Wabash Valley Power v. Rural Electrification Admin.

• Decision Date: 16 May 1989
• Docket Number: No. IP 89-126-C.,IP 89-126-C.
• Citation: 713 F. Supp. 1260
• Parties: WABASH VALLEY POWER ASSOCIATION, INC., Plaintiff, v. RURAL ELECTRIFICATION ADMINISTRATION, Defendant, Indiana Utility Regulatory Commission, Indiana Office of Utility Consumer Counselor, State of Michigan, and Michigan Public Service Commission, Intervenors.
• Court: U.S. District Court — Southern District of Indiana

713 F. Supp. 1260

WABASH VALLEY POWER ASSOCIATION, INC., Plaintiff, v. RURAL ELECTRIFICATION ADMINISTRATION, Defendant Indiana Utility Regulatory Commission, Indiana Office of Utility Consumer Counselor, State of Michigan, and Michigan Public Service Commission, Intervenors.

No. IP 89-126-C.

United States District Court, S.D. Indiana, Indianapolis Division.

May 16, 1989.

David H. Kleiman, Indianapolis, Ind., Lee A. Freeman, Jr., John F. Kinney, Chicago, Ill., Don F. Morton, Indianapolis, Ind., for Wabash Valley Power Ass'n John R. Bolton, Asst. Atty. Gen., J. Christopher Kohn, James G. Bruen, George Kielman, Andrea Larry, Civil Div., Dept. of Justice, Michael W. Kelly, Frank Clover, Office of General Counsel, Dept. of Agriculture, Washington, D.C., Deborah J. Daniels, U.S. Atty., Jeffrey L. Hunter, Asst. U.S. Atty., Indianapolis, Ind., for Rural Electrification Admin.

Linley E. Pearson, Atty. Gen. of Indiana, Brenda Franklin Rodeheffer, Deputy Atty. Gen., Robert K. Johnson, Robert M. Glennon, Office of Utility Consumer Counselor, Indianapolis, Ind., for Indiana Utility Consumer Counselor.

Don L. Keskey, Patricia S. Barone, State of Mich., Michigan Public Service Com'n, Lansing, Mich., for State of Mich., Michigan Public Service Com'n.

Sorelle J. Ancel, Indianapolis, Ind., Albert Ernst, Lansing, Mich., John Coldren, Portland, Ind., for amicus curiae Wabash Valley Power Ass'n Official Members Committee.

Warren D. Krebs, Indianapolis, Ind., for amicus curiae Hendricks County REMC.

Leo J. Clifford, Valparaiso, Ind., for amicus curiae Kankakee Valley REMC.

ENTRY

DILLIN, District Judge.

This cause is before the Court on a motion by defendant, Rural Electrification Administration, to dismiss plaintiff's complaint for lack of subject matter jurisdiction and a motion by plaintiff, Wabash Valley Power Association, Inc., joined by intervenors Indiana Utility Regulatory Commission, Indiana Office of Utility Consumer Counselor, State of Michigan, and Michigan Public Service Commission, for summary judgment. For the following reasons, defendant's motion to dismiss is denied, and plaintiff's motion for summary judgment is granted.

Background

This case basically involves a dispute between a borrower, Wabash Valley Power Association, Inc. ("Wabash"), and a federal lender, the Rural Electrification Administration ("REA"). Wabash is an Indiana not-for-profit electricity generation and transmission cooperative which provides electric service at wholesale to its 24 members. From 1978 through 1984, Wabash borrowed several hundred million dollars, approximately $480 million of which was used to finance Wabash's 17% interest in a nuclear generator at Marble Hill, to be constructed by Public Service Company of Indiana. REA guaranteed these loans, securing them with mortgages on virtually all of Wabash's assets, including power supply contracts with Wabash's members.

In January 1984, Public Service Company abandoned the nuclear project at Marble Hill. In April 1984, at the behest of REA, Wabash sought approval of a 51% rate increase from the Indiana Public Service Commission (now the Utility Regulatory Commission), primarily to pay for its Marble Hill debts. Wabash's rates in Indiana are regulated by the Utility Regulatory Commission; its rates in Michigan are under the jurisdiction of the Michigan Public Service Commission. REA intervened in the rate proceedings before the Indiana Commission and "argued vigorously." National Rural Util. Coop. Fin. Corp. v. Public Serv. Comm'n, 528 N.E.2d 95, 99 (Ind.Ct.App.1988).

In May 1985, Wabash filed for Chapter 11 bankruptcy, and the Indiana rate proceedings were temporarily stayed. See id. at 97-98. While much has occurred in the bankruptcy court, see, e.g., In re Wabash Valley Power Ass'n, 77 B.R. 991 (S.D.Ind. 1987), a reorganization plan has not yet been approved. Meanwhile, on January 28, 1987, the Indiana Utility Regulatory Commission dismissed Wabash's petition for a rate increase because the Indiana Supreme Court had ruled that Indiana does not permit an investor-owned utility to increase rates to pay for a facility that is not "used and useful."

REA appealed the Commission's ruling to the Indiana Court of Appeals, which, in September 1988, affirmed the dismissal of Wabash's petition for a 51% rate increase. National Rural Utilities, 528 N.E.2d at 95. A few weeks later, REA informed Wabash, the Indiana Utility Regulatory Commission, and the Michigan Public Service Commission by letter that

based upon the failure of the Indiana Commission and the Indiana courts to permit Wabash to charge rates sufficient to pay the Marble Hill debt, ... the REA hereby exercises jurisdiction over the rates charged by Wabash. Thus, the Indiana Commission and the Michigan Commission are no longer entitled to serve as regulatory authorities whose approval must be obtained for changes in Wabash's rates.

REA additionally ordered Wabash to raise its rates "9% across the board" as soon as the bankruptcy court lifted the automatic stay, dismissed the bankruptcy proceeding, or confirmed a reorganization plan.

On February 3, 1989, Wabash filed this action seeking a declaratory judgment that REA lacks the authority to usurp state ratemaking authority by letter and unilaterally regulate Wabash's wholesale rates. The Court granted motions of the Indiana Utility Regulatory Commission, the Indiana Office of Utility Consumer Counselor, the State of Michigan, and the Michigan Public Service Commission to intervene and join Wabash in seeking a declaratory judgment against REA. In addition, the Court has permitted the Wabash Valley Official Members Committee, Hendricks County REMC, and Kankakee Valley REMC to appear as amici curiae and file briefs in this case.

REA has moved to dismiss Wabash's complaint, contending the Court lacks subject matter jurisdiction, while Wabash, joined by the intervenors, has moved for a summary declaratory judgment.

Discussion

REA's Motion to Dismiss

Defendant, REA, argues this Court lacks subject matter jurisdiction of this cause of action because the United States has not waived its sovereign immunity and because exclusive jurisdiction of this case rests, if at all, in the United States Claims Court.

Regarding the Claims Court, 28 U.S.C. §§ 1346(a)(2) and 1491 provide that the Claims Court has exclusive jurisdiction of contract claims against the United States seeking monetary damages in excess of $10,000.00. In this case, however, neither plaintiff nor any of the intervenors is seeking any monetary damages at all. Therefore, the Court finds that the Claims Court does not have exclusive jurisdiction of this case.

Regarding sovereign immunity, REA argues that regardless of how Wabash has framed its complaint, what Wabash is really seeking is a declaratory judgment that REA has breached its mortgage contracts with Wabash. REA further contends that the only statute that waives the government's sovereign immunity on contract claims, the Tucker Act, 28 U.S.C. §§ 1346(a)(2), 1491, does not permit such declaratory relief. As defendant notes, the Tucker Act provides for a limited waiver of sovereign immunity in contract cases, but only where a plaintiff is seeking monetary damages, not declaratory or injunctive relief. See Lee v. Thornton, 420 U.S. 139, 95 S.Ct. 853, 43 L.Ed.2d 85 (1975) (per curiam); Richardson v. Morris, 409 U.S. 464, 93 S.Ct. 629, 34 L.Ed.2d 647 (1973) (per curiam).

Some courts have construed the Tucker Act's preclusion of equitable relief to mean that federal district courts in general have no jurisdiction to provide any declaratory or injunctive relief against the government in a suit on a contract. See Sharp v. Weinberger, 798 F.2d 1521, 1524 (D.C.Cir. 1986); North Side Lumber Co. v. Block, 753 F.2d 1482, 1485-86 (9th Cir.) cert. denied, 474 U.S. 919, 931, 106 S.Ct. 248, 265, 88 L.Ed.2d 256, 271 (1985); Serra v. United States Gen. Servs. Admin., 667 F.Supp. 1042, 1049-51 (S.D.N.Y.1987), aff'd, 847 F.2d 1045 (2d Cir.1988). But see Lehner v. United States, 685 F.2d 1187, 1190 (9th Cir.1982), cert. denied, 460 U.S. 1039, 103 S.Ct. 1431, 75 L.Ed.2d 790 (1983) (APA provides jurisdiction for district court to award equitable relief on a contract claim). However, the courts that found no district court jurisdiction to provide equitable relief on a contract claim also pointed out that a district court nevertheless has jurisdiction to award declaratory or injunctive relief where a plaintiff's complaint also contains noncontract claims or alleges statutory or constitutional violations. See Sharp, 798 F.2d at 1524; North Side Lumber, 753 F.2d at 1486; Serra, 667 F.Supp. at 1052-57.

In this case, plaintiff Wabash seeks a declaratory judgment that defendant REA lacks statutory authority to assert jurisdiction to regulate Wabash's rates and to preempt the rate-setting authority of the Indiana and Michigan utility regulatory commissions. Contrary to REA's assertion that this is in essence a contract claim, the Court finds that plaintiff's complaint is not a suit on a contract against the federal government. That REA has allegedly breached its mortgage contracts with Wabash in attempting to usurp state rate-setting authority is merely one of Wabash's arguments in support of its claim. In addition, the intervenors in this case—the Indiana Utility Regulatory Commission, the Indiana Utility Consumer Counselor, the State of Michigan, and the Michigan Public Service Commission—which join Wabash in seeking a declaratory judgment against REA, do not have a contractual relationship with the government nor do they assert contract claims. Consequently, the Court finds that the Tucker Act's preclusion of declaratory relief on a contract claim against the government does not apply to the present case. Moreover, even if parts of plaintiff's complaint were construed as a contract claim, the Court clearly has jurisdiction of the noncontract, statutory claims raised by...