Rural Electrification Admin. v. Northern States Power Co.
| Decision Date | 28 February 1967 |
| Docket Number | No. 18519.,18519. |
| Citation | 373 F.2d 686 |
| Parties | RURAL ELECTRIFICATION ADMINISTRATION et al., Appellants, v. NORTHERN STATES POWER COMPANY et al., Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Harvey L. Zuckman, Atty., Dept. of Justice, Washington, D. C., for appellants. J. William Doolittle, Acting Asst. Atty. Gen., Dept. of Justice, Alan S. Rosenthal, Atty., Dept. of Justice, and Patrick J. Foley, U. S. Atty., Minneapolis, Minn., with him on the brief.
Kenneth W. Green, of O'Connor, Green, Thomas, Walters & Kelly, Minneapolis, Minn., and Cyrus A. Field, of Field, Arvesen, Donoho & Lundeen, Fergus Falls, Minn., for appellees. Kenneth W. Green, Frederick W. Thomas and Joe A. Walters, of O'Connor, Green, Thomas, Walters & Kelly, Minneapolis, Minn., Cyrus A. Field, of Field, Arvesen, Donoho & Lundeen, Fergus Falls, Minn., and Arland D. Brusven and Donald E. Nelson, Minneapolis, Minn., on the brief.
Before BLACKMUN, MEHAFFY and LAY, Circuit Judges.
Appellees filed their complaint below to postpone and restrain the Rural Electrification Administrator from disbursing proceeds of a loan with the East River Electric Power Cooperative, Inc. The loan by the REA is pursuant to § 4 of 7 U.S.C. § 904, and constitutes a 5.9 Million Dollar long-term loan for the construction of transmission facilities in Minnesota and South Dakota. The complaint is to compel the Administrator to perform a duty owed to the appellees pursuant to certain regulations promulgated by the Administrator in handling the loans.1
Appellants filed a motion to dismiss which was heard contemporaneously with appellees' motion for preliminary restraining order as to the consummation of the loan. The lower court denied the motion to dismiss. The preliminary injunction was denied because of the failure of plaintiffs to establish "the requisite reasonable certainty or substantial likelihood of success on the merits so as to justify preliminary injunctive relief." The trial court stated:
"In contrast to plaintiffs\' allegations concerning disregard of the procedural requirements of Bulletin 111-3, considerable evidence indicates that defendants have indeed proceeded in accordance with the regulations."2 Northern States Power Co. v. Rural Electrification Admin., D.Minn. 1965, 248 F.Supp. 616, 625.
Subsequently, appellees moved for production of certain documents and correspondence regarding the negotiations leading up to the present loan. The REA claimed executive privilege by Secretary of Agriculture, Orville Freeman, and the Administrator to the various documents. The court granted an in camera order requiring the government to produce the documents to enable the court to examine them to determine validity of the claim. Thereafter, the appellants moved to amend the in camera order to require the court, in the event that their claim of privilege was overruled, to return the documents so that they might determine whether to stand on their claim of privilege. The trial court properly, we think, refused such an order. Thereafter, appellants filed notice asserting the executive privilege and their announced refusal to obey the court's order concerning the in camera production. On June 17, 1966, the appellees by their attorneys, moved pursuant to Rule 37(b) (2) for certain sanctions and again for a preliminary injunction. Pursuant to said motion and based upon the refusal of the appellants to produce the various documents, the court entered an order finding certain "designated facts" to be taken as true for the purposes of the action. These established facts are generally composed of the allegations of the complaint. The court also found "the requisite factual showing for preliminary injunction relief * * * is now apparent," and entered an order enjoining the defendants and anyone under their control from consummating or participating in the loan to East River or in distributing any portion of said loan. Appellants filed the present appeal from the latter order.
The relationship of the parties is significant. Northern States Power Company and the Otter Tail Power Company, appellees herein, are in the business of generating, transmitting and distributing electrical service within the states of Minnesota, North Dakota and South Dakota. They are known as private power suppliers. The East River Electric Power Cooperative, Inc., organized under the Electric Cooperative Act of the State of South Dakota, is engaged in the business of the transmission of electric service. It does not own any generating facilities. Appellees have for many years been contractual wheeling agents for the Bureau of Reclamation of the Department of Interior, and provide transmission service to various cooperatives. They also supply electrical energy to various borrowers under the Rural Electrification Act. East River purchases its power supply from the Bureau of Reclamation and delivers the electrical energy over its own transmission system to its South Dakota members. The power supply purchased from the Bureau of Reclamation to East River's Minnesota members is presently being transmitted by the appellees to delivery points in Minnesota. In May, 1964, East River applied for a loan with REA to construct its own transmission lines for service to its Minnesota members.
Summary of the plaintiffs' complaint and the particular regulations is essential to a full understanding of the problems involved:
No loan is to be made unless a reasonable contract cannot be obtained.3
We are in accord with the trial court's analysis as to the legal effect of regulations promulgated by the administrator. Congress undoubtedly intended that the Administrator's regulations be followed, whether they speak only of internal policy or not. See Columbia Broadcasting System v. United States, 316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563.6 However it does not necessarily follow, as the trial court has assumed, that the legal status of the regulations necessarily permits review by the appellees herein.7 In Schilling v. Rogers, 363 U.S. 666, 80 S.Ct. 1288, 4 L.Ed.2d 1478, the Supreme Court in reviewing statutory restrictions on the Custodian under The Trading With the Enemy Act stated:
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