Alabama Power Company v. Alabama Electric Cooperative, Inc.

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 prayed separately for a judgment avoiding certain 35-year all-requirements electric 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. 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 district court 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 repeated and our opinion can - be brief.

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 *674Act,1 or as being conditioned upon a violation of the antitrust laws.2 As to the claim of standing under the REA Act, it has been repeatedly held that increased competition which may result to a private power company does not give it sufficient standing to enjoin the making of a loan by a federal agency.3 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 v. 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 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 which the loans are made. Regardless of how outrageous or unfair the making of this loan may seem, the remedy is not in the courts but in the Congress.” 354 F.2d at 865.

The same thought had been earlier 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.26 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 public suppliers proposal unreasonable.”

*675In brief, review under the Administrative Procedure Act of 1946, 5 U.S.C.A. § 1009, is precluded by that statute’s initial exception to the right of review: “Except as (i) statutes preclude judicial review or (2) agency action is by law committed to agency discretion * * ” The REA Act, 7 U.S.C.A. § 904, commits to the discretion of the Administrator the making of loans for rural electrification, including the adequacy of the security for such loans. The statute not only fails to provide for judicial review, but when construed 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 judicial review.

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.4 A different question might be presented if the Administrator went beyond the outer perimeter of the authority vested in him by the statute,5 or as expressed in Hardin v. Kentucky Utilities Co., cited supra note 3, “ * * * outside the range of permissible choices contemplated by the statute.” The Administrator’s affidavit discloses that that condition does not arise under the circumstances of this case.

“My policy reasons for 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 demonstrated its intent to deprive 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 such 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 market 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 *676to assure its repayment within the time agreed upon between REA and AEC. As further assurance, following long-established REA practice, I also required the execution of the supplemental agreement included in Exhibit B attached to the plaintiff’s complaint. As shown in paragraph 7 below, the facilities for which the loan in question 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.
“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 service from another source. Instead of having one 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 and the 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 simply following customary and long-established REA practice, clearly not beyond the “outer perimeter” of his statutory authority6 to determine the security for the loan. Anything less might well mean the acceptance of inadequate security. Under these circumstances, 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, 79 S.Ct. 1335, 1339, 3 L.Ed.2d 1434 is illuminating:

“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 of 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.” 7

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 and 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,8 and that at the very least *677the plaintiff has a right to pursue its antitrust suit against AEC. That position, we think is based upon too narrow a conception of the program authorized by Congress. The 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 mulcted 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.9

The Supreme Court has repeatedly 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.15

Eastern R. Conf. v. Noerr Motors, 1961, 365 U.S. 127, 136, 81 S.Ct. 523, 529, 5 L.Ed.2d 464.

The Power Company would treat REA simply 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, low cost electric energy to rural America.” See also, Salt River Project Agricultural & Power District v. FPC, D.C.Cir. 1968, 391 F.2d 470.

The judgment is therefore

Affirmed.

. 7 U.S.C.A. § 904.

. Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act, 15 U.S.C.A. §§ 1, 2 and 14.

. Alabama Power Company v. Ickes, 1938, 302 U.S. 464, 58 S.Ct. 300, 82 L.Ed. 374; Duke Power Company v. Greenwood Co., 1938, 302 U.S. 485, 58 S.Ct. 306, 82 L.Ed. 381; Tennessee Electric Power Co. v. TVA, 1939, 306 U.S. 118, 59 S.Ct. 366, 83 L.Ed. 543; Kansas City Power & Light Co. v. McKay, 1955, 96 U.S.App.D.C. 273, 225 F.2d 924, cert. den., 350 U.S. 884, 76 S.Ct. 137, 100 L.Ed. 780; Rural Electrification Administration v. Central Louisiana Electric Co., 5 Cir. 1966, 354 F.2d 859. See also Hardin v. Kentucky Utilities Co., 1968, 390 U.S. 1, 88 S.Ct. 651, 19 L.Ed.2d 787.

“26. See, e. g., Schilling v. Rogers, 363 U.S. 666, at 674. 80 S.Ct. 1288, at 1294, 4 L.Ed.2d 1478, where Justice Harlan said:

“ ‘The 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 States ex rel. Rives, 267 U.S. 175, 182, 45 S.Ct. 252, 69 L.Ed. 561].’
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 Pood and Agriculture Act of 1962 before House Committee on Agriculture, 87th Cong., 1st Sess., pp. 680-681. See also H.R. 6852 and H.R. 7213, 88th Cong., 1st Sess.; Hearings before House Appropriations Committee on Department of Agriculture Appropriations for 1964, 88th Cong., 1st Sess., p. 374.

. United Mine Workers of America v. Pennington, 1965, 381 U.S. 657, 671-672, 85 S.Ct. 1585, 14 L.Ed.2d 626; Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 1961, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464; Parker v. Brown, 1943, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315; United States v. Rock Royal Co-op, 1939, 307 U.S. 533, 559-560, 59 S.Ct. 993, 83 L.Ed. 1446; E. W. Wiggins Airways, Inc. v. Massachusetts Port Authority, 1 Cir. 1966, 362 F.2d 52; Stroud v. Benson, D.C.N.C.1957, 155 F.Supp. 482; Miley v. John Hancock Mut. Life Ins. Co., D.C.Mass.1957, 148 F.Supp. 299.

. See S & S Logging Co. v. Barker, 9 Cir. 1966, 366 F.2d 617; Norton v. McShane, 5 Cir. 1964, 332 F.2d 855, 859; compare Pierson v. Ray, 1967, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288.

. 7 U.S.C.A. § 904.

. 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, 79 S.Ct. 1339.

. Or, we might add, to its member distributing cooperatives, though they have not been joined as parties defendant.

“15. United States v. Rock Royal Co-op, 307 U.S. 533, 59 S.Ct. 993, 83 L.Ed. 1446; Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315.”

. In so holding, wo fully appreciate that immunity from the antitrust laws is not to he lightly implied. People of State of California v. Federal Power Commission, 1962, 369 U.S. 482, 485, 82 S.Ct. 901, 8 L.Ed.2d 54; United States v. Philadelphia National Bank, 1963, 374 U.S. 321, 350, 83 S.Ct. 1715, 10 L.Ed.2d 915, Carnation Company v. Pacific Wsetbound Conference, 1966, 383 U.S. 213, 218, 86 S.Ct. 781, 15 L.Ed.2d 709; United States v. First City National Bank, 1967, 386 U.S. 361, 368, 87 S.Ct. 1088, 18 L.Ed.2d 151.