ML19274E824
| ML19274E824 | |
| Person / Time | |
|---|---|
| Site: | South Texas  |
| Issue date: | 04/03/1979 |
| From: | Barnett E BAKER & BOTTS |
| To: | |
| Shared Package | |
| ML19274E823 | List: |
| References | |
| NUDOCS 7904280083 | |
| Download: ML19274E824 (38) | |
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6 BEFORE THE ATOMIC SAFETY AND LICENSING BOARD)7 In the Matter of 5 HOUSTON LIGHT 1M & POWER COMPANY 5 Docket Nos. 50-498A THE CITY OF SAL ANTONIO 5 50-499A THE CITY OF AUSTIN, and 5 CENTRAL POWER AND LIGHT COMPANY 5 (South Texas Project, 5 Units 1 and 2) 5 HOUSTON LIGHTING & POWER COMPANY'S MOTION FOR
SUMMARY
DECISION Houston Lighting & Power Company ("HL&P") moves that this proceeding be dismissed as to HL&P because the antitrust hearing pending before the NRC has been rendered needless and duplicative as a result of developments in related forums, particularly the decision by the Federal District Court in West Texas Utilities Company, et al. v.
Texas Electric Service Company, et al., No. CA3-76-0633-F.
In addition, Congress bas recently enacted the Public Utility Regulatory Policies Act ("PURPA"),M which gives the Federal Energy Regulatory Commission ("FERC") the authority to order any electric utility, including utilities not otherwise subject to FERC jurisdiction, to interconnect with and transmit power for any other electric utility on terms fixed by the FERC. Under these circumstances, the principles of collateral estoppel, as well as broader considerations of 7 9 04 2 3 o og3 1/ Pub. L. No.95-617, 55 202-04 (1978).
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administrative efficiency and economy, confirm the absence of any need for a long and complicated antitrust hearing.
As discussed below, all material issues of fact in this proceeding have been decided by the District Court in HL&P's favor. Given these developments, there is no reason for the NRC to proceed with an exhaustive and expensive antitrust hearing.
I.
Background of the Proceeding The events surrounding the initiation of this proceeding are documented in detail in the Commission's order of June 15, 1977 (5 NRC 1303). In the June 15 order, the Commission refused to reopen the South Texas Project
("STP") construction permit proceedings as requested by Central Power and Light Company ("CP&L"), but announced that it would seek advice from the Department of Justice concerning whether there had been "significant changes" in HL&P's activities which would require an antitrust review in con-nection with the STP operating license application. In the June 15 order, the Commission also requested the Department to evaluate the probable effects of proceedings in other forums. (Id. at 1320). Albeit in a different context, the Commission recognized that developments in other forums could end the controversy before the matter was brought to a final conclusion in proceedings before the NRC:
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g f Finally, we think it appropriate to anti-cipate and say a word about a possible course of events whereby the present con-troversy may be resolved before an operating license antitrust review would normally occur. Understandably, if there is to be an antitrust proceeding at this point, Houston would prefer that that proceeding go forward expeditiously and that there be no further such proceeding. But as was observed at oral argument, we may have an unfolding se-quence of circumstances here, many of which have to be taken into account before a determination is made on antitrust matters.
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In response to the Commission's June 15 order, the Department sent a letter dated February 21, 1978 to the Commission recommending an antitrust review in connection with the operating license application for STP. The Depart-ment's recommendation was premised on the belief that there had been a change in circumstances stemming from the changing fuel situation in Texas. Furthermore, the Department contended that EL&P's refusal to interconnect with any interstate system went beyond a unilateral refusal to deal because HL&P allegedly had an " intrastate only agreement" with Texas Utilities Company ("TU").M Finally, the Department 2/ Id. at 1322. The remainder of the discussion in this paragraph is no longer germane since both the Environ-mental Report and the Final Safety Analysis Report have been accepted for filing.
3/ The three operating subsidiaries of the TU holding company are Dallas Power and Light Company, Texas Electric Service Company, and Texas Power and Light Company.
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s reviewed the proceedings in each of the other forums dealing with the Central and South West Corporation ("CSW")S! contro-versy and concluded that developments in the other proceedings as of that date should not deter the NRC from initiating an antitrust hearing.
After receiving the Department's letter, the Commis-sion concluded in April, 1978 that it was required to convene an antitrust hearing on the operating license application.5/
Since the issuance of this order, the Atomic Safety and Licensing Board ("the Board") designated to conduct the hearing has held prehearing conferences and presided over very extensive discovery efforts. The Board has now fixed July 30, 1979 as the date for completion of discovery and has indicated that evidentiary hear-ings will probably ccmmence in September,1979. HL&P expects that these hearings will require several months to complete.
After almost a year of discovery, the Department has failed to develop evidence supporting the allegations made in its February 21, 1978 advice letter, which raises serious, unanswered questions concerning the bases for the assertions that caused the Commission to initiate this proceeding. Moreover, the party initially responsible for precipitating an antitrust 4/ The four operating subsidiaries of the CSW holding company are Central Power and Light Company, Public Service Company of Oklahoma, Southwestern Electric Power Company, and West Texas Utilities Company.
5/ Order of April 5, 1978.
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hearing, CP&L, has now had its day in court and has lost on every single issue of fact and law. Finally, Congress has passed a new statute that empowers the FERC to order interstate interconnections and wheeling, the essence of the relief requested by all complaining parties other than the City of Brownsville.6/ This " unfolding sequence of circumstances" underscores the need for the Board to consider carefully whether an extended antitrust hearing should be held.
II.
Update of Proceedings in Other Forums A brief summary of recent developments in other forums may serve to clarify the reasons for this motion. Of singular and utmost importance is the final judgment rendered by the Federal District Court on February 27, 1979 in West Texas Utilities Company and Central Power and Light Comoany vs. Texas Electric Service Company and Houston Lighting &
Power Comoany, No. CA3-76-0633-F. In that judgment, the Court determined that HL&P and Texas Electric Service Company
("TESCO") had not violated Section 1 of the Sherman Act and denied the plaintiffs' lawsuit with prejudice. In the same 6/ Brownsville contends, in addition, that an offer of participation in the South Texas Project made by CP&L was not a legitimate offer, apparently because of problems concerning the transmission service to be provided by CP&L. If the proceeding is dismissed as to EL&P, the dispute between CP&L and Brownsville could be resolved with further proceedings tlat would not involve EL&P.
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order, the Court granted EL&P's counterclaim against CP&L, ruling that CP&L had committed an anticipatory violation of the contract provisions of the South Texas Project Partici-pation Agreement, and permanently enjoined CP&L from commencing interstate operation for as long as it was a member of STP.
The appeal by CP&L and West Texas Utilities Com-piny ("WTU") from the orders of the Public Utility Commission of Texas ("PUC") was argued in the State District Court in November, 1978, but no final decision has yet been issued.2/
Likewise, the proceedings before the Securities and Exchange Commission are still ongoing. CSW completed its direct case in January, 1979, and hearings will commence in June, 1979 on the direct case to be presented by intervening jarties.
A new development not contemplated at the time of the Commission's June 15 order, nor at the time of the Department's advice letter, is the passage of the Public Utility Regulatory Policies Act of 1978 ("PURPA"). According to the terms of this new statute, the FERC has authority to order interconnections and wheeling under Sections 210, 211 and 212 of the Act. While all of these sections apply to 7/ CP&L and WTU also appealed the PUC orders to the United States District Court for the Western District of Texas, which abstained in deference to the State courts. The Fifth Circuit C;urt of Appeals aff.rmed this decision on March 28, 1979. Central Power and Light Comoany, et al.
- v. Ptblic Utility Commission of Texas, No. 78-2319.
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HL&P, HL&P would not otherwise be subject to FERC regulation if ordered into interstate operation by virtue of an inter-connection order under PURPA.S/ On February 9, 1979, CP&L filed an application with the FERC requesting an exemption (pursuant to Section 205 of PURPA) from the orders of the Public Utility Commission in Docket No. 14 and, in addition, requesting an order requiring interstate interconnection and wheeling by HL&P and TU.
Notice of this application was published on February 22, 1979, and petitions to intervene are due by March 30, 1979.
III.
The Imoact of the District Court Decision In holding that HL&P and TESCO had not violated Section 1 of the Sherman Act, the District Court made clear and extensive findings of fact. These findings were required to resolve the numerous issues raised and litigated in the seven-week trial.
After considering the voluminous record, consisting of over 3,500 pages of testimony and approximately 1,000 exhibits, the District Court found in favor of HL&P and against CP&L on every factual issue raised by the pleadings and prayer for relief.
CP&L cannot reopen these findings of fact and require HL&P to relitigate the same issues and the same evidence. CP&L is collaterally estopped from asserting in this proceeding the same issues that were litigated and adjudicated in the District Court.
8/ See Section 204 of PURPA.
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A. The Law of Collateral Estoonel Like the related doctrine of res judicata,E/ collateral estoppel operates to prevent an issue of fact that has once been tried and decided in a court of competent jurisdiction from being relitigated in a subsequent suit between the same parties or their privies. The doctrines are designed to protect litigants from the burden of retrying identical issues with the same parties and to prevent needless litigation. The importance of avoiding relitigation of factual issues was given forceful emphasis by the Supreme Court earlier this year in Parklane Hosiery Co. v. Shore, 99 S. Ct. 645, 649, 58 L. Ed. 2d 552, 559 (1979).
The traditional threshold requirements for the appli-cation of collateral estoppel are: (1) the iss.e to be precluded must be identical to that involved in the prior action; (2) that issue must have been actually litigated in the prior action; (3) the issue must have been determined by a valid and final 9/ Under the principles of res judicata, a judgment in a prior suit between the same parties bans a subsequent suit between the same parties or their privies, on the same cause of action. Collateral estoppel applies when the second suit is on a different cause of action and precludes relitigation only of issues actually liti-gated and necessary to the outcome of the first action.
1B J Moore's Federal Practice, 1 0.441[1], at 3771; Cromwell v. County of Sac, 94 U.S. 351 (7.876);
Lawlor v. National Screen Serv. Corr., 349 U.S. 322, 366 (1955); Johnson v. United States, 576 F.2d 606, 611 (5th Cir. 1978); Industrial Credit Co. v. Berg, 388 F.2d 835 (8th Cir. 1968).
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judgment; and (4) the determination must have been necessary and essential to the prior judgment. 1B Moore's Federal Practice, 1 0.443[1], 3901-3902; Restatement (2d) of Judgments 5 68 (Tent. Draft No. 2, 1975); James Talcott, Inc. v. Allahipad Bank, 444 F.2d 451, 458-59 (5th Cir. 1971); Haize v. Hanover Ins. Co., 536 F.2d .76, 579 (3rd Cir. 1976). These prerequisites are designed to insure that collateral estoppel will serve the underlying purposes of promoting decisional economy and fairness. Since all of these requirements are met in the present case, collateral estoppel should be applied.
In other proceedings, the NRC has given collateral estoppel effect to prior court determinations. In Toledo Edison Co., et al, (Davis-Besse Nuclear Power Station, Units 1, 2, and 3, Perry Nuclear Power Plant, Units 1 and 2),
ALAB-378, 5 NRC 557, 563, the Appeal Board ruled that col-lateral estoppel effect should be given to a United States District Court's decision rejecting the plmiutiff's attempt to disqualify the defendant's counsel. In dismissing the Intervenor's (formerly plaintiff) motion to disqualify the Applicant's (formerly defendant) NRC counsel, the Appeal Board stated that:
. . . [A] judicial decision is entitled to precisely the same collateral estoppel effect in a later administrative proceeding as it would be accorded in a subsequent judicial proceeding.
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5 NRC at 561. Furthermore, the ingredients of collateral estoppel are the same in the NRC as in the judicial arena.
Alabama Power Co. (Joseph M. Farley Nuclear Plant, Units 1 and 2),
ALAB-182, 7 AEC 210, 212-13, remanded on other grounds, CLI-74-12, 7 AEC 203 (1974), cited in Toledo Edison Co., supra.
The NRC's position is the general rule. If the tradi-tional requirements of collateral estoppel are met, administrative bodies are bound by prior court determinations of the same fact issues. See, e.g., Lentin v. Commissioner of Internal Revenue, 226 F.2d 695 (7th Cir. 1955); Westaate-Sun Harbor Co. v. Watson, 206 F.2d 458 (D.C. Cir. 1953); George H. Lee Co. v. FTC, 113 F.2d 583 (8th Cir. 1940); see generally, 2 K. Davis, Administrative Law Treatise, 5 18.11 (1958).lS/ It is also settled law that the pendency of an appeal of the District Court's judgment does not suspend its operation as collateral estoppel. See 1B Moore's Federal Practice, 1 0.416 [3], at 2254; Kurek v. Pleasure Driveway & Park District, 557 F.2d 580 (7th Cir. 1977); American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 9 n.3 (5th Cir. 1974). Thus, collateral 10/ It is clear that the presence of some parties in this pro-ceeding who did not appear before the District Court does not defeat the application of collateral estoppel. See Dreyfus v. First National Bank of Chicago, 424 F.2d 1171, 1175 (7th Cir. 1970); Toledo Edison Co., suora at 563.
Estoppel is only sought as to issues litigated between HL&P and CP&L. No attempt is being made to apply collateral estoppel against the Department, the NaC staff, PUB or STEC/MEC.
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estoppel is clearly appropriate in this proceeding, and it should be applied to narrow this litigation to issue.s and parties that, unlike CP&L, have not yet had a day in court.
B. Collateral Estoppel and the District Court's Findings The District Court based its holding that defend-ants had not violated Section 1 of the Sherman Act on several findings of fact. CP&L is collaterally estopped from denying these findings and seeking to relitigate the same issues.
The District Court found that:
(i) HL&P and TESCO did not engage in con-certed action to confine their operations to intrastate commerce, and did not engage in any conspiracy to restrain trade or concerted refusal to deal. (Order at 26-28).
(ii) There is no direct competition betaeen CP&L and either HL&P or TESCO. (Order at 30-31, 61).11/
11/ In this regard, the Court summarized its findings as follows:
Plaintiffs have admitted to the U.S. Depart-ment of Justice, which was then conducting an antitrust review in connection with licensing of the construction of nuclear powered generation plants, that there exists no competition between plaintiffs and defendants and that (Footnote continued on next page)
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(iii) With respect to plaintiffs' cheory of indirect competition, defendants' alleged refusal to cooperate in the " coordinated services market" had no adverse effect on competition in any "down-stream markets" - interfuel markets, self-genera-tion markets, wholesale market.e, or retail markets, including competition for new industrial customers.
(Order at 34-37, 61-62).
(iv) Defencknts were not motivated by any anticompetitive intent in their decision to discon-nect from CP&L and WTU on May 4, 1976. (Order at 39, 62).
(Footnote continued from previous page) the defendants' maintenance of their intrastate status did not injure plaintiffs' ability to compete with others. Retail competition exists only among utilities within dually certified areas, and HL&P has no dually certified areas with WTU or CPL. TESCO has no dually certified areas with CPL and the areas which are dually certified between WTU and TESCO are so insignificant that the revenue to TESCO in 1977 from customers located in those areas constituted less than one-half of one per cent of its total revenues. Consequently, actual and potential competition among WTU and TESCO was de minimis. In addition, there exists no consequential competition in the fringe areas between the service areas of plaintiffs and defendants.
These areas are sparsely populated, with no conse-quential economic growth and no economic incentive for WTU or TESCO to engage in competition in these areas. . .
(Order at 31).
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(v) CP&L and WTU suffered no economic loss or threatened harm as a result of defendants' disconnection on May 4, 1976. (Order at 39, 49, 62).
(vi) There is no relevant market in which plaintiffs and defendants compete. (Order at 34-37, 61-62).
(vii) HL&P and TESCO acted reasonably in opposing interstate operation. (Order at 53-54, 63).
These findings satisfy all the requirements for the application of collateral estoppel, i d CP&L cannot con-ceivably prevail on any of the antitrust issues it has raised in this proceeding without relitigating many of these factual matters. Specifically, in its June, 1976 petition for leave to intervene in this proceeding, CP&L placed the following issues in controversy:
(i) CP&L and HL&P are in direct competition.
(ii) EL&P combined with TU (the parent com-pany of TESCO) to refuse to deal with CP&L; (iii) HL&P's action in disconnecting from CP&L on May 4, 1976 was an unfair method of competing with CP&L; (iv) HL&P has a dominant position which it uses to monopolize or attempt to monopolize CP&L's and HL&P's service areas.
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(v) HL&P's and TU's refusal to deal in interstate commerce has a detrimental impact on CP&L by preventing possible savings from inter-state operations.11/
The District Court decided adversely to CP&L detailed factual aatters essential to the proof of each of these issues.
CP&L should be estopped from relitigating these essential underlying facts in this forum.
The differences between the District Court trial and this proceeding do not lessen the fact that the factual issues basic to both are the same. In the District Court, the parties litigated these issues to establish whether HL&P's decision to operate on an intrastate basis violated -
Section 1 of the Sherman Act under eithe" per se illegality theories or broader rule of reason theories. In the present proceeding, the legal question is whether HL&P's decision is
" inconsistent with the antitrust laws," including Section 1.
It matters not whether the legal standard governing this proceeding is broader than Section 1 of the Sherman Act, because collateral estoppel still applies to preclude CP&L from relitigating the underlying facts.
12/ See CP&L' Petition for Leave to Intervene and Request for Hearing Cut of Time at 8-13 (June 4, 1976).
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A fact issue determined in one suit does not los3 its validity in a subsequent proceeding simply because that fact determination is proffered to support a different legal theory.
That different legal conclusions may flow from a single fact finding, however, does not alter the existence of that fact finding. The distinguishing feature of the doctrine of collat-eral estoppel is that it precludes in a second or subsequent suit the relitigation of fact issues actually determined in a prior suit regardless of whether the prior determination was based on the same cause of action in the second suit.
James Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451, 459 (5th Cir. 1971).
Thus even assuming that the legal standard applied by the District Court differs from the one to be applied here, the District Court's factual determinations have the same impact on and significance for CP&L's contentions here.
The District Court's findings of fact precluded CP&L from showing that HL&P violated Section 1 of the Sherman Act.
The same findings also make it impossible for CP&L to show an " inconsistency" with am antitrust law. If there is no concerted action, no competition, no anticompetitive motive, no relevant market, no impact on the complaining party, and a reasonable basis for the action complained of, how can there be any situation inconsistent with the antitrust laws?
If there is no competition between dL&P and CP&L, there can be no market in which HL&P could have violated
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either Section 1 or Section 2 of the Sherman Act. If there is no definable relevant market in which the parties compete, there is no way to measure the competitive impact of the alleged restraint on interstate commerce under Section 1, Dcugherty v. Continental Oil Co., 579 F.2d 954 (5th Cir.
1978), and no way to prove the possession of monopoly power by HL&P or any of the other requirements for a Section 2 violation. If there is no competition, or anticompetive impact or intent, there can be no " unfair method of competition" within the meaning of Section 5 of the Federal Trade Commission Act, on which CP&L also relies. The District Court's findings thus make it impossible to show that HL&P's decision to maintain intrastate operations offends in any way the concerns and policies underlying the antitrust laws. CP&L should be estopped from attempting--again--to do so.
The issues CP&L raises before this Board were actually litigated in the District Court. The general rule is that where a question of fact is put in issue by the pleadings, submitted to the trier of fact for its deter-mination, and is determined, that question of fact has been
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"actually litigated." Restatement (2d) of Judgments 5 68, comment (d) (Tent. Draft 1975); Exhibitors Poster Exch., Inc.
- v. National Screen Serv. Corp., 421 F.2d 1313 (5th Cir.
1970). This requirement is designed to insure that a party is not estopped from litigating an issue unless he has
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actually had a day in court on that issue. The District Court's opinion and the record amply demonstrate that this requirement has been met.
There is no doubt that the issues raised by CP&L were determined by the District Court's final judgment and order. Moreover, the issues raised by CP&L and determined by the District Court were necessary to that Court's holding.
This requirement for collateral estoppel assures that an issue merely tangential or incidental to one suit is not precluded in a subsequent suit in which it is determinative:
"The decision on an issue not essential to the prior judgment may not have been afforded the careful deliberation and analysis normally applied to essential issues, since a different disposition of the inessential issue would not affect the judgment. Irving Nat'l Bank v. Law, 10 F.2d 721, 724 (2d Cir. 1926) (L. Hand, J.)."
Halpern v. Schwartz, 426 F.2d 102, 104-05 (2d Cir. 1970),
quoted in, Tanker Hygrade No. 18, Inc. v. United States, 526 F.2d 805, 810 (Ct. Claims 1975); see also, 1B Moore's Federal Practice, 1 0.443[5], at 3919. In the present proceeding, none of the findings which HL&P seeks to estop CP&L from relitigating were " incidental, collateral, or immaterial" to the District Court's judgment. The issues of concerted action, of competition, of anticompetitive intent and impact, of market definition, and of reasonableness were all necessary to the outcome of the suit.
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The District Court's findings of fact thus satisfy all of the traditional requirements for the application of collateral estoppel. CP&L had the initiative in both the District Court and in this proceeding, chose the forum,11/ had every incentive to litigate all the issues fully, and received a full and fair opportunity to do so. There is no possible unfairness in estopping CP&L from relitigating the same factual issues against the same party. See Winters v. Lavine, 574 F.2d 46, 58-59 (2d Cir. 1978) (analyzing factors in assessing fairness of applying collateral estoppel).
The application of collateral estoppel sought here is well within the traditional limits of the doctrine,1S/ and is consistent with the need for efficient adjudication before this Board. Collateral estoppel in this case is also consistent with 13/ CP&L in fact chose the District Court over the NRC by filing its case in Dallas a month before it filed its petition to intervene at the NRC.
14/ Indeed, given the Supreme Court's recent holding that "a litigant who was not a party to a prior judgment may nevertheless use that judgment ' offensively' to prevent a defendant from relitigating issues resolved in the earlier proceeding," Parklane Hosiery Co. v. Shore, 99 S. Ct. 645, 649, 58 L.Ed.2d 552, 559 (1979), it is difficult to see any objection to estopping CP&L. In Parklane Hosiery, a decision of potentially great significance in the area of collateral estoppel, the Court emphasized the desirability of avoiding the relitigation of issues resolved in an earlier pro-ceeding. 99 S. Ct. at 649-50. The Court also indi-cated that in terms of decisional economy and fairness, the case for defensive estoppel, which HL&P is seeking in this proceeding, is even more compelling than that for offensive estoppel. 99 S. Ct. at 650-51.
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the need for fairness to HL&P, which has already litigated the same issues against CP&L and should not be forced to continue to do so until CP&L exhausts the supply of available forums.
IV.
The Approcriateness of Administrative Restraint Above and beyond the principles of collateral estoppel as applied to CP&L, this proceeding should be ter-minated as to HL&P for all purposes. The issue here con-cerns comity and rational administration of the Atomic Energy Act ("the Act") to allocate the Commission's and other parties' resources in a manner which effectuates the policies of the Act and serves the public interest. Enor-mous resources of the Commission and of the parties are being devoted to this proceeding. Months of intensive discovery lie ahead and, unless this motion is granted, many more months of evidentiary hearings will follow. And it all makes no sense.
A. The Commission Has Inherent Authority to Order Dismissal if Such Dismissal Serves the Public Interest and Is consistent with Sound Administration of the Com-mission's Responsib111tles under the Act.
The Commission has the inherent power to dismiss proceedings if dismissal serves the public interest and is consistent with the Commission's responsibilities under the Atomic Energy Act. If the Commission decides, in light of
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events which have occurred since the start of the antitrust review, that continued proceedings would be wasteful, dupli-cative, or would not substantially further the policies of the Act, the Commission has the discretion to order dismissal.
It is clear, as a general proposition, that a federal agency may dismiss a proceeding if the agency believes that continuation would be unwise. In Drug Research Corcoration, 63 FTC 998, 14 Ad. L. 2d 482 (1963), the Federal Trade Com-mission ("FTC") dismissed a proceeding on the grounds that dismissal was in the public interest. The Commission stated, in part:
In considering such administrative matters as whether to issue a complaint, or, as here, whether to go on with further proceedings in a case that has already been commenced by issuance of a complaint, the Commission is required to take inte account a broad range of considerations bearing upon the public interest. In order to discharge its respon-sibility to make the most effective possible allocation of its necessarily limited re-sources of funds and personnel, the Commission must consider--as a matter of administrative judgment and discretion--which of the various courses of action open to it should be followed.
Drug Research CorDoration, 14 Ad. L. 2d at 483.15/
A decision by the National Labor Relations Board
("NLRB") reached a similar result. In Local Union No. 12, 15/ See also Moog Industries v. FTC, 355 U.S. 411, 413 (1958); First Buckingham community, Inc., 73 FTC 938, 23 Ad. L. 2d 423, 427 (1968).
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Progressive Mine Workers of America, Dist. No. 1 v. National Labor Relations Board, 189 F.2d 1 (7th Cir. 1951), cert.
denied, 342 U.S. 868 (1951), the court held that the'NLRB had the power to dismiss proceedings if the Board believed that dismissal would best effectuate the policies of the National Labor Relations Act ("NLRA"). In reaching its conclusion, the court discussed a section of the NLRA which, similar to Section 105(c)(2) of the Atomic Energy Act, gave the agency the discretion to initiate a hearing. The court construed that section of the NLRA giving the agency the discretion to initiate a hearing as also giving the agency the discretion
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to dismiss a hearing once begun, even though the statute was silent on the subject of dismissal. _
In its April 5, 1978 order, the NRC concluded, based on the language of Section 105(c)(5) and one statement in the' Joint Committee Report underlying the 1970 amendment to Section 105(c), that it was required to convene an antitrust hearing because of the Attorney General's recommendation in his February 21, 1978 letter.15/ The statute and the legislative history may require the NRC to initiate a hearing upon the recommendation of the Department, but it takes a very strained reading of these provisions to uncover any requirement that the NRC must continue a proceeding so instituted until 16/ Houston Lighting & Power Company (South Texas Project, Unit Nos. 1 and 2), CLI-78-5, 7 NRC 397 (1978).
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conclusion regardless of subsequent events and practical considerations. Unlike the mandatory antitrust review required at the construction permit stage, the decision whether to initiate this Entitrust review was a matter totally within the discretion of the Commission pursuant to Section 105(c)(2). Surely the decision to initiate a review does not deprive the Commission of its inherent discretionary authority to terminate a proceeding that has become un-necessary and duplicative.
The NRC, like the FTC and the NLRB, has broad dis-cretion to control its proceedings so as to implement most effectively the public policies which Congress has entrusted to the agency. Thus, whether the parties must continue to commit their time, personnel and financial resources 'to this hearing is a matter wholly within the discretion of the Commission. If the Commission finds that neither the public interest nor the policies embodied in the Act would be si rved by the continuation of this proceeding, the Commission may exercise its discretion and order that the antitrust hearing be dismissed.
B. Dismissal of this Proceeding is ADpropriate In evaluating the question of dismissal, the Board should consider the fact that neither CP&L, PUB nor STEC/MEC has any legitimate basis for relief through a condition on the STP operating license.
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- 1. CP&L CP&L's initial petition filed in June, 1976, sought two conditions on the STP construction permit: (a) a condition prohibiting HL&P from disconnecting from any member of STP that went into interstate operation, and (b) a condition requiring wheeling of power in interstate commerce. Neither condition would be appropriate now. First, the Federal District Court has permanently enjoined CP&L from going into interstate operation ao long as it remains in STP. With this injunction in effect, the conditions sought have no meaning.
Thus, the NRC must ask what purpose would be served in proceed-ing through a lengthy antitrust hearing to impose conditions that can never take effect while CP&L is a member of STP.
The answer is self-evident.
Even in the absence of the injunction, condition (a) would be superfluous because HL&P cannot disconnect from any member of TIS without prior approval by the PUC. As noted in the Department's advice letter, HL&P is acting pursuant to an order of the PUC, not a private agreement:
The final amended order prohibits all TIS members from disconnecting without TPUC authori-zation and further restrains any utility system connected with TIS from making connections with utility systems not so connected, unless authorized by Texas law or so ordered by the FPC or the TPUC.
The order also provides that TPUC decisions on applications seeking relief fro.a these prohibitions are to be governed by a public interest standard.
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At the present time, it is clear that to some extent the TPUC order has superseded, but not validated, the intrastate only agreement of the private utilities. The agreement is superseded in the sense that it is no longer the sheer economic power of the parties but rather the force of state law that restrains members of TIS from entering into interstate commerce. The agreement is not validated, however, since the TPUC expressly disclaimed any jurisdiction to determine whether the subject contracts were void or voidable.
Therefore, while presently supplanted by a TPUC order, the private intrastate only agreements remain in existence, and are capable of future implementation.17/
Accordingly, by the Department's own reasoning, there are only two future possibilities: (1) if the PUC order remains in effect, HL&P will be acting pursuant to a valid State order with exemption from antitrust sanctions;18/ (2) if the PUC order is reversed on appeal and the PUC should restore
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17/ Advice Letter at 16-17.
18/ The Department has taken a similar position in prior advice letters to the NRC. See, e.g., Letter of February 1, 1977 from Donald I. Baker to Howard K. Shapar in Public Service of Indiana (Marble Hill Units 1 and 2), Docket Nos. 50-546 and 50-547, 42 F.R. 8444 (Feb. 10, 1977):
. . . It is our view that the Nuclear Rege.latory Commission would be unable to remedy an anticon-petitive situation which is in effect mandated by the State of Kentucky as a sovereign, see Goldfarb
- v. Virginia State Bar, 421 U.S. 773 (1975), as opposed to one initiated by the utility and approved by the State, cantor v. Detroit Edison Co., 96 S.Ct.
311 (1976). Here the situation is mandated by what we assume to be a constitutional state law . . . .
The constitutionality question in this case should be decided shortly by the State District Court hearing the appeal of the PUC's order.
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to EL&P the unfettered right to disconnect, EL&P will be acting pursuant to the so-called " private agreement" which has now been approved by the Federal District Court. In either event, an antitrust hearing before the NRC would be unnecessary and wasteful.
It also seems worth noting that the Department may have misunderstood the limited nature of the appeal of the PUC's order in Docket No. 14. The appeal relates only to that portion of the order dealing with WTU's radial line into Oklahoma. No one has challenged that portion of the order which prohibits disconnection. In this regard, the PUC found that the split-up of TIS had jeopardized planning and con-struction of the numerous joint plants in TIS:
[C]onstruction of planned new generation and transmission capacity essential to meet future load growth, and to implemeht necessary conver-sion to fuels other than natural gas, requires certainty that the utility systems connected together in the TIS will remain so interconnected or substantially so, henceforth, insofar as can now be foreseen.19/
Accordingly, the PUC ordered reconnection of TIS and the removal of WTU's radial line into Oklahoma. In so doing, the PUC stated that it was "not concerned with the question of whether TIS or any member thereof operates in interstate commerce." It is clear on the face of the PUC order that the 19/ Order at 5.
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4 PUC intended to keep TIS together, with or without the radial line. Any doubt concerning the PUC's intentions was removed by its denial of a motion in which the Lower Colorado River Authority and the City of Austin sought to amend the PUC's final order as follows:
Austin and LCRA move the Commission to grant a rehearing in the above styled matter for the purpose of making the following changes in the Final Order entered herein on June 2, 1977:
(2) add the following language to finding of fact
' ...; provided, however, that the estab-16:
lishment of any electrical connection which would permit the transmission of electric energy to or from TIS in interstate commerce, shall entitle any member of TIS to disconnect from other members and remain in intrastate commerce.'
(3) add the following language to ordering para-
' ...; provided, however, that the graph 2:
establishment of any electrical connection which would permit the transmission of electric energy to or from TIS in interstate commerce, shall entitle any member of TIS to disconnect from other members and remain in intrastate commerce.'20/
In denying this request, the PUC clearly intended not to per-mit disconnections within TIS regardless of the outcome of any appeals from its order or the outcome of the Dallas federal court case.
20/ TPUC Docket No.14, Motion for Rehearing on Behalf of the City of Austin and the Lower Colorado River Authority (June 17, 1977), at 12.
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Finallv, the NRC should consider that CP&L apparently sought to reopen the construction permit proceeding in June, 1976 so that its proposed conditions would become effective immediately. This strategy was nothing more than an ill-disguised effort to obtain the injunctive relief denied by the Federal District Court on May 4, 1976. The District Court clearly recognized that the request for an injunction, com-bined with the May 4 midnight wiring, was part of a legal strategy to bring about the interconnection of TIS and SWPP through orders of the Federal Power Commission ("FPC"), now the Federal Energy Regulating Commission ("FERC").
. . . By installing the radial line, often referred to as the ' midnight wiring', WTU maliciously and 211Jc11y violated its long standing agreemunt witn TiSCO by failing to notify TESCO of the commencement of interstate operation and f.sr the purpose of requiring TESCO and HLP t) operate in synchronism with SWPP. This is slso evidenced by the fact that this suit was filed on May 3, 1976, along with an application for a temporary restraining order, in an attempt to force the defendants into interstate operations without the defendants' voluntary consent. (Order at 17).
With the passage of PURPA . CSW no longer needs to continue its efforts to coerce HL&P and TU into interstate commerce in order to pitce this controversy in the hands of the FERC. CSW has now !iled an application with the FERC in an effort to force interconnection of TIS and SWPP. While HL&P believes that CSW's petition will be denied on the
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merits, a favorable ruling for CSW (if it can somehow overcome the impact of the Federal Court's injunction and the PUC's order in Docket No. 14) would totally subsume any conditions imposed by the NRC. Moreover, the FERC will address the economic and electrical issaes of interconnection directly, rather than indirectly through concepts of antitrust law. Thus the new FERC proceeding further highlights the need for the NRC to consider carefully its commitment of resources to an extensive antitrust hearing for the STP.
- 2. STEC/MEC STEC/MEC has sought, in effect, the same relief as CP&L. As to the proposed condition prohibiting disconnection, the answer is the same as for CP&L. With respect to the condi-tion on wheeling interstate power, STEC/MEC has never approached
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HL&P with any request to operate on an interstate basis. Further-more, STEC/MEC participated in the PUC proceedings in Docket No. 14 and has consistently supported the PUC's order in Docket No. 14. In fact, in its pleadings filed in Docket No. 14, STEC/MEC represented to the PUC that it had "no position con-cerning whether TIS should ultimately be maintained on an intrastate basis or on an interstate basis (assuming that any interstate connection is made at the time and in the manner dictated by sound engineering considerations.)"21/ Furthermore, 2y STEC/MEC " Petition and Explanation of Position," April, 1977 at 13.
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e STEC/MFC recognized "that avoidance of FPC jurisdiction may be a legitimate corporate objective of HL&P and TU to the extent that it is pursued in a manner consistent with meeting their public utility obligations to the citizens of Texas."22/
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By the terms of these pleadings, STEC/MEC has admitted that: (i) it has no plans for interstate operation, and (ii) it has no complaint against HL&P's policy of intrastate operation.
STEC/MEC does not compete with HL&P, and since STEC/MEC has never asked EL&P to wheel power either intrastate or interstate, there appears to be absolutely no issue of fact to be heard in this proceeding with respect to either an antitrust complaint by STEC/MEC against HL&P or appropriate relief to remedy such a complaint.
- 3. PUB .
Like STEC/MEC, PUB also wants the STP operating license conditioned to require wheeling of interstate power.
Also like STEC/MEC, however, PUB does not compete with HL&F and has never asked EL&P to wheel power. Both PUB and STEC/MEC are wholesale customers of CP&L and are located in CP&L's service area. Brownsville, for example, is approximately 350 miles from Houston. Understandably, therefore, in the petitions to intervene filed by PUB and STEC/MEC, there is not a single in-stance of competition cited nor even an assertion that either 22f Id. at 10.
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of these parties competes with HL&P. If there is no competition between the complaining party and the defendant, as the Federal District Court recognized, there simply cannot be a complaint sounding in antitrust.
In short, dismissal of this proceeding would avert the real possibility of conflict between actions of the NRC, on the one hand, and the FERC and the courts on the other. Moreover, dismissal would serve the interests of efficient and reasonable administration of the Act, and would conserve the resources of the parties.
VI.
Conclusion The doctrine of collateral estoppel clearly applies in this proceeding to prohibit CP&L from relitigating any of the factual issues recently decided by the Federal District Court in Dallas. Moreover, because these factual issues that cannot be retried by CP&L are essential to the proof of any antitrust claim, CP&L is precluded from pursuing against EL&P any theory of antitrust violation or inconsistency with the antitrust laws.
The application of collateral estoppel, in turn, raises broader questions concerning the reasons for continuing this extensive antitrust hearing. In this broader context, while decisions in the area are sparse, it is arguable that only the Commission itself can exercise the NRC's inherent
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discretion to dismiss a proceeding. See Drug Research Corp. ,
63 FTC 998, 14 Ad. L. 2d 482 (1963). If the Board concludes that it does not have authority to dismiss this proceeding on its own, then HL&P requests that the Board certify this question directly to the Commission for decision. See 10 CFR SS 2.718(i) and 2.785(b)(1) .
In seeking this broader relief, EL&P's purpose is not to challenge the Commission's jurisdiction, but rather to appeal to its discretion in protecting the public interest as provided in the Atomic Energy Act. The findings of the Federal District Court and the initiation of the FERC proceeding totally eliminate the rationale for holding an exhaustive antitrust hearing in this case. Even though the NRC has jurisdiction, it need not and should not be exercised unnecessarily.
The public will ultimately pay the costs not only of the Commi;sion and the governmental parties, but also of the electric utilities that are participating in this proceeding.
Under these circumstances, the public interest will hardly be served by the pursuit of a needless antitrust hearing when it is clear that the outcome, because of the past and prospective developments in other forums previously discussed, will n ve no meaningful impact on the operations of the four applicants for the STP operating license. The question is not whether the NRC should abandon its jurisdiction to other decision-making bodies,
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but whether the NRC should use its power and resources in this proceeding rather than other more productive endeavors.
For all of the foregoing reasons, HL&P urges the Board to order the following:
(1) that CP&L be collaterally estopped from relitigating or attempting to relitigate any of the fact issues decided against it by the United States District Court for the Northern District of Texas in i
West Texas Utilities Company, et al. v. Texas Electric Service Company, et al., No. CA3-76-0633-F.
(2) that this proceeding be dismissed as to HL&P for all purposes.
(3) that if the Board has reservations concerning its authority to dismiss the proceeding as to HL&P, the Board should certify the question of dismicsal to the Commission for its determination.
Respectfully submitted, E. W. 8 12'~~
E. W. Barnett Attorney-in-Charge for Houston Lighting & Power Company OF CUNSEL:
BAKER & BOTTS 3000 One Shell Plaza Houston, Texas 77002 (713) 229-1234
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of 5 HOUSTON LIGHTING & POWER COMPANY 5 Docket Nos. 50-498A THE CITY OF SAN ANTONIO 5 50-499A THE CITY OF AUSTIN, and 5 CENTRAL DOWER AND LIGHT COMPANY 5 (South Texas Project, 5 Units 1 and 2) 5 In the Matter of: %
5 TEXAS UTILITIES GENERATING 5 DOCKET NOS. 50-445A COMPANY, et al. 5 50-446A 5
(Comanche Peak Steam Electric 5 Station, Unit Nos. 1 and 2) 5 AFFIRMATION OF SERVICE This is to certify that a true and correct copy of the foregoing instrument has been served upon all counr,el and persons listed on the attached Service List on this the 3d of April, 1979.
EWBAP E. W. Barnett
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SERVICE LIST Marshall E. Miller, Esquire U. S. Nuclear Regulatory Commission Washington, D. C. 20555 Michael L. Glaser, Esquire 1150 17th Street, N.W.
Washington, D. C. 20036 Sheldon J. Wolfe, Esquire U. S. Nuclear Regulatory Commission Washington, D. C. 205 5 Atomic Safety and Licensing Appeal Board Panel U. S. Nuclear Regulatory Commission Washington, D. C. 20555 Chase R. Stephens, Supervisor Docketing and Service Branch U. S. Nuclear Regulatory Commission Washington, D. C. 20555 Jerome D. Saltzman, Chief Antitrust and Indemnity Group U. S. Nuclear Regulatory Commission Washington, D. C. 20555 J. Irion Worsham, Esquire Merlyn D. Sampels, Esquire Spencer C. Relyea, Esquire Worsham, Forsythe & Sampels 2001 Bryan Tower Suite 2500 Dallas, Texas 75201 Jon C. Wood, Esquire W. Roger Wilson, Esquire Matthews, Nowlin, Macfarlane
& Barrett 1500 Alamo National Building San Antonic, Texas 78205
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SERVICE LIST Page 2 R. Gordon Gooch, Esquire Steven R. Hunsicker, Esquire Baker & Botts 1701 Pennsylvania Avenue, N.W.
Washington, D. C. 20006 Roy P. Lessey, Jr., Esquire Michael B. Blume, Esquire U. S. Nuclear Regulatcry Commission Washington, D. C. 20555 Roff Hardy Chairman and Chief Executive Officer Central Power and Light Company P. O. Box 2121 Corpus Christi, Texas 78403 G. K. Spruce, General Manager City Public Service Board P. O. Box 1771 San Antonio, Texas 78203 Perry G. Brittain, President Texas Utilities General Company 2001 Bryan Tower Dallas, Texas 75201 R. L. Hancock, Director City of Austin Electric Utility P. O. Box 1086 Austin, Texas 78767 G. W. Oprea, Jr.
Executive Vice President Houston Lighting & Power Company P. O. Box 1700 Houston, Texas 77001 Richard D. Cudahy, Esquire Joseph Gallo, Esquire Robert H. Loeffice, Esquire Isham, Lincoln & Beale 1050 17th Street, N.W., Suite 701 Washington, D. C. 20036
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JERVICE I.IST Page 3 Michael I. Miller, Esquire Richard E. Powell, Esquire David M. Stahl, Esquire Thomas G. Ryan, Esquire Isham, Lincoln & Beale One First National Plaza Chicago, Illinois 60603 Don R. Butler, Esquite Sneed, Vine, Wilkerson, Selman & Perry P. O. Box 1409 Austin, Texas 78767 Jerry L. Harris, Esquire Richard C. Balough, Esquire City of Austin P. O. Box 1088 Austin, Texas 78767
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Joseph B." Knotts, Jr., Esquire Nicholas S. Reynolds, Esquire Debevoise & Liberman 700 Shoreham Building 806 15th Street, N.W.
Washington, D. C. 20555 Don H. Davidson, City Manager City of Austin P. O. Box 1088 Austin, Texas 78767 Jay Galt, Esquire Looney, Nichols, Johnson & Hays 219 Couch Drive Oklahoma City, Oklahoma 73102 Knoland J. Plucknett Executive Director Committee on Power for the Southwest, Inc.
5541 East Skelly Drive Tulsa, Oklahoma 74135
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SERVICE LIST Page 4 John W. Davidson, Esquire Sawtelle, Goode, Davidson
& Tioilo 1100 San Antonio Savings Building San Antonio, Texas 78205 Douglas F. John, Esquirc Akin, Gump, Haver & Feld 1100 Madison Office Building 1155 15th Street, N.W.
Washington, D. C. 20005 Ronald Clark, Esquire Frederick H. Parmenter, Esquire Judith Linda Harris, Esquire Energy Section Antitrust Division U. S. Department of Justice P. O. Box 14141 Washington, D. C. 20044 Morgan Hunter, Esquire Bill D. St. Clair, Esquire McGinnis, Lockridge & Kilgore Fifth Floor Texas State Bank Building 900 Congress Avenue Austin, Texas 78701 W. S. Robson, General Manager South Texas Electric Cooperative, Inc.
Route 6, Building 102 Victoria Regional Airport Victoria, Texas 77901 Robert C. McDiarmid, Esquire Robert A. Jablon, Esquire Spiegel & McDiarmid 2600 Virginia Avenue, N.W.
Washington, D. C. 20036
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- SERVICE LIST Page 5 Kevin B. Pratt Texas Attorney General's Office P. O. Box 12548 Austin, Texas 78711 William H. Burchette, Esquire Frederick H. Ritts, Esquire Law Offices of Northcutt Ely Watergate 600 Building Washington, D. C. 20037
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Tom W. Gregg, Esquire P. O. Box Dra' .'- 1032 San Angelo, Texas 76902 Leland F. Leatherman, Esquire McMath, Leathermi.n & Woods, P. A.
711 West Third Street Little Rock, Arkansas 72201 Paul W. Eaton, Jr., Esquire Hinkle, Cox, Eaton, Coffield
& Hensley 600 Henkle Building P. O. Box 10 Roswell, New Mexico 88201 J. A. Bouknight, Esquire Bill Franklin, Esquire Lowenstein, Newman, Reis
& Axelrad 1025 Connecticut Avenue, N.W.
Washington, D. C. 20036