ML20040D811
| ML20040D811 | |
| Person / Time | |
|---|---|
| Site: | Saint Lucie  |
| Issue date: | 01/26/1982 |
| From: | Dym H COVINGTON & BURLING, FLORIDA POWER & LIGHT CO. |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| ISSUANCES-A, NUDOCS 8202020277 | |
| Download: ML20040D811 (25) | |
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4 FPL: 1/26/82 UE5b7[0 BEFORE THE UNITED STATES s NUCLEAR REGULATORY COMMISSION e og s , 7, gg BEFORE THE ATOMIC SAFETY AND LICENSING BO R4 E/ Ppg
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In the Matter of )
FLORIDA POWER & LIGHT COMPANY ) Docket No. 50-389A
)
(St. Lucie Plant, Unit No. 2) ) January 26, 1982
)
REPLY MEMORANDUM.OF FLORIDA POWER & LIGHT COMPANY REGARDING OBJECTIONS FILED BY FLORIDA CITIES 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 &
Axelrad 1025 Connecticut Avenue, N.W.
Washington, D.C. 20036 Attorneys for Florida Power &
Light Company Y
Ws II January 26, 1982 8202020277 820126 PDR ADOCK 05000389 M PDR
TABLE OF CONTENTS Page I. OBJECTIONS ON WHICH THE CITIES SEEK ORAL ARGUMENT . . . . . . . . . . . . . . . . . . . . 1 A. The Board Correctly Determined That a Separate Market Does Not Exist for Nuclear Power . . . . . . . . . . . . . . . . . . . 1 B. The Board Correctly Rejected the Cities' Claim That the Settlement License Con-ditions violate Section 1 of the Sherman Act . . . . . . . . . . . . . . . . . . . . 6 C. There Is No Basis for the Cities' Argument That Certain Municipalities should Be Treated As "Inside" Cities Under the Settle-ment License Conditions . . . . . . . . . . 10 D. The Board Correctly Found That FPL Has Not Exercised Any Monopoly Power It Possesses in Its Service Area to Injure the "Outside" Cities . . . . . . . . . . . . . . . . . . . 11 E. The Board Correctly Found That FPL's Refusal to Share Ownership of Its Nuclear Units With the Cities Was the Result of Sound Business Judgment . . . . . . . . . . 13 II. OBJECTIONS RESERVED BY THE CITIES FOR APPEAL . . 17 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . 19
TABLE OF AUTHORITIES Cases: Page Albrecht v. Herald Co., 390 U.S.
145 (1968) . . . . . . . . . . . . . . . . . . . 8 Associated Press v. United States, 326 U.S. 1 (1945) . . . . . . . . . . . . . . . . . 8 Berkey Photo, Inc. v. Eastman Kodak Co.,
603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093 (1980) . . . . . . . . . . . . . . 15, 16 California Computer Products, Inc. v.
International Business Machines Corp.,
613 F.2d 727 (9th Cir. 1979) . . . . . . . . . . 16 Cantor v. Detroit Edison Co., 428 U.S.
579 (1976) . . . . . . . . . . . . . . . . . . . 9 Consumers Power Company (Midland Plant, Units 1 and 2), ALAB-452, 6 NRC 892 (1977) . . . . . . 3, 5 Florida Power & Light Company v. Federal Energy Regulatory Commission, (5th Cir. No. 80-5259) . 17 Gainesville Utilities Dept. v. Florida Power & Light Co., 573 F.2d 292 (5th Cir.),
cert. denied, 439 U.S. 966 (1978) . . . . . . . 13, 17 Gamco Inc. v. Providence Fruit & Produce Bldg., Inc., 194 F.2d 484 (1st Cir.),
cert. denied, 344 U.S. 817 (1952) . . . . . . . 8 Green v. Ancora-Citronelle Corp., 577 F.2d 1380 (9th Cir. 1978) . . . . . . . . . . . 9 Hecht v. Pro-Football, Inc., 444 F.2d 931 (D.C. Cir. 1971), cert. denied, 404 U.S. 1047 (1972) . . . . . . . . . . . . . . 10 In the Matter of E.I. du Pont de Nemours &
l Co., FTC Docket No. 9108 (decided October 20, 1980) . . . . . . . . . . . . . . . 16 Klor's Inc. v. Broadway-Eale Stores, Inc.,
359 U.S. 207 (1959) . . . . . . . . . . . . . . 7 Martino v. Mcdonald's System, Inc., 598 F.2d 1079 (7th Cir. 1979), cert. denied, 444 U.S. 966 (1979) . . . . . . . . . . . . . . 9 Milavetz v. Northwestern Bell Telephone Co.,
1976 CCH Trade Cas. 1 60,970 (D.Minn. 1976) . . 9
- ii -
. ... ..~ ,. .-. .
Miccallcntouar Page-National' Life & Accident Insurance Co.
- v. Parkinson, 136 F.2d 506 (10th Cir. 1943) . . . . . . . . . . . . . . . . 9 Official Airline Guides, Inc. v. FTC, 530 F.2d 920 (1980), cert. denied, 450 U.S. 917 (1981) .. . . . . . . . . . . . . 12, 13 Parker v. Brown, 317 U.S.
341 (1943) . . . . . . . . . .. . . . . . . . . 9
. Railroad Presidents Conference v.
- Noerr Motor Freight, Inc., 365 U.S.
! 127 (1961) . . . . . . . . . . . . . . . . . . . 10 South Carolina Council of Milk Producers, Inc. v. Newton, 360 F.2d 414 (4th Cir.),
cert. denied, 385 U.S. 934 (1966) . . . . . . . 11, 12
! United States v. E.I. du Pont de Nemours & Co.,
351 U.S. 377 (1956) . . . . . . . . . . . . . . 2, 4 United States v. Griffith, 334 U.S. 100 (1948) . . . . . . . . . .. . . . . . 11, 12 United States v. Parke, Davis & Co.,
362 U.S. 29 (1960) . . . . . . . . .. . . . . . 8 United States v. Southern Motor Carriers Rate Conference, Inc., 467 F.Supp.
471 (n.D. Ga. 1979) . . . . . . . . . . . . . .- 9 i
Wainwright v. National Dairy Products Corp.,
l 304 F. Supp. 567 (N.D. Ga. 1969) . . . . . . . . 9 West Texas Utilities Co. v. Texas Electric Service Co., 470 f. Supp. 798 -
(N.D. Tex. 1979) . . . . . . . . . . . . . . . . 13 Yoder Bros., Inc. v. California-Florida ,
Plant Corp., 537 F.2d 1347 (5th Cir.
1976), cert. denied, 429 U.S. 1094 (1977) . . . 4 1
Miscellaneous:
Atomic Energy Act t Section 102b, 42 U.S.C. 2132(b) . . . . . . . . 17 3 J. von Kalinowski, Antitrust Laws
. and Trade Regulation 1 8. 02 [2]
.(1981 ed.) . . . . . . . . . . . . . . . . . . . 3 P. Areeda & D. Turner, Antitrust Law 1 212b (1978) . . . . . . . . . . . . . . . . . 10
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE NUCLEAR SAFETY AND LICENSING BOARD
)
In The Matter Of )
)
Florida Power & Light Company ) Docket No. 50-389A
)
(St. Lucie Plant, Unit No. 2) ) January 26, 1982 l
. ) l REPLY MEMORANDUM OF FLORIDA POWER & LIGHT COMPANY REGARDING OBJECTIONS FILED BY FLORIDA CITIES In this Reply Memorandum, Florida Power & Light Company
("FPL") addresses the Florida Cities' objections to the Board's Memo-randum and Order of December 11, 1981.1 As FPL demonstrates below, the Board correctly granted summary disposition for FPL on each of the issues that the Cities raise. Accordingly, the Cities' objec-tions provide no basis for modifying the Board's decision and should be denied in their entirety.
I.. OBJECTIONS ON WHICH THE CITIES SEEK ORAL ARGUMENT A. The Board Correctly Determined That A Separate Market Does Not Exist For Nuclear Power ,
In his recent summary judgment decision in the Cities' pending treble damage action against FPL, Judge King determined 1
In addition to opposing the Cities' objections on their merits, FPL wishes to express its concern about the unspoken assump-tion on which the Cities are proceeding. The Cities evidently be-lieve that, at any hearing on relief that the Board conducts, they should receive an additional opportunity to present evidence which demonstrates a " situation inconsistent with the antitrust laws."
Based on such evidence, the Cities apparently hope, the Board will determine that " situations inconsistent" exist beyond thos,e identified in its December 11, 1981 decision.
(footnote cont'd)
that a separate market does not exist under the antitrust laws for electricity generated by nuclear facilities. In the Memorandum and Order, based on its own review of the record, the Board " accept (ed]
Judge King's finding." Summary disposition for FPL was appropriate, the Board concluded, because the Cities had failed to demonstrate a
" genuine issue of fact in support" of the existence of a nuclear mar-ket. (Memorandum and Order, 32).
In an effort to refute the Board's conclusions, the Cities argue at length that nuclear facilities possess certain features lack-ing in other types of generation. (Objections, 5-11). The Cities' argument, however, focuses on the wrong issue. Their recitation of the unique features of nuclear facilities cannot obscure the basic fact that all generating units produce the same end-product -- elec-tricity. Under cases construing the Sherman Act, it is the identity 4
of the product offered for sale, and not how it is produced, that is controlling in defining the relevant market.
i The Supreme Court has held that, "[ijn determining the market under the Sherman Act, it is the use or uses to which the com-modity is put that control." United States v. E.I. du Pont de Nemours .
& Co., 351 U.S. 377, 395-396 (1956) (emphasis added). According to the Court, products will occupy the same market where they are " reasonably interchangeable by consumers for the same purposes." 351 U.S. at 395.
(footnote cont'd)
The Cities should not be permitted to broaden the scope of these proceedings in this manner. Having sought and obtained summary dis-position, it would be improper for the Cities to receive a further opportunity to present evidence on antitrust theories that the Board declined to adopt when it granted the Cities' motion; rather they must accept the Board's findings of a " situation inconsistent" and frame their case on relief accordingly.
A noted antitrust authority has explained the Court's approach as follows:
"The test of reasonable interchangeability emphasizes two factors. They are (1) use or uses, and (2) physical characteristics. If the substi-tutes have essentially the same end uses as the product, they are deemed to be interchangeable with each other and may, therefore, be included in the same product market. Similarly, if the physical characteristics of the substitutes are essentially the same as those of the product, so that customers may practicably switch from one commodity to another, they are part of the same market."
3 J. von Kalinowski, Antitrust Laws and Trade Regulation 1 8.02[2),
8-18 (1981 ed.) (emphasis added). The Appeal Board has likewise recognized the importanca of a product's ultimate uses in defining the relevant market. In Consumers Power Company (Midland Plant, Units 1 and 2), ALAB-452, 6 NRC 892, 960 (1977), the Appeal Board emphasized that the "[d]etermination of the competitive market for commodities depends on how different from one another are the offered commodities in character or use [and] how far buyers will go to sub-stitute one commodity for another" (emphasis added).
Under these criteria, there is absolutely no basis for dif-ferentiating electricity produced by nuclear units from electricity derived from other sources. As the Board found, "both forms of elec-tricity are physically indistinguishable to users and have exactly the same value to them." (Memorandum and Order, 31). Judge King reached the same conclusion, stressing that " consumers use the electricity produced without regard to the production source." (Decision, 7).
To challenge these findings, the Cities rely on decisions which purportedly demonstrate the importance of price differences in defining product markets for antitrust purposes. But there is no
reported decision in which a mere difference in the price of other-wise fungible products has been held to be sufficient to justify the creation or recognition of separate product markets. In fact, in the few cases in which such a claim has been advanced, it has been l
summarily rejected. See, e.g., United States v. E.I. du Pont de Nemours & Co., supra, 351 U.S. at 394-96; Yoder Bros., Inc. v. Cali-fornia-Florida Plant Corp., 537 F.2d 1347, 1368 (5th Cir. 1976), cert.
denied, 429 U.S. 1094 (1977).
Equally important, the materials submitted by the Cities at most suggest that nuclear power can be generated at lower cost than power derived from other sources.1 The Cities have failed to produce any evidence that nuclear-generated electricity is customarily sold at different prices than electricity produced by other means. Nor would such a showing be possible. Utility systems do not vary their retail and wholesale rates depending on the method of generation used to sup-ply a particular customer's electrical needs. Rather, in accordance with both industry practice and regulatory requirements, utilities normally set uniform rates that reflect the total costs of operating 1
Even if cost considerations were controlling, Cities could
.not show that cost differences between nuclear and other types of generation were sufficiently great to warrant creating a separate submarket for nuclear power. Evidence before the Board demonstrates that both the Florida Municipal Power Agency ("FMPA") and individual cities are presently considering access to nuclear units as merely
[ one of several viable power supply options; other options receiving equal attention include obtaining interests in coal-fueled and hydro-electric generating plants and purchasing wholesale power from other utilities. See FPL's August 7, 1981 Response to Cities' Motion, at 17-19. Moreover, no utility in the United States has ordered a nu-clear generating unit since 1978, while orders for conventional units have continued to be placed. See pp. 133-34 of Appendix F to FPLs August 7, 1981 Response. This situation demonstrates that, at pre-sent, many utilities view nuclear facilities as less advantageous than other forms of generation.
. .-. - - - . = . . . -. .
their generating systems. Indeed, any other approach would undoubt-edly be unacceptable to electricity users. As the Board observed,
"[t]here 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 elec-tricity generated some other way." gMemorandum and Order, 32).
In their objections, the Cities emphasize that, in prior proceedings, this Board and the Appeal Board have recognized specific submarkets for the sale or purchase of electricity at the wholesale level. These submarkets, however, did not reflect different methods-of generating power. Rather, they reflected differences in the quality and nature of the electrical services being provided, differ-ences that affected the uses for which those services were suitable.1 On no occasion has the Appeal Board or this Board even suggested that electricity can be assigned to a separate product market merely be-cause of its method of generation.
While the Cities have strenuously resisted the Board's grant of summary disposition, they have failed to identify any issue of fact which, if resolved in their favor, would establish the existence of a ,
nuclear power market. Indeed, the basic facts that refute the exist-ence of such a market are uncontested; the Cities themselves do not dispute.that the physical characteristics and uses of nuclear and i
1 For example, in Consumers Power Company (Midland Plant Units 1 and 2), ALAB-452, 6 NRC 892, 970 (1977), the Appeal Board recognized separate markets for coordination services and firm power. As de-scribed by the Appeal Board, the defining characteristics of each mar-ket related to the duration for which, and the circumstancer under which, power would be supplied, not to how that power was generated.
7 For example, the defining characteristic of " firm" power was its I guaranteed availability, which made it a dependable source of elec-tricity.
non-nuclear power are identical. Since no set of facts the Cities might prove could support their position, further proceedings on the existence of a nuclear market would be unproductive. Accordingly, the Board should reaffirm its conclusion that a separate nuclear power market does not exist as a matter of law.1 B. The Board Correctly Rejected The Cities' Claim That The Settlement License Conditions Violate Section 1 Of The Sherman Act In their objections, the Cities reiterate their claim that FPL violated Section 1 of the Sherman Act by agreeing to settlement license conditions which provide some, but not all, municipalities with access to St. Lucie Unit No. 2. According to the Cities, FPL and the municipalities named in the settlement license conditions have entered into an illegal " conspiracy" to deny nuclear access to the re-maining cities.2 The Cities argue that the Board erred in rejecting their Section 1 claims as a mstter of law.'
The Cities' position rests on a total mischaracterization of the settlement license conditions. Those conditions merely assure 2
The Cities imply in their Objections (pp. 13-14) that FPL has acknowledged that there are disputed issues of fact concerning the existence of a nuclear market. On the contrary, FPL's position has consistently been that this issue can be resolved against the Cities as a matter of law. See FPL's August 7, 1981 Response, at 15-22.
- Apart from its other deficiencies, this argument puts Cities' counsel in the untenable position of claiming that those cities which are named in the settlement license conditions have violated Section 1 of the Sherman Act by " conspiring" with FPL to deny nuclear access to the remaining cities. Insofar as Cities' counsel are arguing that some of their clients have joined with FPL in a group boycott of other of their clients, counsel find themselves caught in a patent conflict-of interest.
Memorandum and Order, 31.
certain named cities an opportunity to obtain an ownership interest in St. Lucie No. 2. They contain no provision which, directly or in-directly, prevents FPL from dealing with the remaining cities. Thus, the settlement license conditions leave FPL free to enter into trans-actions with those cities to the extent it sees fit. If FPL has not offered ownership shares in St. Lucie Unit No. 2 to other municipal systems, it is not because FPL is barred from doing so by the settle-ment license conditions. Rather, acting unilaterally, FPL has simply determined that such a course would be contrary to its business interests.
Indeed, the settlement license conditions, and subsequent actions by the Cities in accordance with those conditions, plainly establish the absence of any " conspiracy" to restrict access to St.
Lucie Unit 2.Section VII(f) of the license conditions permits a transfer to FMPA of all or a portion of the named cities' entitlements to St. Lucie Unit No. 2. Such transfers have in fact been made. As a consequence, municipalities unmentioned in the license conditions have received an opportunity to participate as owners in St. Lucie Unit No.
- 2. The Cities' claim that a " group boycott" has excluded these cities ,
from access to St. Lucie Unit No. 2 is thus demonstrably incorrect.
Under these circumstances, the Section 1 cases on which Cities rely are simply inapposite. In each of these cases, two or more firms entered into agreements which restricted their freedom to deal with third parties.2 Here, the absence of such an agreement 1
The factual circumstances of the cases relied upon by Cities graphically illustrate this point. In Klor's Inc.v. Broadway-Hale Stores, Inc. 359 U.S. 207 (1959), several manufacturers and department (footnote cont'd)
1 l
is confirmed by the settlemr.nt licence conditions themselves. Since FPL's refusal to share St. Lucie Unit No. 2 with the "outside" Cities was strictly a unilateral action, no violation of Section 1 could possibly have occurred.
The Cities' arguments are untenable in another fundamental respect. Before the settlement license conditions were finalized, the Cities received a full opportunity to present their views to this Board. Nevertheless, while the Cities objected to certain aspects of the conditions, they did not contend that the omission of the "out-side" Cities was itself a violation of Section 1 of the Sherman Act.
Moreover, after the Board had approved the settlement license condi-tions, the Cities made no effort to seek relief from the Appeal Board, the Commission or the courts. Having failed to challenge the validity of the settlement license conditions under Section 1 of the Sherman (footnote cont'd) stores entered into an agreement under which the manufacturers would either not sell their products to a particular retailer or only sell those products at discriminatory prices. In Albrecht v. Herald Co., ,
390 U.S. 145 (1968), a newspaper and an independent carrier had entered into an agreement that papers could only be resold at speci-fled prices; when the carrier exceeded these prices, the newspaper entered into arrangements with other carriers for the purpose of forcing the first carrier to lower its price. In United States v.
Parke, Davis & Co., 362 U.S. 29 (1960), a drug company established resale prices for its products at both the wholesale and retail levels and required wholesalers to agree not to deal with retailers who de-viated from the prices specified. In Associated Press v. United States, 326 U.S. 1 (1945), newspapers belonging to the Associated Press agreed on by-laws which prohibited member papers from dissem-inating news to non-members, and the Associated Press and-Canadian news service entered into a contract which obligated the two services to furnish news only to each other. Finally, in Gamco Inc. v. Pro-vidence Fruit & Produce Bldg., Inc., 194 F.2d 484 (1st Cir.), cert.
denied, 344 U.S. 817 (1952), the owners of a centrally located market had agreed with the market's tenants to deny space to a competing fruit and vegetable wholesaler.
Act when they were approved, the Cities cannot press such a challenge now.1 Finally, even if the Cities' Section 1 claims were timely, they would have to be summarily rejected for yet another essential reason. The settlement license conditions do not represent a purely private arrangement. On the contrary, the provisions of those condi-tions governing access to St. Lucie Unit No. 2 reflect the views of the Department of Justice and the NRC staff. Moreover, both the staff and the Department advised the Board that these provisions would correct any anticompetitive situation that might otherwise exist. On the basis of these recommendations, the Board itself ap-proved the settlement license conditions, and thus concurred that they were in the public interest.
Under a long line of cases, conduct which is undertaken for the express purpose of satisfying the demands of governmental bodies, and has been directly approved by those bodies, is immune from chal-lenge under the antitrust laws.2 Here, the terms on which FPL has 2
It is established that where parties to a proceeding have failed .
to challenge a compromise or settlement which is accepted and approved by the tribunal, they cannot later claim that the settlement terms are unfair or unlawful. See Martino v. Mcdonald's System, Inc., 598 F.2d 1079, 1083-1085 (7th Cir. 1979), cert. denied, 444 U.S. 966 (1979); Green v. Ancora-Citronelle Corp., 577 F.2d 1380, 1383 (9th Cir. 1978); National Life & Accident Insurance Co. v. Parkinson, 136 F.2d 506, 509 (10th Cir. 1943).
2
"[I]f a private citizen has done nothing more than obey the com-mand of [ sovereign authority), it would be unjust to conclude that he has.thereby offended federal law." Cantor v. Detroit Edison Co., 428 U.S. 579, 592 (1976). "[A] private individual acting at the command of a . . . sovereign [can) avoid the effect of federal antitrust laws
. . .." United States v. Southern Motor Carriers Rate Conference, Inc., 467 F. Supp. 471, 479 (N.D. Ga. 1979), citing Parker v. Brown, 317 U.S. 341, 352 (1943). See Milavetz v. Northwestern Bell Telephone Co., 1976 CCH Trade Cases 1 60,970 (D. Minn. 1976); Wainwright v.
National Dairy Products Corp., 304 F. Supp. 567 (N.D. Ga. 1969)
(footnote cont'd)
afforded access to St. Lucie Unit No. 2 were formally approved by governmental bodies charged with implementing the antitrust laws.
For this reason, FPL's actions under the settlement license conditions could not possibly be a violation of the Sherman Act.
C. There Is No Basis For The Cities' Argument That Certain Municipalities Should Be Treated As "Inside" Cities Under The Settlement License Conditions The Cities also argue that certain municipalities omitted from the settlement license conditions have the same geographical re-lationship to FPL's system as the "inside" Cities. While the precise significance that the Cities assign to this factor is unclear, it plainly does not justify any additional relief.
First, the municipal systems that the Cities seek to add to the list of "inside" Cities cannot reasonably be described as being within FPL's service area. The Cities assert that five of the "outside" Cities " abut rural electric cooperatives which are served at wholesale by FPL." (Objections, 22). In fact, the electric systems of four of the five cities in question do not abut any rural electric cooperative, and of these, three are entirely surrounded by the facilities of Florida Power Corporation.1 The fifth city, (footnote cont'd)
(holding that Parker is available as a defense for private parties who follow prices set by state milk commission); and P. Areeda & D- Turner, Antitrust Law 1 212b (1978) at 69-70. "[W]here a restraint upon trade
. . . is the result of valid governmental action . . . no violation of the (Sherman] Act can be made out." Railroad Presidents Conference v.
Noerr Motor Freight, Inc., 365 U.S. 127, 136 (1961). "[I]t is funda-mental that neither the Sherman Act nor any other antitrust statute restricts the U"ited States Government in directing action in complete contradiction to antitrust policy . . .. Hecht v. Pro-Football, Inc.,
444 F.2d 931, 935 (D.C. Cir. 1971), cert. denied, 404 U.S. 1047 (1972).
1 FPL believes that the fourth city, Alachua, while not technically surrounded, does not abut any REA cooperative system served by FPL.
Ft. Meade, is adjacent to Peace River Cooperative distribution facil-ities that are served at wholesale by Florida Power Corporation.1 Moreover, the Cities apparently assume that, having agreed to share ownership of St. Lucie Unit No. 2 with the cities named in the settlement license conditions, FPL is now legally required to ac-cord identical treatment to all other cities that are arguably similarly situated. The settlement license conditions, however, do not confer any legal rights on unnamed cities but resolve FPL's dif-ferences with the NRC staff and the Department of Justice. As a result, the actions which FPL agreed to undertake under those condi-tions cannot be used as the basis for imposing obligations on FPL that it would not otherwise possess. If FPL had no duty to afford nuclear access to unnamed cities before the settlement license conditions were approved, it can have no such duty now.
D. The Board Correctly Found That FPL Has Not Exercised Any Monopoly Power It Possesses In Its Service Area To Injure The "Outside" Cities In its Memorandum and Order, the Board found that there had been "no showing that the exercise of monopoly power within FPL's ter-ritory caused any harm to the outside Cities, with which FPL has steadfastly refused to compete." (Memorandum and Order, 32). The Cities challenge this conclusion on the asserted ground that it con-flicts with 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).
1 FPL also provides service at wholesale to an electrically isolated distribution system that is owned by Peace River but located elsewhere in Florida.
As the Board properly recognized, these decisions do not apply here. In Griffith, the Supreme Court held that it was unlawful for a theater operator to use its monopoly power in one geographic market to enhance its competitive position in other markets where it owned theaters. In South Carolina Council of Milk Producers, the Fourth Circuit upheld the right of milk producers to challenge a re-tail price cutting scheme by milk processors and grocers that was alleged to have impaired competition in the wholesale milk market.
In each case, it was alleged that, by engaging in anticompetitive conduct in one market, the defendant had adversely affected competi-tive conditions in a second market in which the defendant had a sub-stantial economic stake. Moreover, South Carolina Council of Milk
~
Producers involved concerted action and thus related to Section 1 of the Sherman Act, not Section 2.
By codtrast, the courts have consistently recognized that the antitrust laws do not apply to unilateral conduct by an asserted monopolist that is alleged to have adversely affected firms in a market where the monopolist does not compete. For example, in Official Air-line Guides, Inc. v. FTC, 630 F.2d 920 (1980), cert. denied, 450 U.S. ,
917 (1981), the Second Circuit reversed an FTC decision forbidding a publisher of flight schedules from refusing to list commuter airline flights. To justify its decision, the court emphasized that the publisher, "though possibly a monopolist in the airline sche-dule publishing industry, admittedly had no anti-competitive motive or intent with respect to the airline industry and is engaged in a different line of commerce from that of the air carriers."
630 F.2d at 926. The court distinguished prior FTC cases condemning refusals to deal in one market that had an adverse impact in another
market on the ground that "the utilization of monopoly power in one market . . . resulted in discrimination and the curtailment of com-petition in another market in which the monocolist himself was also engaged." Id. (emphasis added).1 Here, there is no evidence that FPL's actions within its retail service area have caused any competitive injury to the "out-side" Cities. On the contrary, extensive testimony by many of these Cities' own officials demonstrate that there is no actual or potential competition between FPL and utilities outside its service area.2 In light of this evidence, the Board was plainly correct in finding that FPL's actions inside its service area have not caused any com-petitive injury to the "outside" Cities.8 E. The Board Correctly Found That FPL's Refusal To Share Ownership Of Its Nuclear Units With The Cities Was The Result Of Sound Business Judgment In its Memorandum and Order, the Board adopted Judge King's findings that FPL did not engage in anticompetitive acts in acquiring 8
The absence of competition between the defendant and enti-ties allegedly injured by its conduct has justified the denial of ,
relief in antitrust cases involving the electric utility industry.
See West Texas Utilities Co. v. Texas Electric Service Co., 470 F.
Supp. 798, 820-824 (N.D. Tex. 1979) (holding that alleged refusals to interconnect did not violate the Sherman Act in the absence of meaningful competition between the plaintiffs and defendants).
- This testimony is presented in Appendix F of FPL's August 7, 1981 Response.
8
- FPL recognizes that the Board found that the "outside" Cities may have been injured by the territorial division between FPL and Florida Power Corporation found in Gainesville Utilities Dept. v.
Florida Power & Light Co., 573 F.2d 292 (5th Cir.), cert. denied, 439 U.S. 966 (1978) and that evidence concerning the existence of a pen-insula-wide market may be relevant in determining the relief to which the "outside" Cities are entitled by virtue of that market division.
See Memorandum and Order, 33. As discussed in its Objections, FPL believes that the Board's reliance on Gainesville to support its (footnote cont'd)
14 -
or maintaining its nuclear facilities and that FPL's unwillingness to share those facilities with the Cities had "not been shown to be any-thing but a sound business decision." (Memorandum and Order, 33-34).
The Cities challenge these determinations, arguing that evidence be-fore the Board demonstrates that FPL's denial of nuclear access "can only be explained by anticompetitive intent." (Objections, 33).
The Cities do not dispute that, if FPL had agreed to share its nuclear units with other municipal systems, it would have had to replace its lost capacity with capacity from other units at higher costs -- and that, as a result, FPL and its customers would effec-tively be subsidizing other utility systems. Nor do the Cities dis-pute that no City expressed any interest in participating in St. Lucie Unit No. 2 until 1976,2 when FPL's plans for financing and con-structing that facility had already been completed, two other FPL nuclear units were in service, and construction of a third was nearly completed. Finally, it is undisputed that neither the Cities nor any other utility bore any of the financial risks associated with FPL's decision to build and operate nuclear generating units. If those units had proven uneconomical, or if some disaster like Three Mile .
Island had caused them to cease operation, the resulting losses would have fallen on FPL and its customers, without any obligation by the Cities to come to FPL's rescue.
(footnote cont'd) findings was erroneous. For present purposes, however, it should be emphasized that the impact of any territorial division between FPL and FPC on the "outside" Cities is entirely different from the question of whether unilateral actions taken by EPL within its service area caused competitive injury to those Cities.
2 Pursuant to NRC license conditions, FPL offered participa- i tion in St. Lucie No. 2 to Homestead and New Smyrna Beach in 1974. j l
l
FPL submits that these circumstances provide ample business justification for its unwillingness to share its nuclear facilities with the cities. The only contrary evidence identified by the Cities purports to demonstrate an awareness by FPL's management that, because of their small size and lack of coordination, the Cities would be un-able to construct nuclear facilities.1 Even if FPL was aware that the Cities lacked independent access to nuclear power, however, there would still be no basis for assigning an "anticompetitive intent" to FPL.2 The Cities' arguments imply that FPL had an obligation to help municipal systems overcome the disadvantages resulting from their small size and lesser efficiency. Recent judicial decisions make it clear that the antitrust laws impose no such obligation.
In Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093 (1980), it was alleged that Kodak had abused its monopoly position by failing to "predisclose" sufficient information concerning a new camera system to permit com-petitors simultaneously to enter the market. In reversing the trial court's verdict for Berkey on this claim, the Second Circuit acknow-ledged that the effect, and indeed the purpose, of the manner in ,
which Kodak had chosen to introduce the new system was to give Kodak at least a temporary advantage over its rivals. The court held, however, that these facts did not demonstrate that Kodak's actions were anticompetitive:
"a large firm does not violate 5 2 simply by reaping the competitive rewards attributable to Id.
2 FPL disagrees that the Cities lacked independent access to nuclear generation or that FPL believed that, without its assistance, Cities could not obtain such access.
its efficient size, nor does an integrated busi-ness offend the Sherman Act whenever one of its departments benefits from association with a division possessing a monopoly in its own market.
So long as we allow a firm to compete in several fields, we must expect it to seek the competitive advantages of its broad based activity -- more efficient production, greater ability to develop complementary products, reduced transaction costs, and so forth. These are gains that accrue to any integrated firm, regardless of its market share, and they cannot by themselves be considered uses of monopoly power."
603 F.2d at 276. The court stressed that even a monopolist had no obligation to help its rivals overcome their weaknesses:
"[A] firm may normally keep its innovations secret from its rivals as long as it wishes, forcing them to catch up on the strength of their own efforts after the new product is introduced. . . . It is the possiblity of success in the marketplace, at-tributable to superior performance, that provides the incentives on which the proper functioning of our competitive economy rests. If a firm that has engaged in the risks and expenses of research and development were required in all circumstances to share with its rivals the benefits of thbse en-deavors, this incentive would very likely be vitiated."
Id., 283 (citation omitted). Other recent cases have adopted similar conclusions. E.g., California Computer Products, Inc. v. International Business Machines Corp., 613 F.2d 727 (9th Cir. 1979); In the Matter ,
of E.I. du Pont de Nemours & Co., FTC Docket No. 9108 (decided Octo-ber 20, 1980).
These principles are controlling here. As Judge King found (Decision, 12), FPL was entitled "to reap what it has sown" -- even j if its construction of nuclear units gave it competitive advantages that the Cities could not obtain on their own.
- 17 _
II. OBJECTIONS RESERVED BY THE CITIES FOR APPEAL l
l FPL has the following brief comments on the objections that the Cities have reserved for appeal:
- 1. When it adopted Section 105c in its present form in 1970, Congress exempted from antitrust review facilities "the con-struction . . . of which was licensed pursuant to [ subsection 104b]
prior to enactment" of the 1970 amendments.1 However, Congress created an express exception from this provision for "any person who
[previously] intervened or who sought by timely written notice . . .
to intervene" to raise antitrust issues with respect to the licensing of any such facility.2 Turkey Point Unit Nos. 3 and 4 and St.
Lucie Unit No. 1 received construction permits under Section 104b prior to enactment of the 1970 legislation. No one timely intervened or sought to intervene in those proceedings to raise antitrust issues.
Consequently, the Cities' lack of opportunity to raise antitrust is-sues in the wake of 1970 legislation was the result of their failure to assert their claims in a timely fashion.
- 2. The Cities are correct that Florida Power & Light Company v. Federal Energy Regulatory Commission, (5th Cir. No.
80-5259) does not reverse FERC Opinion No. 57. However, the Fifth Circuit's decision grew out of the same FERC docket as Opinion No.
57 and, hence, the Fifth Circuit's interpretation of that Opinion is definitive in construing its scope.
Atomic Energy Act, Section 102b, 42 U.S.C. 2132(b).
2 Id., Section 105c(3), 42 U.S.C. 2135(c)(3).
18 -
- 3. FPL does not disagree with the Cities' statements.
- 4. Document 16 is an interim report of a subcommittee of the Florida Operating Committee ("FOC"). As described in para-graphs 4-8 of the Supplemental Affidavit of Ernest Bivans, FPL did not in fact acquiesce in the report's contents, and statements contained in the report are therefore not admissible against FPL.
- 5. FPL disagrees with the Cities' characterization of the risks it assumed during the construction at.! operation of its nuclear units. The nature and magnitude of these risks are accurately described in the affidavit of Robert J. Gardner, which accompanies FPL's August 7, 1981 Response.
- 6. Nothing in the record cited by the Cities casts doubt on Judge King's and the Board's conclusions as to Tallahassee's lack of earnestness in seeking nuclear power. The facts presented by the Board (Memorandum and Order, 34) have not been disputed by the Cities.
- 7. FPL disagrees that the Cities can obtain the benefits of according collateral estoppel effect to the Gainesville decision while escaping the findings in Gainesville that are unfavorable to their position. In any event, it would be grossly inequitable if Gainesville were binding on FPL but not the Cities and, under such circumstances, the decision should not receive collateral estoppel effect for any purpose. ,i
- 8. The collateral estoppel issues relating to FPC-Op' inion 517 have been addressed in prior briefs filed by FPC. <
l l
l l
, y-19 -
CONCLUSION.
.s None of the Cities' objections provides any basis for modifying the Board's Memorandum and Order of December 11, 1981, and those objections should therefore be denied.
Res etfully submitted f . kAy ,
Herbert Dym Covington & Burling 1201 Pennsylvania Avenue, N.W.
P.O. Box 7566 Washington, D.C. 20044 (202) 662-5520 J.A.1Bouhnight, Jr.
Lowenstein, Newman, Reis & Aexlrad 1025' Co2meeticut Avenue, N.W.
Washington, D.C. 20036 Attorneys for Florida Power &
Light Company.
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BEFORE THE ATOMIC SAFETY AND LICENSING BOARD
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j' In the Matter of )
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FLORIDA POWER & LIGHT COMPANY ) Docket No. 50-389A
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,' 3(St Lucie Plant, Unit No. 2) )
.~-- I CERTIFICATE OF SERVICE
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I hereby certify that copies of the foregoing
" Reply Memorandum of Florida Power & Light Company
'n,[ Regarding Objections Filed by Florida Cities" were served on the following persons by deposit in the U.S. Mail, first clas'q, postage prepaid this 26th day of January, 1982.
Peter B. Bloch, Esquire Alan S. Rosenthal, Esquire
". 2 Atomic Safety and Licensing Atomic Safety and Licensing
' Board Appeal Board Panel jg, > U.S. Nuclear Regulatory U.S. Nuclear Regulatory
.j Commission Commission
> Washington, D.C. 20555 Washington, D.C. 20555
%[ r' Robert M. Lazo, Esquire Christine N. Kohl, Esquire Atomic Safety and Licensing Atomic Safety and Licensing Board Appeal Board Panel 4
, ,/ f U.S. Nuclear Regul,atory U.S. Nuclear Regulatory
. . Commission Commission 20555
/[ Washington, D.C. Washington, D.C. 20555 Michael A. Duggan, Esquire Stephen F. Eilperin, Esquire College of Business Atomic Safety and Licensing
," Administration Appeal Board Panel Univer'sity _of\ Texas U.S. Nuclear Regulatory Austin, Texas 78712 Commission Washington, D.C. 20555 Ivan W. Smith, Esquire Atomic Safety and Licensing Docketing and Service Station Board Office of the Secretary U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, D.C. 20555 Washington, D.C. 20555
~
Atomic Safety and Licensing Atomic Safety and Licensing
,, i Board Appeal Board Panel U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission
- Commission Washington, D.C. 20555 Washington, D.C. 20555 i ,
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r Thomas Gurney, Sr., Esquire Robert R. Nordhaus 203 North Magnolia Avenue Van Ness. Feldman, Sutcliffe, Orlando, Florida 32802 Curtis & Levenberg 1050 Thomas Jefferson Street, N.W.
Robert E. Bathen Seventh Floor Fred Saffer Washington, D.C. 20007 R.W. Beck & Associates P.O. Box 6817 Benjamin H. Vogler, Esquire Orlando, Florida 32803 Ann P. Hodgdon Counsel for NRC Staff Robert A. Jablon, Esquire U.S. Nuclear Regulatory Alan J. Roth, Esquire Commission Spiegel & McDiarmid Washington, D.C. 20555 2600 Virginia Avenue, N.W.
Washington, D.C. 20037 Charles R.P. Brown, Esquire Brown, Paxton and Williams William C. Wise, Esquire 301 South 6th Street Suite 500 P.O. Box 1418 1200 - 18th Street, N.W. Fort Pierce, Florida 33450 Washington, D.C. 20036 George R. Kucik, Esquire Janet Urban, Esquire Ellen E. Sward, Esquire P.O. Box 14141 James H. Hulme, Esquire Washington, D.C. 20044 Arent, Fox, Kintner, Plotkin &
Kahn William H. Chandler, Esquire 1815 H Street, N.W.
Chandler, O'Neal, Avera, Gray & Washington, D.C. 20006 Stripling Post Office Drawer O Argil L. Toalston Gainesville, Florida 32602 Acting Chief Antitrust and Economic Analysis Donald A. Kaplan, Esquire Section Robert Fabrikant, Esquire U.S. Nuclear Regulatory Antitrust Division Commission '
U.S. Department of Justice Washington, D.C. 20555 Washington, D.C. 20530 Reubin O.D. Askcw Greenberg, Traurig, Askew, Hoffman, Lipoff, Quent:1
& Wolff, P.A.
1401 Brickell-Avenue Miami, Florida 33131 g \
wLd Herbert Dym R . j' Covington & Burling 1201 Pennsylvania Avenue, N.W.
P.O. Box 7566 Washington, D.C. 20044 January 26, 1982
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