ML19329D196

Applicants' Memorandum on Authority of Appeal Board to Condition Grant or Denial of Stay Upon Posting of Bond. Appeal Board'S Authority to Require Posting of Bond Has No Significance to Stay Request.Certificate of Svc Encl

ML19329D196
Person / Time
Site:	Davis Besse, Perry
Issue date:	03/02/1977
From:	Reynolds W CLEVELAND ELECTRIC ILLUMINATING CO., SHAW, PITTMAN, POTTS & TROWBRIDGE, TOLEDO EDISON CO.
To:	NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
References
NUDOCS 8002250893
Download: ML19329D196 (11)

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board l In the Matter of )

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THE TOLEDO EDISON COMPANY and ) - -

THE CLEVELAND ELECTRIC ILLUMINATING ) Docket No J -346A_

COMPANY )

(Davis-Besse Nuclear Power Station, )

Unit 1) )

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THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. ) Docket Nos. 50 h40A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

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] THE TOLEDO EDISON COMPANY, ET AL. )

i (Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A

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' APPLICANTS' MEMORANDUM ON THE AUTHORITY OF THE APPEAL BOARD TO CONDITION THE GRANT OR DENIAL OF A STAY i

UPON THE POSTING OF A BOND i 1. By Order of February 15, 1977, the Atomic Safety and j

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Licensing Appeal Board (" Appeal Board") invited Applicants to

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file a supplemental memorandum in connection with the pending application for a pendente lite stay limited to the question

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of the authority of the Appeal Board to condition the grant or denial of a stay upon come undertaking, such as the posting of a. bond. Applicants are unaware of any decision by a Com-mission licensing or appeal board dealing with this question.

Similarly, we are unaware of any Commission rule that would bear on the question. As a result, Applicants have looked to

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analogous practice before the federal courts and attempted

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to apply principles developed there to the circumstances facing the Commission, and in particular, to the factual setting raised-by Applicants' pending stay motion.

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2. In our filing of February 14, 1977, we pointed out that within the context of the present administrative pro-ceeding there is no provision for the posting of bonds or

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other means of security (Renewed Motion at 20). While that is obviously correct, further reflection has led us to the conclusion that the lack of explicit authority to require the posting of a bond may not end the matter.

4 3 Justice Cardoso made the following observation in Landis v. North American Co., 299 U.S. 248, 254-55 (1936):

I [T]he power to stay proceedings is incidental to the L power inherent in every court to control the disposi -

tion of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment , which must weigh competing

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interests and maintain an even balance. [ Emphasis added.]

From this perspective, Applicants believe that if this Appeal Board has the inherent power to issue a stay, it also i probably has the power to condition that stay as it sees fit 1

in furtherance of the public interest, including in appropriate circumstances requiring the posting of a bond. However, as

-described more fully below, Applicants do not believe such j authority ' impacts significantly on the outcome of the instant motion.

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4. Under the Federal Rules of Civil Procedure, the party seeking a stay can be required to post a bond or other-wise give some security. In this connection, Rule 62 deals with the procedures applicable for securing a stay pending appeal 1 while Rule 65 deals with the procedures applicable for securing a preliminary injunction or restraining order pending a full hearing on the merits. The principles set forth in both of these rules would appear relevant to Appli-cants' pending stay motion. Compare Philadelphia Electric Co.

(Feach Bottom Atomic Power Station, Units 2 and 3), ALAB-158, 6 A.E.C. 999 (1973) (issuance of a stay " requires a demonstration of the existence of circumstances such as those which would cause a court to grant a preliminary injunction * * ""); Southern California Edison Co. (San Onofre Nuclear Generating Station, Units 2 and 3), ALAB-189, 7 A.E.C. 410 (1974) (same).

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Conceptually, Rule 62 deals with two distinct situations:

those where a party may obtain a stay as a matter of right by posting a supersedeas bond (see Fed. R. Civ. P. 62(d) and 62(a)) and those where the stay is not of right but the court may issue such a stay "upon terms a.s to bond or otherwise as it considers proper for the security of the rights of the adverse party" (see Fed. R. Civ. P. 62 (c ) and 62(a)). Appli-cants have never claimed a stay as a matter of right; rather our motion appears more akin to a motion seeking a stay of a mandatory injunction and thus governed by Rule 62(c) and the exception clause of Rule 62(a).

Rule 62 must be read in conjunction with Rule 8 of the Federal Rules of Appellate Procedure. Rule 8(b) comports with the language of Fed. R. Civ. P. 62(c) by explicitly authorizing a court of appeals to condition a stay "upon the filing of & bond or other appropriate security in the district courts."

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5 In assessing at what amount a bond should be set, courts traditionally have not looked to the amount of eventual recovery by the winning party as the appropriate measure of security, but have focused instead on the damages likely to i I

result from delaying the mandated action pending an appeal.

See Beaver Cloth Cutting Machines v. H. Maimin Co., 37 F.R.D.

47, 50 (S.D.N.Y. 1964); Gordon Johnson Co. v. Hunt, 109 F. Supp.

571, 576 (N.D. Ohio 1952). In the context of Applicants' stay l

j motion, these cases would seem to require Applicants to post  ;

j a bond in an amount sufficient to indemnify any party's injury

! due to the delay in implementing the license conditions, if Applicants' appeal is eventually unsuccessful. However, the 4

cases also hold that no bond will be required if no showing

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of material damage to the other parties has been proven. See,

e.g., Urbain v. Knapp Brothers Mfg. Co., 217 F.2d 810, 815 1

(6th Cir. 1954), cert. denied, 349 U.S. 930 (1955); United States v. Onan, 190 F.2d 1, 7 (8th Cir. 1951); Tenants &

Owners in Opposition to Redevelopment v. HUD, 406 F. Supp.

1024, 1041 (N.D. Cal'. 1970); Western Addition Community Organization v. Weaver, 294 F. Supp. 433, 446 (N.D. Cal.

1968); Hurwitt v. City of Oakland, 247 F. Supp. 995, 1005-06

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(N.D. Cal. 1965).

6. Since Applicants' motions of January 14 and February 14, 1977, adequately demonstrate that parties ether than Applicants will suffer no recognizable harm if the requested stay'is issued, there would appear to be no need i

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to require Applicants to post a bond.2/ Even hypothesizing some injury to the non-Applicant entities, however, it plainly would be of a nature that could be cured monetarily (see n. h, infra), and thus, even on such an hypothesis, the Appeal Board could still issue Applicants' requested stay, but require that a bond be posted to ensure the other parties that they will be made whole if injured in the interim period during the appeal.

7. There is one additional consideration that bears mentioning. The bond requirement works in both directions.

That is, a court not only can require an appealing party to post a bond, it can also deny a stay to such a party on t he condition that the other parties post a bond sufficient to indemnify the appealing party if its appeal is eventually successful. See Lapin v. La Maur, Inc., 11 F.R.D. 339, 341

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Applicants are hard pressed to see any harm which the Department of Justice or the Staff of the Nuclear Regulatory Commission will suffer if the stay is granted. The showing required by the third criterion of Virginia Petroleum Jobbers is whether other parties interested in the proceeding would suffer substantial harm, and, with the exception of Cleveland, no non-Applicant, CCCT entity saw sufficient need to intervene and become a party to these proceedings. In fact, one entity that might have represented the interests of the Ohio munici-pal systems, American Municipal Power-Ohio, Inc. (" AMP-0"),

chose to withdraw from the proceedings barely two months before the start of hearings. This disinterest on the part of the non-participating Ohio and Pennsylvania entities, none

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of whom have yet indicated a desire to commit to purchase any Davis-Besse Unit 1 power, for example, which will become com-mercia11y available sometime this summer, certainly suggests that a short delay during appeal in implementation of the license conditions will work no substantial harm. Moreover, the failure of such entities to participate has made it all the more difficult for Applicants to quantify the injury they are likely to suffer if the stay is not granted, since they have no idea as to what demands these entities may now make, and thus, are not in a position to plan adequately for the development of their systems (see also n. 4, infra).

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i (D. Minn. 1951). This would seem to suggest that Applicants' requested stay could be denied if a bond were posted by the i L

opposition parties to protect the Applicants.

8. However, as a practical matter, the opposition parties here are in no position to undertake a bond obliga-tion. Pursuant to Rule 62(e) of the Federal Rules of Civil Procedure, no bond, obligation or security can be required

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from the United States, or an officer or agency of the

government as a condition for dssuance of a stay, and Appli-cants would pIesume as a ccndition for denial of a stay. A

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similar prohibition is expressly provided for by statute, r

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See 28 U.S.C. $2408 (1970); Schell v. Cochran, 107 U.S. 625, 628 (1882); Louisville Trust Co. v. National Bank of Kentucky, 3 F. Supp. 925 (E.D. Ky. 1933); cf. Utah v. Livsey, 312 F. Supp. 1397 (D. Utah 1970). Thus, Applicants can look neither to the Staff of the Nuclear Regulatory Cc= mission nor  !

to the Department of Justice for security. As for the City of Cleveland, the record below makes it abundantly clear j that the City is so. deeply in debt that there is no realistic prospect of it posting a bond under any circumstances.-

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, As of the close of the record, the site of the City's J

debt to CEI was in. excess of $10,000,000.00 (Hauser, Tr. 10614;

A-135; A-140; see also A-212}. On September 21, 1976,

. judgment was entered in federal district court against the City and-in favor of CEI for'39,52:,067.50 of that indebted-

,. ness. See City of Cleveland v. Cleveland Electric Illuminating Co., et al., Civil Action No. C75-560. CEI has recently requested the court to increase the judgment to $14,733,080.62.

On February 24, 1977, the district court granted summary

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judgment on CEI's counterclaim for the additional $5,208,013 12,

! while affording to Cleveland an acccunting to verify the outstanding amount of its delinquencies accrued to December 31, 1976.

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s Accordingly, only by staying the license conditions mandated in the Initial Decision can this Appeal Board ensure that Applicants' legitimate interests will be adequately pro-tected during the appeal.

9 This conclusion is reinforced by the fact that Applicants' claim of injury -- which concerns essentially the prospect of a needless disruption and restructuring of existing contractual relationships with ncn-Applicant en-tities -- is not easily quantifiable in dollars-and-cents terms. This is not to say that the anticipated injury to Applicants in the absence of a stay is without serious finan-

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cial consequences; rather it is to emphasise that at the present time Applicants can perceive of no meaning 11 way to measure the extent of their likely injury. Thus, even if the opposition parties were in a position to post a bond, Appli-cants do not know how this Appeal Board would begin to fix l the amount of security needed to ensure that Applicants would be made whole in the event that their appeal is successful.h /

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In contrast, the substantial harm claimed by the other parties is quantifiable in dollars-and-cents terms. The only particularized injury referred to by any of the parties or by the Licensing Board is that Cleveland's electric system may fall deeper in debt to CEI (see DOJ motion of Jan. 27, 1977, at 14-15) and that Cleveland.may suffer damage by being

, forced to deal only with CEI for purchased power (see Cleve-land motion of Jan. 26, 1977, at 10). If those are legiti-mate concerns -- and Applicants believe the record indicates that they are not -- a clear remedy would be to require CEI l l to post a bond in an amount sufficient to cover the differ- l j ence in price between CEI-purchased power and what the future

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cost of power to Cleveland would have been if the stay had l not been issued. Given Cleveland's failure during the

[ hearing-to establish that sizable quantities of less expen-

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-sive power were immediately available to Cleveland, we believe the amount of such a bond would be nominal at best.

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- 10. For the foregoing reasons, the Appeal Board's i

inherent authority to require-the posting of a bond pending the outcome of the appeal does not, in the circumstances,

have any real significance to the disposition of Applicants'

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! instant pendente lite stay request.

4 Respectfully submitted,

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SHAW, PITTMAN, POTTS & TROWBRIDGE ,

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Wm. Bradford Reynolds '

! Robert E. Zahler i

Counsel for Applicants Dated: March 2, 1977 i

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board In the Matter of ) .

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THE TOLEDO EDISON COMPANY and )

THE CLEVELAND ELECTRIC ILLUMINATING ) Docket No. 50-346A COMPANY )

(Davis-Besse Nuclear Power Station, )

Unit 1) )

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THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, ET AL. ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A Units 1 and 2) )

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THE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Power Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing " Applicants' Memorandum on the Authority of the Appeal Board to Condition the Grant or Denial of a Stay Upon the Posting of a Bond" were served upon each of the persons listed on the attached Service List, by hand delivering copies to those persons in the Washington, D.C. area, and by mailing copies, postaga prepaid, to all others, all on this 2nd day of March, 1977.

SHAW, PITTMAN, POTTS & TROWBRIDGE

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By: o - > ^. ,

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• dm . Bradford Rpynolds

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TNITED STATES OF AMERICS -

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NUCLEAR REGULATORY COMMISS JN

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Before the Atemic Safety and Licensine Appeal Board

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In the Matter of )

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THE TOLIDO EDISON COMPANY and )

THE CLEVELAND ELECTRIC ILLUMINATING ) Docket No. 50-346A COMPANY -

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(Davis-Besse Nuclear Power Station, )

Unit 1) )

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THE CLEVELAND ELECTRIC ILLUMINATING )

COMPANY, IT AL. ) Docket Nos. 50-440A (Perry Nuclear Power Plant, ) 50-441A

Units 1 and 2) )

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TEE TOLEDO EDISON COMPANY, ET AL. )

(Davis-Besse Nuclear Pcwer Station, ) Docket Nos. 50-500A Units 2 and 3) ) 50-501A

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SERVICE LIST

Alan S. Rosenthal, Esq. Ivan W. Smith, Esq.

Chairman, Atomic Safety and Atomic Safety and Licensing Bear Licensing. Appeal Ecard U.S. Nuclear Regulatory Cc=missi-U.S. Nuclear Regulatory Cc= mission Washington, D. C. 20555 Washington, D. C. 20555 John M. Frysiak, Esq.

Jerome E. Sharfman, Esq. Atomic Safety and Licensing Bear

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. Atomic Safety and Licensing U.S. Nuclear Regulatory Cc=missi-Appeal Board Washington, D. C. 20555 U.S. Nuclear Regulatory Commission .

Washingten, D. C. 20555 Atomic Safety and Licensing

• Soard Panel Richard S. Sal: man, Esq. U.S. Nuclear Regulatory Cc=missic Atcmic Safety and Licensimg Washington, D. C. 20555

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Appeal Board U.S. Nuclear Regul,atory Ccmmission . Docketing & Service Section Washington, D. C. 20555 Office of the Secretary

-At mic Safety and Licensin.g U.S. Nuclear Regulator *v Ccch.issic

. Appeal = card Panel. Wash _4ngton, D. C. 20006 U.S. Nuclear Regulatorv Commission

.dashington,. D. C. 205m_o voseph ,.u berg, se_s_.

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Benjam4n . ..s. Vcgler, s_sq.

Roy P. Lessy, Jr., Esq.

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Office of che Execucive Legal Director en c, U.S. Nuclear. Regulatory C =missi D 0 Washington, D. C. 20555 ov ~

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Joseph'J. Saunders, Esq. Terence E. Benbow, Esq.

Antitrust Division A. Edward Grashof, Esq.

Dspartment of Justice Steven A. Berger, Esq.

Washington, D. C. 20530 Steven 3. Peri, Esq.

• Winthrop , 'S timson , Putnam & Pcberts Malvin G. Berger, Esq. 40 Wall Stree:

Janet R. Urban, Esq. New York, New York 10005 Antitrust Division P. O. Box 7513 Themas J. Munsch, Esq.

Washington, D. C. 20044 General Attorney

. Duquesne Light Ccmpany

. Rsuben Goldberg, Esq. 435 Sixth Avenue

' David C. Ejelmfelt, Esq. Pittsburgh, PA 15219 Michael D. Oldak, Esq.

} Goldberg, Fieldman & Ej elmfelt David McNeil Olds, Esq.

i Suite 550 ~

Reed Smith Shaw & McClay 1700 Pennsylvania Ave., N.W. Union Trust Building Washington, D. C. 20006 Box 2009

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Pittsburgh, Pi 15230

. Vincent C. Campanella, Esq. .

2 Director of Law Lee A. Rau, Esq.

Robert D. Hart, Esq. Joseph A. Rieser, Jr., Esq.

1st Ass't Director of Law Reed Smith Shaw & McClay City of Cleveland Suite 900 213 City Hall 1150 Connecticut Avenue, N.W.

Cleveland, Ohio 44114 Washington, D. C. 20036

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Frank R. Clokay, Esq. James R. Edgerly, Esq.

i Special Ass't Attorney General Secretary and General Counsel Rcom 219 Pennsylvania Power Ccmpany Towne House Apartments .

One East Washington Street Harrisburg, PA 17105 -

New Castle, PA 16103 4

Donald E. Hauser, E;q. Jchn Lansdale, Esq.

Victor F. Greenslade, Jr., Esq. Cox, Langford & Brown William J. Kerner, Esq. 21 Dupont Circle, N . W. ,

The Cleveland Electric Washington, D. C. 20036 Illuminating Com=an~v

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55 Public Scuare Alan P. Buchmann, Esq.

Cleveland, dhio 44101 Squire, Sanders & Dempsey 1800.' Union Commerce Building Michael M. Briley, Esq. Clevela'nd, Ohio 44115

-Paul M. Smart, Esc. .

Fuller, Henrv,.Hodge &'Snyder gward.A. Matto, Esq- .

P. O.' Box 2088 Richard M. Fires tone, Esq.

. Toledo, Ohio 43603 Karen E. Adkins, Esq.

Antitrust Seccion Russell J. Spetrinc, Esq. 30 E. Broad Street, 15th Ficor

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Thocas A. Kayuha, Esq. Columbus, Ohio 43215 Ohio' Edison Ccmpany Christo=her R. Schraff, Esc.

76 Soutn Main Street

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Akron, Ohio 44308 D rf I D Assistaht Attornev General" j h Environmental Law'Section ss us 361 E. Ercad Street, Sch Ficor.

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