390 U.S. 1 (1968), 40, Hardin v. Kentucky Utilities Co.

Docket NºNo. 40
Citation390 U.S. 1, 88 S.Ct. 651, 19 L.Ed.2d 787
Party NameHardin v. Kentucky Utilities Co.
Case DateJanuary 16, 1968
CourtUnited States Supreme Court

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390 U.S. 1 (1968)

88 S.Ct. 651, 19 L.Ed.2d 787

Hardin

v.

Kentucky Utilities Co.

No. 40

United States Supreme Court

Jan. 16, 1968

Argued December 13, 1967

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

Respondent, a private utility company, sued to enjoin the Tennessee Valley Authority (TVA) from supplying TVA power in alleged violation of § 15d of the TVA Act for use in two small Tennessee, towns where, as of July 1, 1957, respondent had supplied 94% of the electric power and TVA 6%. At that time, TVA supplied 62% of the power used in all Claiborne County. It supplied most of the county's rural areas, and on a relatively unprofitable basis. Respondent's retail rates in the two towns were about 2 1/2 times those of TVA. Section 15d of the Act bars TVA from expanding sales outside "the area for which [it] or its distributors were the primary source of power on July 1, 1957." The District Court upheld the determination of the TVA Board of Directors that Claiborne County as a whole constituted TVA's primary service "area," and dismissed the action. The Court of Appeals reversed, holding that the towns and a narrow corridor between them and respondent's main service area in nearby Kentucky constituted

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the "area." Both courts ruled against petitioners' contention that the respondent lacked standing to sue.

Held:

1. Respondent, being within the class of private utilities which § 15d is designed to protect from TVA competition, has standing to maintain this suit. Pp. 5-7.

2. TVA's determination that Claiborne County constituted the primary service "area" within the meaning of § 15d should be upheld, since it was within the range of permissible choices contemplated by the Act and had reasonable economic and technical support in relation to the statutory purpose of controlling, but not altogether prohibiting, TVA's territorial expansion. Pp. 8-13.

375 F.2d 403, reversed.

BLACK, J., lead opinion

[88 S.Ct. 653] MR. JUSTICE BLACK delivered the opinion of the Court.

The question for decision in these cases is whether Congress has prohibited the Tennessee Valley Authority from competing in the sale of electricity with respondent, the Kentucky Utilities Company, in two small villages in Claiborne County, Tennessee, and in a narrow corridor between the two villages and the Tennessee-Kentucky state boundary 16 miles away. By § 15d of the Tennessee Valley Authority Act of 1933, as added by the 1959 amendments to that Act, Congress barred the TVA from expanding its sales outside "the area for which the Corporation [TVA] or its distributors were the primary

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source of power supply on July 1, 1957,"1 and our problem is therefore the narrow one of deciding whether these villages and the narrow corridor are part of an "area" for which TVA was the primary source of power on the crucial date. The difficulty lies in determining the location and extent of the "area" to which the statute refers. In June, 1957, TVA supplied 62% of the power used in all of Claiborne County, and therefore, if the entire county is an "area" within the meaning of the statute, TVA would have been the "primary" source of power, and its expansion into the two villages would be

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permissible. On the other hand, in the villages themselves, TVA supplied only 6% of the power in June, 1957, while respondent supplied 94%; thus, if the two villages, either alone or with the corridor, constitute an "area," TVA would not have been the primary source of power, and it would be barred by § 15d from expanding into that area.

The question of statutory interpretation now before us arose in this way. TVA is the major supplier of electric power in Tennessee and in many adjoining areas of Alabama, Mississippi, Georgia, Virginia, and Kentucky. Respondent, whose service area is centered in Kentucky, has long served customers in Tazewell and New Tazewell, the two villages within 16 miles of the Kentucky border in Claiborne County, Tennessee. The power lines of TVA distributors also crisscross Claiborne County, and TVA has therefore been able to serve a small number of customers in the two villages, even though respondent was the predominant source of power. Because Kentucky Utilities' retail rates for electricity in the two villages were approximately 2 1/2 times higher for typical consumers [88 S.Ct. 654] than the rates for TVA power,2 the value of residential and commercial properties served by TVA was substantially and uniformly higher than the value of similar properties served by respondent. This rate disparity created a seething discontent among residential and industrial consumers in the villages. Pointing out that they lived in the very heart of the TVA watershed and in immediate proximity to TVA's large Norris Lake, these citizens contended that it was wholly unjust and inequitable to deny them the benefits and advantages of cheap TVA power. After complaints, planning, and consultations over a period of more than three years, the local

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governments engaged a contractor to build the facilities necessary to establish a municipal system linked to TVA's cheap power. Kentucky Utilities' customers immediately began to discontinue their service and become customers of the municipal system.

Kentucky Utilities then filed this suit against TVA, the mayors of the two Tazewells, and the Powell Valley Electric Cooperative, a TVA distributor, charging them with conspiracy to destroy its Tazewell business and asking the court to enjoin TVA from supplying power to the new municipal system in alleged violation of § 15d. The District Court upheld the determination of the TVA Board of Directors that the two Tazewells were within TVA's primary service "area" and dismissed the case, 237 F.Supp. 502 (1964), but the Court of Appeals reversed, holding that the two villages plus the corridor constituted an "area," and that TVA accordingly was barred from extending its service in the Tazewells. 375 F.2d 403 (1966). We granted certiorari, 386 U.S. 980 (1967), to resolve this important question in the administration of the TVA Act. We reverse, and agree with the District Court that the TVA Board properly determined the relevant service "area" to extend beyond the two Tazewells and to include the entire county. TVA, as the primary power source within this area, could therefore properly make its low-cost power available to consumers in this entire county area, including the two villages.

I

Before discussing the merits, we shall briefly consider petitioners' contention that the Kentucky Utilities Company lacks standing to challenge the legality' of TVA's activities. We agree with both the courts below that this contention is without merit. This Court has, it is true, repeatedly held that the economic injury which results from lawful competition cannot, in and of itself,

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confer standing on the injured business to question the legality of any aspect of its competitor's operations. Railroad Co. v. Ellerman, 105 U.S. 166(1882); Alabama Power Co. v. Ickes, 302 U.S. 464 (1938); Tennessee Power Co. v. TVA, 306 U.S. 118 (1939); Perkins v. Lukens Steel Co., 310 U.S. 113 (1940). But competitive injury provided no basis for standing in the above cases simply because the statutory and constitutional requirements that the plaintiff sought to enforce were in no way concerned with protecting against competitive injury. In contrast, it has been the rule, at least since the Chicago Junction Case, 264 U.S. 258 (1924), that, when the particular statutory provision invoked does reflect a legislative purpose to protect a competitive interest, the injured competitor has standing to require compliance with that provision. See Alton R. Co. v. United States, 315 U.S. 15, 19 (1942); Chicago v. Atchison, T. & S.F. R. Co., 357 U.S. 77, 83 (1958).

Petitioners concede, as, of course, they must, that one of the primary purposes of the area limitations in § 15d of the Act was to protect private utilities from TVA competition. This is evident from the provision itself, and is amply supported by its legislative history. The provision grew out of TVA's efforts to find some way to meet the cost of new facilities without dependence upon annual appropriations from Congress. In 1955, TVA began to seek authority to issue bonds to finance these expenditures. Although TVA spokesmen assured Congress that the objective was not territorial expansion, but only improvement of facilities in TVA's existing service area, many members of Congress were apprehensive, and thought that, if congressional budgetary control was to be weakened, some substitute to prevent territorial expansion should be found. A series of bills to give TVA borrowing power failed to pass.3 Several

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bills were then introduced combining the grant of borrowing power with various provisions to prohibit territorial expansion,4 and one of these bills was eventually enacted as the TVA amendments of 1959. Although discussions of the territorial limitation mentioned a number of policy reasons for the restriction,5 it is clear and undisputed that protection of private utilities from TVA competition was almost universally regarded as the primary objective of the limitation.6 Since respondent is thus in the class which § 15d is designed to protect, it has standing under familiar judicial principles to bring this suit, see Stark v. Wickard, 321 U.S. 288, 309 (1944); cf. United States v. ICC, 337 U.S. 426, 433-434 (1949), and no explicit statutory provision is necessary to confer standing.7

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II

Basic to our consideration of the merits of these cases is an appraisal of the significance of the TVA Board's determination that all of Claiborne County, including the two Tazewells, constituted a single "area" in which TVA is the primary source of power. Petitioners argue that the Court of Appeals gave no weight whatever to this...

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