ML20064J567
| ML20064J567 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 03/30/1979 |
| From: | Reynolds W SHAW, PITTMAN, POTTS & TROWBRIDGE |
| To: | |
| Shared Package | |
| ML20064J549 | List: |
| References | |
| NUDOCS 7904170477 | |
| Download: ML20064J567 (70) | |
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I I UNITED STATES OF AMERICA Y
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NUCLEAR REGULATORY COMMISSION Nh.
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Before the Atomic Safety and Licensinc Board
)
In the Matter of
)
)
CONSUMERS POWER COMPAN'l
)
Docket Nos. 50-329
)
50-330 (Midland Plant, Units 1 and 2)
)
)
PROPOSED DESIGNATION OF RECORD OF 4
CONSUMERS POWER COMPANY In accordance with the terms of the January 4, 1979 i
l Order Concerning Remanded Issues, Consumers Power Company sub-j mits the following " designation of all portions of the prior record which should be considered, including transcript refer-ences, affidavits, exhibits, documents, briefs and other i
writings".
(Order at p.
10)
Items on this list marked with an asterisk were not admitted into evidence at the suspension proceeding; copies of these documents are attached.
D_ESIGNATION OF RECORD I.
Transcript References 11/30/76 following Tr. 220 (Temple written testimony) 11/30/76 Tr.
218-232 (Temple testimony) 12/ 1/76 Tr.
298-462 (Tample testimony) 2/ 1/77 Tr. 2275-2482 (Temple testimony) i 7904170 477
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. 2/ 2/77 Tr. 2492-2672 (Temple testimony) 2/ 2/77 Tr. 2687-2741 (Oreffice testimony) 12/ 1/76 Tr.
235-287 (Board discussion) 12/ 2/76 Tr.
474-516 (Board discussion) 1/18/77 Tr. 1003-1004 (Board discussion) 1/20/77 Tr. 1507 (Board discussion) 2/ 1/77 Tr. 2241-74 (Board discussion) 2/ 1/77 Tr. 2262-63 (Beard ruling) 2/ 1/77 In Camera Tr. 1-36 (Board discussion) 2/ 2/77 Tr. 2742 (Board ruling) 2/ 3/77 In Camera Tr. 1-9 (Board discussion) 12/ 3/76 Tr.
661-680 (Wessel statement) 9 II.
Pleadings 12/22/76 Dow Memorandum Regarding Hearing Preparation 12/30/76 Memorandum of Licensee, Consumers Power Company and its Counsel Regarding the Preparation of Testimony and the Presentation of Evidence (Consumers Mem. of 12/30/76)
Attachment A - Report of Dow-Consumers Nuclear Project Meeting, September 13, 1976 Attachment A - Dow-Consumers Power Co.
Meeting Agenda, September 13, 1976 Attachment B - Brief of Consumers Power Conpany dated September 7, 1976 Attachment C - Chronology Midland and Uranium Fuel Cycle Appeals, September 15, 1976 Attachment D - Statement by J. G. Temple, Jr., Before the Saginaw Valley Press Club, November 12, 1975 Attachment E - Aeschliman v. Nuclear Reculatory Commission, D.C.Cir., July 12, 1976 (Slip opinion, unnumbered page)
t t
. Attachment F - Important Progress Dates, Midland Nuclear Plant Attachment G - Joseph G. Temple's Notes of September 13, 1976 Meeting with Consumers Power Company Attachment B - Outline for 9/24/76 Meeting at Dow Attachment C - Draft of Joseph G. Temple, Jr.,
Testimony Prepared by Milton R. Wessel Attachment D - Outline for Joseph G.
- Temple, Jr., Testimony Prepared by R.
Rex Renfrow III and Judd L. Bacon Attachment E - Draft of Statement to be Read by Joseph G. Temple, Jr. Prepared by Milton R. Wessel Attachment F - Draft of Joseph G. Temple, Jr.
Testimony Prepared by Leslie F. Nute Attachment G - Draft of Joseph G. Temple, Jr.
Testimony Prepared by David R. Rosso Attachment H - Draft of Affidavit of Joseph G. Temple, Jr. Prepared by R.
Rex Renfrow III and Copy of Affidavit of Joseph G. Temple, Jr.
as Executed Attachment I - Draft of Joseph G. Temple, Jr.
Testimony Prepared by Leslie F. Nute Attachment J - Draft of Joseph G. Temple, Jr.
Testimony Prepared by R.
Rex Renfrow III, David J. Rosso, Milton R. Wesel, Leslie F.
Nute and David A.
Duran Attachment K - Testimony of Joseph G. Temple, Jr. as Filed Attachment L - Notice of Availability of Documents for Inspection of Consumers Power Company, filed October 29, 1976 Attachment M - Non-Disclosure Agreement Between The Dow Chemical Company and Isham, Lincoln &
Beale Attachment N - Letter from Myron M. Cherry to Milton R. Wessel and James N. O'Connor, dated September 27, 1976 - Letter from Milton R. Wessel to Myron M. Cherry, dated October 12, 1976 Attachment P - Letter from Peter A.
Flynn to.
Milton R. Wessel, dated October 27, 1976 Affidavit of R. Rex Renfrow III (Renfrow Affidavit I)
Affidavit of David J.
Rosso (Rosso Affidavit I)
Affidavit of Judd L.
Bacon (Bacon Affidavit I)
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, 12/30/76 NRC Staff Memorandum in Response to the Atomic Safety and Licensing Board's Order Regarding Preparation of Testimony of Dow Witness Temple I
(Staff Mem. 12/30/76) 12/31/76 Memorandum of Intervenors Other Than Dow i
Chemical Company Concerning Pending Issues 10/ 3/77 Consumers Power Company's Petition for Recon-sideration of Portions of Board's September 23, 1977 Orders 4/24/78 NRC Staff Reply to Commission's April 10, 1978 order 4/24/78 Statement of Consumers Power Company with
.i Regard to What Issues Remain for Commission Consideration 4/24/7o Intervenors' Response to Commission Order of April 10, 1978 III. Exhibits Board Exhibits 1 and 2 Consumers Power Exhibit 24 (Wessel memo)
Midland Intervenors' Exhibit 25 (Nute Notes) t Midland Intervenors' Exhibit 71-(Hanes' Notes)
[ Attachment A]
IV.
Documents
- Document #14 of "Dow Priority 2" documents, submitted to the parties on December 8, 1976 (Klomparens' Notes) (Attachment B]
- Documents #8, 11, 17, 19, 31, 33, 35 and 36 (Nute Notes and Duran Notes) of "Dow Priority 1 and 2" docu-ments which D initially claimed were privileged l
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. by memorandum of December 7, 1976.
These documents were released on February 1, 1977, when the Licens-ing Board overruled the claim of privilege, Tr.
2262-63.
[ Attachments C-K, respectivelyl
- Youngdahl Memorandum dated September 16, 1976.
[ Attachment L]
O
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_, - -t-y-P Wm. Bradford R nolds l
Gerald Charnoff
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SHAW, PITTMAN, POTTS & TRONBRIDGE 1800 M Street, N.W.
Washington, D.
C.
20036 Tel.:
202/331-4100 Counsel for Consumers Power Company Dated:
March 30, 1979.
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- UTE, M. UESSEL, D. DURA
- !), 9/29/75 t.
C on wan.2 r s & ::RC S t a f f.
A.
Larry Orenner
.nain trini co2nsel f:r :'2C - had I day notice.
1.
St d going, to have inde,.endent p n ition - hadn't gotten it >ct.
a.
Didn't hacu cla NRC position will be on suspenctoa issue.
b.
10 nonths bc[ ore staff ril] be ready to go to trint on substantive inst'ec.
Staf f uill file brief today steting all oC the above.
c.
d.
If hearings go on the Oct. 6, ';RC will not put in an affirmative cacc - CenLuzers vill have to go foreard.
2.
Cnerry has filed affidavit - sets out his litigation schedule -
Cherry really is booked until the 13th of Nov. - it is a legitimate request for delay.
B.
Consumers strategy.
1.
Will have to supplement environcent. report and recirculate it through NRC, take at least 90 days puts it in 11 arch - vants to ho:d to the March date - Consunars doesn't want the substantive hearings to be noved out too far.
2.
Consumers has filed new schedule (copy given) - uhat has been done (hopefully) is that ::ovenbar has been freed up for the suspension hearings - but still have to proceed foruard on assu=ption that hearing uill cottence en Oct. 6 (suspension hearing).
3.
Consumers concerns, Joe Tenple's personal feelings on the matter - problem of n.
uitness.
b.
Question of uhat is going on in the negotiations which are new in abeyance - vant to set up ground rules on uhat docunents are discoverabic in tha bic hearing - Milt said very rcluctant to give up any D n internal memos or notes on the negotiations - outside counsel for Consumers bluntly suggesting Dou and Censuners got together and renagotiate before hearings - haz2 until 1/21/76 until diccovery -
Ren pushin3 Judd, and obliquely me, to get a renegotiated contract - Ren wanta both sides to state ultimate negotiating position en stcad and frito environ 0catal report based on those positions.
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II.
Discussion of uritten testinony draft.
A.
Original contract.s - 1967.
1.
Intent of Dou at time - uhat it called for Dou to taha - Dou's commitments in return - (ictter notice of what our intent to tahc) - may need soticonc just to brief Joe and ba c51c to be backup for Joe.
2.
Dou's intention as to its o.n f acil unit:, at that tina.
E.
1974 wodificaticas.
1.
Changes in contract and their r. ear.ing - also reasons for changes.
C.
Continuing Mich. Division of centract.
1.
Basic business judgments as to why this is constantly revieued.
2.
1976 review by the Division - uh:t vere the reasona for Joe saying what he said - objective and subjective - Consunars insists that this be brought out - Milt kept saying are you sure that uant Joe to testify to this - Consunars insists that it does - Consumers wants to know what is there, but may not uant to use it.
3.
Action taken af ter revicu by Division - Consumers assucos that the decision was to refer to Dow Chemical U.S.A. for revles -
uhat vare the alternatives in revieu - Milt said that ray include filing suit - Consumers said no, only considering citernative sources of stean and electricity - corporate revieu considered what alternatives and how to meat probica of Air Pollution Control.
D.
Present intent of Dou vis-a-vis secan and clectric sourcca -
that will get us into the 1976 contract renegotiations - Milt saya he is concerned that if Consumers pushes too far, the Board will terminate the construction license
" cautions" Consuners that if you put on too much information, the Board may draw the contiusion that this is a very tenuous deal at best and licenso should be suspended - Consumers reply that they want to get it all out and try to explain it away.
Ill.
Caucus.
A.
Rex - no probleta to general policy problems of Judd being involted, houcver, on sensitive issues, Judd uill be excused (leavca Rex privileged as Joe Consucars' vitness).
1.
Dou uitness util have to be provided.
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2.
Cot to talh not cul; about 1974 nedifications, but thcau of currem. d } $C'13Sion.
3.
Best ua, to do that is to put it cut in best light you can and then prepare for cross.
IV.
Dir. cuss ion of testi.uny of Teaple uith Cer. tuners' lawyer.
A.
Taaple - is :.bere 1.ny uc, yr.
c r Lec.; then from dige, int. into my parsonal f eelings on the reas:ns f er the 1976 decisica?
Consamers - no, n ty not be aterial b;t Doat
- uill probsbly f orce y ou :.o testify as to those f eelings, regardless. Milt -
uhat about if mice rnh the folloitin; statement (reads)?
Consumers reaponsa is th:.t don't unnt hin to speak such a plecc starting off, perhaps reserve it until later - then, Consu= tra said that they don't uant hin to read it at all - Tenple says he vould like to get through the hearing uithout havin;; to ansucr any questions as to his parsonal feelings - Ren brought this up again in connection uith the co.nents nade in the Sept.
13 neeting, that he will be asked to give his personal feelings as to his reasons for reaching such a decision - Ren said you uill probably be required to answer that kind of quastion.
B.
Instructions by Rex to Joe.
1.
Whc is giving you the information should be available for backup if requested.
2.
Infornation and data used to ansuer questicas - kept in one file so that it can be brought out if necessary.
3.
Milt - inquiry into reasons for decisica is irrelevent, uhat Dou f eels is the decision is inportent - Rex doesn' t feel that uay, feels that Dou ccenonic analysis is proper area of discussion and can b.e brought by Eoard or Cherry - Again, a discussion by liilt & Rex over whether it is really na:essary for Dow to have to supply 2.11 this information, Milt sajing
)
it wasn't really called for, Rex saying he thought it van really necessary - Rex didn't think the issue of nuclear v.
non-nuclear secan vould be raised at this hearing, but certainly would be covered at the big figure.
4.
Start on Monday C S A'I and continuing over on Tuesday - have.
all backup uituesses present, particularly on first round.
5.
Documents needed.
Those related to Air Pollution Control Pr blems.
a.
b.
yress releases from 1976 back to 1967.
1:oticos as to esti=ated take that may have been sent.
c.
d.
Backup docu= eats for data given to Temple place in separate files.
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- tECTING - CONSU:'ERS POWCR - 10/12/76 One in e' D i s cuss ion 1.
Scabrook case.
2.
Current status o f Midlan:1 cat.c.
3.
- . Sinclair pr.per.
4.
Lin! tad appearances by labor orsaai:atier.s.
I.
Seabrook case.
A.
Consuners to file 2micus brief before Cornission en Icgal issues, particula;1y need for oower.
B.
Roisman has gone before 1st Circuit to get Commission order granting stay lifted.
II.
Discussion of testimony due from Dow.
A.
Section IV - Dow Chemical U.S.A. Revieu.
1.
Discussion of graphs, Blach 6 Ventch - does Consumers have a copy of the study.
n.
b.
Apparently a difference in numbers betuaan Dou and Consumers.
Gave them copies of Joe's graphs - liked the:: - if they c.
use graphs, uill use Joe's - haven't decided uhether to go into this in detail, or just say uhat the decision uas and let it go at that for cross.
B.
Discussion of testinony froa beginning.
1.
Original Contracts.
Electricity off the grid - don't emphasize that electricity.
a.
b.
3rd paragraph - where did 20,000,000 figure cone from -
ceasured at what point.
Leave this section out and only go uith the ne::: section c.
(1974 nodifications) and refer back - : y be the uay they (Consumers) uill put in the case. Milt agains brings up that Dou should testify as little as possible -
Consumers should use their people the nest (Mil t).
(!
n 2.
19 74 Mn.l if ica t ~ ons.
a.
Documents stating concy st.n; ir. pou:.r plaats to hecp them going throu3h 1930 - cap tal requeuts? Less than certain arount requests?
3.
Coat i auin;.; neici ct oi che Co str..u
'sy DJ vism t.
a.
M ilt do..:a ': rant to c'e u t.r a'firr:.-ative presentation, all the d. m.i.nn ea*.._
, pro n s - s trr.;,uer, a;;a in that Coasau rc :,h aul:' i' t f.e t in:o thin area c,a direct ter.timony -
disco wic: '; i c h F u s e t.r, t v -.eMicr it should ha 3,res2ntad on dire <t, as Chary cc:c:.4 r,
W.I, or W. tit and ine; iL on crcss - again IUlt ca nen:s Con.sumurs should prepar direct and give to Dou to revieu - Milt again cup,.*enta tha t Conse. ara chouldr.' t ddce intr > Te ple's reaccnn f or his decision o:t Sept. 1.1, or that they chouldn't ash if he agrees with U.S. A. Joard decision.
b.
Judd left roon and Milt inferned CoaLunars some of Joe's reasons for his Sept. 13 decision.
4.
Requirenents.
Lict of "Dow Confidenticl" do:uments that ne won't n.
turn over - Elack & Vectch study given to Bacon just before they lef t.
5.
Dou Chenical U.S. A. Revicu of Division position.
Uant to strike sentence "Other factors."
a.
6.
Present Intent Electric demand projected for 1952 - less than 300,000 -
a.
what will it bc under existing b.
Emissions fron 1,000,000 lbs./hr. backup - uill be no greater than the law allows.
backup documents for corporate revieu negotiating documents for 1974 2 sets of notes for 1976 L. F. Mute e
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63 70 72 74 76 73 80 82 C?
Year of Cost Estimate m e:
Capital C0st; cf Dw Al:2rcatives Are Al so T.'; Sipificantly 0zar See Period
. (1. I. p nid I.
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!nvc.rb 3 c 1, 1976 - Renfra.:, Rosco, Uc.ssel, et al I.
Dic.cui :icn of dncu- :nts on vicu in Jackson A.
T.-tu se t s o f d o'; u. en ts th.:t util be on z ic'.:
1.
Tiian a not : - Ml!w.iy pdc 3
- 1. I.1 b ; G u V i c'.-
2.
Those no'.a acc und: r cutt ority of the letter - ter..tn i. t tealet. ent?.op: - t a ke b:..,.> a d s h /.: t.o Cherry oni,. t;nder protec t.Ive order
'Illt a.r.in sayin3 that l'o.: has no probic.7 sho::ing there docun.;nts to t';e trarid - j us t dua ':.ca n t Connit'm m t 3:e ths ti t :h ::. t not in:; Con 3r wrs. '.
11.
Dincus.sion of th:ir draft om1.ine of tes: eny nad :.ete draf t revisier A. Rosso en chat he attenpted to do - 2 thinga 1.
Tried to ha're n fleu f ron Ecuell to Temple about discucsion of contracts and pact t.odifications - revision looks more like affidavit and less like testimony 2.
Tried to flavor the testicony a little, and that was ta';en out - vanted to knou why this uns taken out B.
Milt ansucr 1.
Changes uere not inadvertent - good reanons and a lot of thought vent into changes - ne are conceracd about cross-exanination of Joe if your version ucre used - we trant to make very clear that if plant sunk as a result of Joe's response on cross, that Consumers will turn around and sue Dou for breach by intentionally trying to siuh the proj ect 2.
Milt also afraid that Rosso draft ticuld appear disingenuous and mislea?.ing - appears to be the complete story, but in reality is no: - once you take decision to get into negotiations, then you have to be complete III. Discussica of Mute draft of 10/29 A.
Houell language trill be lef t out and covered on direct - have Joe read affidavit Para 3raph 1 - Rex vanted a qualifying letter rather than to put B.
it in direct testinony - Milt gracefully conceded that Dou could do that since Consurers felt c ron;1y - Consumers finally decided to put Jc 2' c tes:inony in ques tica and ansuer form.
C.
Paragraph 1 - place in first person (follous fron going question and annuer rou:c)
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D.
Paragraph 2 "Since 1967, uhen tite Cencral Agreer, ant was execured, the :llchigan Division periodically has revie icd the situation uith rer,ard to the economics of nuc] car ceca.m 1.
Last paragraph - add the conplete conclusian of the Daard.
2.
Give Joe letter containing inforration chat was can; to Creen on capitelty, enissicas, etc.
E.
Para 3raph 3 - (copy
.) vill be chansed to direct question and refer to it as an c::hibit.
1.
second parenthetical staten.:nt (or for the.t It [ change to Dow]).
F.
Paragraph 4, discussion of conclusion of Board - line 3 - rewrite according to Milt's notes.
G.
Paragraph 5 - more co:apletc explanation of uhy Dau wante, an ROI -
add a question discussing need for ROI.
H.
Paragraph 6 - explained about the resale restriction and its elitination.
I.
Paragraph 8 - the last phase - some explanation of hou they could minimize costs, yet the nuclear alternative is better.
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MEETC:0 - 2:0" EMBER 13, 1976 - Consumers - Rosso & Renfrow CROSS ELE!::ATION OF TE:!PLE I.
Initial discussion - arcas to cover A.
Rossa brought up prior references to shutting down in 1975 -
Mi '. t took e::ception, saying he didn't think that anything like that had buen said, and, further, that there was a great deal of difference to Dow between 1975 and 198'4 B.
Also cover hou Dow figures its alt eranive costs, especi.'.11y corpired to Ocne.t.:ars.
C.
Discussion of current negotiations.
II.
A.
Asked about reviews - Casha, P.urroughs B.
Economic revieu - Rex wants to get our coal price people toy,ethar with their coal price people this ucch "to see what the differences are and uhether they can be worked out".
1.
Rex also uants Joe to spend some time on economic study, Black and Veatch - and basis Burroughs used - want Joe to be more confortable, not necessarily completely knowledgechle. -
C.
Other factors in the review.
1.
Joe refuses to mention that "we h ve a contract" and that one of the factors considered was the legal liability of breaching the contract.
D.
More stress on how long can they run - what have we done - what studies run - what is past history of reliability?
E.
1,000,000 lbs./hr. backup - can we give any hard data ca emission on how nuch it will be run on auxilliary?
L. F. Nute
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r MEMORANDUM TO FILES D. A. DURAN RE: 00',!/ CONSUMERS POWER MEETING 0F 9/29/76 The following memo is an accurate sunmary of what was said during the meeting; however, it should not be regarded as being verbt. tim in any i
sense.
Massrs. Nute, Wessel and I met with Judd Bacon and Rex Renfrew on i
September 29, 1976 in Building 47 of Dcw's Midland Plant.
Rex st[ted the meeting with the statement that Larry Bremmer has been chosen to try the case. Rex stated that this assignment came from 1
staff meeting with Consucars Power. Rex also stated that he doesn't know what the answer will be on the expansion question. He said it will take them ten conths to get to the hearing on the substantive issues from the date the necessary information is received. He said the ER will still be filed on 10/22/76. He stated that he has told Consumers Power that this ten-month delay is too long for us. He stated that he intends to file their brief.
3.ee asked what the source of the screw-up was.
Judd stated that they just handed the assignment to someone else.
Rex stated that Marty is now on his way to Europe. He stated that Dick Brown was preparing to hear this. Rex pointed out that Dick has now come over to take some of his job and is not ready to handle the job of the hearing. This is why Bremmer is going to do it.
Rex stated that, on the bottom line, we can get them ready to go to the hearing.
Rex stated that he has given Consumers Power Roy Wells and Dick Kiely's names.
Rex stated that if we have to go on the 6th, they will not be able to put forward a substantive case at all. Rex pointed out that if no one meets the burden of going forward, they should cancel the hearings.
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2 Judd stated that they are very close to getting ready for the interim hearing.
Rex stated that they have word that Myron Cherry has his trial schedule filled up to date and a check of Judge Cavelo's calendar confirms that Myron is tied up until November 18, 1975. Rex stated the; they think the Board will give or grant this delay of the hearing.
Rex stated that his main concern is that it will move the substantive hearing so far out that there may be a delay in the interim hearing. Rex stated
~
that he thinks the supplement will have to be recirculated. He said this is going to take 90 days minimum.
He observed that one will then have to work these 90 days into the schedule. He stated that this gets into March, 1977. Rex then handed out a Proposed Schedule for Remand Hearings, copy attached. He then stated that he has a revised schedule that will be attached to their motion.
Rex stated that the hearing would then be on ACRS and the environmental matters. He stated that both sets of discussion would be going on at the same time. He then observed that this schedule change frees up November for the hearing on suspensions.
Rex pointed out that the parties will have to go forward for October 6 like the hearings are going to be held.
Milt stated that we should go forward tcday with what we have worked on.
Rex handed out copies of a proposed schedule for the 10/6/76 hearinos, copy attached. He stated that he has tried to provide time for working with witnesses. Rex stated that the schedule will give one 'an idea when he intends to work with the witnesses and get them ready.
Rex then said he needed to see a basic outline of what Dow will give him x
)
to work on.
'.,)
Milt stated that he didn't feel there needed to be agreement on what was going to go on. Milt pointed out that, as far as what was going to be q
said, Dow will not say anything unless Consumers Power wants us to say i t.
Milt reiterated that he didn't feel that an agreement was needed.
i 3
Rex stated that by agreement, he meant agreement on the facts. Milt stated that if there is a question of privilege or trade secrets, he would surely object.
If it is otherwise, he said that Dow would not get in Consumers Power's hair.
Rex responded that this was " beautiful."
Rex referred to the 10/6/76 schedule and stated that the four main issues form a coalition case. He pointed 0;t that he would not necessarily put the witnesses on in the order shown. He then stated that underneath the nein issues he put the subissues. He pointed out that the witnesses are in all caps out at the side. Rex then stated that he would be glad to answer any questions anyone had on the four issues.
Rex observed to Lee that he and Lee had talked on this. He said that the only problea he had with Temple was that of the original position had on this and he didn't want a witness to get up there and tell other than the truth, riilt stated that Dow will tell the
_., as Dow sees it.
Milt pointed out tnat it is probably better to have a person there who has direct knowledgs of the situation and Joe Temple knows more about this situation than most people. Milt stated that Joe knows about the effect of delay.
Milt pointed out that, on the question of his lack of enthusiasam, Joe will testify to the truth. Milt did point out, however, that Joe is one member of'a board on these decisions. Milt stated that Company policy is different frcm Joe's view and we will give Dow's position on this. Milt statgd. that he knows Joe Temple will state that he agrees with'the Company's policy. Rex stated that he would be satisfied with Joe's position if he in fact does just that. Milt stated that at some pointi the parties will have a full hearing on the matter. Judd stated that aM these thii.gs should be brought out at the suspension hearings.
Milt stated that at this point Dow is not prepared to give^ anyone informa-tion on what went on during any proceedings. Milt stated that, he felt, s
4 -
any correspondence that has~gote on bet,ieen Cow people, internally, has not been givep to Consumers Power yet. Milt stated that, while Joe Temple e
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4 does have knowledge on all these internal things, we don't feel it is proper to give you this info because of the delicate nature of the relation-ship now between Dou and Consumers Power regarding on-going negotiations.
Rex stated that, provided Joe Temple's position is how Dow has related it this morning, he would be more than happy to go with Joe as a witness.
Rex stated that he didn't know what the pure economics were on whether there was an alternative way to get steam to Dow.
l Milt stated that he thought Consumers Power would see that in what Dow would give them today. l tilt stated that this position of Dow depends on whea one reviews it.
He pointed out that if one looks at it right now, the answer is that nuclear power comes out best. However, he further observed that if you look at it in 1983 or 1934, this could undoubtedly change.
Lee talked about the program Mary Sinclair is going to be on. He pointed out that she may talk about the November 1974 press release of Joe Temple.
Milt cautioned that one must be aware that this was done in 1974 and a lot of things have happened since then and it will be shown that Joe Temple has changed his view now to get in line with the Dow Board decision.
Milt mentioned all of the factors considered with all the legal implica-tions that are present in this situation. Milt stated that he was very reluctant to get into these areas. He pointed out that some of this informa-tion is privileged and some of it is not.
Rex stated that the third big thing on his list was the current negotia-tions that are going on now. Judd stated that those current negotiations are in abeyance now. He pointed out that he wasn't quite sure wnere the parties are right new. Rex stated that the negotiations gave him a problem, not so much from the suspension hearing part but from the big hearing. He stated that he would like to get them out in the open in the suspension hearing. He pointed out that when the big hearing is held, he would like to work out something between Dow and Consumers Power.
5 Something in the nature of general guidelines as to where the parties are going. He further stated that if he had to put a person on the stand, he would like to know what that person is going to say.
He stated that this may come right in the middle of negotiations and this may cause a problem from this viewpoint.
Milt stated that this is exactly what he had in mind when he was saying that this type of thing would cause a problem because Dow is not going to turn over voluntarily what is going on inhouse or internally. Mil t pointed out that the answer to all of this is that it is obvious from today's position that the parties have both asserted rights and interests and they don't really know what to do about this information.
He stated that the parties should try to resolve these differences before the suspension hea*ings.
Rex stated that the parties today could go forward with the environmental stuff. He felt that the parties should set down some reasons for their positions. Rex stated that what he was saying was that the parties were going to have to do the ER on all of this. Judd stated that if this 11/15 continuance is granted, the parties would be able to sit down and iron their differences out.
Milt stated that in answer to Consumers Power's question concerning attorney-client privilege, he didn't think work product applies to the negotiations going on between Dow and Consumers Pcwer. He further pointed out that another thing to consider was the relationship among the parties.
Mil reiterated that Dow would not give up the information generated in-houst until compelled to do so. Milt stated that Consumers Power would proba*.ly agree with him when he pointed out that Dow would be very reluc-tant to expose Dow's internal processes until there have been some final agreement made in the negotiations.
Rex stated that it didn't bother him to have to tell the Hearing Board that the documents asked for were internal to Cow and could possibly cause a business relationship problem, and that they whould be subpoenaed before 1
6 they are given to Myron Cherry.
Rex further stated that the other point was the parties could get by this problem if Lee and Judd could resolve 1
the negotiations before we Set to the suspension hearing. Judd cbserved that neither he nor Lee could do this alone. He pointed out that they would need a lot of other people getting together before some agreement could be reached. Milt pointed out that Dow would have to be ready to turn these notes over to the parties if they are requested by the Board.
Rex stated that he felt the parties could work out a position that could be taken on the witness stand which could limit the problem to a great extent. This could be acco:plished by stating what your ultimate position was vs. what you may be able to go back to. Rex stated that he didn't want to put Youngdahl on the stand. He pointed out that what he was going to try to do was to get people to state their ultimate positions on the ER instead of their fall-back positions. Milt suggested that something be cone about getting these positions refined.
Judd stated that the issues we want to cover today are: will Dow take steam and what will Dow do about present fossil-fuel facilities?
Milt handed Judd and Dex a copy of the draft of Joe Temple's testimony, copy attached. He told them to look it over and get back to Dow when they want to discuss it. This was at 9:18 a.m.
The parties adjourned at 9:20 a.m.
The meeting commenced at 10:15 a.m.
Rex handed Milt a copy of an outline of items he would like to have answered for the hearings, copy attached.
Milt stated that Cow has given Consumers Power at least an outline of the questions Judd asked of Milt on the phone. Milt pointed out that if Ocw was requested to fo further, they could run into problems. Milt stated
7 that Consumers Power should give Dow what they need further and Dow would see what they could do about supplying the infonnation.
Rex stated that most of the stuff we need is somewhere in the draft and when he puts Joe Temple on the stand, he would like to see Joe testify ir, the order as outlined on the list. Rex went to the list and stated that, en the subject of original contracts, what Consumers Power needs here is the original thing Dow stated about requirements and commitments in the contract. llilt stated that Dow may have included intentions in the original contract, but he doubted if Joe Temple could remember what the intentions were. Milt didn't feel Joe could answer the question.
Rex stated that if one was going to ev. plain the 1974 modifications, he could just put the entire contract into evidence and state that the document speaks for itself. However, Rex then pointed out that he would rather put Joe Temple on the stand and actually get into the situation from the beginning. Rex stated that he would like to know, generally, what the contract called for on Dow's part and also what their commitments were under the contract. Rex pointed out that, when he said Dow's commit-ments, he meant what Dow had committed in return. Rex stated that he thought the water thing came into play here, but that he would get to
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that later. Milt stated that neither he nor Lee were there when this was agreed to.
Rex stated that he didn't care on this one whe-e Lee or Milt have stated that since this contract was entered into, that Dow's requirements were such and such.
Milt stated that if Consumers Power wants something beyond the document as to what Dow's requirements were Dow would probably have to go get the information. Rex stated that he felt he really had to have the extra information. Rex stated that what he was really looking for was a person to feed this information to Joe Temple in a general fashion.
Rex stated that he thought the Commission asked Dow's people scme questions and Dov had come back with some answers. Judd stated that he would like whatever the Ccmmission had asked Dow fcr and also Dow's answers. He stated that the contract would have something in respect to Dow's opinions of its own facilities.
8 Rex pointed out that Dow probably also stated that they were not going to run their present equipment and not have air pollution problems.
Rex stated that in the 1974 negotiations he wants the changes for require-ments and commitments made by Dow. Milt pointed out that there are differences as to what these things mean. He stated that there have been differences in the parties' discussions as to whether costs are non-recoverable under any circumstances or just in the event of some environ-mental action. Judd stated that he didn't feel the parties have to get into the meaning of these clauses, but rather they should get into the meaning of change and what Dow wants to do in the matter.
Rex stated that he was not going to ask Joe Temple what some of these responses in the draft mean.
Judd stated that Consumers Power is going to need further detail of those 1974 changes. He pointed out that Dow has stated that they are going to be taking 2,000,000 lbs/hr because this is what it states in the contract.
Rex stated that what he had tried to do was state this matter out logical'ly and in a fashion of what really happened from 1967 to 1976.
Judd stated that if the Board can still conclude that the reasons for the original contract are valid, then they may see it Consumers Power's way.
Judd referred to the third item and asked if Cow committed to building the sewage building changes in the original centract. Lee stated that the sewage item was a separate agreement between Dow and Consumers Pcwer.
Rex stated that he would like to fit this sewage thing into Joe's testi-many. He said this is why he needs the information.
Rex pointed out that one of Consumers Power's problems was that they have port-a-johns on site and as soon as Dow can get the sewage thir.g completed, Consumers Power will be able to remove them. On item number III on the outline, Continuing Michigan Division Review, Rex said that he wanted Joe to state why he reviews the contract from time to time. Rex pointed out that this is separate from the Dow USA Review.
I 1
9 Rex asked !411t why Joe Temple had made certain statements regarding Joe's opinion on this entire matter. f4 fit wanted to know why Rex and Judd wanted Joe's opinion on some of the items. f4 fit asked if they wanted Joe's views on the Court of Appeals findings. f411t pointed out that he hoped Rex would let Joe say just what Joe had said in the litchigan Division Review position. Rex stated that he hoped 1411t and Joe would sit down and put down some basic business decisions on this matter.
14ilt pointed out that this is what Dow had tried to do in the draft they prepared of Joe's testimony.
Rex stated that liary Sinclair has all of the press releases of Joe's and Joe is going to be confronted with them et the hearings. : lilt pointed out that Rex and Judd were asking for all the things Joe Temple has ever said r
or thoguht about the natter. Rex stated that he wanted all of it --
everything that Joe has ever said or thought about the matter. Rex pointed out that they may not use it all, but they would like to see it all. Judd stated that he felt the parties were better off in the long run if the infomation is revealed now.
f411t cautioned that Dow and Consumers Power have to be very careful about what they are doing in this hearing and what they may be doing otherwise in the negotiations between themselves. iiilt stated that he didn't know how much of the infomation Rex wanted was privileged informa-i tion. 14ilt pointed out that Rex was asking for a lot of information and this request really presented Dow with a problem. tillt stated that the ideal thing to do would be for. Dow and Consumers Power to reach some agreement on the negotiations before they get to the hearings. Judd pointed out that Consumers Power wants to know what the picture is before we get to the hearings so we won't be surprised by the other side.
Rex stated that he didn't want this problem concerning the negotiations j
between the parties to come out and interfere with what goes on in the hearings.
Judd pointed out that for Consumers Power's purpose, initially, Consumers j
Power would like to see everything there is on this entire matter. Rex
le i
10 i
stated that he needed the action Joe Temple took based on the Michigan Division Review. He then pointed out that he needed the same kind of information on the Michigan Division Review. Milt stated that if Consumers Power pushed farther on this information, than the parties may get into a situation where Dow immediately files s, c against Consumers Power. Rex pointed cut that all of this is aimed at the requirements for steam and electricity. Rex stated that he was not interested in the legal implica-tions of breaking the contract. He pointed out that he wanted to know what Dow viewed their requirements at initially and why they have changed.
4 Milt asked Rex if it would solve the problem if he put a clause in Joe's draft that stated that there are a number of elements involved in a corporate decision and necessarily does include many things.
Rex stated j
that this would invite a question and he wanted to stay away from this.
J Rex stated that the requirements under the original contract is what he is after. He said that he would then like to get into the 1974 modifica-tions and why they were arrived at. Rex then said he would like to get into the Michigan and Dow USA reviews and why these decisions were reached.
Rcx continued that after the reviews, he would like to know what Dow's present intent of what their needs are. He stated that this is what he was aiming for in all the items outlined in his request for information.
Rex pointed out that, in item II, Joe will tell Consumers Power what things
[
he used for consideration and these same things or considerations will be used again in item V.
Rex once again pointed out that he was only l
interested in items related to Dow's requirements for steam and electricity l
supply.
Rex pointed to item 4 in Joe's draft and stated that he would like Dow to be a little more specific if the Board is expected to make a decision under NEPA.
l tilt pointed out that this is what happens when Consumers Power wants Dow to be a little more specific. He stated that a source of concern will be j
Dow's problem of what to do with Consumers Power's request. Rex stated I
that he didn't think any lawyer would let Dow get away with their statement in a courtroom. Rex observed that Dow should say they are entirely dependent upon Consumers Power to supply them steam; that Dow has no backup for this steam; and, if the units do go down, Dow will be without l.
3 11 this backup but with the need still existing. Hilt pointed out that Joe's draft already says just that. 14 fit stated that he is hopeful that when the witness gets on the stand and is pushed to these other irrelevant issues, that Consumers Power's lawyers will stop the line of questioning.
1 Rex stated that he wanted Joe Temple to give him an outline of what he, i
Joe, wants to say. [4ilt pointed out that Joe has a great reluctance to say anything. Tiilt asked if it was possible for Dow to send Consumers Power a letter on this. Rex stated that the Court of Appeals wants to j
know what Dow's intent is. He stated that this has to be brought out now.
]
Ililt stated that Rex's observation may be true in relation to the big hearing, but surely not true for the suspension hearing. Rex stated that he thought they wanted to kr.ow this. Rex pointed out that, if Cow's intentions were to run their fossil fuel operations until 1990, the Board would want to know this. He pointed out that Consumers Power has already stated that if Dow doesn't need the steam, then Censumers Power would cancel one unit and move the other to Palisades.
f411t pointed out that Judd had told Lee that if Dow wanted out of the situation, then that would be the end of the project. f411t stated that he had the feeling that if what is being asked for by Consumers Power is furnished, this would invite the Board to say that this is such a tenuous thing, that this project should be put to an end. Judd re emphasized that he still wanted to hear this information from Joe Temple. itilt pointed out that once Judd hears this information from Joe Temple, then Dow has a lot of other problems. ftilt stated that it was his intent to do what-ever needs to be done to cooperate with Consumers Power. iie did point out, however, that one may come up with the conclusion that this is, indeed, a very tenuous thing.
Rex said that if Joe gets before the Board and states that it is Dow's
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intent to take an amount of steam and an amount of electricity, then this l
will suffice. flilt stated that he had no problem with that as long as i
that is all you ask Joe.
1 l
l l
l
12 Rex stated that he wanted to know what Dow was really going to do. He stated that he wanted to know why Cow was doing this and why they are there. He pointed out that there has been a stormy relationship between the parties.
Rex stated that he would like to put this out in the best light possible -- which is business judgment.
Rex pointed out that when this has been talked about, the parties were talking about mixing in items 2 and 3.
These items seemed to relate back to what was said on day one.
Rex stated that he didn't know enough about this contract to know what the restrictions were all about. Judd pointed out that the restrictions only went to how to use the steam that Dow gets from Consumers power.
He stated that the question was, "Can Dow sell this steam to other people?"
Rex stated that every time he got back into this situation, everything from day one seems to flow from the question of reliability of getting steam.
Lee pointed out that there are two things to consider here. One is that once the steam comes on, how reliable will it be; and, secondly, when will we get the steam?
Rex pointed out that he was going to have to put Consumers Power on the stand to talk about what they want to do in selling a portion of their output.
Rex stated that he thought there was a distinction between why Dow wanted the contract and why they wanted it changed from what is going on now in negotiations. Milt stated that the June 30 letter to Young.dahi lists several reasons for these negotiations. Milt pointed out that Rex wanted more specifics about the technical aspects con-cerning the amount of steam and electricity, the alternatives for steam and electricity and what the present fossil fuel operations can do.
He pointed out that it seems Rex did not want any more statements concern.
ing the problem areas underlying these factors.
Judd pointed cut that while Consumers Power may not need them for testimony, they would like all of this information at this time.
Rex stated that he didn't want any more frem Ocw than what they put in Joe's draft. He did point cut, however, that he wanted it in a core direct fashion. Milt stated that he thought he finally saw what Rex
13 meant.
Rex stated that he wanted the information from the scope of what Dow needs in steam and electricity. Milt told Judd that Dow would like to give Consumers Power details for their purposes here as long as this request didn't get into other considerations. Milt asked why did Cow have to talk about the best efforts clause and things of that nature.
Judd stated that he didn't want to hear this information from a legal side, but he did want to know what was troubling Joe Temple from a personal side.
Judd pointed out that he wanted to know why Joe had made the statements he made to the Press Club.
Milt pointed out that one cannot avoid getting into the details as long as one is going to get into the reasons for our decisions. Milt wanted to know why Consumers Power wanted to get into the reasons at all. Milt stated that this gets the parties into other areas of considerati)n.
Milt stated that he didn't know if what corporate attorneys say is privileged or not. Milt stated what he was struggling for was of what importance is Joe Temple's opinion to this situation? Milt pointed out that Joe Temple is prepared to answer in response to such questions con-cerning reasons. Milt did point out though that what is bothering Joe Temple is that he is concerned about Consumers Power's inability to supply steam and electricity and to share data in the area of money decisions, etc. Milt stated that these reasons from Joe are his personally and not necessarily the views of the Board of Directors. Milt wanted to know why Consumers Power wanted to get into this at all.
Rex stated that what he thought the best thing would be to be aware of a-1 the information in the case and then shape the facts the best way they could to Dow and Consumers Power's best advantage. Milt once again stressed that he thought a lot of the things Joe Temple would say would have the effect of prejudicing the on-going negotiations.
Judd stated that he wanted to know what some of the other things were that Joe Temple may state if he is asked. Milt stated that he had already listed a couple of things previously.
14 Rex stated that Bremer told him that if Dow doesn't have a witness there, then he, Bremmer, would subpoena Dow's witness.
Milt asked if it wouldn't be better if Dow let Bremer subpoena Joe Temple.
Rex stated that he didn't think this was the best thing to do.
The meeting was adjourned at 11:20 a.m.
The meeting commenced at 11:40 a.m.
Rex stated that he had a proposal to make. When the parties share general and policy stuff, Rex said that he could see no harm in having all of the people in the meeting present. He stated that, on the sensitive stuff Milt has been concerned about, he would csk Judd to leave the room when he, Rex, is preparing Joe as a witness.
Rex then sumarized what he wanted from Cow. He said he needed three things -- a Dow witness will have to be provided by Consumers Power or be subpoenaed by the other party; how to go about deciding what information to put in (1974 negotiations, current intent; corporate review); when Rex has to include those items, the best way would be to do this in the most direct manner and then prepare the witness so that the answers one gets are the best one can come up with.
Rex stated that he had been toying with the idea of not having Joe as a witness; but someone will probably subpoena him so we may as well just use him and go from there.
Milt asked why the parties just didn't go in and talk to Joe right away?
Rex stated that the parties could just go in and talk to him about the general outline. Rex stated that Judd could stay with the parties on this. Milt said that Judd may be present on the general stuff, but on cross-exam stuff, he should not be present. Rex stated that what he would like to acccmplish with Joe was to talk to him about what he, Rex, was going to need from him.
Rex stated he would then give him a couple of days for him to put the stuff together and then give him, Rex, an out-line of this. Rex stated he would like this information to be delivered to him by this Saturday in Jackson.
E
15 The parties then adjourned to meet with Joe Temple.
Meeting continued with Joe Temple now present.
Milt told Joe that Rex was going to go into those alternatives concerning Dow's needs and requirements for steam and electricity and Dow's intentions in those areas, but not the legal aspect of what happens if we have to sue Consumers Power or anything in that area. Milt then went over the general outline prepared by Rex.
Rex stated to Joe that, in the outline, he is really looking for the steam and electricity part of the subject between the parties.
Rex stated that i
this is what he wanted to focus on. Rex stated that he knows that any corporation that signs a contract that was to be completed in 1974 but is now scheduled to be completed in 1931 must review their options from time to time. Rex pointed out that in this review, there are reasons why 3
the corporation comes to the conclusions of going forward with the project or not. Rex stated that one must look at the availability, reliability, and safety of it.
Rex stated that what he was looking for in this outline was to go through the hassle Dow has been through to ensure themselves that this steam will be there in 1981. Rex stated that if the steam is not going to be there, then the corporation is going to continue to review the situation. Rex state.1 that he wanted more detail than was provided in Joe's draft.
Joe stated that he thought Dow would be willing to proclaim that it was a very good idea to get nuclear steam in the beginning and if the project was to go on stream today, it would still be a good idea.
Rex stated that he would like to limit the information to Dow's intent today during the hearing. He did-point out that there was no way this could be limited because of the other parties' interests. Joe asked if the Hearing Board will let the other parties get into his, Joe's, personal views regardless of its relevance. Milt then read the prefacing statement
16 i
that he had prepared for Joe's use and recital before the Board, copy attached.
Rex stated that he didn't want Joe to start off making this kind of statement initially even though he may have to say something like it in the hearing process.
Rex said that Joe should become sensitive to the fact that he, Joe, should state it's his personal opinion rather than Dow's position.
Rex stated that he will make the statement that Consumers Power has requested that Dow provide Consumers Power with a witness. Rex i
then pointed out that when it gets down to the 1976 decision date, the parties should get down to what Dow's position was and their reasons for it.
Rex reminded the parties once again that he was talking about steam and electricity, and not about other things. Rex stated that he was really looking for Dow's alternatives in these two areas.
Rex observed that Joe made the decisions on these items and passed them up through the system.
He then pointed out that Dow USA then made a decision on the matter. Rex stated that, as soon as this fact is brought out, the other side is going to ask Joe what his personal opinion is and our side will object -- but to no avail. Rex stated that what we are going to do today is cover some of Joe's reasons as to why he arrived at his decisions in a personal sense.
j Rex stated that he needed to do this for cross-exam purposes and this information gathering would be done without Judd being present. Rex stated that, on the negotiations, he would like to get into Cow's intent just a little bit further. Rex told Joe that he may be asked about what Consumers power's intent was in the negotiations so Consumers Power will get Joe a copy of what Consumers Power will want him to say on this. Rex j
told Joe that he would probably go on the stand on 10/6/76 or 10/7/76 and f
his statements would be as of that date. Rex stated that the questioning j
was going to be by oral means. Rex pointed out that what becomes important
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is not the idea he may want to convey, but the words he may use to convey j
i t.
l Joe wanted to know why one couldn't just write it down if one's words are what one is. Rex told Joe that he really wasn't interested in Joe's l
17 words.
Rex pointed out that Joe talks differently than he writes.
Rex stated that this is why he would like Joe to prepare an outline frca his, Joe's, own words in response to the outline Rex ha given Joe.
Rex said that he would like Joe's outline by Saturday of this week (10/2/76) and that he would get back to Joe and discuss it with him on Monday (10/4/76). Milt asked Rex if it was possible to delay the discussion between Rex and Joe until Tuesday. Rex stated that he would probably still be talking to Joe on Tuesday and he felt he needed two days to do this. Therefore, Rex emphasized that he would still like to get together with Joe on Monday.
Milt pointed out that Rex would like as many more specifics as Dow can give him on what Dow's requirements are. Milt stated that the information doesn't have to be written in formal fashion but rather in a raw data form and then put into Joe's own words. Rex stated that what he really wants is information to show that Dow was really reviewing a business decision. Rex stated that, under the circumstances, this review was the proper thing for Dow to do and to continue doing it.
Rex pointed out that he would rather Dow err on the side of too much on their outline rather than not enough. Rex observed that he had to get into a lot about Joe and his feelings on the matter.
Joe stated that he hoped he didn't have to get into an area that a Jim Burroughs or an economic evaluator could answer when he takes the stand.
Rex stated that the data Joe gets from other people should be put in a file and kept. Rex observed that this will allow the parties to get that person on as a back-up witness becausa he didn't contemplate putting Joe on the stand as an expert in any of the areas. Judd stated that one of Cherry's tactics was to take a person out of his particular area of expertise and allow him to answer questions in order to trap him.
Milt talked about Dow's plans on coal gasification. Rex stated that if Joe is asked to talk about best cost / benefit alternatives, he should not bring up the coal gasification item because Dow has stated that the nuclear power steam is the most economical alternative. Milt pointed
m 18 out that no one went into Dow's cperations to see if there are other ways to generate steam.
Rex pointed out that if Dow would have stated that the best alternative was not nuclear steam, then the parties would be in a position to discuss other alternatives at this point.
Milt observed that the parties have to be very careful that this coal gasifica-tion item does not get into the trade secret area.
Rex stated that he didn't intend to raise the issue of nuclear steam versus non-nuclear stear in the suspension part of the proceedings. He observed that there is a greater probability that when the cost / benefit analysis is redone, the Board will get into this area.
This will occur in the big hearing.
Joe pointed out that the data Dow has on the nuclear thing is what they have received from Consumers Power and then Dow looked at it for their purposes.
He stated that the base set of facts is one set of numbers but Dow looks at it from different viewpoints. He further stated that the alternative review does not spring from information Dow got from Consumers Power but rather from information that is generated internally.
Milt told Rex that what Dow will try and get for Rex by Saturday is a response to the' one through six items (including attached documents, if necessary) to the best of Dow's ability. Milt asked Rex for an approxi-mate time he would like to get together en Monday.
Rex stated that 8 a.m.
in the morning would be fine with the possibility of going through Tuesday until finished. Rex stated that he would like to start with the back-up people and go from there.
Milt asked Rex if, in his planning for the suspension hearing, was he, Rex, going to use Joe as the second witness.
Rex stated that he had to go with Keeley first because Keeley will go into the Consumers Power area. - Rex then said that he would have to go with someone from Dow next. Af ter Dow, Rex said he would go with the environmental impact guy. Joe asked Rex when Steve would come in.
Rex said that he could play with Steve and Joe.
19 Judd pointed out that the discovery file has already been talked about and he stressed that Dow should make sure that this file is made up.
Rex said that Dow should separate out the privileged information from the other material in the file. Judd stated that the file should include the proposal from the air pollution people, press releases concerning Joe's remarks, and notices under the contract regarding estimated take and reserve capacity.
Rex stated that he didn't have much time to comply with the discovery request on the big hearing. Rex asked Lee to make sure that he, Lee, put together a file of documents to back up Dou's position.
Rex asked Joe to make sure, when a back-up person is going to be used, that that person have the back-up material he worked from.
The meeting adjourned.
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MEtiORANDUM TO FILES D. A. DURAM RE:
DOW/CO.'tSUMERS POWER MEETIMG OF 10/12/76 The following memo is an accurate summary of what was said during the meeting; however, it should not be regarded as being verbatim in any sense.
Messrs. Nuta, Wessel and I met with Judd Bacon, Rex Renfrow and Dave Rosso from 10:45 a.m. to 4:25 p.m. on Tuesday, October 12,1976 in Building 17 of Dow's Midland Plant.
Mr. Wessel talked about a letter he had received frca Myron Cherry asking for discovery and then read a draft of a letter he was consider-ing sending to Mr. Cherry on the discovery matter. Mr. Bacon stated that he had some deletions to suggest be made on Mr. Nute's 10/6/76 draft of Mr. Temple's testimony.
Mr. Nute talked about the MCS meeting where Mary Sinclair was scheduled to present a paper regarding nuclear power.
Mr. Renfrow stated that he had received a phone call from a Mr. Arnold, labor representative, who was upset about the effect the proposed shutdown would have on the labor force in the area.
Mr. Nute stated that he has received about ten requests from people who want to make their feelings known to the Hearing Board. Mr. Renfrow felt, to a limited extent, that appearances before the Board would be the be:t way to handle their concerns.
Mr. Bacon tentioned what the possible effect such a shutdown would have on the community.
Mr. Renfrow cited the recent Seabrook case regarding the impact on the community from a shutdown. He stated that this type of information could be given to the community to give them an idea of what impact a shutdown would have on the area.
2 Mr. tlute asked Mr. Renfrow for the current status on the Seabrook Mr. Renfrow commented that the MRC was going to review the case.
he said that Consumers Power was going to file an amicus curie case.
brief in the matter.
Mr. Bacon pointed out that briefs were due on 10/18/76 and oral argument was going to be set for 10/24/76.
Mr. Renfrou talked about the intricacies of the Seabrook case. He then handed out a copy of the revised Midland Hearing Schedule, copy attached.
Mr. '.!essel asked Consumers Pcwer what was wrong with the 10/6/76 draft of Mr. Temple's testimony that Dow gave to them. ftr. Bacon responded that he felt the 10/6/76 document was just an outline of testimony rather than an actual draft.
Mr. Nute asked if Consumars Power was going to do the testimony in question and answer form.
Mr. Renfrow stated that he didn't want it done in question and answer form.
Mr. Messel stated that he wanted to tell Consumers Power where he felt things were today. He stated that the first draft of Mr. Temple's testimony was his work and his words. He then stated that the second draft was Mr. Mute's work and words. Mr. Messel did point out that the form of the testimony was not really important.
He then stated to Consumers that what Dow has given Consumers Power to date is final in terms of what Mr. Temple has to say on the matter. Mr. Bacon stated that Dow has done a good job on what they have done, but there are some holes in the work that need to be filled. Mr. Wessel stated that he needed to know what information Consumers Power wanted in the first and second drafts. He said that he felt Dcw had done everything that needs to be done in respond-ing to requests from Consumers Power regarding Mr. Temple's testimony.
Mr. Rosso stated that he wanted to go down through the material Dow has given Consumers Power and ask some questions concerning the material.
Mr. Wessel stated that he and Mr. Nute would agree to do that.
Mr. Renfrow stated that he would like to see more information end up in Mr. Temple's testimony than what he (Rex) has asked for to date. He pointed out that Consumers Power has not really decided uhat to put in
s 3
in tems of cross and direct. Mr. Rosso stated that he and Mr. Renfrow and Consumers Power viewed the information Dow has supplied as repre-senting that which Dow has to say about the matter. He then pointed out that they would then go back and review the information.
Mr. Messel stated that he wanted to emphasize once again that Cow did not consider themselves a party and that Mr. Temple's testimony was a Consumers Power document and Consumers Power would decide what would actually be put in. He stated that Mr. Temple just wanted to make sure that whatever went into the document was accurate and comolete. Mr.
Wessel stated that, apart from questions of trade secrets and privilege.
Dow would share any information that Consumers Power felt was important.
He then emphasized that Consumers Power would be the authoring party, and Dow was only the sucolying party.
Mr. Rosso stated that Consumers Power shared the same understanding. He then said that the parties should start with the material on the alterna-tives. He said that the area dealing with the graphs is where Consumers Power has the most questions. A discussion followed between Messrs. Rosso, Bacon, Renfrow and Nute on this matter, copy attached. Mr. Nute stated that the charts or graphs were the ones used in the Dow U.S. Area Review.
He pointed out that he felt the information on coal costs was given to Dow by Consumers Power. Mr. Renfrow stated that the information shown was based on old costs. Mr. Nute stated that he felt the infomation was based on new coal costs. A discussion followed and was centered on what the charts meant and where the information came from. The ROIST concept was discussed. Mr. Bacon observed that if tnis subject came up on cross-exam, then Mr. Temple should answer questions according to what was actually done in this area.
Mr. Renfrow stated that the strongest reason as to why Consumers Power cannot stand a delay in construction is because of D0w's needs. He pointed out that this is why Mr. Temple has to come up with the type of reasoning which will support this point. Mr. Renfrow pointed out that the charts were of Mr. Temple's work and could be put to use. Mr.
Rosso observed that there may be no need to use any charts.
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~ Mr. Renfrow stated that Consumers Power would not argue with Dow on the coal costs being too low as the truth probably lies somewhere in between.
Mr. Bacon stated that the only thing that is relevant is--does Dow still want steam and what are they going to do about their present fossil fuel facilities.
Mr. Rosso stated that Consumers Power has not made the technical decision as to how much of the material Cow hss given them will actually be put in Mr. Temple's tes timony. He did point out that Mr. Temple's position should be as told to Consumers Power. He then mentioned that Mr. Tempie should state that Dow is reviewing the situation all the time and they have come up with the conclusion to take the steam and power from Consumers Power.
Mr. Rosso told Dow that Consumers Power would have to look at all the information Dow has given Consumers Power and then discuss it with Dow.
Mr. Renfrow stated that he would like to sit down with Mr. Nute next week and run through Dow's documents. He pointed out that this may give him a better feel for what is in those documents dealing with the cost /
benefit analysis. Mr. Wessel stated that he didn't see any reason for Mr. Renfrow to have to do this. He pointed out that Dow has done what Consumers Power has requested. He further stated that Consumers Power should nois sit down and review what they have from Dow and then let Oow know what more they need.
Mr. Wessel stated that Consumers Power should
.let Dow know at this point in time what documents they are interested in seeing. Mr. Bacon stated that Consumers Power needs to review all docu-ments because of the request for cross-exam. Mr. Wessel asked Mr. Benon to be more specific on what documents he was talking about.
Mr.
'ferf stated that he didn't want current negotiating documents right now.
he stated that he hoped Mr. Bacon and Mr. Nute could get together and continue with current negotiations.
Mr. Renfrow then stated that Consumers Power needed the back-up documents of what had taken place in the past.
Mr. Nute stated that there have been four meetings on current negotiations.
He stated that there are minutes from Dow's notes of those meetings. He pointed ou. that Consumers Power has copies of the minutes of the first two meetings.
Mr. Wessel pointed out that Dcw gave Consumers Power copies
5 of those minutes and Consumers Power had responded that they were not satisfied with the content.
Mr. Rosso stated that Consumers Power needed the infornation requested for cross-exam preparation. He pointed out that another reason Consumers Power wanted the information was because Mr. Myron Cherry may want to get into what Dow's position will be six months from now and what informaticn Dow would use to base their position on.
Mr. Renfrow pointed out that, since Consumers Power is going to state that they cannot stand another delay because of Dow's problem of needing a reliable supply of steam, Mr. Cherry will probably want to get into Dow's decision and positior.
Mr. Rosso pointed out that everything Consumers Power has from Dow to date is strongly slanted towards the economic side. He suggested that it may be a good idea to look into all the other things that were considered. He stated that he would like to see a list of what Dow had considered.
Mr. Wessel made che observation that once Consumers Power gets into this area, then one gets into an area of how much Dow has relied on Consumers Power and Mr. Cherry would have a field day with the subject.
Mr. Rosso pointed out that Consumers Power views the information Dow has given them as a step towards Consumers Power making a decision on what to put into Mr. Temple's testimony. He suggested that the parties go through the 10/6/76 draft of Mr. Temple's testimony as prepared by Mr. Nute.
A discussion followed among those present regarding the need to put into evidence all the contracts associated with the matter. fir. Wessel suggested that the original contracts plus the negotiated changes be put into the record via Consumers Pcwer witnesses.
A complete review of each item on Mr. Temple's drafted testimony followed with all parties present participating.
6 1.
ORIGINAL CONTRACT (S)
Mr. Renfrow pointed out that the Court of Appeals has ruled that the entire cost / benefit analysis is up for grabs. He did point out, however, that if an item had not changed from its original position, then Consumers Power does not have to worry about it.
He then suggested that it may make sense to take out the information in the draft on the original contracts and start with the 1974 modifications to the contracts. He stated that this may be the way Consumers Power may want to proceed or approach the-matter but a decisica will be made later.
Mr. Renfrow did state that he would still like the information on all areas though.
A question arose on who could calculate the cost of steam. Even though Mr. Jim Burroughs was mentioned in this regard, Mr. Nute suggested that someone from Consumers Power should testify on this subject.
II. 1974 MODIFICATIONS TO CONTRACT (S)
A discussion took place between Messrs. Renfrow, Nute, and Bacon on Dow's intentions on running its present fossil fuel plants and what type of plant would they install for back-up purposes.
Mr. Renfrow wanted to know if Dow was far enough along in their plans to tell the Board or Staff what Dow was going to do in this area and what effect this may have on air pollution. Mr. Nute stated that Dow was not really sure where they were going to be in this area in terms of what alternative to go with. Mr. Rosso asked if the plants were going to be new and Mr.
Nute responded that they were. Mr. Nute also pointed out that whatever type Dow would put in, it would meet new air quality source standards.
Mr. Renfrow then expressed a fear that Consumers Power may be caught using two different sets of costs in the area of delivery of 1,000,000 pph of steam -- Black and Veatch Study vs. Consumers Power esti: ate of costs.
III. CONTINUING MICHIGAN DIVISION REVIEW l
In the area of a continuing Michigan Division review, Mr. Rosso stated that it was important to emphasize that the Dow Board's decisicn is the
7 thing the parties should be looking at.
Mr. Wessel stated that that was his p int exactly and also why he felt so reluctant to answer questions from Consumers Power pertaining to the Michigan Division review.
Mr. Wessel did state that, in relation to Item III, C, on decisions and reasons, Dow was concerned with putting down Mr. Temple's reasons because tnis gets Dow into a very sensitive area. He pointed out that if this area is mentioned in cross-exam, he would object on the basis of privilege, irrelevance, etc.
Mr. P.osso then wanced to know what isc. Temple's reasons were for coming up with the decisions he did on Item III, C.
Milt pointed out, once again, that this was a sensitive area that the parties have talked about at length and he questioned what effect, if any, this information could have on the entire case.
Mr. Rosso stated that when Consumers Power considers what to put into Temple's direct testimony, they will have to try and anticipate what Mr.
Cherry is going to ask on cross-exam. He stated that Consumers Power may either put the information into the record during their direct case or be ready to meet it, should it come out during cross-exam. He pointed out that these are Consumers Power's alternatives. He further pointed out that his original stand was not to get into the Division review and the reasons for that review being reversed by the Dow Board. He then made the observation that he is now becoming concerned because he has heard that Mr. Cherry may already have this information.
Milt Wessel pointed out that it might be a good idea to have Joe Temple testify that, because of the on-going negotiations, Dow would be reluctant to get into this area because of its sensitive nature. Milt further pointed out to Mr. Rosso that Consumers Power should make a decision as to whether they want to take this position or not.
Rex Renfrow stated that one of the reasons he asked for the economic stuff was because of the possibility that the Dow Board relied on it to make their decision. Milt pointed out that Joe Temple's concern has te do with the reliability of Consumers Power as a continuing supplier even af ter the plant comes on stream. He did state, however, that this feeling may not have been instrumental in the Dow Board making its decision. Milt observed that the Dow Board probably made their decision en the economics
8 of the case and this is why Renfrow wants this economic information.
Dave Rosso stated that he didn't want to second guess Rex, but he has heard what Rex has said about Joe's position and would like to form his own opinion on the matter.
Lee !!ute discussed how the decision was made by the Cow U.S. Area Board.
Dave Rosso wanted to know if there was any
'qg further to discuss on Item III, C.
Rex stated that he likes to know what a witness will say when he asks the witness for his opinion on a particular subject. Rex pointed out that this is why Consumers Power needs to know if there are any documents in existence that hava a bearing on the matter. He further
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stated that it would be helpful to get a five or six page thing on Joe's opinions on this area.
Lee asked Judd Bacon to leave the room.
Milt Wessel proceeded to relate to Dave and Rex hcw Joe felt about certain things, and why Joe had these particular feelings. Milt stated that Joe has a credibility problem with Consumers Power because of Consumers Power's actions over the years. He discussed several items.
- Consumers Power entered into a new contract agreement in 1974 and then could not continue the plant because of money problems;
- Mr. Youngdahl's entire demeanor in the matter;
- Consumers Power's sale of its position regarding future nuclear fuel purchases;
- financing by Consumers Power and disclosure by Consumers Power to Cow;
- Consumers Peaer not prepared to discuss coal requirements for future needs;
- Consumers Power's failure to tell Dow about delays and why the delay came up;
- track record of Consumers Power was not one which would lead a persnn to have much confidence in Consumers Power's ability in the utility area; 1
- a lot of what Myron Cherry states about Consumers Power is really true.
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9 Rex asked Milt if the things Milt had just related about Joe's position found their way into the request from Joe to the Dow Board when Joe asked for a review on the matter. Milt stated that most of what Joe sent to the Board did not contain many of the things he had just talked about.
Lee Nute talked about his own experiences with Judd Bacon at a meeting with Dow and Consumers Power on this issue. Lee stated that Consumars Power told Joe Temple to be sure that he was ready to go on the witness stand, but they didn't ask Joe what he was going to say once he got up there. Lee further stated that Joe finally told Consumers Power at this particular meeting what his personal feelings were regarding Consumers Power.
Milt pointed out that one consideration Joe Temple may not be swayed by is that crude petro is the lifeline of Dow and Dow needs nucle:.r fuel development to protect this and free up oil for their other uses. Milt then talked about Consumers Power's attitude in negotiations and their refusal to really address the problem and make decisions about what Dow j
is asking for in regard to changes in the contract.
Rex asked if he and Dave Rosso should go back to Consumers Power and tell them that Consumers Power should try and conclude the on-going negotiations because it would remove a great number of items of concern when the parties get to the hearing? Rex also asked how many of the items of concern would be taken care of if the negotiations were finalized? Milt stated that if Joe Temple could get all the changes he has asked for regarding a definite date of " liability," he would be happy and the various problems would not exist. Dave Rosso stated that if Consumers Power were to put in an "out date" now, this would be very harmful to their position in the sus-pension hearing.
Milt pointed out that Mr. Youngdahl is of the opinion that Dow has the right to just walk away from the project but Judd Bacon keeps saying Dow does not have tnat right. Lee Nute talked about other examples of Consumers
10 Power thinking Dcw can get out by 1985. Milt stated that, if Consumers Power would say that 1985 is when the plant is going on-stream, most of the Dow Board would probably say that Dow will " walk" on this.
Dave Rosso stated that Consumers Power's position on this is -- Consumers Power cannot stand any more delays and there is a possiblity that Dow will " walk" because of another delay.
Milt pointed out that the cost / benefit analysis is affected dramatically by a two-year delay in construction and this has to be considered.
Rex Renfrow stated that, on the substantive issues -- Consuners P wer has a winner, on the suspension hearing -- Consumers Power has a prcblem because the appeal board may not realize that Dow does not have until 1935 before they are forced to act on the decision of whether to start on new plants or not.
Rex made an observation on the issue of documents regarding negotiations.
He stated that some of the documents have been turned over to Consumers Power and some of them have not. Rex then asked Lee if Dow had a file of documents that Dow has sent to Consumers Powr.r and; if so, Rex said that he would like to sit down with these documents and go through them.
Lee stated that Rex's request could be complied with.
Rex stated that he would not look at the documents regarding negotiations that Cow has not already given to Consumers Power.
Dave Rosso asked what the nature of the documents were that Consumers has not seen regarding negotiations. Lee stated that there were a lot of privileged information plus a lot of information that is " confidential in-house," but may be discoverable. Dave pointed out that it may give Consumers Power a problem if it is discoverable.
Milt stated that if Myron Cherry asked Consumers Power to get this informa-tion from Dew, Dow may refuse to do this and run the risk of having it subpoenaed. Milt stated that Dcw would hope not to have to deal with this at all because they would hope the entire area could be regarded as irrelevant!
11 Rex made an observation relating to how to handle the sensitive iocuments.
He stated that Dow could turn over all the documents they used to support Joe's testimony. He did point out that this would depend on which direction Consumers Power took on direct.
Milt stated that this cast is Consumers Power's responsibility and Dow will try to make sure that they help Consumers Pcwer in their endeavor.
Milt once again stated that the sensitivity of the documents regarding current negotiations causes a problem.
Dave Rosso stated that Consumers Power's concern abcut this hearing is that the Scard is running scared with intervenors, in general, and the applicant will probably lose in the long run.
Dave Rosso than asked that if Rex came up to see Dow, would Cow be willing to let Rex review all those documents that Dow does not. consider confidential or privileged?
He asked if Dow could give Consumers Power a list of those documents they consider to be confidential. Milt stated that this would be no problem as long as Consumers Power does not need the confideatial material that relates to on-going negotiations between Dow and Consumers Power.
Dave Rosso stated that a document that was integral to the decision-making process with Dow should be included, excluding those documents that are confidential from an "in-house" stand in relation to the on-going negotiations.
Dave Rosso asked Dow if Dow could supply Consumers Power with this type of list? Lee stated that, as Dave Rosso had outlined it, Dow would have no problem supplying this list to Consumers Power.
IV. 1976 00W U.S. A. REVIEW Dave Rosso asked what decision the negotiating team came up with. Lee Nute stated that the negotiating team position was -- there is no longer a probability or a possibility that the nuclear plant would be good for Dow's Midland Plant. Lee pointed out that this decision was stated by Joe Temple to Russ Youngdahl at a 9/13/75 meeting. Lee stated that this is the itecision that the Dow Board rever:ed.
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The various charts listed ynder Item IV, B were discussed. Judd Bacon asked for a copy of the Black' ano Veatch Study and was given one by Lee Nute.
In referring to factors (uncertainties) that sere neitha* discussed nor resolved. Dave 'Rosso pointed out that he oreferred that this statement not be included in any testimony.
V.
PRESENT INTENT OF DC'!
I Dave Rosso askeri if Dow had any infornation that shows steem needs beyond I 1982? Lee Nute' stated that Dow did not have this information. Rex Renfrow asked Dow for eiiergy conservation information within Dow. Lee pointed out that Dou has had an energy conservation program for many years.
A discussion '6mong those present took place regarding ItemiI, B cc electrical take. Dave Rosso' pointed out that Consumers Power needs tolnow the-following -- Dow will need "X" number of KW for their process.
"Y number of KW being' taken from Consu.?ers Power and "2" number 'of KW to be generated
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' by Dow's own facilities. Lee pointed'out that if Consurers Power's steam facilities come on and give steam to Dow ecoronically enough, Dow would not have to generate their own steam.
t This concluded the discus:fon by those'present on the draft of Joe Temple's testimony.
A discussion ensued about setting up a schedule for preparation of Joe Temple as a witness.
Rex stated that either he or Dave Rosso would talk to and prfpare Joe.
Dave Rosso stated that Consumers Power will go back ano come to a decision on wnat approach they want to take. He stated that this should be made in the next two days or after Consumers Power takes a look at the documents they have requested from Dow. He then stated that either he or Rex would have to sit down and do some writing on the ma-ter. Dave Rosso stated that Consumers Power would then like to be able to check their draft against what
13 the people who have worked on the matter have done:
Dave said Consumers Power would then like to sit down with Joe Temple and a copy of the draft.
A discussion took place on scheduling of time and place for review of documents and preparation of Joe Temple. The tentative schedule agreed upon was -- Consumers Power will make approach decision by 10/13; Rex will review Dow documents on 10/18: Dave Rosso will start writing on 10/141 Consumers Power will send Dow their draft on Joe's testimony on 10/19 and then come up and review it with J6e on 10/20; Rex stated that after the 10/20 neeting, Consumers Power will give Joe nine days to writa up his testimony; witness preparation of Joe by Consumers Power will be on 11/8.
Witness lineup was discussed.
Lee Nute then went over the list of documents Rex was going to want to review when he came up on 10/18/76. This list included the following:
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- money sunk into power plants to keep them going;
- list of documents Dow regards as confidential vis-a-vis Consumers Power; l
- Black and Veatch Study;
- back-up documents: all documents relating.to what Dow and Consumers Power have discussed regarding Joe's testimony, excluding confidential documents;
- documents reg:rding 1974 negotiations;
- sets of meeting notes from two 1976 negotiation meetings that Dow has given Consumers Power.
i The meeting adjourned at 4:25 p.m.
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V, r%.
MEMORANDUM TO FILES l
D. A. DURAN i
j RE: DOW/ CONSUMERS POWER MEETING OF 11/1/76
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The following memo is an accurate summary of what was said during the meeting; however, it should not be regarded as being verbatim in any sense.
Messrs. Nute, Wessel and I met wich Dave Rosso and Rex Renfraw on November I,1976 in Building 47 of Dow's Midland Plant.
Dave Rosso opened the meeting by stating that he and Rex-would like to talk about Joe Temple's testimony.
Rex asked Milt about the documents he wanted to take back-to Chicago with him. Milt asked Rex if he was talking about the sealed package of documents. Rex discussed the documents that he was going to let Myron Cherry see in Jackson. He stated that Mr. Cherry would be asked to sign a protective order regarding documents of meetings held between Dow and Consumers Power.
I Milt stated that he really didn't care if Mr. Cherry sees those particular documents -- he just didn't want Consumers Power to see them without letting Dow see Consumers Power's documents of a similar nature. Milt discussed Dow's rights under the " protective order."
He stated that if Dow is forced to let the documents out under the I
protective order, then Dow wants to see like documents from Consumers Power.
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Rex Renfrow talked about notes that Consumers Power has like Mr. Keeley's notes.
Rex stated that Dow would be able to see these notes. He stated that Consumers Power doesn't have any meeting notes similar to Dow's.
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2 Rex then talked about Mr. Youngdahl's notes. He stated he wouldn't let these notes out until he absolutely had to.
Dave Rosso pointed out that both Mr. Youngdahl's notes and Dow's docum.ents would be under the protective order.
Milt talked about the protective order again. He went over the terms of the protective order between Dow and Consumers Power.
He pointed out to Rex tnat the documents Rex asked about initially would be pro-tected under the same order.
Rex stated that he didn't want to see the-subject of " continuing negotiations" aired in public and Milt voiced his agreement with this statement.
Lee Nute asked Rex about the possibility of getting out of the hearing.
Rex stated that Consumers Power hasn't anything on this.
Rex asked Lee if he had had a chance to look at the ER Rex had sent to him. Lee stated that he had given it to Jim Burroughs and Jim was looking at it.
Rex mentioned that he had 'a meeting set up with the Mayor to talk about the impact of delay'6n the community. He then talked about the one million pounds of back-up steam. Rex stated that he didn't want to get into a debate with Dow at the hearings on the economics of this item. He stated that it would be better if Dow and Consumers Power could agree on the figures beforehand. Rex stated that the price of coal was increasing at a rapid rate and expressed a desire to talk with Dow on this subject some more.
Dave Rosso suggested that they get started on Joe Temple's testimony.
He stated that the main problem he had with Dow's draft is that it looks more like an affidavit than testimony. He went through why he had drafted the testimony in the manner he did in the first place. Dave Rosso stated that he had wanted the testimony to flow from Howell's testimony to Joe's testimony. He talked about why he put in certain statements to " flavor" the testimony. Dave Rosso stated that he was confused as to why Cow had cut out some of these items in their redraft
3 4
or why Dow had gone back to an affidavit format. Dave Rc'so stated that he was trying to lead Dow back to working from Consumers Power's draft rather than Dow's draft.
Milt stated that the Dow draft was not done inadvertently.
He stated that what was done was done with a lot of thinking. Milt pointed out that the third person format is different frcm what Consumers Power did, but is consistent with what was done in the earlier draft proceedings.
Milt stated that Dow is concerned with what may happen on Joe's cross-He stated that he did want to make it very clear that the testimony exam.
was Consumers Power's doing and not Dow's. Milt stated that Dow has this feeling because Dow is concerned with Consumers Power coming back at a later date and saying that Dow shot the " thing" down. Dave Rosso stated that he really didn't follow what Milt was saying. A discussion followed between Dave Rosso and Milt on this point.
Milt stated that Dow is concerned that once some of this stuff on con-tinuing negotiations is out on the table, people may then tend to select things that would show that the negotiations between Dow and Consumers Power are of a very tenuous nature. He stated that this could be very easily brought out on cross-exam. Dave Rosso asked if it would be better if the testimony was put in a " question and answer" format. Milt stated that this would at least show that the testimony was being brought out in response to Consumers Power's questions and not a product solely of Dow.
Milt voiced a concern that Consumers Power's draft of Joe's testimony could be easily regarded as being of a misleading, or disingenuous, nature because of the way it was put together. Dave Rosso asked Milt why he felt Consumers Power was being disingenuous. Milt stated that-Dow is very interested in maintaining its rights to leave its options open.
He stated that he felt Dow has a good case for a cause of action against l
Consumers Power based on the "best efforts" clause in the contract between j
Dow and Consumers Power. Milt pointed out that Dow has not said a thing l
about this item. He mentioned that Dow wants to leave this option and j
others open. Milt stated that a 'ot of what happens in the future depends
4 on what is agreed upon during continuing negotiations.
Milt stated that i
he thought he had made this clear when he talked to both Dave Rosso and Rex about Joe Temple's views at an earlier meeting.
Dave Rosso stated that he thought Milt was only talking about the
" cost" factors and the " energy" factors.
Dave Rosso stated that he thought Milt said that if these factors were not a problem, then Dow would be prepared to go forward with the matter. Milt stated that he was also concerned with the " reliability" factor. He discussed this espect. Milt pointed out that all those things are there, and if Joe Temple is pushed, ne will say tham Milt stated that Joe has two concerns -- he supports Consumers Power's efforts but he also will not jeopardize Dow's rights.
Dave Rosso talked about the fact that Consumers Power did not have in the testimony that Dow was also concerned about Consumers Power's " reliable-ness" to deliver steam, and if it came to a certain point that Dow would
" walk." Dave Rosso stated that Consumers Power didn't put this into the testimony because it would lose the case.
Milt went through Consumers Power's original draft and pointed out that one could read into the statements about supply options that there are several ways to allow Dow to meet their needs. Milt stated that Dow is concerned about Consumers Power coming back and accusing Dow of trying to mess the thing up.
Milt then talked about the problem he had with Joe Temple stating that he is familiar with Mr. Howell's testimony because Joe may or may not be familiar with it and this leaves Milt with an uncomfortable feeling.
Milt then talked about whether or not Dow will agree with Consumers Power en what is " principal" amont the things that were going back and forth between the two. Milt asked why Consumers Pcwer just couldn't say that the contracts speak for themselves. Dave Rosso stated that Consumers Power thinks that Mr. Howell's testimony concerning changes made in 1974 would be directly out of the contract and Joe Temple should not have any
5 problem with this, Milt stated that Joe has not seen Mr. Howell's affidavit. Rex stated that Consumers Power would be willing to send this affidavit up to Joe for him to read. Milt pointed cut that Joe would be " characterizing" the document and this would be done by Joe's accepting Mr. Howall's testimony. Milt wanted to know why Consumers Power wanted Joe to characterize Mr. Howell's testimony.
Dave Rosso stated that Consumers Power wants this characterization because the tettimony is factually correct of what the contract is all about concerning the 1974 changes and it would be better if Joe affirms this on direct instead of on cross. Lee Nute pointed out that there is violent disagreement between the parties (Dow and Consumers Power) on what changes were " principal" and what they meant.
Dave Rosso pointed out that the above problem is covered in the last sentence of their statement on this matter. Rex pointed out that the only time this issue becomes important is in the case of abandonment.
He stated that what Consumers Power has tried to do is go into the changes that affect the cost / benefit analysis for the Commission.
Milt asked Rex where Consumers Power had actually said this.
Rex stated that Consumers Power didn't say it per se. Milt pointed out that if Joe Temple doesn't make this clear in the hearing, it could come back to haunt Dow later on in a possible lawsuit with Consumers Power. Mil t stated that this is why Dow does not want Joe to characterize Mr.
Howell's testimony as being factually correct. Dave Rosso stated that he could agree with Dow that the statement "following principal changes" could create a problem.
Milt stated that the proper way to do this whole thing is to say that the contract speaks for itself.
A discussion between all present took place about various feelings and relationships between Dow and Consumers Power that have evolved over a period of time. Lee Nute stated that Cow and Consumers Power are at a point now where they do not trust each other at all. Milt pointed out that, because of this mistrust between Dow and Consumers Power, it would be better to say that the contract speaks for itself.
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Rex stated that in the interest of getting on with the matter, they should start with what Lee Nute has submitted as Joe's testimony and j
keep in mind what we are doing this exercise for. Rex stated that if Consumers Power wants to include things that Ocw has left out, they can j
talk about it.
4 Dave Rosso pointed out that if the testimony was prepared in a question and ' answer format, it would eliminate a lot of problems. Rex agreed with this point and stated that he wanted to go through the draft.
Rex then proceeded to suggest several changes and codifications or additions. He said that in the first paragraph he would like to add the folicwing statement - "This testimony was prepared under my super-vision and direction and is true and accurate to the best of my knowledge."
He suggested changes to wording regarding the period from 1967 to 1974.
He stated that he would like to get whatever was factual about 1967-1974 in the draft. He suggested, on page.two, that we may want to consider adding the statement that Dow is going to continue to review as a result of any significant changes or happenings in the matter. Lee Nute pointed out that this is already stated later on in the draft.
4 Dave Rosso suggested that, in paragraph 4 on page 5, we may want to change this in some manner as to what Dow will do in the event of some signifi-cant changes. Milt stated that this would present Dow with a significant problem. Milt pointed out that Consumers Power is going to pick what questions to ask and Joe will answer them. He stated that if Joe.is asked a question and he doesn't come through as having answered the questien, he would be criticized for this. Milt stated that he didn't want Joe to get into this type of situation. Milt stated that, in a question and answer format, this may not happen and it could be better for Joe.
i Rex stated that Dow may want to respond to a question that Dow wants to 4
reserve its options. Milt stated that the Dow Board got the impression what Consumers Power wanted Dow to produce a witness that didn't knew i
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7 what had gone on. He said that the Dow Board didn't like this approach and, directed that Dow's witness was to be completely aware and so testify.
Dave Rosso stated that he didn't feel he was asking Dow to make a substantive change.
Milt asked Dave Rosso if Consumers Power ir. tended to ask a question pertaining to the 1976 management review. Dave Rosso stated that they may ask Joe to only state what the conclusion of the Corporate review
- was, i
Rex stated that they may want Joe to then conclude that Dow wants to keep its rights and options open.
Lee Nute pointed out that Dow management saw two general areas of significant misrepresenation from Consumers Power that Dow was concerned about:
- the issue that things may have been misrepresented by Consumers Power on their prospectus;
- serious misrepresenation by Consumers Power since the 1974 amendments were agreed to.
Rex stated that he knew about these issues. He then pointed out that he didn't want anything in the draft that would allow Mr. Cherry to say that Joe Temple had misled him. Lee Nute observed that this is the tay Joe Temple wants it stated.
Milt pointed out that, in response to the question, "What was the conclu-sion," Joe may want to say that nuclear steam was the decision and not get into the area of options, etc. Lee asked Consumers Power to tell him how they wanted it phrased and he would then take it into Joe and 5
see what Joe had to say about it.
Dave Rosso stated that they were going to have to do some drafting in the afternoon and if they saw Joe then, they could explain some of these items to him.
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Rex stated that he would like to have the statement continue to review it and keep all its options open" included in the testimony. Mil t y
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cautioned that this statement brougt out the tenuousness between Dow and Consumers Power. Dave Fosso stated that he didn't know if it had that effect or not.
Rex stated that Consumers Power wanted to emphasize that, right now, it is Cow's intent to go forward with the plant while, at the same time, keep all its options open. Rex also emphasized that the Court of Appeals statement deals with the cost / benefit analysis and the continu-ing negotiations between Oow and Consumers Power do not affect this analysis and shouldn't be permitted to be gone into during the hearing.
A discussion followed concerning statements made on pages 7 through 10 pertaining to steam take, Rate F, minimization of Dow's costs, etc.
The parties spent the remainder of the day putting Joe Temple's testi-mony in a question and answer format.
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MEMOPANDUM TO FILE
- 0. A. CUR.AN RE: 00'# CONSUMERS POWER MEETING OF 11/8/76 The following memo is an accurate summary of what was said during tne meeting: however, it should not be regteded as being verbatim in any sense.
Messrs. Note, Wessel, Temple and I mat with Dave I,osso and Rey. Renfrow on "overter 8.1976 in Buildit y 47 of Coa's Midland Plant.
Dave Rosso opened the meeting by stating that they were here to accomplish three things:
- cross-exam of Joe in preparation for next week;
- talk about other things relevant to the hearings;
- talk about pricing on coal and coal gasification.
Dave Rosso stated that he had notified Mr. Cherry of the availability of Consumers Power's documents in Jackson on Thursday, but Mr. Cherry had not shown up as yet. He then went through a variety of areas that he felt Mr. Cherry would focus on. These included the various reviews that have been conducted by Dcw and also certain information on the old powerhouses.
Milt pointed cut that there was a very substantial distinction between the 198A date and whatever Dow plans to do in 1932. He stated that one is to stop the old powerhouses when Dow had another source of supply; the 1984 date has been selected at the outside if everything fails.
Dave Rosso stated that he wanted to explore what distinction Joe Temple will make in his own mind. Dave Rosso stated that he thought Mr. Cherry would be attacking this. Milt pointed out that there is an element of adversity between Dow and Consumers Pcwer. He then asked why Mr. Cherry would want to show that these things could be run longer. Dave Rosso pointed out that this would give 'tr. Cherry a chance to show that the plant should be shut down.
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2 Dave Rosso then continued the outline of items they wanted to accomplish at this meeting:
- comparative cost studies that Dow has done:
- current contractual negotiations and how they relate to Dow's current plans (Dow will keep all its options open; firm deadline on steam supply).
Dave Rosso and Rex then proceeded to 90 through a " preparation" and
" cross-exam" exercise with Joe Temple regarding his testimony.
The parties present discussed the coal pricing situation between Oow and Consumers Power.
Rex pointed out that he didn't want to get into a debate as to whose cost estimates were right.
He stated that it seems Dow's estimates are usually three months behind Consumers Power's estimates.
Joe added that he didn't know if this was right or not. Rex stated that the Consumers Power people have told him that their coal prices are based on estimates they have received from quotes and that Dow's estimates may be based on the cost of getting the coal from their own mines.
He pointed out that the big lag is the percent increase in 1982 and beyond.
Milt stated that the Consumers Power people may be thinking that there has been a doubling of coal prices in the last few months.
Joe stated that Dow does not agree with Consumers Power coal price estimates. He pointed out that Dow's own in-house experts have been looking at this and Dow is not going to change its estimates. Milt pointed out that the figures used by Dow came from a letter from Mr. Howell dated 9/21/76.
He stated that Consumers Power now is raising their estimates after this date. Rex stated this has happened because Consumers Power went out after that date and tried to buy coal. He stated that the prices Consumers Power is coming up with are those quoted to them from the people they buy coal from. Joe pointed out that Dow's prices are based on information from the people Dow buys coal from.
In response to a question from Rex, Joe stated that Cow was using high sulfur coal to base their estimates. Rex stated that this fact may be r
a reason for the discrepancy since he felt Consumers Power is using
3 low sulfur coal and there is a significant cost difference between high and low sulfur coal. Rex stated that this entire issue is a problem between Dow and Consumers Power, and he would try to get-the respective coal people together and try to make some sense out of it.
The preparation and cross-exam exercise continued between Dave Rosso, Rex, and Joe.
i Dave Rosso asked Joe how much of a sense did Joe have of a decision that Dow may eventually decide not to take nuclear steam power from Consumers Power. Joe reiterated his persor al views on the matter. Milt stated that this was a perfect answer for Joe because he is looking at this from a personal viewpoint. Dave Rosso stated that, from a Consumers Power point of view, it would be better to have the Dow Corporate decision.
He said this was because Joe feels so strongly aboat Consumers Power being here at all. Dave Rosso pointed out that he thougnt Joe j
felt that Dow does not have proper control over all of this. Dave Rosso stated that it was not going to be good for Consumers Power to have Joe stress the negative on this matter. He stated that Joe should stress the Dow Corporate Review position, t
Rex pointed out that, generally, people see things differently from one another. He also pointed out that the review team was made up of several different people and their collective decision quite possibly could have differed from what some of the team felt frcm a personal level or viewpoint. Dave Rosso stated that Joe ray want to state I
what the Dow Corporate position is and then state what his personal concerns are. Joe stated that he didn't have a problem with that approach.
Dave Rosso and Rex then proceeded to point out areas where Joe should be thoroughly familiar and comforatble with because of the high probability of attack by Mr. Cherry on cross-exam. The preparation and cross-exam exercise continued.
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4 During the " exercise," Dave Rosso made the observation that Joe was a lousy witness in terms of Consumers power's position in the case. Dave Rosso pointed out that Joe did not support the project in as positive a manner as.they would like to have him pursue it.
Dave Rosso stated that it would be better to have a witness that would look at the nuclear plant in a very positive manner.
A discussion ensued between those present pertaining to the back-up facilities Dow has or would have and how they were going to be used when the nuclear project goes on stream. The concern was how much steam Dow may be taking from this back-up system.
Dave Rosso stated that it would be more effective if Joe and Jim Burroughs could quantify how much steam Dow was going to use. Milt asked if it would be proper for Dow to state that they are going to use twice as much as what Consumers Power has stated in their ER Report. Milt stated that he didn't want Dow to be blamed for what was in the ER Report. Dave Rosso stated that all he wanted Dow to state was that Dow is going to operate their back-up system X% of the time.
The preparation and cross-exam exercise continued.
After a general discussion about the " return on investment before taxes" concept between Rex and Joe, the meeting adjourned.
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MEMORANDUM TO FILES
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RE: DOW/ CONSUMERS POWER MEETING OF 11/15/76 4
The following memo is an accurate summary of what was said during the meeting; however, it should not be regarded as being verbatim in any sense.
Messrs. Temple, Wessel, Hute, Pribila and I met with Dave Rosso and Rex Renfrow on 11/15/76 in Building 47 of Dow's Midland Plant.
Rex opened the meeting by stating that Joe Temple was going to testify on November 30, 1976. He made the observation that this would be before Mr. Houell's testimony and that Joe would not have to be bothered with Mr. Cherry throwing Mr. Howell's testimony back at Joe. A discussion continued concerning Joe's unavailability after 12/1/76.
Dave Rosso pointed out that no one has gone down to look at the docu-ments as yet. Dave Rosso told Joe that he and Rex were going to go L
back through the same things they had covered with Joe on 11/8/76.
I Dave Rosso' asked a question regarding a proper foundation concerning the documents from the Michigan Air Pollution Control Commission in this area. He wanted to know who the custodian was of the business records for the Michigan Division. Lee Nute stated that he had the records in his file and would be willing to testify to that fact.
l Rex proceeded to tell Joe what to cepect during the hearing and how to conduct himself during his testimony and cross-examination.
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A discussion ensued on whether or not Dow has initiated any legal action against Consumers Power in relation to the contract between Consumers Power and Dow. A discussion then continued on the letter F
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- o that Lee Mute sent to Judd Bacon. Lee pointed out that Consumers Power has stated in the Prospectus that there is a possibility that Dow will sue Consumers Power over Consumers Power's actions.
Dave Rosso asked Joe to stay out of the area of legal actions taken or not taken.
Rex told Joe that'he (Joe) should refrain from referring to the fact that there were two separate reviews (Michigan Division and Dow Corporate).
Dave Rosso reviewed Dow's position on what would happen if. there were additional delays or increased costs of construction. He stated that Jre should emphasize that, in the event of any particular significant change, Dow will review the situation in depth.
Lou Pribila discussed the alleged S0 vi lation problem Dow is having 2
with MAPCC.
Dave Rosso stated that it is very important to realize that Dow is not really going to know what to do in the event of further delays until Consumers Power and Dow get together and resolve things via further negotiations.
Rex and Dave Rosso continued to engage in a cross-exam exercise with Joe.
4 discussion folicwed concerning coal pricing assumptions. Dave Rosso asked Rex what the status of this situation was. Rex stated that Lee was still working on setting this meeting up to try and resolve the differences between Dow's and Consumers Power's assumptions on coal prices. Lee pointed out that there was no difference between C;w and I
Consumers Power on " data base" on prices but there were definite differences in the " escalation" factors. Milt pointed out that one of the dangers of Dow changing their escalation figures to match Consumers
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Power's is that it may seem that Dow is buckling under to Consumers Power or that Dow really doesn't have any faith in their (Dow's) own numbers or procedures.
Dave Rosso stated that he had called for a meeting of Dow and Consumers Power coal people with the hope that they could define the difference and make Joe aware of this difference. Milt talked about several things pertaining to Dow's impeaching their own internal review.
He pointed out that it would probably be sufficient to have Consumers Power just communicate to Dow that they (Consumers Power) have escalated the figures and their reasons for doing so.
Dave Rosso asked Lee if an attempt could be made to get the coal people together before the hearing.
Lee stated that he thought Dow could do this once they got to the people involved with the matter.
I left the meeting at approximately 12:45 p.m. *o attend a hearing in Bay City on the Echols' matter.
The meeting continued.
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e raca RCYoungdahl Oarc Septe=ber 16, 1976 POV!Gr Cam 0Sau
'Suestc7 DCW-CONSU::ERS pCWER lNicmNAL Commcsponocuct AHA nend cc j
JDCelby JBFalahee I received a telephone call fren Joe Temple on September 16 at approximately -
11:00 141 as a follow-on to cur recent discussiens, iie identified that the Dov tea = has been formed with a series of seven task force assi;f.nents. He would not tell ne who headed up each task force. All of the task forces vill report back to Paul Orfice, President, Dow USA. It appears to me that the coordina. tor is a tai named Al Kle:porens (sp?) - described as a black, intelligent staff =en to Orfice.
The seven task force assi g=ents are:
- 1) to review the Dow decisien frem both econcaic and nenecenc=ic standpoints -
CFCo is invited not to provide input
- 2) review the legal aspects of the decision - past, present and future -
CFCo is invited to take ce=ents
- 3) review the envirennental and energy conservation aspects of the Midland Division alternatives for both pcVer and steam - CFCo is invited not to provide input-4
- 4) review the validity of the Dev position; for exc=ple, the decisien is made l
vith the fall understandia.g that nucles.r safety is not an issue.
Julius Jchnson is the Dov team leader and CFCo is invited to provide en input
- 5) consider the i=uact of the Division decision en the Midland ec:: unity.:/nen
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-ade public - CpCo is invited to provide an input
- 6) censider the impact of the Div.sion position and a si-ilar Dev corporate positien on Censu=ers Fewer. CFCo is invited to have an input and the date is Septc=ber 214 at 2:00 P'i.
Dcv tembers include - FCrfice, ?.~Eniting, JTemple, AKle:perens and I';ute
- 7) consider the i.. et en (a) the natienal energy proc--a= (b) nuclear pcver in the United States (c) en the State of Michicen - CFCo is invited to provide an input.
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l I told Joe Temple I would get back o hi= vith Censuners Fever centacts for those task forces where ve are invited to provide input.
Temple indicated that the corperate review must be ccqlete for presentatien and adeption at their 3 card acetin 6 en Octcher 7 i
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