Protect Our Aquifer v. Tenn. Valley Auth.
| Decision Date | 12 August 2021 |
| Docket Number | 2:20-cv-02615-TLP-atc |
| Citation | 554 F.Supp.3d 940 |
| Parties | PROTECT OUR AQUIFER, Alabama Center for Sustainable Energy, doing business as Energy Alabama, and Appalachian Voices, Plaintiffs, v. TENNESSEE VALLEY AUTHORITY, Defendant. |
| Court | U.S. District Court — Western District of Tennessee |
George H. Nolan, Amanda Rosemary Garcia, Chelsea Bowling, O.W. Bussey, III, Stephanie Biggs, Southern Environmental Law Center, Nashville, TN, for Plaintiffs.
Jill E. McCook, Maria Victoria Gillen, David Demar Ayliffe, Tennessee Valley Authority, Knoxville, TN, for Defendant.
ORDER DENYING MOTION TO DISMISS
This case is about long-term contracts for electricity between the Tennessee Valley Authority ("TVA") and local utilities. Plaintiffs here allege those contracts not only pose negative consequences for the environment but they violate the law. Plaintiffs are not the local utilities. So they are not parties to the contracts. Instead, Plaintiffs are three conservation groups that sue TVA over these long-term contracts, which Plaintiffs dub "never-ending." (ECF No. 17.) TVA now moves to dismiss Plaintiffs’ claims. (ECF No. 20.) Plaintiffs responded in opposition (ECF No. 26), and TVA replied. (ECF No. 27.) And as explained below, the Court DENIES Defendant's Motion to Dismiss.
But before addressing the parties’ arguments, the Court will give a bit of background.
To begin, Congress formed the Tennessee Valley Authority under the TVA Act of 1933 in part "to produce, distribute, and sell electric power." 16 U.S.C. § 831d(1). And one of TVA's "core statutory objectives is to provide low-cost, reliable electricity to ten million people in TVA's seven-state service area." (ECF No. 20-1 at PageID 1390.) To achieve this mission, the TVA Act authorizes TVA to enter into contracts with local power distributors "for a term not exceeding twenty years." 16 U.S.C. § 831i.
So in 2019, TVA started offering a long-term agreement ("LTA") to local utilities to purchase its electricity exclusively from TVA for twenty years with a provision that calls for the contract to automatically renew each year. (ECF No. 17 at PageID 1199.) And if the local distributor wants to terminate the contract, it must give 20 years’ notice. (Id. ) If a local power company chooses to execute the LTA contract, in return, TVA provides monthly bill credits throughout the contract. (ECF No. 20-1 at PageID 1394.) But Plaintiffs contend that if the local utility gives notice of termination, TVA will stop the bill credits for the next twenty-years until termination. (ECF No. 17 at PageID 1256.) They argue the length of the LTAs violate the TVA Act. (Id. )
TVA claims that these LTAs help it to ensure that it can meet its long-term financial and power generation goals.1 (ECF No. 20-1 at PageID 1393.) And while the LTA is exclusive, it introduces a "Flexibility Proposal," in which local distributors can self-generate three to five percent of their energy from non-TVA, renewable sources. (Id. )
As for environmental concerns, some TVA decisions fall under the National Environmental Protection Act ("NEPA"), so it has to conduct environmental impact assessments under NEPA for those decisions. See 42 U.S.C. § 4332. For the LTA, TVA decided that it did not need to prepare an Environmental Impact Statement ("EIS")2 under NEPA. (See ECF No. 20-1 at PageID 1394 n. 8.)3
To date, at least 142 local power companies have signed the LTA. (ECF No. 27 at PageID 2878.) To TVA, the LTAs are mutually beneficial because they give incentives to local distributors and help TVA with long-range planning. (See ECF No. 20-1 at PageID 1393.) Plaintiffs accuse TVA of enticing local distributors to sign the LTAs by using a "carrot-and-stick" approach. (ECF No. 17 at PageID 1219.) TVA provides a wholesale credit to distributors that sign the LTAs—but those who decline do not get the incentive. (Id. ) Plaintiffs believe this creates a "regime in which some local distributors enjoy favored status while others are treated like second-class citizens." (Id. )
Plaintiffs here are three environmental conservation groups—Protect Our Aquifer, Alabama Center for Sustainable Energy, and Appalachian Voices. (ECF No. 17.) And Plaintiffs claim TVA is using the LTA to further a monopolistic strategy designed to insulate TVA from competition—including local distributors’ consideration of alternative, renewable energy sources. (Id. at PageID 1217.) Meanwhile, TVA counters that nothing in the LTA limits TVA's ability to acquire energy from renewable sources in the future. (ECF No. 20-1 at PageID 1390–92.) Indeed, TVA touts its recent commitments to reducing coal-based power and increasing its reliance on nuclear and solar generation. (See id. )
But Plaintiffs allege TVA pressures local electricity distributors into signing the exclusive LTA that caps (i.e., the "Flexibility Proposal") the amount of power that distributors may obtain from other clean energy sources from 3 to 5% forever. (See ECF No. 17 at PageID 1219.) What is more, Plaintiffs allege that TVA should have conducted environmental review under NEPA before adopting the LTA. (Id. at PageID 1221.)
This suit centers on TVA's adopting the LTA. Plaintiffs have two claims against TVA: (1) By adopting a never-ending contract, TVA violated the TVA Act of 1933, which prohibits contracts lasting longer than 20 years, and (2) TVA violated NEPA by failing to conduct required environmental assessments before adopting the LTA. (Id. at PageID 1251–59.)
Plaintiffs bring these claims under the Administrative Procedures Act ("APA"), which allows parties to seek judicial review of an agency action. 5 U.S.C. § 702. Because TVA is an agency, Plaintiffs believe the APA gives them a route to force TVA compliance under the TVA Act and NEPA. First, Plaintiffs claim that the TVA Act prohibits contracts lasting longer than 20 years. (ECF No. 17 at PageID 1255.) And the LTA violates that prohibition because it renews every year for another twenty-year term and requires twenty-years’ notice to terminate. (Id. ) So Plaintiffs ask this Court to declare the contract term invalid or to reform the offending contract provision and issue an injunction forbidding TVA from entering into additional perpetual contracts. (Id. at PageID 1260.)
Second, Plaintiffs claim that NEPA requires federal agencies like TVA to prepare an EIS for all "major federal actions significantly affecting the quality of the human environment." (Id. at PageID 1251 (citing 42 U.S.C. § 4332(C) ).). If an agency expects that a proposed action may not have "significant" effects, it may prepare a less rigorous Environmental Assessment ("EA"), instead. (Id. at PageID 1252.) Plaintiffs allege that TVA violated NEPA, because it prepared neither an EIS nor an EA. (Id. ) Plaintiffs ask the Court to declare that TVA violated NEPA and issue an injunction requiring TVA to comply with NEPA. (Id. at PageID 1260.)
Defendant moves to dismiss all Plaintiffs’ claims. (ECF No. 20.) First, Defendant argues the Court should dismiss Plaintiffs’ TVA Act claim, because the LTA complies with the TVA Act. (ECF Nos. 20-1 at PageID 1396; 27 at PageID 2878–79.) What is more, TVA argues that it has discretionary rate-making authority, which includes setting the LTA length. (ECF No. 20-1 at PageID 1395–97.) And because TVA has this discretion, this Court cannot review whether the LTA violates the TVA Act. (Id. ) Second, Defendant moves to dismiss arguing that Plaintiffs do not have standing to bring either of their claims. (Id. at 1399–1403.)
This motion depends on three threshold jurisdictional questions that the Court will address in the following order. First, may the Court judicially review whether the LTA complies with the TVA Act? Second, do Plaintiffs have standing to bring their TVA Act claim? And third, do Plaintiffs have standing to pursue their NEPA claim?
But for starters, the Court will outline the legal standards for a motion to dismiss.
Defendant moves to dismiss under both Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6).
To analyze a motion to dismiss under Rule 12(b)(6), the Court begins with the pleading requirements in Rule 8 of the Federal Rules of Civil Procedure. Under Rule 8, a complaint must contain "a short and plain statement ... showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In practice, Rule 8 requires that a "complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ); Engler v. Arnold , 862 F.3d 571, 575 (6th Cir. 2017).
Though a court will grant a motion to dismiss if a plaintiff has no plausible claim for relief, a court must "construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff." DirecTV v. Treesh , 487 F.3d 471, 476 (6th Cir. 2007). "A complaint should only be dismissed if it is clear to the court that ‘no relief could be granted under any set of facts that could be proved consistent with the allegations.’ " Herhold v. Green Tree Serv., LLC , 608 F. App'x 328, 331 (6th Cir. 2015) (quoting Trzebuckowski v. City of Cleveland , 319 F.3d 853, 855 (6th Cir. 2003) ). "Dismissal of the action is proper if there is an absence of law to support the type of claim made, if the facts alleged are insufficient to state a valid claim, or if, on the face of the complaint, there is an insurmountable bar to relief." Doe v. Ohio , No. 2:91-CV-464, 2012 WL 12985973, at *5 (S.D. Ohio Feb. 16, 2012) (citations omitted).
Addition...
To continue reading
Request your trial