Appendix — Alabama Power Co. v. Alabama Electric Cooperative, Inc.

APPENDIX A

OPINIONS AND JUDGMENT OF COURT or APPEALS

IN THE

United States Court of Appeals

FOR THE FIFTH CIRCUIT

No. 23016

ALABAMA POWER COMPANY,

Appellant,

versus

ALABAMA ELECTRIC COOPERATIVE, INC., ET AL.

1 Appellees.

Appeal from the United States District Court for the

Middle District of Alabama

(April 2, 1968.)

Before RIVES, GEWIN AND GODBOLD, Circuit Judges.

RIVES, Circuit Judge: Alabama Power Company (hereafter

Power Company) filed its complaint against Rural

Electrification Administration (REA), Alabama Electric

Cooperative, Inc. (AEC), Norman M. Clapp, the Administrator

of REA, the Department of Agriculture and the Secretary of

Agriculture. The complaint prayed for a preliminary and

permanent injunction restraining the consummation or use of a |

$20,350,000.00 loan from REA to AEC for the purpose of

financing the construction and operation of a generating plant

and high voltage electric transmission and distribution lines. It

“

2a

Appendix A—Prevailing Opinion

prayed separately for a judgment avoiding certain 35-year

all-requirements ele- power contracts between AEC and

fourteen electric distribution cooperatives as violative of the

antitrust laws, and sought to recover from AEC treble damages,

costs and attorneys’ fees. )

‘The defendants moved to dismiss and, alternatively, for

summary judgment. Affidavits were filed in support of and in

opposition to the plaintiff’s motion for preliminary injunction —

‘and the. defendants’ motions for summary judgment. The

district court, in an opinion reported in 249 F. Supp. at 855,

denied plaintiff's motion for preliminary injunction and granted

the several motions of the defendants to dismiss the action. The

district court held that the Power Company had no standing to

enjoin the consummation of the REA loan. The 35-year

all-requirements electric power contracts the distri held

were the result of valid governmental action and, hence, not

violative of the antitrust laws. Since we are in agreement with

the district. court, what was said in its able opinion need not be

Power Company argues that it has standing to seek judicial

review of the REA loan either as made in violation of the

“central station service” limitation contained in Section 4 of

the REA Act,' or as being conditioned upon a violation of the

antitrust laws. As to the claim of standing under the REA Act,

may result to a private power company does not give it

1 7US.C.A.8904. | \

2 Sections 1 and 2 of the Sherman Act and Section 3 of the

Clayton Act, 15 U.S.C.A.§§ 1,2 and 14.

Appendix A—Prevailing Opinion

sufficient standing to enjoin the making of a loan by a federal

agency. The answer to the claim of standing under the antitrust

laws was indicated in Kansas City Power & Light Co. v. McKay,

supra note 3, and was clearly furnished in the Fifth Circuit case

decided some months after the district court’s decision in the

instant case, Rural Electrification Administration. u. Central

Louisiana Electric Co., supra note 3. There, this Court said:

From the entire history of the Rural

Electrification Act and its administration we are

totally convinced that Congress has never enacted -

or intended that loans by this Agency should be

reviewable in the courts. The Act itself makes no

provision for judicial loan review. By the

allegations of the Complaints we are informed of

-the thorough manner in which Congress has ridden

herd on the. REA. Congressional Committees

caused the promulgation of the REA Bulletin

111-3, which appellees now say has been violated.

Certainly, the demands of Congressional ©

Committees do not have the force of law.

Congress has seen fit not to enact these particular

demands into law, evidently being most content to

rely on the deadly sword constantly in its own

hands, that is, the sole control of the purse out of

Alabama Power Company v. Ickes, 1938, 302 U.S. 464; Duke

Power Company v. Greenwood Co., 1938, 302 U.S. 485; Tennessee

Electric Power Co. v. TVA, 1939, 306 U.S. 118; Kansas City Power &

Light Co. v. Mekay, D.C. Cir. 1955, 225 F.2d 924, cert. den., 350

U.S. 884; Rural tion Administration v. Central Louisiana

Electric Co., 5 Cir. 1966, 354 F.2d 859. See also Hardin v. Kentucky

Utilities Co., U.S. Oct. Term 1967, Nos. 40, 50 and 51, decided Jan.

16, 1968, ms., 19 L.ed. 787. RS ax

Appendix A—Prevailing Opinion

‘which the loans are made. Regardless of how

outrageous or unfair the making of this loan may

seem, the semogy fs not in the courts but in the

Congress. 354 F.2d at 865.

The same thought had been . expressed by the D. C.

Circuit in the Kansas City Power & Light Co. case, supra. See

225 F.2d at 930, 931. As later said by the Eighth Circuit in

Rural Electrification Administration v. Northern States Power

Co., 1967, 373 F.2d 686, 700:

“Congress has steadfastly refused to provide

judicial review under 7 U.S.C.$901 of the REA

Act.* This silence could be premised on the

concern that the private supplier could otherwise

interfere with REA loans in each instance where

the Administrator finds the 2 suppliers

een

| . e.g., Schilling v. Rogers, 363 U.S. 666, at

J 674. 80 S.Ct. 1288, at 1294, where Justice

Harlan said:

he point is that in this Act [Trading

with the Enemy Act] Congress was advertent

to the role of courts, and an absence in any

specific area of any kind of provision for

judicial participation ‘strongly indicates a

legislative purpose that there be no such

participation * * * [citing Work v. United

5a

ä A—Prevailing Opinion

States, ex rel. Rives, 267 U.S. 175, 182, 45

S8. Ct. 252].

In 1962 and 1963 attempts were made to

introduce bills into Congress amending the Rural

Electrification Act to provide for public hearings

and judicial review of orders approving loans.

These bills were not reported out of committee.

See Hearings on Food and Agriculture Act of

1962 before House Committee on Agriculture,

87th Cong., Ist Sess., pp. 680-681. See als H.R.

6852 and H.R, 7213, 88th Cong., Ist Sess.;

Hearings before House Appropriations

Committee on Department of Agriculture

Appropriations for 1964, 88th Cong., Ist Se.

p. 374. ”

In brief, review under the Administrative Procedure Act of

1946, 5 U.S.C.A. 8 1009, is precluded by that statute’s initial

exception to the right of review: “Except as (1) statutes

preclude judicial review or (2) agency action is by law

committed to agency discretion .“ The REA Act, 7

.S. C. A. 5 904, commits to the discretion of the Administrator

the making of loans for rural electrification, including the

adequacy of the security for sich loans. The statute not only

fails to. provide for judicial review, but when constnied in the

light of its purpose and of legislative history, the statute retains

oversight of the Administrator’s actions in the hands of

Congress itself and precludes * review.

6a

— 4— —Prevailing Opinion ;

The same rationale would deny the plaintiff Power Company

standing ‘to enjoin the consummation of the loan or its claimed

invalid provision for security directly under the antitrust laws.

Further, it is settled that neither the Sherman Act nor the

Clayton Act was intended to authorize restraint of

governmental action. A different question might be presented

if the Administrator went beyond the outer perimeter of the

authority vested in him by. the statute,Sor as expressed in

Hardin u. Kentucky Utilities Co., cited supra. note 3. .

outside the range of permissible choices contemplated by the

tatute. The Administrators affidavit discloses that that

condition does not arise under the circumstances of this case.

My policy reasons is tee approving the aforesaid

loan were: (1) it would result in significant savings

in the cost of power to AEC and the Members as

compared with the cost of power purchased by

AEC and the Members from the plaintiff and Gulf

Power Company; and (2) the loan was necessary

to protect the effectiveness and security of. AEC

and the Members since the plaintiff had through

its activities ere its intent to _—

4 United Mine Workers v. Pennington, 1965, 381 U.S. 657,

. 671-672; Eastern R. R. Presidents Conference v. Noerr Motor Freight,

Inc., 1961, 365 U.S. 127; Parker v. Brown, 1943, 317-U.S. 341;

United States v. Rock Royal Co-op, 1939, 307 U.S. 533, 559-560; E.

M. Airways, Inc: v. Massachusetts port Authority, 1 Cir. 1966,

362 F.2d 52; Stroud v. 3enson, D.C. N.C. 1957, 155 F.Supp. 482:

Miley ¥. John Hancock Mut. Life Ins. Co., D.C. Mass. 1957, 148 F.

5 See S&S 8 9 Cir. 1966, 366 F. 2d 617:

Norton v. McShane, 5 Cir. 1964, 332 F.2d 855, 859; — Pierson

v. Ray, 1967, 386 US. 547.

7a

Appendix A—Prevailing Opinion

AEC and the Members of existing and potential

consumers in their service areas, and since

continuance of dependence by AEC and the

Members. upon plaintiff as a wholesale supplier

would inevitably assist and facilitate auch activities

on the part of the plaintiff. |

As authorized by section 4 of the RE Act (7

U.S.C. 904), the loan to AEC is to be repaid over a

period of thirty-five (35) years. It has been the

practice for many years of REA Administrators,

including the affiant, to require as a condition of

making generating and transmission loans pursuant

to section 4 to cooperatives such as AEC, that the

‘ borrower shall obtain 35 year contracts with its

members (hereinafter called “thirty-five © year,

all-requirements contracts’) obligating them to

purchase all of their electric requirements to the

extent that the borrower shall have power and

energy available. The purpose of this requirement

is to assure that the borrower will have a marh +t

for the power generated and transmitted by the

REA-financed facilities and thus be able to repay _

the loan. Such a requirement is established

customarily, and was imposed on AEC in this case,

in the exercise of the REA administrator’s power

and obligation under section 4 to obtain

reasonably adequate security for the loan and to

assure its repayment within the time agreed upon

between REA and AEC. As further assurance,

following long-established REA practice, I also

„

' 8a A 7

Appendix A—Prevailing Opinioan

required the execution of the supplemental

agreement included in Exhibit B attached to the

pPlwkGwaintiff's complaint. As shown in paragraph 7

below, the facilities for which the loan in question S&S, |

was made will not be placed into operation before )

1968 at the earliest. Based on load forecasts made

before the loan was approved, AEC will have

power and energy ‘available for the total electric _

requirements of its members for a period of no

more than 2 years thereafter. Based on the same

forecasts, AEC’s available power and energy in

1974 will represent no more than 83% of its

members’ electric requirements in that year, and

such percentage will significantly decline each year

- thereafter. Under their contracts with AEC, the

Members will be free to purchase from plaintiff

and others their electric requirements in excess of

the power and energy available from AEC. aon

AEC is owned and controlled by its members

and is merely the means by which they generate

and transmit electric power for themselves rather

than purchasing power and transmission segyice ©

from another source. Instead of having gone

organization performing the generating,

transmitting and distributing function, AEC

engages in the first two operations on behalf of its

members and the latter perform the distributing

operation. Because of this separation of the

operations required to serve consumers the

35-year, all requirements contracts between AEC

— aa $ ;

» ; : : .

é {

5

'

era

9a

Appendix A—Prevailing Opinion

and ihe Members were necessary. to meet the

requirements of section 4 of the RE Act (7 U.S.C.

904). ;

Thus in requiring AEC to obtain. 35-year all-requirement

contracts with its electric distribution cooperatives, the .@

Administrator was doing nothing unusual, but was àimphy

following,customary and long-established REA practice, clearly:

not beyond the “outer perimetet of his statutory authority to

determine the security for the loan. Anything less might well

the acceptance of inadequate security. Under these 8

cumstances, to require or permit the outer perimeter

boundaries to be determined by another fact-finding body

would defeat the reasons for the recognition of the absolute

privilege. What was said by Mr. Justice Harlan in Barr v. Matteo,

1958, 360 U.S. 564, 571, is iluminating:

It has been thought important that officials of

government should be free to exercise their duties

unembarrassed by the fear of damage suits in

respect to acts done in the course of those

duties—suits .which: would consume time and

energies which would otherwise be devoted to

governmental service and the threat of which

might appreciably inhibit the fearless, vigorous, .

and effective administration of policies of

government.“ g

6 TUS.CA. §904.

7 See also Mr. Justice Harlan’s long quotation from Judge Learned

Hand’s opinion in Gregoire v. Biddle, 2 Cir. 1949, 177 F.2d 579, 581,

appearing at 360 U.S. 571-572. .

__. Appendix A—Prévailing Opinion

Finally, a unique question presented by the Power Company

must be answered. This is the first of the attacks, by private

: companies on federal loans to competitors in which

‘there has been a separate attack on the borrower an those

—— —

alleged to be in conspiracy with it for claimed violation of the

antitrust laws. It is argued that there is nothing in the Act or in

its legislative history which authorizes the Administration to

grant immunity to the borrower, AEC and that at the very

least the plaintiff has a right to pursue its antitrust suit against ö

_ AEC. That position, we think is based upon too narrow a

conception of the program authorized by Congress. Thé making

of loans by the Administrator necessarily includes the existence

and ability of borrowers to whom such loans can be made. If

the security which the Administrator requires can be undercut

and the borrower muleted in treble damages for complying with

the condition imposed by the Administrator for making the

loan, then the functioning of the Act will be crippled, if not

' defeated. To avoid frustrating the intent of Congress, it must

follow that in cases where the Administrator is immune from

suit under the antitrust laws, the borrower is likewise immune:

| : eee

The Supreme Court has repeatedly held that,

basin “where a restraint upon trade or

mono n is s the result of valid governmental

| lla 5 8

Appendix 4 — mm. ing Opinion 8

an action, as opposed to private action, no violation

of the Act can be made out- 7

| United States v. Rock Royal Co-op, 307 1 S.

5333; Parker v. Brown, 317 U.S. 34.“

Eastern R. Conf. v. Noerr Motors, 1 1961, 365 US. 127, 136.

The Power Company 900 treat REA sigh as a rival

public utility. We agree with the recent decision of the Federal

Power Commission in Dairyland Power Cooperative, | 37 F. P. C.

12, 35 L. W. 2385, that rural electric cooperatives are something

more than public utilities; they are instrumentalities of the

United States. “They were chosen by Congress for the purpose

of bringing abundant, Tow cost electric energy to rural

America.“ See also, Salt River Project Agricultural & Power

District v. FPC, D.C. Cir., Feb. 15, 1968, 36 L.W. 2524.

The judgment is therefore

AFFIRMED...

—

Appendix A-sDissenting Opinion

‘GODBOLD, Circuit Judge, dissenting: g

ines eee

2

.

heretofore judicially determined of the interplay between, on

the one hand, the antitrust laws and the national policy which

they represent and, on tlie other hand, the Rural Electrification

Act4and national policies of aid to rural citizens witheut

electric servite. In addition there are vital factual issues which

have been neither determined nor reached, since the decision 2

_ below was a dismissal for lack of standing to cue.

Three issues must be discusséd. 1

. the others, and the relationship between tom has been hazy at

times in the previous case history:

1 Standing to sue under the antitrust laws of the United

States In my opinion the Power Company has standing. |

(2) Implied governmental immunity from the antitr:st laws

of the REA Administrator, of private citizens who-deal with

him, and of private citizens who deal between themselves as

incident to or in consequence of dealings with the

Administrator. In my view the Administrator as no such

implied immunity. as a governmental officer whether acting ;

within or without the “outer periphery of his authority.” If he

possesses such implied imniunity he cannot pass it on to private

citizens to immunize them in their dealings with him or to

private citizens to immunize them in their dealings with each

other. : 2 a .

1” 7 US.C.A.§ 901 et seq.

9

yee A~Dissenttng G

(3) Hf ths Administrator doce cojoy ax implied iamannity

the existence of which depends upon whether he was acting 2

p within the outer limits of his authority, there is a material issue

of fact, not yet so as to whether he was within sun

limits, ‘BS | i

g

I. The 35-year exclusive desting contracts °

“The j provisions of the contracts which the Administrator, as a

condition of approval of the loan to AEC, required beexecuted

by ABC and the distributor cooperatives, are central to the case.

The majority describe the contracts, without amplification, as

“certain 35-year all. requirement · electrie contracts between

AEC and fourteen electric distribution cooperatives 2

The contracts on the ame cooperative

(Distributor) to purchase all oj its electric em needs from

_ AEC AC (Supplier):

» Supplier shall sell and deffier to Distributor end

Distributor shall purchase and receive trom

Supplier all electric power and energy which

Distributor shall require to the extent that

Supplier shall have such power and energy

available, provided, however, that Distributor shall

have the right: to continue to purchase electric

power and energy from a source other than

Supplier for all or a separable part of its system.

: The distribution cooperatives are not parties to the suit. The

ee claims he is aot a party to the contracts. But see footnote 3,

10 *

Appendix A—Dissenting Opinion

untit Supplier shall be in position to supply

mi eee deme tel tate buen

J ila ‘Sigil thea

time as it may legally do so, to terminate its contracts with

other power suppliers upon request .of, AEC made

we the

approval, or at the direction, of the Administrator. If the

Distributor fails to terminate an existent contract either the

Supplier or the Administrator may bring tit to enforce the

termination provisions.

Distributor shall terminate, if the Supplier with

_ the approval of the Administrator of the Rural

-_Hlectrification Administration shall so request,

“any existing contract or. contracts with a source

other than Supplier at such time as it may legally

do eo, provided Supplier shall have sufficient

eléctric power and energy available for

eee :

The Supplier, the Distributor and the

Aduiinistrator agree that if the Distributor, upon

being requested to do so by the Supplier with the

approval or at the direction of the Administrator,

‘thall fail to terminate any contract with a power

supplier other than the Supplier, as provided by

Section 1 of the Power Contract, the Supplier or

the Administrator, if he shall so select, shall have

the right to enforce the obligations of the

a

ie

3 15a f :

: Appendix — Opinion

. the provisions of bald Section „

of the Contract by instituting all necessary actions |

St law or suits in equity, including, without

limitation, suits for specific er e a b

0 - .

The Distributor plirchases its power requirement under a rate

schedifle, which must be reviewed at least annually: by it and

AEC, and revisions may be agreed upon but are & side

unless approved by the Administrator. ay ee

Contracts are veqiuieed by the Administrator to, be obtained

from 13 distribution cooperatives located in Alabama, which

the Power Company alleges endeavor to serve approximately

50% of the geographical area of the state, and three located in

Florida. The Power Company alleges the 35-year contracts will

: foreclose it from supplying nine of these cooperatives, six of

whom presently receive all their power, and three that receive

part of their power, from the Power Company, and as a

consequence it will be foreclosed from serving at least one-third

of the rural areas of Alabama. The extent of the private utility’s

e ee ee |

— —

*

3 - This paragraph is part of a “Supplemental Agreement,” to’ which the

Administrator is to be a signatory, to the 35-year contracts. It creates a

of fact and law of whether the Administrator himself becomes a

party to the transactions between AEC and the distributors.

®, 8 : — 1 . 2

. 16a 9

Ps ave A—Dissenting Opinion.

sscrtions of the appellees the share"of the relevant market’

r seetieet net salietietia 7

Totally without relevarice i is the contention of AEC that REA

“hag made it previous loans and in connection with each has

required similar 35-year contracts, but the Power Company has

not before claimed them to be violations of the antitrust laws.

There is no right by prescription to violate the antitrust laws.

This theory that governmental action can bootstrap itself to a

state of validity is expressly adopted by the majority, who

conclude that in miaking the contracts the Administrator was

not beyond the outer perimeter of his authority because he was

) doing nothing unusual, but. was 1 e customary

ee ee career

— court nor the msjiy inthis court each

the igsue of whether the contracts are by the

Ac states the loss will be of two ts customers and

three customers. In its AEC concedes the Power

will at least temporarily, approximately 16% of its total

systems

5 Several arguments of may have relevance to a factual

determination of impact on — anatet. if that not be established

as a matter of law, or of the extent of restraints on commerce, but have no

_ Felevance at. this juncture—ie., that AEC serves a smaller area and has

smaller capital investment and operating revenue than Alabama Power;

*

*

172

— A.- Dinenting Opinion

out a plassic can case of — ——

Section 3 of the Clayton. Act because it forecloseg in the

relevant market a substantial share of the line of commerce

affected. Pennsylvania Water & Power Co. uv. Consolidated Cas,

Elec: ‘Light & Péwer Co., 184 F.2d 552 (4th Cir.), cert. denied,

340 U.S. 906, 71 S.Ct. 282, 95 L. Ed. 655 (1950); Consolidated

Gas, Eléc. Light & ‘Power Co. u. Pennsylvania Water & Power

Co., 194 F. 2d 89 (4th Cir.), cert: denied, 343 U.S: 963, 72 S. Ct.

4057, 96 L.Ed. 1361 (1952). See also Tampa Elec. Co. u.

National Coal Co., 365 U.S. 320, 81 S.Ct. 623, 5.L.Ed. 2d 580

(1961); Standard Oil Co. of California v. United States, 337 ;

U.S. 293, 69 S.Ct. 1051, 93 L.Ed. 1371 (1949); International

Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed.

20 (1947). While I view the ‘violation as otherwise

unquestionable, if there be any question the 35-year duration

lays it to rest. It is an exclusive dealing ‘arrangement that can

foreclose the Power Company for the rest of the twentieth |

century. United States v. American Can-€o:; 87 F.Supp. 18

G. p. Cal. 1949)5 Nor do I have any doubt that the contracts,

and the effects alleged, constitute restraints wane: the’

Sherman Act. Consolidated Gas, supra. _ .

8 See also United States v Pullman Co., 50 F Supp. 123, 129 (E. D. Pa. \

gia “AS a competition killer the long term contract ‘is an

effective weapon. One could hardly have a more favored service

contract than an agreement for exclusive dealing. and a quarter

* . century of time to elapse before one need to be concerned with

n neee

6 The contract in Consolidated included price fixing, a per se violation

of. the Sherman Act. Also it foreclosed competitors from a su

market and eam a territory between competitors. 134 F. 24 at 558, 559. . *

Appendix A-Dissenting Opinion 8 Sa 1

; ‘ailing cli thy, contrecta violate’ the antitrust tawa.:At

cass part of a wider course of dealings they violate the antitrust laws

and 60 characterise that broader spectrum as to make it a

- violation. The violation by thie contracts is 80 clear that I do not |

pere the allegations that the Administrator coerced the |

bik RUT ERNE Ea a factual issue. |

a n. Immunity

tube majority conclude the ‘Adminiitistor ‘enjoys, a

:governmental immunity from the Sherman and Clayton Acts

for acts done within the outer periphery of his authority.

_ Examination of this premise is inextricably entwined with

- _ consideration of the two implications drawn therefrom, that the

Administrator's immunity extends to private citizens (the AEC)

who deal with him and to private citizens who deal between

themselves (the AEC and the distribution cooperatives) as an

incident to or in consequence of their dealings with the

dee or. i 3 „

—

Nowe of thee immuunitice cen be found in the REA Act.

The. majority opinion tipe its hat to thé principle that

“[i} mmunity from the antitrust laws is not li implied.“

f Californie u Federal Power Comm n., 369 U.S. 482, 485, 82

S.Ct. 901, 8 L.Ed. 2d 54, 57 (1962). In fact, It] his canon of

construction . . . reflects the felt indispensable role of antitrust

policy in the maintenance of a free economy.” United States u

Philadelphia Nat 7 Bank, 374 U.S. 321, 348, 83'S.Ct. 1715, 10

LE 28915, Wan

: i 193 See 2

4 Appendix A- Dissenting Opinion

Congress ean, and in numerous instances by express

legislation has, subordinated the national policies reflected in ;

the antitrust laws 80 as to authorize government officials to

perform acts or pursue policies without regard to the antitrust

laws. The exemptions or immunities thus conferred are in some

instances to conduct between the official and the citizen, in

others to dealings between private citizens which the official is

ehen to deter and if approved tho citince: hes ker.

“immunities to the scope defined in cach instance by Congrts so 7

ay eee ee ee

. Under the Agricultura Marketing Agreeinent Act ‘the

. Secretary of ‘Agriculture may become a party to marketing

agreements with private citizens for the handling of agricultural.

- commodities which are exempt from the antitrust laws. 7

U.S. C. A. §608b. In United States v. Borden Co., 308 U.S. 188,

60 S. Ct. 102, 84 L. Ed. 181 (1939), the Supreme Court declined

to broaden this specific exemption into a general exemption

from 8 1 of the Sherman Act of the. marketing of agricultural

commodities so as to immunize marketing agreements between

private parties “If Congress had desired to grant any further

immunity Congress doubtless would have said so.” 308 U.S. at

201, 84 L.Ed. at 192. e

4 in ike manner the‘Secretary of Greer may make marking

hog-cholera virus, 7 U.S. C. A. esi et 5 and the

et 4 — —

r o hae than to the .

ex no to agreement merican

Co-op. Serum Ass’n v. retype 153 F.2d 907 (7th Cir.), cert

denied, i US. 721, 6 S.Ct. 57, L.Ed. 6 625 (1946). . 28

an foe

— A-Disenting Opinion .

*

“implied. A eee exemption 3 es

— — —

fe private parties, AEC * tho distribution eee

, “(T]}he typical anal adopted by Congress ce it has

- lifted the ban of the Sherman Act is the scrutiny and approval

of designated public representatives,“ (giving examples of the

code machinery and presidential approval under the National |

Recovery Act, the ICC in transportation, the SEC

over associations of brokers and dealers, the Bituminous Coal

| Commission over price fixing in the coal industry). United

States v. Socony- Vacuum Oil Co., 310 U.S. 150, 228 n. 60, 60

” $.Ct. 811, 84 L. Ed. 1129, 1170 n. 60 (1940). The REA Act

does not lift the ban. Nor does it confer upon.the Administrator

authority to create or approve, or to state applicable standards

to govern the creation or approval, of situations or relations in ;

eee. .

ee . e ee

°. of the Interstate Commerce Commission exemplified an |

3 ‘implicit public policy that competition in the transportation

- field was desirable, a policy subsequently expressed for a

Baoader field in the Sherman Act of 1890? Subsequently, and

repeatedly, Congress has amended the Interstate Commerce Act

to grant authority to the ICC, in the context of a pervasive -

regulatory scheme, to, approve and permit consolidations,

- mergers, controls, combinations, and agreements to fix rates, all

"° outside the usual operation of the antitrust laws.” The history

8

2 Er 49 U.S. C. A. Gi wns.

SD Sap the Giunta’ of ‘the history in Untied Stetes ». Marshelt

“Transport Co., 322 US. 31, 64 S.Ct. 899, 88 L.Ed. 1110 (1944).

S

. g

Appendix A—Dissenting Ane f

reveals carefully- -held Congressional reins over the terplay of

antitrust policy and governmental action ia derogation thereof.

The Congressional action to create. exemptions. has not made 8

the antitrust laws wholly inapplicable to the transportation

industry; Congress has not authorized the ICC to ignore

_ antitrust policies, for the Commission is under a duty, as an ae \

administrative matter, to consider effect on competitors and +g

the general competitive situation in the light of national

transportation policy. McLean Trucking Co. v. United States,

321 L. 8. 67, 84 nn. 20 & 21, 64 S.Ct. 370, 88 L.Ed. 544, $55

un. 208 21 (1944). 3

2 .

) . With 5 regulated industries the courts have .

_ Rejected the theory that governmental grant—federal or state—of

| monopolistic privileges accompanied by regulation, sometimes ‘

allpervasive, by government bodies carries an implied

exemption. from the antitrust laws or deprives the courts of

jurisdiction tg-enforce them. See Georgia u. Pennsylvania R.R.,

324 U.S. 439, 65 S.Ct. 716, 89 L.Ed. 1051 (1945), sustaining

ie right of an injured party, the State of Georgia, to enjoin a :

— conspiracy of railroads to fix rates in violation of the antitrust

laws, ema: the rates had been er by the ICC:

But it is paar that repeals by 2 blies

are not favored. Only a clear repugnancy between 95

tte old law and the new results in the former

een eee eren, | :

of the repugnaney.

1 8 5 22a a

Appendix A—Dissenting Opinion

It is sufficient here to note that we find no

wirrant in the Interstate Commerce Act and the

Sherman Act for saying that the authority to fix

joint through rates clothes with legality a

conspiracy to discriminate against a State or a

region, to use coercion in the fixing of rates, or to

put in the hands of a combination of carriers a

veto power over rates proposed by a single carrier.

the type of regulation which Congress chose did

_ not eliminate the emphasis on competition and

individual fréédom of action in rate making.

324 U.S. at 456-57, 458-59, 65 S.Ct. at.726, 89 L.Ed. at 1062,

1063. See also, as to railroads, United States v. Terminal R. R.

Ass'n, 224 U.S. 383, 32.8. Ct. 507, 56 L.Ed. 810 (1912); the

shipping industry, Carnation Co. v. Pacific Westbound

Conference, 383 U.S. 213, 86 S.Ct. 781, 15 L.Ed. 2d 709

(1966); banking, United States v. Philadelphia Nat’ Bank,

supra; insurance, United States v. South-Eastern Underwriters

Ass’n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944);

„United States Tel. Co. v. Central Union Tel. Co., 202

Fed. 66 (6th Cir. 1913); gas and electric energy, In re American

Fuel & Power Co., 122 F.2d 223 (6th Cir. 1941); Pennsylvania

Water & Power Co. v. Consolidated Gas, Elec. Light & Power

Co., supra; radio and television, United States v. Radio Corp. of

America, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed. 2d 354 (1958);

natural gas, California v. Federal Power Com., 369 U.S. 482, 82

S.Ct. 901, 8 L.Ed. 2d 54 (1962); export trade associations,

United States Alkali Exports Ass’n v. United States, 325 U.S.

196, 65 S.Ct. 1120, 89'L.Ed. 1554 (1945).

ey 23a f gta

Appendix A—Dissenting Opinion 3

* 8 we

The Capper-Volstead Act" authorized agricultural producers

to unite in preparing for market, and marketing, their

and to make contracts necessary for that collaboration. The

antitrust exemption thereby granted is much broader than the

general provision of § 6. of the Clayton Act which excepts 5

agricultural and horticultural cooperatives from the Sherman

Act. But Borden held that the Capper-Volstead.Aet does not.

cover the entire field of the Sherman Act and does not

authorize a combination or conspiracy. with persons other than

producers. See also, Maryland & Virginia Milk Producers fas n.

v. United States, 362 U.S. 458, 50 S.Ct. 847, 4 L.Ed. 2d 880

(1960). '

Case-Swayne Co. v. Sunkist Growers, Inc., 36 U.S.L. Week

407 (U.S. Dec. 18, 1967), holds that the antitrust exemption

granted by Congress to producer cooperatives under

Capper-Volstead does not extend to give antitrust immunity to

an association which has nonproducer interests in its

‘participating membership, even though the participation of the

nonproducers is relatively small. )

The Fishermen’s Collective Marketing Act iz authorizes

fishermen to market collectively, and the Secretary of the

Interior has power to’ issue cease and desist orders if such

organizations restrain trade to the extent of unduly enhancing

prices. Neither Congressional authorization of the cooperative

marketing association nor the power of the Secretary exempts

fishermen and their association or union from the antitrust

laws. Hinton v. Columbia River Packers Ass’n, 131 F.2d 88 (9th

Cir.1942), * ge

There are various specific*exemptions from antitrust laws in

the labor field. Section 20 of the Clayton Act"? withdrew from

u 15 US.C.A.§ 521-22.

11 issn Gaara 8

1 29 U.S. C. A. 32.

ue 24a

Appendix A—Dissenting Opinion

the general prohibitions of the Sherman Act specifically

. enumerated practices of labor unions by prohibiting

‘injunctions. Norris-BaGuardia™ further narrowed the

jurisdiction of federal equity power in labor disputes.

Thereafter in determining if trade union conduct is a violation

of Sherman one must read and harmonize Sherman, § 20 of

Clayton, and Norris-LaGuard@ijg. United States v. Hutcheson,

312 U.S. 219, 61 S.Ct. 463, 85 L. Ed. 788 (1941); Apex Hosiery

Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311

(1940). But Congress in granting immunity to labor

opganizations did not give immunity to combinations of labor

with non-labor groups. Allen Bradley Co. v. Local No. 3, IBEW,

325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939 (1945). The

Supreme Court, in Allen Bradley, found nothing in the

Congressional history to indicate that it was ever suggested,

considered or legislatively determined that unions, while free to

engage themselves in conduct which restrains trade, were to be

granted immunity for aiding and abetting manufacturers and

traders in Violating the Sherman Act, the availability of such an

exemption being solely for —

14% “It must be remembered that the exemptions granted the unions were

— ceptions general legislative The primary objective cf all

Anti-trust e

a 25a bees

Appendix A—Dissenting Opinion

The distribution cooperatives have no special status under the

antitrust laws by reason of. their being cooperatives. “It is

significant that when Congress has desired to permit

cooperatives to interfere with the competitive system of

-business, it has done so expressly by legislation.” Associated

Press v. United States, 326 U.S. 1, 14, 65 S.Ct: 1416, 89 L.Ed.

2013 (1945). | 5 78 n

Ine judicially- created immunities of this case are rested

on g 4 of the REA Act, 7 U.S. C. A. 5904. The Administrator

squarely puts his requirement of the 35-year contracts on his

power and obligation under § 4 to obtain reasonable security for

the loan, that “loans shall be on such terms and conditions

| relating to the expenditure of the moneys loaned and the

security therefor as the Administrator shall determine.” It

boggles. the imagination to suggest that the myriad of

government agencies having the power to lend (each based on

Congressional determination that the particular lending power

authorized is in the national interest) are, by reason of routine

administrative control over sufficiency of collateral, vested with

implied power to carve out of the national economy exempt

enclaves in which borrowers may deal free of the antitrust laws.

The REA Act, and its Congressional history, reveal no

purpose of granting any power to the Administrator to operate

free of national antitrust policy.“

It is beyond question that the purpose of the central station

service provision of g 904 was to give private utilities some

measure of protection from competition created as a result of

16 If he had any implied power there would be an additional question of

the scope of it—i.e., can he exclude a private utility as a competitor; can he

require a private citizen to make an exclusive dealing contract as a

condition of a loan? . 8 .

—

26a ;

— A- Dissen ting Opinion

RE dans. 1 Protection from lawful competition of

~ REA-financed borrowers ‘has been held not a constitutional

entitlement and a matter for relief solely in Congress. But it

flies in the teeth of the Congressional intent expressed

in §904—protection of private utilities from a described area of

competition—to distill the same § 904 into an authorization to

the Administrator to require, with impunity and immunity,

action that freezes out the private utility as a competitor. By

some unzevealed process of alchemy the partial shield given the

private utility against the REA borrower by § 904 is converted

into a sword in the borrower's hands.

‘The authorities relied on by the majority for a general

principle of governmental exemption from the antitrust laws do

not support 80 broad a pronouncement.

, Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315

(1940), was concerned with action by the State of California in

setting up a ‘raisin marketing program. The state command vel

ee ae oe ee not forbidden by the

Sherman Act“ F. V. Wiggins Airways, Inc. v. Massachusetts

Port Authority, o and. Miley v. John Hancock Mut. Life Ins.

Code concerned with sovereign sarod of the stete and

follow Parker v. Brown.

75

all

5

885

ae

x

1

388

x.

8

rg

8

punish somebody or parallel ebe e sume

Court pointed out, “we have no question of the state or its

— 2 to's quleels eaneomiat or conhtuntion

278" a :

Appendix A-Dissentirig Opinion )

Eastern R.R. Conference v. ‘haem Motor Freight, rt 3685

U.S. 127, 81 S. Ct. 523, 5 L.Ed. 2d 464 (1961), held that a

violation of the Sherman Act cannot be’. predicated upon

attempts to influence the passage or enforcement of laws. The 5

Court distinguished between an 1 gions jointly to seek

legislation or law enforcement agreements traditionally

condemned by the Sherman Act, and it warned against treating

defendants’ conduct as though it were a common-law trade

restraint. Presumably the majority refer to the first sentence of

the following part of the opinion: |

Accordingly, it has been held that where a

restraint upon trade or monopolization is the

result of valid governmental action, as opposed to

private action, no violation of the Act can be

made out. These decisions rest upon the fact that

under our form of government the question

whether a law. of that kind should pass, or if

passed be enforced, is the responsibility of the

appropriate legislative or executive branch of

government 80 long as. the law itself does not

violate some provision of the Constitution.

The limiting language of the second sentence makes quite plait

that the governmental action e to is of the particular

by others for restraint of. trade, td (317 US. 351-52, 87 LEA. at 326) and,

“the state in adopting and enforcing the prorate prorate program made no

contract or t and entered into no conspiracy in restraint of trade

22988 — which the Sh Ar rr

. et not to prohibit.”

e 3

19 362 F. 2d 52 (Ist Cir. 1 66). There is an over-broad dictum in Wiggins

of a general governmental immunity. There go wes no conspiracy in the case,

a “simple agreement or arrangement.

20 148 PSP: 299 (D. N 242 F. 758 (Ist Ci. 1957).

0 5 0

—Z

Appendix A—Dissenting Opiniuunn

kind before the Court. Primarily the Court was concerned with

protecting the legislative process. It speaks (365 U.S. at 136-37,

8 L. Rd. 2d at 470-71) of associations seeking to persuade the

legislative or executive to take particular action with regard to

passage or enforcement of laws, of the significance in a

representative democracy of the people making their wishes

_ known to their representatives, arid the constitutional issue of

de right to petition, 8

United Mine Norbert b. Pennington, 381 U.S. 657, 85 S. Ct.

1585, 14 L. Rd. 2d 626 (1965), was concerned with joint efforts -

of private: citizens to influence public officials, approaches to

the Secretary of Labor by union and large companies to

establish a minimum wage under the Walsh-Healey Acta! which

would make it impossible for smaller companies to compete.

plaintiff was held, under Noerr, not entitled to dantages

arising from the Secretary's Walsh-Healey determinations, not

‘because of any governmental immunity but because his action

"was “the act of a public official who is not claimed to be a

co-conspirator.” (381 U.S. at 671, 14 L.Ed. 2d at 637). The

REA Administrator is claimed to be a conspirator.??

‘2 The fos ling was that a concerted effort to

is of intent not within the Sherman

i

‘

i

5

rennen. Valley Net T Bank, 339 F. 2d

564 (9th Cir. 1964): g 5 8

present . The complaint can de read as that

appelices’ joint effort to influence the Attorney was but

ene element in a larger p

29a

Appendix A—Dissenting Opinion

"Stroud v. Benson, 155 F.Supp. 482 (E. D. N. C. 1957), refers

to sovereign immunity to the antitrust laws, quoting the Parker

v. Brown language concerning state action (which was not

involved). There was no allegation of conspiracy; only of the

validity of an order of the Secretary of Agriculture, and there

was no wan of trade. a

The cases do not support a proposition of general

governmental immunity. If there is such a principle Congress

has been proceeding for a long time under. a misapprehension in

providing for government officers, and those with whom they

deal, exemptions which are specific in nature and varying in

ope,

im. The material issues 2 of fact

The majority. acknowledge a possible application of thes

antitrust laws if the Administrator went beyond the outer

perimeter of the uthority granted him by statute.

The motions to dismiss were submitted to the district court,

along with the motions for simmary judgment and motion for

preliminary injunction, on the pleadings, affidavits, exhibits,

and briefs and argument. The district court and the majority in

this court have drawn freely on the affidavits and exhibits to

support their conclusions. The Complaint and answer alone, but

in sharpened form when aided by the other pleadings and the

supporting affidavits and exhibits, squarely raise a factual i issue

reserved the

herman Act to the case of ‘a state or its

participant in a private agreement or combination by others

211, 351, 63 S.Ct. 307, 314, 87 LEA, 315 (1943), the C

question of the a Of the

restraint of trade,’ V .

inapplicable in such a situation.

339 F. ad at 566.

** ; 3

* whoa

30a

Append — Opinioan

of lbs the Administrator is acting within or without his

outer limits. That question of fact was not determined by the

_ district court.

&

In this court the majority: say that to require or — a

fact-finding body: to determine the outer perimeter boundari

or ‘the range of. permissible choices contemplated by the

stati,’ /would defeat the reasons for recognition of the

eae pile of government officials against suit, relying upon Barr

v. Matteo, 360 U.S. 564, 79 S.Ct. 1335, 3 L.Ed. 2d 1434

(1958). I do not W eee this statement. Barr itself, as have

mimerous other cases, determined outer perimeter boundaries:

The fact that the action here taken was e a

the outer périmeter of petitioner’s line of duty is

enough to render the privilege applicable, mei

the allegations of malice in the complaint. .

360 U.S. at 575. See also Norton v. McShane, 332 F. 2d 855,

862 (Sth Cir. 1964). To couple a privilege for acts done within

the perimeter with immunity from judicial investigation of

where ‘the perimeter ‘lies, or where the “permissible choices?

end, would a the Jasna into or for any act

done. 7 7

The privilege originated with judicial officers, but has been

extended to some executive officers. It has its greatest vitality

in the field of defamation, but by implication has been

extended to civil torts generally. Norton v. McShane, supra

footnote 2, 332 F.2d at 858. The privilege seems to me to have

the least force, if any force at all, in the case where the

executive officer's authority—his “permissible choices”—and the

wrong against which privilege is asserted both are created by

38

8 —

Bue? 31a

Appendix A Diasenting · Opinion

Congressional enactment. The privilege of the officer and the

Congressional authority to grant or withhold immunity from

the statutory wrong then pull in opposite directions. To give

effect to privilege in that situation is to grant by indirection an

immunity to a statutory offense which Congress, in creating the

offense, saw fit o withhold. The government officer may not

thus — himself from Congressional intent.

_ While disclaiming the propriety of any fact finder’s doing so

the majority ‘make a finding that the Administrator did not 1

beyond his outer perimeter or exceed his “permissible choi

basing it on customary REA practice and his affidavit reciting —

his “policy reasons” for approving the loan. That finding, not

made by the. district court, is inappropriately made by an

appellate. court. It is not sustained by the record, which shows .

that whether the Administrator was within the outer limits of

his authority i is a serious, disputed and material issue of fact.

The complaint alleges repeatedly that the e * and

the proposed use of the loan funds, violate the central station

service requirements of 8904 The position of the defendants

on these allegations is far from clear. The joan commitment

letter of REA to AEC contains several conditions but none

- limiting use of the funds to the statutory purpose. As part of a

petition to secure the state consent required by the third

proviso of 8 904 there were filed with the Department of

Finance of the State of Alabama resolutions of the Board of

Trustees of AEC. They call for construction and operation of

generating facilities and additional electric transmission,

distribution and service lines, bes cst with all necessary

23 The Administrator is authorized and e n

for rural electrification . for the — — tn the construction

and operation of generating plants, — transmission and distribution

lines or systems for the furnishing of T

areas wha are not receiving central station service.” |

— ‘ 325

Appendix g Opinion

. appurtenances, in rural areas in [describing the areas}, and

_* along such routet us shall be approved by the Administrator of

ite Rural Electrification Administration for the purpose of

maid furnishing electric energy to consumers not receiving central

‘station electric service. Whether routes approved by the

Administrator may be in non-rural areas, and whether

“consumers not receiving central electric station service” may

de in non rurai areas, depend on construction of the resolutions.

3 A feasibility study wee made for AEC by. a consulting

engineering firm, Which on January 8; 1962 reported to

AEC It makes no mention of the statutory standard of g 904.

_ Tt does not state who the “additional n members” are and where 5

located. :

Tue 8 Company — . the 8 of

Finance of Alabama its contention that g 904 was being

violated. The Department made no finding thereon, saying

tersely that AEC's proposal “‘serves some public need and is in 3

the public. interest. On limited review of the Department's

action by certiorari the state circuit court quashed the order of

the Finance Department as not supported by sufficient

opens evidence. It ‘found the 8904 perpen was not

** eee eee

and industrial . 300 f indirectly serves electrie

8 consumers, and in

a

1

eee

and transmission facilities of your —

following objectives: (a) To serve

member (d) To provide improved ae

(o) To power costs. (d) To transmit ~*.

79 gh (SEPA) to member

preference customers. As a result studies

q

Hn

1 0 ü

1

mode, # pan of expansion i developed which will achiev

&

*

ens A~Diasentng Opinion : |

9 #ith*On appeal the Alabama Supreme Court

treversed and rendered — ——

wrong standard of review. Alabama Elec. Co-op., Inc. v. .

Alabama Power Co., 278 Ala. 123, 176 So. 2d. 403 (1964). It

declined to pass on the central station service issue, pointing

out, inter, alis, that in the Kansas City case there had been a

decision n the merits in the district court that the contract in

mo question did not violate the central station provisions.

When the case now before us reached, the 8 court

defendants filed the affidavit of Administrator Clapp. Pertinent

N extracts referring to the purposes of the loan are set out in the

margin. This is the came affidavit from which the statement

of ere reasons” Shes by the yaad is taken.

réceiving central

r lication.” Alabama Power Co. v.

2 Elec. Co-dp., Inc., No. 3519 (als. Cir. Ct., July 9, .

27 “Stich facilities [ cted with the proceeds] were

to be used to — electric power needs of ti describing Soy

cooperatives] ... to enable them to furnish electric energy to

. who, being persons in rural areas not receiving central

station service, were supplied with electric energy for the first time

‘rough, electric facilities financed by REA, pursuant to 7 U.S.C. 901 ee

Lin addition to the use of the facilities: to the cooperatives

described in the preceding which | tiff complains,

seeds af cae a to be used to serve the electrio power

energy to their member-corisumers : who, persons in rural areas not

receiving central station service, Brag supplied | with po Ayer energy for the

first time through electric facili REA pursuant to the RE

Act; Act; o (2) enable them to continue to e, furnish electric service to those of

their consumers who are

ped oy AEC ne ae 5

pursuant to the RE Act, as a mecessary {sic} and incidental

of extending sevice to unseved pésons in rural areas and as «means of

. 9 K

0 — ;

yg 1 ~*~ x

1 t

4 ＋

4 ll 2

Appendix A—Dissenting Opinion

Possibly the affidavit is an effort to assert facts within the

construction of “central station service” reached by the district

court in the Kansas City case, Kansas City Power & Light Co. v.

McKay, 115 F.Supp 402 (D. Ct. D. C. 1953), that loan

agreements were within the §904 requirement when providing

for a successive loan (to a cooperative originally financed by

REA). to meet increasing power requirements of members

presently being served and to supply the demand for service

from new consumers in surrounding areas denied such service

except for the assistance of REA. The difficulty is that some of

the Administrator's statements of fact are controverted by the

complaint and by affidavits filed in the district court by the

Power Company, setting out that consumers of some of the

member cooperatives said by Clapp to have been supplied with

electric energy for the first time through electric facilities

— ~ —

. Sra ts cer ett

referred to above are members of AEC and are hereinafter

° eee

Elsewhere in his affidavit the Administrator states he 8 d the

loan because it would effectuate the policies and purposes of the REA Act

:

|

E

.

F

Ht

nf

121

Ait

hd |

55

fi

:

|

52

A

3582

Appendix — Opinion

financed by REA in fact had been in the past’ and are at

present, supplied with central station service by the Power

Company. A Power Company affidavit says: “As a matter of

fact, the major portion of the proposed expanded project of

Alabama “Electric Cooperative is to furnish electric service to

persons who have been, were at the time the loan was approved

and are now being supplied by central-station electric power

generated in central stations of Alabama Power Compary =e

Gulf Power Company.”

The district court in Kansas City made its findings after a

three-weeks trial, expert testimony: and numerous exhibits. In

the case before us the district court made no findings From

this record it is impossible to determine with any degree of

assurance that the proposed loans are within the Congressional

authority granted by g 904. It is impossible to tell whether the

Administrator has c correctly acted in accord with the statutory

purpose, or has gone beyond his outer periphery, ‘or is in an

intermediate zone in which he has made an administrative |

decision which though erroneous is not beyond his outer limits””

The factual issues drawn are not anewered wpe case » law that

when the Administrator is acting within the periphery of his

authority the national policy of aid to 2 electrification

prevents judicial review of his action.

28 The state circuit court, —— — the

issue of central station service (other taan the one-sentence finding by this

— LTU supra and

accompan text

29 The Power Company contends. that one of the reasons for requiring

the exclusive dealing contracts arises from the fact that the central station

e Le., that the are the means

by the Administrator to eliminate tition which will

ensue between the distributing tives existent

Like other factual issues, this cannot be resolved on motion to

36a

Appendix A—Dissenting Opinion

Disposition of the case without hearing and findings of fact

makes impossible another pertinent inquiry. The character and

quality of acts done by the Administrator and their impact as

restraints on trade and competition are relevant on several

issues—relating to immunity and standing—whether there was

Congressional intent to exempt acts of this general character

and of this specific nature, and the weight to be given to the

acts done in the balancing of rural electrification and antitrust

policies. Valid determinations cannot be reached in this ease

without factual data that definitively’ presents just what it is

that the Administrator and the private citizens have required,

agreed upon and done, and the impact thereof on the relevant

market. The issues cannot be resolved in a vacuum nor on the

Rem eee

IV. Standing

On its antitrust theory the Power Company claims standing

under Sections 4 and 16 of the Clayton Act, 15 U.S. C. A 8815

& 26, and aseerts substantive violations of Section 3 of the

Clayton Act, 15 U.S.C.A.§14; and Sections 1 and 2 of the

Sherman Act, 15 U.S. C. A. 88 1 & 2.

.. „„

laws the majority, as did the district court, treat this case as ont

_more in the line of Ickes,” TVA,” Kansas City and Central

3 Alabama Poser Co. v. Ickes, 302 U.S. 464, $8 S.Ct, 300, 82 L.Ed.

374 (1938).

: Tennessee Elec. Power Co. ¥. TVA, 306 US. 118, 59 S.Ct. 366, 83

Lea. $43 (1939).

ol $i Oa e er a: d

22 . 780 (1 5

— —

iis See 37a ;

Appendix A—Dissenting Opinion

Louisiana. Those cases do not reach the issue before us. They

represent a succession of efforts by private utilities to establish

standing by combining a charge that the government officer was

making an unauthorized loan (or otherwise acting outside his

authority) with a charge that the purpose or effect was to create

competition for the plaintiff, this combination being then: :

characterized as “unlawful competition” or “conspiracy.”

These: efforts were rebuffed, because review of loans is for

Congress and not the courts, and the private utilities have no

legally protectible right to freedom from competition.

Those established principles have no application to a

complaint by the private utility of actions which in themselves —

are monopolistic in nature and violate the antitrust laws. The

actions here charged draw their ‘characteristics of invalidity

from their own nature and impact, not from efforts to create a

synthesized illegality. The Power Company does not complain

of the mere competition” of Central Louisiana or the lawful

competition of TVA and Kansas City but of unlawful

competition, exclusive dealing contracts and coercion. There is

no national policy to create monopoly, or unlawful

competition, or engage in coercion, in the name of competition.

“Competition” is not a magic word which when uttered

dispenses with consideration of what as a matter of fact is being

done and 33G

5 consequences.

Ickes sss 4 ok epee Sadie e

antitrust ey The Supreme Court declined to. enjoin

_3 Rural tion Administration v. Central Louisiana Elec. Co.,

354 F.2d 859 (Sth Cir. 1966), reversing 236 1 271 (W.D. La. 1964,

cert. denied, 385.U.S. SS, 87 S.Ct. 34, * 54 (1966).

38a

Appendix A—Dissenting Opinion

agreements and grants for municipal electric systems on the

sole and detached ground that the Administrator lacks

constitutional and statutory authority to make them, and that

ihe resulting moneys, which the municipalities have clear

authority to take, will be used by the municipalities in lawful,

albeit destructive, competition with petitioner.” The Court

referred to the finding of the district court that the contracts

did not require the municipalities to eliminate competition or

designate the source from which they must purchase power.

The Court referred numerous times to ‘the competition as

lawful, noted that there was no conspiracy and made the

oft-repeated dictum, “If- conspiracy or fraud or malice or

coercion were involved a different case would be —"

TVA also was not filed under the procedural provisions of

the antitrust laws but was for general equitable relief, and on

the theory public power competition was illegal because it

. injured property rights represented by the private franchises.

The Supreme Court pointed out that possession of the

franchises did not render competition illegal and conferred no

contractual or property right to be free of competition. There

had been specific findings by the district.court that the

— Power Co. 9; Grecussood County, 302°U8, 465, 58 SL.

306, 82 L.Ed. 381 (1938), decided the same day, the proposed

e nn oso win *

8 8

Appendix A—Dissenting Opinion

and lawful cooperation by government officials leading to

lawful competition. ae

iw

Kansas City is inapplicable for two reasons. First, no cause of

action was asserted under. the antitrust laws (see 225 F.2d at

936). The suit was for declaratory judgment based on the Rural

Electrification Act“ and the Flood Control Act of

1944. neither of which is a statutory provision designed to

protect competition.” Second, the nature and quality of the,

acts charged were such that as a matter of law there was no

“conspiracy.” Kansas City, as had Ickes, teaches that. the

spectrum of dealings between private citizens and goverriment

officials is not made a “conspiracy” by the fact alone that the

official exceeds his authority. In neither case was there action

which carried within itself the seeds of restraint or monopoly.”

Central Louisiana was a suit for temporary injunction to

prevent the REA from ana a loan. It did not involve .

standing under Sections 4 and 16 Of the Clayton Act. In the

„Cooperation by two federal officials, one acting under a statute

whereby funds are provided for the erétfton of municipal plants, and the

other under a statute authorizing the production of electricity and its sale

to such plants, in competition with the appellants, does not spell

conspiracy to injure their business. As the court below held, such

cooperation does not involve unlawful concert, plan, or design, or

cooperation to commit an unlawful act or to co t acts otherwise lawful

with the intent to violate a statute.” 306 U.S. at 146-47, 83 L.Ed. at 554.

7 7: U.S.C.A.§.901 et seq. }

233 U.S. C. A. §7011 et seq.; 16 U.S.C.A.§ 8258 et seq.

„ See the discussion of Hardin v. Kentucky Utilities

2 L 19 L. Ed. 2d 787 (1968), infru.

40 This is the point which Judge Washington in Kansas City seeks to

make in his reference to Ickes. It is the same point made by Judge

Coleman in Central Louisiana; that lawful competition plus excess of

. statutory authority do not constitute the kind of “conspiracy” the court

had in mind in Ickes. 354 F. 2d at 866. y

8

402

Appendix — Opinion

district» court Judge Dawkins held plaintiff had made out a

prima facie case of illegal competition and coercion and granted

the temporary injunction. On appeal: this court reversed,

holding that there was not raised anything more than “mere

economic competition made possible by governmental action.”

It reinforced this conclusion by the further statement that

“their [appellees] only standing for this [that the loan was

illegally made and would cauee illegal consequences]. is their

natural opposition to having territory invaded which heretofore

has been de facto their sole domain but in which they have no

exclusive right.” 354 F.2d at 865.

Central Louisiana dealt with i invasion s of the private utility’ 8

territory by ‘a mere competitor.” We deal in this case with

ouster of the private utility from a market by a borrower under

a monopolistic contract. Whether exclusive dealing contracts

standing alone violated the antitrust laws, and whether as a part

of the overall dealings they violated the antitrust laws and

thereby caused the overall s aa in violation, were

matters: not decided in Central Lo There are references

to 35-year requirement contracts (see 354 F.2d at 863) but no

such contracts had been executed (although it was recognized

the Administrator would require them) and neither AEC nor

the distributor cooperatives were parties to the suit“

* About 2s close as the court came to considering the contracts isthe

statement (354 F.2d at 864):

“The have been and are now doing business |

with cooperatives established and financed under the

REA Act. The record shows no intention or attempt to

abrogate oe contracts between the parties.

A a Constitutionally guaranteed

— pi to 5 8 of

—. Ushio thn snittet laws

they abrogate existing contracts between one of the parties thereto

of the private utility is that it not be be foreclosed from the market, which

may or may not involve breach of an existent contract.

| 476

Appendix A—Dissenting Opinion

Rural Electrification Administration v. Northern States

Power Co., 373 F.2d 686 (8th Cir. 1967), considers standing

under the Administrative Procedure Act and under the REA

* 7

Act itself. It does not reach the antitrust issue.

This brings us to the latest chapter. In Kentucky Utilities Co.

v. TVA, 375 F.2d 403 (6th Cir. 1966), rev'd sub nom. on other

grounds, Hardin v. Kentucky Utilities Co. . U.S. ae

S. Ct... ., 19 L.Ed.2d 787, (1968), the private power company

sought an injunction restraining TVA, its distributor (an electric

cooperative), and mayors of cities concerned, who were charged

with a conspiracy by which’ the cooperative would take over

the supply of electric power to the cities in violation of 16

U.S. C. A. 8 831 n—4(a) forbidding TVA from making new

contracts to supply power outside the area for which it or its

distributors were the primary source of power on July 1, 1957. .

The district court found against the private power company on

the merits but held it had standing to sue. 237 F.Supp. 502

(E.D. Tenn. 1964). The Court of Appeals affirmed on standing

to sue, pointing out that the court did not ask a decree

protecting it from all competition but from violation of the

statute, which had been enacted to protect established utilities

from intrusion by TVA into areas where such utilities

were. established. Of significance on the matter of standing to

sue under the antitrust laws, the court distinguished Ickes, TVA

and Kansas City: ee;

All of them involve efforts by private utitlities

to get court relief from the competition of

publicly owned or supported power facilities

which were creatures of the Federal Government's

entry into the power business. The right to sue

2

0

42a.

Appendix A—Dissenting Opinion

and the asserted ground for relief in each case

were bottomed upon broad claims of

unconstitutionality of the federal power program,

- *. illegality in the means whereby competitors of

private utilities had or would obtain the funds to

set up their operations and other charges of

illegality in the establishment of the plaintiffs’

competitors. Such plaintiffs were held to be

without standing to sue. Their surfact analogy is

immediately dissipated by the fact that in none of

. _ them was the plaintiff’s suit planted on a federal

_ statute enacted specifically for the protection of

the involved plaintiff. The plaintiff utilities did

not have exclusive franchises, and the cases hold

that where there is no constitutional or common

law right to be free of competition and where the

hurting competition is valid as competition, the

- courts will not restrain it because of some

_ antecedent illegality in its creation or in its

obtaining of funds. 5

The Supreme Court affirmed on standing to sue, distinguishing

lawful com petition” cases (including TVA), in which

“competitive injury provided no basis for standing. - Simply

because the statutory and constitutional eee that the

plaintiff sought to. enforce were in no way concerned with

protecting, against competitive injury,” from the contrasting

cases in which the particular statutory provision invoked does

reflect a legislative purpose to protect a competitive interest,

the injured competitor has standing to require compliance with

that provision. *The power company had standing because it is

thus in the class which § 15d is designed to protect.” „Kansas

ey was characterized as holding that an 8 competitor |

43a

_ Appendix A—Dissenting Opinion o

cannot sue to enforce statutory requirements not designed to 7

protect competitors [in that case not the antitrust laws but the

EEA Act and the Flood Control Act of 1944]. :

It seems to me beyond rational question that the antitrust-

laws were designed to include competitors as among those

protected. As much is conceded by REA in its latest brief:

We stress, however, that, if Alabama Power Co.

could not bring suit, it would be solely because of

an absence of a legally cognizable injury to it and

not because it was the Alabama Power Co. In

short, contrary to appellant's implication, we have

neyer suggested that the principles governing its

standing to sue are any different than those 8

155 _ applicable to other parties. . g ;

Specifically, § 16 of the Clayton Act provides for the right of

the private party to sue for, injunctive rejief against threatened\_

loss or damage by violation of the antitrust laws. ad

Insofar as the antitrust laws are concerned, this court need

not pause on the inquiry—over which the parties do mighty

battle in their briefs—of attack on the loan vs. attack on the

requirement contracts as an incident of the loan. The Power

Company has standing to attack the contracts standing alone,

whether or. not the Administrator is a formal party thereto, and

to attack the broader range of activities of which the contracts

are a part and in which the parties defendant are charged as

Participants. c 5

I agree with my brothers that REA is an instrument chosen

buy Congress to bring abundant and low cost power to our rural

citizens and is not just another utility. But that characterization

ee | — Opinion 72 5

does not answer whether it is to be given an implied 8

to deal free of antitrust law and national antitrust policy.

3