# Appendix — Otter Tail Power Co. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0104%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1973 - **Citation:** 410 U.S. 366 ## Text 2 ‘le, Malye EROS a se 8 Index APPENDIX—VOLUMES I AND II Index for Volume III of Appendix (Exhibits) is found in Volume III. I : The Revelant Docket Entries in the Proceeding Below... „„ r ³¶ßꝙ m ð ß Memorandum and Order of the United States District Court, District of Minnesota, Sixth Division, dated — Z) »» District Court Findings of Fact and Conclusions of Law, ,, ũ¶oͤ ͥ ͤłͤ rr pee ceme yet Original Judgment of the Distriet Court, dated RR np pellant's Alternative Motions for a New Trial or for Amended and/or Additional Findings of Fact and for Amended and/or Additional Conclusions of Law, and to Amend the Judgment Accordingly ............... Order of the District Court ruling on Appellant’s said Post-Trial Alternative Motions, dated November 10, WE. Shes 4040s / Pad ue oa ] . Lins . Amended Judgment, dated November 10, 1971 Notice of Appeal to the Supreme Court of the United OTT Teer Tere - ee ere ee Index TRANSCRIPT OF TESTIMONY AND PROCEEDINGS* OPENING STATEMENTS — GOVERNMENT’S WITNESSES Harland Martinson: Elaine Waples: in the following form—(T.II,2). SESE OE eR ay A.218 [T.1,2] EG GS REE (( IS ESE A.220 [T.1,12] Harland Martinson: —% ee A:286 [T.1,109] Cross-examination ................ A. 299 [T.1,127] Edward C. Spethmann: a —. ̃— U —! ! ee A. 312 [CT. II, 21] Cross- examination (cont’d) ............ A. 321 [œT.II, 14] Redirect examination ................. A.329 [ôT. II, 27] Hubert Lewis, Jr.: —! — 8 A. 331 [T. II, 29] Cross- examination A. 332 [TT. II, 32] Ernest Woytassek: , Direct examination ................... A.344 [T.II1,49] Cross-examination ............./..... A.351 [T. II, 60] Redirect examination A. 357 [T. II, 681 Direct examination „ A. 359 [æT. II. 711 — // c ͤ ĩᷣͤ 8 A. 362 [TT. II. 75] The Transcript of the Proceedings is contained in 10 volumes, one volume for each day of trial, each of which starts over with page 1. As a result, the Transcript page numbers must be related to the volume number. The pagination of the transcript references Will be an : Index . Frank J. Belinskey: Direct examination A. 373 [CT. II. 92] — 0 oe A. 375 [T. II. 94] Joseph O. Perino: f Direct examination eres A.378 [T. II, 100] John S. Holten: a g — 2 A. 394 [T. III, 2] Cross- examination A. 404 [T. III, 15] James L. Grahl: Direct examination A. 430 [T. IV, 2] Cross- examination 4.440 [T. IV, 15] Redirect examination ................ A.475 [T.IV,63] William E. Trommershausen : Direct examination ................... A.491 [T.V,2] Cross-examination .................... A.550 [T.V,85] Redirect examination ................ A.633 [T.VI,83] Recross-examination .............. 4.640 [T.VI,93] OPENING STATEMENT MN oie este dascrcss K. A.651 [T.V1,110] DEFENDANT’S. WITNESSES Albert V. Hartl: ; Direct examination A.656 [T. VI, 119] Cross- examination A. 752 [T. VII, 116] Redirect examination A. 823 [T. VIII, 95] Recross- examination A. 844 [CT. IX, 10] Redirect examination ................ A.849 [T.IX,16] Warren Nye: Direct examination A.851 [T.IX,20] Goomiemeeinstion. ................... A.893 [T.IX,80] Redirect examination A.912 [T.IX,107] Recross-examination ................ A.917 [T,IX,113] Walter A. Morton: . ee en ce eee A.919 [T.X,2] ee See 8 A.965 [T.X,66] GOVERNMENT’S EXHIBITS* GX Exhibits 1 through 294 were all offered and received on page A.285 [T.I,108] and are described on the Government Exhibit list. GX Offered Received Description 206-A A.534 A.534 Map indicating Han- LT. V. 63] [T. V, 63] 8 kinson and Elbow N Lake. 206-B A.903 A.904 Map. [T. IX, 95] [T. IX, 95 295 A.288 A.288 Elbow Lake Council (T.1,111] (T.1,112] Minutes, 9/8/62. 296 A289 A.291 Various Elbow Lake (T.1,113] (T.1,116] Council Minutes from 6/6/60 to 5/7/65. 297 4.294 A. 295 Letter, Martinson to [T. I. 1201 [T.I. 1211 Wolter, 7/8/65. 298 4.294 A. 295 Letter, Wolter to LT. I. 120] ILT. I, 1211 Martinson, 8/10/65. This list of Exhibits and their descriptions is compiled from the introductory pages of each volume of the Transcript prepared by the Court Reporter. Index GOVERNMENT’S EXHIBITS GX Offered Received Description N DSS A.298 fectric power case (T.1,126] (T.1,126] ~ study for Village of Elbow Lake. 300, XII AAN Letters Re: Colman. 301 [T. 1,4] LT. I, 41 302, NIN ASS Letters Re: Alexan- 303 = [T.II,4] CT. II, 4 dria. 304, ~A3IS — ASI Letters between 305, [T. II, 13] [T. II, 13] Elbow Lake and and Basin Electric. 306 ‘ 307 N32 A332 Contract for electric (T.11,32] LT. II. 32] service, Bureau of Reclamation and Colman. 308 32 32 Re: Litigation (T.11,32] (T.II,32] 3090 ASS A332 Report of Buell & (T.11,32] [T. II, 32] Winter, Minutes of City Council N of Colman. 311 A IIA Exhibits Re: Woytas- thru [T.II,49] [T. II, 49] sek's testimony. 317 318 81 A361 Exhibits Re: Waples thru [T.II,75] [T. II. 78] testimony. Index GOVERNMENT'S EXHIBITS GX Offered Received Description 330 A376 A.376 Letter from Bartel. {T.I1,97] [T. II.971] WI Ase A.376 Waples, Minutes. [T. II. 97] [T. II. 971] 332 Le A316 Waples, Letters. | thru [T. II. 97] [T. II. 97] | 338 339 Withdrawn 340 NN “A376 Waples, Letter. {T.I1,97] {T.I1,97] 341 A376 A376 Waples, Agreement. | [T.11,97] [T.11,97] 342 e A.376 Waples, Letter. (T.II,97] ILT. II, 97] 343 Ae A316 Waples, Contract. {T.I1,97] {T.11,97] 344. 579 A379 Perino, Letters. thru (T.11,101) LT. II, 1011] 348 349 Assi A.381 Hickerson, Letter. ILT. II, 104] LT. II, 104] 350 A.d83 A.384 Re: George Danforth. thru [T.II,107] (T.11,110] 356 357, A.400 A.404 Letters by Holten to 358 II. III, 10] LT. III, 14] Woytassek and Healey. vi Index GOVERNMENT’S EXHIBITS GX Offered Received Deseription 359 A400 A404 Letters by Holten thru [T. III, 10] LT. III, 14] Re: City of Colman. 371 i 72 A A.404 “Signature Certifi- _ LT. III, 10] LT. III, 14] cate”. 373 A400 A.404 “Faegre and Benson” : LT. III, 10] LT. III, 14] “$95,000 Electric Rev- enue Bonds of 1964, City of Colman.” 374 A.414 — — thru [T. III, 28] — 426 374 479 thru [T.IV,69] 434 374 A.487 Exhibits 374 thru thru LT. IV, 82] 434 described on 378 Government's Exhibit list. 419 A. 487 thru LT. IV, 82] 426 428 A. 487 LT. IV, 82] 431 A.487 thru : [T.IV,82] 434 vii Index GOVERNMENT’S EXHIBITS GX Offered Received Description 8 X85 A.496 Systems Map Central LT. V. 71] LT. V. 71 Power Coop. 736 8 X95 Systems Map UPA. [T. V. 7] LT. V. 7] . 7 A496 XA Systems Map CPA. IT. V. 71] [T. V. 7] 438 95 A.496 Systems Map East [T. V. 71] [T. V. 7] River Cooperative. 1898 Id A.508 Transmissions Map [T. V. 111 [T. V. 271] Otter Tail Service Area. 440 A. 512 4.512 Transmissions Map LT. V. 321] [T. V. 32 Otter Tail Service Area. 441 A. 512 A. 513 Otter Tail Report [T. V. 32] ILT. V. 331 Filed 1970 with FPC. 442 XI X5I8 Otter Tail Report IT. V. 32] [T. V. 33] Filed 1960 with N FPC. 3 514 A515 Bureau of Reclamation [T.V,35] LT. V, 36] Map 1970, Missouri River Basin Power System. 444 A. 769 A. 769 Statement of [T. VIII, 16] [T. VIII, 16] A. V. Hartl. viii Index GOVERNMENT'S EXHIBITS GX Offered Received Description S NF 7 Speech by A. V. Harti (T.VIII,86] [T. VIII, 86] 11-18-70. 446 A.975 A.975 Government Exhibit [T.X,80] [T.X,80] List, Exhibits 1 thru 294. 27 A975 A.975 Government Exhibit [T.X,80] LT. X, 80] List, Exhibits 374 thru 434. DEFENDANT’S EXHIBITS DX Offered Received Description 1 291 I Elbow Lake Council (T.1,116] (T.1,416] Minutes, 8/7/61. 2 A291 A291 Elbow Lake Council [T. I. 116] [T. I. 116] Minutes, 8/17/61. 8 291 A.291 Elbow Lake Council [T.1,117] (T.1,117] Minutes, 6/4/62. 4 A.291 A291 Elbow Lake Council [T.I. 117] [T. I. 117] Minutes, 8/6/62. 5 4.292 . 292 Elbow Lake Council (T.1,117] (T.1,117] Minutes, 6/7/65. ix Index DEFENDANT’S EXHIBITS DX Offered Received Description ä A320 Letter by Nye to Vil- (T.11,14] | (T.I1,14] lage of Elbow Lake. TES A325 2 Letters to Martinson. (T.11,21] (T.11,21] vs >? ASS A.359 Letter by Woytassek. (T.11,71] [T.II. 711 UX II A366 IU Letters. ILT. II. 66] LT. II, 66] Tz 886 X58 Minutes. [T. II. 66] [T. II. 66] Ts” 356 A.356 Letter, 2-14-64. (T.11,66] (T.11,66] 17 A3s6o A.356 Articles of Incor- LT. II, 66] [T. II, 66] poration. I A3d6 XU Bylaws. (T.11,66] [T. II, 66] je NN N Contract. {T.11,83] (T.II,83] TTT TNT 87 Agreements. [T. II. 83] [T. II. 83] 19 TNS A. 368 Letter. [T. II. 84] LT. II. 84] 20 — — Same as GX 242 11 — — Same as GX247 2 A. 416 4.417 [T. III. 32] [T. III. 32] 22 Withdrawn on A. 429 [T. III, 50] Same as GX237 X Index DEFENDANT’S EXHIBITS DX Offered Received Description 2 A460 > A460 July, 1970, Booklet [T. IV, 48] LT. IV, 43] published by Missouri Basin Systems Group. 24 NAU A.460 North Central Power LT. IV, 43] LT. IV, 48] Study. 25 NASN A8 Campaign material. thru [T. IV, 85] LT. IV,. 86] 37 s 38 Marked for Identification A. VI] 38 0 XII Source Map. [T. VI. 51] LT. VI. 52] 39 A. 610 A. 611 Source Map. ILT. VI. 521 LT. VI. 52] 40 A726 A727 Otter Tail Chart. (T.VII,81] (T.VII,81] 41 A738 A.739_ Otter Tail Chart. (T.VII,97] LT. VII. 97] 88 328 X82 Engineering Study. LT. VIII, 98] LT. VIII, 98] (See A. 826 LT. VIII, 99].) 22 2850 50 Documentation thru [T. IX, 18] LT. IX. 18] of cases in area 87 of litigation. 89. A.840 A.840 List of REA [T. IX, 4] LT. IX, 4] cooperatives. xi Index DEFENDANT’S EXHIBITS DX Offered Received Description 30 X51 A851 1969 REA Statistical ILT. IX. 19] [T. IX, 19] Report. Si ASST A.858 Excerpts from (T.1X,28] LT. IX, 30] Exhibit GX-2. 81 TGA Map. [T. IX, 35] [T. IX, 39] 93 A. 861 A. 864 Map. ILT. IX, 35] [T. IX, 39] 94 A.873 A.873 Study of Power [T. IX. 52] [T. IX. 52] Supply, Area 26. 95 A. 933 A. 938 Study and schedules [T. X. 21] [T. X. 28] of Dr. Morton. 96 A.952 A.952 Study and schedules [T. X, 47] [T. X, 48] of Dr. Morton. 97 A. 958 A. 958 Study and schedules [T. X, 56] T. X. 56] of Dr. Morton. 98 A.975 A.976 List of towns served [T. X, 81] [T. X,. 82] by Co-operatives at retail. Dx99—Letter from East River to Elbow Lake. Added to record by Order dated Nov. 8, 1971 A.1211 Otter Tail Dep. bx. Army Engineers’ study. Offered and received in evidence at A.315 [T.II,6,7] A. 1214 Chart Submitted by the United States—Ineluded in Record by Order dated July 5, 1972 A.1219 is Docket Entries 1 IN THE Supreme Court of the United States OCTOBER TERM, 1971 No. 71-991 OTTER TAIL POWER COMPANY, APPELLANT v. UNITED STATES OF AMERICA, APPELLEE APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA THE RELEVANT DOCKET ENTRIES IN THE PROCEEDING BELOW 7-14-69 — Filed Complaint. ' Issued Summons. Case assigned to J. Devitt. 7-22-69 — Filed Summons, returned served 7-15-69. 8-4 — Filed Answer with aff. of serv. by mail 8-1-69. 8-19-69 — Filed Motion To Associate Counsel Kenneth C. Anderson and Keith I. Clearwaters of U. S. Dept. of Justice, Washington D.C., and entered Order therein that Kenneth C. Anderson and Keith I. Clearwaters be and are, recog- — 2 Docket Entries nized as co-counsel for U.S. in entitled and numbered pro- ceeding. (Devitt-J 8-14-69) | 9-29-69 — Filed Plaintiff's Interrogatories To Defendant with Cert. of Service by mail 9-26-69. 10-81-69 — Filed Answers of Deft to Plaintiff's Interroga- tories. Cert. of Serv. by Mail 10-30-69 attached. 128-69 — Filed Plaintiff's Notice of Motion For The Produc. tion of Documents and Motion For Production of Docu- | ments. Affidavit of Kenneth C. Anderson attached. Certifi- cate of Service by mail 12-38-69 attached. Noticed for hearing at St. Paul on 12-22-69 at 9:00 A.M. or as soon thereafter as counsel can be heard, for an order granting Motion for Production of Documents. Filed Memorandum of Points and Authorities In Support of Plaintiff's Motion For The Production of Documents Pursuant to Rule 34 of the Federal Rules of Civil Procedure. Cert. of Serv. by Mail 12-3-69 attached. 12-16-69 — Filed Defendant’s Response To Motion For The Production of Documents. Aff. of serv. by Mail 12-15-69 attached. Filed Defendant’s Brief In Support of Defendant’s Response To Motion For Production of Documents. 5-26-70 — Entered record of pretrial conference, during which the case is set for trial in November of 1970 at St. Paul. (Devitt, J.) 6-30-70 — Filed Deft’s Motion for Continuance together with Notice of hearing on the Foregoing Motion at St. Paul Aug. 10, 1970 at 9:00 A.M. or as soon thereafter as counsel can be heard, or at such other time and place as may be deter- mined by the Court. Cert. of Service by mail 6-4-70 attached. Docket Entries 3 8-24 — Entered record of hearing on deft’s motion for cont. : argued, denied. Order to be submitted. (Devitt, J.; Lind- berg, reporter) 8-31 — Filed and entered Order denying continuance. (Devitt, J.) Mailed notice to counsel. 9-14 — Filed reporter's notes of proceedings had 8-24-70. (Lindberg, reporter) Filed reporter’s transcript of proceedings of 8-24-70. 9-16 — Filed defendant’s interrogatories 1 and 2, with aff. of serv. by mail 9-11-70. 9-21-70 — Filed plaintiff’s notice to take depositions of War- ren K. Nye, Albert C. Hartl, P. J. Brewer, R. W. Nygard, J. J. Seashore, with certificate of service by mail on 9-18-70. 9-29-70 — Filed Plaintiff’s Notice of Motion For the Produc- tion of Documents and Motion For Production of Docu- ments. Noticed for hearing Oct. 12, 1970 at 9:00 A.M. or as soon thereafter as counsel can be heard for an order. Aff. of serv. by mail 9-25-70, attached. 9-29-70 — Filed pretrial order no. 1, setting pretrial confer- ence 12-21-70 at 9:00 a.m. (Devitt, J.) Order bears approval of counsel for the respective parties, 10-1-70 — Filed plaintiff’s answers to interrogatories, with aff. of serv. by mail 9-30-70. 10-6 — Filed and entered order granting plaintiff’s ex part Motion to associate counsel. (Devitt, J.) The order is on the Same page as the Motion itself. 10-7 — Filed defendant’s response to plaintiff’s second motion for production of documents. Cert. of personal service 10- 5-70 attached. 10-12-70 — Filed Partial Stipulation of Facts. 8 nennen 4 11-19-70 — Filed Plaintiff's Supplemental Answers to Inter- rogatories Proposed by Deft. Cert. of Serv. by Mail 11-17- 70 attached. 12-14-70 — Filed Defendant’s Statement re Defendant’s Wit- nesses. Cert. of serv. by mail 12-11-70. 12-21 — Filed Additional Stipulation of Facts, with exhibits “A” through “KK” inclusive. Entered Record of pretrial conference. Further pretrial 2-16-71 with briefs to be submitted prior to that date. Trial set tentatively 5-24-71. (Devitt, J.; Anderson, reporter) 1-15-71 — Filed and entered Pretrial order No. 2, setting a second pretrial conference at St. Paul 2-16-71, and tentative trial date of 5-24-71 in St. Paul. (Devitt, J.; 1-12-71) Docu- ment bears approval of counsel for both parties. Mailed conformed copy of the order to counsel for the respective parties. 2-1-71 — Filed Defendant’s Response To Plaintiff's Proposed Stipulation of Facts Supplement, No. 1, and Proposed Addi- tional Stipulation of Facts as To Documentary Evidence. Aff. of Serv. by mail 1-29-71 attached. 2-8-71 — Filed Copy of Pre-trial Brief by U. S. Department of Justice. 2-16-71 — Entered Minutes of Proceedings of record of pre- trial conference (Devitt, J.) (Lindberg, Reporter) 3-971 — Filed Reporter’s Notes of hearing 2-16-71 (No. 139) Lindberg, Reporter. 3-15-71 — Filed and entered Pretrial Order No. 3 (Devitt, J. 3-15-71) Mailed Notice to Counsel 5-3-71 — Filed deft. Otter Tail’s compliance with paragraph 4 Docket Entries Docket Entries 5 3(a) of pretrial order No. 3, with eight exhibits, five of them received this date, the rest en route. Aff. of serv. 4-30-71 attached. . Filed Deft. Otter Tail’s compliance with paragraph 3(b) of pretrial order no. 3, with aff. of serv. 4-30-71. 3 large plats received and are now in exhibit room. 5-4 — Filed additional stipulation of facts, supplement no. 1, with exhibits listed on letter attached to the stip. 5-10-71 — Filed Otter Tail’s Compliance with Paragraph 2 of Pretrial Order No. 3. Aff. of Serv. by Mail 5-7-71 at- tached. 5-17-71 — Filed defendant’s compliance with paragraphs 4 (a) and (b) of pretrial order no. 3. Aff. of Serv. on 5-14- 71 attached. . 6-4-71 — Entered further record of trial ( Devitt, J.) (Ander- son-Sutfin, Reporter) 8-2-71 — Lodged Plaintiff’s Post-Trial Reply Brief and de- livered same to Judge Devitt. 5-17-71 — Filed plaintiff’s compliance with paragraph 4 of pretrial order no. 3. Lodged plaintiff’s reply to defendant’s pretrial brief. Lodged plaintiff’s pretrial findings of fact and conclusions of law. Delivered above reply and pretrial findings to Judge Devitt. Filed cert. of service of foregoing three items by mail on 5-16-71. 61-71 — Entered record of trial (Devitt, J.) (Anderson-Sut- fin, Reporters) 6271 — Filed Deposition of Albert C. Harti taken October 5, 1970. Filed Deposition of P. J. Brewer taken October 9, 1970. 6 Docket Entries Filed Deposition of Warren K. Nye, taken October 8, 1970. Filed Deposition of Robert W. Nygard, taken October 9, 1970. Filed Deposition of James J. Seashore, taken October 9, 1970. 6-83-71 — Filed Reporter’s Deposition of Frederick William Muller, taken 5-24-71, Vol. I. Filed Deposition of Frederick William Muller, taken 5-25- 71, Vol. II Filed Deposition of Frederick William Muller, taken 5-25- 71, Vol. III Filed Deposition of Frederick William Muller, taken 5-25- 71, Vol. IV Filed Deposition of Frederick William Muller, taken 5-26- 71, Vol. V. 6-2-71 — Entered record of further trial (Devitt, J.) (Ander- son-Sutfin, Reporters) ~ 6-3-71 — Entered record of further trial (Devitt, J.) (Ander- son-Sutfin, Reporters) 6-4-71 — Entered record of further trial (Devitt, J.) (Ander- son-Sutfin, Reporters) 6-7-71 — Entered record of further trial (Devitt, J.) (Ander- son-Sutfin, Reporters) ö 68-71 — Entered record of further trial (Devitt, J.) (Ander- son-Sutfin, Reporters) 6-9-71 — Entered record of further trial (Devitt, J.) (Ander- son-Sutfin, Reporters) 6-10-71 — Entered record of forther trial (Devitt, J.) (Ander- son-Sutfin, Reporters) 6-11-71 — Entered record of further trial (Devitt, J.) (Ander- son-Sutfin, Reporters) Docket Entries 7 6-14-71 — Entered record of further trial; matter taken under advisement. Counsel are to submit briefs and proposed findings simultaneously July 14, 1971 and reply briefs by July 30, 1971. Filed list of exhibits, Filed reporter’s transcript of testimony of trial from June 1 thru June 11, 1971, in 9 volumes. (Anderson-Sutfin) 9-9-71 — Filed and entered Memorandum and Order finding that deft. has attempted to, and has, monopolized interstate commerce in the retail distribution of electric power in vio- lation of Section 2 of the Sherman Act; order enjoins deft. from continuing the violations herein found to exist. Coun- sel for plaintiff is directed to submit findings of fact, con- clusions of law and order for judgment, together with a proposed form of judgment. (Devitt, J.) ö 9-971 — Mailed conformed copy of the foregoing Memo and Order to counsel for the respective parties, as listed on these docket sheets. Filed reporter’s transcript of proceedings 6-14-71. (Ander- son-Sutfin, Reporters) Filed reporter’s transcript of trial of 6-14-71 (Anderson- Sutfin, Reporters) 9-9-71 — Filed one document entitled: Transcript directing suggestions by deft. in re: Vol. 1-10. 9-27-71 — Filed Praecipe of John W. Wright, Operations Attorney, Rural Electrification Division, U.S. Dept. of Ag- riculture, Office of the General Counsel, Washington, D.C. 20250. Copy issued and mailed 9-13-71 pursuant to telephone order. 8 Docket Entries Filed Praecipe of Mrs. Ruth H. Jacobson, Secretary of Judicial Panel on Multidistrict Litigation for copy of opin- ion dated 9-9-71. Issued and mailed. 10-22-71 — Filed and entered Findings of Fact, Conclusions of Law in favor of the plaintiff. (Devitt, J.) Filed and entered Judgment enjoining and restraining deft. from violating the Sherman Act. Copy attached. (Devitt, J.) Mailed notice to counsel. 10-28-71 — Filed defendant’s alternative motions for a new trial or for amended and/or additional findings of fact and for amended and/or additional conclusions of law, and to amend the judgment accordingly, with notice of hearing, returnable at St. Paul at 11:00 a.m. Nov. 8, 1971, and certificate of service by mail on 10-27-71. Filed and entered order staying enforcement of judgment pending disposition of motions filed this date, directing that deft. furnish bond. (Devitt, J.) Filed defendant’s bond in the sum of $50,000.00. Mailed notice to counsel of the foregoing order and of filing of the bond. 11-8-71 — Entered record of hearing of Deft’s Motion for New Trial and/or for amended Findings of Fact, Conclu- sions of Law and to amend Judgment accordingly: Argued, submitted to and by the Court denied as to a new trial. Mr. Field to submit an Amended Judgment for the Court’s sig- nature and the Court stays the entry of Judgment. (Devitt, J.) (Anderson, Reporter) Filed and entered Order re Transcript corrections and DX 99. Docket Entries 9 11-10-71 — Filed and entered order amending judgment here- in. (Devitt, J.; 11-10-71) Filed and entered amended judgment. (Devitt, J.) Mailed conformed copies of the foregoing order and amend- ed judgment to Mr. Field and to Kenneth C. Anderson. Mailed notice to counsel. 12-7-71 — Filed defendant’s notice of appeal to U. S. Supreme Court, Filed and entered order suspending injunction during ap- peal. (Devitt, J.) Mailed copy of conformed notice of appeal to United States Attorney, 596 U.S. Courthouse, 110 South 4th St., Mpls., Minn. 55401, to Kenneth C. Anderson, Keith C. Anderson, and Herbert D. Miller, Jr., each individually, addressed as follows: U. S. Department of J ustice, Washington, D. C. Filed request by defendant for certification and transmis- sion of record to the Supreme Court of the U. 8. Mailed notice to counsel of the foregoing order filed this date. : 12-9 — Filed and entered order for transmission of original record and original exhibits to U. S. Supreme Court. (Dev- itt, J.) Conformed copy of this order mailed to counsel for the respective parties. 1-13-72 —Mailed certificate with original files and copies of docket sheets and notice of appeal, certified, to Clerk, Su- preme Court of the United States, Supreme Court Building, Washington, D. C. 20544, with copy of cover letter to counsel whose names: and addresses are on the first page of the docket sheet. 14 — Mailed exhibits to Clerk, Supreme Court of the U. S. addressed as above. 10 Plaintiff's Complaint UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA SIXTH DIVISION (Title Omitted in Printing) COMPLAINT The United States of America, by its attorneys, acting under the direction of the Attorney General of the United States, brings this action against the defendant named herein and complains and alleges as follows: i JURISDICTION AND VENUE ~ 1. This complaint is filed and this action is instituted against the defendant under Section 4 of the Act of Congress of July 2, 1890, as amended (15 U.S.C. §4), commonly known as the Sherman Act, in order to prevent and restrain the continuing violation by the defendant, as hereinafter alleged, of Section 2 of the Sherman Act (15 U.S.C. §2). 2. The alleged violation of law hereinafter described has been and is being carried out in part within the Sixth Division of the District of Minnesota where the defendant has offices, transacts business and is found. II. THE DEFENDANT 3. Otter Tail Power Company (hereinafter Otter Tail“) is made a defendant herein. Otter Tail is a corporation orga- nized and existing under the laws of the State of Minnesota with its principal place of business in Fergus Falls, Minnesota. It generates, transmits and sells electric power at retail and wholesale. Plaintiff's Complaint 11 III. TRADE AND COMMERCE 4. The electric power industry is comprised generally of three functional levels: production, transmission and distribu- tion. Production encompasses the conversion into @ectric pow- er of energy obtained from combustion of fossil fuels, from moving water, or more recently, from atomic reaction. Trans- mission refers to the transportation of electric energy via a network of high voltage lines from points of generation to distribution areas. Distribution involves the delivery and sale of electric current to ultimate consumers. Although most large electric utilities, including Otter Tail, perform all three func- tions, some companies perform only one or two of such func- tions. For example, the Bureau of Reclamation of the Depart- ment of the Interior (hereinafter “the Bureau”) and many electric cooperatives restrict their activities to the production and transmission of electric power. Also, many municipal power systems and electric cooperatives engage solely in dis- tribution of electric energy to ultimate consumers. 5. Otter Tail operates an integrated electric power system in western Minnesota, northeastern South Dakota and eastern North Dakota. It maintains generation facilities having a capacity of approximately 280,000 kilowatts. In addition, the company purchases substantial amounts of electric power produced by the Bureau. 6. Otter Tail has 5,900 miles of transmission lines which blanket its tri-state area of operations. These lines cross state boundaries and carry power produced both by Otter Tail and the Bureau. Although various electric cooperatives have transmission lines within the tri-state Otter Tail area, Otter 12 Plaintiff's Complaint Tail’s network of high voltage lines is the dominant factor in the transmission of power in the area. Bureau-generated elec- tric power is transmitted (“wheeled”) by Otter Tail to certain Bureau customers pursuant to an agreement between the Bureau and Otter Tail. In addition, Otter Tail has agreements with various electric cooperatives under which each party agrees to wheel electric power over its lines for the other. In 1966, Otter Tail wheeled a total volume of 523,704,610 kilowatt hours of electric power, from which it derived revenues of $508,613. 7. The statutes of the States of Minnesota, South Dakota and North Dakota give to each municipality the option of awarding a distribution franchise for a term of years to an electric utility company or of establishing and operating a municipally-owned electric power distribution system. Selec- tion of the method by which electric power distribution is to be performed is made by the electorates of the respective towns. Changes in the method of distribution are authorized by the respective state statutes. 8. Otter Tail distributes electric power at retail in approxi- mately 464 towns, which constitute the vast majority of towns in its service area. (Electric power distribution in rural areas within Otter Tail’s service area is performed principally by electric cooperatives; however, the latter are restricted by law from distributing electric power within towns.) In 1967 Otter Tail sold 867,621,740 kilowatts of electric energy in the 464 towns, from which it derived revenues of $25,179,979. 9. In 1966 the municipal electric power systems of 18 towns located within the Otter Tail service area purchased all or part of their electric power requirements at wholesale from the Bureau. 122,864,314 kilowatt hours of electric energy Plaintiffs Complaint 13 were wheeled over Otter Tail transmission lines part of the distance between Bureau generation facilities and the munic- ipal systems. 10. Otter Tail is a member of the Upper Mississippi Val- ley Power Pool and sells to and buys from its fellow members electric power for resale. The members of the pool are located in several different states, and the power exchanged among them crosses state lines. In 1967 Otter Tail sold 166,107,600 kilowatt hours to pool members, from which it derived reve- nues of $1,607,616. IV. OFFENSES CHARGED 11. Beginning in or about 1955 and continuing thereafter up to and including the date of filing of this complaint, defen- dant Otter Tail has attempted to monopolize and has monopo- lized the aforesaid trade and commerce in the sale of electric power in or to towns located in the areas of Minnesota, North Dakota and South Dakota which it serves, in violation of Sec- tion 2 of the Sherman Act (15 U.S.C. §2). These offenses are continuing and will continue unless the relief hereinafter prayed for is granted. 12. Pursuant to and in furtherance of the aforesaid at- tempt to monopolize and monopolization, defendant Otter Tail has sought to prevent municipalities from shifting local elec- tric service from Otter Tail to another electric power system, supplied either by Otter Tail or another supplier of power, by doing among other acts, the following: 1. refusing and threatening to refuse to sell power at wholesale to the proposed alternative local electric power sys- tems; i | 2. refusing and threatening to refuse to wheel electric power from other wholesale power suppliers to the proposed alternative local electric power system; and 8. engaging in other activities designed to obstruct and defeat the attempt by municipalities to establish alternative local electric power system. 14 Plaintiff's Complaint V. EFFECTS 18. The aforesaid offenses have had, among other things, the following effects: (a) Otter Tail has been able to preserve a monopoly of retail distribution in towns in its service area; (b) Competition for local electric power distribution franchises has been eliminated ; i (c) Yardstick competition in the retail distribution of electric power has been lessened; (d) Competition in the wholesale sale of electric power has been restrained. PRAYER WHEREFORE, the plaintiff prays: 1. That the Court adjudge and decree that defendant Otter Tail has attempted to monopolize and has monopolized inter- state trade and commerce in the retail distribution of electric power in violation of Section 2 of the Sherman Act. 2. That defendant Otter Tail and all persons, firms, and corporations acting in its behalf or under its direction or con- trol be permanently enjoined from engaging in, carrying out, or renewing any contracts, agreements, policies, practices, or understandings, or claiming any rights thereunder having the purpose or effect of continuing, reviving, or renewing the aforesaid violation of the Sherman Act or any contract, agree- Plaintiff's Complaint 15 ment, policy, Practice, or understanding having like or similar purpose or effect. 3. That the plaintiff have such other and further relief as the nature of the case may require and the Court may deem just and proper. 4. That the plaintiff may recover the costs of this action. Dated : KENNETH C. ANDERSON Attorney, Department of Justice JOHN N. MITCHELL Attorney General RICHARD W. McLAREN Assistant Attorney General BADDIA J. RASHID JOSEPH J. SAUNDERS Attorneys, Department of Justice 16 Defendant’s Answer UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA SIXTH DIVISION (Title Omitted in Printing) ANSWER Defendant Otter Tail Power Company (Otter Tail) for its Answer to the Complaint herein, respectfully alleges: I, GENERAL Otter Tail admits that it is a corporation organized and existing under the laws of the State of Minnesota with its principal place of business in Fergus Falls, Minnesota. Otter Tail further admits and alleges that it owns and operates an integrated electric system, which includes transmission lines which interconnect generating stations located at strategic points on the system and which system furnishes adequate and reliable retail electric service at reasonable rates to approxi- mately 464 communities, and also to a substantial number of rural customers, located generally in western Minnesota, east- ern North Dakota, and northeastern South Dakota. Otter Tail’s system is connected with other major electric suppliers in the area pursuant to the provisions of special agreements which have been voluntarily negotiated and entered into. Otter Tail denies that its high voltage lines are the dominant factor in the transmission of power in the area. The statistics alleged in the Complaint are approximately correct, but, in connection with any statistics for wheeling, or pool transac- tions, or any transactions with other suppliers, the particular Defendant’s Answer 17 special agreements under which they are performed must be referred to in order to understand their meaning, context, and limitations. Paragraph 7 of the Complaint contains allegations regard- ing the laws of the three States of Minnesota, North Dakota, and South Dakota, the details of which the Court can take judicial notice of. II. OTTER TAIL’S GENERAL STATUS AND POLICY Otter Tail is an investor-owned electric company which has, through its initiative and efficient management, put together its integrated electric system over the past 60 years, and whfth has been a leader in adopting modern technological advances, and in voluntarily negotiating and entering into interconnection agreements with other suppliers, and, as a consequence, has succeeded in bringing the advantages of scale to its retail electric consumers in a widespread and pre- dominantly rural area. Of the 464 communities which it serves at retail only 28 have a population of 1,500 or greater, and only 2 have a population in excess of 10,000. This action, and its companion cases, the Village of Elbow Lake’s Complaint be- fore the Federal Power Commission, 1 and Elbow Lake’s suit for treble damages and an injunction under the Sherman Act 1 Village of Elbow Lake, Minnesota vs. Otter Tail Power Company, FPC Docket No. E-7278, which proceeding was commenced on March 16, 1966, and is presently being processed at the administra- tive level before the Federal Power Commission. There is also an appeal to the Circuit Court of Appeals of the Eighth Circuit from an interim order of the Federal Power Commission, which appeal is now pending. This appeal bears No. 19,628 in the Court of Ap- peals for the Eighth Circuit and is entitled “Otter Tail Power Com- pany vs. Federal Power Commission and Village of Elbow Lake. Minnesota”. — in this Court,? seek to compel Otter Tail to use its own facili- ties to support or subsidize a new municipal system that puts Otter Tail out of the retail business in that community. It is Otter Tail's position in this action, as well as in the companion cases mentioned, that to do so would create a precedent and situation which would subject its integrated system to erosion and would impair its credit in the money markets of the coun- try. Otter Tail resists being compelled to use its own prop- erties to destroy itself. Otter Tail denies that this position and policy of Otter Tail in any way violates the Sherman Act. On the contrary, Otter Tail alleges that it is not in the public interest, either from the standpoint of public utility regula- tion, or the antitrust laws, or the effect on both the customers and shareholders of Otter Tail, to create a situation or prece- dent tending toward that result. N III. WHOLESALE SERVICE Otter Tail has never held itself out generally to furnish electric service at wholesale, and its properties have not been dedicated to wholesale service. The consistent and historic policy of Otter Tail is to furnish service at retail to the ulti- mate consumer. This basic policy of Otter Tail was stated as early as 1947, as a part of Otter Tail’s Electric Schedule filings with the Federal Power Commission. A copy of this Statement of Company’s Policies and Practices as so filed with the Fed- eral Power Commission in 1947 is attached hereto as Exhibit 18 Defendant’s Answer 2 The Village of Elbow Lake, Minnesota vs. Otter Tail Power Com- pany, being Civil Action File No. 667-244 in the United States Dis- trict Court for the District of Minnesota, Sixth Division. The trial of this case in this Court has been continued until the completion of the administrative proceedings before the Federal Power Com- mission and of judicial review of its orders, by the Order of Hon- — * Edward J. Devitt, Chief Judge of this Court, dated June 20, Defendant’s Answer 19 A. The few wholesale accounts Otter Tail once had were cov- ered by special contracts and within the limitations of those contracts. With the availability of underpriced government power, the wholesale accounts covered by those special con- tracts have left Otter Tail to become preference customers of the Bureau of Reclamation. At the present time there is only one wholesale contract left, and that has been taken over by the Cass County Electric Cooperative, and expires by its terms in 1970. When this one remaining contract expires in 1970, the policy of the Company which has been followed down through the years will result in a complete divorcement of wholesale customers. IV. WHEELING SERVICE One of the agreements which Otter Tail has voluntarily negotiated and entered into providing for interconnection with other suppliers is a contract between the Bureau of Reclama- tion of the Department of Interior (Bureau) and Otter Tail, dated June 14, 1955 (Bureau-Otter Tail Contract). The Bu- reau-Otter Tail Contract provides for the exchange of use of the facilities of the two parties as therein described, which includes the use of Otter Tail’s transmission system by the Bureau to “wheel” Bureau power to its preference customers in the marketing area of the Bureau. A provision in the Bu- reau-Otter Tail Contract specifically provides that Otter Tail’s transmission system is not to be used to wheel electric power to a municipality already receiving retail service from Otter Tail as of the date of that Contract in 1955. The Bureau- Otter Tail Contract also provides that Otter Tail does not dedicate or intend to dedicate its facilities to the common fe ON ee 20 Defendant’s Answer carrying of electric energy for the account and use of the United States or anyone else. Excerpts from the Bureau-Otter Tail Contract containing these provisions are attached hereto as Exhibit B. The Bureau itself has thousands of miles of transmission lines throughout the area. What “wheeling” Otter Tail has done of Bureau power over Otter Tail’s lines, as well as any other transactions between the Bureau and Otter Tail, have been done pursuant to the provisions of the Bureau-Otter Tail Contract. V. UPPER MISSISSIPPI VALLEY POWER POOL Otter Tail admits and alleges that it is a charter member of the Upper Mississippi Valley Power Pool under the terms and provisions of an agreement which was voluntarily nego- tiated and entered into. Any transactions between Pool mem- bers are pursuant to the provisions of this agreement. VI. DENIAL OF OFFENSES CHARGED Otter Tail specifically denies that it has done anything in violation of Section 2 of the Sherman Act (15 U.S.C. Sec. 2). Otter Tail admits and alleges that it has refused to permit the use of Otter Tail’s facilities (by furnishing either wholesale or wheeling service) to subsidize or support a new municipal electric system which is constructed for the purpose of ousting Otter Tail from the retail electric business in that municipal- ity. Otter Tail also admits and alleges that it attemps to use all reasonable means to continue in business, and to continue to furnish adequate and reliable service at reasonable rates at retail in the municipalities which are served by its inte- grated system, and in attempting to present its case that it Defendant’s Answer 21 is to their advantage not to severe their connection with Otter Tail’s system and service. VII. DENIAL OF ALLEGED EFFECTS Otter Tail denies the existence of the alleged effects set forth in Paragraph V of the Complaint. On the contrary, Ot- ter Tail alleges that it is subject to competition at all levels of its operations, and particularly in the area of retail distri- bution. Hence, Otter Tail’s efforts to attempt to stay in busi- ness, and its policy not to furnish its own facilities to assist in putting itself out of business. VIII. CONSTITUTIONAL RIGHTS Otter Tail alleges that to order Otter Tail to use its own facilities to support or subsidize a new municipal system which puts Otter Tail out of the retail business in that munic- ipality, and establishes a precedent which will erode Otter Tail’s integrated system and impair its credit, constitutes the taking of Otter Tail’s property without due process of law or just compensation in violation of its constitutional rights (Article V of the Amendments to the Unitéd States Constitu- tion). IX. GENERAL DENIAL Further answering the Complaint, defendant denies each and every allegation therein contained, except as is herein- before admitted, alleged or otherwise stated. PRAYER WHEREFORE, the defendant prays the Judgment of this Court determining that Otter Tail has not violated Section 2 of the Sherman Act, and that this action be dismissed on its 22 Defendant’s Answer merits, and that the defendant recover its costs and disburse- ments of this action. Dated August 1, 1969. CYRUS A. FIELD Of the firm of FIELD, ARVESEN, DONOHO, LUNDEEN & HOFF Fergus Falls National Bank Building Fergus Falls, Minnesota 56537 Attorneys for the Defendant EXHIBIT A Otter Tail Power Company FPC Electric Schedules Original Sheet No. 2 PRELIMINARY STATEMENT AND GENERAL EXPLANATION OF COMPANY’S POLICIES AND PRACTICES Otter Tail Power Company is an integrated operating elec- tric utility engaged in the business of generation, transmis- sion, distribution and sale of electric energy within portions of the States of Minnesota, North Dakota and South Dakota. The major source of generation is steam generating plants. The Company’s general policy and practice is to serve custom- ers at retail within the area served by it. The furnishing of electric service at wholesale is incidental and limited to those wholesale purchasers with whom the Company has contracted for such service. The Company has never held itself out gen- erally to serve wholesale purchasers. Issued By: C. G. Wright, Vice President Effective: November 1, 1947 Defendant’s Answer 23 EXHIBIT B Contract No. I79r-1592 Supplement No. 2 UNITED STATES DEPARTMENT OF THE INTERIOR BUREAU OF RECLAMATION Missouri River Basin Project—Eastern Division Minnesota, North Dakota, and South Dakota CONTRACT FOR ELECTRIC SERVICE TO OTTER TAIL POWER COMPANY 1. This Supplemental Contract made this 14th day of June 1955, in pursuance of the Act of Congress approved June 17, 1902, (32 Stat. 388), the Act of Congress approved December 22, 1944 (58 Stat. 887), and acts amendatory thereof or sup- plementary thereto, between the UNITED STATES OF AMERICA, hereinafter called the United States, represented by the officer executing this contract, his duly appointed suc- cessor, or his duly authorized representative, hereinafter called the contracting officer, and OTTER TAIL POWER COMPANY, a corporation duly organized, created, and exist- ing under and by virtue of the laws of the State of Minnesota, hereinafter called the Contractor, its successors and assigns; WITNESSETH 2. WHEREAS, the parties hereto have entered into that certain Contract No. I79r-1592, dated March 14, 1950, and Supplement Number 1 thereto, dated February 28, 1952, to- gether hereinafter called the original contract, and it is the desire of the parties hereto to codify, and in certain respects to modify, the arrangements provided in said contract and its supplement, to the extent that these arrangements have not already terminated; and * * * RAPT PY SR AIR TAO Rat eR eRe) rr NN r 2 12 4 7 13 * f 5 3 i 4 ty 3 24 Defendant’s Answer (Ex. B) specified by the Contractor not less than four (4) years from the date such notice is received by the contracting officer; Provided, That the United States, at any time after receipt of said notice from the Contractor terminating the application of PART FOUR hereof, in whole or in part, may terminate this PART FOUR on not less than thirty (30) days’ written notice to the Contractor. (e) If any public regulatory body or commission has or asserts jurisdiction over this PART FOUR or any part thereof, the Contractor shall promptly apply to such body or commission for an order authorizing the Contractor to carry out the terms thereof, and will, in such event, prosecute the application and any proceedings thereon with due diligence. If such application be denied, then the United States may terminate this PART FOUR on not less than thirty/(30) days’ written notice to the Contractor. Unless and until so termi- nated, this PART FOUR shall be inoperative only to the extent the order denying the application provides. (f) It is understood and agreed that the Contractor, by entering into this contract, does not dedicate or intend to dedi- cate its facilities to the common carrying of electric energy for the account and use of the United States or anyone else. DELIVERIES OF ELECTRIC POWER AND ENERGY 27. (a) The United States, under the terms and condi- tions stipulated in this PART FOUR, will furnish the electric power and energy required for the United States and/or its customers at the points of interconnection and nominal volt- ages specified in Article 10 hereof, and at the point or points of interconnection between the systems of the Contractor and Northern States Power Company, and at the nominal voltages of such interconnections, pursuant to the provisions of the contract between the United States and Northern States Pow- er Company hereinbefore referred to; Provided, That delivery — to Northern States Power Company for redelivery to the Con- tractor shall be deemed delivery to the Contractor hereunder. (b) The electric power and energy will be furnished and delivered hereunder as three-phase, alternating current, at a nominal frequency of 60 cycles per second in such amounts and at such rates of delivery as are from time to time required by the United States for redelivery to itself, Northern States Power Company, and/or its customers, plus losses in trans- mission equal to seven percent ( 7%) of maximum coincidental demand and seven percent (7%) of the energy deliveries to loads of the United States and/or its customers served by the United States directly from the system of the Contractor; Provided, That except for the deliveries (i) to the Village of Badger, South Dakota, and (ii) to the one existing delivery to Central Power Electric Cooperative at less than 34,500 volts, whenever pursuant to paragraph (1) of the proviso in Article 31(a) delivery is made from the system of the Con- tractor at less than 34,500 volts, the losses in transmission for which the United States shall supply power and energy pursu- ant to this Article shall be 10% in lieu of the 7% allowed for above; and Provided further, That except as otherwise speci- fied in Article 26(c) the electrical load thus added plus the then existing load on the Contractor’s facilities will not exceed the normal capacity thereof, as determined by the Contractor. Deliveries that are inadvertently greater or less than require- ments to serve the loads and customers of the United States shall be corrected in later deliveries pursuant to Article 11. (c) The electric power and energy to be delivered by the Contractor to the United States and/or its customers pursuant to this PART FOUR shall be limited to such electric power and energy as is necessary for preference customers (as de- fined in the Reclamation Law) and Federal establishments: Defendant’s Answer (Ex. B) 25 1 i 26 Defendant’s Answer (Ex. B) (1). Which have had monthly maximum demands of 100 kilowatts or more each for three consecutive months in the twelve months immediately preceding the date on which the Contractor is requested to commence service; Provided, That reductions in the monthly maximum sys- tem demand of any customer after delivery to such cus- tomer commences hereunder shall not affect the obliga- tion of the Contractor to continue delivery, and (2) Which are located and use such power and energy outside the corporate boundaries of municipalities where- in the Contractor now serves at retail. In view of the difficulty of anticipating future facts and con- ditions, it is understood that if additional loads of the United States or customers of the United States become prospective, the parties hereto will then consider the problem of serving such loads, and the Contractor will advise the United States within ninety (90) days after request whether or not service to such additional loads or customers shall be made available hereunder. PAYMENT FOR TRANSMISSION SERVICE 28. (a) The United States will compensate the Contrac- tor for the transmission and delivery of electric power and energy to the United States as provided in this PART FOUR, subject to additional compensation as provided in Article 29, in the amount of one mill ($0.001) per * * * (Certificate of Service Omitted in Printing) District Court Decision UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA SIXTH DIVISION (Title Omitted in Printing) MEMORANDUM & ORDER Kenneth C. Anderson, William Jaeger and Barry McNeil, Washington, D. C., attorneys for plaintiff. Cyrus Field and David Lundeen, Fergus Falls, Minnesota, attorneys for defendant. In this action brought under Section 2 of the Sherman Act the basic issue is whether the acts of Otter Tail Power Com- pany, a Minnesota public utility, in refusing to sell electric power at wholesale, and refusing to wheel electric power to municipalitigs it formerly served at retail, constitute a monop- olization of commerce in violation of the Act. The Sherman Act, Section 2, provides: Every person who shall monopolize, or attempt to monopolize * * * any part of the trade or commerce among the several states * * * shall be guilty of a mis- demeanor * * *, 15 U.S.C. §2. Under Section 4 of the Act the United States District Court is vested with jurisdiction to restrain violations of the law. 15 U.S.C. §4. Plaintiff seeks such an injunction. Defendant Otter Tail Power Company with headquarters at Fergus Falls, Minnesota, is an investor-owned utility pri- 28 District Court Decision marily serving small towns in western Minnesota and eastern North and South Dakota. Its business is almost exclusively retail. Its operation consists of an integrated power system running the full gamut from initial production to final sale of electrical power combined with pool arrangements which supply emergency power reserves. From time to time citizens of some of the municipalities served by defendant have worked for the establishment of municipally owned electric facilities. Otter Tail has opposed such movements and has refused to sell power at wholesale, or to “wheel”! power, to its former municipal customers who have converted or who seek to convert to municipal systems. Plaintiff claims this violates the Sherman Act. Defendant asserts this is but the exercise of proper business judgment aimed at protecting the integrity of its business. The pleadings more particularly shape the issue. The gov- ernment alleges that Otter Tail has sought to prevent the mu- nicipalities from shifting local electric service from defendant to other electric power systems, supplied either by Otter Tail or another supplier of power, by the following acts: 1. By refusing and threatening to refuse to sell power at wholesale to the proposed alternative local electric power system; 2. By refusing and threatening to refuse to wheel electric power from other wholesale suppliers to the proposed alterna- tive local electric power system; and 3. By engaging in other activities designed to obstruct and defeat the attempt by municipalities to establish alternative local electric power system. 1 Wheel means to transport power for another supplier. District Court Decision 29 Otter Tail specifically denies that it has done anything in violation of Section 2 of the Sherman Act. In its Answer, para- graph IV, it “admits and alleges that it has refused to permit the use of Otter Tail’s facilities (by furnishing either whole- sale or wheeling service) to subsidize or support a new municipal electric system which is constructed for the purpose of ousting Otter Tail from the retail electric business in that municipality. Otter Tail also admits and alleges that it has attempted to use all reasonable means to continue in business, and to continue to furnish ade- quate and reliable service at reasonable rates at retail in the municipalities which are served by its integrated system, and in attempting to present its case that it is to their advantage not to sever their connection with Otter Tail’s system and service.” The case was tried to the court June 1 through June 14, 1971. The parties stipulated to many of the facts. Plaintiff called eleven witnesses, the defendant three. Several extensive pretrial conferences preceded trial. A summary of the facts essential to an understanding of the issue follows: Otter Tail was incorporated in Minnesota in 1910. Its ser- vice area encempasses western Minnesota, northeastern South Dakota and eastern North Dakota. The company’s integrated system consists of approximately 5,900 miles of interstate transmission lines which serve at retail, approximately 465 towns, mostly small communities of under 1,500 population. In 1969 Otter Tail sold 1,158,329 kilowatts (Kw.) of power to 103,829 customers, deriving a total operating revenue of $31,191,000. Otter Tail had a net generation capacity of 271,145 Kw. in 1969. 30 District Court Decision Otter Tail has entered into interconnection contracts with other electric systems. These contracts provide means by which the company can obtain power to supplement that pro- | vided by its own generation and sell excess power to others. One of Otter Tail’s interconnections is with the United States Bureau of Reclamation. The relationship between the Bureau and Otter Tail is reflected in a comprehensive agreement which dates back to 1950. Pursuant to this contract, Otter Tail purchases a considerable volume of dump and secondary power from the Bureau. Otter Tail is also directly interconnected with Minnesota Power and Light, Northern States Power Company, North- western Public Service Company, Montana-Dakota Utilities Company, Minnkota Power Cooperative, Central Power Asso- ciation, United Power Association and several smaller rural electric cooperatives. Generally speaking, Otter Tail provides retail service to ‘municipalities pursuant to franchise agreements awarded to it by the city or town. By state law in each of the three states the franchises are non-exclusive and, depending upon the state, the franchise terms are limited to periods ranging from ten to twenty years. The franchises customarily grant Otter Tail the right to construct and maintain electric distribution systems and necessary transmission lines, and operate these within the regulations and provisions imposed by the munici- pal government. Otter Tail also regularly engages in the business of wheel- ing power. A large proportion of Otter Tail’s wheeling activity is done pursuant to its contractual relationship with the Bu- reau of Reclamation. Beginning in the 1930’s Congress ap- propriated funds for the construction of a series of hydro- electric generation facilities along the Missouri River in District Court Decision 81 Montana, North Dakota and South Dakota. The Bureau of Reclamation of the Department of the Interior handles the marketing of the power generated by the facilities. Congress . mandated that public bodies, REA electric cooperatives and municipal electric systems be designated as preference custom- ers for this power; that is, that they be given first option to purchase the power. The Congress also appropriated funds for the construction of high voltage transmission lines to transport Bureau power from the hydroelectric sites to the areas where the power was to be marketed. In 1950 Otter Tail and the Bureau entered into the detailed contract which provided, inter alia, for the sale of dump power to Otter Tail and for the wheeling of Bureau power across Otter Tail transmission lines to preference customers. The Bureau pays a set. wheeling fee to Otter Tail for this service. At the request of Otter Tail, a renewal contract dated June 14, 1955 contained language which, in the defendant’s view, exempted it from any obligation to wheel power to towns which it previously had served at retail. Otter Tail does wheel power to 18 municipal preference customers which it has not previously seryed at retail. More background facts will be recited in connection with the court's consideration of the issues. The principal thrust of the government's case is that Otter Tail has a monopoly on the retail distribution and sale of power to towns in its operating area. It is not contended that defendant acted illegally or improperly in achieving this claimed monopoly position but rather in its actions seeking to preserve this position. Specifically, it is urged that Otter Tail's refusal to sell or wheel power to towns desiring to estab- lish municipal systems, and its actions participating in local 32 District Court Decision municipal power political campaigns, and sponsoring, encour- aging, and financially supporting court litigation are all in- tended to impede and frustrate attempts to establish indepen- dent municipal electric systems. Otter Tail does not deny its refusal to sell or wheel power to municipalities which it formerly served at retail but argues that to supply power to these municipalities would aid in its own demise. It admits its participation in local municipal political campaigns and in litigation surrounding attempts to establish municipal systems but contends this is proper and legal conduct. Such actions were taken, defendant argues, to preserve the electric power free enterprise system for the benefit of its customers, shareholders and employees. Otter Tail denies that it has a monopoly, is attempting to preserve a monopoly, or that it possesses a dominant share of the pertinent market under Sherman Act principles. Defen- dant points to the many other electric power entities operat- ing in the same area, particularly the United States Bureau of Reclamation, many electric cooperatives, Northern States Power Company, and other private power sources, from one or more of which electric power and the means of transmitting this power are readily available to those municipalities which defendant does not choose to serve. Otter Tail finally urges a “Rule of Reason” and argues that its conduct is fully justified by its legitimate right to fight for its corporate life, remain viable in serving the public and pre- vent the erosion of its integrated system and the impairment of its credit. A monopoly condemned by the Sherman Act is the power to fix prices or exclude competition coupled with policies de- signed to use or preserve that power. The United States Su- preme Court in its most recent decision on the question, United — District Court Decision 33 States v. Grinnell Corp., 384 U.S. 568, 570, 86 S. Ct. 1698, (1966), said: The offence of monopoly under §2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from the growth or development of a superior product, business acumen or historic accident. 5 The two principal questions involved are: (1) Does Otter Tail possess monopoly power, and (2) Has it sought to main- tain that power? The term relevant market consists of both a produet market and a geographic market. Grinnell, supra. It is not disputed here that the product market is the sale of electric power at retail. Indeed more than 90% of Otter Tail’s income is from retail sales. There is dispute as to the definition of the geographic mar- ket. The government contends that each of the 465 towns served by Otter Tail constitutes a separate geographic market. If this not be accepted, the government urges that the geo- graphic market is, at least, the towns in the Otter Tail service area. There is some logical basis for considering each town a sep- arate geographie market; but viewing it in a broader light, there are, in the Otter Tail service area, 465 towns served by Otter Tail and 45 towns served by municipal electric systems. On this basis it may be concluded that Otter Tail services approximately 91% of the relevant geographical market, cer- tainly enough to justify the inference that the defendant possesses monopoly power in the area. | — — 34 District Court Decision There are also 105 towns served by rural cooperatives in the Otter Tail service area. Because of congressional restric- tions upon REA loans to cooperatives seeking to serve urban areas, it is doubtful that the 105 towns could be viewed as competitive and hence considered in determining Otter Tail’s share of the total relevant market. But even if these 105 are considered as part of the market, the result still has Otter Tail serving 465 of the 615 towns in the area. This is 75.6 percent of the relevant market. In our view this percentage is suffi- cient to justify the inference that Otter Tail possesses monop- oly power in the area.“ Having found that Otter Tail does possess monopoly power, the second question is whether Otter Tail has sought to main- tain that. power. A principal contention of the government is that the defendant has been able to maintain this power be- cause of its strategic dominance of transmission capacity in most of the Otter Tail area. Several map exhibits in evidence reflect a maze of electric power lines covering, almost blanketing it would seem, the entire Otter Tail service area. Defendant urges that its trans- mission lines represent only 8% of the transmission lines of all power suppliers in the area. Evidence at trial showed that electric power lines fall into three general categories: (1) Bulk power supply lines, usually of a voltage of 115 Kv. or greater, which are intended to move large blocks of power from generating facilities to load centers. 2(1) American Tobacco Co. v. United States, 328 U.S. 781, 66 S. Ct. 1125 (1946); (2) United States v. United Shoe Machinery Corp., 563, 86 S. Ct. 1699 (1966); (4) United States v. E. I. du Pont de Nemours & Co. (Cellophane), 351 U.S. 377, 76 S. Ct. 994 (1956). District Court Decision 35 (2) Subtransmission lines, usually of a voltage from 34.5 Kv. to 69 Kv. These are utilized to move power from the bulk power source to local retail distribution systems. (3) Distribution lines, usually of a voltage of 12.5 Kv. or less, which move the power from the subtransmission network station to the ultimate consumer. Most of the bulk supply lines in the Otter Tail area are owned and operated by the Bureau of Reclamation. The Bu- reau does not main its own subtransmission system but con- tracts with Otter Tail, and others, to transmit the power from bulk supply stations over their subtransmission lines to local retail distribution systems whence it is stepped down for delivery via distribution lines to customers. About two-thirds of Otter Tail’s total electric line mileage, or 4,036 miles, consists of 41.6 Kv. subtransmission lines. It appears that Otter Tail is dominate in operation of subtrans- mission lines in the area. The contract between Otter Tail and the Bureau contains a provision [Para. 27 (e) (2)] which Otter Tail interprets as meaning that it need not wheel Bureau power over its sub- transmission lines to its former retail customers. Otter Tail refuses to do so, the Bureau does not have its own subtrans- mission lines to use for that purpose and the transmission lines of others are not readily available in the area sought to be served. Hence many potential preference customers of the Bureau, including municipalities, are unable to obtain Bureau power because of the absence of available subtransmission lines and the refusal of Otter Tail to wheel that power over its lines. It is not economically feasible or practical for a municipality to construct its own subtransmission lines. In support of its argument that Otter Tail does not have a dominance of transmission facilities, defendant showed at 36 District Court Decision trial that 87,000 miles of electric power lines in the Otter Tail service area are owned by various rural distribution electric cooperatives. This testimony and other evidence established, however, that most of these lines are of a voltage of 12.5 Kv. and hence suitable only for distribution to the customer and not for transmission, which requires a heavier voltage, in the range of 34 to 69 Kv. One of defendant’s witnesses at trial, Mr. Nye, testified that the 12.5 Kv. cooperative lines in the vicinity of Elbow Lake and Hankinson, (two municipalities here involved and con- cerning which more will be said later) were not capable of transmitting power to these towns. Northern States Power Company (NSP) does distribute retail power in some towns near ‘the Otter Tail service area but it refuses to supply power to towns not in its own service area. For this reason NSP refused to supply Alexandria, Min- nesota, and Coleman, South Dakota. Hence NSP is not an available power source for municipalities refused service by Otter Tail and desiring to convert to municipal ownership. We conclude that Otter Tail has a strategic dominance in the transmission of power in most of its service area. Much of the evidence at trial was directed to the claimed employment of this dominance in transmission to prevent municipalities in the area from obtaining power to operate municipally owned systems. The testimony dealt principally with five towns, Elbow Lake, Minnesota, Hankinson and Fin- ley, North Dakota, and Colman and Aurora, South Dakota, with the emphasis on happenings at Elbow Lake and Hankin- son. A summary of events at each of these towns follows: Elbow Lake, Minnesota, is a small county seat town near Fergus Falls. Elbow Lake was served at retail by Otter Tail until 1966 when the citizens voted for a municipally owned District Court Decision 37 system. The defendant refused to furnish power at wholesale. Elbow Lake acquired its own generating plant. It sought stand-by power from Otter Tail which was refused. Litigation ensued. The Federal Power Commission ordered the defendant to furnish stand-by power. The Court of Appeals of the Eighth Circuit affirmed. Otter Tail Power Co. v. Federal Power Commission, 429 F. 2d 232 (8th Cir. 1970). When Otter Tail refused to sell power to Elbow Lake, the town sought power, either as a sole source or on a stand-by basis, from the Bureau of Reclamation, the United Power Association, the Basin Electric Power Cooperative and the Runestone Electric Association. Each of these sources was willing and able to furnish the power, but could not, as the power could only be delivered to Elbow Lake over Otter Tail’s transmission lines, because of the restrictive provisions contained in the contracts between Otter Tail and the suppliers previously discussed, and because of Otter Tail’s refusal to wheel the power. It was, and is economically unfeasible, for either Elbow Lake or the sup- pliers to build the required transmission facilities from the power source to Elbow Lake. From all of the evidence, of which this is a short precis, the court concludes that Otter Tail employed its dominance in transmission in the Elbow Lake area to prevent Elbow Lake from obtaining electric power from outside sources of supply. Otter Tail served Hankinson, North Dakota, with electric power under a 20-year franchise dated February 16, 1931. In 1947 the voters of Hankinson approved the establishment of a municipal electric system. Otter Tail refused to sell power at wholesale to Hankinson. The town sought power from the United States Bureau of Reclamation, the Basin Electric Power Cooperative and the RSR Electric Cooperatives. All 38 District Court Decision three of these suppliers were dependent on the use of Otter Tail’s transmission lines in transporting power from the near- est Bureau substation at Forman, North Dakota, some 39 miles from Hankinson. Otter Tail refused to wheel power over its lines to Hankinson. Again, it was not feasible for Hankin- son to construct its own transmission lines 89 miles to Forman. The Bureau was unable to do so for the same reason, with the result that Otter Tail’s conduct prevented Hankinson from obtaining needed power to service a municipally owned sys- tem. The town abandoned its efforts and granted a new retail franchise to the defendant. On the basis of the above the court finds that defendant has a monopoly in the relevant market and has consistently re- fused to deal with municipalities which desired to establish municipally owned systems on the alleged justification that to do so would impair its position of dominance in selling power at retail to towns in its service area. The court con- cludes that this conduct is prohibited by the Sherman Act. It is well established that the unilateral refusal to deal with an- other, motivated by a purpose to preserve a monopoly position, is illegal. Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S. Ct. 400 (1927); Lorain Journal Co. v. United States, 342 U.S. 148, 72 S. Ct. 181 (1951). Here the defendant does not dispute that its purpose in refusing to deal with municipalities desiring to establish municipally owned systems is to protect itself in the position it now enjoys in the area. Such is a monopoly position, and the law prohibits conduct such as this when such is intended to preserve the monopoly. A similar “refusal to deal” case was decided in this district in 1945, United States v. Klearflax Linen Looms, Inc., 63 F. Supp. 32, 89 (D. Minn. 1945). There J udge Nordbye capsulized ‘ J District Court Decision 39 the legal principle involved when he held that “A refusal to sell, while it may be lawful per se, cannot be used in order to achieve an illegal result.” Here Otter Tail refuses to sell power to municipalities which would thereby take retail power business from defen- dant and refuses to wheel power for others willing to sell to these municipalities. Because of its dominant position Otter Tail is able to deprive towns of the benefits of competition which would result from municipally owned facilities. Pertinent to an examination of the law is a reference to cases expressive of the “bottleneck theory” of antitrust law. This theory reflects in essence that it is an illegal restraint of trade for a party to foreclose others from the use of a scarce facility. Here the theory finds application in Otter Tail’s use of its subtransmission lines. One authority believes: “The Sherman Act requires that where facilities cannot practically be duplicated by would-be competitors, those in possession of them must allow them to be shared on fair terms.”* This statement epitomizes the holdings in federal cases which have established the principle: United States v. Termi- nal Railroad Assoc., 224 U.S. 388, 32 S. Ct. 507 (1912); Gam- co, Inc. v. Providence Fruit & Produce Building Inc., 194 F. 20 484 (1st Cir. 1952); Packaged Programs, Inc. v. Westing- house Broadcasting Co., 255 F. 2d 708 (3rd Cir. 1958); Six Twenty-Nine Productions, Inc. v. Rollins Telecasting, Inc., 365 F. 2d 478 (5th Cir. 1966). The bottleneck principle is applicable to Otter Tail. Its con- trol over transmission facilities in much of its service area ‘A. D. Neale, The Antitrust Laws of the U.S.A., Cambridge Univer- sity Press at 67 (1960). 40 District Court Decision gives it substantial effective control over potential competition from municipal ownership. By its refusal to sell or wheel power, defendant prevents that competition from surfacing. COURT LITIGATION The efforts of Elbow Lake, Hankinson, Aurora and Colman, South Dakota, to establish municipal power systems were opposed by the defendant in court proceedings. Otter Tail either instituted or sponsored and financially supported court litigation which had the effect of frustrating the sale of reve- nue bonds to finance the municipal systems. A “no-litigation certificate,” reflecting the absence of litigation which might impair the salability of revenue bonds, is essential to a suc- cessful sale of municipal bonds. The pendency of litigation has the effect of preventing the marketing of the necessary bonds thus preventing the establishment of a municipal system. Most of the litigation sponsored by the defendant was car- ried to the highest available appellate court and although all of it was unsuccessful on the merits,* the institution and main- tenance of it had the effect of halting, or appreciably slowing, efforts for municipal ownership. The delay thus occasioned and the large financial burden imposed on the town’s limited treasury dampened local enthusiasm for public ownership. In some instances, Otter Tail made offers to the towns to ab- sorb the towns’ costs and expenses, and enhance the quality of its service in exchange for a new franchise. Hankinson, after several years of abortive effort, accepted this type of offer and renewed defendant’s franchise. While every person has the right to resort to the courts to redress claimed wrongs, the right is not without limitation. One who enjoys a monopoly may not resort to litigation for With the possible exception of litigation in Aurora where the court held that Otter Tail had no standing to sue. District Court Decision 5 the purpose of illegally maintaining the monopoly. The Nint Circuit has observed that “* * * litigation can be an integr: part of a scheme prohibited by the Sherman Act.” Truckin Unlimited v. California Motor Transport Co., 432 F. 2d 75: 760 (9th Cir. 1970). This legal principle is well established and has been ex pressed in patent cases particularly in connection with th institution of infringement suits. See Walker Process Equi ment Inc. v. Food Machinery & Chemical Co., 382 U.S. 172 86 S. Ct. 347 (1965); Plastic Contact Lens Co. v. Butterfiela 366 F. 2d 388 (9th Cir. 1966); Kobe, Inc. v. Dempsey Pum; Co., 198 F. 2d 416, 424 (10th Cir. 1952). In Kobe, supra, the court said: we must not permit the courts to be a vehi cle for maintaining and carrying out an unlawful monop oly which has for its purpose the elimination and preven tion of competition.” The court finds that the litigation sponsored by defendan was instituted for the purpose of delaying and preventing th. establishment of municipal electric systems with the expecta tion that this would preserve its predominant position in th. sale and transmission of electric power in the area. Defendant urges that the so-called Noerr doctrine, Faster Railroad Presidents Conference v. Noerr Motor Freight, Inc. 365 U.S. 127, 81 S. Ct. 523 (1961), exempts its conduct in the field of court litigation from antitrust attack. But the Noerr principle is applicable only to efforts aimed at influencing the legislative and executive branches of the government. It only immunizes political activity directed toward the enactment and enforcement of the laws from anti- trust attack. See Woods Exploration & Producing Co. v. Aluminum Co. of America, 488 F. 2d 1286 (5th Cir. 1971), and 42 District Court Decision Trucking Unlimited v. California Motor Transport Co., supra. Noerr does not free from antitrust sanctions the institution of court litigation. From all of the evidence it appears that defendant, by refus- ing to deal with municipalities and by conducting or sponsor- ing court litigation, has violated Section 2 of the Sherman Act and monopolized or attempted to monopolize the sale of elec- trict power in its service area. IMMUNITY AS A RESULT OF “VALID GOVERNMENT ACTION” P But Otter Tail takes the position that since it contrałted with government agencies with reference to the delivery of power, it is thereby immune from antitrust sanctions. It will be recalled that Otter Tail’s agreement with the Bu- reau of Reclamation contains a provision which defendant interprets as freeing it from any obligation to wheel power from the Bureau to any municipality which received retail service from Otter Tail as of the date of the contract, that is, June 14, 1955. Further, Otter Tail’s transmission agreements with certain cooperatives (Cooperative Power Association, Lyon-Lincoln Electric Cooperative, Inc. and Traverse Electric Cooperative, Inc., RSR Electric Cooperative, Inc. and East River Cooperative, Inc.) contain provisions which prohibit the use of defendant’s transmission system to supply power from the cooperatives to a retail customer served by Otter Tail. These contracts also extend the same prohibition with respect to customers served by the cooperatives. It is urged by Otter Tail that these restrictive provisions are immune from antitrust attack. The gist of this contention seems to be that since the Bureau is a government instrumen- tality and the REA administrator approved the contracts with the cooperatives, the contracts are the result of “valid govern- — District Court Decision 43 mental action,” thus falling within the scope of Alabama Power Co. v. Alabama Electric Cooperative, Inc., 394 F. 2d 672 (5th Cir. 1968). In my view there is no merit in this contention. The Ala- bama Power case is inapposite. The restrictive provisions here are, in reality, territorial allocation schemes. Agreements among competitors to allocate customers or territories are per se violations of the Sherman Antitrust Act. Northern Pacific Railroad v. United States, 356 U.S. 1, 78 S. Ct. 514 (1958). Our Eighth Circuit has held to the same effect. Mon- tana-Dakota Utilities Co. v. Williams Electric Cooperative, Inc., 263 F. 2d 481 (8th Cir. 1959). There the court condemned a contract provision between an investor-owned utility and a rural electric cooperative allocating marketing territories as a per se antitrust violation. The court said: By the great weight of authority in this country, the rule has been promulgated and consistently applied that contracts between quasi-public corporations, having for their object the division of territory between such com- panies, are against public policy, and being so, are abso- lutely void, untempered by any application of the ‘rule of reason.’ Montana-Dakota Utilities at 434. A recent decision of the Court of Appeals for the District of Columbia Circuit, Hecht v. Pro Football, Inc.,. F. 2d —— (D.C. Cir. 1971) held that a public armory board, in leasing a public stadium to a professional football team exclu- sively for a period of 30 years, was not immune from the anti- trust laws. rok In Hecht, the court held that in order for antitrust immu- nity to attach to action by à governmental body there must be specific and unequivocal language to this effect in the en- abling statute. 44 District Court Decision “The basic philosophy of our antitrust policy has been so long established, is of such recognized economic im- portance, and has assumed in the statutory scheme of things such high, dignity that a contrary Congressional intent of ‘immunity from antitrust laws is not lightly implied. Hecht at ——. There is nothing in any of the legislation under which either the Bureau of Reclamation markets its power or the rural electric cooperatives operate which either expressly or impliedly confers immunity from antitrust laws upon the actions of the Bureau in negotiating contracts for sale of power or upon the action of the REA administrator in approv- ing contracts between a cooperative and a private power com- pany. The record reflects it was reluctantly, and only after a ‘determination that no other transmission facilities were avail- able, that the Bureau signed the contract with defendant which contained the restrictive provision in question. In addi- tion, the Bureau interpretation of the contract varies from that of the defendant. The Bureau officials were and are of the view that the provision is not a blanket restriction but requires the defendant to give separate consideration and to reach separate judgment as to each applicant for transmission service over defendant’s lines. In order for antitrust immunity to attach in situations of this kind there must be a clear indication that Congress, in enacting the law, considered the competing interests of anti- trust policies and whatever policy is best served by the other competing interest, and expressed a clear judgment that the antitrust policy should be suspended. There is no such showing here. No antitrust immunity attached to the contracts or to the parties executing them. — — District Court Decision 46 That which defendant refers to as the “heart of the case” is its argument that if Otter Tail is required to sell power at wholesale or wheel power to its former retail customers, it will be contributing to its own corporate death because more and more municipalities would then change to municipal own- ership to obtain the cheaper Bureau power. Eventually, de- fendant claims, most of its customers would convert and the Otter Tail system would be eroded to the detriment of its cus- tomers, stockholders and employees. This argument was pressed hard by defendant and its president, Albert Hartl, who testified vigorously and eloquently in defense of privately owned utilities vis-a-vis public power interests. Of course, it should be remembered that a public utility which operates without exclusive franchises from its custom- ers does not have a right to be free of competition. Rural Electrification Administration v. Central Louisiana Electric Company, 354 F. 2d 859 (5th Cir. 1966). This has long been the law and extends to competition from municipally owned facilities. Alabama Power Co. v. Ickes, 302 U.S. 464, 58 S. Ct. 300 (1938). One principal purpose of the Sherman Act is to insure com- pegtion. Otter Tail cannot violate the law albeit its avowed purpose is to protect the integrity of its business. The Supreme Court recently held that the Schwinn Bicycle Company could not employ anti-competitive methods in order to preserve its business which was gradually but markedly going downhill. United States v. Arnold Schwinn and Co., 388 U.S. 365, 375, 87 S. Ct. 1856 (1967). The court said: “The promotion of self-interest alone does not invoke the rule of reason to immunize otherwise illegal conduct.” So here there appears to be no legal justification for conduct which violates the Sherman Act. A so-called “erosion study” (DX 41) offered by defendant * 7 46 District Court Decision sought to fortell its financial disaster if it is required to serve its former customers which convert to municipal operation. The pessimistic view of the matter suggested by the defen- dant is not supported by the record. The Bureau of Reclama- tion now furnishes power to only two towns previously served by Otter Tail, to wit, Colman and Aurora, South Dakota. El- bow Lake also has an allocation of power for future use. The Bureau’s generating capacity is now fully committed, it has denied requests for allocation of power from several appli- cants, including Sioux City and Aurelia, Iowa, and no new generating capacity is scheduled to be activated. It is not un- likely that some present Bureau customers will have to find a continued power source elsewhere. All in all, it does not appear that Bureau of Reclamation power is a serious threat to the defendant nor that it will be in the foreseeable future. But regardless, as stated, even the threat of losing business does not justify or excuse violating the law. The court finds from a preponderance of the evidence that the defendant has attempted to monopolize, and has monop- olized, interstate commerce in the retail distribution of elec- tric power in violation of Section 2 of the Sherman Act. NOW THEREFORE, the defendant and its agents are en- joined from any and all conduct, whether expressed in terms of contracts, policies, or practices, having the effect of contin- uing the violations of the Sherman Act herein found to exist. Plaintiffs’ counsel shall promptly present suggested detailed Findings of Fact, Conclusions of Law and Order for Judgment reflective of these expressions together with a form of Judg- ment. Dated: September 9, 1971. EDWARD J. DEVITT Chief Judge United States District Court District Court Findings and Conclusions 47 UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA SIXTH DIVISION (Title Omitted in Printing) Kenneth C. Anderson, William Jaeger and Barry McNeil, Washington, D. C., attorneys for plaintiff. Cyrus Field and David Lundeen, Fergus Falls, Minnesota, attorneys for defendant. In this Section 2 Sherman Act case, tried to the Court June 1, 1971 through June 14, 1971, the Court makes Findings of Fact and Conclusions of Law in supplement of its Memoran- dum and Order of September 9, 1971, as follows: I. JURISDICTION 1. This is an action brought by the United States under Section 4 and Section 2 of the Sherman Antitrust Act (15 U.S.C. 88 4, 2). 2. Otter Tail Power Company (hereinafter “Otter Tail’), an investor-owned electric utility, is a corporation organized and existing under the laws of the State of Minnesota, with its principal place of business in Fergus Falls, Minnesota. [Ans., part I]. It maintains offices, transacts business and may be found within the District of Minnesota, Sixth Division [Ans., part I]. 3. Otter Tail is engaged in interstate commerce within the meaning of Section 2 of the Sherman Act. Otter Tail engages in the generation, transmission and distribution of electric power and energy for municipalities, rural customers, rural electric cooperatives and investor-owned utilities located gen- 48 District Court Findings and Conclusions erally in western Minnesota, eastern North Dakota, and north- eastern South Dakota. Otter Tail, an integrated transmission system, delivers power across state lines to customers through- out this tri-state area. [Ans., part I]. 44% of Otter Tail’s customers are located in Minnesota, 46% in North Dakota and 10% in South Dakota. [DX 95, Schedule 2]. II. DESCRIPTION OF OTTER TAIL POWER COMPANY 4. Otter Tail operates an integrated electric system. Its generating stations are linked together and connected to its customers by an extensive network of transmission lines over which power is delivered to its customers. [Ans., part I; Hartl Tr. VI; p. 123]. In 1970 Otter Tail operated generating units with a net generation capacity of 272,245 kilowatts; its 1969 capacity was 271,145 kilowatts. [GX 426, p. 23]. In 1970 Otter Tail’s transmission system consisted of 5,992 miles of line of varying voltages. [GX 426, p. 22]. 5. In 1970 Otter Tail sold 1,321,998,594 kilowatt-hours (kwh) of electric power to 104,316 customers, for which it received total electric revenue of $34,153,292. [DX 95, Sched- ule 1]. In 1969 Otter Tail sold 1,158,379 kwh of electric power to 103,829 customers from which it received total electric revenue of $31,191,000. (GX 426, p. 22]. Otter Tail’s electric revenues have steadily increased since the company’s incep- tion in 1907. During the decade 1960-1970 Otter Tail’s reve- nue from the sale of electric power and energy increased from $19,945,762 to $34,153,192, an increase of approximately 70% [DX 95, Schedule 1]. 6. Otter Tail’s electric system is physically interconnected with other electric suppliers, including privately owned utili- ties, rural electric cooperatives, the Bureau of Reclamation — District Court Findings and Conclusions 49 é (hereinafter “Bureau”) and municipal electric systems. These interconnections permit Otter Tail to purchase electric power to supplement that provided by its own generation as well as to sell and wheel power to the other electric systems, and they provide à means to increase reliability of service. [Hartl Tr. VI; pp. 123-125]. 7. There are 14 interconnections between Otter Tail’s elec- tric system and that of the Bureau. [GX 443]. The Otter Tail- Bureau interconnections provide a means for Otter Tail to purchase electric power and energy from the Bureau. Otter Tail has purchased substantial amounts of electric power and energy from the Bureau each year beginning in 1955. In 1970 Otter Tail purchased 274,042,381 kilowatt-hours of electric energy from the Bureau at a total cost of $1,242,533.49. [GX 2, p. 4; GX 211, p. 24]. 8. Otter Tailisa chartgg member of the Upper Mississippi Valley Power Pool which consists of 18 electric power sup- pliers located in several different states. The pool coordinates the planning of new generation and transmission and provides a means for the members to sell power to each other [GX 23 through GX 37]. Otter Tail is also a charter member of Mid- Continent Area Power Planners (MAPP), an organization consisting of 54 utilities operating in ten states in the Upper Midwest. The purpose of MAPP is to plan and coordinate the scheduling and construction of production and transmission facilities in the ten-state area. [Hartl Tr. VII; pp. 8-9]. Otter Tail has willingly coordinated and interconnected its electric facilities with those of other electric utilities through separate agreements with other electric suppliers. [Hartl Tr. VII; p. 9]. 50 District Court Findings and Conclusions III. CHRONOLOGY OF EVENTS IN TOWNS WHICH ATTEMPTED TO ESTABLISH MUNICIPAL ELECTRIC SYSTEMS A. Elbow Lake, Minnesota 9. Elbow Lake renewed Otter Tail’s franchise to serve the village on July 30, 1940 for a twenty year term. [GX 85). 10. At a special election on September 2, 1949 the voters of Elbow Lake approved establishment of a municipal electric system by a vote of 452 Yes and 180 No. [GX 2, p. 2]. 11. On March 1, 1950, the Village Council accepted the bids of several companies to supply the equipment for and eonstruet the municipal electric system, including the bid of Fairbanks, Morse & Company to supply the diese] generators which would supply the power for the proposed municipal electric system. [GX 87, p. 9]. 12. On March 29, 1950, Otter Tail advised Elbow Lake that it would not sell its distribution system in the village. [GX 86]. 13. On April 24, 1950, the Village Council passed a resolu- tion approving the issuance and sale of $275,000 in revenue certificates to finance construction of the municipal electric system, and set May 16, 1950 as the deadline by which interest- ed parties had to submit bids to purchase them. [GX 87, p. 12]. 14. On May 12, 1950, Otter Tail, and three Elbow Lake residents filed a suit against Elbow Lake seeking to enjoin the sale of the revenue certificates and the construction of the municipal electric system. The complaint alleged, inter alia, (1) that the engineer’s proposal for construction of the mu- nicipal system contained specifications and designs which were too vague, indefinite and restricted as to preclude compe- titive bidding; (2) that the bids accepted and the contracts District Court Findings and Conclusions 51 * negotiated pursuant to the engineer’s proposal were therefore null and void; (8) that Elbow Lake acted illegally in negotiat-. ing a contract covering the purchase of a watt-meter because the lowest responsible bidder was not chosen; (4) that El Lake acted illegally in accepting the bid for the generating equipment inasmuch as only one company submitted a bid; x and (5) that the revenue certificates did not contain language sufficient to protect Elbow Lake from general liability in the event the Village failed to perform acts agreed upon under the terms of the certificate. [GX 87]. 15. On May 13, 1950, the court issued a temporary re- straining order against Elbow Lake. [GX 88]. 16. On September 11, 1950, the trial court ruled in favor of Elbow Lake and dissolved the temporary restraining order. The court specifically ruled that (1) the engineer’s specifica- tions did not limit competitive bidding, (2) all contracts en- tered into were proper and legal, and (3) the revenue certifi- cates contained protective language sufficient to shield the Village from general liability on the certificates. [GX 89]. 17. Otter Tail appealed the trial court’s decision, and on June 22, 1951 the Supreme Court of Minnesota unanimously affirmed the trial court’s decision. The Court specifically re- jected Otter Tail’s argument, holding that (1) a municipality is not bound under state law to accept the lowest bid sub- mitted, but rather is bound to accept the lowest responsible bid which involves considerations of quality, suitability and price; (2) there was ample evidence supporting Elbow Lake’s contention that the engineer’s specifications were drawn 80 as to allow competitive bidding; (3) the Village did not act improperly in accepting the only submitted bid for generating equipment; and (4) the revenue certificates did not create a general liability of the Village. [GX 90]. if $2 District Court Findings and Conclusions 18. On September 8, 1952, Otter Tail offered to pay Elbow Lake $14,000 to reimburse the Village for the expenses in- curred in its effort to establish a municipal system, on condi- tion that Elbow Lake abandon its efforts to establish a munic- ipal system and sign a new street light contract. The same day the Village Council accepted this settlement offer. [GX 295]. 19. On June 6, 1960, Otter Tail requested the Village Coun- cil to grant Otter Tail a new franchise and sign a new munici- pal service contract. The Council refused to approve the new franchise and Otter Tail’s franchise to serve Elbow Lake ex- pired on July 30, 1960. [GX 296, p. 1; GX 2, Schedule A, p. 231. 20. On September 5, 1961, the Village Council retained K. B. Mac Kichan & Associates (MacKichan) to prepare an engineering feasibility study of a municipal electric system in Elbow Lake. [GX 296, p. 4]. On November 24, 1961, Mac- ö Kichan submitted its engineering report to the Village Coun- cil. The report concluded that a municipal electric system would be feasible and economical and analyzed eight possible power supply arrangements, seven of which involved either buying the Otter Tail distribution system in the village or purchasing power at wholesale from Otter Tail or having Otter Tail wheel power from the Bureau of Reclamation to the village. The eighth alternative was that the Village con- struct its own generation and build a new distribution system. [GX 299]. 21. Warren Nye, Vice President of Otter Tail, analyzed the MacKichan report and informed the company’s district manager in Elbow Lake’s area that the first seven power sup- ply arrangements need not be considered because they re- quired the cooperation of Otter Tail, thus leaving only the eighth alternative of construction of both a generating plant and a new distribution system by Elbow Lake. [GX 101]. District Court Findings and Conclusions 53 22. On December 4, 1961, Otter Tail distributed a circular to the residents of Elbow Lake which criticized the MacKichan report. The circular further stated that Otter Tail would not sell power at wholesale to the town, that the town would have to construct a transmission line and other facilities costing up to $1,000,000 to receive power from the Bureau of Reclama- tion and that the only way Elbow Lake could get power for a municipal electric system would be to build a generating plant. [GX 111]. 23. On December 22, 1961, the Village Council scheduled a special election for January 23, 1962 to decide whether to issue $715,000 of electric revenue certificates to finance con- struction of a municipal generation and distribution system. [GX 296, p. 5]. At the special election on January 28, 1962, the citizens of Elbow Lake approved a municipal electric sys- tem by a vote of 538 to 160. [GX 296, p. 7; GX 2, p. 2]. 24. On February 17, 1962, Elbow Lake asked Otter Tail whether the company would discuss the sale of its distribution system in Elbow Lake and discuss the sale of power at whole- sale to the Village. On February 26, 1962, Otter Tail responded that it had no interest in selling its distribution system to the Village nor would it sell power to Elbow Lake on a wholesale basis. [GX 91, GX 92]. 25. On September 4, 1962, the Village Council approved the plans and specifications for the municipal power plant and the electrical distribution system prepared by K. B. Mac- Kichan & Associates, and set October 1, 1962 as the date for receipt of construction bids. [GX 296, p. 15]. 26. On October 1, 1962, three companies submitted bids to construct the electric distribution system and two com- panies submitted bids to construct the municipal power plant. On October 5, 1962, the Village Council awarded the contract 54 District Court Findings and Conclusions to construct the electric distribution system to Northolt Elec- tric Company and awarded the contract to construct the mu- nicipal power plant to en Morse & Company. [GX 296, pp. 17-19]. 27. On October 10, 1908, the ne Counsll ned a resolution calling for the issuance and sale of $670,000 of electric revenue certificates, and setting October 30, 1962 as the date for receipt of bids on the bonds. [GX 296, p. 20; GX 106, p. 61. 28. On Oetober 29, 1962, Otter Tail and A. L. Anderson filed a lawsuit against the Village of Elbow Lake, the mem- bers of the Village Council, K. B. MacKichan & Company, Fairbanks, Morse & Company, and Northolt Electric Company seeking to enjoin the constructidn' of the municipal electric system and the issuance and sale of the electric revenue cer- tificates. The complaint alleged, inter alia, that (1) the plans and specifications for the municipal electric system were il- legal because they restricted competitive bidding, (2) certain bids accepted by the Village did not conform with the plans and specifications, and (3) the prospectus for the sale of the bonds contained material misrepresentations. [GX 105]. 29. Asa result of Otter Tail’s lawsuit filed the day before, no bidders appeared before the Village Council on October 30, 1962 to bid for the revenue certificates. [GX 296, p. 21]. 30. On August 8, 1963, the trial court dismissed Otter Tail’s lawsuit against Elbow Lake. The court held, inter alia, that (1) the contracts negotiated by Elbow Lake were in all respects proper and ſegal; (2) Elbow Lake exercised proper business judgment in accepting and awarding bids and (3) the plans and specifications were sufficiently precise to afford a proper basis for competitive bidding and were in all respects reasonable and proper. [GX 106]. District Court Findings and Conclusions * 31. On February 20, 1964, the trial court entered a jude ment dismissing Otter Tail’s complaint against Elbow Lalhe On March 7, 1964, Otter Tail filed notice of appeal with t Minnesota Supreme Court. [DX 48, p. 1]. al, 82. On May 4, 1964, during the pendency of the appeor Mr. Hartl of Otter Tail made a settlement offer to the Mayn and Village Council to the effect that Otter Tail would rein, burse the Village for all expenses incurred by it in connect with the municipal power project, install a new white w system, improve all other street lighting, make available t 3 most favorable municipal pumping rate, and withdraw fro * litigation pending with the Village on condition that Elbe sal Lake grant Otter Tail a new franchise and sign a municip services contract. [GX 98]. The Village rejected the offer. 33. On July 8, 1964, the Bureau of Reclamation allocat: 205 KW of firm power to Elbow Lake. Elbow Lake had a?” plied to the Bureau for an allocation on August 5, 1963. [G t 259; GX 214]. On August 5, 1964, Elbow Lake requested th the Bureau allot the Village more power, but on Septemb | 18, 1964, the Bureau advised the Village that the Bureau h: no additional firm power available. [GX 260; GX 2611. 34. On December 14, 1964, the Mayor of Elbow Lake ask the Bureau whether the Village could compel either Ott“ Tail or Runestone Electric Cooperative to wheel power fro” the Bureau to the Village and whether the Bureau would at its expense, a transmission line to deliver Bureau pow” to the Village. [GX 262]. On December 28, 1964, the Bure?” responded and advised the Mayor that the Bureau would ack Otter Tail to wheel Bureau power to the Village once the pla as for the municipal electric system were firmed up. The Bureau also advised the Village that the Bureau had no wheeling con tract with Runestone Electric Cooperative. Finally, the Bu- 56 District Court Findings and Conclusions reau stated that to provide loop service to Elbow Lake would require construction of 113 miles of transmission line and that the Village would have to pay a major part of the costs to construct the line and associated facilities. [GX 263]. 85. On February 5, 1965, the Minnesota Supreme Court unanimously affirmed the trial court’s dismissal of Otter Tail’s lawsuit against Elbow Lake. The court specifically held that (1) a municipality has the right to tailor engineering specifications to fit the community’s needs and there was no evidence that the specifications were based on favoritism or fraud; (2) the evidence indicated that several manufacturers produced equipment meeting the specifications, and if they did not bid, it had to be presumed that they could not meet the competitive price; (3) the bid submitted by Fairbanks, Morse & Company embodied a sufficient warranty so that the bid complied with the plans and specifications; (4) the plans and specifications were sufficiently definite to permit competitive bidding and were legal and proper, and (5) there were no material misrepresentations in the prospectus. [GX 106A— Decision reported in 270 Minn. 262, 133 N. W. 2d 5111]. 36. The lawsuit filed by Otter Tail against Elbow Lake on October 29, 1962, delayed establishment of the municipal electric system in the village by two and one-half years. 37. At the Village Council meeting on February 9, 1965, Otter Tail’s district manager presented a settlement proposal to the Council similar to the offer made by Mr. Hartl to the Village on May 4, 1964. The Village Council rejected the offer. He also advised the Council that Otter Tail would take no fur- ther legal action against the proposed municipal electric sys- tem. He further stated that Otter Tail would not sell power at wholesale or wheel power to the Village. [GX 296, p. 33]. District Court Findings and Conclusions 57 38. On February 25, 1965, the Bureau advised Otter Tail that it had allocated power to Elbow Lake and was exploring ways of delivering power to the Village. The Bureau asked whether Otter Tail had sufficient excess capacity in its trans- mission system to permit it to wheel Bureau power to Elbow Lake. [GX 264]. 39. On February 26, 1965, Mr. Hartl of Otter Tail repeated his settlement offer to the Mayor and Village Council. The offer was identical to the one Otter Tail had made on May 4, 1964 with the addition of an offer to place a three man area line crew in Elbow Lake and to construct an area service build- ing in the Village. [GX 95]. 40. On March 8, 1965, Ulteig Engineers, a consulting en- gineering company, submitted, at the request of Otter Tail, a report to the Village Council which recommended that the Village reconsider its decision to proceed with a municipal electric system and examine the benefits of continued retail- service from Otter Tail. Otter Tail paid Ulteig for the prepara- tion of the report. [GX 434; Hartl Depo. GX 287, pp. 280-81]. 41. On April 6, 1965, the Village Council received bids for the purchase of $670,000 of revenue bonds to finance construc- tion of the municipal electric system. The bid of E. J. Prescott & Co. was accepted. Otter Tail representatives at the meeting were asked whether Otter Tail would file any more lawsuits against the Village and they responded that Otter Tail would use any legal means to protect its investment in the Village. [GX 296, p. 26; GX 104]. 42. On April 14, 1965, Otter Tail responded to the Bureau’s request to wheel power to Elbow Lake. Otter Tail asserted that Section 27 of the Bureau-Otter Tail contract prohibited the use of Otter Tail’s transmission facilities to wheel power to a town served at retail by Otter Tail. [GX 265]. 58 District Court Findings and Conclusions 48. On May 5, 1965, Elbow Lake informed the Bureau that it would soon start construction of its municipal electric system and asked what needed to be done to deliver the Vil- lage’s allocation of Bureau power. [GX 267]. On May 27, 1965, the Bureau informed Elbow Lake that Otter Tail had refused to wheel Bureau power to the Village and thus the Bureau could not enter into a power service contract with Elbow Lake because no method of delivering the power to the Village had been found. [GX 268; GX 269]. 44. On July 8, 1965, Elbow Lake asked United Power Asso- ciation, (UPA), a generation and transmission cooperative located in Elk River, Minnesota to furnish electric service to Elbow Lake. [GX 297]. On July 16, 1965, UPA informed Otter Tail of Elbow Lake’s request for power, and stated that UPA would not serve Elbow Lake without Otter Tail’s consent and help in delivering the power because UPA had no transmis- sion lines in the Elbow Lake area. [GX 107]. On July 23, 1965, Otter Tail advised UPA that it would not be in the best inter- ests of the electric power industry to use Otter Tail’s trans- mission facilities to wheel power to Elbow Lake. [GX 108]. On August 10, 1965, UPA advised Elbow Lake that it was un- able to make the arrangements with other parties necessary to deliver power to the Village. [GX 298]. 45. On March 16, 1966, Elbow Lake filed an application with the Federal Power Commission for an interconnection with the Otter Tail system. [GX 84, p. 6—Stipulation # 13]. 46. In June 1966 construction of the municipal electric system in Elbow Lake was completed. The system was sup- plied with power from an isolated generating plant in Elbow Lake which has no interconnection with Otter Tail’s system. [GX 84, pp. 5-6—Stipulations + 10 and 11]. 7 District Court Findings and Conclusions 59 47. On June 17, 1966, Elbow Lake advised the Bureau that the municipal electric system was operational and re- quested an extension of its allocation of Bureau power. On November 25, 1966, Elbow Lake again asked the Bureau for an extension of time to enter into a power contract with the Bureau. The Bureau granted an extension to June 30, 1967. [GX 271, 278, GX 274]. 48. On December 7, 1966, Elbow Lake, at the suggestion of the Federal Power Commission staff trying to settle the FPC litigation between Elbow Lake and Otter Tail, again asked Otter Tail whether the company would negotiate to sell power at wholesale to the Village. On December 18, 1966, Ot- ter Tail repeated its refusal to sell power at wholesale or wheel Bureau power to Elbow Lake. [GX 96; 97]. 49. On April 28, 1967, Basin Electric Power Cooperative, in response to a request for power from Elbow Lake, advised the Village that Basin would sell power at wholesale to Elbow Lake. Basin stated that it could only deliver power at the near- est Bureau substation from which point Elbow Lake would have to arrange to have the power wheeled to its system. [GR 304]. On May 3, 1967, Elbow Lake informed Otter Tail of Basin’s wholesale sale offer and requested Otter Tail to wheel the power to the Village. On May 11, 1969, Otter Tail again re- fused to wheel any power to Elbow Lake. [GX 305; GX 98]. 50. On April 26, 1968, Elbow Lake asked the Department of Interior to request Runestone Electric Cooperative (Rune- stone) of Alexandria, Minnesota, which had a substation near ; Elbow Lake, to wheel Bureau power to the Village. On May 17, 1968, the Department of Interior advised Elbow Lake that the Bureau would investigate the possibility of delivering pow- er to Elbow Lake through the Runestone system. [GX 276, GX 277]. a 60 District Court Findings and Conclusions 51. On June 5, 1968, the Bureau again asked Otter Tail whether it would wheel power to Elbow Lake. On August 28, 1968, Otter Tail again notified the Bureau that it would not wheel power to Elbow Lake. [GX 278, GX 279]. 52. On June 18, 1968,,the Bureau informed Elbow Lake that Otter Tail’s consent was necessary before Runestone could wheel Bureau power to Elbow Lake, because Runestone purchased its power from Cooperative Power Association (CPA) which in turn bought a large block of power from the Bureau. The Bureau emphasized that Bureau power delivered to CPA for Runestone had to be wheeled over Otter Tail's transmission lines. [GX 282]. 53. On June 18, 1969, the Bureau asked Runestone whether it could arrange to wheel Bureau power to Elbow Lake. On July 22, 1968 Runestone advised the Bureau that a provision of the integrated transmission agreement between Otter Tail and Cooperative Power Association [GX 22] required that Otter Tail had to give its consent before Otter Tail’s transmis- sion facilities could be used to wheel power to a customer which Otter Tail served at retail on or after January 13, 1966. Runestone conveyed the same information to Elbow Lake on August 19, 1968. [GX 281, GX 344, GX 345]. 54. On September 24, 1968, the Bureau advised Elbow Lake that the Bureau was unable to secure a means to deliver Bureau power to the Village, and that Otter Tail still refused to wheel. [GX 284]. 55. On November 22, 1968, Runestone advised Elbow Lake that the only impediment preventing Runestone from wheeling Bureau power to Elbow Lake was the provision in the trans- mission agreement between Otter Tail and Cooperative Power Association, Runestone’s supplier, which required Otter Tail’s consent before Otter Tail’s transmission facilities could be se District Court Findings and Conclusions 61 used to serve a customer which had been served by Otter Tail on or after January 13, 1966. [GX 346]. 56. On October 1, 1970, Elbow Lake again asked Rune- stone to discuss possible delivery of power to the Village. On October 6, 1970, Runestone informed Otter Tail of Elbow Lake’s request and asked whether Runestone could negotiate to deliver power to Elbow Lake despite the fact that previous requests had been turned down on the basis of the provision in the Otter Tail-Cooperative Power Association contract. Mr. Hartl orally notified Runestone that Otter Tail would not answer its request. [GX 347, GX 348; Perino Tr. II, p. 1021]. 57. On March 29, 1971, Basin Electric Power Cooperative renewed its offer to sell power at wholesale to Elbow Lake at a rate higher than that offered in 1967. Basin also told Elbow Lake first to attempt to secure power at wholesale from the utility which would have to wheel Basin’s power to the Village, namely Otter Tail. [GX 306]. 58. Elbow Lake did not intend to build its own generating plant unless it was unable to obtain power from any other source. [Martinson Tr. I, pp. 118-119]. 59. The proceeding before the Federal Power Commission commenced by Elbow Lake on March 16, 1966 to obtain an interconnection with Otter Tail is still continuing. The Com- mission has completed phase 1 of the proceeding and has or- dered an emergency interconnection between Otter Tail and Elbow Lake’s municipal electric system. Otter Tail appealed the Commission’s ruling which was affirmed by the Eighth Circuit Court of Appeals in Otter Tail Power Company v. Federal Power Commission, 429 F. 2d 232 (8th Cir. 1970), cert. denied, 91 S. Ct. 923. On September 13, 1971, the Com- mission Ordered Otter Tail to make a permanent interconnec- tion with Elbow Lake. 62 District Court Findings and Conclusions B. Hankinson, North Dakota 60. Otter Tail obtained a 20 year franchise to distribute electric power at retail in Hankinson on February 16, 1931. [GX 115]. 61. On May 19, 1947 the voters in Hankinson approved the establishment of a municipal electric system. [GX 2, p. 2]. No municipal system was developed and Otter Tail con- tinued to serve the town at retail. 62. Hankinson did not renew Otter Tail's franchise when it expired on February 16, 1951. [GX 84, p. 7, Stipulation # 16). 63. On January 7, 1963 the City Council appointed a com- mittee to investigate the feasibility of establishing a municipal electric system to serve Hankinson. [GX 311, pp. 9-10]. On August 12, 1963 the City Council retained North Central Engineers to prepare an engineering feasibility study of a municipal electric system. The report was submitted to the City Council on September 26, 1963 and concluded that a municipal electric system in Hankinson was economically feasible. [GX 315-316; GX 311, pp. 13-15; GX 84, p. 7, Stip- ulation # 19]. * f 64. On September 30, 1963 Hankinson applied for an al- location of power from the Bureau of Reclamation. [GX 248, pp. 2-3]. 65. On October 7, 1963 the City Council passed a resolu- tion to schedule an election for October 22, 1968 to vote on the question of whether the City should issue $190,000 of electric revenue bonds to finance construction of a municipal electric system. [GX 314, pp. 2-4]. a 66. On October 11, 1963 Otter Tail informed the mayor of Hankinson that Otter Tail would not under any circum- stances wheel power for Hankinson, for Central Power Elec- tric Cooperative or for the Bureau of Reclamation for delivery to Hankinson, that Otter Tail would not supply wholesale or standby or supplemental power to Hankinson, and that Otter Tail would not sell its distribution system in Hankinson under any circumstances, [GX 117]. On October 15, 1968 Otter Tail told the mayor of Hankinson that the engineering feasibility report had several erroneous assumptions, including one that Otter Tail would sell power at wholesale. [GX 119]. 67. On October 22, 1968 the residents of Hankinson ap- proved the establishment of a municipal electric system by a vote of 442 to 211, and approved the issuance of $190,000 of electric revenue bonds to finance it by a vote of 440 to 213. [GX 311, pp. 16-18; GX 2, p. 21. 68. In 1963 Otter Tail owned the only subtransmission lines near Hankinson. The Bureau had a high voltage 230 kv bulk power supply transmission line approximately 39 miles from Hankinson at Forman, North Dakota. Otter Tail had a substation at Forman and two subtransmission lines running from Forman eastward past Hankinson. One of these was a 41.6 subtransmisison line which was connected to another sub- station adjacent to Hankinson which stepped the voltage down for retail distribution in Hankinson. [GX 206; GX 316, pp. 6.9]. 69. RSR Electric Cooperative is a distribution cooperative and a member of Central Power Electric Cooperative, a gen- eration and transmission cooperative. In 1968 RSR had a sub- station located on Otter Tail’s transmission line about two miles from Hankinson to which Otter Tail wheeled power pursuant to a wheeling contract between Otter Tail and Cen- tral. RSR Electric Cooperative could not supply wholesale power or wheel power to Hankinson without using Otter Tail’s 64 District Court Findings and Conclusions transmission lines. [GX 206; GX 348; GX 816, p. 7; GX 41-47; Belinsky Tr. II, pp. 97-98]. 70. In October 1963 Hankinson applied for an allocation of power from the Bureau. On November 5, 1968 the Bureau advised Hankinson that it would study possible methods of delivering power to the city. [GX 248-249]. 71. On October 28, 1963 Hankinson asked RSR Electric Cooperative to supply power to the proposed municipal electric system. On November 19, 1963 RSR offered to deliver power to Hankinson if the town were successful in establishing its own municipal distribution system. [GX 335]. 72. On November 27, 1963 Hankinson asked Otter Tail whether it would discuss the possible sale of its distribution system to the city and the termination of its existing street lighting contract with the city, and whether it would wheel power to the city. On December 4, 1963 Otter Tail advised Hankinson that it would not sell its distribution system in Hankinson, would not wheel power, and saw no reason to terminate the street lighting contract. [GX 120, GX 121]. 78. On January 24, 1964 Central Power Electric Coopera- tive completed a study of possible methods for RSR Electric Cooperative to supply power at wholesale to Hankinson. The study concluded that the best method was to have power wheeled over Otter Tail’s lines to RSR’s substation near Han- kinson, because construction of a 39 mile radial line to connect with the Bureau’s transmission line at Forman, North Dakota would result in poor service reliability, and because the con- struction of transmission lines to connect with any other power supplier was not economically feasible. [GX 334]. 74. On February 17, 1964 the City Council passed a reso- lution to hire Maeir & Tompt Engineers to design a municipal electric system. [GX 311, pp. 23-26]. District Court Findings and Conclusions 65 75. On April 20, 1964 Allison-Williams Company, an in- vestment banking company hired by Hankinson in connection with the expected sale of the electric revenue bonds, advised Hankinson that the bonds could not be sold until the city entered into a firm contract with a supplier of wholesale power. [GX 336]. 76. On May 14, 1964 Hankinson asked RSR Electric Co- operative to serve the town at wholesale and furnish the city with a proposed contract for such service. [GX 336]. 77. On May 19, 1964 RSR requested Central Power Electric Cooperative to increase its power delivery to RSR so it could supply power at wholesale at Hankinson. On May 28, 1964 Central advised RSR that it would ask Otter Tail to increase the capacity of RSR’s substation near Hankinson, but that Otter Tail probably would not wheel power for RSR if it was to be used to supply power at wholesale to Hankinson. [GX 337, GX 333]. . 78. On May 28, 1964 Central advised Otter Tail that RSR desired Lo increase the capacity of its Hankinson substation and asked if this was permissible under the wheeling contract between Central and Otter Tail. [GX 122]. 79. On June 8, 1964 Otter Tail asked Central whether the proposed increase in substation capacity would be used to serve Hankinson. On June 10, 1964 Central notified RSR of Otter Tail’s question. [GX 123-124]. 80. On June 24, 1964 RSR notified Central that the increase in substation capacity related to long range plans for service in the area and was necessary because RSR’s system was overloaded. On July 14, 1964 Central forwarded this explana- tion to Otter Tail. [GX 338, GX 124]. 81. On July 24, 1964 Otter Tail advised Central that the company suspected that RSR intended to supply power to 66 District Court Findings and Conclusions Hankinson, and since Otter Tail served the city it would not agree to the increase in substation capacity. [GX 125]. 82. On July $1, 1964 Central advised RSR that Otter Tail would not agree to increase the substation capacity if RSR used it to supply power to Hankinson, so RSR would have to make other transmission arrangements if it wanted to supply power at wholesale to Hankinson. [GX 332]. 88. On July 8, 1964 the Bureau made an allocation of power to Hankinson. [GX 250; GX 214, p. 3]. 84. On August 7, 1964 the Bureau asked Otter Tail to add the Hankinson load to the wheeling notice which the Bureau had sent to Otter Tail with service to Hankinson expected to commence in July 1965. [GX 2511. 85. On September 30, 1964 Otter Tail advised the Bureau that Otter Tail would not wheel Bureau power to Hankinson, and that Article 27 (e) (2) of the transmission agreement be- tween the Bureau and Otter Tail limited Otter Tail’s obliga- tion to wheel only to towns which were not served at retail when the contract was signed. [GX 253]. 86. On December 16, 1964 the Bureau advised Otter Tail tha [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0104%3A01. Public record. Not legal advice.