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  98-28731. United States v. City of Stilwell, et al., Civ. No. 96-196 B, Response of the United States to Public Comments Concerning the Proposed Consent Decree  

  • [Federal Register Volume 63, Number 207 (Tuesday, October 27, 1998)]
    [Notices]
    [Pages 57313-57314]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 98-28731]
    
    
    
    [[Page 57313]]
    
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    DEPARTMENT OF JUSTICE
    
    Antitrust Division
    
    
    United States v. City of Stilwell, et al., Civ. No. 96-196 B, 
    Response of the United States to Public Comments Concerning the 
    Proposed Consent Decree
    
        Pursuant to Section 2(d) of the Antitrust Procedures and Penalties 
    Act, 15 U.S.C. 16(d), the United States publishes below the written 
    comments received on the proposed Consent Decree in United States v. 
    City of Stilwell, et al., Civil Action No. 96-196 B, United States 
    District Court for the Eastern District of Oklahoma, together with its 
    response thereto.
        Copies of the written comments and the response are available for 
    inspection and copying in Room 215 of the U.S. Department of Justice, 
    Antitrust Division, 325 Seventh Street, NW, Washington, DC 20530 
    (telephone 202-514-2481) and at the Office of the Clerk of the United 
    States District Court for the Eastern District of Oklahoma, United 
    States Courthouse, 5th and Okmulgee, Muskogee, Oklahoma.
    Rebecca P. Dick,
    Deputy Director of Operations.
    
    United States' Response To Public Comments
    
    [Case No. CIV 96-196B]
    
        Pursuant to section 2(d) of the Antitrust Procedures and Penalties 
    Act, 15 U.S.C. 16(d), the United States files this response to a public 
    comment regarding the proposed Final Judgment submitted for entry in 
    this civil antitrust proceeding.
        This action began on April 25, 1996, when the United States filed a 
    Complaint charging defendants, City of Stilwell and Stilwell Area 
    Development Authority, with violations of the antitrust laws. The 
    Complaint alleges that in the portions of Stilwell annexed into the 
    City since 1975, the defendants violated the antitrust laws by refusing 
    to sell sewer and water service to customers (services for which 
    defendants had monopoly power) unless the customer would also agree to 
    purchase electricity from defendants (service for which defendants 
    faced competition). The effect of this ``all-or-none'' policy was to 
    eliminate retail electric competition in the annexed areas of Stilwell.
        After more than two years of litigation, and with trial scheduled 
    to commence several weeks later, defendants agreed to the entry of a 
    court order enjoining them from continuing such practices. Thus, on 
    July 15, 1998, the United States filed a proposed Final Judgment, a 
    Competitive Impact Statement, and a stipulation signed by defendants 
    for entry of the proposed Final Judgment.
        The APPA provides for a 60-day public comment period on the 
    proposed Final Judgment. The 60-day comment period commenced on August 
    3, 1998, and expired on October 2, 1998. The United States received one 
    comment on the proposed Final Judgment, from the National Rural 
    Electric Cooperative Association (``NRECA''), a not-for-profit national 
    service organization representing approximately 100 rural electric 
    cooperatives. As required by 15 U.S.C. 16(b), NRECA's comment is being 
    filed with this response. (Exhibit A).
        NRECA ``applauds'' the United States' suit. NRECA observed that the 
    electric industry is becoming more competitive, but warned that 
    practices like that employed by defendants work to deprive consumers of 
    a choice of electric service providers. NRECA encouraged the Department 
    of Justice ``to continue monitoring and challenging these types of 
    anticompetitive actions to ensure that the evolving electric market is 
    in fact more competitive.'' Finally, NRECA ``thank[ed] the government 
    for its actions'' in this case.
        NRECA's comment supports the common sense view that enjoining 
    defendants from continuing to engage in the anticompetitive practices 
    at issue is in the public interest.
        The proposed Final Judgment provides all the substantive relief 
    requested in the Complaint against defendants, without the substantial 
    expense of a trial. The relief provided in the decree will eliminate 
    the anticompetitive all-or-none policy. Thus, entry of the proposed 
    Final Judgment is in the public interest.
    
        Respectfully submitted,
    John R. Read,
    Michele B. Cano,
    Michael D. Billiel,
    United States Department of Justice, Antitrust Division, 325 Seventh 
    Street, N.W., Suite 500, Washington, D.C. 20530, (202) 307-0468.
    October 13, 1998.
    Roger W. Fones,
    Chief; Transportation, Energy and Agriculture Section, Antitrust 
    Division; United States Department of Justice, 325 Seventh Street, 
    Northwest, Suite 500, Washington, D.C. 20530
    
    Re: Proposed Final Judgment and Competitive Impact Statement; United 
    States v. City of Stilwell, OK, et al.; 63 Fed. Reg. 41,292 (1998)
    
        Dear Mr. Fones: The National Rural Electric cooperative 
    Association (NRECA) is a not-for-profit national service 
    organization representing approximately 100 rural electric 
    cooperatives (RECs) that provide central station electric service to 
    approximately 30 million consumers in 46 states. Nearly all of 
    NRECA's members meet the definition of ``small entity'' under the 
    Small Business Regulatory Enforcement Fairness Act. Of these rural 
    systems, more than 60 are generation and transmission (G&T) 
    cooperatives, which are owned by and serve nearly 750 of the more 
    than 900 distribution cooperatives. Kilowatt-hour sales by RECs 
    amount to 7.4 percent of total electricity sales in the United 
    States, and produce revenues of over $14 billion. RECs owned 
    approximately 32.8 million kilowatts of installed electric capacity, 
    or 4.5 percent of all capacity in the country. RECs own and maintain 
    more than 2 million miles of power lines to serve their consumers 
    (approximately 44 percent of the total miles of power lines operated 
    by all electric utilities in the United States).
        In the August 3, 1998 Federal Register, the Antitrust division 
    of the United States Department of Justice published a proposed 
    final judgment in United States of America v. City of Stilwell, 
    Oklahoma and Stilwell Area Development Authority, United States 
    District Court for the Eastern District of Oklahoma Case No. CIV 96-
    196-B. Proposed Final Judgment and Competitive Impact Statement; 
    United States v. City of Stilwell, OK, et al., 63 Fed. Reg. 41,292 
    (1998).
        As explained in the proposed final judgment, the City of 
    Stilwell, Oklahoma and the Stilwell Area Development Authority 
    (``Defendants'') are the sole suppliers of water and sewer service 
    to customers within Stilwell's city limits. Through an all-or-none 
    utility policy, Defendants denied water or sewer service to any 
    customer who did not also purchase electric power from Defendants 
    (``Policy''). In areas of Stilwell annexed after 1961, Defendants 
    compete with Ozarks Rural Electric Cooperative (``Ozarks''), an 
    NRECA member, in selling electric power to new customers. Alleging 
    restraint of trade or commerce, monopolization, and attempts to 
    monopolize, the United States of America sued Defendants for 
    violating section 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1 & 2.
        In general, the proposed final judgment enjoins Defendants from 
    enforcing the Policy, requires Defendants to include appropriate 
    disclaimers on certain written materials, orders Defendants to 
    maintain an antitrust compliance program, and grants the United 
    States certain enforcement rights. The proposed final judgment, 
    however, expires ten years from the date of entry.
        As specified in the August 3, 1998 Federal Register, and 
    pursuant to 15 U.S.C.A. Sec. 16 (1997), NRECA comments upon the 
    proposed final judgment.
        NRECA applauds the challenge of the Defendants' Policy. Congress 
    enacted federal antitrust laws to prevent actions that thwart 
    competition authorized under state law. Under existing state law, 
    certain Stilwell residents may choose their electrtic power 
    provider. Because Defendants' Policy prevents these Stilwell 
    residents from choosing an electric power provider other than 
    Defendants, Defendants' Policy violates sections 1 and 2 of the 
    Sherman Act.
    
    [[Page 57314]]
    
        There is an underlying programmatic concern to NRECA, its 
    members, and all consumers of electricity. The electric utility 
    industry is becoming more competitive. In this atmosphere of 
    heightened competition, the role of antitrust laws as guardians of 
    competition becomes even more critical.
        NRECA is concerned that other municipal entities may operate, 
    formally or informally, under all-or-none utility policies similar 
    to Defendants' Policy. Many NRECA members, such as Ozarks, are 
    located near these municipalities, and have the lawful right to 
    provide electric power to qualified municipal residents who choose 
    them. Policies similar to Defendants' Policy deprive these consumers 
    of choosing an electric power provider. NRECA encourages the 
    Department of Justice to continue monitoring and challenging these 
    types of anti-competitive additions to ensure that the evolving 
    electric market is in fact more competitive.
        NRECA appreciates the opportunity to comment upon the proposed 
    final judgment, and again thanks the government for its actions 
    regarding Defendants' Policy. If you have any questions regarding 
    these comments, please call me or Tyrus H. Thompson, NRECA Corporate 
    Counsel, at 703-907-5855.
            Sincerely,
    Wallace F. Tillman,
    Chief Counsel.
    WFT/ks
    Cc: Larry Watkins
        Charles Cosby
    [FR Doc. 98-28731 Filed 10-26-98; 8:45 am]
    BILLING CODE 4410-11-M
    
    
    

Document Information

Published:
10/27/1998
Department:
Antitrust Division
Entry Type:
Notice
Document Number:
98-28731
Pages:
57313-57314 (2 pages)
PDF File:
98-28731.pdf