ML19331A177

Responds to DOJ & Intervenors' Motions for Order Requiring Applicant to State Facts Expected to Be Proved by Discovery. Motions Judged Unnecessary.Certificate of Svc Encl

ML19331A177
Person / Time
Site:	Midland
Issue date:	08/27/1973
From:	Ross W, Watson K CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.), WALD, HARKRADER & ROSS
To:	US ATOMIC ENERGY COMMISSION (AEC)
References
NUDOCS 8006110623
Download: ML19331A177 (16)

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s@T UNITED STATES OF AMERICA BEFORE THE ATOMIC ENERGY COMMISSION In the Matter of )

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CONSUMERS POWER COMPANY ) Docket Nos. (0-329A)

(Midland Plant, Units 1 and 2)) 5v-55Ua APPLICANT'S RESPONSE TO DEPARTMENT OF JUSTICE'S AND INTERVENORS' MOTIONS FOR AN ORDER REQUIRING APPLICANT TO STATE FACTS EXPECTED TO BE PROVED BY DISCOVERY Pursuant to Section 2.730 of the Commission's Rules of Practice, 10 CFR Part 2, Consumers Power Company (" Applicant")

replies to the Motions of the Department of Justice and the Intervenors--1/ for an order requiring Applicant to state with particularity the facts which it expects to prove by its outstanding discovery requests. Applicant submits that the motions are ill-founded, and unnecessary.

When their argument is reduced to essentials , the moving parties are seen to be contending that they have not complied with Applicant's outstanding discovery requests in a timely manner and that, now, in lieu of compliance, they should be permitted to embark on stipulation negotiations.

This procedure is proposed in *.he name of expedition.

_1/ The Motions were filed August 10 and August 16, 1973, respectively.

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l The proposal is a blatant attempt to block Appli-cant from discovery to which it is clearly entitled. Appli-cant is not responsible for the purported lack of expedition in these proceedings. On the contrary, the delay has been primarily the result of the failure of both the party Inter-venors and the non-party municipais to respond to Applicant's discovery requests in accordance with agreements of counsel and with the schedules established by this Board and the Ap-peals Board. As discussed below, Applicant has a strong in-terest in expediting this proceeding and would be concerned by any future delay in its completion. However, in seeking to deprive Applicant of data it needs in order to prepare for hearing, the Department of Justice and the Intervenors have exaggerated the potential for delay. Moreover, the stip-ulation procedures proposed by theue raving parties would not significantly expedite the proceedings, and in fact, could substantially delay them.

Thus, although ostensibly directed to the desira-bility of stipulation between the parties hereto, the instant motions are, in reality, simply another in a series of efforts to block Applicant's access to party and non-party discovery to which this Board and the Appeals Board have held it is entitled. For the reasons set forth below, Applicant submits that the Board should reject this suggestion that stipulation discussions are feasible in advance of the completion of dis-covery.

I. Applicant is Entitled to Compliance with its Non-Party Subpoenas Prior to Stipulation Discussions.

In their motions, the Department of Justice and the Intervenors resurrect their time-worn arguments that responses to Applicant's subpoena to the non-parties can be satisfied through stipulations and that, therefore, the non-parties need not comply with this discovery. However, these argu-ments ignore the fact that both this Board and the Appeals Board previously have rejected identical claims concerning this very same discovery.

At the Prehearing Conference of February 12, 1973, the non-party municipals supported their Motion to Quash Applicant's discovery by arguing that "by stipulation among the parties" many of the subpoena requests could "be avoided" (Tr. 199). The Department of Justice endorsed the non-parties' position, noting that it would be prepared "to sit down and work out a stipulation as to whether . . . the municipal

[is] selling power at rates above or below consumers power (sic], and are they making a profit?" (Tr. 203)

In opposing this approach, Applicant's counsel drew the Board's attention to the difficulties of stipulation prior to discovery (Tr. 210-211). Similarly Board Member Clark noted that it would " help the Board in its deliberations to find out whether all parties in this case would be willing to let their case rise and fall on just the Intervenors",

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and asked counsel for the Department of Justice whether he would be "willing to exclude any evidence with regard to any small municipality or small power company who is not an intervenor in this case?" (Tr. 216-217). Counsel re-sponded: "No, your honor, I would not." (Tr. 217)

Subsequently the Hearing Board ruled that most of the Applicant's subpoena requests to the non-party municipals should be answered. Thus, this Board already has considered and rejected the suggestion that stipulations are an ade-quate substitute for the non-party discovery propounded by Applicant more than eight months ago.

On Appeal, the non-par-ties again argued that Appli-cant's discovery should be denied because the data sought could be stipulated. In a lengthy dialogue with the Appeals Board, their counsel stated (Appeals Tr. 11-13):

"There are certainly obvious alternatives than this type of data request, one of which would have been stipulations among the parties to the proceeding . . . .

"The Traverse City Group has stated that they have no intention of contesting Appli-cant's claims because frankly we do not deem it relevant. . . .

"The Department of Justice on page 203 (quoted above] of the transcript specifically stated that he was willing to stipulate to the fact which Consumers Power apparently wishes to prove. . . .

". . . I think before embarking on something like this [ discovery] there ought to be very careful consideration of whether it is necessary. . . ."

But Appeals Board Chairman Rosenthal immediately questioned this hypothesis by asking counsel:

"We are still, aren't we, Mr. Jablon, talking about discovery here? The Licens-ing Board, when the evidentiary proceedings commence, can make determinations respecting the nature of the evidence which it is evidence which it is prepared to . . . have adduced." (Emphasis supplied). (Appeals Tr. 13-14).

In its orders of April 24 and May 16, 1973, the Appeals Board rejected the municipals' claims and ruled that Applicant was entitled to the data it sought from the non-party municipals. The Board's May 16 order also endorsed an agreement between the Applicant and the municipals that the latter's responses should be forthcoming within 45 days.

Applicant has been seeking compliance with its dis-covery requests since December, 1972. The non-party munici-pals, through these motions , would now be permitted to cast aside the orders of two tribunals and their own agreement on responses to discovery. The movants propose that compliance with the discovery responses be delayed further while fact specifications and stipulation discussions are undertaken.

As Appeals Board Chairman Rosenthal indicated in the above-quoted excerpt, the Board has adequate power to insure an expeditious hearing, but this should not disturb the dis-covery process. The instant motions by Department of Justice and the Intervenors, seeking to require stipulation in lieu

of discovery, do no more than reiterate a position that this Board and the Appeals Board properly rejected many months ago.

In its previous responses to the aforementioned argument of the Department and the Intervenors concerning stipulations and discovery, Applicant has expressed its will-ingness to engage in the stipulation process where appropri-ate (Tr. 210-213; Appeals Tr. 43-45). Moreover, in response to the 232-item Request for Admissions from the Department of Justice, Applicant has in effect entered into stipulation with respect to facts about which it can knowledgeably affirm or deny.

As we have frequently reiterated, however, absent compliance with outstanding discovery requests, Applicant does not have sufficient knowledge about the operations of the non-party municipalities to enter into any stipulation with respect to their profitability, rates of growth, or retail rate comparisons. Any such stipulation would be too generalized to illuminate adequately the basic competitive l

relationships which the Department of Justice and Intervenors i

have put in issue in this proceeding. Further, the Department of Justice has said (Tr. 324) it will not stipulate with respect to the City of Lansing, by far the largest and most important of the municipal generating entities involved in this proceeding.

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l It also should be noted that the Department of Justice and the Intervenors suggest stipulation only as to profitability issues, and ignore the other issues relating to municipality competitive practices, market bulk power supply alternatives, system coordination, reliability, and many other areas with which they have never indicated will-ingness to stipulate facts.

Thus, the Board should reject the proposal that Applicant be compelled to state "with particularity" the facts which it seeks to prove by its discovery. The Depart-ment supports its view in this regard by reference to a regu-lation of the Interstate Commerce Commission which is not embodied in this Commission's Rules of Practice. Applying such a rule would be particularly inappropriate here since Applicant's extensive pleadings and oral arguments--2/ before the hearing Board and the Appeals Board contain ample specifi-cation of its need for the requested data from the non-party municipals.

Since Applicant's need and entitlement to the non-party discovery is well-settled, the eleventh hour efforts of the moving parties to block access to that discovery under a pretext of expedition should be summarily denied.

~~2/ For example, at the February 12 Prehearing Conference, Applicant explained the need for its discovery on an item-by-item basis in a presentation that consumed many hours and one hundred transcript pages (Tr. 219-320).

II. Applicant is Entitled to Compliance with "Second Round" Discovery to Parties Prior to Stipulation Discussions.

In their motion of August 16, 1973, the Intervenors

seek to deny Applicant access to discovery of the parties as well as the non-party municipals in this proceeding. Pres-ently outstanding are "second round" interrogatories and docu-ment requests which were propounded on July 6, 1973, and with which the Board has ordered compliance by September 1, 1973.

In a motion to extend time to respond to Applicant's "second round" discovery, the Intervenors pledged to "make a good faith effort to supply all the documents and responses" and stated that "in some instances the requests might very well be completed in advance of the proposed date. . . .

(Emphasis supplied.) (Intervenor's Motion For Extension of Time, filed July 27, 1973, p. 3-4.) Applicant did not oppose this proposal, and the Motion was granted by tFe Board on August 8, 1973, "with the understanding that the response is due September 1, 1973".

Despite their " good faith" pledge to respond to all

"second round" discovery requests, the Intervenors now seek l

to block Applicant's access to this data by proposing to sub-stitute fact specifications and stipulation discussions in lieu of compliance. To date, Applicant has received only fragmentary responses to its "second round" requests, and the stipulaticu discussions which the Intervenors propose

would surely postpone compliance therewith far beyond the September 1 date established by the Board. Moreover, most of the "second round" discovery to the Intervenors is unre-lated to the cost and profitability issues which the moving parties herein propose to discuss.

Thus, as with the non-party discovery, the Inter-venors propose a procedure which would violate their agree-ment to comply with outstanding discovery requests, would nullify the Board's order concerning the date of compliance therewith and would delay this proceeding (see Section III).

The Intervenors' motion of August 16 therefore should be denied.

III. If the Municipals and Cooperatives Desire to Expedite the Proceeding, They Should Abide by Agreements of Counsel and Comply With the Board's Orders.

Both the Intervenors and the Department claim in their respective motions that compelling compliance with Ap-plicant's outstanding discovery requests will delay this pro-l ceeding. This claim ignores the fact that the party Intervenors failed to comply with the Board's April 2 deadline and did I

not complete responses until mid-July -- therefore delaying the submission of the "second round" discovery until that time. Similarly, the non-parties ignored the Appeal Board's order of May 16, 1973, and have yet to complete their responses to discovery served eight months ago. Consequently, unlike i

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the other parties herein, Applicant was unable to commence its depositions until mid-Augtst and will be unable to complete them until mid-September.

By contrast, Applicant completed its response to the Joint Document Request on April 2, 1973, as the Board ordered, and the Department and the Intervenors, relying extensively on this documentary discovery, completed four weeks of Company depositions in early June.

As we have stated on several occasions, Applicant requires a minimum of 45 days betu;en the close of discovery and the commencement of the hearing to permit preparation of exhibits and testimony, a pretrial brief, and preparation of 3/

cross-examination.-- Thus, if responses to Applicant's out-standing discovery requests are completed by September 1, 1973, as the Board has ordered, the hearing schedule whic'h the Board presently contemplates can be met. Because the non-parties have had eight months to respond to Applicant's discovery, and the Intervenors have pledged to complete 3/ It should be noted that because Applicant provided its adversaries with full discovery response by early June, the other parties already have had three months longer than Applicant to prepare their respective cases.

"second round" discovery by September 1, there is no appar-4/

ent reason why expedition can not be achieved.--

We must reiterate that Applicant is not responsi-ble for the delay of these proceedings, and should not be deprived of its ability to prepare adequately for hearing because of delays occasioned by its adversaries. Nor, con-trary to the suggestions of the Intervenors, has Applicant benefited from this situation. Applicant is most desirous of expediting the hearing and decision of this case, and in particular, most anxious that the hearing be held during this fall. The large costs of the proceeding, the burden on the time and attention of the Applicant's senior officers, and the continued uncertainty as to Applicant's licensing status, all provide strong incentives to the Company for expediting the hearing and decision of this case.

Thus, if the Intervenors and non-parties respond to Applicant's discovery in accordance with their agreements

_4/ The Department of Justice's estimate that the hearing l postpone. ment occasioned by Applicant's discovery "may run up to a year or longer" (p. 2) is wholly fanciful and without foundation. Even should the party or non-party systens again f ail to meet the September 1 dead-line established by the Board, discovery could be com-pleted in sufficient time to permit the hearing to go forward this fall. This estimate, of course, assumes the continued cooperation of the parties, in particular

, the continuation (with assent of counsel) of informal l discussion between Applicant's technical experts and their counterparts on the staffs of the municipal and cooperative systems.

and the orders. of the Hearing Board and the Appeals Board, the hearings can commence as scheduled. If there is no timely compliance, the solution lies not in compelling Applicant to prepare fact specifications, but in compelling compliance.

IV. Applicant's Evidentiary Case Will Not Burden the Record.

Applicant agrees with the Intervenors that the

" burden and time of trial" should be limited (p. 4), and during the interim between the completion of discovery and the commencement of the hearing, Applicant is prepared to pursue any, course of action which will contribute to that end. Thus, the Intervenors' fear that Applicant s case will unduly burden the hearing record is obviously misplaced.

The Intervenors' statement about the length of Appli-cant's evidentiary case similarly is inaccurate. It is Appli-cant's intention to call seven or eight witnesses in presenting its case in this proceeding. The combined number of witnesses contemplated by the Department and the Intervenors is twice that figure. Moreover, Applicant contemplates offering much of its direct evidence in " written" form pursuant to Section 2.743(b) of the Rules -- a procedure for expediting the hear-ing which the Department has opposed and thus , presumably, will not utilize. All available indications are, therefore, that Applicant's evidentiary presentation will consume much less time than those of the Department and the Intervenors.

Thus, the Intervenors' assertion that Applicant plans " hundreds of days of hearings" (p. 2) and will otherwise burden the record is clearly no more than self-serving rhetoric.

The record also belies the Intervenors' claim that Applicant has sought to " broaden" the scope of this proceeding (p. 1) through its discovery. Indeed, the opposite is true.

For example, the Department has argued that " Applicant's position that the Commission's inquiry must focus exclusively on Applicant's activities to construct and ultimately to operate the Midland units 'and only those activities ' is clearly erroneous" (" Reply of the Department of Justice

. . ., filed June 9, 1972, pp. 4-5). The Intervenors have endorsed the Department's expansive views about scope and have asserted that the Commission's antitrust review under Section 105c should be " coextensive with the interrelated problems of concentrated control over nuclear power plants for electric power production and the concern of conduct in the planning, coordination and arrangements required to inte-grate these massive plants into regional or area programs to benefit all electric systems and the consumers they serve"

("Statemer:.t of Petitioners . . .,

" filed June 9, 1972, p. 15).

In its order dated August 7, 1972, the hearing Board

" deferred" ruling whether the views as to scope of the Depart-ment and the Intervenors are correct but directed that these broad views would govern the scope of the " relevant matters

in controversy" for discovery purposes ("Prehearing Confer-ence Order . . ., " August 7, 1972, p. 3) . Thus , it is the Department and the Intervenors , not the Applicant, who are responsible for the broad scope of discovery in this pro-ceeding.

It would be patently unfair, and indeed a denial of due process, to permit the Intervenors and the Department to pursue their discovery under the expansive standard they proposed while reducing the scope permitted to Applicant in its discovery requests. This is particularly so where the only basis for the proposed change in standards governing the scope of discovery is the failure of the Applicant's adversaries to comply with agreements of counsel and with the discovery schedules established by the Hearing Board and the Appeals Board.

COI4CLUSION Under the guise of securing expedition, the Depart-ment of uustice and the Intervenors propose a procedure which will deny, or at least substantially delay, Applicant's access to discovery which two tribunals have held it is entitled.

The proposals are particularly ill-founded since Applicant has complied with massive discovery directed to it on a timely basis, while the cooperative and municipal systems have con-sistently failed to comply with Doard orders and agreements of counsel concerning compliance with Applicant's discovery of them.

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The fact specifications and stipulation discussions contemplated by the moving parties also are unnecessary since they do not obviate the need for Applicant's discovery and merely provide yet another pretext for further delay in com-plying with this discovery. Thus, such procedures at this juncture will not expedite, and may in fact substantially delay, the commencement of the evidentiary hearing herein.

Applicant supports expedition and submits that if full compliance with its discovery is forthcoming by Septem-ber 1, as ordered, the hearing can go forward as scheduled.

The answer to expedition, therefore, does not lie with fact specifications or stipulations at this juncture; the solu-tion is simply a matter of compliance by the Intervenors and the non-party municipals with the Boards' orders and agreements of counsel.

The Motions of August 10 and August 16, 1973, by the Department of Justice and the Intervenors therefore should be denied.

Respectfully, Wm. Warfield Ross August 27, 1973 Keith S. Watson Wald, Harkrader & Ross Of Counsel: 1320 Nineteenth Street, N. W.

Washington, D. C. 20036 Harold P. Graves, Esquire Consumers Power Co. -

212 West Michigan Avenue Jackson, Michigan 49201 i

UNITED STATES OF AMERICA ATOMIC ENERGY COMMISSION In the Matter of )

) Docket Nos. 50-329A CONSUMERS POWER COMPANY ) and 50-330A (Midland Units 1 and 2) ) f l

CERTIFICATE OF SERVICE I hereby certify that copies of APPLICANT'S RESPONSE TO DEPARTMENT OF JUSTICE'S AND INTERVENORS' MOTIONS FOR AN ORDER REQUIRING APPLICANT TO STATE FACTS EXPECTED TO BE PROVED BY DISCOVERY, dated August 27, 1973, in the above-captioned matter have been served on the following by deposit in the United States mail, first class or air mail, this 27th day of August, 1973:

Jerome Garfinkel, Esq., Chairman Dr. J. V. Leeds, Jr.

Atomic Safety and Licensing Board P. O. Box 941 Atomic Energy Commission Houston, Texas 77001 Washington, D. C. 20545 William T. Clabault, Esq.

Hugh K. Clark, Esq. Joseph J. Saunders, Esq.

P. O. Box 127A David A. Leckie, Esq.

Kennedyville, Maryland 21645 Public Counsel Section Antitrust Division James Carl Pollock, Esquire Department of Justice 2600 Virginia Avenue, N. W. Washington, D. C. 20530 Washington, D. C. 20037 Joseph Rutberg, Jr. , Esq.

Antitrust Counsel for AEC Regulatory Staff Atomic Energy Commission Washington, D. C. 20545 Wallace E. Brand, Esq.

Antitrust Public Counsel Section P. O. Box 7513 Washington, D. C. 20044 Atomic Safety and Licensing Board Atomic Energy Commission Washington, D. C. 20545 Toni K. Golden