Protect Our Aquifer v. Tennessee Valley Authority

654 F.Supp.3d 654

PROTECT OUR AQUIFER, Energy Alabama, Doing Business as Energy Alabama, and Appalachian Voices, Plaintiffs, v. TENNESSEE VALLEY AUTHORITY, Defendant.

No. 2:20-cv-02615-TLP-atc

United States District Court, W.D. Tennessee, Western Division

Signed February 1, 2023

George H. Nolan, Amanda Rosemary Garcia, Chelsea Bowling, O.W. Bussey, III, Stephanie Biggs, Southern Environmental Law Center, Nashville, TN, for Plaintiffs.

Maria Victoria Gillen, Steven Chin, David Demar Ayliffe, Tennessee Valley Authority, Knoxville, TN, for Defendant.

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

THOMAS L. PARKER, UNITED STATES DISTRICT JUDGE

This case is a legal challenge under the Administrative Procedure Act concerning long-term contracts between Defendant Tennessee Valley Authority ("Defendant" or "TVA") and local power companies ("LPCs"). Plaintiffs are conservation groups who are not parties to those contracts. Yet they allege that the length and adoption of the contracts violate both the Tennessee Valley Authority Act ("TVA Act") and the National Environmental Protection Act ("NEPA"). The Court held a hearing on the Parties' cross-motions for summary judgment. Because the Court finds that Plaintiffs lack standing to bring the TVA Act claim, and that Defendant acted reasonably under NEPA, the Court GRANTS summary judgment for Defendant

BACKGROUND

I. Defendant Tennessee Valley Authority and the Long-Term Contracts

During the depths of the Depression in 1933, Congress created the Tennessee Valley Authority through the TVA Act. 16 U.S.C. § 831. First envisioned to aid agricultural and industrial development along the Tennessee River, Defendant has grown to be the largest federally-owned power company in the United States. Defendant identifies the provision of "low-cost, reliable electricity to ten million people in TVA's seven-state service area," as one of its statutory objectives. (ECF No. 20-1 at PageID 1390.) Defendant generates power and sells it to local power companies, which in turn sell and distribute the power to individual consumers like some of Plaintiffs' members. As a creature of congressional statute, Defendant must operate within the bounds of the TVA Act. In terms of contract length, Section 10 of the TVA Act ("Section 10") authorizes Defendant to enter into contracts with LPCs "for a term not exceeding twenty years." 16 U.S.C. § 831i.

Fast forward to 2019 when Defendant began offering two contractual provisions germane to this suit. The first is a long-term provision. As part of a twenty-year contract, this new provision extends the contracts' termination notice to twenty years also. (ECF No. 75 at PageID 6671.) Several of Defendant's contracts with its LPCs already have an initial term of twenty years, and an "evergreen provision" that renews the contract—absent a termination notice—every year. (Id.) The second is a flexibility proposal. Defendant's contracts with LPCs have been "requirements contracts," meaning that LPCs have to buy all their power exclusively from Defendant. (ECF No. 75 at PageID 6671.) The flexibility proposal commits Defendant to "collaborating with [signatory LPCs] to develop and provide enhanced power supply flexibility." (ECF No. 17-1 at PageID 1264.) The resulting flexibility provisions allowed LPC signatories "to self-generate three to five percent of their energy." (ECF No. 33-28 at PageID 4250.)

LPCs that agree to both provisions accrue a monthly 3.1% rate credit from TVA. (ECF No. 74-1 at PageID 5833.) Defendant characterizes this bill credit as its way of sharing the financial benefits from the contracts' enhanced long-term certainty with LPCs. (ECF No. 17-4 at PageID 1310.) Defendant maintains that these contracts advance its goal of fulfilling its "statutory obligation to sell power at rates as low as feasible." (ECF No. 92 at PageID 7669 (citing ECF No. 33-6 at PageID 3415).) To date, about 143 LPCs have signed the long-term contracts. (ECF No. 92 at PageID 7684, 7732.)

II. Plaintiff Organizations and Their Claims

Plaintiffs are three environmental conservation groups: Protect Our Aquifer from Memphis, Tennessee; Energy Alabama from Huntsville, Alabama; and Appalachian Voices from Boone, North Carolina. (ECF No. 17.) Their members or supporters are customers of at least four of the 143 LPCs that have signed the long-term contracts¹. (ECF No. 17-9-16; ECF No. 92 at PageID 7731). They challenge the contracts through the Administrative Procedure Act ("APA"), based on Defendant's alleged violations of the TVA Act and NEPA. (ECF No. 74-1 at PageID 5831-32.)

Plaintiffs' TVA Act claims arise from the long-term provision. They claim that the combination of the initial twenty-year term of the contract, the evergreen provision, and the twenty-year notice requirement results in a perpetual term, which they call a "Never-ending contract." (ECF No. 74-1 at PageID 5847) ("The Never-ending Contracts automatically extend themselves each year so that the Contracts never erode or expire with the passage of time.") Because the 3.1% rate credit, among other benefits, is available only to LPCs who agree to the long-term provisions, Plaintiffs suggest that Defendant pushes LPCs "into contracts that bind them forever rather than hewing to the twenty-year limit in the Act." (Id. at PageID 5832.) So they claim that Defendant's contracts exceed Section 10's twenty-year limit. (Id. at PageID 5847 ("The practical effect of that contract structure is that, once signed, the agreements last forever.").)

Plaintiffs' NEPA claim arises from both the long-term and the flexibility provisions. Under NEPA, a federal agency must complete prescribed environmental reviews before undertaking major actions that "significantly affect[] the quality of the human environment." 42 U.S.C. § 4332. Plaintiffs' claim that Defendant violated NEPA in two ways. First, TVA failed to perform the required NEPA review before adopting and executing the long-term provisions with the LPCs. (ECF No. 74-1 at PageID 5859.) Second, TVA belatedly performed a NEPA review for its flexibility provisions. (Id. at PageID 5872.) According to Plaintiffs, TVA performed the required NEPA review on its flexibility provisions in July 2020 but began incorporating them into contracts with the LPCs as early as August 2019. (Id. at PageID 5874; see also ECF No. 92 at PageID 7639-41.)

III. Procedural Posture

This APA suit began in August 2020 when Plaintiffs filed the original complaint against Defendant. (ECF No. 1.) Defendant moved to dismiss Plaintiffs' suit for lack of standing, which the Court denied in August 2021. (ECF No. 48.) In doing so, the Court emphasized that Plaintiffs' burden to sustain standing will increase at summary judgment because it will have access to the administrative record. (Id. at PageID 5085.) The Court permitted Plaintiffs to conduct extensive discovery for more than a year, denying Defendant's motion for reconsideration, and ordering Defendant to complete an expanded administrative record. (ECF No. 67.) The Parties cross-moved for summary judgment, for which the Court held a hearing in December 2022. (ECF No. 92.) The Court will now turn to those competing motions.

LEGAL STANDARD

I. Standard for Summary Judgment on the Administrative Record

A party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). But in an APA case involving the review of an agency action, the normal standards set forth under FRCP 56 do not apply because of the Court's limited role in reviewing the administrative record. See Oak Ridge Env't Peace All. v. Perry, 412 F.Supp.3d 786, 808 (E.D. Tenn. 2019).

A court conducting judicial review under the APA does not resolve factual questions but determines whether "as a matter of law the evidence in the administrative record permitted the agency to make the decision that it did." Harkness v. Sec'y of the Navy, 174 F.Supp.3d 990, 1004 (W.D. Tenn. 2016), aff'd, 858 F.3d 437 (6th Cir. 2017) (citations omitted). See also Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985); Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973). So the APA renders summary judgment "the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review." Harkness, 174 F.Supp.3d at 1004; see also Oak Ridge, 412 F.Supp.3d at 808 ("Instead, under the APA, the agency resolves factual issues to arrive at a decision that should be supported by the administrative record.") The APA directs the Court to "hold unlawful and set aside agency action, findings, and conclusions found to be ... in excess of statutory jurisdiction, authority, or limitations, or short of statutory right [or] ... without observance of procedure required by law[.]" 5 U.S.C. § 706(2)(C)-(D). Plaintiffs' APA suit challenges Defendant's actions under both the TVA Act and the NEPA. The Court will now offer an overview of these two statutes.

II. Overview of the Tennessee Valley Authority Act

With the TVA Act, Congress created Defendant as a federally-owned electric utility company in 1933. 16 U.S.C. § 831. Defendant acts through its board of directors ("Board"), who are nominated by the President of the United States and confirmed by the Senate. Id. Section 10 of the TVA Act limits the Board's authority to manage Defendant's contracts:

The Board is empowered and authorized to sell the surplus power not used in its operations, and for operation of locks and other works generated by it, to States, counties, municipalities, corporations, partnerships, or individuals, according to the policies hereinafter set forth; and to carry out said authority, the Board is authorized to enter into contracts for such sale for a term not exceeding twenty years, and in the sale of

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