandum of Octo-ber 30, 1981 and its Supplemental Reply Memorandum of Novem-ber 17, 1981.
8 Memorandum and Order, 36-43.
In discussing these docu-ments, the Board utilizes the identification numbers assigned to them in the Cities' Exhibits to their motion.
The documents cited in the Board's Memorandum and Order are Exhibits 1, 12, 15, 16 and Documents 13 and 26.
. Second, with one exception,2 the documents in question were prepared not by FPL but by other organizations such as the Florida Operating Committee.
The Cities have failed to demon-strate that the authors of these documents had authority to speak on behalf of FPL, or were FPL agents, with respect to the matters to which the documents relate.
Thus, the Cities have not layed the necessary foundation for the documents' admission into evidence under Fed. R. Evid. 801(d)(2)(C)-(D).2 D.
Conclusions Relating to Relief The' Board's Memorandum and Order does not reach any conclusions on questions of relief, and FPL assumes that all legal and factual issues relating to relief remain to be re-solved.
Nevertheless, as a precaution, FPL wishes to express its concern about certain statements by the Board that suggest a predisposition concerning relief that FPL considers unwarranted.
First, the Memorandum and Order indicates that the Board believes that it is empowered to grant relief with respect to any aspect of a situation which it finds to be inconsistent with the antitrust laws, regardless of whether the form of relief has a " nexus" to the activities to be carried out under the license for St. Lucie No. 2.8 FPL submits that this view is inconsistent with the limited authority vested in the NRC 2
Exhibit 15.
FPL's objections to the documents' admissibility are 2
described in more detail in Part II of Appendix A to FPL's Reply Memorandum of October 13, 1981 and at pages98-106 of FPL's Response of August 7, 1981.
8 Memorandum and Order, 48-49.
by virtue of Section 105c of the Atomic Energy Act.
- Thus, forms of relief unrelated to the operation of St. Lucie No. 2, such as access to wholesale power produced by FPL's entire generating system, should be excluded from consideration during the remedy phase of this proceeding.
Second, the Board's decision indicates that, in deter-mining whether the "outside" Cities are entitled to wholesale l
l service, it is " irrelevant" whether FPL's rates to existing customers would increase.
To support this conclusion, the Board asserts that "a portion of the rate advantage [ enjoyed i
by FPL's customerc] was produced through monopolistic practices and an illegal conspiracy" and that the outside Cities have "been deprived of a competitive environment because of the existence of a situation inconsistent with the antitrust laws."2 These conclusions represent pure speculation on the part of the Board.
Neither the Gainesville decision nor any evidence in the record suggests that FPL's customers enjoyed a " rate advantage" because of the conspiracy found in Gainesville or that this conspiracy deprived the "outside" Cities of a " competitive environment."2 Moreover, even if the i
Board's assertions were supported by evidence, it would still remain necessary to assess the precise magnitude of any benefits Ibid.
2 Indeed, there is nothing in the record that supports the Board's implicit assumption of competition between FPL and the "outside" Cities, and abundant evidence, summarized at Appen-dix F to FPL's Response of August 7, 1981, demonstrates the absence of any such competition.
that FPL's customers derived from the conspiracy found in Gainesville and to weigh those benefits asainst any competitive injury sustained by the "outside" Cities.
No such assessment i
is reflected in the Board's Memorandum and Order.
Finally, the Board has stated that FPL need not pro-vide service to the "outside" Cities if it can demonstrate to FERC that " compelling public interests justify the service con-ditions" and that it has selected "the least anticompetitive method of obtaining legitimate planning or other objectives."1 The Board fails to recognize, however, that FERC Opinion No. 57 explicitly limits the applicability of this stringent standard to utilities that possess monopoly power.
32 PUR 4th at 314.
The Board itself has acknowledged that the present record cannot support a conclusion that FPL possesses monopoly power in any wholesale market that includes the "outside" Cities.2 Accord-ingly, there is no basis for applying the FERC standard (even assuming, but not conceding, its legslity) to the question of FPL's right to refuse to provide wholesale service to "outside" Cities.
CONCLUSION The Board's Memorandum and Order of December 11, 1981 contains several legal and factual errors, and the Board's grant of summary disposition was therefore improper.
The Board should vacate its Memorandum and Order and conduct an 1
Memorandum and Order, 50.
2 Id.,
32-33.
evidentiary hearing to determine whether the issuance of a license for St. Lucie Unit No. 2 would create or maintain a situation inconsistent with the antitrust laws.
Respectfully submitted, 1
5 c l&x A/
d Herbert Dym,:
Covington & Burling 1201 Pennsylvania Avenue, N.W.
P.O. Box 7566 Washington, D.C.
20044 (202) 662-5520 J.A. Bouknight, Jr.
Lowenstein, Newman, Reis & Aexlrad 1025 Connecticut Avenue, N.W.
Washington, D.C.
20036 Attorneys for Florida Power &
Light Company i
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