ML20010B286
| ML20010B286 | |
| Person / Time | |
|---|---|
| Site: | Farley  |
| Issue date: | 08/06/1981 |
| From: | Whitler J JUSTICE, DEPT. OF |
| To: | NRC COMMISSION (OCM) |
| References | |
| ISSUANCE-A, ISSUANCES-A, NUDOCS 8108140323 | |
| Download: ML20010B286 (12) | |
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UNITED STATES OF AMERICA omce cithe Smetary Dockstin;f Suvice $ NUCLEAR REGULATORY COMMISSION E- ['gg\F \irj o**
A Before The Commission - I ) !?J' ro g g 'Q p#
I 6 m. U In the matter of ALABAMA POUER COMPANY
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Docket Nf7mg4 Nos. 50448A,-
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(Joseph M. Farley Nuclear Plant,) 50-364A Units 1 and 2) )
, ANSUER OF DEPARTMENT OF JUSTICE- IN' OPPOSI-TION TO '
ALABAMA POWER COF.PANY'S APPLICATION FOR AN ORDER STAYING PENDENTE LITE THE EFFECTIVENESS OF ANTITRUST CONDITIONS Pursuant to 10 C.F.R. { 2.788(d), the United States Departraent of Justice (" Department") submits this answer opposing Alabama Power Company's (" Applicant") " Application for an Order staying Pendente Lite the Effectiveness of Antitrust Conditions" dated July 22, 1981 (" Application"). For the
. reasons set fortn below, the Department respectfully urges the Commission to deny the Application.
Tne Atomic Safety and Licensing Appeal Board (" Appeal Board") issued an order and decision, dated June 30, 1981
_("ALAB-646") in the above captioned proceeding which affirmed in part and reversed in part decisions by the Atomic Safety and Licensing Board (" Licensing Board") 5 NRC 804 (1977) and 5 NRC 1482 (1977). Tne Appeal Board affirmed the Licensing Board's findings: 1) that the~ Applicant had monopoly power in the wholesale market in central and southern Alabama and controlled access to transmission in its service area; 2) that the Applicant had misused its monopoly power and transmission dominance to eliminate arid foreclose competition from a f I.I 8108140323 810BO6
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4 competing bulk power producer, the Alabama Electric Cooperative
("AEC"); and 3) that license conditions were necessary in order c of a situation
.to prevent the creation or maintenan'e inconsistent with the antitrust laws. The Appeal Board reversed the Licensing Board on two issues dealing with-relevant markets, finding that the Board below had erred in rejecting a coordination services ~ market and a retail market.
Tne Appeal Joard also reversed on'two issues. dealing'with Applicant's conduct, finding that the Applicant had engaged in a series of rate reductions to-prevent AEC from building-competing generation and that the Applicant had denied ~AEC ,
reasonable access to the Farley Nuclear Plant. -Finally, the Appeal Board ordered additional license conditions appropriate
. to remedy the situation found to be inconsistent with the antitrust laws.
Applicant filed the subject application seeking a stay of the license conditions ordered by the Appeal Board pending an appeal. Applicant has petitioned the full Commission and the Fi-itn Circuit Court of Appeals for review of the Appeal Board's decision.
The criteria for granting or denying a stay _is set forth in the Commission's Rules and Regulations, 42 C.F.R. i 2.788(e):
(e) In determining whether to grant or deny an application for a stay, the Commission, Atomic Safety and Licensing Appeal Board, or presiding officer will consider:
(1) Unether the moving party has made a strong showing that it is likely to prevail on the merits;
(2) Unether the party will be irreparably injured unless a stay is granted; (3) Uhether tne granting of a stay would harm other parties; and (4) Where the public interest ~ lies.
Tne Appeal Board has stressed that where an Applicant is asking "as a preliminary matter for the full relief to which
[itj might be entitled if successful at the conclusion of [its) appeal . . . [it] has a heavy -burden indeed to establish a rignt to it." The Toledo Edison Company & The Cleveland-Electric Illuminating Company (Davis-Besse Nuclear Power Station, Units 1, 2& 3), 5 URC 621 (1977) (ALAB-385, at 6-7).
See also In Re South Carolina Electric and Gas Company (Virgil C. Summer Nuclear Station, Unit 1), NRC Docket No. 50-395 OL, Memorandum and Order dtd June 19, 1981 (CCH Nuclear Regulat' ion Reports <30,605.01). Applicant has-failed to make the required showing on any of the four criteria and has not met the heavy ourden imposed upon a party seeking a stay.
I. APPLICANT HAS NOT MADE A STRONG SHOUING THAT IS LIKELY TO PREVAIL ON THE MERITS Applicant alleges a mixed bag of legal and factual," errors" committed by the Appeal Board that, in the Applicant's view, make ALAB 646 " fundamentally flawed and thus likely to be reversed." Application, page 3. Applicent assert's that.the finding that it has monopoly power is likely to be reversed because it is subject to " pervasive" state and federal regulation . Applicant asserts that the Appeal Board's
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< application of the stricter standard required of one possessing
r monopoly power in assessing applicant's conduct is likely to be reversed because it is a regulated utility. Applicant also asserts that the Appeal Board is likely to be reversed because
.the Appeal-Board ignored or misapplied the facts in affirming the Licensing Board's determination that the Applicant had
-transmission dominance. .
Applicant asserts that the license conditions ordered by the Appeal Board that require the Applicant to Offsr ownership participation to AEC and wheeling to the members of the Municipal Electric Utility Ascociation ("MEUA*), are likely to be reversed because of errors by the Arreal~ Board in evaluating-Applicant's conduct.
Applicants primary argument is that the Appeal Board will be reversed because it failed to take into account the effect of state and federal regulation on Applicant's ability to use its monopoly power. Applicant relys on Almeda Mall, Inc. v.
Houston Lighting & Power Co., 615 F. 2d 343 (5th Cir. ), cert.
denied, 101 S. Ct. 208 (1980), and-Mid-Texas Communications Systems, Inc. v. A.T. & T., 615 F.2d 1372 (5th Cir.'), cert.
denied sub nom..Uoodlands Telecommunications Corp. v.
Soutnwestern' Bell Telephone Company, 101 S. Ct. 286 (1980), to support its assertion that regulation prevents if.from possessing monopoly power.
Contrary to Applicant's arguments, the cases cited support ,
affirmance of the Appeal Board decision rather than reversal.
Neither case requires, as a matter of law, a finding that the
existence of regulation prevents the exercise of monopoly power. Rather, tne cases require only that the' regulatory scheme be considered by the trier of fact in assessing a utility's ability to exercise monopoly power. The Licensing Board was cartainly mindful of the regulatory scheme under
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which tne Applicant operated. Tne nature and extent to which the Applicant was regulated was the subject of testimony by Applicant's witnesses and was thoroughly briefed by all
, parties. Tne Licensing Board concluded, based on an exhaustive analysis of Applicant's conduct, that the Applicant possessed monopoly power and had used that power to raise prices and I exclude competition. The Licensing Board, consistent with Almeda Mall, viewed Applicant's market share as having only
" ancillary importance" and made no inferences of monopoly power ,
based on market share alone. 5 NRC 804, 901.
Likewise tne Appeal Board's rejection of the Applicant's contention that regulation prevents the exercise of monopoly power is consistent with Almeda Mall and Mid-Texas. The Appeal Board concluded that "the impact ' pervasive regulation' has on its activities is simply another factor which must be assessed in examining applicant's activities for conformance to the antitrust laws." (ALAB-646 at 21). See also Consumers Power Company (Midland Units 1 and 2), 6 NRC 892, 1008. In view of the extensive evidence placed into the record by the Applicant,
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the Licensing Board's careful analysis of the impcct of regulation (5 NRC 804, 882-5), and existing legal precedent in 5-
the courts and in the NRC, 1/ Applicant has not made the requisite strong showing that it is likely to prevail on the merits.
Applicant's otner examples of error will likewise fail.to be reversed. The standard against which Applicant's conduct is judged is properly _that of one having monopoly power. The Licensing Board and the Appeal Board took regulation into-account in assessing Applicant's' conduct. To the extent that regulation is ineffective, or authority is-lacking or not.
exercised, no argument can be made that the existsnce of regulation has an effect on Applicant's monopoly power.
Accordingly, the standard for judging Applicant's conduct should be no different than the standard applied to a nonopolist in an unregulated industry. Neither Alme.da Mall, supra, nar City of Groton v. Connecticut Light & Power Co., 497 F. Supp. 1040 (D. Conn. 1980), is to_the contrary.
Applicant will not prevail on obtaining reversal of the finding relating to transmission dominance. All of the " facts of record" cited by Applicant (Application at 6) and alleged to have been ignored by the Appeal Board were the subject of extensive testimony during the hearing and were fully briefed by all parties. Tne Licensing Board's determination of transmission dominance and the Appeal Board's affirmance are
- fully supported by the record, including testimony from
. 1/ F.P.C. v. Conway, 426 U.S. 271 (1976); Gulf States Uti31 ties Co. v. F.'P .C. , 411 U.S. 747 (1973); Otter Tail Power Co. v. United States, 410 U.S. 366 (197~,; Midland, ALAB-452, 6 NRC 892 (1977); Davis-Besse, supra.
Applicant's own witness and' affiant in the Application, Elmer Harris.
Nor is Applicant.likely to-prevail on getting a reversal-of' 4
< rne license conditions dealing with ownership participation and uneeling. Applicant'.s strained 1and narrow reading of selected portions of the legislative history does not dispose of'the-overwhelming evidence in the record of its anticompetitive denial of access to the Farley units and the need for a license condition allowing AEC-access.
Finally, the license condition dealing with wheeling is clearly justified since Applicant has used its transmission
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dominance to foreclose competition. In the one instance that it agreed to wheel to municipal systems-in its' service area Applicant insisted on a restriction in the contract that was- .
l anticompetitive thus justifying the need for the license condition.
II. APPLICAIC WILL NOT BE IRREPARABLY INJURED IF THE STAY IS:
'- DENIED Applicant's exanples of irreparable injury are simply too speculative to rise to the level necessary to tip the " balance I of norm" in f avor of granting the s cay. 2/ Applicant' alleges I that it will be subjected to " substantial" costs that it may
!- not ce able to recoup snould it prevail. (Application, page I
-8). It suggests a vague legal problem with the Farley mortgage, possible denial of part'of a retail. rate increase, j and possiole difficulty in obtaining financing if i
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In re Soutu Carolina Electric ~& .Cas, supra.
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F-Applicant's lenders perceive Applicant as a greater investment risk because it is subject to competition.
Tne specter of unrecouped cost as justification for a stay of antitrust'Iicense conditions was raised and rejected in Davis-Besse (ALAB-385) 5 NRC 6~21 (1977). The Appeal Board's.
reasoning in Davis-Besse' is equally applicable here. Planning; for the future in the electric utility industry ~is beset with imprecision.- The acts required by: the license conditions (i.e., joint ownership, coordination and wheeling) are similar to those engaged in by Applicant ~ and other electric utilities throughout the country. Tne " risks" of rate increases being denied or financing being difficult exist whether or not the i stay is granted. ' Applicant has not contended that the
! conditions are impossinle of performance, that-costly new-facilities woLid nave to be constructed or.that Applicant would have to provide services without compensation. (ALAB-385, at 10). Applicent has failed to make even a minimal snowing of irreparable injury. As the court of appeals stressed in Virginia Petroleum Jobbers Ass'n v. F.P.C., 259 F.2d 921 (D.C.
. Cir. 1958), "[t]he Key word in tnis consideration is irreparable. Mere injuries, however substantial,-in terms of money, time and energy necessarily expended in tne absence of a stay, are not enough." Id. at 925-(emphasis in original).
III. OT11ER PARTIES WILL BE HARMED IF THE STAY IS-GRANTEDE Granting the stay will result denial of the ordered relief' to the AEC and the MEUA.for-a further indefinite period of 4
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time.- This relief was found necessary to remedy an on going-situation inconsistent'with the antitrust laws. It'was ordered only after a long and. exhaustive hearing and briefing period-
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and careful deliberation by the Licensing Board'and the Appeal-Board. Denialfof the relief ^for a further period of time simply allows Applicant's monopoly over generation.and transmission to continue while leaving-its victims in a disadvantaged competitive posture, still almost totally' dependent on Applicant. Tnere is sufficient-evidence in the record to support the Licensing Board 's and the Appeal Board's findings that past practices of the Applicant have disadvantaged AEC and the municipal systems. The record thus supports a conclusion that the issuance'of a stay would=have a serious adverse effect on AEC and the municipal systems.
_ Applicants suggestion:that AEC could raise its rates or-borrow more money (Application, page 9) does not' alleviate the harm to-AEC from continued denial'of ownership-in the Parley units.
IV. DENIAL OF THE STAY UOULD BE IN THE PUBLIC INTEREST Applicant presents no arguments that ~ granting-of tne* stay-would be in the public interest. Applicant suggests somewhat ooliquely.tnat license condition 2.is deficient because AEC may.
not be able to-pay its pro rata share of the " clean-up" and
-associated staggering costs should the Ferley plant suffer an incident such as that which_ occurred at Three Mile Island. .
(Application, page 10). Heighing-tnis' highly speculative concern against the public interest in assuring that' access to
nuclear facilities be as widespread as possible and in preventing the use of nuclear e.4ergy from developing into a private monopoly-3/ clearly dictates that the public interest in this case is~better served if the. stay is denied. Tha Farley plant is licensed and in operation. Denial of the stay will have no adverse effect on tne plant.
In view of.tne extremely low probability of Applicant's prevailing on the merits plus the " balance of equities,"
tipping in favor of denying the stay, 4/ Applicant has failed to meet its "neavy burden" to establish a right to a stay.- The Department respectfully urges the Commission to deny the Applichtion.
Respectfully submitted, w
- John D. Unitler Attorney, Energy Section Antitrust' Division Wasnington, D.C.
August 6, 1981 3/ Louisiana Power & Light Co. (Waterford Steam Generating Station, Unit 3), 6 AEC 619, 620 (1973). -
4/ Uashington Metropoliten Ara a Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977).
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i 2 Lm 1o 1981 >m s
L gg zTR'-}.k[
e ' **,.f$ [$5) CERTIFICATE OF SERVICE 0
- 1ereby certify that copies of the attached Answer have been served on the following by United States Mail, postage prepaid, this 6tn day of August, 1981.
1.
Gw-
- LU%;.A S A Jonn D. Unitler Secretary Joseph Rutberg, Eng.
Nuclear Regulatory Commission Benjamin H. Volger, Esq.
Wasnington, D . C .. 20555- Michael B. Blume, Esq.
Antitrust Counsel Nuclear Atomic Safety and Licensing Regulatory Staff Appeal Board Panel Nuclear Regulatory Commission Nuclear Regulatory Commission Washington, D.C. 20555 Wasnington, D.C. 20555 Micnael C. Farrar, C. airman S. Eason Balch, Esq.
Atomic Safety and Licensing Robert A. Buettner, Esq.
Appeal Board Balch, Bingham, Baker, Nuclear Regulatory Commission Hawthorn, Willians & Hard Wasnington, D.C. 20555 600 North 18th Street Birmingham, Alabama 35203 Richard S. Salzman, Esq. Terence H. Benbow, Esq.
Atomic Safety and Licensing Theodore M. Weitz, Esq.
Appeal Board David J. Long, Esq.
Nuclear Regulatory Commission Winthrop, Stimson, Putnam Washington, D.C. 20555 & Roberts 40 Uall Street New York, New York 10005 Mr. Cnase Stephent, Supervisor Martin G. Malsch, Esq.
Docketing and Service Section Majorie S. Nordlinger, Esq.
Office of tne Secretary of the Office of General Counsel j Commission Nuclear Regulatory.Conrismien Nuclear Regulatory Commission Wasnington, D.C. 20555 Washington, D.C. 20555 Reuben Goldberg, Esq. Bennet Boskey., Esq.
Goldberg, Fieldman & Lethem, P.C. D. Biard IidcGuineas, Esq.
1700 Pennsylvania Avenue, N.W. Volpe, Boskey and Lyons Wasnington, D.C. 20006 918 16th Street, N.U.
Wasnington, D.C. 20006 B
' David C. Hjelmfelt,.Esq. -
1967. Sandalwood Ft. Collins, Colorado 80526 Bruce W. Churchill, Esq. ~
Shaw, Pittman, Potts & Trowbridge' 1800 "M"' Street,.N.W.
Washington,.D.C. 20036 Martin Frederic Evans, Esq.
. Debevoise, Plimpton, Lyons &' Gates 299 Park Avenue New York,: New York 10171 i
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