Dean v. Herrington

668 F. Supp. 646
CourtDistrict Court, E.D. Tennessee
DecidedAugust 11, 1987
DocketCiv. 3-87-436, 3-87-439
StatusPublished
Cited by10 cases

This text of 668 F. Supp. 646 (Dean v. Herrington) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dean v. Herrington, 668 F. Supp. 646 (E.D. Tenn. 1987).

Opinion

MEMORANDUM OPINION

JARVIS, District Judge.

These two consolidated actions arise out of two long-term power contracts entered into between two federal government agencies, the Tennessee Valley Authority (hereinafter “TVA”) and the Department of Energy (hereinafter “DOE”).

DOE has notified TVA of its refusal to make certain payments allegedly due under these contracts. In Civil Action No. 3-87-436, TVA, Charles H. Dean, Jr., Chairman of TVA’s Board of Directors, and John B. Waters, a member of the Board of Directors, have sued DOE, John S. Herring-ton, the Secretary of the DOE, and John R. Longenecker, a Deputy Assistant Secretary of the DOE, for “declaratory and injunctive relief.” The complaint alleges that the “defendants are proceeding with an arbitrary, capricious, bad faith, ultra vires, and unlawful course of conduct in refusing to pay the applicable rates set by plaintiffs Dean and Waters as the TVA Board of Directors pursuant to the TVA Act (16 U.S.C. §§ 831-831(dd))” and in “attempting themselves to set "other and lower rates in violation of the TVA Act (42 U.S.C. § 2204), and DOE’s power contracts entered into under the statutes.” Plaintiffs seek the following relief: (1) a declaratory judgment that the actions taken by the defendants are arbitrary, capricious, in bad faith, ultra vires, and unlawful; and (2) a declaratory judgment that DOE be required to pay the rates established by the TVA Board of Directors as agreed under the power contracts. By way of amended complaint, TVA also seeks a writ of mandamus pursuant to 28 U.S.C. § 1361 requiring defendants Longenecker and Harrington to take steps to assure that the amounts allegedly owed are paid. TVA also seeks a preliminary injunction enjoining the defendants from withholding amounts due under the contracts.

Civil Action No. 3-87-439 is brought by four distributor corporations of TVA power against DOE, Herrington and Longenecker. The complaint seeks an injunction barring the “continued unlawful acts of defendants in refusing to pay sums appropriated by Congress and legally due under certain contracts” between TVA and DOE. The gist of the complaint is that if DOE is able to avoid its liability under its contracts with TVA, TVA will be forced to shift those obligations to other ratepayers and their rates will be increased by 6%. These plaintiffs seek an injunction requiring the defendants to fulfill their obligations under *649 the contracts, enjoining the defendants from any attempts to shift their obligations to the ratepayers and/or distributors, and enjoining them from interfering with the duties of the Directors of the TVA Board of Directors, contrary to the provisions of the TVA Act (apparently those provisions dealing with TVA’s ratemaking authority).

On June 18, 1987, the Tennessee Valley Industrial Corporation (hereinafter “TVIC”) filed a motion for leave to intervene in Civil Action No. 3-87-436 pursuant to Rule 24(b), Fed.R.Civ.P., seeking the same declaratory and injunctive relief sought by TVA. On July 1, 1987, TVIC’s motion to intervene was granted. On July 23, 1987, the Aluminum Company of America (hereinafter “Alcoa”) filed a similar motion to intervene.

Currently pending is Alcoa’s motion to intervene in Civil Action No. 3-87-436, DOE’s motion to dismiss both actions pursuant to Rule 12(b), Fed.R.Civ.P., and the motions for a preliminary injunction of the TVA and the TVIC.

The Court will consider first DOE’s motions to dismiss the complaints. DOE contends that (1) with respect to TVA, this action does not involve a justiciable controversy as it represents an internal dispute between two Executive agencies; (2) alternatively, this Court lacks subject matter jurisdiction over what is essentially a breach of contract action between TVA and DOE, over which exclusive jurisdiction rests in the United States Claims Court; (3) the plaintiffs and intervenors other than TVA lack standing to bring these actions or participate as parties; (4) the Court lacks in personam jurisdiction over defendants Herrington and Longenecker; and (5) the complaints fail to state a claim against defendants Longenecker and Herrington.

I. Factual Background.

DOE operates uranium enrichment facilities at Oak Ridge, Tennessee and Paducah, Kentucky as the successor to the Atomic Energy Commission. TVA has made electric power available to the Oak Ridge facilities since World War II and to the Paducah facilities since 1951.

TVA alleges that in the late 1960’s DOE was expecting tremendous increases in production at its uranium enrichment and other plants at Oak Ridge and Paducah, and approached TVA regarding making very large amounts of power available. TVA says that DOE could have undertaken the significant risks associated with building its own generating facilities or could have entered into arrangements whereby TVA would build and dedicate specific generating plants to the DOE projects, but it chose not to. Instead, TVA asserts that DOE asked and TVA agreed to enter into contractual arrangements which would make TVA electricity available to DOE’s facilities from the TVA system generally.

The resulting contracts, dated December 1,1967 and effective April 1,1971, required TVA to make available large amounts of electric power to the Oak Ridge and Paducah facilities. The Oak Ridge contract was titled “Oak Ridge Power Contract Between United States of American Acting By and Through United States Atomic Energy Commission and Tennessee Valley Authority.” [See Exhibit “A” to TVA’s Complaint]. The Paducah contract was similarly titled. [See Exhibit “B” to TVA’s Complaint]. The contracts were amended in November, 1968, to increase in steps to 3,165,000 kilowatts the total amount of power required to be made available by TVA. Further increases in the total of kilowatts to be required were made in 1973 and 1974. The DOE contracts are “availability” contracts; that is, they obligate TVA to make power available, without obligating DOE to actually use any particular amount.

Each of the DOE contracts provides that it will continue through June, 1990, and from year to year thereafter through June, 1999, unless terminated earlier by either party upon notice of a reduction to zero (in successive steps of not more than 1,000,000 kilowatts per year beginning no earlier than eight (8) years after notice) of the aggregate amount to be made available. In a series of notification letters to TVA dated December 24, 1981, December 20, 1982, December 23, 1983, December 24, 1984, and March 7,1986, DOE exercised its *650 right under the contracts to reduce the aggregate contract demand to zero kilowatts, thus terminating the contracts effective March, 1994. As written, the contracts require DOE to pay the applicable demand charges, as well as energy and customer charges, until the termination becomes effective, regardless of the amount of power DOE is actually using. Such charges constitute DOE’s minimum payment obligation.

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Cite This Page — Counsel Stack

Bluebook (online)
668 F. Supp. 646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dean-v-herrington-tned-1987.