Electricities of North Carolina, Inc. v. Southeastern Power Administration

774 F.2d 1262
CourtCourt of Appeals for the Fourth Circuit
DecidedOctober 10, 1985
DocketNo. 84-2271
StatusPublished
Cited by5 cases

This text of 774 F.2d 1262 (Electricities of North Carolina, Inc. v. Southeastern Power Administration) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electricities of North Carolina, Inc. v. Southeastern Power Administration, 774 F.2d 1262 (4th Cir. 1985).

Opinion

HARRISON L. WINTER, Chief Judge.

This appeal challenges the final power marketing policy of the Southeastern Power Administration (SEPA), a federal power marketing agency within the Department of Energy. Plaintiffs, various municipally-owned electric systems in North Carolina, South Carolina, and Virginia, along with the Cities of Bennettsville and Camden, South Carolina (collectively referred to herein as “Electricities”), brought this action in the district court for review of SEPA’s final power marketing policy for its Georgia-Alabama system of projects. On cross-motions for summary judgment the district court granted defendants’ motion on the alternative grounds that SEPA’s actions were nonreviewable because “committed to agency discretion by law,” or that SEPA’s policy, even if subject to the district court’s jurisdiction, was not arbitrary, capricious, or an abuse of discretion. Because we perceive no merit in plaintiffs’ appeal, we affirm.

I.

Under the authority of Section 5 of the Flood Control Act of 1944, 16 U.S.C. § 825s, SEPA sells power produced at federal dams to energy consumers.1 The Act requires that SEPA, as delegate of the Secretary of Energy, dispose of the power produced “in such manner as to encourage the most widespread use thereof at the lowest possible rates to consumers consistent with sound business principles.” Id. It further requires that preference in the sale of power be given to public bodies and cooperatives, rather than to private entities.

SEPA sells power in a ten-state area, which it has divided into four marketing areas. This appeal involves the final power marketing policy for the Georgia-Alabama system, which includes parts of Georgia, Alabama, South Carolina, North Carolina, Florida, and Mississippi.

SEPA does not own or control any transmission lines. It must depend on others to move the output of its generating facilities to its customers. Also, SEPA supplies only a small part of the needs of its customers. In 1978, its generating capacity amounted to only 21% of the capacity and 10% of the [1265]*1265average annual energy of the load of its preference customers in the Georgia-Alabama marketing area. Thus, the demand for power generated by it far exceeds the supply. The power that it sells from the Georgia-Alabama system is “peaking” power, that is, power to meet the peak demands of its customers.

The availability of peaking power from SEPA eliminates the need on the part of its customers to invest in generation facilities to meet the demands for energy made on them during peak periods.

Prior to 1978, SEPA marketed power from its Georgia-Alabama system on an ad hoc basis by negotiating contracts with consumers. In 1978, SEPA adopted a formal procedure for establishing its marketing policies. 43 Fed.Reg. 29186 (1978). Under the new procedure SEPA develops its marketing policies by informal rulemak-ing with notice and an opportunity to submit comments.

Pursuant to this new procedure SEPA issued a notice of intent to formulate a power marketing policy for the Georgia-Alabama system in 1979. 44 Fed.Reg. 10111 (1979). SEPA received seventy-eight responses to the notice, including written comments from Electricities. Electricities proposed that once existing contracts for power expired, SEPA should allocate to all interested preference entities proportionately equal allocations.

After the comment period SEPA published a notice of proposed marketing policy for the Georgia-Alabama system. 44 Fed. Reg. 59642 (1979). SEPA subsequently held two public comment fora concerning the proposed policy in January 1980. SEPA received further oral and written comments on its proposed marketing policy, including additional comments from Electricities.

On October 1, 1980, SEPA published its notice of the issuance of the Final Power Marketing Policy. The final marketing policy expanded the list of preference customers that would receive some allocation of SEPA power from 150 to 204. Among the added preference customers are several cities that had previously refused SEPA power including several plaintiff cities. Although the final marketing policy expanded the list of preference customers, it also provided that SEPA’s pre-existing customers would continue to receive their existing allocations of power after their contracts expired. New customers would only receive power as it became available after the completion of the Richard B. Russell project and the expansion of the Hartwell project both along the Savannah River on the Georgia-South Carolina border. Old and new customers would share the new power proportionately.

In its final marketing policy, SEPA also divided the Georgia-Alabama marketing area into two parts with the Savannah River serving as the boundary between the parts. Customers in the portion of the Georgia-Alabama marketing area that is east of the Savannah River would receive their power from the three projects located on that river. The final marketing policy provided that the eastern portion of the Georgia-Alabama area would consist of the South Carolina Public Service Authority’s and South Carolina Electric and Gas Company’s service areas and only that part of the Duke Power Company’s service area that was within a radius of 150 miles of the Savannah River projects.

Plaintiffs challenged the marketing policy on several grounds. Most important upon appeal are plaintiffs’ contentions that SEPA’s decisions to treat existing customers preferentially and to exclude potential customers situated more than 150 miles from the Savannah River project are arbitrary and capricious, constitute an abuse of discretion, and are in violation of the Flood Control Act of 1944.

II.

In granting defendants’ motion for summary judgment, the district court first ruled that allocation of power among preference customers is a matter “committed to agency discretion by law” and therefore not subject to judicial review. 5 U.S.C. [1266]*1266§ 701(a)(2). The district court concluded that the Act’s command to dispose of power “in such a manner as to encourage the most widespread use thereof” was “simply too vague to supply this Court with a standard by which it can judge the propriety of SEPA’s actions.” It agreed with the Ninth Circuit that the Act’s “most widespread use” language does not provide a standard against which to measure SEPA’s marketing decisions, since the language is susceptible to a wide range of divergent interpretations. Santa Clara v. Andrus, 572 F.2d 660, 668 (9 Cir.), cert. denied, 439 U.S. 859, 99 S.Ct. 177, 58 L.Ed.2d 167 (1978); see also Greenwood Utilities Commission v. Hodel, 764 F.2d 1459, 1464-65 (11 Cir.1985) (holding that section 5 of the Flood Control Act of 1944 provides no law to apply regarding allocation decisions among preference customers). The district court therefore decided that it had no jurisdiction to review SEPA’s decision regarding the marketing of power to preference customers.

We agree with the district court. Agency actions are presumptively subject to judicial review except where Congress manifests its intent to preclude such review. Abbott Laboratories v. Gardner, 387 U.S. 136, 140-41, 87 S.Ct. 1507, 1510-11, 18 L.Ed.2d 681 (1967);

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774 F.2d 1262, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electricities-of-north-carolina-inc-v-southeastern-power-administration-ca4-1985.