ML19289F411

Sc Public Svc Authority Reply to Central Electric Power Cooperative 790319 Reply Brief Re Motions to Dismiss Latter'S Amended Petition & No Latter'S 790322 Ltr. Certificate of Svc Encl

ML19289F411
Person / Time
Site:	Summer
Issue date:	04/19/1979
From:	Leeper C, Morrison H CAHILL, GORDON & REINDEL
To:
References
NUDOCS 7906070338
Download: ML19289F411 (13)

Text

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___________________x (9s __

x In the Matter of  :

n 'lL SOUTH CAROLINA ELECTRIC & CAS  :

COMPANY and

Docket No. 50-395A SOUTH CAROLINA PUBLIC SERVICE AUTHORITY  :

(Virgil C. Summer Nuclear Station  :

___________________x REFLY OF SOUTH CAROLINA PUBLIC SERVICE AUTHORITY TO THE REPLY BRIEF AND LETTER OF CENTRAL ELECTRIC POWER COOPERATIVE, INC. IN RESPONSE TO MOTIONS TO DISMISS ITS AMENDED PETITION Introduction On March 19, 1979, Central Electric Power Coopera-tive, Inc. (" Central") filed a Reply Brief in Response to Motions to Dismiss its Amended Petition (" Reply Brief").

Thereafter, in a letter dated March 22, 1979 (" Letter"),

Central responded to the Staff's submission by making addi-tional arguments. On March 28, 1979, the Commission issued its " Scheduling Order" permitting the Applicants and the Commission Staff to respond to Central's Reply 3rief and Letter, Central's Reply Brief and Letter advance nc new legal arguments. Central once again argues that SCE&G 28e

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" conditioned" the Authority's access to the Summer Nuclear Unit in exchange for the Authority's agreement to support the territorial legislation

• and again suggests, without offering any explanation whatsoever, that SCE&G " exercised monopoly power" in order to obtain the Authority's support of the territorial legislation.** The Authority has responded to these allegations in both of its prior pleadings.***

Additionally, Central again argues that there was a " realignment" in the competitive structure in South Carolina independent of the territorial legislation. **** The Authority has already responded to this contention by pointing out that any " realignment" of the competitive structure in South Carolina stemmed from the territorial legislation and, therefore, would be immune from the antitrust laws under the state action doctrine.***** Since Central advances no new facts supporting its realignment allegation, the Authority will not offer further response as to this theory. To the extent that Central relies on the " dual rate," its ongoing Central Reply Brief at 2-8; Letter at 1.

• • Central Reply Brief at 12-13.

• • • See the Authcrity's Motion for Summary Disposition at 15 et sec. and the Authoritv's Recly Erief to Central's AmeEcec petition at 20 et sec.

"'** Central Reply Brief at 14.

• • • • ' See the Authority's Reply Brief to Central's Amended Petition at 27-38.

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negotiations with both SCE&G and the Authority with respect to power exchange services, and the Authority's merger proposal to Central as " exemplifying" this realignment,* the Authority adheres to its position that these events do not and cannot rise to the level of significant changes.** The Authoriti would only add that it agrees in all respects with the Commission Staff's evaluation of these events.

Central asserts that the above allegations, purport-edly supported by factual matter contained in the new Exhibits, create a material issue of fact so as to withstand the Applicants' motions for summary disposition. The Authority respectfully submits that Central's Reply Brief fails to advance any new facts sufficient to withstand summary dis-position of its Amended Petition.

I. CENTRAL'S REPLY BRIEF AND LETTER PRESENT NO FACTS SUFFICIENT TO WITHSTAND THE APPLICANTS' MOTIONS FOR

SUMMARY

DISPOSITION A. The Conduct of the Applicants Prior to the Passage of the 1973 Territorial Legislation is Exempt from the Antitrust Laws under the Noerr-Pennington Doctrine.

Central again contends that SCE&G " conditioned" access to the Summer Nuclear Unit in exchange for the Auther-

• Central Reply Brief at 14.

"* See the Authority's Reply Brief ts Central's Amended Petition at 13-20 and 39-42.

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ity's agreement to seek passage of the territorial legisla-tion.* Central produces new Exhibits at this late date which contain facts sufficient, in Central's view, to with-stand summary disposition.** However, Central's Reply Brief misses the mark. The Noerr-Pennington doctrine requires rejection of Central's argument as a matter of law even if one assumes that Central's " conditioning" allegation is correct -- which it is not.

Under Noerr-Pennincton, joint attempts to influence

, the passage of legislation are exempt from the antitrust laws for fundamentally sound reasons, whether or not such attempts are motivated solely by an anticompetitive motive.

Pennington, 381 U.S. at 670.*** Indeed, such attempts are exempt regardless of intent or purpose. In this tespect, the Supreme Court has stated in Pennincton:

• See Affidavit of Kelly Smith at 54.

• • These new exhibits are (1) Affidavit of Kelly Smith, (2) a memorandum attached to the Smith Affidavit pur-portedly prepared by Mr. Smith sometime in early 1973 prior to the passage of the 1973 territorial legisla-tion; (3) SCE&G inter-office correspondence, dated October 1967, concerning possible membership of the Authority in the Carolinas-Virginia Power Pool (CARVA); ,

and (4) the Fourth and Fifth Responses of the Department of Justice to Interrogatories in the Matter of Duke Pcwer Company (Cconee Units 1, 2 and 3; McGuire Units anc 2),

""' For a full discussion of Neerr-Penningtcn. see the Authority's Motien for Summary Disposition at 15-19.and the Authority's Reply 3rief to Central's Amended Petition at 20-27.

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"Noerr shields from the Sherman Act a concerted effort to influence public officials regardless of intent or s urcose."*

The essence of Cer *ral's " conditioning" allegation is that the Authority supported passage of the territorial legislation as a means of gaining access to nuclear power.

Viewed in the light most favorable to Central, this contention amounts to nothing more than an accusation that the Authority sought to further its own interests by supporting the legis-lation. But the desire to further or to protect one's own interests by seeking governmental action is preciselv the kind of conduct which Noerr-Pennington protects. As one court has observed:

"The defendants in Noerr and Pennington were within their rights in seeking to influence the passage of legislation for reasons of personal gain."**

Thus, even assuming arguendo that the Authority supported passage of the territorial legislation for the purpose of gaining access to nuclear power, such a purpose would not serve to render Noerr-Pennincton inapplicable. Moreover,

" United Mine Workers v. Pennincton, 381 U.S. 657, 670 (1965) (emphasis added). This is true, of course, so long as the activities of those seeking to influence governmental action do not fall within the " sham" exception to Noerr-Pennincton. See California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 50s (1972). Central makes no allegation that the " sham" exception is applicable to the facts presently under consideration.

• ' Wilmorite, Inc. v. Eagen Real Estate. Inc., 454 F.Supp.

1124, i+131 .( N . D . N . Y . 1977), aff'd 575 F.2d 1372 (2d

,Cir, 1978), cert. denied, 47 U.S.L.W. 3369 (1978),

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assuming arguendo the truth of Central's suggestion that such conditioning was " common knowledge," presumably the legislators of South Carolina were well aware of that fact and found it to be of insufficient weight to prevent passage of the territorial legislation. In short, while there is no evidence to support Central's " conditioning" allegation ---

indeed, all of the evidence is to the contrary -- the alle-gation even if proven must fall as a matter of law under Noerr-Pennington.*

To the extent that Central's new exhibits are relevant to this proceeding at all, they show only lobbying efforts by representatives of SCE&G and the Authority to influence passage of the territorial legislation -- conduct falling precisely within the Noerr-Pennington exemption.

Central admits in its Reply Brief that the Smith memorandum attached to the Smith Affidavit " summarized the arguments

• Central's vague allegation that SCE&G somehow used

" monopoly power" to force the Authority into agreeing to seek passage of the territorial legislation remains -

totally explained and unsubstantiated. Neither Central's Reply Brief nor its Amended Petition offers any evidence to support this conclusory allegation. Additionally, that allegation flies in the face of the affidavits and contemporaneous documents submitted by the Authority which reveal that the Authority had reasons quite unrelated to access to nuclear power to support passage cf the territorial legislation. See Authority's Reply Brief to Central's Amended Petition at 13-14 and Exhibits discussed therein. The fact that Central considers the Authority's reasons to be " unpersuasive" (Central Reply Brief, Point II) is of no consequence to this proceeding since the Commission is not being called upon to Judge conflicting business philoscphies.

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that were being made by SCE&G lobbyists to members of the General Assembly."* Indeed, the quotation from the Smith memorandum which appears on page 3 of Central's Reply Brief simply paraphrases arguments which SCE&G representatives were making "at the State House."** Similarly, the purported statement of Mr. Padgett,*** made in connection with the introduction of the territorial legislation, is but another example of lobbying.

• Central Reply Brief at 2 (emphasis added).

• • Central cites this passage (59 of the Smith memorandum) in support of its " conditioning" allegation. Signifi-cantly, the remainder of that paragraph, which Central chose not to cite, directly contradicts the conclusion which Central. attempts to draw. After Mr. Smith para-phrased the argument which the SCE&G lobbyists purport-edly were making to the legislators, Mr. Smith went on to call their argument "nothing but a sham." Smith Memorandum at $9. Mr. Smith's memorandum further stated that:

" Electric and Gas has no choice but to sell the Authority a share (of the nuclear plant]. The Justice Department will see to that." (emphasis added)

Thus, in Mr. Smith's view it was a foregone conclusion that the Authority would have access to the nuclear plant regardless of whether the territorial legislation were passed. Hence, far from supporting the view that SCE&G was actually " conditioning" nuclear access on passage of the territorial legislation, paragraph 9 of the Smith memorandum inescapably concludes that the so-called " conditioning" argument supposedly made by SCE&G representatives had no validity beycad its pcssible usefulness in influencing passage of the territorial legislation.

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""* . Smith Affidavit at '4.

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The remainder of Central's exhibits in support of Point I of its Reply Brief are totally unrelated to a finding of significant change in this proceeding. The two memoranda dealing with the Authority's potential membership in CARVA in 1967* were prepared some five years prior to the issuance of the Attorney-General's advice letter. The Authority never joined CARVA and that organization was formally terminated in 1970 still some two years prior to the issuance of the advice letter. In any event, the Attorney General expressly considered membership in and termination of CARVA in his advice letter.** Finally, whatever discussions SCE&G had in 1971 with Duke Power Company concerning territeries*** would not affect a finding of significant change in this proceeding since those discussions would, in any event, have required legislation to reach fruition.

II. CENTRAL'S CONTENTION THAT THE STATE ACTICN EXEMPTION WILL APPLY ONLY WHEN THE STATE STATUTE IS " CONSISTENT WITH FEDERAL LAW AND POLICY" IS A MISSTATEMENT OF THE LAW Central argues in its Reply Brief that the state action exemption will apply only when the state action is consistent with federal law and policy.***" This is a clear

• Central Repl/ Drief, Exhibits 3 and C. Central's Exhibit E wn:ch also deals with CARVA is irrelevant fsr the same reasons.

• " 37 Fed. Reg. 7265, 7266 (April 12, 1972).

""* Central Reply Erief, Exh; bit D.

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• • • " Central Reply Erlef at 23-26.

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misstatement of the law which has been rejected by the Supreme Court on three separate occasions. New Motor Vehicle Board v. Orrin W. Fox Co., 47 U.S.L.W. 4017, 4021 (Dec. 5, 1978); Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 98 S. Ct. 2207, 2218 (1978); City of Lafayette v. Louisiana Power

& Light Co., 435 U.S. 389, 98 S. Ct. 1123, 1139 (1978).*

Thus, for instance, in City of Lafayette the Court, citing principles of federalism, stated that:

" Parker and its progeny make clear that a state properly may, as States did in Parker and cates, direct or authorite its instrumental 1 ties to act in a way which, if it did not reflect state colicy, would be inconsistent with the antitr'ist laws."""

This principle was strongly reaffirmed in New Motor Vehicle Board, suora. In that case, the Court specifically re;ected an argument that the state action exemption should not apply to a California statute which was inconsistent with the Sherman Act where, as here, that statute was part of a clearly articulated state policy intended to displace competition. The Court stated as follows:

" These cases have already been fully briefed by the Applicants and Staff and that discussion will not be repeated here.

+* 98 S. Ct. at 1139 (emphasis added). Accord, L. Sullivan, Handbcok of the Law of Antitrust, 5 235 at 719 (1977)

(The predicate of tne state action exemption "is the conviction that action inconsistent with the antitrust laws which is directly taken by a state in its sovereign capacity represents implicitly a sovereign

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decision that the role of ccmpetition shculd in the

!particular instance be displaced" (emphasis added)).

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"The dispositive answer is that the Act's regule-tory scheme is a system of regulation, clearly articulated and affirm tively expressed, designed to displace unfettered business freedom in the matter of the establishment and relocation of automobile dealerships. The regulation is there-fore outside the reach of the antitrust laws under the ' state action' exemption."*

In effect, Central's argument is simply that the territorial legislation may have an anticompetitive effect and for this reason alone should be struck down under the Sherman Act. However, this precise argument was rejected in Exxon Corn. v. Governor of Maryland, supra, where the Court stated:

" Appellants . . . argue that the Maryland statute ,

' undermines' the competitive balance that Congress struck between the Robinson-Patman and Sherman Acts. This is merely another way of stating that the Maryland statute will have an anticompetitive effect. In this sense, there is a conflict between the statute and the central policy of the Sherman Act -- 'our charter of economic liberty. . . . '

Nevertheless, this sort of conflict cannot itself constitute a sufficient reason for invalidating the Maryland statute. For if an adverse effect on competition were, in and of itself, enouch to render a state statute invalid, the States' power to engace in economic regulation would ce effec-tivelv destroyed. We are, therefore, satisfied that neither the broad implications of the Sherman Act nor the Robinson-Patman Act can fairly be construed as a congressional decision to pre-empt the power of the Maryland Legislature to enact this law."*"

" 47 U.S.L.W. at 4021.

• ' 9e S. Ct. at 2218 (emphasis added),

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CONCLUSION Central's Reply Brief advances no new legal arguments.

Nor does Central's Reply Brief advance any new facts sufficient to withstand the Applicants' Motions for Summary Disposition.

Thus, for the reasons stated herein and for the reasons stated in the Authority's prior two pleadings, Central's Amended Eatition should be dismissed.

Respectfully submitted, CAHILL GORDCN & REINDEL Hugh P. Morrison, Jr.

Charles S. Leeper 1990 K Street, N.W.

Suite 630 Washington, D.C. 20006 (202) 862-8900 Counsel for the Licensee Of Counsel:

Wallace S. Murphy Dated: April 19, 1979 2231 294 20s .

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

_________________x In the Matter of  :

SOUTH CAROLINA ELECTRIC & GAS  :

CO. and

Docket No. 50-395A SOUTH CAROLINA PUBLIC SERVICE AUTHORITY  :

/\ 03 (Virgil C. Summer Nuclear  :

Station) y, cent o A

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_________________x g73 p c.~. 4 3 ;;;<

CERTIFICATE OF SERVICE gs, ' ' N *.= - 6

, A I hereby certify that copies of the foregoing

" Reply of South Carolina Public Service Authority to the Reply Brief and Letter of Central Electric Power Cooperative, Inc. in Response to Motions to Dismiss its Amended Petition" have been served upon the following by deposit in the United States mail this 19th day of April, 1979:

Mr. Samuel Chilk Secretary Nuclear Regulatory Commission Washington, D.C. 20555 Attn: Docketing and Service Section Wallace E. Brand, Esq.

Pearce & Brand 1000 Connecticut Avenue, N.W.

Washington, D.C. 20036 C. Pinckney Roberts, Esq.

Dial, Jennings, Windham, Thomas

& Roberts P.O. Box 1792 Columbia, South Carolina 29202 Qf\

Frederick Chanania Office of the Executive Legal Director Nuclear Regulatory Commission Washington, D.C. 20555 Mr. P. T. Allen Executive Vice President and General Manager Central Electric Power Cooperative, Inc.

P.O. Box 1455 Columbia, South Carolina 29202 George H. Fisher, Esq.

Vice President and General Counsel South Carolina Electric and Gas Company P.O. Box 764 Columbia, South Carolina 29202 Edward C. Roberts, Esq.

Senior Attorney South Carolina Electric and Gas Company P.O. Box 764 Columbia, South Carolina 29202 Robert Medvecky, Esq.

Reid & Priest 1701 K Street, N.W.

Washington, D.C. 20006 Donald A. Kaplan Janet R. Urban Antitrust Division U.S. Department of Justice Washington, D.C. 20530 g, , ;jA . 4l/ ' h

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