248 F.Supp. 616 (D.Minn. 1965), 4-65-Civ.-260, Northern States Power Co. v. Rural Electrification Administration

Docket Nº4-65-Civ.-260.
Citation248 F.Supp. 616
Party NameNORTHERN STATES POWER COMPANY, a corporation, and Otter Tail Power Company, a corporation, Plaintiffs, v. RURAL ELECTRIFICATION ADMINISTRATION, Norman M. Clapp, as Administrator of the Rural Electrification Administration, the United States Department of Agriculture, Orville L. Freeman, as Secretary of the United States Department of Agriculture, a
Case DateDecember 31, 1965
CourtUnited States District Courts, 8th Circuit, United States District Court of Minnesota

Page 616

248 F.Supp. 616 (D.Minn. 1965)

NORTHERN STATES POWER COMPANY, a corporation, and Otter Tail Power Company, a corporation, Plaintiffs,

v.

RURAL ELECTRIFICATION ADMINISTRATION, Norman M. Clapp, as Administrator of the Rural Electrification Administration, the United States Department of Agriculture, Orville L. Freeman, as Secretary of the United States Department of Agriculture, and John Doe and Mary Roe whose true and correct names are unknown to plaintiffs, Defendants.

No. 4-65-Civ.-260.

United States District Court, D. Minnesota

Dec. 31, 1965

Page 617

[Copyrighted Material Omitted]

Page 618

Kenneth W. Green and Joe A. Walters, Minneapolis, Minn., Cyrus A. Field, Fergus Falls, Minn., Arland D. Brusven, Minneapolis, Minn., Donald E. Nelson, Minneapolis, Minn., of counsel, for plaintiffs.

Howard E. Shapiro, Dept. of Justice, Washington, D.C., Miles W. Lord, U.S. Atty., Minneapolis, Minn., for defendants.

DEVITT, Chief Judge.

In this action by two privately owned power companies against certain government officials, several motions pend. Plaintiffs, Northern States Power Co. (N.S.P.) and Otter Tail Power Co. (O.T.P.) move for a preliminary injunction. Defendants move for dismissal or in the alternative for summary judgment. A temporary restraining order issued on September 17, 1965 is extant.

Plaintiffs in this action seek to challenge a loan approved by the R.E.A., pursuant to the Rural Electrification Act of 1936, 7 U.S.C. § 901 et seq., (R.E.Act), to the East River Electric Power Cooperative, Inc. (East River) on May 26, 1965, in the amount of $5,919,000. Plaintiffs claim the loan is illegal because consummated in violation of R.E.A. Bulletin 111-3, 29 Federal Register No. 40, pp. 2765-2766, which allegedly establishes certain rights in favor of power suppliers such as N.S.P. and O.T.P. and imposes certain duties upon the R.E.A. and the Administrator.

The loan to East River consists of two portions: $4,027,000 to finance transmission facilities in South Dakota, and $1,892,000 to finance transmission facilities in Minnesota. N.S.P. and O.T.P. now serve as wheeling agents, or transmitters, of the power which East River, a supercoop, purchases from the Bureau of Reclamation and furnishes to its two Minnesota member cooperatives, Lyon-Lincoln Electric Cooperative and Traverse Electric Cooperative, which in turn furnish electric power to consumers. With the loan East River would build its own transmission facilities in Minnesota duplicating to some extent the existing N.S.P. and O.T.P. facilities.

R.E.A. Bulletin 111-3 provides in part: Purpose. This notice sets forth REA policy with regard to power supply surveys and certificates thereto by the Administrator in relation to the approval of loans for generation or transmission facilities. * * *

* * *

* * *

No loan for generation or transmission facilities will be made except * * * upon certification by the Administrator to the Secretary of Agriculture that the loan has been approved after the completion of a power supply survey which shows that the loan is * * * (c) needed because existing and proposed contracts to provide the proposed facilities or service to be financed were found to be unreasonable, each supplier involved was so advised, REA attempted to have such contracts made reasonable, and the

Page 619

existing or other proposed supplier had failed or refused to do so within the time set by the Administrator.

29 Federal Register No. 40, pp. 2765-2766.

East River applied to R.E.A. for the loan on May 26, 1964. The administrator, at about such time or prior thereto, to, undertook a two-part power survey, one part dealing with Minnesota and one part dealing with South Dakota. The survey began after the two newlyacquired Minnesota members of the East River System began receiving transmission service from N.S.P. and O.T.P. under a 22-month contract negotiated between plaintiffs and East River.

The parties differ as to what constitutes the relevant history of the R.E.A. determination to grant the loan to East River. The plaintiffs note a conference on June 9, 1964 among representatives of N.S.P., O.T.P., R.E.A. and East River as the first material attempt by the Administrator to institute negotiations for a long-term power supply arrangement between plaintiffs and East River. On the other hand, defendants point to correspondence and meetings long prior to the June, 1964 date as being negotiations relevant to the eventual granting of the loan and rejection of plaintiffs' proposals. Plaintiffs characterize plans submitted by plaintiffs and considered by East River in June and July of 1964 as working drafts or possible arrangements to obviate the need for an R.E.A. loan while the R.E.A., the Administrator and East River apparently viewed such drafts as final proposals.

On August 3, 1964 the R.E.A. informed plaintiffs by letter of certain basic requirements which any acceptable joint plan proposal must meet. It was suggested that East River would build, with R.E.A. aid, certain facilities which N.S.P. and O.T.P. would use in exchange for the use by East River of certain presently existing facilities of the plaintiffs. Straight-wheeling arrangments, under which plaintiffs would transmit power to East River's Minnesota members for a charge rather than in exchange for the use of East River facilities, were also considered. The R.E.A. eventually concluded that plaintiffs' proposals were unreasonable and so informed them.

During September 21-24, 1964, further negotiations took place in the R.E.A. offices in Washington, D.C., with representatives of all parties in attendance. Following this meeting N.S.P. and O.T.P. submitted another proposal on October 2, 1964. Plaintiffs characterize this proposal as 'definite' while defendants characterize it as 'final.'

Further negotiations concerning the approval or disapproval of plaintiffs' last proposal ceased until May 17, 1965 when the R.E.A. informed N.S.P. and O.T.P. that the plan was unreasonable and unsatisfactory. On May 26, 1965 the Administrator approved the loan to East River.

Beyond this skeleton view of the negotiations prior to the granting of the loan, substantial dispute exists among the parties as to the significance of various meetings and correspondence, the nature of various proposals, the effect of various dates and deadlines, and the meaning and intent of various communications among the parties. In addition defendants allege dilatory and insufficient action on the part of plaintiffs in the submission of proposals while plaintiffs allege dilatory and insufficient action by defendants in considering proposals and otherwise acting in conformity with the requirements of Bulletin 111-3.

Plaintiffs' basis for this motion for a preliminary injunction, as well as for the relief requested in the main action, is the alleged failure of the R.E.A. to follow the procedural steps contained in Bulletin 111-3. Specifically, plaintiffs allege a fulfillment in the plaintiffs' proposal of October 2, 1964 of the R.E.A.'s basic requirements set forth in the letter of August 3, 1964. Further, plaintiffs allege the failure of the R.E.A. between October 2, 1964 and May 17, 1965, the date of the Administrator's rejection of plaintiffs' last proposal, to inform plaintiffs wherein the proposal was unreasonable or to make any attempt

Page 620

to have the proposal made reasonable. Also plaintiffs allege that the letter of May 17, 1965 rejecting the proposal does not sufficiently inform plaintiffs of the unreasonableness of the proposal and no opportunity has since been given to attempt to make the proposal reasonable. Plaintiffs contend the R.E.A. has acted in violation of Bulletin 111-3, which plaintiffs claim is a duly promulgated administrative regulation having the force and effect of law and binding on the R.E.A. and the Administrator. Further, such actions are alleged to be arbitrary and capricious in violation of the rights of plaintiffs.

Plaintiffs assert several grounds for jurisdiction and venue; 28 U.S.C.A. § 1361, granting district courts original jurisdiction in actions in nature of mandamus; 5 U.S.C.A. § 1009, § 10(a) of the Administrative Procedure Act, granting judicial review of administrative action in certain situations; 28 U.S.C.A. § 2201, dealing with declaratory judgments; 28 U.S.C.A. § 1331, granting original jurisdiction to district courts when the matter in controversy exceeds the value of $10,000 and arises under the Constitution, laws or treaties of the United States; and 28 U.S.C.A. § 1391, concerning venue in cases where each defendant is an employee of officer of the federal government acting in his official capacity.

Defendants, in addition to opposing the granting of a preliminary injunction, move for dismissal or for summary judgment. Defendants urge primarily the grounds that plaintiffs lack standing to sue, that the action constitutes an unconsented suit against the United States, and that the subject matter of the R.E.Act has been committed to the unreviewable discretion of the Administrator and is, therefore, not judicially reviewable. These three negative contentions viewed affirmatively constitute the single issue of whether plaintiffs have any judicially enforceable and reviewable legal right in this situation.

Defendants rely on a line of cases denying standing to similar plaintiffs on the ground that mere economic competition, which is in itself lawful, created as the result of government action, grants no standing to persons in circumstances similar to the plaintiffs in this action. Defendants further assert in this regard that R.E.A. Bulletin 111-3 is merely a notice or a policy statement and not a duly promulgated regulation having the force and effect of law and, therefore, establishes no legal rights in favor of persons such as the plaintiffs here.

In support of their motion for summary judgment defendants...

To continue reading

Request your trial
4 practice notes
  • 394 A.2d 899 (N.J.Super.Ch. 1978), Associated East Mortg. Co. v. Young
    • United States
    • New Jersey Superior Court of New Jersey
    • 24 Ottobre 1978
    ...on other grounds 338 U.S. 621, 70 S.Ct. 392, 94 L.Ed. 393 (1950); Northern States Power Co. v. Rural Electrification Administration, 248 F.Supp. 616, 622 (D.Minn.1965); U. S. v. Springfield Fire & Marine Ins. Co., 107 F.Supp. 753, 756 (W.D.Mo.1952), aff'd 207 F.2d 935 (8 Cir. 1953). The......
  • 251 F.Supp. 715 (E.D.N.Y. 1966), 64-C-518, Edelman v. Federal Housing Administration
    • United States
    • Federal Cases United States District Courts 2nd Circuit Eastern District of New York
    • 11 Marzo 1966
    ...of Interior, E.D.PA. 1958, 160 F.Supp. 417. Compare, Northern States Power Co. v. Rural Electrification Administration, D.C.Minn.1965, 248 F.Supp. 616. [5] 'Often tenders or bids are advertised for by public corporations, municipalities, counties or states, or private corporations. The rule......
  • 377 F.Supp. 254 (D.Del. 1974), Civ. A. 4773, Descomp, Inc. v. Sampson
    • United States
    • Federal Cases United States District Courts 3th Circuit District of Delaware
    • 3 Giugno 1974
    ...not be subject to the shifting whims of a government administrator.' Northern States Power Co. v. Rural Electrification Administrator, 248 F.Supp. 616, 622-623 (D.Minn.1965) reversed on other grounds 373 F.2d 686 (C.A. 8, 1967), cert. den. 387 U.S. 945, 87 S.Ct. 2079, 18 L.Ed.2d 1332 (1967)......
  • 373 F.2d 686 (8th Cir. 1967), 18519, Rural Electrification Administration v. Northern States Power Co.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • 28 Febbraio 1967
    ...have indeed proceeded in accordance with the regulations.' 2 Northern States Power Co. v. Rural Electrification Admin., D.Minn. 1965, 248 F.Supp. 616, Subsequently, appellees moved for production of certain documents and correspondence regarding the negotiations leading up to the present lo......
4 cases
  • 394 A.2d 899 (N.J.Super.Ch. 1978), Associated East Mortg. Co. v. Young
    • United States
    • New Jersey Superior Court of New Jersey
    • 24 Ottobre 1978
    ...on other grounds 338 U.S. 621, 70 S.Ct. 392, 94 L.Ed. 393 (1950); Northern States Power Co. v. Rural Electrification Administration, 248 F.Supp. 616, 622 (D.Minn.1965); U. S. v. Springfield Fire & Marine Ins. Co., 107 F.Supp. 753, 756 (W.D.Mo.1952), aff'd 207 F.2d 935 (8 Cir. 1953). The......
  • 251 F.Supp. 715 (E.D.N.Y. 1966), 64-C-518, Edelman v. Federal Housing Administration
    • United States
    • Federal Cases United States District Courts 2nd Circuit Eastern District of New York
    • 11 Marzo 1966
    ...of Interior, E.D.PA. 1958, 160 F.Supp. 417. Compare, Northern States Power Co. v. Rural Electrification Administration, D.C.Minn.1965, 248 F.Supp. 616. [5] 'Often tenders or bids are advertised for by public corporations, municipalities, counties or states, or private corporations. The rule......
  • 377 F.Supp. 254 (D.Del. 1974), Civ. A. 4773, Descomp, Inc. v. Sampson
    • United States
    • Federal Cases United States District Courts 3th Circuit District of Delaware
    • 3 Giugno 1974
    ...not be subject to the shifting whims of a government administrator.' Northern States Power Co. v. Rural Electrification Administrator, 248 F.Supp. 616, 622-623 (D.Minn.1965) reversed on other grounds 373 F.2d 686 (C.A. 8, 1967), cert. den. 387 U.S. 945, 87 S.Ct. 2079, 18 L.Ed.2d 1332 (1967)......
  • 373 F.2d 686 (8th Cir. 1967), 18519, Rural Electrification Administration v. Northern States Power Co.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • 28 Febbraio 1967
    ...have indeed proceeded in accordance with the regulations.' 2 Northern States Power Co. v. Rural Electrification Admin., D.Minn. 1965, 248 F.Supp. 616, Subsequently, appellees moved for production of certain documents and correspondence regarding the negotiations leading up to the present lo......