[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]



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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