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3c FUPT,iG DCCmFiNT RCOM

UNITED STATES OF AMERICANUCLEAR REGULATORY COMMISSION

BEFORE THE ATOMIC SAFETY AND LICENSING BOARD

In the Matter of ))

PACIFIC GAS AND ELECTRIC ) NRC Docket No. P-564ACOMPANY )

(Stanislaus Nuclear Project, )Unit No.1) )

\"%7 4

TsTd' 'S

? O H U 1973 > t )ly, e , .. . -- :

'' " ' 'NRC STAFF'S PREHEARIflG C0tlFEREtlCE BRIEF, s

ANSWERS TO DWR'S MOTI0tlS REGARDING THE HEARING N.. .,.

AND DISCOVERY SCHEDULE, AND STATUS REPORT '

__.~.

Jack R. GoldbergCounsel for NRC Staff

David J. EvansCounsel for NRC Staff

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Benjamin H. Vogler-

Assistant Chief AntitrustCounsel

7902060004

s,

TABLE OF CONTENTS

I. INTRODUCTION: QUESTIONS PRESENTED . . .............. 1

II. THE ATTORNEY GENERAL' S ADVICE . . . . . . . . . . . . . . . . . . 2

III. THE IMPACT OF THE PG&E COMMITMENTS ON THIS PROCEEDING . . .... 9

A. PG&E's Moo tnes s A rguments . . . . . . . . . . . . . . . . . . 9

B. Alternative Roles of the PG&E Commitments in this . . . . . . 14Proceedi ng

IV. THE EFFECT OF OTHER PROCEEDINGS ON THIS CASE 15..........

A. Colla teral Es toopel . . . . . . . . . . . . . . . . . . . . . 16

B. Primary Jurisdiction 18....................

V. STAFF'S ANSWER TO DWR'S " MOTION FOR BIFURCATED HEARING" . . . . . 22

VI. STAFF'S ANSWER TO OWR'S " ALTERNATIVE MOTION FOR ORDERESTABLISHING DISCOVERY SCHEDULE FOR A SINGLE HEARING" 24.....

VII. REDUCING THE MAGNITUDE OF THIS PROCEEDING . . . . . . . . . . . . 25

VIII. STAFF'S STATUS REPORT ON DISCOVERY DOCUMENTS 26..........

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I. INTRODUCTION; QUESTIONS PRESENTED

During the Prehearing Conference held in San Francisco on

September 27-29, 1978, the Board requested all parties to submit briefs

addressing certain matters affecting the course of this proceeding. The

Staff has identified the following questions raised by the Board at the

Prehearing Conference and/or addressed by one or more parties in their

briefs filed on December 1,1978, and on or about December 22, 1978.

1. What interpretation and weight is to be given the requirement of

section 105c(5) of the Atomic Energy Act of 1954, as amended, that "[t]he

Commission shall give due consideration to the advice received from

the Attorney General .. ."? (Tr. at 1536)

2. What is the legal and practical impact of the PG&E Commitments

on this proceeding? (Tr. at 1544-45)

3. What is the effect of other ongoing proceedings (at FERC or

elsewhere) on this proceeding? (Tr. at 1572)

4 Should this case proceed by means of a bifurcated hearing?

5. What can be done to reduce or limit the scope of this proceeding

and/or the time necessary +a fairly adjudicate the issues? (Tr. at 1543-44)

In addition to requesting briefs on these issues, the Board requested

all parties to submit a status report on their experience reviewing the

documents being produced by PG&E pursuant to the Board's Orders. The -

Staff hereby submits its Brief and Status Report.

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II. THE ATTORNEY GENERAL'S ADVICE

Section 105c(5) of the Atomic Energy Act of 1954, as amended -1/

("Act"), states, in relevant part:

The Commission shall give due consideration to theadvice received from the Attorney General and to suchevidence as may be provided during the Droceeding inconnection with the subject matter, and shall make afinding as to whether the activities under the license

- would create or maintain a situation inconsistent withthe antitrust laws as specified in subsection 105a. _2_/

The Board has posed the question of the interpretation and weight

to be given the advice received from the Attorney General pursuant to

this provision of the Act. With respect to the first part of the Board's

question dealing with the interpretation or meaning of the ter n "due

consideration", the Staff has explored the legislative history of the.3

Act to determine whether an answer, or at least an indication of

intent, could be located. The Staff explored statements of Atomic Energy

Commission ("AEC") officials before the Joint Committee on Atomic Energy

("JCAE") on matters involving the AEC's responsibilities for antitrust

review prior to the 1970 amendment of the Act. Those statements intro-

duced the present language of Section 105..-

9

_1f 42 U.S.C. 552011 e_t_ sea. (1970).

_2/ 42 U.S.C. 52135c(5)(1970) (emphasis added). *

_3] See 2A SUTHERLAND, STATUTORY CONSTRUCTION, 146.01 at 48 (andcases cited therein).

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In May 1968, AEC Commissioner James T. Ramey and the AEC General

Counsel Joseph Hennessey appeared before the JCAE to testify on bills

involving proposals to amend the Act with respect to the AEC's antitrust

responsibilities. During that session of the hearing the following ex--

change occurred with John Conway, JCAE Executive Director:

MR. CONWAY. Now, if under section 103 the Attorney Generalwould advise you that the proposed license would tend tocreate or maintain a situation inconsistent with the anti-trust laws, what would the Commission's authority be or whatwould the Commission do at that time?MR. RAMEY. I think that our lawyers have construed that itwould be an issue in the license proceeding. Perhaps Mr.Hennessey might comment on that.MR. HENNESSEY. The act, of course, is silent as to what theCommission will do with this advice that it receives fromthe Attorney General. As we read the leaislative history,it seems to us that the intent of Congress was that theCommission should take this advice into account in the licen-sing proceedings.

MR. CONWAY. In other words, in effect, if there is someviolation of the antitrust laws or a tendency to violate thelaw, this would give you grounds for turning down a constructionpe rmi t.MR. HENNESSEY. In our regulationsMR. RAMEY. Or conditioning it.-

MR. HENNESSEY. Since the 1954 act, we have included in ourreculations a orovision that in section 103 cases we will givedue consideration to the views of the Attorney General . To me

.this means that, since we are in the framework of a mandatorypublic hearing, the requirements of constitutional due processand the requirements of the Administrative Procedures Act wouldrequire that these issues be fully aired in a public hearing andthat the applicant and any intervenors have an opportunity topresent their positions on the matter. _4/ ,

_4/ Particioation by small Electrical Utilities in Nuclear Power: Hea r-ings on S. 2564, H.R.13828, H.R.15273, Before the Joint Committeeon Atomic Energy, 90th CONG. , 2d SESS. 42 (1968) . (Testimony of JamesRamey) (emphasis added) (hereinafter " Participation Hearings").

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As best we can determine, this exchange appears to be the genesis_.5/

of the term "due consideration" in the context of the Commission's

antitrust review. Subsequently, the tem "due consideration" reappeared'

in the 1970 amendments of the Act which resulted in the inclusion of

the amended language of Section 105 which is in effect today. -6/

The legislative history of the 1970 amendments of the Act is sparse

with respect to shedding much light on the interpretation to be given to

the term "due consideration". The only discussion of the term appears

to be in the section by section analysis of the propcsed section 105c(5)

in the JCAE Report on S.4141, wnere it is noted:

Paragraph five requires that the Commission "give dueconsideration to the advice received from the AttorneyGeneral and to such other evidence as may be providedduring the proceedings in connection with such. subjectmatter." Whether or not the Attorney General appears asa party, all advice and information provided by theAttorney General that is utilized by tne Commission inarriving at its finding must be made a cart of the

record. l/

l/ The regulation to which Mr. Hennessey referred,10 C.F.R. 550.42(b)required not "due consideration" but "due account" be given to theadvice. The pertinent language, still in effect, is: "Due accountwill be taken of the advice provided by the Attorney. General, pursuantto subsection 105c of the Act, and to such evidence as may be providedduring any proceeding in connection with the antitrust aspects ofthe application. . ." temphasis added) .

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J/ See note 2 and accompanying text suora.

l/ S. REP.NO. 91-1247, 91ST CONG., 2d SESS. 30 (1970) (Hereafter JointCommittee Report) (emphasis added).

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Thus, as far as legislative history is concerned, there is little

assistance to be provided as to what the Congressional drafters meant

by "due consideration". We must assume, however, that the reason so

little is included in the legislative history regarding this term is

that Congress expected AEC to apply a comr..on sense and practical

interpretation to the term. This simply means that deference is given

to the views of the Attorney General, but they are not dispositive.

With respect to the second part of the Board's inquiry, namely the

question of the weight to be accorded the Attorney General's advice, the

legislative history is more helpful. During the JCAE hearings in 1970

concerning the antitrust amendments to the Act, ~~~8/the Justice Departme c'-

Acting Assistant Attorney General of the Antitrust Division provided his

views as to the' weight to be given to the Attorney General's advice:

MR. COMEGYS: ...the Attorney General's advice in no eventis decisive, it is merely grist for the Commission's mill,as it were, and again I refer to the fact that we have hadsome experience in dealing with language of this sort inour administration of the Surplus Property Act.... _9/

.....

.CHAIR 4AN HOLLIFIELD: Now it is obvious while you havesaid that the Justice Department will be called uponfor advice, I would wonder if the Atomic Energy Commissionwith its legal staff -- and it does have a very good one,by the way -- if they were in a quandary of if theywanted to insure the correctness of their decision, ifthey did appeal to the Justice Department for advice, Iam wondering if they would decide otherwise than as ad-

"vised by the Justice Department.

.....

_g/ Prelicensine Antitrust Review of Nuclear Powerolants: Hearings on5.212, H.R. 8289, H.R. 9647, S. 2768, before the Joint Committee onAtomic Energy, 91st Cong. ,1st Sess. (Hereinafter "PrelicensingHea ri n gs ") .

9_/ Id. at 123 (emphasis added). The Surplus Property Act, whichserved as a model for section 105 of the Act, is set forth at40 U.S.C. 1488.

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MR. COMEGYS: ....Again, I get back to the point wherethis is merely advice given to the Commission. I thinkI would add to that point that while we would hooe thatthe Comission would give weight to the Attorney General'sadvice, that certain1v they are not reouired to accept it.They are entitled to take evidence and reach their ownconclusions and I would expect that as this antitrustfeature becomes operative thst the Atomic Energy Commissionwould develop sufficient expertise that it certainly wouldnot be a rubberstamp of the Attorney General's view, al-though I think in this sort of advice we would be cognizantof the public interest and it would be advice available tothem... ,10/

This view of the weight tc be given to the Attorney General's

advice is supported by the AEC General Counsel's testimony before the

JCAE,in which he states, "In the last analysis, it would be the Commission

itself making the required judgment notwithstanding the mandatory

requirement of the bills that the Attorney General present his viewsLl>

on the matter."

Similarly, a report of the AEC, which is included in the

legislative history of the 1970 amendments, states:

Each bill requires the Commission to give due consid- .

eration to the Attorney General's advice... . In this

regard, these provisions make explicit what we haveconsidered to be implicit in the existing provisionsrelating to 103 license appifcations, nacely, thatwhere the antitrust advice of the Attorney Generalbecomes an issue in our licensing proceeding, it is

- the Commission itself which must make the requiredjudgment on that issue. Nevertheless, they do provideuseful clarification g/ .

10f Id. at 124-125 (emphasis added).

11/ Id. at 81.

12/ Id. at 173-174

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The legislative history quoted above leads the Staff to conclude

that the Attorney General's advice is an element in the antitrust review

process and must be included in the record of application in an MRC

antitrust proceeding. It is not, t.owever, dispositive of the issues in

an antitrust case. It is not evidence and it cannot be the basis for the

Board's resolution of antitrust issues unless its conclusions are

supported by probative evidence accepted into the formal record of the

proceeding and that probative evidence is subject to the test of

cross-examination.

The conclusion of the Staff, above, that the advice of the Attorney

General is not evidence and is not dispositive, can be analogized with

'the treatment accorded the advice of the Advisory Committee on Reactor

Safeguards ("ACRS"). The ACRS is instructed by the Act to submit a

report on each proposed plant design "which shall be made part of the13/

record of the application. . ."

With regard to the ACRS letter, a Commission regulation dictates that--

more than merely becoming "part of the record"--the ACRS letter "shall be

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lj/ 5182b of the Act, 42 U.S.C. 52232(b).,

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offered into evidence by the Staff" in compliance with sECtion 182b

of the Ac.. There is no such requirement for the Attorney General's advice.

The application of this regulation was amplified by the Appeal Board

in Arkansas power and Licht Comoany, -15/wherein it stated:

...the contents of an ACRS report cannot, of themselves, serveas an underpinning for findings on the health and safety as-pects of i f censing proceedings. It is quite true that Section182b. of the Atomic Energy Act, 42 U.S.C. 2232(b), and a regu-lation of the Commission,10 CFR 2.102, require both that theACRS render a report on every docketed appifcation for a con-struction permit or operating permit and that the report bemade a part of the record. But, since the persons responsiblefor the report (the members of tha ACRS) are not subject tobeing examined by the Nrties or the Board, with reference toits contents, the recort cannot be treated as having been ad-mitted into evidence for the truth of any of the statementstherein. Rather, its introduction into the record must bedeemed to be for the Ifmited ourcose of establishina compliancewith the requirements of the statute. This being so, thereport may not be assigned any indeoendent orobative value.16,/

As with the ACRS letter, it is clear that any attem,t to treat the

Attorney General's advice as " evidence" of the truth of the matters

asserted therein would necessarily fail..

In sum, the Staff's position is that the Attorney General's letter

is not evidence, but is only a part of the non-evidentiary record of the

application.

ly 10 C.F.R. 52.743(g) (emphasis added).

15] Arkansas power and Licht Comoany (Arkansas Nuclear One, Unit 2)ALAB-94, 6 AEC 25 (1973).

16f Id. at 32 (emphasis added).

ly See the Licensing Board Chairman's initial remarks concerning theAttorney General's advice which are in accord. Prehearing Conferencetranscript at 932-50 (December 1,1977).

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III. THE IMPACT OF THE PG&E COMMIT"ENTS ON THIS PROCEEDING

A. PG&E's Mootness Arguments _

PG&E argues that the Commitments it sent to the Department of

Justice by lctter dated April 30, 1976, moot many of the issues in this

proceeding, especially since the Commitments were soon expected to be l. 8/enforceable license conditions to the Diablo Canyon Construction Permit.

Those Commitments are now enforceable license conditions, but that fact

has no impact on the allegations of the intervenors that PG&E's position,

action, and policies constitute a situation inconsistent with the anti-

trust laws notwithstanding the Commitments. Indeed, as the Licensing

Board made explicit in granting all three intervenor's petitions, each

intervenor specifically alleged that issuance of Stanislaus licenses

conditioned only with the Commitments would create and/or maintain a

situation inconsistent with the antitrust laws. -19/The Licensing Board

]8/ At the date of filing of PG&E's " Initial Brief" (December 1,1978),the Commitments had not yet attached as conditions to the DiabloCanyon construction permits. As Staff counsel informed the Boardand all parties by letter dated December 7,1978, the Diablo Canyonconstruction permits were amended to include the Commitments asconditions on December 6,1978.

On page 2 of PG&E's " Initial Brief", PG&E stated that two and one-half months ago, PG&E was "specifically assured by the NRC Staff(Mr. Goldberg) that the Diablo construction permits would be amendedwithin tuo weeks to include the Commitments as conditions" (emphasisadded). That statement is not true. Mr. Goldberg informed PG&E onlythat h_e, was infomed that the Staff's licensing personnel usuallyrequired two weeks to prepare the paperwork necessary to issue amend- .

ments to construction permits. Mr. Goldberg gave no assurances ,specific or otherwise!

19/ Pacific Gas and Electric Comcany (Stanislaus Nuclear Project, Unit 1),5 NRC 1017,1027-28 (NCPA), 1031 (DWR),1034 (Ci ties) (1977) .

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granted intervention after consideration of the existence of the

10)Commitments . And the Appeal Board, in affirming the granting of

all three petitions, specifically held that the intervenors' con-

tentions that the Commitments were inadequate to remedy the situat.an

alleged to be inconsistent with the antitrust laws satisfied the11|

requirements for an " obligatory" granting of the petitions.

To the extent that PG&E's mootness argument constitutes a renewed

motion for summary disposition, it must fail, in addition to the

reasons stated above, on the grounds that it wholly fails to satisfy

the requirements for the granting of' a motion for summary disposition.

The Staff set forth the requirements of the NRC Rules of Practice and

case Taw regarding summary disposition and the requirements for t!.e federal

court's analogous summary judgment in the "NRC Staff's Answer to PG&E's

Motion for Summary Disposition," -22/incorporated herein by reference. In'

short, the basic requirement is that the moving party has the burden of

establishing that there is no genuine issue of material fact in dispute

and the moving party is entitled to a judgment as a matter of law. -23/ If

anything should be clear in this proceeding, it is that there is a genuine

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20/ Id.

21/ Pacific Gas and Electric Comoany (Stanislaus Nuclear Project, Unit1), ALAB-400, 5 NRC 1175,1176 (1977).

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E/ June 29, 1977.

--23/ 10 CFR 52.749; Public Service Comoany of New Hamoshire (SeabrookStation, Units 1 and 2) LSP-74-36, 7 AEC 377, 878-79 (1974); seealso "NRC Staff's Answer to PG&E's Motion for Summary Disposition"and the cases cited therein.

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issue concerning the factual impact of the Commitments on the situation

alleged to be inconsistent with the antitrust laws. That factual dis-

pute, and the corresponding inquiry into its resolution, is precisely

why summary disposition is improper and an evidentiary hearing is

necessa ry.

PG&E also takes the position that the Commitments moot its histor-

ical conduct. PG&E argues that the history of PG&E prior to the

Commitments is irrelevant if inconsistent with its present policies as

defined by the Commitments and redundant if consistent with the Commit-

ments. This position reflects a fundamental misunderstanding of the

Commission's antitrust jurisdiction and authority as well as the basic

antitrust laws.

The Nuclear Regulatory Commission has explicit statutory juris-

diction and authority to dete.rmine whether the activities under certain

NRC issued licenses would create or maintain a situation inconsistent

with the antitrust laws (including the Sherman Act, the Clayton Act, and

the FTC Act), or the policies underlying the antitrust laws. -24/ Since

it has been alleged in tP;s case that PG&E has " monopolized" certain

markets, and since monopo:ization is defined as

(1) the possession of monopoly in the relevant market and

(2) the willful acquisition or maintenance of that poweras distinguished from growth or development as a >

jy 5105 of the Act; Houston Lighting & Power Comoany, et al. (SouthTexas Project, Unit Nos. I and 2), CLI-77-13, 5 NRC 1303 (1977);Consumers Power Comoany (Midland Plant, Units 1 and 2), ALAB-452,6 NRC 892 (1977) (hereinafter " Consumers").

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a consequence of a superior product, business acumen,or historic incident, 3/

it follows that the " situation" which must be examined in relation to

the antitrust laws and their underlying policies includes PG&E's monopoly

power, if any, and if so, how PG&E acquired that market power and ,

whether and how PG&E is maintaining that market power. Furthermore, in

proving that PG&E has monopolized, PG&E can be presumed to intend the

natural and probable consequences of its historical actions. -26/

The Staff does not suggest that the Commitments should be ignored

when considering PG&E's present and historical position in the market;

Mdeed, as discussed below, the Staff believes it is necessary to consider

the Commitments either as gart of the situation or as affecting the

license conditions that otherwise would be required to remedy the

situation without the Commitments. But just as the Commitments cannot

be ignored, neither can the historical development of PG&E's present

position be ignored. The Act and the antitrust laws require no less than

full consideration of both.

g/ United States v. Grinnell Coro., 484 U.S. 563, 570-71 (1966). Seealso Consumers at 918. PG&E states in the footnote on p. 3 of itsReply Brief that "[t]he only portion of this antitrust concept whichhas relevance to the limited nature of pre-licensing reviews shouldbe whether there is monopoly power in a relevant market which theapplicant is willfully maintaining." The glaring omission of "will-ful acquisition" from this statement, coupled with PG&E's erroneousbelief of the " limited nature of pre-licensing reviews" (see Houston

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Lichting & Power Comcany (South Texas Project, Unit Nos.1 and 2),CLI-77-13, 5 NRC 1303,1310,1312 (1977)), precisely demonstratesPG&E's fundamental misunderstanding of both this Board's authorityand basic antitrust principles.

_2_6/ United States v. Griffith, 334 U.S.100,105 (1948); United Statesv. Paramount Pictures. Inc., 334 U.S.131,173 (1948); Consumers at923.

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PG&E also contends that certain issues have been mooted by events

other than the Commitments: (a) PG&E no longer imposes long-term con-

tracts; (b) NCPA and DWR are on their way to developing geothermal

resources; and (c) the Seven Party Agreement has been terminated. The

Staff agrees with DWR's analysis --27/and the analysis of NCPA and2.B|

Ci ties that PG&E's assertions, even if true, do not moot the legal

significance of PG&E's historical conduct. In addition, the courts

have consistently held that one charged with engaging in anticompetitive

conduct cannot avoid corrective action by adopting a policy of conduct29/

consistent with what is sought by the complaint or litigation.

In Clinton Watch v. FTC the court held:

Voluntary discontinuance of an unfair trade practicedoes not necessarily preclude issuance of a cease anddesist order. The order to desist from an abandoned un-lawful practice is in the nature of a safeguard for thefuture. 3_1/.

n/ DWR's Reply Brief at 6-9.

m/ Joint Reply Brief of NCPA and Cities, December 26,1978, at 3 4

--29/ Diener's. Inc. v. FTC, 494 F.2d 1132 (D.C. Cir.1974); Doherty,Cli fford, Steers & Shenfield, Inc. v. FTC, 392 F.2d 921 (6th Cir.1968); Libbev-Owens ord Glass Co. v. FTC, 352 F.2d 415 (6th Cir.1965); Giant Food, Inc. v. FTC, 322 F.2d 977 (D.C. Cir.1963),cert. denied, 376 U.S. 967 (1964); Clinton Watch Co. v. FTC, 291F.2d 838 (7th Cir.1961), cert. denied, 368 U.S. 952 (1962);Dolcin Coro. v. FTC, 219 F.2d 742 (D.C. Cir.1954), cert. denied,348 U.S. 981 (1955); Standard Distributors . Inc. v. FTC, 211 F.2d -

7 (2d Cir.1954); Dejov Stores , Inc. v. FTC, 200 F.2d 865 (2d Cir.1952); C. Howard Hunt Pen Co. v. FTC,197 F.2d 273 (3d Cir.1952).U.S. v. W.T. Grant Co. , 345 U.S. 629 (1953) (" voluntary cessationof allegedly illegal conduct does not deprive the tribunal of powerto hear and determine the case.. .").

30/ Suora note 32.

31 / 291 F.2d at 841.

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And in Giant Food, Inc. v. FTC -32/the court said:

On the record it appears that Giant discontinued itsreference to ' regular price" only after it became awarethat the Commission was investigating its advertisingpractices . That investigation, moreover, was directed tothe totality of an advertising program which was possiblydeceptive in its impact upon the customers. The orderbefore us represents the Commission's effort to dealfinally with the program in its entirety. The voluntaryabandonment of part of the program under the circumstancesshown by the record does not disable the Commission 'fromformulating a rule of conduct for the future as broad asthe derelictions of the past. R/

B. Alternative Roles of the PG&E Commitments in thisProceeding

The Licensing Board has raised the question of the legal and

practical impact of the PG&E Commitments on this proceeding. The Staff

does not believe, as noted above, *. hat the Commitments have a legal ,

impact on the proceeding in the sense of being a basis for summary dis-

position or mooting issues otherwise ripe for resolution. Rather, the

Staff believes that the Commitments have a practical impact on the presen-

tation of each party's (including PG&E's) case at hearing. Normally an

NRC antitrust proceeding is aimed at making four key deteminations:

(1) What is the " situation"?

(2) <Is that " situation" inconsistent with the antitrust lawsor the policies underlying those laws?

(3) If the answer to (2) is affirmative, would issuance of anunconditional license create or maintain that situation?

D

(4) If the answer to (3) is affirmative, what license conditions

are appropriate to remedy the situation?

g/ Suora note 32.

33/ 322 F.2d at 986-87._

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The Staff can identify two genval alternative roles for the Commit-

ments : either (a) the Commitments are considered as part of the

" situation" and the scheme described above otherwise remains unchanged, -34/

or (b) the "situmtion" is considered not to include the Commitments

but, if it is determined that the " situation not including the Commit-

ments"is inconsistent with the antitrust laws, and that issuance of an

unconditional license would create or maintain that situation, then,

the Commitments must be examined to see if they remedy that situation.

If so, no further relief is required; if not, a determ1 nation must be

made as to what additional license conditions are appropriate.

In short, the Commitments play a role either in determining what

the " situation" is oz in determining what relief, if any, is appropriate.

The Staff views the choice between these two alternative roles as

largely a matter for each party '; decide upon as a matter of trial

s trategy.

IV. THE EFFECT OF OTHER PROCEEDINGS ON THIS CASE

The Board has asked the parties to address the issue of the effect,

if any, of other ongoing proceedings involving PG&E and one or more of

the intervenors on this case. Those ongoing proceedings, before FERC

or elsewhere, involve some of the same or related antitrust issues as

have been raised here..

g PG&E apparently subscribes to this view. See " Pacific Gas andElectric Company's Reply 3rief on Issues Mocted or to be DealtWith on Summary Dispositicq", December 21,1978, a t 10.

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In brief, the Staff's general position is that section 105c(5) of

the Act requires the Nuclear Regulatory Commission to ,1-dependentiv

"make a finding as to whether the activities under the license would

create or maintain a situation inconsistent with the antitrust laws."

No other tribunal operates under this standard and therefore no other

tribunal's findings can be binding on this Commission. More speci fically,

other proceedings could have a binding legal effect on this proceeding

only by the application of either the doctrine of collateral estoppel -35/

or the doctrine of primary jurisdiction.

A. Collateral Estoocel

With respect to collateral estoppel, it is well established that

there are three prerequisites to its application in a proceeding to pre-*

'

vent the litigation of issues which were litigated in a prior proceeding:

(1) identity of parties; (2) identity of issues; and (3) a final3p6f

adjudication of those issues on the merits in the prior proceeding.

All three of these prerequisites must be satisfied; if any one is not

satisfied, application of the doctrine is improper. It is the Staff's

position that none of these necessary prerequisites for the application

of the doctrine of collateral estoppel in this antitrust proceeding have

been satisfied.

j5/ Collateral estoppel is distinguished from res judicata in that res "

judicata prevents the assertion of the same claim or cause of actionwhile collateral estoppel prevents the relitigation of the sameissues between the same carties, even if in connection with differentclaims or causes of action. X. Davis, Adm'nistrative Law Text

518.01 (3d. ed. 1972).

3 See, e.g. , IB J. Meore, Federal practice, Paragraph 0.441[2], at3777 (2d ed.1974 (' Moore").

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The Staff takes the position that there is no identity of parties

between the antitrust proceeding before this Licensing Board and the

proceedings at the Federal Energy Regulatory Commission to which the Staff is

not a party. -37/ To find such an identity of parties and to decide

issues before this Board solely on the basis of collateral estoppel

(assuming arcuendo that the other elements of collateral estoppel are

satisfied) would necessarily preclude this Board from having the beneff *

of the Staff's position on those issues.

Neither is there an identity of issues. The issue to be resolved

by this antitrust proceeding is wl ether the issuance of unconditioned

licenses to PG&E for Stanislaus would create or maintain a situation

inconsistent with the antitrust laws or the policies underlying those

laws. The Staff submits that- only this Commission, exercising

its own independent judgment, can make that determination. That

issue is not, and cannot b' rc any other tribunal. With respect

to specific antitrust issues in controversy, even if one or more of

them are being litigated at FERC, the standard for resolving those

~

M DWR asserts in its brief that it has not been and is-not a party toany other case, or in privity with any party to any other case,against PG&E which involves the antitrust allegations it has raisedhere against PG&E. DWR concludes, therefore, that no other proceedingcan have the effect of narrowing the scope of DWR's case againstPG&E before the NRC. Prehearing Conference Brief of the Departmentof Water Resources, December 1,1978, p.10-11. The Staff agrees

*

with DWR's reasoning.

_38/ Order Regarding Special Prehearing Conference: Identification ofIssues: Discovery Schedule (July 14,1977) , p. 2.

~

- .... .- -. - - - - .. -.

-18-

issues differs markedly from the flRC standard of an inconsistency with

the antitrust laws or the policies underlying those laws. FERC,

on the other hand, considers antitrust allegations only from the

perspective of a public interest standard -39/or a "just and reasonable"

standard. -40/This'is far short of the NRC's specific antitrust

responsibility which the Commission has held requires an antitrust ,

41/ 42/review which is both " thorough" and "in-depth".

Finally, there has not yet been a prior final adjudication on the

merits of any specific issues that may be common to this and other

proceedings .

A Primary. Jurisdiction

Turning to the doctrine of primary jurisdiction, it is equally

clear that it does not prevent the Board from fully examining issues

relevant to this case, simply because similar issues are now pending

before the Federal Energy Regulatory Commission (FERC). In its Initial

Brief, PG&E argued that application of the principles of collateral

estoppel, primary jurisdiction, omity, or their analogues," will

drastically reduce the burden on this. Commission..." -43/And yet, in

_39/ Gul f States Utilities Co. v. FPC, 411 U.S. 747, 756-62 (1973) .

_4y 5205(a) of the Federal Power Act,16 U.S.C.1824d(a).

S/ Houston Lichtino & Power Comoany, et al. (South Texas Project, "

Unit flos. I and 2), CL1-77-13, 5 NRC 1303,1312 (1977) .

47/ Id. at 1310.

_4J PG&E's Initial Brief at 25.

-19-

its Reply Brief, PG&E recognizes the true dimensions of the doctrine

of primary jurisdiction in its quote from Justice Frankfurter, which

44|notes. " court and acency are not to be regarded as wholly independent..."

The doctrine of primary jurisdiction has always been thought to

define relationships between administrative agencies and the courts.

As Kenneth Culp Davis has expressed it, "The doctrine of primary

jurisdiction determines whether the court or the agency should make

the initial decision." -45/ It is based upon the notion that courts

should recognize the " expertise" of administrative agencies. But, more

importantly, "[t]he princioal reason _ behind the doctrine is recognition

for orderly and sensible coordination of the work of acencies and of

46/c ou rts . " For example, "in some circumstances the primary juris-

diction of an agency may mean that the court will dismiss the caseg/

be fore i t."

Thus, the doctrine of primary jurisdiction itself has no application

to the relationship between FERC and the NRC. Nei" :r administrative

agency is a court, and hence "the principal reason" of coordinating agency

and court action is lacking. A decision by FERC in the issues now pending

before it would not preclude this Board's antitrust review.

,g/ PG&E's Reply Brie; at 8, citing Far East Conference v. United States,342 U.S. 576, 575 (1952) (emphasis added).

45/ 3 K. Davis, Administrative Law Treatise (1st Ed,1958) 519.01 at 2. '

46,/ id,. at 5.d

47/ Id. at 4.

-20-

However, PG&E has asked the Board to also consider " analogues"

to the principal of primary jurisdiction. Authority for the very

exi:t2nce of such an analogy is scant and PG&E has cited none in its

two briefs. In FTC v. Texaco, ~~~48/gas producers appearing befrre the

FTC, who had appeared before the Federal Power Commission concerning

the same matter, resisted an FTC subpoena, alleging "the FTC had no

' jurisdiction' to inquire into gas reserves, by virtue of both primary

jurisdiction and collateral estoppel." ~~49/ The Court of Appeals for

the District of Columbia Circuit refused to reach the merits of the

allegations that "the FTC has intruded into the FPC's territory of50/

expertise," basing its decision instead on the principle that

collateral estoppel was not a proper defense "in the investigatory con-

text" -51/of a FTC subpoena.

Although refusing to decide the issue raised by the gas producers

that "the FTC ... is attempting to relitigate an issue definitively

settled by the Power Commission," ~~~52/the Court of Appeals noted "tnis

is an era of overlaucino acency jurisdiction under different statutory

jyy 555 F.2d 862 (D.C. Cir.), cert, denied, 431 U.S. 974 (1977),rehear, denied, 434 U.S. 883 (1978).

4j9/ 555 F.2d at 879 (note 41).

SG/ Id. at 880..

El*/ Id.

52/ Id. at 880-81.

.

e

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mandates" -53/and concluded:

...what the FPC found to be consonant with the oublicinterest could still be viewed by the FTC as an unfairmethod of comoetition. It therefore appears that acourt should approach gingerly a claim that one agencyhas conclusively determined an issue later analyzedfrom another oersoective by an acency with di fferent

4substantive jurisdiction. 3/

This is precisely the situation in the instant case. As noted above,

although FERC must consider antitrust allegations in passing on applications

before it. -55/it does so under different standards and with 'different

substantive jurisdiction" than the NRC. Thus, while FERC could determine

that the public interest or " justness and reasonableness" did not prevent

it from granting, e.g., wholesale rate applications requested by an

applicant, the NRC might be required by its findings to condition a

license under its different standard.

FERC's authority is limited to consideration of a particular request

before it. The NRC, by comparison, must consider the entire " situation"

in determining whether issuance of the license would " create or maintain

a situation inconsistent with the a.ntitrust laws." For example, while

one contract or issue considered in isolation may not be deemed by FERC

to be anticompetitive, when considered by the NRC as merely a part of an

entire situation, it may lead to a finding that that entire situation is

g Id,., 881 (emphasis added). .

f/ M. (emphasis added).

55/ Gulf States Utilities Co. v. FPC, 411 U.S. 747, 756-62 (1973),

-22-

inconsistent with the antitrust laws. Thus, accepting the findings

of FERC as to a particular contract or particular issue would limit

the full analysis by this Board of the entire situa' ion as required

by the Act.

V. STAFF'S ANSWER TO DWR'S " MOTION FOR BIFURCATED HEARING"1fV

The Staff opposes DWR's " Motion for 9ifurcated Hearin3." The

Staff believes the notion of a bifurcated hearing in this case is

ill-conceived, fraught with a probability of substantial, unnecessary

delay, and has associattu with it numeroud disadvantages and virtually

no advantages.

DWR suggests that this case be tried in two phases: first, trial

of the relief r license condition phase, assuming a situation incon-

sistent with the antitrust laws, and second, a trial involving the

liability issues. The Staff believes that the nature of this case does

not lend itself to such a " reverse bifurcated hearing." Rather, we

believe that the issues of liability and relief are inseparable insofar

as an efficient presentation of evidenu " . concarned. Many of the

expert and fact witnesses and the documentary evidence which the Staff

expects to be presented at hearing relate inextricably to both liability

and relief. Any artificial separation of the two would necessarily re-

quire substantial duplication of preparation and actual trial time, not

to mention the likelihood of numerous objections in each phase that

proferred evidence is relevant only to the other phase of hearing,

jiy Prettearing Conference Brief of the Department of Water Resources,December 1,1978, pp.14-21.

''

,

,

-23-., 6

Also, it is clear from DWC s motion and Proposed Order Regarding

Bifurcation of Hearing" -57/that a bifurcated hearing requires a

significant amount of time between the trial cf the two phases. The

second phase cannot begin until after the parties submit proposed.

findings of fact and conclusions of law and the Board decides the issues

in the first phase, and discovery for pha'se two is complete.

DWR believes that phase II diser ary can be overlapped with the

trial of phase I. The Staff main :t3 that is impossible. Exper-

ience with discovery in this pr- 2 ding thus far should be sufficient

to convince anyone of the full-time nature of ', hat job using all avail-

able personnel .

The Staff urges the Board to recognize the dant of substantial,

delay inherent in DWR's bifurcated hearing proposal and to deny DWR's

moti on .

One other point deserves mention here. In response to DWR's motion

to bifurcate the hearing, pG&E asserts that the intervenors (and,

presumably, PG&E means the Etaff as well) "have the burden of proving any

allegations not directly mooted by the Commitments." ~58/

17/ Appendix A to DWR's Prehearing Conference Brief.

18/ PG&E's Reply Brief at 9..

, % - . .e= , --e..- g..

'

.

-24---. ~

PG4E is in error. Section 2.732 of the Commission's Rules of

Practice -59/explicitly places the burden of proof on the Applicant,

who seeks by its application an NRC license and who now is the

proponent of an order granting them a license. It is the Staff's

position that the parties opposed to a license conditioned only with

the PG&E Commitments only have the burden of going forward with

evidence sufficient to establish a prima facie case, after which PG&E

has the burden of proof that either there is no situation inconsistent

with the antitrust laws or that no additional license conditions are

warranted.

VI. STAFF'S ANSWER TO DWR'S " ALTERNATIVE MOTION FOR ORDER ESTABLISHINGDISCOVERY SCHEDULE FOR A SINGLE HEARING"

The Staff supports DWR's Alternative Motion for an order establishingg/

the discovery schedule contained in DWR's Alternative Proposed Order.

As noted by DWR, the proposed order is substantially the same as the one

proposed by DWR in its September 14, 1978, Motion for Extension of Dis-

covery Schedule. The Staff supported that schedule -51/and supports the

instant one for the same reasons.

M/ 10 C.F.R. 52.732.

g/ Appendix B to DWR's Prehearing Conference Brief.,

3]/ NRC Staff's Answer to Motion for Extension of DiscoverySchedule, September 19, 1978.

.. . .- -

-25-

As explained by DWR in its Prehearing Brief, the presently pro-

posed schedule differs from the September proposal primarily by the

addition of the requirement to produce war? house documents fairly ea.rly

in the scheme. The Staff adopts DWR's explanation of the startling

discovery by etervenors and Staff of the large number of highly

relevant documents which were coincidentally shipped by PG&E to its

warehouse storage facility between the time of propounding of the

Joint Document request and the time Intervenors and Staff were given

(: cess to certain of PG&E's files. This discovery necessitates pro-

duction of the highly relevant warehouse documents according to the

proposed order.

VII. REDUCI?1G THE MAG 1ITUDE OF THIS PROCEEDII;G

The Staff has considered various suggestions to reduce the scope

and time needed for th's proceeding. These suggestions include elimin-

ation of certain iss . s, reducing the number of documents that need to

be produced by PG&E, bifurcating the hearing, and other possibilities.

The Staff does not believe any of these alternatives can be adopted

without depriving one or more parties of their right to a full and fair

evidentiary hearing.

The Staff, on its part, has from the beginning of this proceeding

kept in mind the likely scope of the issues, the time needed for,

preparation, and the extremely large volume of documents that would

have to be reviewed. With those things in mind, the Staff initially

reduced substantially the number of documents that PG&E would have to

produce to the Staff compared with the number selected by Intervenors

-.

-26-

for production. We recognize, however, that such a decision must be

made by each party independently after carefully weighing the risks,

advantages, and burdens.

The Staff has no magic suggestions to offer to reduce this

proceeding. Intervention was granted on the basis of a large number

of very broad antitrust al!egations and a complex and detailed set of

PG&E Commi tments. PG&E is one of the largest utilities in the country.

The position the parties and the Board find themselves in now

necessarily follows from these facts. All' parties can only proceed

as expeditiously as possible with the available resources we can bring

to bear on this case.

VIII. STAFF'S STATUS REPORT ON DISCOVERY COCUMENTS

As of January 2,1979, the Staff estimates that PG&E has produced

a total of approximately 260,190 pages of green-dotted documents to

Intervenors. Of these, approximately 112,156 pages were selected by

Staff and sent to us by PG&E. The Staff has completed its review of

approximately 62,930 pages and is continuing its review. This review

includes the examination, selection, analysis, indexing, and filing of

the documents.

The recent occurrence of several events prevented the Staff from

completing its review of even more pages. The Staff has four persons .

who work nearly full-time on Stanislaus, and two persons who work about

hal f-time on Stanislaus. One of these full-time persons was recently

absent from the office for two weeks due to an unexpected death of a

close relative. Another full-time person has been hospitalized-

-.

-27-

and on sick leave for two weeks. A third full-time pe: son was unable

to devote much time to document review due to a nearly full-time

responsibility on briefs, interrogatories and other matters before

this Board. When these absences and time-consuming matters were

compounded with the normal personnel absences due to the holiday

season and end-of-year annual leave use, the result was that a sub-

stantially less than normal amount of time was available for document

review.

Respectfully submitted,

''f5L \ gl |

dhck R. GoldbergCounsel for NRC Staf

|-David J. EvaCounsel for RC Staff

d'y A ,". ogBergamin H. Vogler /

Assistant Chief AntitrustCounsel

Dated at Bethesda, Marylandthis 12th day of January,1979.

P

. >

UNITED STATES OF AMERICANUCLEAR REGULATORY COMMISSION

BEFORE THE ATOMIC SAFETY AND LICENSING BOARD

In the Matter of ))

PACIFIC GAS AND ELECTRIC ) NRC Docket No. P-564ACOMPANY )

(Stanislaus Nuclear Project, )UnitNo.1) )

CERTIFICATE OF SERVICE

I hereby certify that copies of NRC STAFF'S PREHEARING CONFERENCE BRIEF,ANSWERS TO DWR'S MOTIONS REGARDING THE HEARING AND DISCOVERY SCHEDULE,AND STATUS REPORT, in the above-captioned proceeding have been served onthe following by deposit in the United States mail, first class, or, asindicated by an asterisk, through deposit in the Nuclear RegulatoryCommission's internal mail system, this 12th day of January 1979.

Marshall E. Miller, Esq., Chaiman George Spiegel, Esq.Atomic Safety and Licensing Board Robert C. McDiarmid, Esq.U.S. Nuclear Regulatory Commission Daniel I. Davidson, Esq.Washington, D.C. 20555 Sandra J. Strebel, Esq.

Peter K. Matt, Esq.Seymour Wenner, Esq. Bonnie S. Blair, Esq.Atomic Safety and Licensing Board Thomas C. Trauger, Eso.4807 Morgan Drive 2600 Virginia Avenue, N.W.Chevy Chase, Maryland 20015 Washington, D.C. 20037

Edward Luton, Esq. Evelle J. YoungerAtemic Safety and Licensing Board Attorney General of CaliforniaU.S. Nuclear Regulatory Commission Michael J. StrumwasserWashington, D.C. 20555 Deputy Attorney General

of CaliforniaDonald A. Kaplan, Esq. 555 Capitol Mall, suite 550P.O. Box 14141 Sacramento, California 95814Washington, D.C. 20044

Morris M. Doyle, Esq.Jerome Saltzman, Chief William H. Armstrong, Esq.Antitrust and Indemnity Gmup Terry J. Houlihan, Esq.U.S. Nuclear Regulatory Comission McCutchen, Doyle, Brown & EnersenWashington, D.C. 20555 Three Embarcadero Center, 28th Floor

San Francisco, Cali fornia 94111 -

Philip A. Crane, Jr.Glen West, Esq. H. Chester Horn, Jr., Esq.Richard L. Meiss, Esq. Deputy Attorney GeneralPacific Gas & Electric Company Office of the Attorney General77 Beale Street 3580 Wilshire Blvd. , Suite 800San Francisco, California 94106 Los Angeles , Cali fornia 90010

*.

-2-

Ron NicholsEnergy Commission1111 Howe AvenueSacramento, Cali fornia 95825

Docketing ano Service SectionOffice of the Secretary

. U.S. Nuclear Regulatory CommissionWashington, D.C. 20555 *

Clarice Turney3900 Main StreetRiverside, California 92521

Atomic Safety and Licensing BoardU.S. Nuclear Regulatory CommissionWashington, D.C. 20555 *

fj,

r // is,f'|,/j> Y|1YIl s

Jack R. Goldbergdounsel for NRC Staf

.