ML20058A561
| ML20058A561 | |
| Person / Time | |
|---|---|
| Issue date: | 09/23/1981 |
| From: | Eilperin S NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| To: | |
| Shared Package | |
| ML20058A382 | List:
|
| References | |
| FOIA-92-436, TASK-AIA, TASK-SE SECY-81-562, NUDOCS 8201070316 | |
| Download: ML20058A561 (11) | |
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September 23, 1981
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ADJUDICATORY ISSUE (Affirmation)
For:
The Commissioners From:
Stephen F. Eilperin, Solicitor Subj ect :
!!EW DEVELOP!!ENT IN FLORIDA CITIES A11D FLORIDA POWER & LIGHT A11TITRUST !!ATTER r
Purpose:
To advis e -w i
in our view Discussion:
Background
In May, 19 7 8, the U.S. Court of Appeals for the Fif th Circuit ruled that the Florida Power & Light Company (FP&L) had conspired with the Florida Power Company to divide the wholesale power market in Florida, in violation of the antitrust laws.
Gainesville Utilities Departr. ant v.
Florida Power & Light Company, 573 F.2d 292, cert. denied, 439 U.S. 966 (1978).
The court's decision came on appeal from a district court's finding that no such conspiracy had been proven.
The Fif th Circuit, in reversing the lower court, found that the uncontested evidence in the record compelled a finding of conspiracy, and it remanded the case to the lower court for a determination as to whether the plaintiff City of Gainesville had been harmed by the conspiracy, and if it had, the extent of the damages that should be awarded.
s201070316 930412 Section 105a of the Atomic Energy Act provides
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2 violated any of a number of antitrust laws in the conduct of the NRC-licensed activity, the Commission "may suspend, revoke, and take such other action as it may deem necessary with r esp ect to any license issued by the Commission 42 U.S.C.
2135.
Florida Power & Light Company is a Commission licensee, holding two construction permits (St. Lucie 1 and 2) and two operating licenses (Turkey Point 3 and 4).
On July 27, 1978, the Commission issued an order requesting the views of interested parties, including the Department of Justice and the NRC staff, as to the implica-tions of the Fif th Circuit's Gainesville decision for the Commission's antitrust ~ responsibilities.
Specifically, the order asked for comments on whether the Commission should, on the basis of the Fifth Circuit's decision, institute a Sec-tion 105a proceeding at once, or await the decision of the district court in the remanded proceeding; whether any 105a proceeding that mightbeinstitutedshouldbeconsolidatedwitgj the Section 105c proceeding already underway:
and if this was not the appropriate time to institute a Section 105a proceeding, when the issue should be revisited.
1/
FP&L applied for a construction permit for St. Lucie 2 in 1973, under Section 103 of the Atomic Energy Act.
In accordance with Section 105c of the Act, the application was referred to the Attorney General for his advice on the desirability of a hearing to determine whether licensing the proposed facility would create or maintain a situation inconsistent with the antitrust laws.
At the time, the Justice Department did not recommend institution of a Sec-tion 105c proceeding.
In 1976, some 2-1/2 years af ter the CP application was docketed, the Florida Cities, a group of approximately 20 municipalities and municipal utilities,
petitioned the Commission for institution of a Section 105c proceeding.
The Cities claimed that they had refrained relied on FP&L'g for a hearing earlier only because they had from petitionin s promise to allow them to participate in future nuclear facilities built by the company.
Now, accord-ing to the Cities, FP&L was reneging on that promise.
Despite the tardiness of the intervention petitions, the Licensing Board found good cause for the delay and permitted intervention.
5 URC 789 (1976).
That decision was affirmed by the Appeal Board, 6 NRC 8 (1977), and by the Commission, 7 NRC 939 (1978).
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On December 21, 1979, the Commission issued an order declining to initiate a Section 105a pro-c eeding.
10 URC 767.
In its order, the Commis-sion observed that the i ugislative history-of Section 105a was unequivocal:
the Commission 's authority to take action af ter a court finding that a licensee had violated the antitrust laws i
was " permissive and not mandatory," according to Representative Chet Holifield, in hearings before the Joint Committee on Atomic Energy in 1954.
The Commission quoted from a colloquy between Rep. Holifield and William Mitchell, the Atomic Energy Commission General Counsel, in which Mitchell made clear the purpose of Section 105a :
"[I)n the case of a finding of violation of law by a court, normally the court itself would take whatever action would be appropriate, but this provides for additional authority in the -Commis-sion."
10 NRC 767, 768.
The Commission's order observed that the context of the court finding that FP&L had conspired to violate the antitrust laws was significant:
the finding was made by the Court of Appeals in a decision which left to the district court, on remand, to determine whether the plaintiffs had i
been injured by the conspiracy and to provide whatever remedy might be appropriate.
The Com-mission stated:
Ordinarily, the first finding of a viola-tion of the antitrust laws would be made by a district court, and its decision would lay out the factual predicate for its finding, the measure of damages suf-f ered, and the court 's remedy.
At that point, the Commission would have the opportunity, through Section 105a of the Atomic Energy Act, to formulate whatever additional remedies might be necessary in order to effectuate the clear Congressional
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purpose that licensed nuclear activities be fully consistent with the antitrust laws.
In this, the unusual case, the initial find-1 ing of a violation was made by the Court of Appeals, leaving other issues to the district court.
To initiate a Section 105a proceed-ing at this time would therefore be to create
4 the possibility of reversing the normal order in which relief is granted first by the court and only afterwards, if warranted, by the Commission.
10 NRC 767, 769.
The Commission's order noted that, in addition, it was unclear whether the violations of the antitrust laws took place in the conduct of the Commission-licensed activities. 2/
Although it did not. regard an unambiguous demonstration of a link between the antitrust violations and the licensed activities to be a necessary precondition for institution of Section 105a proceedings (since that nexus could be explored by the Licensing Board conducting those roceedings), the Commission stated that it was p' conscious that the factual record developed in the remanded district court decision uur well 1
illuminate this issue."
10 NRC 767, 769.
The Commission expressly reserved judgment on the question "whether, under other circumstances, a Section 105a proceeding could be instituted on the basis of a record as slender as that before us with respect to the connection between the viola-tion of the antitrust laws and the licensed activity," stating that "[U]e exercise our dis-cretion to await a possibly fuller record on this point."
10 NRC 767, 770, fn. 3.
The Commission summcrized its decision in the following terms :
Our decision to exercise our discretion not to initiate proceedings at this time is thus based on two grounds.
First, by await-ing tne decision of the district court and the remedies it_ may provide, the Commission will be in a position to determine whether any additional Commission action may be needed to fulfill the antitrust purposes of the Atomic Energy Act.
Until the district court acts, that Commission determination clearly cannot be made.
Secondly, the district court may help clarify whether the 2/
The conspiracy to violate the antitrust laws was found on the basis of a complaint filed in 1968.
The last overt act alleged in the complaint took place in 1966.
Florida Power
& Light received its first Commission-issued construction permit in 1967.
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5 threshold test triggering application of the statute has in fact been met.
[ Footnotes omitted.)
10 11RC 767, 769-70.
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l Commissioner Bradford issued a strongly worded:
i dissent, in which he characterized the majority l
opinion as " legal sleight-of-hand"'which served to undermine the Congressional purpose in i
enacting Section 105a.
He stated that Section i
105a was intended to give the Commission discre-l tion in formulating a remedy, but that its dis-cretion did not extend to-the decision whether to initiate a hearing in the first place.
Commis-sioner Bradford discounted the Commission's reliance on the legislative history, and stated j
that he found it "dard to treat with respect" the Commission's expressed uncertainty as to whether the violations of the antitrust laws had taken place in the conduct of the licensed activity.
He derided the Commission's statement that by i
declining to institute a Section 105a proceeding l
at that time, and by awaiting instead the decision i
of the district court in the remanded Gainesville case, it might be in a better position to decide whether the connection between the violations of law and the licensed activities had been demon-.
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strated, and whether further-action by the Commis-sion was needed in order to effectuate the anti-l trust purposes of the' statute.
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6 The Florida Cities appealed the Commission's decision to the D.C. Circuit Court of Appeals.
Fort Pierce Utilities Authority of the City of Fort Pierce, et al. v.
U.S.N.R.C., No. 80-1097.
The case has been briefed and argued, but no decision has been rendered.
The New Development On August 3, 1981, the City of Gainesville and Florida Power & Light reached an out-of-court settlement of their differences. 3/
Pursuant to that agreement, the parties asEed the district court to dismiss the remanded Gainesville case, and the court complied on the following day.
On August 25, the Florida Cities filed a " Motion for Leave to File Notice of Recent Developmen t" with the D.C. Circuit, informing the court of the dismissal and suggesting that the court might wish either:
(1) to seek the advice of the parties as to whether the appeal of the Commission's December,1979 decision was not moot, or (2) to ask the NRC whether the district court's dismissal of the remand proceeding affected the Commission's view of the time, if any, for initiation of Section 105a proceed-ings regarding FP&L.
The court accepted Florida Cities' filing but did not pose any questions for the Commission's consideration.
3/
Under the terms of the agreement, Gainesville received, among other things, SS,000,000 in cash, a transmission s ervice credit of $3,000,000, the right to interconnect with FP&L, and an option to exchange one half of its p ower fr om St. Lucie 2 (FP&L having made a 2.09359%
ownership share of Unit 2 available to Gainesville) for power from St. Lucie Unit 1.
In return, FP&L received, among other things, Gainesville's agreement to withdraw from:
the remanded Gainesville case; a second district court lawsuit, seeking treble damages for antitrust viola-tions; the appeal in the D.C. Circuit of the Commission's Dec emb er, 1979 order; and the Commission's St. Lucie 2 antitrust proceeding under Section 105c.
Gainesville also agreed to withdraw its request for a Section 105a proceed-ing, and to refrain from suing or otherwise seeking relief related to the subject matter of these various proceedings.
7 2
On August 27, the Florida Cities filed a " Motion to Establish Procedures" with the Commission in which it reviewed the history of the Commission's consideration of the implications of the Gaines-ville decision, advised the Commission of the dismissal of the Gainesville case, urged insti-tution of a Section 105a proceeding at this time, and promised to cooperate with any procedures ordered by the Commission, adding:
"One possi-bility is an investigation at the Commission or Staff level with opportunities to comment."
Alternatively, the Florida Cities suggested, since the hearing has not yet begun in the St. Lucie 2 antitrust proceeding, and since many common issues are raised, the Commission might institute a Section 105a proceeding and con-solidate it with the St. Lucie Section 105c proceeding.
On September 16, 1981, Florida Power & Light replied to the Cities ' August 27 motion arguing against institution of Section 105(a) proceedings on three grounds -- that there is no jurisdic-tional basis for such a proceeding since its antitrust violation was not-in the conduct of licensed activity, that no further relief is necessary to supplement the court's decree, and that if a Section 105(a) proceeding is instituted it should be separate from the ongoing antitrust review for St. Lucie 2 so as not to delay issuance of an operating license.
On September 10, this office filed a " Motion to Hold Case in Abeyance" with the D.C. Circuit,
asking'that it delay a decision on the Florida Cities appeal of the Commission's December, 1979 order.
As noted above, that case has been argued, and is thus ripe for decision at any time.
In l
that motion, we acknowledged that the Commission's decision not to initiate proceedings in December, 1979 was premised in part on the pendency.cf the remanded Gainesville case in district court, and that the order expressly contemplated that th e Commission would revisit the question of whether i
to initiate a Section 105a proceeding once the district court proceeding reached its conclusion.
We also informed the court of the Cities ' August 27 filing with the Commission, and of FP&L's September 9 request for an extension of time.
In anticipation of the Commission's receipt of this memorandum, the motion concluded :
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Stephen F. E11perin Solicitor
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Commissioners' comments or consent should be provided-directly to the Office of the Secretary by c.o.b. Thursday, October 8,'1981.
Commission Staff Office comments, if any, should be submitted to the Commissioners NLT October 1,1981, with an information copy to the Office of the Secretary.
If the paper is of such a nature that it requires additional time '
analytical review and comment, the Commissioners and the Secretariat shoul be apprised of when comments may be expected.
This paper is tentatively scheduled for affirmation at an open meeting during the week of October 12, 1981.
Please refer to the appropriate Weekly Commission Schedule, when published, for a specific date and time.
DISTp.iBUTION Commissioners Commission Staff Offices Secretariat
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