Petition for Writ of Certiorari — David Holbrook, Petitioner v. Tennessee Valley Authority, et al.
Supreme Court briefJan 5, 2023
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No. 22In the
Supreme Court of the United States
DAVID HOLBROOK,
Petitioner,
v.
TENNESSEE VALLEY AUTHORITY;
BVU AUTHORITY,
Defendants .
On Petition for a Writ of Certiorari to the United
States Court of A ppeals for the Fourth Circuit
PETITION FOR A WRIT OF CERTIORARI
Mark T. Hurt
The Law Offices of
Mark T. Hurt
159 West Main Street
Abingdon, VA 24210
(276) 623-0808
Martin Bienstock
Counsel of Record
Bienstock PLLC
1629 K. Street NW, Suite 300
Washington, DC 20006
(202) 908-6600
mbienstock@bienstockpllc.com
Counsel for Petitioners
317072
A
(800) 274-3321 • (800) 359-6859
i
QUESTION PRESENTED
The Tennessee Valley Authority (“TVA”) is an
independent government corporation that leverages
government power and resources to operate commercially,
as an electric power company. Its enabling statute
provides that its electricity plants are to be primarily
“for the benefit of. . . consumers.” 16 U.S.C. § 831j.
“[A]ccordingly,” Congress instructed:
[S]ale to and use by industry [of TVA power]
shall be a secondary purpose, to be utilized
principally to secure a sufficiently high load
factor and revenue returns which will permit
domestic and rural use at the lowest possible
rates.... (Id.)
About a decade ago, TVA allegedly moved to a privatesector model, architecting a structure in which, contra
the statute, load factors and revenue returns from sales
to industry are not used to benefit consumers. Petitioner
filed suit asserting claims for breach-of-contract, illegalexaction and under the APA. The Fourth Circuit upheld
dismissal of Petitioner’s complaint, applying inter alia a
new judicial-abstention doctrine which abjures judicial
review of discretionary agency decision-making even
where Congress provided a meaningful standard to apply.
The question presented is:
Do federal courts have authority to review TVA’s fidelity to
its enabling statute, or is TVA’s rate-setting excepted from
all judicial review even when TVA sets rates in deliberate
disregard of Congress’ clearly expressed policy directive?
ii
PARTIES TO THE PROCEEDING
Petitioner is David Holbrook. Petitioner was the plaintiff
below.
Respondents are Tennessee Valley Authority and BVU
Authority. Respondents were defendants below.
iii
RELATED PROCEEDINGS
United States District Court (W.D.V.A.)
David Holbrook v. Tennessee Valley Authority and
BVU Authority, No. 1:20-cv-00025, March 19, 2021 (order
granting motion to dismiss)
United States Court of Appeals (Fourth Circuit)
David Holbrook v. Tennessee Valley Authority and
BVU Authority, No. 21-1415, September 7, 2022 (Opinion)
iv
TABLE OF CONTENTS
Page
QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . i
PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . . . ii
RELATED PROCEEDINGS . . . . . . . . . . . . . . . . . . . . iii
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . iv
TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . ix
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED . . . . . . . . . . . . . . . . . . . . . 5
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . 6
FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. The TVA Is an Independent Agency that
Congress Subjected to Court Review . . . . . . . . . 6
B. The TVA Utilizes Government Power
and Resources to Operate a Commercial
Electricity Company . . . . . . . . . . . . . . . . . . . . . . . 8
v
Table of Contents
Page
C. Congress Specifically Instructed the
TVA on How to Set Electricity Rates . . . . . . . . . 9
1.
The Second Sentence of Section 831j
(Sale to and Use by Industry) . . . . . . . . . . . . 9
2.
Section 831i
(Limited Authority to Set Resale Rates) . 10
D. T he T VA Ent ered a Cont ract w ith
Holbr o ok ’s L o c a l Powe r C omp a ny
Expressly Making Consumers the ThirdParty Beneficiaries of the Contract . . . . . . . . . . 11
E. The TVA Rejected Congress’ Rate Setting
Directives in Favor of Its Own Policy . . . . . . . . 11
F.
Ho l b r o ok S u f fe r e d D i r e c t I nj u r y
as a Result of TVA’s Setting Rates in
Derogation of Congress’ Instructions . . . . . . . . 13
G. The Proceedings Below . . . . . . . . . . . . . . . . . . . . 13
REASONS FOR GRANTING THE PETITION . . . . 17
vi
Table of Contents
Page
POINT I
CERTIORARI IS NECESSARY BECAUSE
THE FOURTH CIRCUIT ’S REFUSA L
T O R EQU I R E J U DICI A L R E V I E W
OF T VA’ S A LLOCATION OF R AT ES
I N DER O G A T ION OF C ONGR E S S ’
INSTRUCTIONS PRESENTS AN ISSUE
OF EXTRAORDINARY IMPORTANCE
AFFECTING THE PRIMARY PURPOSE
OF A SIGNIFICA NT GOV ERNMENT
AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Petitioner’s Action Is the Only Process
Available for Obtaining Court Review
of T VA’s Compliance w ith Congress’
Rate Setting Directives . . . . . . . . . . . . . . . . . . . . 17
B. Holbrook Stated a Claim for Relief under
the APA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
C. The T VA Act Provides a Meaningful
Standard for Courts to Apply in Reviewing
Whether the TVA Sets Rates Consistent
with the Directives of Congress. . . . . . . . . . . . . 18
D. The Fourth Circuit Erroneously Substituted
a New Judicial Abstention Approach to
Agency Action in Place of this Court’s
“Meaningful Standard” Test to Find TVA
Rate-Setting Unreviewable. . . . . . . . . . . . . . . . 20
vii
Table of Contents
Page
E. In Conflict with the Federal Circuit, the
Fourth Circuit Erroneously Dismissed
Holbrook’s Claim as an Express Intended
Beneficiary of the TVA Contract . . . . . . . . . . . . 26
F.
In Conflict with the Federal Circuit, the
Fourth Circuit Erroneously Dismissed
Holbrook’s Unlawful Exaction Claim . . . . . . . . 27
G. Certiorari Is Necessary Because the
Fou r th Ci rcu it Opinion Improperly
Enables T VA to Evade Compl iance
with Congress’ Instructions Governing
Its Core Function and Affecting More
Than 10 million Customers . . . . . . . . . . . . . . . . . 28
POINT II.
CERTIORARI IS NECESSARY BECAUSE
THE FOURTH CIRCUIT ENDOW ED
THE TVA WITH UNREVIEWABLE AND
U NAC C OU N TA BL E L E GI S L A T I V E
A ND EX ECU TI V E POW ERS IN
CONTRAVENTION OF THE SEPARATIONOF-POWERS DOCTRINE. . . . . . . . . . . . . . . . . . . . 30
A. Certiorari Is Necessary to Prevent TVA from
Operating as a Commercial-Governmental
Entity with Unchecked Power to Distribute
Government Benefits . . . . . . . . . . . . . . . . . . . . . . 30
viii
Table of Contents
Page
B. This Case Is an Excellent and Necessary
Vehicle to Address Constitutional Limitations
on Economically Independent Agencies . . . . . . 32
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ix
TABLE OF CITED AUTHORITIES
Page
Cases
Am. Hosp. Ass’n v. Becerra,
142 S. Ct. 1896 (2022) . . . . . . . . . . . . . . . . . . . . . . . . . 24
Arizona Elec. Power Co-op., Inc. v.
United States,
816 F.2d 1366 (9th Cir. 1987) . . . . . . . . . . . . . . . . . . . 24
Astra USA, Inc. v. Santa Clara Cnty., Cal.,
563 U.S. 110 (2011) . . . . . . . . . . . . . . . . . . . . . . 3, 16, 27
Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Citizens to Preserve Overton Park, Inc. v.
Volpe,
401 U.S. 402 (1971) . . . . . . . . . . . . . . . . . . 14, 21, 22, 23
Columbus Reg’l Hosp. v. United States,
990 F.3d 1330 (Fed. Cir. 2021) . . . . . . . . . . . . . . . . . . 27
Dep’t of Com. v. New York,
139 S. Ct. 2551 (2019) . . . . . . . . . . . . . . . . 18, 19, 21, 22
Farmers Union Cent. Exch., Inc. v. FERC,
734 F.2d 1486 (D.C. Cir. 1984) . . . . . . . . . . . . . . . . . . 24
Ferguson v. Electric Power Bd. of Chattanooga,
378 F. Supp. 787 (E.D. Tenn. 1974) . . . . . . . . . . . . . . 12
x
Cited Authorities
Page
Indus. Union Dep’t, AFL-CIO,
448 U.S. 607 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
J.W. Hampton, Jr., & Co. v. United States,
276 U.S. 394 (1928) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Mach Mining, LLC v. EEOC,
135 S. Ct. 1645 (2015) . . . . . . . . . . . . . . . . . . . . . . . . . 30
Maryland Nat. Cap. Park & Plan. Comm’n v.
Lynn,
514 F.2d 829 (D.C. Cir. 1975) . . . . . . . . . . . . . . . . . . . 24
McCarthy v. Middle Tennessee Elec.
Membership Corp.,
466 F.3d 399 (6th Cir. 2006) . . . . . . . . . . . . . . . . . . . . 14
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v.
State Farm Mut. Auto. Ins. Co.,
463 U.S. 29 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
N. Carolina ex rel. Cooper v.
Tennessee Valley Auth.,
515 F.3d 344 (4th Cir. 2008) . . . . . . . . . . . . . . . . . . . . . 6
Nat’l Veterans Legal Servs. Program v.
United States,
968 F.3d 1340 (Fed. Cir. 2020) . . . . . . . . . . . . . . . . . . 27
Panama Canal Co. v. Grace Line, Inc.,
356 U.S. 309 (1958) . . . . . . . . . . . . . . . . . . . . . . . . 23, 24
xi
Cited Authorities
Page
Pol’y & Rsch., LLC v. United States Dep’t of
Health & Hum. Servs.,
313 F. Supp. 3d 62 (D.D.C. 2018), appeal
dismissed, No. 18-5190, 2018 WL 6167378
(D.C. Cir. Oct. 29, 2018) . . . . . . . . . . . . . . . . . . . . . . . 25
Seila L. LLC v. Consumer Fin. Prot. Bureau,
140 S. Ct. 2183 (2020) . . . . . . . . . . . . . . . . . . . . . . . . . 32
Sorenson Commc’ns, Inc. v. F.C.C.,
765 F.3d 37 (D.C. Cir. 2014) . . . . . . . . . . . . . . . . . . . . 24
Tacoma v. Taxpayers of Tacoma,
357 U.S. 320 (1958) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Tenn. Valley Auth. v. EPA,
278 F.3d 1184 (11th Cir. 2002) . . . . . . . . . . . . . . . . . . . 7
Tenn. Valley Auth. v. United States,
13 Cl. Ct. 692 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tennessee Elec. Power Co. v.
Tennessee Valley Auth.,
21 F. Supp. 947 (E.D. Tenn. 1938), aff’d,
306 U.S. 118 (1939) . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Thacker v. Tennessee Valley Auth.,
139 S. Ct. 1435 (2019) . . . . . . . . . . . . . . . . . . . . . . . . . . 8
United States v. George S. Bush & Co.,
310 U.S. 371 (1940) . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
xii
Cited Authorities
Page
Vermont Yankee Nuclear Power Corp. v.
Nat. Res. Def. Council, Inc.,
435 U.S. 519 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
W. Virginia v. Env’t Prot. Agency,
142 S. Ct. 2587 (2022) . . . . . . . . . . . . . . . . . . . . . . . . . 32
Weyerhaeuser Co. v.
United States Fish and Wildlife Serv.,
139 S. Ct. 361 (2018) . . . . . . . . . . . . . . . . . . . . 18, 21, 22
Statutes and Other Authorities
16 U.S.C. § 831a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 7
16 U.S.C. § 831c(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
16 U.S.C. § 831i . . . . . . . . . . . . . . . . . . . . 5, 9, 10, 15, 19, 29
16 U.S.C. § 831j . . . . . . . . . . . 1, 2, 3, 5, 9, 10, 12, 13, 15, 16,
18, 19, 20, 25, 29, 30
16 U.S.C. § 831n–4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
16 U.S.C. § 851i . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
APA § 554 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
xiii
Cited Authorities
Page
APA § 701(a)(2) . . . . . . . . . . . . . . . . . . 14, 16, 18, 19, 21, 22
APA § 706(2)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Anders Aslund, Russia’s Crony Capitalism:
The Path from Market Economy to
Kleptocracy (Yale University Press,
May 21, 2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Berger, Administrative Arbitrariness: A Synthesis,
78 Yale L.J. 965 (1969) . . . . . . . . . . . . . . . . . . . . . . . . 24
Congressional Research Services, Privatizing
the Tennessee Valley Authority: Options
and Issues (July 29, 2013) . . . . . . . . . . . . . . . . . . . . . .12
Glozer, Time for the Sun to set on the Tennessee
Valley Authority, 2904 Heritage Foundation
Backgrounder (May 6, 2014) . . . . . . . . . . . . . . . . . 8, 17
Lazard Report to the Tennessee Valley
Authority, February 7, 2021 (available at
https://perma.cc/ZZ5J-B3C8) . . . . . . . . . . . . . . . 13, 18
McCarthy, Keeping TVA Unshackled--A Continuing
Struggle, 49 Tenn. L. Rev. 699 (1982) . . . . . . . . . . . . . 7
McConnell, Socialism and the Constitution,
Hoover Institution (2020) . . . . . . . . . . . . . . . . . . . . . . 31
1
INTRODUCTION
The TVA is a unique federal agency. Acting outside of
the direct control of the President or Congress, it utilizes
sovereign power, regulatory authority and government
subsidy in support of its commercial electric-power
operations. It holds more than $50 billion in public assets,
which it uses to generate and distribute more than $10
billion in electricity each year in service of more than 10
million customers.
Congress has instructed the TVA on how to allocate
the benefits of the substantial public resources and
authority with which it is endowed. The second sentence of
Section 831j speaks directly to the question, providing as
a matter of policy that the primary purpose of TVA power
is to benefit consumers. 16 U.S.C. § 831j. The statute then
requires TVA to implement this policy by utilizing sales
to industry to generate revenue returns and load factors
that will enable TVA to provide consumers with the lowest
possible rates. Id.
For most of its existence, TVA apparently complied
with these Congressional directives. It even included the
relevant statutory purposes in its form contracts with
local distributors, and it made consumers the express,
intended beneficiaries of those contracts. Then, about a
decade ago, amidst discussions of TVA privatization, TVA
rejected its founding directive in favor of its own policy.
It determined that sales to industry no longer should
be used for the purpose of reducing consumer rates. It
implemented rate changes which reduced industrial rates
and correspondingly increased consumer rates, so that
today its competitors – who do not have the same statutory
2
requirement to benefit consumers – treat consumers
relatively more favorably than does the TVA.
Petitioner is a consumer who pays rates set by the
TVA. He filed suit under the Administrative Procedures
Act (“APA”), for breach of contract, and for illegal exaction,
alleging that TVA failed to consider and faithfully apply
the governing statute in setting his rates. TVA’s ratesetting decisions are not otherwise subject to review (or
even scrutiny) in any other forum.
Under this Court’s well-established jurisprudence,
the APA requires judicial review of TVA’s rate-setting
activities so long as Congress has supplied a meaningful
standard against which to judge its exercise of discretion.
Since the second sentence of Section 831j identifies both
a policy and methodology that TVA must apply when
setting rates, courts are able to review TVA’s rate-setting
activities to ensure they comply with that section. Courts
regularly review agency rate setting, and TVA rate setting
does not involve the type of “rare circumstances,” such as
enforcement decisions, Congressional appropriations, or
national security, that might preclude review.
Nonetheless, in response to Petitioner’s suit, the
Fourth Circuit coppered up a newly designed abstention
doctrine, not argued by the parties below or the
District Court. Under this doctrine, a “presumption of
unreviewability” attaches to certain agency decisions,
based on a variety of factors, including primarily preAPA lower court decisions, but without regard to modern
precedent and to whether the agency function at issue is
of the type readily reviewed by courts in the modern era.
For this class of “presumptively unreviewable” agency
3
decisions, courts may not review an agency’s exercise of
discretion even where Congress has supplied a meaningful
standard to apply -- the exact opposite of the “meaningful
standard” test applied under this Court’s precedents. Only
if mandamus lies will the Fourth Circuit allow review.
Applying its newly formulated test, the Fourth
Circuit found that lower court cases against the TVA,
involving other claims and issues (only one of which, an
unreported conclusion of law, had preceded enactment
of the APA), combined with the “complexity” of rate
setting, had created a presumption of unreviewability. It
then evaluated Section 831j not for whether it contained a
meaningful standard to apply, but for a command issued
in the form of “TVA shall do ‘x’.” Faced with a statute
that did in fact use the term “shall” (twice), it explained
that under its presumption of unreviewability, not even a
statutory provision requiring that TVA “shall have this
goal [in setting rates]” would allow for judicial review.
It therefore concluded that TVA rate-setting was an
unreviewable agency function.
The Fourth Circuit also dismissed Holbrook’s breachof-contract claim and illegal-exaction claim. As to the
breach-of-contract claim, it found the claim precluded
under Astra USA, Inc. v. Santa Clara Cnty., Cal., 563
U.S. 110 (2011), even though Astra had prohibited claims
against non-government contractors, not government
entities, and explicitly had left open the question whether
an agency might expressly grant beneficiary status to
a third-party. It dismissed the illegal exaction claim
because, it erroneously concluded, an unlawful fee never
could be an “exaction.” Both conclusions conflict with
decisions of the Federal Circuit.
4
The Fourth Circuit therefore dismissed Holbrook’s
claims in their entirety, leaving him with no forum in which
to obtain review of TVA’s unlawful actions in setting rates,
even though Congress has not exempted either the TVA
or its rate setting from federal-court jurisdiction.
As this Court previously has recognized, TVA today
functions primarily as a government corporation providing
a commercial service. Certiorari is necessary to ensure
that TVA is held accountable for allocating the benefits of
its $50 billion operation among its 10 million customers in
accordance with the explicit directions of Congress. TVA
otherwise will be entirely unaccountable: it cannot be held
accountable in any other judicial or administrative forum,
and has no shareholders to which its Board is answerable.
Recent decisions of this Court have highlighted the
dangers to liberty that may rise when federal agencies
assume powers in excess of those permitted under our
Constitutional framework. Here, the Fourth Circuit’s
ruling permits T VA to leverage sovereign power,
government subsidies, and regulatory authority on
behalf of a commercial enterprise without being subject
to judicial review for how it allocates the benefits of this
aggregation of power. Certiorari is necessary so the Court
can identify the Constitutional limits of legislative power
that may be delegated to entities such as the TVA, and the
role that Courts must play in ensuring their compliance
with such limits.
OPINIONS BELOW
The opinion of the court of appeals is reported at 48
F.4 282 and reprinted in the appendix at Pet. App. la. The
th
5
decision of the district court is reported at 527 F. Supp.
3d 853 and reprinted at Pet. App. 31a.
JURISDICTION
The court of appeals rendered its decision on
September 7, 2022. Pet. App. 1a. On November 14, 2022, by
order of the Chief Justice, the time for filing this petition
was extended to and including January 5, 2023. The Court
has jurisdiction under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The full text of 16 U.S.C. §§ 831i – 831j are reproduced
at Pet. App. 42a. The relevant portions read as follows:
16 U.S.C.A. § 831i (TVA Act § 10)
[T]he Board is authorized to include in any
contract for the sale of power such terms and
conditions, including resale rate schedules, and
to provide for such rules and regulations as in
its judgment may be necessary or desirable for
carrying out the purposes of this chapter . . ..
16 U.S.C.A. § 831j (TVA Act § 11)
Th[e] policy is . . . declared to be that the
projects herein provided for shall be considered
primarily as for the benefit of the people of
the section as a whole and particularly the
domestic and rural consumers to whom the
power can economically be made available, and
6
accordingly that sale to and use by industry
shall be a secondary purpose, to be utilized
principally to secure a sufficiently high load
factor and revenue returns which will permit
domestic and rural use at the lowest possible
rates and in such manner as to encourage
increased domestic and rural use of electricity.
STATEMENT OF THE CASE
FACTS
A. The TVA Is an Independent Agency that Congress
Subjected to Court Review.
On April 10, 1933, Franklin Delano Roosevelt sent a
“Message to Congress Suggesting the Tennessee Valley
Authority.” The Message asked Congress to create
the TVA as “a corporation clothed with the power of
Government but possessed of the flexibility and initiative
of a private enterprise.” Id.
Congress obliged. To foster TVA independence, the
TVA Act included provisions establishing the TVA as
independent of control by the President. It provided for
TVA to be governed by an independent Board of Directors
(16 U.S.C. § 831a), and exempted it from a broad range
of laws otherwise applicable to federal agencies. See N.
Carolina ex rel. Cooper v. Tennessee Valley Auth., 515 F.3d
344, 349 (4th Cir. 2008) (structural and statutory indicia of
TVA independence justify subjecting it to court review).
7
TVA’s board and executive long maintained the goal
of retaining independence from Congressional control.
See McCarthy, Keeping TVA Unshackled--A Continuing
Struggle, 49 Tenn. L. Rev. 699 (1982) (TVA’s former
general counsel describing efforts to maintain TVA
autonomy). Over time, this independence grew. In 1959,
Congress provided the TVA with authority to issue its
own bonds with which it could fund power-generating
programs, rather than with congressional appropriations,
thus freeing TVA of control by Congress through annual
funding. TVA Act § 15d, 16 U.S.C. § 831n–4. In 2004, the
TVA Act was amended to authorize the part-time Board
(whose members are nominated by the President and
confirmed by the Senate) to appoint a chief executive
officer. TVA Act § 2, 16 U.S.C. § 831a.
The TVA operates as an agency so independent of
presidential control that it takes positions in court that
are adverse to the United States, and routinely refuses
representation by the Attorney General. See, e.g., Tenn.
Valley Auth. v. EPA, 278 F.3d 1184 (11th Cir. 2002); Tenn.
Valley Auth. v. United States, 13 Cl. Ct. 692 (1987). Unlike
other government officers, TVA’s CEO and other C-Suite
executives are paid millions of dollars each in salary and
benefits each year, reflecting their independence from
the Executive branch, and their commercial roles. TVA
2021-22 Form 10K (“Form 10-K”) at 158.
While Congress granted TVA substantial independence
and authority, it fully recognized that TVA’s commercial
operations would be subject to Court review. Accordingly,
the TVA Act included a sue-and-be-sued clause, allowing
it to be sued in its corporate name. TVA Act § 4, 16 U.S.C.
§ 831c(b). A decade later, when Congress enacted the
8
Federal Tort Claims Act of 1946, Congress carved out the
TVA from the immunity that it provided to other agencies.
See Thacker v. Tennessee Valley Auth., 139 S. Ct. 1435,
1439–40 (2019).
B. The TVA Utilizes Government Power and Resources
to Operate a Commercial Electricity Company.
The TVA Act authorized the TVA to engage in a
wide range of activities. Thacker, 139 S. Ct. at 1439.
“[O]ver the years, as it completed other projects, the
TVA devoted more and more of its efforts to producing
and selling electric power.” Id. Today, the TVA is a $52
billion corporation. Form10-K at 90. Its electricity sales
generate more than $10 billion in annual revenues, which
constitute 99% of its annual budget. Form 10-K at 92. It
is the third-largest electricity generator in the nation.
Form 10-K at 165.
While the TVA operates primarily as a commercial
entity, it nevertheless enjoys the power and benefits of
operating as a federal agency. See Glozer, Time for the Sun
to set on the Tennessee Valley Authority, 2904 Heritage
Foundation Backgrounder (“Heritage Backgrounder”)
(May 6, 2014), at 4-7. It enjoys an effective, ongoing federal
subsidy of billions of dollars; is exempt from federal and
state taxes; and is exempt from a host of federal, state
and local laws, from the civil service laws to antitrust. Id.
TVA also is exempt from State laws regulating the retail
sale of electricity to local businesses and consumers. Id.
at 7. See also Form 10-K at 59.
9
C. Congress Specifically Instructed the TVA on How
to Set Electricity Rates.
The second sentence of Section 831j specifically
directs the TVA on how it is to allocate the benefits of the
electricity-generating plants that Congress authorized
it to operate. Id. Section 831i, a different provision,
limits TVA’s resale rate authority to setting rates that
are intended to carry out these purposes. TVA is an
instrumentality of Congressional will; Congress never
has revoked this crucial functional responsibility that it
directed to the TVA, or authorized it to set resale rates
other than in fulfillment of this responsibility.
1.
T he S e c ond S ent enc e of S e c tion 8 31j
(Sale to and Use by Industry)
When creating the TVA, Congress authorized it
not only to sell power for the benefit of consumers but
also to sell it for use by industry. It specified, however,
that, as a matter of policy, TVA projects were intended
primarily for the benefit of domestic consumers, and that
sales to industry were to be only a secondary purpose.
Accordingly, the TVA Act made clear that sales to and use
by industry were to be utilized to permit domestic use at
the lowest possible rates.
Specifically, the second sentence of Section 831j
specifies that:
[The] policy is . . . declared to be that the
projects herein provided for shall be considered
primarily as for the benefit of the people of
the section as a whole and particularly the
10
domestic and rural consumers to whom the
power can economically be made available, and
accordingly that sale to and use by industry
shall be a secondary purpose, to be utilized
principally to secure a sufficiently high load
factor and revenue returns which will permit
domestic and rural use at the lowest possible
rates and in such manner as to encourage
increased domestic and rural use of electricity.
16 U.S.C. § 831j. In other words, TVA can and should
provide commercial power too, keeping its eye on the
objective of providing power to domestic and rural users
“at the lowest possible rates.”
2.
Section 831i
(Limited Authority to Set Resale Rates)
Section 831i of the TVA Act includes provisions
authorizing the TVA’s regulation of wholesale transactions
and its setting of resale rates. As to sales at wholesale,
Section 831i authorizes the TVA “to make such rules
and regulations. . . as in its judgment may be just and
equitable.” 16 U.S.C. § 831i.
In contrast, as to resale rates, that section authorizes
TVA to provide “for such rules and regulations as in its
judgment may be necessary or desirable for carrying out
the purposes of this Act. Id. (emphasis added).
11
D. The TVA Entered a Contract with Holbrook’s Local
Power Company Expressly Making Consumers the
Third-Party Beneficiaries of the Contract.
The TVA sells electricity to consumers like Holbrook
by entering form contracts with local power companies,
who then sell electricity to consumers at retail. JA 10506; see also TVA-BVU Power Contract, Dkt. No. 23,
Ex.5 (“TVA-BVU Power Contract”). As permitted under
Section 831i, the form contacts authorize TVA to set the
local power companies’ resale rates, in conformance with
the TVA’s statutory purposes. JA 87-88.
The TVA’s form contracts with local power companies
expressly provide that the contracts are “primarily for the
benefit of the consumers of electricity.” JA 10; TVA-BVU
Power Contract at 1. The form contracts recognize this
provision as “of the essence” of the contract. Id.
E. The TVA Rejected Congress’ Rate Setting Directives
in Favor of Its Own Policy.
TVA makes changes to its retail rates using two
separate processes. It uses “Rate Adjustments” to change
the amount of revenues that are to be generated; and it uses
“Rate Changes” to change the allocation of costs among
different classes of customers, such as among consumers
and industry. JA 171. Rate Changes are designed by TVA
to be revenue neutral. Id. By segregating the process of
Rate Changes from the process of Rate Adjustments, TVA
isolates its decisions concerning the allocation of rates
among consumers and industry from broader questions
concerning its need for sufficient revenues.
12
Following the 2004 authorization to hire a full-time
CEO, the TVA, of its own initiative, undertook a significant
project to alter its own mission in selling electricity to
consumers. As a result, for the past dozen years TVA has
eschewed Section 831j in setting rates and rendered it
nugatory. This occurred around the same time the Office of
Management and Budget performed “a strategic review”
of the TVA’s role, including “the possible divestiture of
TVA, in part or as a whole.” See Congressional Research
Services, Privatizing the Tennessee Valley Authority:
Options and Issues (July 29, 2013).
By 2010, TVA believed that it had unreviewable ratesetting authority.1 JA 298. Acting accordingly, and in the
spirit of a for-profit corporation to which it was being
compared, TVA adopted a policy which gave no weight at
all to the policy directives of Section 831j. 2 JA 114, 170,
187, 276. Over the next decade, it repeatedly made Rate
Changes designed to eliminate the use of load factors
1. Over time, TVA became aware that various courts had
said that TVA rate-setting was unreviewable – though the more
careful opinions typically issued the caveat that review would be
available if TVA was alleged to violate “the purposes of [the TVA]
Act.” See, e.g., Ferguson v. Electric Power Bd. of Chattanooga,
378 F. Supp. 787, 789 (E.D. Tenn. 1974) (“In the absence of a clear
violation of the ‘purposes of this Act’ the matter of rate setting under
the Tennessee Valley Authority Act is not subject to judicial review.”)
(emphasis added). None of the cases previously stating that TVA
rate setting was unreviewable had involved the allegations at
issue here, likely because prior to 2010 TVA complied with the
requirements of Section 831j.
2. While TVA rate setting takes place in private, information
about its practices is provided in environmental assessments it
produces under the EPA Act.
13
and revenue returns generated from sales to and use by
industry for the benefit of domestic consumers. Id.
By the time this lawsuit was filed, the transformation
was complete. As a result of TVA’s new policy, load factors
and revenue returns from sales to industrial users no
longer are used to reduce rates for domestic consumers.
To the contrary, TVA’s industrial rates are the very lowest
among 17 regional power companies, while its residential
rates are ranked only seventh best competitively. See
Lazard Report to the Tennessee Valley Authority,
February 7, 2021, at 36-37 (available at https://perma.cc/
ZZ5J-B3C8) (Lazard Report).
F. Holbrook Suffered Direct Injury as a Result of
TVA’s Setting Rates in Derogation of Congress’
Instructions.
Petitioner Holbrook is a retail consumer of TVAgenerated electricity. JA 119. As a result of TVA’s failure
to comply with Section 831j, Holbrook paid and continues
to pay inflated electricity bills each month. Id.
G. The Proceedings Below.
Holbrook filed suit in the Western District of Virginia.
He sought relief for breach of contract and unlawful
exaction, and under the APA for review of the TVA’s
rate-setting in violation of its statutory purposes. JA
119. TVA moved to dismiss, arguing that federal courts
lack jurisdiction to review TVA rate-setting activities,
that such cases are not justiciable, and that in any event
federal courts should abstain from review. The district
court dismissed on that ground, relying on the Sixth
14
Circuit’s opinion in McCarthy v. Middle Tennessee Elec.
Membership Corp., 466 F.3d 399, 407 (6th Cir. 2006) (APA’s
“prohibition on judicial review” of TVA’s rate setting
provides TVA unreviewable power to preempt State laws
through use of contract terms and conditions). Pet. App.
32a.
The Fourth Circuit affirmed the dismissal, but for
reasons different from the District Court and according
to a legal theory not argued by the TVA. It found that the
APA applied generally to Holbrook’s claim. Pet. App. 3a,
n.1. But, faced with a statute that clearly provided “law
to apply” (see Citizens to Preserve Overton Park, Inc.
v. Volpe, 401 U.S. 402, 410 (1971); a recalcitrant agency
determined to ignore that law; and, perhaps, a New Deal
pricing policy it considered outdated (see Pet. App. 22a,
n.13), the court below devised and applied a new test to
govern when a matter is unreviewable because committed
to agency discretion under APA Section 701(a)(2), in
service of insulating TVA from court review. Pet. App.
10a-14a.
To craft this new test, it first acknowledged that
“[e]arly cases” used a “no law to apply” test drawn from
the APA’s legislative history to determine when a court
should refrain from reviewing discretionary agency
decisions. Pet. App. 12a. It then asserted that because
this test is “so difficult to meet,” this Court “often takes
a different approach,” that operates “more like a commonlaw analysis than a task of statutory construction.” Pet.
App. 12a-13a.
It next devised a new, two-part test that does not
look at all to whether the statute at issue contains a
meaningful standard for the exercise of agency discretion
15
that courts might apply. Pet. App. 14a. Instead, under the
newly devised test, a “presumption of unreviewability”
may derive from multiple factors, including lower court
opinions and the “complexity” of agency decision-making.
Pet. App. 14a-18a, 21a. At this stage, rather than look to
the nature of the agency function at issue to determine
whether it is susceptible to review under this Court’s
recent precedents and modern practices, the court is to
look primarily at case law decided prior to enactment
of the APA in 1946. If the court finds support for such a
presumption, then the agency is not subject to court review
even if it has acted arbitrarily and capriciously or abused
its discretion, unless Congress has issued a command to
the agency in a form suitable for enforcement through an
order of mandamus. Pet. App. 22a.
The Fourth Circuit applied this new-found test to
Holbrook’s claim. It found first that TVA rate-setting
was presumptively unreviewable because other lower
courts had said so, even though those cases did not
involve challenges to TVA’s failure to comply with the
rate setting directives of Section 831j. Id. It supported
its conclusion by pointing to a smattering of older cases,
without acknowledging that in the modern era, ratesetting issues routinely are subject to judicial review, and
without identifying a clear rationale for why TVA ratesetting should be presumptively unreviewable.
It then found that Section 831j did not contain a
command of the type that could overcome the newly
fashioned presumption against review. Id. In reaching its
conclusion, it did not take account of Section 831i, which
cabined TVA’s resale authority by limiting it to setting
resale rates for “carrying out the purposes of [the Act];”
16
or the policy directive in Section 831j that TVA projects
were intended for the “benefit of . . . consumers.” It also
was undeterred by Congress’ use of the term “shall,” or
the requirements that TVA utilize sales to industry to
generate load factors and revenue returns, because in its
view a Congressional command that “the agency shall
have this goal [in setting rates]” is an insufficient basis to
require Court review under Section 701(a)(2). Pet. App.
24a, n.14. It concluded that because the statute lacked
the requisite command, TVA’s actions in setting rates in
derogation of Congress’ instructions was unreviewable.
Pet. App. 25a, 29a-30a.
The Fourth Circuit’s analysis did not evaluate whether
Section 831j supplies law to apply, as is required under
this Court’s “meaningful standard” test, or provide a
reasoned explanation (outside formulaic application of its
newly created common-law test) for why judicial review
is not available to determine whether TVA complied with
the law when performing its core remaining function in
setting rates, when courts decide properly presented cases
involving rate-setting activities all the time.
The Fourth Circuit also dismissed Holbrook’s breachof-contract and illegal-exaction claims, the former on
the basis that Astra prohibits third-party beneficiary
claims against the government, and the latter because,
it concluded, an unlawful fee is not an exaction. Both
conclusions conflict with recent decisions of the Federal
Circuit.
The Fourth Circuit opinion affirmed dismissal of
Holbrook’s complaint, and established TVA rate-setting as
an agency function entirely exempt from judicial review.
17
REASONS FOR GRANTING THE PETITION
POINT I
CERTIORARI IS NECESSARY BECAUSE THE
FOURTH CIRCUIT’S REFUSAL TO REQUIRE
JUDICIAL REVIEW OF TVA’S ALLOCATION
OF RATES IN DEROGATION OF CONGRESS’
INSTRUCTIONS PRESENTS AN ISSUE OF
EXTRAORDINARY IMPORTANCE AFFECTING
THE PRIMARY PURPOSE OF A SIGNIFICANT
GOVERNMENT AGENCY.
A. Petitioner’s Action Is the Only Process Available
for Obtaining Court Review of TVA’s Compliance
with Congress’ Rate Setting Directives.
TVA does not set its resale rates through noticeand-comment or formal rulemaking. Vermont Yankee
Nuclear Power Corp. v. Nat. Res. Def. Council, Inc., 435
U.S. 519 (1978). Its rates aren’t subject to an individual
“adjudication” under APA Section 554. Its resale rates are
not subject to State law utility regulations. See Heritage
Backgrounder at 4-7. Nor is there some other forum upon
which Congress conferred exclusive jurisdiction. Tacoma
v. Taxpayers of Tacoma, 357 U.S. 320, 335-36 (1958).
Absent review in an action such as this one, TVA
rate-setting is not subject to review anywhere, anytime,
or in any forum.
18
B. Holbrook Stated a Claim for Relief under the APA.
Petitioner Holbrook is a retail consumer of TVAgenerated electricity. JA 119. He has alleged that in
setting retail rates, TVA is acting in deliberate disregard
of its obligations under Section 831j. JA 116-119.
Petitioner has offered credible evidence in support of
his allegations, including TVA’s own admissions (JA114,
170, 187, 276); its repeated Rate Changes (see JA 108119); and price comparisons with industry peers (Lazard
Report, at 36-37). Petitioner further has alleged that
as a result of TVA’s failure to comply with its statutory
requirements, he paid and continues to pay inflated
electricity bills each month. JA119. His complaint sought
relief under inter alia the APA. JA121.
C. The TVA Act Provides a Meaningful Standard for
Courts to Apply in Reviewing Whether the TVA Sets
Rates Consistent with the Directives of Congress.
This Court previously has noted the tension between
the prohibition of judicial review for actions “committed
to agency discretion” under Section 701(a)(2), and the
command in APA Section 706(2)(A) that courts set aside
any agency action that is “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law.” See,
e.g., Weyerhaeuser Co. v. United States Fish and Wildlife
Serv., 139 S. Ct. 361, 370 (2018). It has resolved this tension
firmly in favor of judicial review, concluding that Congress’
enactment of the APA had established a presumption of
review that always would apply to an agency’s exercise of
discretion so long as Congress had supplied a meaningful
standard to apply. Id. As the Court explained in Dep’t of
Com. v. New York, 139 S. Ct. 2551, 2568 (2019):
19
we have read the § 701(a)(2) exception for action
committed to agency discretion quite narrowly,
restricting it to those rare circumstances
where the relevant statute is drawn so that
a court would have no meaningful standard
against which to judge the agency’s exercise of
discretion. And we have generally limited the
exception to certain categories of administrative
decisions that cour ts traditionally have
regarded as committed to agency discretion,
such as a decision not to institute enforcement
proceedings, or a decision by an intelligence
agency to terminate an employee in the interest
of national security.
Id.
Here, Congress has supplied a “meaningful standard”
against which to assess TVA’s exercise of discretion in
setting rates. Section 831i limits the ambit of TVA’s ratesetting to fulfilling “the purposes of the Act,” described
by the second sentence of section 831j as “for the benefit
of . . . domestic consumers.” Id.
Congress further provided that “accordingly,” “sale
to and use by industry shall be a secondary purpose,”
which are “to be utilized principally to secure a sufficiently
high load factor and revenue returns which will permit
domestic and rural use at the lowest possible rates.” This
clause identifies a specific outcome goal: “lowest possible
[domestic] rates;” a specific methodology for achieving
that outcome goal: “sufficiently high [industry] load factor
and revenue returns;” and connects them through the
phrase “[shall be] utilized . . . to secure” to demonstrate
its intention to direct TVA to action. In its structure and
20
text, the plain meaning of Section 831j therefore provides
meaningful standards for court review. 3
TVA is of course entitled to deference in its methods
of applying the statutory factors to achieve the stated
goal. But courts can and should hold TVA accountable
for acknowledging and attempting to meet the statutory
goal, even if courts do not second guess its technocratic
expertise. See Motor Vehicle Mfrs. Ass’n of U.S., Inc. v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)
(“agency must examine the relevant data and articulate a
satisfactory explanation for its action including a rational
connection between the facts found and the choice made
. . . Normally, an agency rule would be arbitrary and
capricious if the agency has. . . entirely failed to consider
an important aspect of the problem.”).
D. The Fourth Circuit Erroneously Substituted a New
Judicial Abstention Approach to Agency Action in
Place of this Court’s “Meaningful Standard” Test
to Find TVA Rate-Setting Unreviewable.
In its opinion below, the Fourth Circuit acknowledged
that this Court had resolved the “tension” inherent in
3. Section 831j does not require that TVA gouge industrial
users by always setting the highest possible industrial rates and
using whatever profit it generates to subsidize rates for consumers.
The statute instead identifies two factors for reducing consumer
rates: revenue returns, and also “load factor.” “Load factor”
refers to the economic value generated from utilizing available
capacity. Increasing “load factor” might tend towards reducing
rates for industry, which can attract more industrial users and
thereby reduce rates overall. Increasing revenue returns would
tend towards increasing rates. It is TVA’s responsibility to balance
these factors to achieve the stated goal of “lowest possible domestic
rates.”
21
Section 701(a)(2) by devising and applying the “no law to
apply” and “meaningful standard to apply” test described
above. But then, after reviewing Overton Park and other
“early cases” (roughly pre-1990), the Fourth Circuit
pronounced that the “no law to apply” test had been
“so difficult to meet” that this Court “has often taken
a different approach,” one that operates “more like a
common-law analysis [regarding abstention] than a task
of statutory interpretation.” Pet. App. 12a-13a.
The opinion text offers no support for this “different
approach” (which implies the overruling of or at least
departure from prior precedent), other than in a footnote.
As the Fourth Circuit describes it there:
This switch from the “no law to apply” test to
a more common-law approach [got] extensive
treatment in a dissent by Justice Scalia
in Webster. . . This understanding of § 701(a)
(2) was adopted by a majority of the Court
in Lincoln. And this approach to § 701(a)
(2) has often been reiterated in the years
since—though not often used to find new
categories. See, e.g., Dep’t of Com., 139 S. Ct.
at 2568[;] Weyerhaeuser Co. v. U.S. Fish &
Wildlife Serv., 139 S. Ct. 361, 370 (2018).
Pet. App. 13a-14a, n.7.
While the Fourth Circuit cites Weyerhauser and
Dep’t of Commerce as supporting the purported “shift”
away from the “no law to apply” standard, in each case
the Court applied the “no law to apply” standard as the
basis for its holding. See Dep’t of Commerce, 139 S. Ct. at
2569 (“Because this is not a case in which there is ‘no law
22
to apply,’ Overton Park, 401 U.S. at 410, the Secretary’s
decision is subject to judicial review.”); Weyerhaeuser, 139
S. Ct. at 371–72 (“Section 4(b)(2) requires the Secretary
to consider economic impact and relative benefits before
deciding . . . The statute is, therefore, not drawn so that a
court would have no meaningful standard against which to
judge the [Secretary’s] exercise of [his] discretion”).4 The
Fourth Circuit does not cite any other court decisions or
secondary sources for the conclusion that the “meaningful
standard” test no longer is good law, or explain how or why
pre-APA common law should override the presumption
of reviewability expressed by Congress through its
enactment of the APA.
Nevertheless, after rejecting this Court’s settled
precedents, the Fourth Circuit next crafts its own twopart test for identifying categories of unreviewable agency
decisions. Crucially, this test functions in a manner that
avoids asking the very question that this Court always
views as determinative, to wit: did Congress provide the
agency with a meaningful standard against which courts
can measure the agency’s exercise of discretion?
4. It was a lone dissenting opinion in Dep’t of Commerce that
advanced a “common-law” basis for non-review, not the majority.
See id., 139 S. Ct. at 2597 (Alito, J., concurring and dissenting)
(identifying multi-factor approach; dissenting from majority
by finding court review precluded under APA Section 701(a)
(2)). Unlike the Fourth Circuit, however, that dissenting opinion
incorporated a “meaningful standard” analysis, albeit as one part
of a multi-factor test. Id., 139 S. Ct. at 3597(Alito, J.) (evaluating,
first, whether the “text and structure of the relevant statutes leave
a court with any meaningful standard against which to judge the
agency’s exercise of discretion”).
23
Instead, in the first part of the Fourth Circuit analysis,
the court looks to various extraneous factors to create a
presumption vel non of unreviewability. These factors
include whether the decision involves balancing (which, in
the case of bureaucratic decision-making, is almost always
the case), and whether lower court decisional law prior to
the APA had excepted the particular agency function from
review. In contrast, the court does not look to whether the
function at issue is considered unreviewable under this
Court’s modern precedent, or whether there is a clear
reason that a presumption of unreviewability might apply.
The wide range of agency decision-making that might
be swept up by this “different approach” is reflected in its
application here. Only a single, unreported, trial-courtlevel Conclusion of Law had ever found TVA rate-making
unreviewable prior to the APA, in a case that had nothing
to do with TVA ratemaking. See Pet. App. 18a (quoting
unreported Conclusion of Law from case later decided at
Tennessee Elec. Power Co. v. Tennessee Valley Auth., 21
F. Supp. 947 (E.D. Tenn. 1938), aff’d 306 U.S. 118 (1939)
(dismissing suit by eighteen power companies to enjoin
further construction of Tennessee Valley Authority dams)).
Accordingly, to find support for its presumption of
unreviewability, the Fourth Circuit looked to a mishmash
of purportedly analogous older cases where lower courts,
both before and after enactment of the APA, had found
a basis to avoid review. 5 Pet. App. 19a. But as the Fourth
5. Only two of the cases cited by the Fourth Circuit were
issued by this Court. Panama Canal Co. v. Grace Line, Inc.,
356 U.S. 309 (1958), which was decided prior to Overton Park,
involved a dispute about an accounting issue that arose between
the President and Congress relating to tariffs in the Panama
24
Circuit itself acknowledged, even in the pre-APA period,
courts “regularly intervened” in government regulation
of utility ratemaking. Pet. App. 20a, n.12. In the modern
era, courts routinely review both government ratemaking
and rate regulation, in such disparate circumstances as
Medicaid rates (Am. Hosp. Ass’n v. Becerra, 142 S. Ct.
1896 (2022)); coal rates (Arizona Elec. Power Co-op., Inc.
v. United States, 816 F.2d 1366, 1368 (9th Cir. 1987)); oil
pipeline rates (Farmers Union Cent. Exch., Inc. v. FERC,
734 F.2d 1486 (D.C. Cir. 1984)); public parkland fees
(Maryland Nat. Cap. Park & Plan. Comm’n v. Lynn, 514
F.2d 829 (D.C. Cir. 1975)); and communications (Sorenson
Commc’ns, Inc. v. F.C.C., 765 F.3d 37, 48 (D.C. Cir. 2014)),
to name but a few.
The Fourth Circuit reasoned however that TVA’s
rate-setting nevertheless should be immune from review
because the TVA is “setting the price for something it
is selling itself.” Pet. App. 20a, n.12. It certainly is true
that in order to implement the purposes of the TVA Act,
Congress assigned to the TVA a dual role, in which it acts
as a commercial enterprise when it sells electricity at
wholesale and acts as regulator by setting the resale rates
Canal. Id. This Court applied a rational basis test to approve the
tariffs. See Berger, Administrative Arbitrariness: A Synthesis,
78 Yale L.J. 965, 971 n.32 (1969). United States v. George S. Bush
& Co., 310 U.S. 371 (1940), which also involved a tariff imposed by
the President, is a pre-APA decision which reflects an approach
entirely at odds with this Court’s current jurisprudence. See, e.g.,
id., 310 U.S. at 946 (“Whenever a statute gives a discretionary
power to any person, to be exercised by him upon his own opinion
of certain facts, it is a sound rule of construction, that the statute
constitutes him the sole and exclusive judge of the existence of
those facts”).
25
that its wholesale purchasers must then pass through.
But each of these individual roles is routinely subject to
judicial review. The fact that both roles are exercised
by the TVA makes it more imperative that the TVA’s
allegedly unlawful exercise of these functions be subject to
judicial review; it is not a reason to create a presumption
of unreviewability. Certainly, Congress never expressed
such a view, and the Fourth Circuit never explained why
that should be the case.
Once the presumption of unreviewability is applied,
the analysis effectively reaches its end: this presumption
of unreviewability can be overcome only when the
Congressional enactment admits of no discretion at all.
Thus, for example, in this case, the relevant clause – “sales
to and use by industry shall be . . . utilized principally
to secure a sufficiently high load factor and revenue
returns which will permit domestic and rural use at the
lowest possible rates” – plainly directs TVA to set rates
by leveraging the two identified inputs into an outcome
goal. Nevertheless, the Fourth Circuit found the phrase
“will permit” does not satisfy its requirements for a
“command,” because the use of future tense indicated
the goal was “aspirational.” But under traditional rules of
statutory interpretation, this clause must be given effect.
The text and structure of Section 831j therefore provide
a sufficient basis for judicial review to ensure that TVA
remains faithful to Congress’ direction in Section 831j.
See Pol’y & Rsch., LLC v. United States Dep’t of Health &
Hum. Servs., 313 F. Supp. 3d 62, 67 (D.D.C. 2018), appeal
dismissed, No. 18-5190, 2018 WL 6167378 (D.C. Cir. Oct.
29, 2018) (“it is . . . clear beyond cavil that an agency acts
arbitrarily and capriciously if it acts in a manner that is
contrary to . . . a congressional statute”).
26
The Fourth Circuit’s new judicial-abstention approach
stands this Court’s jurisprudence on its head. Under
this approach, even where Congress has specified how
agencies are to exercise their discretion, agencies are
free to disregard Congress, abuse their discretion, and
act arbitrarily and capriciously in derogation of Congress’
explicit directions, all without threat of judicial review.
By applying its new-found judicial-abstention
approach, the Fourth Circuit thus created a “new
category” of decision making – how TVA establishes
rates – exempt from judicial review under the APA. Pet.
App. 13a, n.7. Its approach finds no support in this Court’s
precedents, which always require judicial review where,
as here, Congress has supplied a meaningful standard
to apply.
E. In Conflict with the Federal Circuit, the Fourth
Circuit Erroneously Dismissed Holbrook’s Claim
as an Express Intended Beneficiary of the TVA
Contract.
Congress specifically authorized the TVA to implement
the purposes of the Act through the terms and conditions
of its contracts with local power companies. 16 U.S.C. §
851i. TVA in turn utilized that authority to incorporate
its statutory rate-setting obligations into those contracts.
JA 105-06. As the Fourth Circuit acknowledged (Pet.
App. 27a-28a, n.16), TVA also expressly made consumers
such as Holbrook the intended third-party beneficiaries
of those contracts. JA 10; TVA-BVU Power Contract at 1.
The Fourth Circuit nevertheless dismissed Holbrook’s
breach of contract claim on the ground that Holbrook
sought to enforce a government form contract for which
27
Congress had not provided a private cause of action. Pet.
App. 28a, citing Astra, supra (no third-party breach
of contract action available against pharmaceutical
manufacturers who entered form statutory ceiling-price
agreements with federal government).
The Fourth Circuit misconstrued Astra. The Court
in Astra left open the question whether a contracting
agency such as TVA may authorize third-party suits to
enforce a government contract, as the TVA Act permitted
and as TVA did here. Id., 563 U.S. at 119, n.4. And, as
the Federal Circuit has explained, while Astra prohibits
private parties from displacing the enforcement role of
the Government, “[t]hat concern . . . is inapplicable where,
as here, the third party is not seeking to supplement or
displace the role of the government as the enforcing party
but is seeking to enforce rights against the government.”
Columbus Reg’l Hosp. v. United States, 990 F.3d 1330, 1347
(Fed. Cir. 2021) (hospital stated third-party beneficiary
claim against FEMA).
The Fourth Circuit opinion, in conflict with the Federal
Circuit, precludes the courts’ exercise of jurisdiction over
TVA’s rate setting in derogation of Congress’ instruction.
Certiorari is warranted for this reason, and to resolve the
conflict between the Fourth Circuit opinion and Columbus
Reg’l.
F. In Conflict with the Federal Circuit, the Fourth
Circuit Erroneously Dismissed Holbrook’s Unlawful
Exaction Claim.
The Fourth Circuit also dismissed Holbrook’s claim
that the overcharges he paid constituted an illegal exaction
because “a voluntary payment for services rendered is not
an exaction, illegal or otherwise.” Pet. App. 29a.
28
This conclusion conflicts with the Federal Circuit’s
decision in Nat’l Veterans Legal Servs. Program v. United
States, 968 F.3d 1340, 1349 (Fed. Cir. 2020). In that case,
the Federal Circuit held that the plaintiff had stated a
claim by alleging that the government’s PACER fees
had exceeded the statutorily authorized amount. As the
Federal Circuit held:
because . . . the government is alleged to have
illegally collected more than the authorized fee,
the necessarily implied remedy for any violation
through overcharging is that the government
must return the excess fees collected.
Id., 968 F.3d at 1349.
Under Nat’l Veterans, a voluntary payment of an
unlawful government fee still may constitute an illegal
exaction. Here too, the Fourth Circuit opinion, in
conflict with the Federal Circuit, improperly precludes
the exercise of jurisdiction over TVA’s rate setting in
derogation of Congress’ instruction.
G. Certiorari Is Necessary Because the Fourth
Circuit Opinion Improperly Enables TVA to Evade
Compliance with Congress’ Instructions Governing
Its Core Function and Affecting More Than 10
million Customers.
The Fourth Circuit’s decision precluding court review
of TVA rate-setting decisions leaves TVA free to set rates
in arbitrary and capricious fashion and in derogation of
Congress’ intent. It impacts directly the electricity rates
paid by TVA’s resale ratepayers each month. The Court
29
therefore should grant certiorari to determine whether
court review is available to ensure that TVA is complying
with the requirements of Sections 831i and 831j when
it leverages its $50 billion worth of public property to
distribute more than $10 billion worth of electricity
annually for the benefit of more than 10 million customers.
Review of this very case is especially necessary
because TVA rate-setting is not subject to review in any
other forum. Indeed, absent review of this very case, it is
unlikely that another plaintiff will entertain the financial
and legal risks of bringing a similar suit in the future, or
possible Rule 11 motions in the Sixth or Fourth Circuits.
Congress has not repealed federal court jurisdiction
for actions against the TVA; to the contrary, it specifically
authorized such actions through the sue-and-be-sued
clause, carved it out from the immunity provided under
the Tort Claims Act, and made it subject to the APA.
Petitioner has adequately alleged that he pays excessive
rates as a direct result of TVA’s ultra vires setting of his
electricity rates.
Nevertheless, the Fourth Circuit dismissed all
claims against the TVA, and created a new category
of unreviewable agency decision. The Fourth Circuit
approach requires courts to abstain from considering an
otherwise properly pleaded complaint. See Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007). This judge-made
abstention doctrine finds no support in the TVA Act or
Congressional sanction. By eliminating the possibility
of review, the lower court has empowered TVA to act
in derogation of Congress’ instructions without the
possibility of “consequences” necessary for when “legal
30
lapses and violations occur.” Mach Mining, LLC v. EEOC,
135 S. Ct. 1645 (2015).
POINT II.
CERTIORARI IS NECESSARY BECAUSE THE
FOURTH CIRCUIT ENDOWED THE TVA WITH
UNREVIEWABLE AND UNACCOUNTABLE
LEGISLATIVE AND EXECUTIVE POWERS IN
CONTRAVENTION OF THE SEPARATION-OFPOWERS DOCTRINE.
Certiorari also is necessary because the ruling below
eliminated the sole remaining check that Congress and
the Constitution placed on the independently operated,
commercially driven, and government-empowered TVA.
The Fourth Circuit’s opinion empowers TVA to act without
the oversight provided by judicial review. Absent review
by this Court, the unaccountable enterprise empowered
by the Fourth Circuit would operate radically at odds
with the system of Government devised by the Founders.
A. Certiorari Is Necessary to Prevent TVA from
Operating as a Commercial-Governmental Entity
with Unchecked Power to Distribute Government
Benefits.
There is a clearly intelligible purpose in Congress’
creation of the TVA as a government-empowered but
commercially operated power company. See J.W. Hampton,
Jr., & Co. v. United States, 276 U.S. 394 (1928) (Congress
required to lay down intelligible purpose to which agency
is directed to conform.). The second sentence of Section
831j, whatever its precise contours, directly addresses that
31
question: It says that the purpose of TVA power projects
is to benefit consumers, and that sales to industry should
be used to support consumers by leveraging load factors
and revenue returns to enable consumers to receive the
lowest possible rates.
TVA performs its rate setting functions by fiat, without
informal or notice-and-comment rulemaking, without
being subject to administrative hearings, and without
supervision of state regulatory agencies. See supra at 6-8.
Nor, unlike private enterprises, are there shareholders
who may hold the Board and executives accountable. The
only potential check on TVA’s commercial and regulatory
powers is court review in a case such as this one.
Absent the possibility of review, the TVA Board
acts as the sole arbiter in determining how to allocate
the benefits generated by its vast economic enterprise –
whether by preferring industrialists and bitcoin miners,
for populist purposes, to benefit or harm competitors,
or otherwise -- even though Congress clearly vested it
with its broad powers in order to achieve a specified goal.
The aggregation of power in the unaccountable TVA is
inconsistent with our Constitutional scheme and presents
a serious threat to individual liberty. See McConnell,
Socialism and the Constitution, Hoover Institution (2020)
(federal checks-and-balances constrain potential excesses
of federal agencies, such as TVA, endowed with power
over significant enterprises or sectors of the economy);
Anders Aslund, Russia’s Crony Capitalism: The Path from
Market Economy to Kleptocracy (Yale University Press,
May 21, 2019).
32
Certiorari therefore is necessary to ensure that
Congress’ delegation of powers to the TVA remains
within Constitutional limits. See Indus. Union Dep’t,
AFL-CIO, 448 U.S. 607, 646 (1980) (if statute had
delegated unreviewable authority, it “would make such a
sweeping delegation of legislative power that it might be
unconstitutional”) (internal quotations omitted).
B. This Case Is an Excellent and Necessary Vehicle
to Add ress Constitutional Limitations on
Economically Independent Agencies.
This Court recently has granted certiorari and
otherwise acted to address instances in which federal
agencies arguably exceeded the powers authorized by
Congress or permitted under the Constitution. See, e.g.,
W. Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587 (2022)
(Congress did not grant EPA authority to devise certain
emissions regulations); Seila L. LLC v. Consumer Fin.
Prot. Bureau, 140 S. Ct. 2183 (2020) (for-cause restriction
of President’s executive power to remove CFPB’s single
Director violated constitutional separation of powers).
The unreviewable power arrogated to the TVA by
the Fourth Circuit presents issues as consequent as any
at issue in those cases. This case therefore presents an
excellent vehicle to describe the limitations that apply
to delegations of economic power to such independent
agencies, including the need for Congress to identify an
intelligible principle for its activities; the requirement
that it is for Congress to set policy goals; and that courts
must be available to review whether the agency properly
took into account Congress’ priorities.
33
CONCLUSION
For the foregoing reasons, the petition for a writ of
certiorari to the United States Court of Appeals for the
Fourth Circuit should be granted.
DATED: January 5, 2023
Respectfully submitted,
Martin Bienstock
Counsel of Record
Bienstock PLLC
1629 K. Street NW, Suite 300
Washington, DC 20006
(202) 908-6600
mbienstock@bienstockpllc.com
Mark T. Hurt
The Law Offices of Mark T. Hurt
159 West Main Street
Abingdon, VA 24210
(276) 623-0808
Counsel for Petitioners
APPENDIX
i
TABLE OF APPENDICES
Page
A P P E N DI X A — O P I N ION O F T H E
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT, FILED
SEPTEMBER 7, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . 1a
A P P E N DI X B — O P I N ION O F T H E
UNITED STATES DISTRICT COURT
FOR T H E W EST ERN DIST RICT OF
VIRGINIA, ABINGDON DIVISION, FILED
MARCH 19, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31a
APPENDIX C — RELEVANT STATUTORY
PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42a
1a
APPENDIX A — Appendix
OPINIONAOF THE UNITED
STATES COURT OF APPEALS FOR THE FOURTH
CIRCUIT, FILED SEPTEMBER 7, 2022
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 21-1415
DAVID HOLBROOK,
Plaintiff-Appellant,
v.
TENNESSEE VALLEY AUTHORITY;
BVU AUTHORITY,
Defendants-Appellees.
Appeal from the United States District Court for the
Western District of Virginia, at Abingdon. James P. Jones,
Senior District Judge. (1:20-cv-00025-JPJ-PMS)
Argued: January 27, 2022
Decided: September 7, 2022
Before RICHARDSON, RUSHING, and HEYTENS,
Circuit Judges.
Affirmed by published opinion. Judge Richardson wrote
the opinion, in which Judge Rushing and Judge Heytens
joined.
2a
Appendix A
RICHARDSON, Circuit Judge:
The Tennessee Valley Authority sells its power
to the BVU Authority in Virginia, one of its many
customers. The BVU Authority in turn sells its power to
local consumers who need electricity. Among those local
consumers is David Holbrook, and Holbrook thinks he
has been paying too much for power. He believes that the
TVA has a statutory duty to use the fruits of its sales to
large industrial buyers to subsidize consumers’ electricity
consumption. He bases this view largely on § 11 of the
Tennessee Valley Authority Act of 1933, Pub. L. No. 7317, § 11, 48 Stat. 58, 64-65 (codified at 16 U.S.C. § 831j).
That provision gives the TVA two goals: The first goal is
to operate “primarily . . . for the benefit of the people . . .
particularly the domestic and rural consumers to whom
the power can economically be made available,” and a
“secondary” goal is to use sales to industry “principally
to secure a sufficiently high load factor and revenue
returns which will permit domestic and rural use at the
lowest possible rates.” Holbrook reads that language
as a command to the TVA to subsidize consumers from
the pockets of industry. Under that reading, Holbrook
believes that a string of TVA rate changes, shifting costs
from industry to consumers, were illegal. So he sued BVU
Authority and TVA under three theories, which all more or
less amount to claims that the TVA failed to live up to its
statutory duties under § 11. The district court dismissed
all three claims because TVA’s ratemaking authority is
committed to agency discretion and thus unreviewable.
We affirm.
3a
Appendix A
I.
Background
A.
The Tennessee Valley Authority
“Congress created the TVA—a ‘wholly owned public
corporation of the United States’—in the throes of the
Great Depression to promote the Tennessee Valley’s
economic development.” Thacker v. TVA, 139 S. Ct. 1435,
1439, 203 L. Ed. 2d 668 (2019) (quoting TVA v. Hill, 437
U.S. 153, 157, 98 S. Ct. 2279, 57 L. Ed. 2d 117) (1978)).1
Congress created the TVA through the Tennessee Valley
Authority Act of 1933. 2 And Congress gave the TVA a lot
to do. It was tasked with improving the navigability of
1. The TVA is a unique federal agency. See North Carolina ex
rel. Cooper v. TVA, 515 F.3d 344, 349 (4th Cir. 2008). For it is also a
corporation and can sue and be sued in its corporate name. TVA Act,
§ 4(b). Consequently, it has been exempted from many provisions
that govern other agencies. The TVA is explicitly exempt from suit
in the Court of Federal Claims. 28 U.S.C. § 1491(c). That’s why we,
and not the Federal Circuit, are hearing this case. The TVA is also
exempt from many rules that govern other federal agencies, including
civil service laws, TVA Act, § 3, purchasing requirements, § 9, and
systematic review under 5 U.S.C. § 305(a)(2), (b) (“[E]ach agency
shall review systematically the operations of each of its activities,
functions, or organization units, on a continuing basis.”)). But the
provision on judicial review of agency action in the Administrative
Procedure Act does not exempt the TVA. 5 U.S.C. § 704. And § 701
of the APA lays out the meaning of “agency” for the purposes of
agency review, and the TVA is not listed among the types of entities
exempt from review. § 701(b).
2. We adopt the practice of the parties who refer to the TVA’s
provisions by their original section titles in the Public Law. The
most important provision for our purposes is § 11, which is codified
at 16 U.S.C. § 831j.
4a
Appendix A
the Tennessee River, preparing for flood control along the
river, reforesting parts of the Valley, and putting other
areas to more productive use. TVA Act, §§ 1, 22-23. It was
even told to act “in the interest of the national defense”
by operating a fertilizer plant in Muscle Shoals, Alabama.
§§ 1, 5, 11. 3
What matters for our purposes is 16TVA’s role in
producing electricity. To this day, the TVA is a major
purveyor of electricity to the Tennessee Valley.4 It sells
electricity wholesale to federal agencies, industrial users,
localities, local governments, and co-ops who do the retail
selling to consumers (or use the power themselves).
B. Holbrook’s Claims and TVA Rate-Setting
David Holbrook is one of those consumers. He lives
in Bristol, Virginia, and buys his power from the BVU
Authority, a power company created by the State of
3. The Muscle Shoals plant produced nitrates — a primary
ingredient in both fertilizer and explosives. § 5(g). So in peacetime,
those nitrates were used to make fertilizer, but they could be directed
to explosives manufacturing during wartime.
4. A note on why the Fourth Circuit is hearing this case. The
Tennessee Valley is the drainage basin of the Tennessee River, which
is—you guessed it—mostly in the state of Tennessee. Tennessee,
of course, sits in our sister circuit, the Sixth. But the River and the
Valley and therefore the TVA dip into other states in the Sixth Circuit
(Kentucky), the Fifth Circuit (Mississippi), the Eleventh Circuit
(Alabama and Georgia), and parts of the Fourth Circuit (North
Carolina and Virginia). This case comes to us from the Western
District of Virginia.
5a
Appendix A
Virginia. The TVA sells power to the BVU Authority who
serves local customers. Holbrook’s suit here focuses on the
rates that TVA requires BVU Authority, as a wholesale
buyer, to charge Holbrook, as a retail power consumer.
When the TVA sets rates, it aims to meet a slew of
policy objectives that Congress laid out in the Act. To
start, § 10 of the Act instructs the TVA to give preferences
to “States, counties, municipalities, and cooperative
organizations of citizens or farmers, not organized or
doing business for profit, but primarily for the purpose
of supplying electricity to its own citizens or members.”
Section 11 of the Act is of particular importance to
this suit:
It is hereby declared to be the policy of the
Government so far as practical to distribute
and sell the surplus power generated at
Muscle Shoals equitably among the States,
counties, and municipalities within transmission
distance. This policy is further declared to be
that the projects herein provided for shall be
considered primarily as for the benefit of the
people of the section as a whole and particularly
the domestic and rural consumers to whom the
power can economically be made available, and
accordingly that sale to and use by industry
shall be a secondary purpose, to be utilized
principally to secure a sufficiently high load
factor and revenue returns which will permit
domestic and rural use at the lowest possible
6a
Appendix A
rates and in such manner as to encourage
increased domestic and rural use of electricity.
Holbrook reads this piece of the statute as a directive
to use industry sales to subsidize “domestic and rural
consumers.” See § 11.
Holbrook’s claims concern several revenue-neutral
rate changes implemented through BVU Authority
contracts under a new TVA policy called the “Strategic
Pricing Plan.” J.A. 107. To understand that claim, we
need to understand how the TVA sets its rates. To grossly
simplify, when the TVA sets rates, it takes two distinct
steps. First, it determines the amount of revenue it needs
to collect from all its sales. Then, it determines how to
assign prices to various customers to meet that overall
goal. When the TVA changes that total amount it needs,
that’s called a “rate adjustment.” In contrast, a “rate
change” occurs when the TVA rearranges or otherwise
changes the various rates among customers while keeping
its overall revenue goal the same. So rate changes must
be revenue neutral.
The TVA sets its rates largely through entering power
contracts with local power companies, who then resell the
power to different classes of customers at different rates
as required by the power contracts with TVA.
Back to the Strategic Pricing Plan. In 2010, the
TVA began putting the Plan, which focused on “TVA’s
long-term pricing,” into motion in power contracts with
local power companies. J.A. 249. The Plan aimed to
7a
Appendix A
achieve fairness in pricing and increase competitiveness
by charging customers based on their proportion of
total cost of service. The TVA aimed to change rates
so “that revenue [would] be recovered in proportion to
costs by customer class.” J.A. 187. Because supplying
power to industry is cheaper, TVA sought to create new
benefits and discounts for industrial consumers, things
like manufacturing credits and high-volume discounts.
TVA hoped the Plan would better transform the TVA’s
savings from efficient, industrial-energy use into savings
for the industrial consumers who made those efficiencies
possible. But Holbrook alleges that all those changes to
benefit industrial customers unjustifiably shifted costs
onto consumers.
To illustrate the effect of these changes, Holbrook says
that in 2015, compared to its rivals, TVA had industrial
rates in the cheapest quartile and consumer rates around
the median, which already suggests that consumers were
not top priority. But then the TVA added a “General
Manufacturing Credit,” which reduced industry rates by
an average of 6.4% and increased consumer rates by 1.1%.
By 2016, Holbrook says this shifted nearly half a billion
dollars in costs from industry to consumers, and that has
only increased since then.
Holbrook’s power supplier BVU entered contracts
with TVA over the past decade, carrying out the rate
structure envisioned by the Strategic Pricing Plan.
Based on his theory that TVA was illegally requiring
his electric company to charge him too much for power,
Holbrook brought this Complaint on behalf of “[a]ll
8a
Appendix A
persons who within the statute of limitations period
were domestic customers of TVA” and “[a]ll persons who
within the statute of limitations period were domestic
customers of BVU and who received energy pursuant to
a contract between the TVA and the BVU.” J.A. 119. The
Amended Complaint focuses on three claims: a third-party
breach of contract claim against both TVA and BVU,
an Administrative Procedure Act claim under 5 U.S.C.
§ 702 against TVA alone, and an “Unlawful Exaction”
claim against both TVA and BVU, which alleges that TVA
caused Plaintiffs to pay more for electricity than “could
lawfully be charged under the TVA Act.” J.A. 121-22.
While we do not have the exact contracts used during
the relevant period since the district court dismissed
the case by granting a motion to dismiss, we do have an
example of a similar contract from 2006. Holbrook alleges
that this contract is representative of the contracts they
have used since. The 2006 contract reiterates many of the
TVA’s goals and purposes as laid out in the TVA Act. It
may be more accurate to say that the statutory language
is copied into the contract. And importantly, the contract
includes the § 11 language that “power shall be primarily
for the benefit of the people of the section as a whole and
particularly the domestic and rural consumers, to whom
it is desired to make power available at the lowest possible
rates.” J.A. 10.
The district court relied on precedent from courts in
the Sixth Circuit to hold that TVA’s ratemaking authority
is “committed to agency discretion by law” under 5 U.S.C.
§ 701(a)(2). And because § 701(a)(2) precludes judicial
review over issues committed to agency discretion, the
9a
Appendix A
district court dismissed Holbrook’s APA claims. From
there, the court dismissed the contract and exactions
claims for the same reason, finding that the contract and
exaction claims were essentially the same claim as the
APA challenge and were therefore barred by § 701(a)(2)
just the same. See Holbrook v. TVA, 527 F. Supp. 3d 853,
858 (W.D. Va. 2021).
II. Discussion
We review the dismissal of these claims de novo.
Demetres v. E.W. Constr., Inc., 776 F.3d 271, 272 (4th Cir.
2015). We take each claim—the APA claim, the breach-ofcontract claim, and the unlawful-exaction claim—in turn.
A.
APA Claim
Under the APA, “[a] person suffering legal wrong
because of agency action . . . is entitled to judicial review
thereof.” 5 U.S.C. § 702. That language sets up a “basic
presumption of judicial review” of agency action. See
Abbott Lab’ys v. Gardner, 387 U.S. 136, 140, 87 S. Ct. 1507,
18 L. Ed. 2d 681 (1967). But the APA’s text lays out two
exceptions to that basic principle: first, where “statutes
preclude judicial review,” § 701(a)(1), and second, where
“agency action is committed to agency discretion by
law,” § 701(a)(2). Only the second exception might apply
here, so we must figure out whether TVA ratemaking is
“committed to agency discretion by law.”5
5. One influential administrative law scholar had this to say
about the task of figuring out what § 701(a)(2) means: “I don’t see
how anybody can find the meaning of those words. The words seem
10a
Appendix A
Courts have dealt with two initial puzzles about what
it means under the APA for something to be “committed
to agency discretion by law.” The first puzzle is how to
differentiate the two exceptions to judicial review. At a
glance, it’s hard to see the difference between a statute that
precludes judicial review and law that commits decisions
to agency discretion (thereby precluding judicial review).
Yet the Supreme Court has given us some guidance.
The Court tells us the § 701(a)(1) exception for statutes
precluding judicial review “applies when Congress has
expressed [its] intent” and the § 701(a)(2) standard for
agency discretion applies when there is “no meaningful
standard against which to judge the agency’s exercise of
discretion.” Heckler v. Chaney, 470 U.S. 821, 830, 105 S.
Ct. 1649, 84 L. Ed. 2d 714 (1985). So the first exception is
for explicit statutory limitations on review, and the second
exception—the one at issue—is for implicit limitations on
review. See Dep’t of Just., Attorney General’s Manual on
the Administrative Procedure Act 94 (1947) (“A statute
may in terms preclude, or be interpreted as intended to
preclude, judicial review altogether.”).6
to contradict themselves; they don’t make any sense; if they do, what
might the sense be? Nobody can extract from the words an answer
to this simple question: When discretionary power is conferred by
statute on an agency, when, if ever, may a court review for abuse of
discretion?” Present at the Creation: Regulatory Reform Before
1946, 38 Admin. L. Rev. 507, 519 (1986) (remarks of Kenneth Culp
Davis). Well, that’s our task.
6. The Attorney General’s Manual on the APA has often been
relied on by the Supreme Court in interpreting the Act. See Vt.
Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, Inc., 435
U.S. 519, 546, 98 S. Ct. 1197, 55 L. Ed. 2d 460 (1978). Because the
11a
Appendix A
The second puzzle arises from the seeming tension
between the second exception, § 701(a)(2), and § 706, the
APA’s provision defining the scope of agency review. Under
§ 706(2)(A), courts are instructed to “hold unlawful and
set aside agency action, findings, and conclusions found
to be . . . an abuse of discretion.” One might wonder how
courts can set aside something as abuse of discretion
when discretionary questions committed to the agency
by law are insulated from judicial review in the first
place. The Supreme Court’s solution to this puzzle has
been to focus on the suitability of the agency action for
judicial review—“if no judicially manageable standards
are available for judging how and when an agency should
exercise its discretion, then it is impossible to evaluate
agency action for ‘abuse of discretion.’” Chaney, 470 U.S.
at 830. If courts can naturally review for an abuse of
discretion, they should; if they can’t, § 701(a)(2) tells them
to steer clear. See Lincoln v. Vigil, 508 U.S. 182, 190-91,
113 S. Ct. 2024, 124 L. Ed. 2d 101 (1993). So the main task
under § 701(a)(2) is to determine when there are or are not
“judicially manageable standards” for judging an agency’s
exercise of discretion.
Department of Justice played an unusually important role in the
drafting of the APA, id., the Court has been willing to cite this
contemporaneous guide. See Kisor v. Wilkie, 139 S. Ct. 2400, 2419,
204 L. Ed. 2d 841 (2019). Even Justice Scalia, ever the opponent of
legislative history, found that the Attorney General’s Manual is often
a “persuasive” source in expounding the meaning of the APA given
its unique status. See Norton v. S. Utah Wilderness All., 542 U.S.
55, 63-64, 124 S. Ct. 2373, 159 L. Ed. 2d 137 (2004). While of course
it cannot overcome the plain text of the Act, we consider it.
12a
Appendix A
Early cases applying this subsection used a “no law to
apply” test drawn from the legislative history of the APA.
See Chaney, 470 U.S. at 830 (quoting Citizens to Preserve
Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S. Ct. 814,
28 L. Ed. 2d 136 (1971)). The test asks whether this is one
of “those rare instances where ‘statutes are drawn in such
broad terms that in a given case there is no law to apply.’”
Overton Park, 401 U.S. at 410 (quoting S. Rep. No. 79-752,
at 26 (1945)). The problem with that test is that there is
nearly always some law to apply— “beginning with the
fundamental constraint that the decision must be taken
in order to further a public purpose rather than a purely
private interest.” Webster v. Doe, 486 U.S. 592, 608, 108 S.
Ct. 2047, 100 L. Ed. 2d 632 (1988) (Scalia, J., dissenting).
Remember § 706 and abuse-of-discretion review as
well: Arbitrary-and-capricious review only involves
“articulat[ing] a satisfactory explanation for [agency]
action including a rational connection between the facts
founds and the choice made.” Motor Vehicle Mfrs. Ass’n v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S. Ct.
2856, 77 L. Ed. 2d 443 (1983) (quoting Burlington Truck
Lines v. United States, 371 U.S. 156, 168, 83 S. Ct. 239, 9
L. Ed. 2d 207 (1962)); see Ronald M. Levin, Understanding
Unreviewability in Administrative Law, 74 Minn. L. Rev.
689, 708 (1990) (“Pure abuse of discretion inquiries do
not depend on the contents of the statute under which an
agency acts.”). We could always apply that legal test by
making sure the agency had offered reasoned explanation
of its actions.
Because the “no law to apply” test is so difficult to meet,
the Supreme Court has often taken a different approach
13a
Appendix A
to § 701(a)(2), one that operates more like a commonlaw analysis than a task of statutory interpretation.
The aim of this common-law approach has been to
determine categories of administrative action that “courts
traditionally have regarded as ‘committed to agency
discretion.’” Dep’t of Com. v. New York, 139 S. Ct. 2551,
2568, 204 L. Ed. 2d 978 (2019) (quoting Lincoln, 508
U.S. at 192).7 Once we are in a traditional category, the
7. This switch from the “no law to apply” test to a more commonlaw approach was implied in Chaney but got a more extensive
treatment in a dissent by Justice Scalia in Webster, 486 U.S. at 60621. There, Justice Scalia argued that § 701(a)(2) cannot be limited
to situations when there is no law to apply for the reasons we’ve
just pointed out. He argued instead, as the Court had hinted at in
Chaney, that § 701(a)(2) was meant to refer to a preexisting body of
common law of judicial review of agency action that the APA was
meant to embrace and carry on. Id. at 609 (“The intended result of
§ 701(a) is to restate the existing law as to the area of reviewable
agency action.” (quoting AG’s Manual, supra, at 94)). In essence,
“committed to agency discretion by law” means action that is “of
the sort that is traditionally unreviewable,” which includes looking
at past practice, practical consequences, and whether the decision
involves inherently discretionary judgment calls. Id. at 609.
This understanding of § 701(a)(2) was adopted by a majority of
the Court in Lincoln, 508 U.S. at 191 (citing Webster, 486 U.S. at 609
(Scalia, J., dissenting)), where the Court found that “the allocation
of funds from a lump-sum appropriation is another administrative
decision traditionally regarded as committed to agency discretion.”
Id. at 192. And this approach to § 701(a)(2) has often been reiterated
in the years since—though not often used to find new categories. See,
e.g., Dep’t of Com., 139 S. Ct. at 2568 (“We have generally limited
the exception to certain categories of administrative decisions
that courts traditionally have regarded as committed to agency
discretion.” (cleaned up)); Weyerhauser Co. v. U.S. Fish & Wildlife
14a
Appendix A
“presumption of reviewability” under the APA flips, and
the agency action becomes “presumptively unreviewable.”
Chaney, 470 U.S. at 831-32. But only presumptively.
Even in an area that has been traditionally insulated
from review, “Congress may limit an agency’s exercise
of enforcement power if it wishes, either by setting
substantive priorities, or by otherwise circumscribing an
agency’s power to discriminate among issues or cases it
will pursue.” Id. at 833.
We take all this to create a two-part inquiry. We begin
by considering whether TVA ratemaking is the kind of
agency action that “has traditionally been ‘committed to
agency discretion.’” Id. at 832. We hold that it is. From
there, we determine whether the TVA Act intentionally
limits agency discretion by setting guidelines or otherwise
providing a limit. We hold that it does not. So we affirm
the district court’s decision that TVA ratemaking is
“committed to agency discretion by law.”
1.
Traditional Categories Committed to
Agency Discretion
No clean rule materializes for determining whether
an agency action is the kind of action that has traditionally
been committed to agency discretion. But the Supreme
Court has looked to a few factors that characterize such
action. First, these actions involve “complicated balancing
Serv., 139 S. Ct. 361, 370, 202 L. Ed. 2d 269 (2018) (“The few cases
in which we have applied the § 701(a)(2) exception involved agency
decisions that courts have traditionally regarded as unreviewable.”
(citing Lincoln, 508 U.S. at 191)).
15a
Appendix A
of a number of factors which are peculiarly within [the
agency’s] expertise,” Lincoln, 508 U.S. at 193 (quoting
Heckler, 470 U.S., at 831), especially decisions that involve
resource allocation and the need for flexibility to “adapt to
changing circumstances,” Lincoln, 508 U.S. at 192. Next,
these are areas that often do not involve the use of coercive
power, which means they will not trigger the traditional
rights-protecting duties of the federal courts. Chaney,
470 U.S. at 832. And perhaps most importantly, these
areas enjoy a tradition of nonreviewability. Id. at 832.
Past practice should guide us. And an unbroken practice
of judicial deference that predates the APA is strong
evidence of an area where judicial review is inappropriate.
See ICC v. Brotherhood of Locomotive Eng’rs, 482 U.S.
270, 282, 107 S. Ct. 2360, 96 L. Ed. 2d 222 (1987). 8
TVA ratemaking has each of these characteristics.
To start, TVA price setting is a balancing act that
demands significant expertise and involves complicated,
counterfactual questions of resource allocation. As we
explain below, the TVA Act tasks the TVA with several
8. The Attorney General’s Manual on the APA offers a few
examples of unreviewable action under the “committed to agency
discretion” provision. AG’s Manual, supra, at 94. One such example is
United States v. George S. Bush & Co., 310 U.S. 371, 60 S. Ct. 944, 84
L. Ed. 1259 (1940), which dealt with the President’s powers to adjust
tariffs under the Tariff Act of 1930. Id. at 375-76. In finding that
“[n]o question of law is raised when the exercise of [the President’s]
discretion is challenged,” the Court appealed in part to a long history
of discretionary tariff adjustments. Id. at 379-80 (citing Norwegian
Nitrogen Prods. v. United States, 288 U.S. 294, 308, 53 S. Ct. 350,
77 L. Ed. 796, Treas. Dec. 46331 (1940)). That history was central to
the holding that tariff adjustments are not subject to review.
16a
Appendix A
goals that necessarily require trade-offs, including a
focus on self-sufficiency, equitable service across States,
building up capacity, repaying the Treasury, supporting
consumers, and more. And as a look through the TVA’s 2018
Wholesale Rate Change shows, the practical difficulties of
electricity pricing are even more complicated, including
additional hurdles like “distributed generation, energy
efficiency, technological advances, shifts in customer
behavior, and regulatory requirements,” not to mention
the interplay between price (which is calculated to the
quarter cent) and demand. J.A. 170-71. All that suggests
a “complicated balancing of a number of factors which are
peculiarly within [the agency’s] expertise.” Lincoln, 508
U.S. at 193 (quoting Chaney, 470 U.S. at 831).9 Setting a
price is complicated, and it is not a task on which judges
are traditionally expected to be experts. Indeed, the
opposite may be closer to the truth.
9. Holbrook suggests that TVA’s competing goals can be
harmonized. Remember that rate setting involves rate adjustments
(the grand total) and rate changes (shifting around who owes what).
So at step one, TVA might say, “We need $X billion to meet all costs.”
Then it would look to the likely sales and set prices for each kind of
sale to try to add up to that $X billion figure. Holbrook argues that
at that second step you could tend toward higher prices for industry.
But his argument ignores the feedback loop between those two
steps. Supply and demand are dynamic processes, and the cost of
producing power for different customers can vary. So making power
more expensive for some group means they will buy less of it, which
changes TVA’s costs and requires a different revenue goal, meaning
you have to readjust step two, and so on and so on. Finding the right
equilibrium can be complicated.
17a
Appendix A
And price setting isn’t coercive either. It does not
exercise power over “an individual’s liberty or property
rights.” Chaney, 470 U.S. at 832. Prices are agreed-to, not
enforced. Therefore, these issues will rarely implicate the
traditional rights-protecting duties of the federal courts.
See id. Any argument that Holbrook is somehow forced to
buy from BVU because of limited options would stretch
the idea of coercive power beyond recognition. When the
government disposes of its own property, it will seldom
be acting coercively.10
Finally, federal courts in the Tennessee Valley region
have a long history of declining to review TVA ratemaking.
See, e.g., McCarthy v. Middle Tenn. Elec. Membership
Corp., 466 F.3d 399, 407 (6th Cir. 2006); 4-County Elec.
Power Ass’n v. TVA, 930 F. Supp. 1132, 1138 (S.D. Miss.
1996); Carborundum Co. v. TVA, 521 F. Supp. 590, 593
(E.D. Tenn. 1981); Mobil Oil v. TVA, 387 F. Supp. 498,
506-07 (N.D. Ala. 1974); see also Matthews v. Town of
Greeneville, 932 F.2d 968, 1991 WL 71414, *4 (6th Cir.
10. In its discussion of coercion, Chaney focuses in part on the
agency’s refusal to act, as distinct from affirmative agency action.
In those circumstances, the agency “generally does not exercise
its coercive power over an individual’s liberty or property rights”
because the agency has done nothing. 470 U.S. at 832. And on the
flip side, where there is action, there is usually a “focus for judicial
review.” Id. But Chaney’s focus was on coercion, not inaction—
inaction was useful to prove coercion, not the other way around.
While rate-setting is action of a kind—and while we concede that
action is more likely to be reviewable than inaction and more likely
to be coercive—rate-setting still does not influence any coercive
power over liberty or property rights, which we take to be the more
important takeaway from Chaney’s coercion discussion.
18a
Appendix A
1991) (unpublished). This trend reaches back at least 84
years to a case decided just a few years after the TVA Act
was passed. Tenn. Elec. Power Co. v. TVA, 21 F. Supp. 947
(E.D. Tenn. 1938), aff’d, 306 U.S. 118, 59 S. Ct. 366, 83
L. Ed. 543 (1939). “The Tennessee Valley Authority Act
authorizes the Board of Directors of the Authority to fix
the rates at which the electric energy generated at the
dams authorized by the Tennessee Valley Authority Act
may be sold. The statute vests discretion in the board in
fixing such rates, and the exercise of this discretion is not
subject to judicial review.” Mobil Oil, 387 F. Supp. at 508
(quoting Tenn. Elec. Power Co., 21 F. Supp. 947 (Conclusion
of Law 33) (unpublished)). And Tennessee Electric Power
Company was decided eight years before the APA
was passed, which makes this tradition a part of the
“existing law” that the APA was understood to embrace
and “preserve.” Brotherhood of Locomotive Eng’rs, 482
U.S. at 282; see Chaney, 470 U.S. at 832 (quoting 5 Davis,
Administrative Law § 28:6 (1984), for the proposition that
the “APA did not significantly alter the ‘common law’ of
judicial review of agency action”). In fact, Holbrook has
not provided—nor have we found—any case in which
a federal court has subjected the TVA’s ratemaking to
judicial scrutiny in the way that is requested here.11 Given
11. Holbrook mentions that some TVA action has been found
reviewable at the Supreme Court, citing Hardin v. Kentucky Utilities
Co., 390 U.S. 1, 88 S. Ct. 651, 19 L. Ed. 2d 787 (1968) (holding that a
TVA decision to provide power to a certain area was subject to review
under § 15(d) of the TVA Act); cf. id. at 13 (Harlan, J., dissenting).
But that case was about where the TVA could operate—i.e, whether it
could expand into two towns near the Tennessee-Kentucky border—a
meaningfully different question from how they set their prices. And
19a
Appendix A
the TVA is going on a century old, this long tradition
counsel against reviewing TVA’s rates here.
We also draw more support for this principle by
zooming out from TVA ratemaking to electric ratemaking
by government-owned utilities generally, see, e.g., V.I.
Hotel Ass’n v. V.I. Water & Power Auth., 465 F.2d 1272,
1274-75, 8 V.I. 580 (3d Cir. 1972); Electricities of North
Carolina, Inc. v. Southeastern Power Admin., 774 F.2d
1262, 1265-67 (4th Cir. 1985); and then zooming out further
to government-utility ratemaking generally, see Pan.
Canal v. Grace Line, 356 U.S. 309, 318-19, 78 S. Ct. 752,
2 L. Ed. 2d 788 (1958); Rural Electrification Admin. v.
N. States Power Co., 373 F.2d 686, 700-01 (8th Cir. 1967);
Hahn v. Gottlieb, 430 F.2d 1243, 1250-51 (1st Cir. 1970);
Langevin v. Chenango Court, Inc., 447 F.2d 296, 304 (2d
Cir. 1970); cf. United States v. George S. Bush & Co., 310
U.S. 371, 379, 60 S. Ct. 944, 84 L. Ed. 1259 (1940) (“No one
has a legal right to the maintenance of an existing rate
or duty.” (quoting Norwegian Prods. Co. v. United States,
the TVA Act contains a clear rule about the corporation’s geographic
scope, the sort which permits judicial review. Section 15(a) of the
TVA Act—added in twenty-five years after the TVA Act’s initial
passage—says, “Unless otherwise specifically authorized by Act of
Congress the [TVA] shall make no contracts for the sale or delivery
of power which would have the effect of making the Corporation
or its distributors, directly or indirectly, a source of power supply
outside the area for which the [TVA] or its distributors were the
primary source of power supply on July 1, 1957.” The case dealt with
determining the boundaries of that forbidden “area.” Hardin, 390
U.S. at 8. The Court did not defer, but determined for itself whether
the towns were in that area. But this says nothing about a tradition
of reviewing TVA rates.
20a
Appendix A
288 U.S. 294, 318, 53 S. Ct. 350, 77 L. Ed. 796, Treas. Dec.
46331 (1933)).12
Holbrook responds with an argument based on the
language of the APA. Holbrook argues that (1) under the
APA, “the approval or prescription for the future of rates
[or] prices [or] costs” is defined as a kind of “rule,” 5 U.S.C.
§ 551(4); (2) all “rules” are “agency action,” § 551(13); and
(3) that all “agency action” is subject to judicial review,
§ 704. By adding these premises up, Holbrook argues
that TVA ratemaking must not be one of the traditional
categories we are talking about.
But that argument misses the point. No one has
questioned, and we do not deny, that TVA ratemaking is
agency action or that the general rule is that agency action
is presumptively reviewable. See Abbott Lab’ys, 387 U.S.
at 140. The question here is whether this is the kind of
agency action where that presumption is flipped because
of § 701(a)(2), which is separate from the analytically
antecedent answer that this was an “agency action.”
After all, Chaney dealt with “agency decisions to refuse
enforcement,” 470 U.S. at 831, and we know that “failure
to act” is defined as “agency action” under § 551(13). But
the Court there found refusal to enforce to be “committed
to agency discretion” under § 701(a)(2) anyway. To say the
12. This is a different context than government regulation of
private utility companies’ ratemaking, where courts often intervened.
See, e.g., Missouri ex rel. S.W. Bell Tel. Co. v. Pub. Serv. Comm’n,
262 U.S. 276, 287, 43 S. Ct. 544, 67 L. Ed. 981 (1923) (collecting
cases). Here the government is setting the price for something it is
itself selling.
21a
Appendix A
TVA’s actions were agency action is to make an obvious
point about why the APA applies at all; we instead focus
on § 701(a)(2)’s specific exception, which immunizes certain
“agency action” from judicial review.
In sum, given the complexity of the task, the lack
of coercive power, and the long, unrebutted history of
courts refusing to review these prices, we hold that TVA
ratemaking is a decision committed by tradition to agency
discretion. That tradition brings with it a presumption
against judicial review, which can still be overcome by
showing that Congress intended to cabin the exercise of
that traditional discretion. We now turn to that question.
2.
Congressional Guidelines or Limits on
Traditional Discretion
Congress may overcome the presumption against
review by providing “guidelines for the agency to follow
in exercising its enforcement powers,” by “setting
substantive priorities, or by otherwise circumscribing
an agency’s power.” Chaney, 470 U.S. at 833. Because
the question is about what Congress did, it amounts to a
question of statutory interpretation. See Webster, 486 U.S.
at 600 (“[Section] 701(a)(2) requires careful examination
of the statute on which the claim of agency illegality is
based”). The only argument that Holbrook makes here
is based on the twin goals of TVA Act § 11, but we do not
read that provision to provide the kind of clear guidance or
instruction that would overcome the presumption against
judicial review.
22a
Appendix A
An example will help illustrate the kind of language
we are looking for. The Chaney Court uses Dunlop v.
Bachowski, 421 U.S. 560, 95 S. Ct. 1851, 44 L. Ed. 2d 377
(1975), as a prototype. At issue there was the Secretary
of Labor’s decision to decline to prosecute a violation
of the Labor-Management Reporting and Disclosure
Act. As Chaney makes clear, decisions about whether
to prosecute are traditionally insulated from judicial
review, but in Dunlop, the statute provided the kind of
command that overcomes that presumption. The statute
said that after a union member files suit in the agency,
“[t]he Secretary shall investigate such complaint and, if
he finds probable cause to believe that a violation . . . has
occurred . . . he shall . . . bring a civil action.” Id. at 563
n.2 (quoting 29 U.S.C. § 482(b)). Because the statute “quite
clearly withdrew discretion from the agency,” judicial
review was appropriate. Chaney, 470 U.S. at 834. So even
in the quintessentially insulated prosecutorial-discretion
arena, plain statutory commands will provide meaningful
standards for judicial review.
Holbrook focuses on § 11 of the TVA Act, arguing that
the provision “includes both a statement of purpose and a
directive.” Appellant’s Op. Br. 5. But § 11 cannot be read
as a clear directive and therefore will not overcome the
presumption against a review.
Section 11 has two relevant sentences.13 The first
sentence reads: “It is declared to be the policy of the
Government so far as practical to distribute and sell the
13. The third sentence of § 11 is important but irrelevant here.
It deals with fertilizer.
23a
Appendix A
surplus power . . . equitably among the States, counties,
and municipalities within transmission distance.” The next
sentence elaborates on that policy by laying out a primary
and a secondary purpose:
This policy is further declared to be that the
projects herein provided for shall be considered
primarily as for the benefit of the people of
the section as a whole and particularly the
domestic and rural consumers to whom the
power can economically be made available, and
accordingly that sale to and use by industry
shall be a secondary purpose, to be utilized
principally to secure a sufficiently high load
factor and revenue returns which will permit
domestic and rural use at the lowest possible
rates . . . .
Holbrook argues that this is a command that the TVA use
industry sales to subsidize consumer sales. He argues that
this provision provides a “directive” to the TVA by giving
both a goal—“lowest possible rates” for consumers—and
a methodology for achieving that goal—using industry
for its load factor and revenue returns—and that taken
together this provides enough “law to apply” to invite
judicial review. We disagree. Instead, we read this
provision as a general policy statement and, in places, as
a kind of aspiration about what Congress hopes will be
accomplished.
Start with the fuzzy language in the provision: “so far
as practical,” “primarily,” “economically,” “sufficiently.”
24a
Appendix A
Each of those words suggests room for discretion. And
all that discretion adds up. Taken together, the mass
of discretionary lingo suggests that, far from being
a provision that withdraws discretion, this provision
acknowledges and accentuates that discretion. Webster,
486 U.S. at 600 (“This standard fairly exudes deference”).14
Next, consider a phrase we’ve already mentioned:
“so far as practical.” Notice that the first sentence of
the provision suggests that the policy should be carried
out only “so far as practical,” and notice further that the
second sentence of § 11 begins “This policy is further
declared to be . . .,” before then discussing consumer and
industry sales. Read together, this suggests that both
sentences are referencing the same policy, and that the
policy should only be pursued “so far as practical.” That is
not a directive. Since the Act does not define “practical,”
determining the limits of what is and what is not practical
must be a matter of discretion.
Finally, turn to the discussion of sales to industry:
“[S]ale to and use by industry shall be a secondary
purpose, to be utilized principally to secure a sufficiently
high load factor and revenue returns which will permit
domestic and rural use at the lowest possible rates.” § 11
(emphasis added). Holbrook wants this to mean that sales
to industry must be used to subsidize consumers, but we
do not agree. The text says that sales to industry are to be
14. Holbrook points out that this passage includes “shall” twice,
and that this word choice suggests a directive. “Shall” does often
mandate behavior. But here the shalls are attached to broad policy
goals. “The agency shall have this goal” is not a command in the same
way as “the agency shall prosecute if they have probable cause.”
25a
Appendix A
used to secure high load factors and strong revenues. And
then it says those things “will permit” better treatment for
consumers, in the form of “the lowest possible rates.” The
“will permit” suggests that this isn’t really a command
or a “methodology” for achieving a specified “goal” as
Holbrook argues. Rather, the text suggests that Congress
had an expectation, that by selling to industry, the TVA
would get higher load factors, allowing more consistent
energy usage, which in turn would bring in revenues
to the company, which would help to increase returns
to scale, and all of that “will” naturally make sales to
consumers easier and cheaper. “Will permit” highlights
how this policy is an aspiration not a command. And even
if we read that as something more than an aspiration, we
would be confronted again by the discretionary phrases
“sufficiently high” and “lowest possible” which do little to
cabin the agency’s actions.
We cannot read § 11 as the kind of guideline or
command that would overcome the presumption against
judicial review here. Because TVA ratemaking is a
category that has traditionally been insulated from
judicial review and because Congress has not provided
clear limits on the exercise of that discretion, we hold that
TVA ratemaking is “committed to agency discretion by
law.” So the district court was correct to dismiss the APA
claim under § 701(a)(2).
B. The Other Claims
We also affirm the district court’s dismissal of
Holbrook’s two other causes of action, but we must take
a moment to explain our different reasoning. The district
26a
Appendix A
court held that it lacked jurisdiction over all three legal
theories because they were all various flavors of the
same claim—challenges to the discretionary ratemaking
decisions of the TVA. Holbrook, 527 F. Supp. 3d at 858
(citing McCarthy, 466 F.3d at 407 (“If we were to review
the Cooperatives’ actions in enforcing the contract,
we would still be reviewing the TVA’s actions and thus
ignoring the APA’s prohibition on judicial review.”)). But
§ 701(a)(2) of the APA says only that “This chapter applies
. . . except to the extent that agency action is committed to
agency discretion by law.” (Emphasis added.) By focusing
on “this chapter” only, Congress did not go so far as to
preempt any judicial review anywhere in the vicinity of a
discretionary agency judgment. The § 701(a)(2) bar only
prevents us from hearing claims under the APA itself.
It’s not clear why this should prevent courts from
reviewing other claims—even other claims that look a
lot like the APA claims they tag along with—so long as
those claims themselves are otherwise cognizable.15 So
even though we will not generally review TVA rates, once
the TVA signs a contract, it’s possible we may have—as
Holbrook claims here—contract “law to apply.” See
Portland GE Co. v. Bonneville Power, 501 F.3d 1009,
1032 (9th Cir. 2007). Or if there is a claim that the TVA’s
discretionary ratemaking was racially discriminatory, we
15. The Attorney General’s Manual on the APA provides more
support. See AG’s Manual, supra, at 95. It imagines a time when a
civil servant challenges their discretionary firing. In that case, the
employee could not demand arbitrary-and-capricious or substantialevidence review under the APA, but they could still challenge the
firing to ensure the Civil Service Act procedures were followed. Id.
(citing Levine v. Farley, 107 F.2d 186 (D.C. Cir. 1939)).
27a
Appendix A
might have federal civil-rights “law to apply.” Cf. Angelex
Ltd. v. United States, 723 F.3d 500, 508 (4th Cir. 2013).
So while we agree with the district court that the APA
claim was properly dismissed under § 701(a)(2), we do not
agree that strips us of jurisdiction to consider any other
claims that happen to look like the APA challenge to TVA
ratemaking. We must consider the other claims separately.
In the end, however, this quibble won’t help Holbrook;
we will affirm those dismissals individually instead of
en mass. See Willner v. Dimon, 849 F.3d 93, 103 (4th
Cir. 2017) (“We may affirm on any grounds supported by
the record, notwithstanding the reasoning of the district
court.” (cleaned up)).
First to the contract claim. As a member of a class of
intended beneficiaries of the contract between TVA and
BVU Authority, Holbrook argues that TVA has violated
the contract provision which includes the same statutory
duties to provide the lowest feasible rates.16 While not
16. Even though Holbrook was not a party to the TVA contracts,
it is possible he had standing to bring a contract action as an intended
beneficiary—assuming that the relevant contract here, which is not
in the record, includes the same language as the 2006 contract in the
record. TVA contracts are governed by federal law. See Salary Pol’y
Empl. Panel v. TVA, 731 F.2d 325, 330 (6th Cir. 1984); Stock Equip.
Co. v. TVA, 906 F.2d 583, 585 n.1 (11th Cir. 1990); see also Priebe
& Sons v. United States, 332 U.S. 407, 411, 68 S. Ct. 123, 92 L. Ed.
32, 109 Ct. Cl. 870 (1947). And under federal law, a nonparty to a
contract has standing to bring a contract action when the contract
“reflects the express or implied intention of the parties to benefit
the third party.” Montana v. United States, 124 F.3d 1269, 1273
(Fed. Cir. 1997) (cleaned up). “The intended beneficiary need not be
specifically or individually identified in the contract, but must fall
28a
Appendix A
barred by § 701(a)(2), this attempt fares no better than
the APA claim. The Supreme Court has held that, where
a statute provides no cause of action and where an agency
signs a contract including those statutory obligations as
boilerplate, a breach of contract suit alleging violation
of those statutory-but-also-contractual provisions “is in
essence a suit to enforce the statute itself.” Astra USA,
Inc. v. Santa Clara Cnty., 563 U.S. 110, 118, 131 S. Ct.
1342, 179 L. Ed. 2d 457 (2011). A nonparty to the contract
cannot evade Congress’s decision to not include a statutory
cause of action by casting themselves as a third-party
beneficiary of the identically worded contract. Id. In
this case, the self-styled contract action is, instead, an
attempted cause of action under § 11 of the TVA Act—
which has no private cause of action. “The statutory and
contractual obligations, in short, are one and the same.”
Id. We therefore affirm the dismissal of the contract claim.
Finally, to the exactions claim.17 An illegal exaction
claim is ultimately a claim under the Due Process Clause
within a class clearly intended to be benefited thereby.” Id. Here,
the 2006 contract between TVA and BVU Authority expressly states
that the contract was “primarily for the benefit of the consumers of
electricity.” J.A. 10. So we proceed on the assumption that Holbrook
is an intended beneficiary of the contract with BVU.
17. Illegal exactions claims are often brought in the Court of
Federal Claims but claims against the TVA are specifically exempted
from that court’s jurisdiction. 28 U.S.C. § 1491(c) (“Nothing herein
shall be construed to give the United States Court of Federal Claims
jurisdiction. . . of any action against, or founded on conduct of, the
Tennessee Valley Authority, or to amend or modify the provisions of
the Tennessee Valley Authority Act of 1933 with respect to actions
by or against the Authority.”).
29a
Appendix A
of the Fifth Amendment that there was a deprivation
of property without due process of law. See Norman v.
United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005). In
layman’s terms, an exaction claim is when the government
takes your things without justification. So an exactions
claim asks “for recovery of monies that the government
has required to be paid contrary to law.” Elec. Welfare Tr.
Fund v. United States, 907 F.3d 165, 170 (4th Cir. 2018)
(quoting Aerolineas Argentinas v. United States, 77 F.3d
1564, 1572 (Fed. Cir. 1996)). Holbrook cannot make out
an exaction here because “a reasonable user fee is not a
taking if it is imposed for the reimbursement of the cost
of government services.” United States v. Sperry Corp.,
493 U.S. 52, 63, 110 S. Ct. 387, 107 L. Ed. 2d 290 (1989);
see Koontz v. St. Johns River Water Mgmt. Dist., 570
U.S. 595, 615, 133 S. Ct. 2586, 186 L. Ed. 2d 697 (2013).
In short, a voluntary payment for services rendered is not
an exaction, illegal or otherwise. And even if it were an
exaction, Holbrook’s payments were not illegal because the
TVA Act cannot be read to require subsidies to consumers
as we have already said. So again, we affirm the dismissal
of Holbrook’s exactions claim.
***
Section 11 of the TVA Act lays out broad policies and
goals that operate more like aspirations than commands.
It does not support any of the claims that Holbrook offers
against TVA or BVU Authority. TVA ratemaking is a
presumptively unreviewable category of agency action
under 701(a)(2), and the policy-laden language of § 11
does not provide any guidelines or limits to overcome
that presumption. Because the TVA-BVU contract simply
30a
Appendix A
repeats the vague statutory language, Holbrook’s contract
claim is really a statutory claim in disguise, and § 11 of
the TVA Act does not provide a private cause of action.
And finally, because Holbrook voluntarily bought power
from BVU Authority, nothing was exacted or taken from
him at all. So the district court is
AFFIRMED.
31a
APPENDIX B — Appendix
OPINIONBOF THE UNITED
STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF VIRGINIA, ABINGDON DIVISION,
FILED MARCH 19, 2021
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ABINGDON DIVISION
Case No. 1:20CV00025
By: James P. Jones
United States District Judge
DAVID HOLBROOK,
Plaintiff,
v.
TENNESSEE VALLEY AUTHORITY, ET AL.,
Defendants.
OPINION
In this proposed class action concerning electricity
rates charged by the Tennessee Valley Authority (TVA),
the defendants have filed motions to dismiss pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
For the reasons that follow, the motions will be granted.
I.
The Amended Class Action Complaint alleges the
following facts, which I must accept as true for purposes
of deciding the motions to dismiss.
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Appendix B
TVA is the nation’s largest public power provider.
It was formed during the Great Depression at a time
when most rural American households could not access
electricity. Currently, TVA sells electricity directly to
about 60 large industrial customers and to 154 local
power companies, who in turn distribute the electricity to
industrial, commercial, and residential customers in the
southeastern United States.
The Tennessee Valley Authority Act (TVA Act)
includes the following provision:
It is declared to be the policy of the Government
so far as practical to distribute and sell the
surplus power generated at Muscle Shoals
equitably among the States, counties, and
municipalities within transmission distance.
This policy is further declared to be that the
projects herein provided for shall be considered
primarily as for the benefit of the people of
the section as a whole and particularly the
domestic and rural consumers to whom the
power can economically be made available,
and accordingly that sale to and use by
industry shall be a secondary purpose, to be
utilized principally to secure a sufficiently
high load factor and revenue returns which
will permit domestic and rural use at the
lowest possible rates and in such manner as
to encourage increased domestic and rural use
of electricity. It is further declared to be the
policy of the Government to utilize the Muscle
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Appendix B
Shoals properties so far as may be necessary to
improve, increase, and cheapen the production
of fertilizer and fertilizer ingredients by
carrying out the provisions of this chapter.
16 U.S.C. § 831j (emphasis added).
Beginning in 2010, through its Strategic Pricing
Plan, TVA adopted a series of rate changes that were
intended to be revenue neutral. In other words, TVA
anticipated that the rate changes would neither increase
nor decrease its total revenue but would result in some
customers paying more and others paying less for the
same amount of electricity used. “The rate changes
included manufacturing credits, discounts for high-volume
users and other changes that had the intent and effect of
shifting costs from industrial users to consumers.” Am.
Class Action Compl. ¶ 7, ECF No. 27. TVA’s purpose in
adopting these rate changes was to further its stated
objective that revenue collected from each customer
class should be proportional to the costs associated with
that customer class. One of TVA’s goals was to make its
industrial rates more competitive.
In 2010, TVA implemented a rate change that sought
to adjust pricing based on the time of year electricity was
used. TVA expected that this change would be nearly costneutral for classes of end-users, but in practice, it shifted
costs from industrial customers to domestic customers.
TVA documents attached to the Amended Complaint
suggest that this is so because industrial customers tend
to use more electricity in milder seasons, while commercial
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Appendix B
and residential customers tend to use less electricity when
the weather is mild. By 2013, domestic customers were
paying approximately 10% more than they had in 2010,
while industrial customers were paying approximately
10% less.
In 2013, TVA gave industrial customers a rate
reduction for two years. This change, too, was designed
to be revenue neutral, and domestic rates correspondingly
increased. As a result, “TVA achiev[ed] an industry-wide
ranking for industrial rates that was better than TVA’s
industry-wide ranking for domestic consumer rates.” Id.
¶ 74.
“By 2015, the TVA’s industrial rates were more
competitive than its domestic rates, according to the TVA’s
own analysis.” Id. ¶ 75. In 2015, TVA’s industrial customers
were charged electricity rates within the top 25% of those
charged by TVA’s competitors, and TVA’s residential
customers were charged rates that were approximately
at the median of those charged by TVA’s competitors.
TVA then instituted another manufacturing credit and
made other rate changes. As a result, the rates TVA
charged to industrial consumers were reduced by 6.4% on
average, and direct-serve industrial consumer rates were
decreased by 9%, while the rates TVA charged to domestic
consumers increased by 1.1%. “By 2016, the TVA’s rate
changes had shifted approximately $439 million in rates
per annum from domestic consumers to industry. Changes
subsequent to 2016 increased the shift in rates.” Id. ¶ 12.
TVA adopted additional revenue-neutral rate changes
in 2018. It reduced rates for large general service
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Appendix B
customers and increased rates for other customers,
including domestic consumers. T VA also reduced
wholesale energy rates for all users and instituted a Grid
Access Charge. “This action shifted approximately $600
million in revenue from charges based on customers’
electricity usage to fixed charges under which a portion
of customers’ electricity rates are set regardless of
electricity use.” Id. ¶ 94. The change benefitted industrial
users to the detriment of domestic users.
TVA enters into standard form contracts with its
distributors, one of which is defendant BVU Authority
(BVU). Expressly incorporated into these contracts is
the statutory directive that sale of electricity to industry
should be used primarily to ensure the provision of
electricity to domestic consumers at the lowest possible
rates. TVA sets the resale rates that distributors like BVU
charge their customers. Different classes of customers —
industrial users, commercial users, and domestic users —
are charged different rates, but all customers within a user
class are charged the same rate. Local power companies
and TVA can attempt to agree on changes to rates and
charges, but if they are unable to reach agreement, TVA
is empowered to change rates unilaterally.
Plaintiff David Holbrook is a customer of BVU.
He alleges that he has paid higher rates for electricity
than he would have paid had TVA not implemented the
aforementioned rate changes, which he contends violate
the TVA Act’s directive that rates should be set to ensure
the lowest possible rates for domestic consumers. He
brings this action on behalf of a class of TVA residential
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Appendix B
customers and a subclass of BVU residential customers
who received electricity pursuant to a contract between
TVA and BVU.
Count One of the Amended Class Action Complaint
asserts a breach of contract claim against both defendants.
Holbrook avers that he is an intended third-party
beneficiary of the contract between TVA and BVU. He
claims that TVA and BVU have violated the “lowest
possible rates” provision contained in the contract.
Count T wo claims that T VA has violated the
Administrative Procedure Act (APA), 5 U.S.C. § 702, by
acting arbitrarily and capriciously in setting rates that
were not the lowest possible rates for domestic consumers
of energy. He contends that TVA’s rate changes exceeded
TVA’s statutory jurisdiction and authority.
Count Three is a claim of unlawful exaction. Here,
Holbrook alleges that TVA caused him to pay rates that
exceeded the amount that could lawfully be charged under
the TVA Act.
The defendants have moved to dismiss the Amended
Class Action Complaint. They contend that this court
lacks subject-matter jurisdiction over the plaintiff’s
claims because TVA’s rate-setting decisions are judicially
unreviewable due to the broad discretion the TVA Act
grants to TVA. They further argue that even if this court
had jurisdiction, Holbrook’s claims are barred by the
statute of limitations, and he has failed to state viable
claims of breach of contract, violation of the APA, or
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exaction. The motions have been fully briefed and orally
argued.
II.
Federal courts have limited jurisdiction and are
empowered to act only in the specific instances authorized
by Congress. Bowman v. White, 388 F.2d 756, 760 (4th
Cir. 1968). The court must determine questions of subjectmatter jurisdiction before it can address the merits of a
case. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83,
94-95, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998). Thus,
when a party moves to dismiss for lack of subject-matter
jurisdiction and for failure to state a claim, the court
must address the question of subject-matter jurisdiction
first. Bell v. Hood, 327 U.S. 678, 682, 66 S. Ct. 773, 90 L.
Ed. 939 (1946). The party asserting federal jurisdiction
bears the burden of proving jurisdiction. See Richmond,
Fredericksburg & Potomac R.R. Co. v. United States,
945 F.2d 765, 768 (4th Cir. 1991). A district court must
grant a Rule 12(b)(1) motion to dismiss “if the material
jurisdictional facts are not in dispute and the moving
party is entitled to prevail as a matter of law.” Id. at 768.
“A long line of precedent exists establishing that TVA
rates are not judicially reviewable.” McCarthy v. Middle
Tenn. Elec. Membership Corp., 466 F.3d 399, 405 (6th
Cir. 2006) (citation omitted). While the APA generally
provides for judicial review of agency actions, such an
action is unreviewable if it is “committed to agency
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Appendix B
discretion by law.” 5 U.S.C. § 701(a)(2).1 That exception is
read narrowly. Weyerhaeuser Co. v. United States Fish &
Wildlife Serv., 139 S. Ct. 361, 370, 202 L. Ed. 2d 269 (2018).
“It applies only in those rare instances where statutes are
drawn in such broad terms that in a given case there is
no law to apply.” Electricities of North Carolina, Inc. v.
Southeastern Power Admin., 774 F.2d 1262, 1266 (4th Cir.
1985) (internal quotation marks and citations omitted).
In Electricities of North Carolina, the Fourth Circuit
held that a statutory directive to distribute power “in
1. There is a circuit split regarding whether the A PA’s
exemption from judicial review of actions committed to agency
discretion affects a court’s subject-matter jurisdiction. The D.C.
Circuit has concluded that “a complaint seeking review of agency
action ‘committed to agency discretion by law,’ 5 U.S.C. § 701(a)(2),
has failed to state a claim under the APA, and therefore should be
dismissed under Rule 12(b)(6), not under the jurisdictional provision
of Rule 12(b)(1).” Sierra Club v. Jackson, 648 F.3d 848, 854, 396 U.S.
App. D.C. 297 (D.C. Cir. 2011). The Sixth Circuit considered the
issue and reached the opposite conclusion in an unpublished opinion,
finding, “In classes of cases where we have no meaningful standard
by which to evaluate the agencies’ exercise of discretion, we have
no jurisdiction.” Sheldon v. Vilsack, 538 F. App’x 644, 649 n.4 (6th
Cir. 2013) (unpublished). Most courts of appeals considering such
challenges have addressed them as jurisdictional issues. See, e.g.,
Gentile v. Sec. & Exch. Comm’n, 974 F.3d 311, 320 (3d Cir. 2020);
Vela-Estrada v. Lynch, 817 F.3d 69, 71-72 (2d Cir. 2016); Animal
Legal Def. Fund v. U.S. Dept. of Agric., 789 F.3d 1206, 1214 (11th Cir.
2015) (“Whether an agency action is reviewable under § 701(a)(2) is a
matter of subject matter jurisdiction.”); Gulf Restoration Network v.
McCarthy, 783 F.3d 227, 237-28 (5th Cir. 2015). I agree that whether
an agency’s action is reviewable under § 701(a)(2) raises a question
of subject-matter jurisdiction, for the reasons stated in Sheldon.
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Appendix B
such a manner as to encourage the most widespread
use thereof at the lowest possible rates to consumers
consistent with sound business principles” essentially
granted the agency unfettered discretion and was too
vague to supply a standard for judicial review of agency
decisions. Id. at 1264, 1266 (quoting 16 U.S.C. § 825s).
The language considered in that case is analogous to the
“lowest possible rates” provision of the TVA Act, and I
conclude that it, too, sets forth no meaningful standard
for courts to apply.
Holbrook characterizes the “lowest possible rates”
clause as a subsidy mandate, but that is an overly simplistic
reading of the statute. The TVA Act does not state that
industrial rates must be lower than residential rates
or that industrial users must bear more than their pro
rata share of the costs of delivering electricity in order
to subsidize residential consumers. Section 831j sets
forth several polices – to equitably distribute power,
to benefit the people as a whole and domestic and rural
consumers in particular – and tempers them with phrases
such as “so far as practical” and “economically.” Sale of
electricity to industry is to be utilized not only to secure
revenue returns, but also to secure “a sufficiently high
load factor.” Id. The statute contemplates that sale to
industry will be used to permit domestic and rural use
not only “at the lowest possible rates,” but also “in such
manner as to encourage increased domestic and rural use
of electricity.” 2 Id.
2. As the Fourth Circuit noted more than 35 years ago, “The
goals of rural electrification hav[e] been, by and large, realized.”
Elecs. of N.C., 774 F.2d at 1267 n.4.
40a
Appendix B
Based on the environmental assessments, responses
to public comments, and other documents attached to the
Amended Complaint, TVA appears to have concluded that
reducing rates for industry would encourage a sufficiently
high load factor as well as a more consistent demand for
electricity, and perhaps greater overall use by industry.
This would, in TVA’s estimation, satisfy the statutory
“objective that power shall be sold at rates as low as are
feasible.” 16 U.S.C. § 831n-4. TVA could reasonably have
decided that reducing industry rates would have the
ultimate effect of lowering electricity bills for all users,
including rural and domestic users.
It is unnecessary at this junction to delve into the
weeds of TVA’s thought processes. The statute simply
does not say what the plaintiff suggests it says. A review
of § 831j and the TVA Act as a whole reveals that TVA
is tasked with balancing a number of objectives that
are not cabined by clear criteria. This is the essence of
commitment to agency discretion by law. There is no law
this court could apply to determine whether TVA has
complied with § 831j. “[D]eterminations about the level of
rates necessary to recover the various costs of operating
TVA’s power system, as well as the terms and conditions of
TVA’s power contracts, . . . are part of TVA’s unreviewable
rate-making responsibilities.” McCarthy, 466 F.3d at 407
(quoting 4-Cnty. Elec. Power Ass’n v. TVA, 930 F. Supp.
1132, 1138 (S.D. Miss. 1996)).
Holbrook cannot escape dismissal of this case by
rebranding his claims under different legal theories.
The court lacks subject-matter jurisdiction over all three
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Appendix B
counts of the Amended Class Action Complaint, including
the plaintiff’s claims of breach of contract and exaction,
because they all seek review of TVA’s discretionary ratemaking decisions. See id. at 407 (“If we were to review the
Cooperatives’ actions in enforcing the contract, we would
still be reviewing the TVA’s actions and thus ignoring the
APA’s prohibition on judicial review.”). The statute ensures
that Holbrook’s only remedy is a legislative one. Because
the court lacks jurisdiction over the plaintiff’s claims, the
case must be dismissed.
III.
For the foregoing reasons, it is ORDERED that the
defendants’ Motions to Dismiss, ECF Nos. 20, 22, are
GRANTED. It is further ORDERED that the plaintiff’s
Request for Judicial Notice, ECF No. 39, is DENIED
AS MOOT because the court considered the referenced
statements as true in accord with the applicable standard
of review. A separate Final Order of Dismissal will be
entered.
ENTER: March 19, 2021
/s/ James P. Jones
United States District Judge
42a
C STATUTORY
Appendix C —Appendix
RELEVANT
PROVISIONS
16 U.S.C. § 831i (TVA Act § 10)
§ 831i. Sale of surplus power; preferences; experimental
work; acquisition of existing electric facilities
The Board is empowered and authorized to sell the surplus
power not used in its operations, and for operation of
locks and other works generated by it, to States, counties,
municipalities, corporations, partnerships, or individuals,
according to the policies hereinafter set forth; and to carry
out said authority, the Board is authorized to enter into
contracts for such sale for a term not exceeding twenty
years, and in the sale of such current by the Board it
shall give preference to States, counties, municipalities,
and cooperative organizations of citizens or farmers, not
organized or doing business for profit, but primarily for
the purpose of supplying electricity to its own citizens or
members: Provided, That all contracts made with private
companies or individuals for the sale of power, which
power is to be resold for a profit, shall contain a provision
authorizing the Board to cancel said contract upon five
years’ notice in writing, if the Board needs said power to
supply the demands of States, counties, or municipalities.
In order to promote and encourage the fullest possible
use of electric light and power on farms within reasonable
distance of any of its transmission lines the Board in its
discretion shall have power to construct transmission
lines to farms and small villages that are not otherwise
supplied with electricity at reasonable rates, and to
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Appendix C
make such rules and regulations governing such sale and
distribution of such electric power as in its judgment may
be just and equitable: Provided further, That the Board
is authorized and directed to make studies, experiments,
and determinations to promote the wider and better use
of electric power for agricultural and domestic use, or
for small or local industries, and it may cooperate with
State governments, or their subdivisions or agencies, with
educational or research institutions, and with cooperatives
or other organizations, in the application of electric
power to the fuller and better balanced development of
the resources of the region: Provided further, That the
Board is authorized to include in any contract for the sale
of power such terms and conditions, including resale rate
schedules, and to provide for such rules and regulations
as in its judgment may be necessary or desirable for
carrying out the purposes of this chapter, and in case
the purchaser shall fail to comply with any such terms
and conditions, or violate any such rules and regulations,
said contract may provide that it shall be voidable at the
election of the Board: Provided further, That in order
to supply farms and small villages with electric power
directly as contemplated by this section, the Board in its
discretion shall have power to acquire existing electric
facilities used in serving such farms and small villages:
And provided further, That the terms “States”, “counties”,
and “municipalities” as used in this chapter shall be
construed to include the public agencies of any of them
unless the context requires a different construction.
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Appendix C
16 U.S.C. § 831j (TVA Act § 11)
§ 831j. Equitable distribution of surplus power among
States and municipalities; improvement in production
of fertilizer
It is declared to be the policy of the Government so far as
practical to distribute and sell the surplus power generated
at Muscle Shoals equitably among the States, counties, and
municipalities within transmission distance. This policy is
further declared to be that the projects herein provided
for shall be considered primarily as for the benefit of
the people of the section as a whole and particularly the
domestic and rural consumers to whom the power can
economically be made available, and accordingly that sale
to and use by industry shall be a secondary purpose, to
be utilized principally to secure a sufficiently high load
factor and revenue returns which will permit domestic
and rural use at the lowest possible rates and in such
manner as to encourage increased domestic and rural use
of electricity. It is further declared to be the policy of the
Government to utilize the Muscle Shoals properties so far
as may be necessary to improve, increase, and cheapen
the production of fertilizer and fertilizer ingredients by
carrying out the provisions of this chapter.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.