Hardin v. Kentucky Utilities Company

PETITIONER:Edward J. Hardin, Mayor of Tazewell, Tennessee, Powell Valley Electric Cooperative, Tennessee Valley Authority
RESPONDENT:Kentucky Utilities Company
LOCATION: Tazewell, Tennessee City Hall

DOCKET NO.: 40
DECIDED BY: Warren Court (1967-1969)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 390 US 1 (1968)
ARGUED: Dec 13, 1967
DECIDED: Jan 16, 1968
GRANTED: Mar 27, 1967

ADVOCATES:
Malcolm Y. Marshall – for the respondent
Robert H. Marquis – for the petitioners
William R. Stanifer – for the petitioners

Facts of the case

Dixie Power and Light Company provided service to several locations in Claiborne County, Tennesee, including the towns of Tazewell and New Tazewell. Kentucky Utilities Company (KU) held a non-exclusive county franchise to occupy county roads. In 1954, Dixie Power and Light transferred its assets to KU and dissolved, giving KU control over the vast majority of the market in Tazewell and New Tazewell.

The Tennessee Valley Authority Act of 1933, as amended in 1959, barred the Tennessee Valley Authority (TVA) from expanding its sales outside the area for which the TVA or its distributors were the primary source of power supply on July 1, 1957. On that date, the area of Claiborne County had 3,564 users of TVA power compared to 1,839 users of KU power; the towns of Tazewell and New Tazewell, however, had 28 TVA users and 561 KU users. KU’s retail rates for electricity in the towns were approximately two-and-one-half times higher than those offered by TVA. Citizens in Tazewell and New Tazewell responded to this rate disparity by demanding access to the TVA’s cheaper power. After three years of complaints, planning and consultations, the towns’ governments contracted to hook up a new municipal system to TVA’s power grid.

KU filed suit against TVA, the mayors of Tazewell and New Tazewell, and the Powell Valley Electric Cooperative, a TVA distributor. KU charged the defendants with conspiracy to destroy its business in Tazewell and asked the court to enjoin TVA from supplying power to the new municipal system. Shortly before trial, the TVA Board of Directors determined that TVA was the primary source of power for Claiborne County on July 1, 1957, and that Claiborne County was the relevant area for the purposes of the act. The district court upheld the board’s decision, but the Sixth Circuit United States Court of Appeals reversed. Comparing the number of customers served by KU and TVA in Tazewell and New Tazewell, the Sixth Circuit held that the two towns and KU’s original county road corridor were an ‘area’ for the purposes of the act and that TVA was barred from extending its service to that area.

Question

1. Did Kentucky Utilities Company, a private utility, have standing to maintain an action to enjoin the Tennessee Valley Authority from supplying power to customers and areas served by that utility under the Tennessee Valley Authority Act of 1959?

2. Did the Sixth Circuit United States Court of Appeals exceed its authority by rejecting the TVA Board of Directors’ interpretation of the TVA Act?

Earl Warren:

J. Hardin as Mayor of Tazewell, Tennessee et al., Petitioners, versus Kentucky Utilities Company, Number 50, Powell Electric Cooperative, Petitioner, versus Kentucky Utilities Company and Number 51, Tennessee Valley Authority, Petitioner, versus Kentucky Utilities Company.

Mr. Marquis you may proceed with your argument.

Robert H. Marquis:

Mr. Chief Justice and may it please the Court.

This is an action by the Kentucky Utilities Company, KU, to enjoin the distribution of TVA power in Tazewell and New Tazewell, two small towns in Claiborne County in Northeastern Tennessee.

The gist of the complaint is that such distribution would violate Section 15d of the TVA Act.

That Section was added to the Act in 1959, primarily to authorize TVA to issue revenue bonds to help finance its power program.

It also provided subject to certain exceptions which aren’t here directly involved.

The TVA shall make no contracts for the sale of power which would result in hit for its distributors becoming a source of power supply outside the area for which TVA or its distributors were the primary source of power supply on July 1st, 1957.

The TVA Board determined that the Tazewell’s’ were within the area thus described.

The District Court after a court — a trial sustained that determination and indicated its own agreement with it.

The Sixth Circuit Court of Appeals reversed holding that the TVA Board’s determination was of no consequence in making its own independent determination to the contrary.

There are two issues presented here whether KU have standing to sue and if so, whether the Court of Appeals erred in ignoring the TVA Board’s determination in making its own contrary determination.

I should like to —

William J. Brennan, Jr.:

There’d be a third —

Robert H. Marquis:

If Your Honor —

William J. Brennan, Jr.:

Wouldn’t there be a third issue assuming that KU has standing to sue, assuming that whatever the finding of the TVA was, there is judicial power to review its finding and the — but the (Voice Overlap) —

Robert H. Marquis:

Yes sir, I was —

William J. Brennan, Jr.:

— on the facts —

Robert H. Marquis:

— including that in my (Voice Overlap) —

William J. Brennan, Jr.:

— that on the facts that the TVA was right.

Robert H. Marquis:

That’s correct sir, it is.

William J. Brennan, Jr.:

And the Court of Appeals is wrong.

The District Court was right.

Robert H. Marquis:

That might well be true, yes sir.

I should like first to turn to the facts out of which this controversy arose.

TVA is a part of this reasonable resource development program to supply as lower cost power in an area of some 80,000 square miles, which is online generally on this map.

The blue on this map shows the Tennessee Valley drainage basin, the area in which power supply is shown approximately in the pink area and in that portion, the blue that is inside the pink line.

TVA is primarily a wholesaler of power except for supply to some federal defense installations and a few very large industries.

It distributes its power through some 150 municipalities and cooperatives with whom it has power contracts.

Now, Claiborne County, Tennessee is shown on this map as within the area.

Robert H. Marquis:

It’s just below the point where the Tennessee, Kentucky and Virginia boundaries come together.

And the situation in Claiborne County on the key date, the key statutory date of July 1st, 1957 is shown on this map.

This is a combination of two exhibits in the case — numbers exhibit — exhibit numbers 91 and 38.The towns of Tazewell and New Tazewell are shown here in pink.

KU had a transmission line shown by the solid red line but that serve no customers.

It — distribution lines are shown in the broken red lines.

For many years, the electric service provided in the county, it was provided by those distribution lines coming from Hillsboro down to and just beyond the Tazewell.

KU made no effort to serve the rural areas of the county and that vacuum was filled beginning in the early 1940s by two distributors of TVA power, the City of La Follette which is located in (Inaudible) west and the Powell Valley Electric Cooperative.

Byron R. White:

Where is that?

Robert H. Marquis:

The Powell Valley Electric Cooperative has its headquarters up in Virginia Your Honor and also serves a portion of Tennessee.

Now these black lines indicate the service lines, distribution lines with the two TVA distributors.

The black dots indicate customers whom they served on July 1st, 1957.

The lines in the western portion of the county are those of the following.

The lines here in the eastern portion are those of Powell Valley.

Potter Stewart:

Is that Exhibit 91 blown up?

Robert H. Marquis:

91 plus 38, Your Honor, it’s a combination of the two.

Potter Stewart:

Plus 38.

Robert H. Marquis:

Right.

Potter Stewart:

Not — oh, and there’s Exhibit 36 here also in the — appended to the petition for certiorari by the Mayors of Tazewell and New Tazewell.

Robert H. Marquis:

Oh, that’s a different map, yes sir.

Potter Stewart:

But although it purports to be of the same thing, doesn’t it?

Robert H. Marquis:

No sir, that’s the map made in 1952, five years before this key date.

It was a map prepared by TVA engineer and the record is very silent on the basis on which it was prepared for what he considered.

Earl Warren:

Where do we find these two maps in the record?

Robert H. Marquis:

Exhibit 91, Your Honor is in Exhibit Volume 1.

It is in the sheet 1(b).

Potter Stewart:

It’s also appended to the dissenting opinion of Judge Edwards —

Robert H. Marquis:

That’s correct Your Honor, yes.

Potter Stewart:

— of the Court of Appeals, is it not?

Robert H. Marquis:

Exhibit number 38 is in Exhibit Volume 2.

Byron R. White:

Page 774?

Robert H. Marquis:

773.

And this pink map is Exhibit Number 96 which is sheet 7(b) of Exhibit Volume Number 1.

Now by July 1st, 1957, the TVA distributors were supplying approximately two thirds of all the customers in Claiborne County.

KU continued to supply about 95% of the customers in the Tazewell themselves and in Powell Valley had some customers in each town.

As the Court could see, Powell Valley’s service lines completely surrounded the Tazewell’s and penetrated into the towns at several points.

KU’s rates were —

William J. Brennan, Jr.:

Mr. Marquis, may I ask you?

You mentioned Exhibit Volume 1, I don’t have any Exhibit Volume 1 —

Robert H. Marquis:

That’s the —

William J. Brennan, Jr.:

Exhibit Volume 2, is that another one?

Robert H. Marquis:

That is a —

William O. Douglas:

This is a —

Robert H. Marquis:

(Inaudible) maps, Your Honor.

William J. Brennan, Jr.:

That’s alright.

I just don’t seem to have it.

I’ll —

Robert H. Marquis:

Sorry Your Honor.

William J. Brennan, Jr.:

I’ll — probably, the clerk would have this.

Robert H. Marquis:

As I was saying, KU’s rates were considerably higher than those of the TVA distributors.

The towns located on a depressed area were anxious to attract industry and create jobs and they felt that KU’s rates were handicapped.

A representative of the towns came to meet with the TVA Board in February of 1960 to see if they could obtain TVA power.

Also present at that meeting were representatives from Middlesborough, Kentucky located just across the state line.

The TVA Board at that time advised that the Tazewells were within the area the TVA could legally supply but Middlesborough was not.

That I may say was the first application of the 1959 Amendment.

A little less than six months after the statute was passed and the then members of the TVA Board, General (Inaudible), Mr. A.R. Jones and Mr. Brooks Hayes had also been directors at the time the amendment was passed and were thoroughly with it — familiar with it.

So I think that’s a clear case of contemporaneous construction.

The TVA Board also at that time suggested that because of their small size, the Tazewells explore the possibility of getting power through Powell Valley.

Now the Board had occasioned again to review this matter in November 1962 because Tazewell had gone to Powell Valley.

They had some exploratory meetings and Powell Valley wanted to be sure that if it supplied power to the towns, TVA would continue to supply the necessary power to Powell Valley.

That was a problem because that might require TVA to build admission — additional transmission into the area at a cost of some three quarters of a million dollars.

Robert H. Marquis:

The Board again reviewed the matter at that time and directed that Powell Valley be given that necessary assurance.

After that, the Tazewells attempted to buy the distribution lines of KU within their limits.

KU is not interested in selling.

The Tazewell’s then decided to construct their own duplicating distribution system and arranged with Powell Valley to supply them with the power.

Some customers transferred from KU service to the service offered by the towns in KU then brought this lawsuit.

Again, in August 1964, the matter came before the TVA Board because as a result of the lawsuit and the publicity attending it, TVA received various inquiries from specific organizations, from members of Congress, from distributors and individuals as to whether TVA might supply power in other portions of Claiborne County.

And at that time, the TVA made a formal determination that TVA power might be sold within all of Claiborne County.

Now, I would like next to take up the statute which the TVA Board was called upon to apply.

I think this pink and blue map is of importance of that connection.

Not because we think that it exactly shows the boundaries of the area that TVA distributors supply.

We think they’re very approximate but it does help to show what the Congress had purported.

This is one of the three generally similar maps which were purported to Congress at the time it was considering the TVA bond legislation.

That consideration incidentally extended from 1955 to 1959.

And I think this map tends to show that what Congress was thinking of was a solid expanse, a solid area which might be imposed within a periphery or a perimeter.

Congress knew incidentally that there were islands.

Senate Committee Report shows that clearly the private power service inside the pink line.

We think that the statutory —

Potter Stewart:

Would you outline with your pointer there the pink line, I —

Robert H. Marquis:

Certainly sir.

Potter Stewart:

I don’t think I can see a pink line from here.

Robert H. Marquis:

It starts right here going over here and then to this.

Potter Stewart:

Obviously, I cannot see it.

Thank you.

Robert H. Marquis:

I don’t know if that helps but I hope it is.

Now, we think that the area for which the primary source of power, TVA or its distributors with primary source of power supply includes everything within that pink line.

KU’s contention is that areas of private power service and indeed, I think any private power customer are excluded.

Now the statute as we see it describes three areas.

The first two are included in the first provision — the first sentence of the territorial limitation in Section 15d (a) and they’re described as the area for which the corporation or its distributors were the primary source of power supply in July 1st, 1957.

And we think as I indicated that that meant an area within which there were some prior — some power supply by others that in which we were the chief supplier.

Then next, such additional area, extending not more than five miles around the periphery of such area, that is the primary area as maybe necessary to care for the growth of the corporation and its distributors within the said area and we think that by that, the Congress meant a five-mile belt extending around the periphery.

Robert H. Marquis:

The Act contains no limitations on TVA service within the primary area.

It contains certain limitations and service within the peripheral area.

One of which is that we may not serve within a municipality which is receiving power from another source on or after July 1st, 1957.

Then the Act speaks of what we think is a third area and that is described in these terms.

Nothing in this subsections, subsection (a) of 15d, shall prevent the corporation or its distributors from supplying electric power to any customer within any area in which the corporation or its distributors had generally established electric service on July 1st, 1957 into which, electric service was not being supplied from any other source on the effective date of this Act which is August 6, 1959.

That we think is a catchall, an insurance kind of provision.

Congress knew for example that we were serving an AC complex delivering huge quantities of power to it up here in Kentucky where we moved from that pink area.

They were serving customer in Tarrant City, Alabama down here.

There were possibilities that perhaps the distributor lines existing on July 1st, 1957 might have been extended outside the 57 peripheral areas between 57 and 59.

We think that that is the meaning of that Section where it was designed to take care of and we also do not believe that it can possibly be read as I think KU raised it as a limitation on the first two areas since it begins, nothing shall prevent.

We don’t think that that can be read dramatically as a limitation.

Now KU also relies on legislative history.

We think that reliance is erroneous.

The bill which became Section 15d was past first by the House.

And as so passed, it included an amendment offered by Representative Benson which would have prevented with the exception of service to certain named towns the supplying of power outside the service area of the corporation has existed on July 1st, 1957.

Now when the bill went over to the Senate and got before the Senate Public Works Committee, there is obviously a great deal of difficulty with respect to the term “service area”.

One reason being that at that time the only limitation on TVA’s supplying of power was that it had to be within economic transmission distance of a TVA dam on the Tennessee River.

That obviously was not a very specific limitation and it was one which is subject to change with technological change and with economic change.

Some members of the Senate Committee, Senator Kerr for one as he said the floor, interpreted service area to include everything that we might then supply as being within economic transmission distance.

Hugo L. Black:

Who is that?

Robert H. Marquis:

Senator Kerr who was Chairman of the Senate Subcommittee has considered the bill Your Honor.

Then other members obviously thought it was so much a narrower provision.

It would appear that Congressman Benson himself may have intended it as a narrower provision.

But in any event, the Senate Committee decided, so they said in their report that it was a nebulous term difficult to define and it’s substituted the term area for which TVA was the primary source of power supply.

Now I don’t think if there’s any question about what the Senate Committee meant when it used that term.

It’s said expressly that that term meant the area in which TVA was the chief or principal supplier of power on July 1st, 1957.

It also said that while its version of the bill which would have permitted us to serve everything within the area for which we were the sort — the primary source of power supply plus an additional 2000 square miles or 2.5%.

It said that that version would permit elasticity and adjustments, adjustments on the periphery of the area presently supplied and within that area.

It made pretty clear what kind of adjustments to have in mind.

It said, within the general area receiving TVA power, there are small areas served by a private power entirely surrounded by the lines of TVA distributors.

Robert H. Marquis:

There are also many areas in which the lines of TV — of distributors of TVA power and the lines of private power companies were interlaced.

And we think that describes the situation in and around the Tazewells as well as any can possibly could.

Now KU says that the Senate Committee report is irrelevant because after the bill was reported out, there was adopted what was one small change was the final version of the bill, an Amendment cosponsored by Senator Randolph, the Randolph Amendment.

KU says and the Court of Appeals said that this Amendment was in effect a return to the House version of the bill considered in a stricter sense.

Well, we just believe that that is erroneous.

It certainly wasn’t for one thing.

It included the five-mile belt which the House Bill certainly didn’t.

It included the third area which I mentioned which the House Bill certainly didn’t but most importantly, it retained the language area for which TVA was the primary source of power supply after the Senate Committee had made perfectly clear what it meant by that language.

And the Senate Committee’s explanation incidentally of course accords fully with the dictionary meaning of the term “primary”.

Primary means first in rank or importance, chief or principal which is just what the Senate Committee said it meant.

Potter Stewart:

The issue here really isn’t — the meaning of the word primary, is it?

It’s the meaning of the word area in this legislation.

I suppose both parties would agree that if the area of these two cities then TVA was not the primary supplier of these two cities.

And I also suppose both parties or I understand both parties would agree that if the area is the county, Claiborne County, then TVA is the primary supplier —

Robert H. Marquis:

Well —

Potter Stewart:

— to that county.

Robert H. Marquis:

Yes Your Honor.

Potter Stewart:

Am I wrong about that?

Robert H. Marquis:

Well —

Potter Stewart:

And if so, tell me.

Robert H. Marquis:

— the question is, the area for which we were the primary source of power supply which we (Voice Overlap) —

Potter Stewart:

It’s the area that’s an issue here isn’t it?

Robert H. Marquis:

That’s right.

Potter Stewart:

(Inaudible) not the —

Robert H. Marquis:

But —

Potter Stewart:

— concept of primary.

Robert H. Marquis:

Well, but the term primary describes the term area.

The area that we’re dealing with is the one for which we’re the primary source of power supply.

Potter Stewart:

But what if the areas — the two cities then there’s no question that — what KU is the primary supplier and TVA was not, am I correct?

Robert H. Marquis:

Yes Your Honor.

Robert H. Marquis:

The an — the question Your Honor is whether the area in effect includes something approximating everything within the pink —

Potter Stewart:

Right.

Robert H. Marquis:

— or whether utility islands within that pink line are excluded.

Potter Stewart:

Well, now that —

Robert H. Marquis:

That’s —

Potter Stewart:

Is that a way of telling me that I’m right or wrong with my understanding —

Robert H. Marquis:

Well —

Potter Stewart:

— of the issue.

Robert H. Marquis:

I think you’re right Your Honor.

Now the Randolph Amendment, we think also designed from the use of the statutory language as the Senate Committee had explained with the elasticity and adjustment both on the periphery and within the periphery, the Randolph Amendment did not change that basic concept.

Also, Senator Randolph had made very clear in his supplementary reviews to the Senate Report what his problem was with the Senate Committee version of the bill.

That version as I said permitted this to supply an additional 2000 miles without limiting it to anything necessarily contiguous to the primary area.

And he was afraid that we might run a narrow corridor and perhaps a couple of miles and with a long distance away perhaps as he put it even getting up to his homestead of West Virginia.

The final version keeps the 2000 mile limitation on the peripheral area but it limits it to the five-mile belt.

Now KU also relies on some subsequent legislative history.

In 1966, which we think directly contradicts its theory, the original 59 legislation that authorizes to issue bonds in the total amount of $750 million.

The 1966 legislation increased that to $1,750,000,000.

At the time that legislation was before the Senate Public Works Committee, the Jackson Purchase World Electric Cooperative appears before the Committee and asked to be specifically — asked that it be named specifically in the legislation so that TVA could serve it.

Jackson Purchase served an area up here in the extreme portion of Northwestern Kentucky.

It was a customer of KU.

It had come to TVA and asked that we serve it.

The TVA Board had determined in that case that we could not legally supply it under the terms of the 1959 Amendment and Jackson Purchase there upon filed suit against this for mandatory injunction as a preference customer to seek an order requiring that we serve it.

That suit was pending at the time of the 1966 hearing.

The Senate Committee denied Jackson Purchase’s request and in doing so, it discussed the meaning of the amendment adopted in 1959.

And it is interesting to note that Mr. Randolph submitted the report for the Senate Committee.

He was now a Chairman both of the Senate Public Works Committee and of the Flight Control Subcommittee which considered that legislation.

And that Senate Committee report speaks just as did the 59 report.

It says, the Act permits an increase in such area of 2.5% or 2000 square miles which ever is the lesser or of which TVA was the chief or principal supplier of power in July 1st, 1957.

And then it indicated its understanding of what it meant by the legislation.

It goes back and actually quotes from the 1959 Senate Committee Report.

Robert H. Marquis:

On Page 57 of KU’s brief, they quote a portion of the 59 Senate Committee report and say that the Senate — that the Randolph Amendment was a departure from it.

Well now here on 66, along comes the Senate Committee and quotes from the very paragraph of that report to which they refer on page 57 of their brief, saying in part, it, the legislation will permit desirable minor adjustments on the periphery of the area presently supplied and within that area.

Now, I think if it’s once recognized that the primary area is that area for which we were the chief source of power supply, not the sole source of power supply and may include some private utility customers then there is considerable discretion as to how that primary area shall be drawn.

The TVA Board’s interpretation of this was that the Act indicated that they should draw stable boundaries, boundaries within the area, the utilities, TVA, and the people could live with, and we think that is correct.

We also think that it was perfectly reasonable and proper in that situation to include the Tazewells as within the area.

In fact, we think it had been — would have been most unreasonable to exclude them.

The determination made by the Board I think was a mixed one of law and fact.

The legal part was that as I have said, the area was a single area with a perimeter around it and with some private utility — islands of private utility service inside.

The back portion of it was that the Tazewells were inside the periphery.

This was an executive determination.

There is no provision in this Act for notice for hearings and the thing of the — things normally associated with adjudicatory process.

It was an executive or management determination incident to the sale of property in this case, TVA power and contracting for the sale of that power.

Even in the case of quasi judicial agencies, I think this Court has gone a long way in deferring to the construction, contemporaneous construction of statutory terms by such agencies.

And of course it upholds their fact determinations where there’s anything in the record to support.

I think that the scope of judicial review in the case of an executive determination is narrow.

I think the principle has been — then accepted ever since (Inaudible) against Paul then the case of such a determination unless the Act is in effect a ministerial Act, the Court will not substitute its own judgment for that of the executive agency either as to the law, if there’s any question about its meaning, or the facts unless the executive agency is just going clear (Inaudible).

Now certainly, the TVA Board’s determination both of law in fact in this case can hardly be unreasonable where a long experienced district judge after a four-day trial, indicates that he agrees independently both with the interpretation of law and the interpretation of the facts.

Potter Stewart:

You’re telling us though as I understand it, that we must give more deference to a decision which is made with no notice, no hearing, no adversary proceeding.

We should give more deference to a decision that is made in that unilateral in camera way than we should give to a — the findings and conclusions of a quasi administrative agent?

Robert H. Marquis:

Yes Your Honor, we do say that —

Potter Stewart:

(Inaudible)

Robert H. Marquis:

— because we think the rule has always been that where you have an executive determination, one that is not associated with adjudication, a situation where the executive is called upon in performing its normal duties to look at the statutes under which it acts and act accordingly that you have there a question of executive discretion.

And unless you have a ministerial act situation, the Court’s have not historically intervened to either a mandamus or injunction.

William J. Brennan, Jr.:

Well, why was it that — why wasn’t this something like a rulemaking by executive or administrative agency?

Robert H. Marquis:

Well, it certainly couldn’t be rule making, Your Honor, because the Administrative Procedure Act expressly excludes anything having to do with property or contracts from rulemaking.

William J. Brennan, Jr.:

I didn’t say it was rule making within that, I just — I — isn’t it like rulemaking? It’s really an instruction of the statute by the —

Robert H. Marquis:

Yes, yes, it is that.

William J. Brennan, Jr.:

And certainly the administrative agency of the rulemaking has some kind of previous notice and enough to be heard by the public?

Robert H. Marquis:

That’s correct and that’s what the —

William J. Brennan, Jr.:

(Voice Overlap) —

Robert H. Marquis:

— Administrative Procedure Act provides for.

William J. Brennan, Jr.:

Yes, I didn’t suggest the lack of — it applies, but —

Robert H. Marquis:

Correct.

William J. Brennan, Jr.:

But you say except where it does apply that this sort of determination by executive agency have always been and should be practically immune judicially?

Robert H. Marquis:

Not practically immune.

If for example, the Court should think that the law is absolutely and completely clear against the agency’s construction so that there is no doubt about the matter then you have a ministerial situation and a mandamus or injunction would lie.

William J. Brennan, Jr.:

Are you going to argue standing and —

Robert H. Marquis:

Yes, I’m about to get to that right now.

That of course is the threshold question.

And I think the factors there that are of primary importance are first, that KU has no exclusive franchise to serve in Claiborne County.

It’s a non-exclusive franchise.

And second, that the towns of Tazewell and New Tazewell under Tennessee law are entitled to compete.

There’s no question about that.

The Tennessee Municipal Electric Plant Act expressly gives municipality such authority.

Now, KU’s theory here is that the competition is illegible not because the towns had no right to compete but because TVA was unlawfully supplying power ot them.

We find it difficult to distinguish their situation from Alabama Power Company against Ickes.

In that case, there was a challenged loan — there were challenged loans and grants by the Emergency Administrator of Public Works for the purpose of financing municipal construction of electric distribution systems.

And this Court said that the utility company could not challenge the constitutionality of federal action, loan some grants which made possible competition which in itself was legal.

Here, TVA is not furnishing loan to grants, its furnishing power and we think the basic situation is the same.

Also, we think that the duty here that TVA owes, is a duty not owed to any private party but a duty owed to the Government.

We think that Congress reserved to itself the authority to determine whether the TVA Board was doing its duty in applying the statute and itself giving adequate protection of utilities as of course we did in the case of Middlesborough and in the case of Jackson Purchase.

And in that connection in closing, I would just like to read briefly from the Senate Committee Report.

I seem not to have it Your Honors but what they said in that case was that nothing in this Act would change the basic relationship between Congress and TVA that TVA would be held as it always has been accountable for results.

It would have to come before Congress each year in connection with its appropriations for its other programs at which time its power program could also be reviewed.

And it said that it in effect would rely upon the TVA Board to carry out faithfully the duties entrusted to it.

I would now like if I may Mr. Chief Justice, deal to Mr. Stanifer and to reserve the balance of what time we have after —

Earl Warren:

Very well.

Mr. Stanifer.

William R. Stanifer:

Mr. Chief Justice and may it please the Court.

Mr. Marquis has covered the legal question and I do not want to discuss those.

William R. Stanifer:

But I would like to talk a little bit about the Tazewells and what our problems are.

I was born and raised in New Tazewell.

Now Tazewell and New Tazewell are two small mountainous communities located in Claiborne County, Tennessee.

In 1955, Tazewell and New Tazewell incorporate separately.

In that territory incorporated was two small areas.

Now this area beyond this dark mark was the municipal limit of the town of Tazewell.

This dark area which they have common municipal boundaries in this section, this dark area was the municipal boundaries of the town of New Tazewell —

Hugo L. Black:

Town of what?

William R. Stanifer:

New Tazewell, Tennessee.

Abe Fortas:

What’s the population?

William R. Stanifer:

The population on incorporation 1955 was approximately 1040 in Tazewell and approximately 700 in New Tazewell.

Now, at the time of the incorporation in 1955, there was TVA customers or two that are distributors, and Kentucky Utility customers.

Now as time passed, it came necessary for each town to annex additional territory.

In fact, when Tazewell annexed additional territory about the year 1960, it over doubled in size.

Now in that newly annexed territory, there were more TVA customers annexed than there were Kentucky Utilities customers.

Now, New Tazewell has now annexed additional territory in which it has tripled its size through annexation approximately year 1960.

There is one annexed area which is not shown on this Exhibit, this Exhibit B on Number 24 and this is a map indicative of the year 1954.

William J. Brennan, Jr.:

What was the population today?

William R. Stanifer:

The populations today, Your Honor are in Tazewell, approximately 1600 and New Tazewell approximately 1200 to 1300.

Now, neither town now can annex in any direction into any territory without there have been more TVA customers than Kentucky Utility customers.

Now in the 1920s, Kentucky Utilities run a power line down to Tazewell.

And all that they have served is along the highway, a small section on the highway and into town.

There are two distributors of TVA power begins supplying electrical power to the rest of our citizens and eventually started serving citizens in the town in the south.

Now, with these customers located within the towns is that where our problems begin.

Now Kentucky Utility rates are approximately 2 and a half times higher than Kentucky Utility rates, I mean the TVA rates.

Now that is if anyone won’t use the electrical power for your things except electric lights.

So therefore, no one wants to live in an area before they cannot be served by TVA power.

Now the property which these black dots, they were agreeing, Your Honor, and we didn’t think you can see them from there, so they were applied.

So that these are TVA customers located.

Now this has been the original (Inaudible).

William R. Stanifer:

This is an annexed area which resulted in Tazewell about the year 1960 which extended the municipal mandate and all of these black dots are TVA customers.

Now people of our (Inaudible) that’s where they want to fail or their residential or emerging property, they said they don’t want to buy property that which they cannot obtain this power in due to the high rate.

Now, going through Kentucky Utilities’ brief, it sounds to me that Kentucky Utilities are trying to tell this Court that this is justifiable between Kentucky Utilities and TVA.

Well, this just isn’t so.

I don’t know how much TVA cares about serving the town, but believe me the citizens that happily live there do care.

KU seems to ignore the fact that we’re just not talking about Kentucky Utility rights or KU rights or the TVA rights.

I feel that the citizens of those Tazewells have their rights also.

Now there is nothing in their brief that indicate that they recognize that decisions have been interacted or that there’s nothing in their brief where they indicate their concern for the dissatisfaction of the people that give rise to these lawsuit.

Now in 1959, the Claiborne County Chambers of Commerce was organized in the effort to locate (Inaudible) to supplement the low form of income which we had.

And in fact in 1961, Claiborne County was raised most economic best area from the State of Tennessee.

We have had some small success in obtaining the industry.

In fact, we have located three new small factories.

One is located in this area.

One located in this area.

And one located in an area which then had been in New Tazewell which is not on this map.

And all three of those new small plants, it’s served by TVA power.

Now our system believes that we are entitled to TVA power and they can’t understand why that we would not be entitled to it when the very backwaters of the first dam ever built by TVA is within three and one half miles of our municipal boundary.

Potter Stewart:

(Inaudible)

William R. Stanifer:

Yes.

Potter Stewart:

That’s three and a half miles away from you?

William R. Stanifer:

Yes, the backwaters.

Potter Stewart:

Yes

William R. Stanifer:

Now to affirm KU’s position in this case would be to deny our citizens the freedom of choice and would most certainly create an intolerable situation that we could never live with.

They just doesn’t seem fair that our citizens should be forced to live in such an unstable situation.

Thank you very much.

Earl Warren:

Mr. Marshall.

Malcolm Y. Marshall:

Mr. Chief Justice, may it please the Court.

Before discussing what we believe to be the real issue in the case, I want to respond briefly to Mr. Stanifer’s statement on behalf of the towns of Tazewell and New Tazewell.

Unless TVA is to be permitted to expand its service to include the entire country, there must always be a border between TVA on the one hand and investor owned utilities on the other.

That border will always be a top situation.

Malcolm Y. Marshall:

The investor owned utilities and I do not propose to get into the philosophy of public against private power but the investor owned utilities cannot pay federal and state income taxes in the full capital cost of their facilities and still sell power as cheaply as TVA.

There are two alternatives.

One is to give this tax free power to whatever group happens to be just outside the current border, Tazewell and New Tazewell.

If you do that, you have not eliminated the border problems.

You simply push them back to another area where they will reoccur next year, a different group.

The second alternative is to draw a boundary as of some given time and say that’s it.

That’s as far as we’re going to let it go.

In the 1959 statute, Congress adopted the second alternative.

Again, in 1966 when Jackson Purchase went back to Congress and said that we’re just outside the boundary.

We have the same intolerable situation which the cities have described this morning, making exception for us, Congress said no.

We drew the boundary in the 1959 Act and we’re going to adhere to it.

Abe Fortas:

Has Kentucky Utilities taking TVA power?

Malcolm Y. Marshall:

Kentucky Utilities exchanges power with TVA at a number of points, one of them being here at the Tazewells.

Abe Fortas:

And how much of the —

Malcolm Y. Marshall:

We —

Abe Fortas:

— Kentucky — how much of Kentucky Utilities power is TVA power (Voice Overlap)?

Malcolm Y. Marshall:

We do not buy power from TVA.

Abe Fortas:

I know but —

Malcolm Y. Marshall:

One —

Abe Fortas:

–you exchange power as a net one way or the other.

Malcolm Y. Marshall:

There’s a very little on that.

The exchange works out — I’m not in the position where I can answer the question but it is a pay back of power.

And if I’m not mistaken, the pay back actually, TVA uses more of our power than we use of theirs.

We exchange —

Abe Fortas:

What do you supply, base load of power or peak power or —

Malcolm Y. Marshall:

I didn’t understand the first word.

Abe Fortas:

What do you supply the TVA?

Is there any difference in the kind of power that’s supplied as a peak or the other way —

Malcolm Y. Marshall:

No.

Abe Fortas:

–and off peak the other way?

Malcolm Y. Marshall:

No.

That’s not the point of our exchanges with TVA.

There are areas in which we have transmission facilities available where TVA loads grew.

In those areas, we supply power for the account of TVA.

There are reversed areas where they have transmission available for our loads grew and they supply power for our account.

There is no difference in base load and peaking power.

And if I — as I say it, if I’m not mistaken on the facts, the exchange is virtually equal.

We are not customers of TVA.

Abe Fortas:

I see.

That’s really what —

Malcolm Y. Marshall:

I think I know the point of your question and —

Abe Fortas:

That’s certainly what I was trying to (Voice Overlap).

Malcolm Y. Marshall:

Alright sir.

We had understood that there were three issues in this case and I’m really genuinely baffled by Mr. Marquis’ statement of the issues.

He did not seem to me to state an issue on the merits.

We have felt that the three issues we’re standing to sue the substantive question on the merits and administrative discretion.

What effect is to give to the so-called termination by the TVA Board?

Particularly in this case, administrative discretion cannot be considered apart from the facts.

So I would propose to discuss the facts and the substantive question on the merits first.

That question is, are Tazewell and New Tazewell to which electric service admittedly is being supplied by KU on July 1, 1957 outside the area for which TVA or its distributors were the primary source of power supply on that date.

I would emphasize that there is no dispute in any basic operative fact in the case.

For example, KU on the statutory date supply, 95% of the customers sold 95% of the power consumed in the towns.

Powell Valley in contrast had a few customers in the eastern edge of the towns.Powell Valley’s lines in the rural area had extended in to the eastern edge.

This map which is Exhibit B shows customers not as of the statutory date but as of April 1964.

There is another map, Exhibit 25, which shows the customers as of the July 1, 1957 statutory date.

KU was virtually the sole supplier of power in the Tazewells.

I would like to state the substantive question in TVA terms in an indirect discussion of the facts to it.

TVA, general counsel — former general counsel, stated the question as follows to the District Court and this continues to be Mr. Marquis statement of it.

It is the periphery of the area, the TVA area that is not defined.

That is really the job to determine where the periphery is.

Malcolm Y. Marshall:

Does it go across the straight line or does it dip down into to Tennessee.

Now Mr. Marquis discussed with you some exceptions to the basic primary area section of the statute.

We discussed them in our brief, we differ with them, with TVA.

I’m not going to discuss them this morning because of time limitations and because —

Byron R. White:

I would just like to aske you a question on that respect?

Let’s assume that KU had no transmission line running into Tazewell but had a plant there, generating —

Malcolm Y. Marshall:

Generating plant.

Byron R. White:

— and that that’s — and here was just a — here was a place where they had a generating plants and supplied an area inside — with inside the general area thereby served by TVA.

I suppose that the exception would — the exception for islands or whatever you want to call it would mean that TVA could sup — could compete with you in those — in that area?

Malcolm Y. Marshall:

Does your assumption include customers KU had a generating plant and served customers at a defined area?

Byron R. White:

Yes.

Malcolm Y. Marshall:

We — that is where we differ with TVA.

If that situation existed where we were completely surrounded by TVA service in island well within that territory, it’s our interpretation of the Act.

I think it supported the legislative history.

We so urge in our brief that TVA could not take that service area.

That’s the point of difference.

Byron R. White:

Well does — and the — and so it is — if you would say the same — that would be no difference from this situation where you have a line running in from outside.

Malcolm Y. Marshall:

I’m going to come to that line matter because that is not the situation presented by this case if Your Honor please.

I would like to go back to emphasize that TVA does not claim that this is the island situation.

All we differ on what the result would be if it were.

TVA says in its own statement of the question — of the periphery dips down —

Byron R. White:

I think I got it.

Malcolm Y. Marshall:

— and TVA — if TVA is wrong in that position, if the Tazewells and New Tazewells are not thus within TVA’s primary area defined by that dipping periphery, then TVA would concede that it cannot take the Tazewells.

So that’s why — I’m not going to get in the legislative history and the difference, I’m going to discuss where the periphery goes because if we’re correct in that and the Circuit Court so held in TVA by its own statement of the law loses on the merits.

TVA would have you believe that the Tazewells are these islands.

If they’re connected in our service area only by the transmission line which extends up into Kentucky, that is not the case.

I want to talk about several towns in Tennessee, the Tennessee state line and the Tazewells.

And you can only consider those matters in relation to each other by reference to a map.

This map that I have is the map which was attached to the Sixth Circuit’s opinion.

It’s a so-called TVA DeMerit Map.

Malcolm Y. Marshall:

It’s found in your record at page 771.

It is the KU area is shaded here to make it more apparent.

This map was made not by KU but by TVA in 1952.

William J. Brennan, Jr.:

As Exhibit 36?

Byron R. White:

Yes sir.

Mr. Marquis said that the record is not clear as to its purpose.

The map was sent to us with a letter from TVA which I think clarifies any question as to its purpose.

The letter says, “I am attaching that made up of our LC 7000 series of distribution maps, showing the areas now served by La Follette Electric Department of TVA distributor, Powell Valley, and other TVA distributor and KU where in the Cumberland Gap Tazewell, section of Tennessee.

Now if you would refer to this map, you would see that the Kentucky-Tennessee state line is near the top of the map.

It comes from a point on the west until it intersects KU’s cart of service area then up to the point I’m indicating which is the point where Virginia, Kentucky and Tennessee converge.

Then the Virginia-Tennessee state line passes on of to their right or the east.

Abe Fortas:

What is that cart of service, what do you mean by that?

Malcolm Y. Marshall:

May I answer that?

I’m going to answer it in detail.

Abe Fortas:

Is — but —

Malcolm Y. Marshall:

I think that’s —

Abe Fortas:

(Inaudible)

Malcolm Y. Marshall:

— exactly where I’m headed.

Abe Fortas:

Yes.

Malcolm Y. Marshall:

In Kentucky, just north of the Tennessee state line, Kentucky Utilities has the only service there.

TVA and its distributors have none.

There is a Kentucky town of Middlesborough which is almost on the state line.

Coming on down in the Northern Tennessee, you find the Tennessee towns.

Now, all of these are Tennessee communities.

Cumberland Gap, Harrogate, off to the west, (Inaudible) up at the eastern corner Shawanee, five miles down south of Cumberland Gap, Arthur.

Kentucky Utilities is the only utility which has any facilities, customers or service in these towns and in all of the area between them.

TVA and its distributors do not have any facilities, customers or service in the area I’ve described.

In this corridor —

Abe Fortas:

What area is not exactly — make a lawful decision?

It’s not like the area between Boston and New York or New York (Voice Overlap) —

Malcolm Y. Marshall:

Something different, if you’ve ever driven through this part of the mountains down there —

Abe Fortas:

(Inaudible)

Malcolm Y. Marshall:

— it’s quite a bit different.

Now in this corridor which they would again have you believe as a transmission line, KU has a 69,000 volt major transmission line, a substation, 100 miles of 12,000 volt distribution lines which is shown off here in red and all of the other secondary line, services and other facilities which are not shown on here to serve about 2000 customers in that county.

On July 1, 1957, KU supplied service in the corridor outside of Tazewell and New Tazewell to 1278 customers.

When the litigation began, Powell Valley’s manager undertook to make a map for using that litigation on which you would show individual KU customers.

He wrote a letter to TVA and said, “I cannot do it because of the density on KU’s system.”

This corridor is not empty.

It is not a transmission line.

If you would refer to Map Exhibit 37 at record 772 as well as this map, Exhibit 38, you would see that KU’s facilities fill and served all parts of this corridor.

The Tazewells are not islands.

They are not isolated from the rest of our service area.

They are an integral part of that service area and the service area as shown on this map continues on up into and as a part of our contiguous service area up in Kentucky.

On the map, you would see U.S. Highway 25E running from Harrogate down to the Tazewells.

Tazewell on the map is near the hill of the boot and New Tazewell is further down to something I suppose would be the instep.

In addition to this matter, the TVA DeMerit Map which they criticize was having been made in 1952.

There are in this record 10 other maps.

They are Exhibits 26 through 35.

Each one of the 10 maps was made by TVA, made published and distributed by it, not by Kentucky Utilities Company.

These maps, the 10 others are dated variously in 1956, a year before the significant date in the statute and then in each of the year successively through 1963.

Four of these 10 other TVA maps were made after this Act became effective in 1959.

They were thus made at a time when everyone knew the significance of putting a service area boundary on a map.

Every one of these 10 maps —

Abe Fortas:

Well, don’t forget about my corridor — don’t forget about my corridor question and this map is dated, am I wrong?

November 30, 1944?

Malcolm Y. Marshall:

No sir.

This — or the corridor was put on here in 1952, the base map —

Abe Fortas:

What’s that date, the November 30, 1944?

Malcolm Y. Marshall:

Are you looking at Exhibit 36 sir?

Abe Fortas:

Yes.

Malcolm Y. Marshall:

That — that’s the time the base map was made.

The TVA engineer who drew this, Mr. DeMerit used that base map and then he drew this corridor on here in 19 —

Abe Fortas:

Well, however, it says general revision.

Is your map say — general revision on it at the bottom?

Malcolm Y. Marshall:

Yes, I — I can’t.

Oh yes, I see down there.

Abe Fortas:

(Inaudible) revision says some date in 1945.

Malcolm Y. Marshall:

Yes sir.

Abe Fortas:

This was revised 1945, what evidence is there in the record that something happened later.

Malcolm Y. Marshall:

The evidence says the letter from Mr. DeMerit, dated in 1952 in which he indicates that he used a base map.

It was dated 1945.

This base map was not drawn to show the corridor.

He used that map in 1952 and sent the map with a letter which says I’m attaching a map made up of our LC 7000 series of distribution maps.

Abe Fortas:

I don’t know what that is.

Hugo L. Black:

Where is the letter?

Malcolm Y. Marshall:

The letter is part of the Exhibit 36.

The letter is on page 769 of the record.

Abe Fortas:

And now, tell me what this corridor means if anything which you referred to as a corridor?

Malcolm Y. Marshall:

Everyone of the —

Abe Fortas:

He doesn’t refer to this corridor, does he?

Malcolm Y. Marshall:

No, he refers to it as an area now served by KU.

It means —

Abe Fortas:

You’re telling us that when this is seen by Kentucky Utilities, all these lines are on this map.

Malcolm Y. Marshall:

Everything that’s on this map except the dark shading was there.

As you look at the map in your record, everything was on there as you see it when we received it.

Abe Fortas:

And you also — what evidence do you have that this was made up subsequent to 1945 except to this letter?

Malcolm Y. Marshall:

Nothing except to the letter.

Mr. DeMerit did not testify.

Abe Fortas:

And anything in the letter would indicate when a drawing was made on the map and there’s no data there — no occasion of their revision at ‘45, is it?

Malcolm Y. Marshall:

No sir.

Abe Fortas:

Alright, now explain the corridor to me if you will, please.

Malcolm Y. Marshall:

I’m not sure I understand exactly what you mean by explain the corridor.

Do you want me to tell you what —

Abe Fortas:

But you’re referring to this as a corridor.

I don’t know what a corridor is, I see.

Malcolm Y. Marshall:

It —

Abe Fortas:

Your reliance here that — going down, scoop down a southeasterly direction on this map but that doesn’t indicate — I don’t know why it’s called a corridor because there’s any — no allocation of that territory to you so far as I know by law, is there?

Malcolm Y. Marshall:

No, not by law but I will come to facts that indicate it was our recognized territory, recognized by the defendants themselves.

I think your question would be answered or — each of these 10 other maps that I’ve referred to made by TVA dated 1956 through 1963 reports to show the service area of TVA and its distributors, each indicates as an exception to the TVA service area, the same corridor.

Each of these maps shows the TVA periphery to dip down in the manner shown on this DeMerit Map and to exclude that geographic area from the TVA service area as defined on these maps.

There are other acknowledgments by the defendants that this was our service area.

In 1952 and in 1958, KU and Powell Valley, the TVA distributor entered into territorial agreement so referred to by the defendants throughout their correspondents, supplementing and implementing the 1958 agreement and I hope Mr. Justice Fortas that this may answer your question.

In 1960, representative — a representative of Powell Valley, the TVA distributor and a representative of KU went on the ground.They took a very detailed coast and geodetic survey map which is in evidence as Exhibit 14 and they drew of the map is entitled.

The map showing agreed territorial boundary lines between KU and Powell Valley in Tennessee.

The legends on the maps are shaded area that designates KU territory.

This map was made —

Hugo L. Black:

Where is that map?

What page is that map?

Malcolm Y. Marshall:

It’s (Inaudible) on Exhibit 14

Hugo L. Black:

You said, it represents the boundary.

Malcolm Y. Marshall:

It’s Exhibit 14 sir.

I do not know whether the entire map was reprinted, parts of it I think.

This is the so-called Roe-Osborn map because those are the names of the two men who made it.

The portion around the Tazewells is sheet 4(b) of Exhibit 14.

The map however —

Byron R. White:

Is that — say what page of the —

Malcolm Y. Marshall:

It’s on this large map volume.

On the Roe-Osborn Map — on this coast and geodetic survey map, these two men went out and marked in minute detail the boundaries.

This map is so detailed that it shows such things as cemeteries, knobs, ponds, ridges, roads, schools, churches, every individual features.

The Roe-Osborn Map shows the boundary between KU and Powell Valley to start up in this area much like the TVA DeMerit map that then continued down to this point where there is a single line crossing which I’ll mention again in a moment.

Malcolm Y. Marshall:

It then includes within the KU territory, Tazewell and New Tazewell and continues up to a point about here midway up.

Now the boundary on the Roe-Osborn Map stops at that point because the area above it on the northwest is served La Follette rather than Powell Valley.

KU and La Follette had no controversy so the boundary was not defined here.

There’s a waiving cross patched line just to get somebody to the corridor.

The boundary is defined all down the east around the Tazewell and the New Tazewell from about half way up by this Roe-Osborn map.

Abe Fortas:

But what do — please tell me what significance you place upon these so-called divisions of territory?

Malcolm Y. Marshall:

These divisions of territory constitutes acknowledgments by the defendants themselves that this was territory supplied by KU on the effective date of the Act —

Abe Fortas:

So —

Malcolm Y. Marshall:

— and therefore was not supplied by TVA.

It cannot be considered within TVA’s —

Abe Fortas:

Are you saying that the Powell Valley acknowledgements if such there were are binding on TVA?

Malcolm Y. Marshall:

I’m not saying they’re binding in a contractual sense, I’m saying they constitute evidence as to where the services were.

They constitute acknowledgements.

TVA itself has no service area.

It does not supply customers except for a few large industrial loads.

Each area is the area of its distributors.

Abe Fortas:

I thought Mr. Marquis told us that in the Tazewell and New Tazewell areas as — power were supplied by two TVA distributors, Powell Valley and what’s the other one?

Malcolm Y. Marshall:

La Follette.

Abe Fortas:

Where — and what about La Follette?

Is La Follette acknowledged your boundaries?

Malcolm Y. Marshall:

The map was drawn to show only the boundary between KU and Powell Valley.

It was not located between La Follette.

This is a mountainous area, the La Follette facilities run to a point about here.

There has never been any controversy with La Follette.

Abe Fortas:

Well, I don’t know about controversy between La Follette.

That — doesn’t La Follette supply some customers in New Tazewell or Tazewell?

Malcolm Y. Marshall:

I think not.

I think it services in the northwest part of the county.

I don’t think it supplies any in the immediate area of the Tazewells.

Byron R. White:

Well, on the date of the Act, do you say that other than that, you had up there was the showing the corridor — with your so-called corridor.

Byron R. White:

You say on the date the Act went into effect, as — those were the boundaries of TVA territory and between TVA and non-TVA territory, is that it?

Malcolm Y. Marshall:

This map right here?

Byron R. White:

Yes.

Malcolm Y. Marshall:

Was this the map that you referred to?

Byron R. White:

Yes.

Malcolm Y. Marshall:

Those are substantially the boundaries.

This map is not drawn in the detail of the Roe-Osborn Map.

Byron R. White:

Yes.

Well, the —

Malcolm Y. Marshall:

So —

Byron R. White:

The outer boundaries of that shaded area are — represent the exterior limits of TVA territory on the date of the Act.

Is that —

Malcolm Y. Marshall:

Yes.

Byron R. White:

Is that your — well, the five-mile —

Malcolm Y. Marshall:

Are you saying the outer boundaries of this shaded —

Byron R. White:

Yes.

Malcolm Y. Marshall:

— TVA’s facilities run to the border —

Byron R. White:

That’s right.

Malcolm Y. Marshall:

— of that shaded area and did not come in with one exception.

Byron R. White:

I understand.

I understand that.

I understand, that’s what — you do say then that TVA territory ended at those gray — at those — at that shaded area?

Malcolm Y. Marshall:

Yes, they did not serve in that area.

Byron R. White:

Well, but it would have the authority over the Act to go ahead and serve anywhere in that shaded area except as you say in the Tazewell.

Malcolm Y. Marshall:

Except as I say what sir?

Byron R. White:

Except in the Tazewell?

Malcolm Y. Marshall:

No.

No sir.

Byron R. White:

Well, what about the five-mile of the periphery?

Malcolm Y. Marshall:

The TVA does not claim a right to take any territory in this case by reason of the five-mile periphery provision because that says that they cannot take any power — cannot take any part of a municipality serve —

Byron R. White:

Oh, I know but that isn’t one of my question —

Malcolm Y. Marshall:

You’re — and here outside the Tazewell?

Byron R. White:

I believe yes.

Malcolm Y. Marshall:

Alright.

Now, that’s not involved in this case but —

Byron R. White:

I know but —

Malcolm Y. Marshall:

But the answer to it is this.

The five-mile periphery does not say to TVA, “You can take anything you want around the five miles without a basis.”

The five-mile periphery was because there were some towns near the border inside TVA and it was pointed out to Congress that those towns might expand outside the periphery.

So the five-mile says, you can go for up to five miles as necessary.

Byron R. White:

I think it would be a contrary to the Act if one of the customers you are now serving in that corridor outside of Tazewell ask the TVA to supply them power and the TVA build a line into — or one of their distributors build a line into them and supply them.

Malcolm Y. Marshall:

Yes, I think it would be contrary to the Act because they can only do that Mr. Justice White.

They can only do it if necessary to care for growth of their distributors within the primary area.

That’s the statutory language.

It does not say you can expand anywhere you want to for five miles outside of a municipality.

It says as necessary to care for the growth of one of your distributors in your primary area.

Here, TVA — if Powell Valley had a facility outside this corridor and simply wanted to go take a customer, that would not be necessary to care for the growth of Powell Valley.

If there were a city outside that corridor that grew over the line, annexed territory, yes, that’s the legislative history of what that section was designed to correct.

Hugo L. Black:

I haven’t got the (Inaudible).

May I ask you one or two (Inaudible)?

What do you claim is a documented or is that of — which provides for the division of territory between you and the TVA?

Malcolm Y. Marshall:

The Roe-Osborn map made jointly between KU and TVA as distributor of Powell Valley delineates the boundary.

There is no contract.

There were two letter —

Hugo L. Black:

Delineates the boundaries?

Malcolm Y. Marshall:

Between KU and Powell Valley.

Hugo L. Black:

Well, that should be a pretty clear, easily understood thing if that’s what the — TVA agreed that that map represents the boundaries?

Malcolm Y. Marshall:

TVA did not agree to the making of the map.

I do not know that it knew of the making with the map.

It was made by TVA’s distributor, Powell Valley that had the service and KU.

Hugo L. Black:

Alright.

Malcolm Y. Marshall:

I don’t think it disputes the fact set out in the map but it did not agree in the sense of contractual — or didn’t participate in the making of the map.

Hugo L. Black:

Wouldn’t the — if — what does the TVA say — what do they say, we should look at to determine where its boundary results.

Malcolm Y. Marshall:

That’s a difficult question for me to answer because part of our position in this lawsuit is that they offer you no standard.

They say that if — that their Board can fix the periphery, they say first that the job is to draw the periphery and then they say that the Board can draw the periphery as we say without relation to fact.

I’m going to come to that in —

Hugo L. Black:

It’s a very strange method for business to be done.

It seems to me to present us a case here where it said that the two owned territory, if neither one can point to anything, which will show what that division of territory is.

Malcolm Y. Marshall:

Mr. Justice Black, I think we have pointed in this record the facts which showed very sharply what the division is.

If you look at the —

Hugo L. Black:

Well, do we have to determine that from circumstantial evidence, the map?

Malcolm Y. Marshall:

It is a matter of fact.

I do not know any other word to establish a utility’s boundary other than in relation to where it has facilities —

Hugo L. Black:

They never agreed on —

Malcolm Y. Marshall:

— in customers.

Hugo L. Black:

They’ve never agreed on, is that right?

Malcolm Y. Marshall:

KU and TVA?

Hugo L. Black:

Yes.

Malcolm Y. Marshall:

As far as I know, that’s right.

Hugo L. Black:

Well, have any representative of TVA have agreed to this KU?

Malcolm Y. Marshall:

On the boundary in this particular —

Hugo L. Black:

That’s right.

Malcolm Y. Marshall:

Other than as Powell Valley is a representative of TVA, I would have to say no.

Hugo L. Black:

Well, did you all — did either one of you offer any evidence to the judge to show where its division was?

Malcolm Y. Marshall:

Yes sir.

There are —

Hugo L. Black:

What kind of evidence?

Malcolm Y. Marshall:

Evidence as to the location of facilities, customers and service on the date of the Act and that’s the only way I know to fix the —

Hugo L. Black:

Is it your claim that the map that (Inaudible) “the division which existed on the day the Act was passed”.

Malcolm Y. Marshall:

You just say, — is it my claiming that the Act —

Hugo L. Black:

Does the Act, the day it was found (Inaudible) the division —

Malcolm Y. Marshall:

Oh, I missed that.

Hugo L. Black:

— that existed at that time?

Malcolm Y. Marshall:

Yes, precisely.

Hugo L. Black:

Do they agree to that?

Malcolm Y. Marshall:

I think so.

I have to let them — except as I say they have discretion to put it almost anywhere they want to without relation to facts as to facilities and customers which discretion we do not find anywhere in the Act.

William J. Brennan, Jr.:

Is there any — is there a finding in the trial court — the trial court can’t hold against you, do they?

Malcolm Y. Marshall:

Yes sir.

William J. Brennan, Jr.:

Was there a fact finding under this thing that Mr. Justice Black was asking you?

Malcolm Y. Marshall:

As to the boundary, I would say no.

The trial court brought a lengthy opinion in which he recited all of the physical facts pretty accurately and again may I emphasize —

(Inaudible)

Malcolm Y. Marshall:

That’s alright.

May I again, I emphasize to both of you that there is no controversy as to the physical facts as to where we have facilities, where they had facilities, where we have customers and they have customers.

There is no controversy as to that character of fact.

After the trial court accurately reciting those facts as to service, he then in about three paragraphs expressed the conclusion that Congress did not intend to exclude the Tazewells.

Hugo L. Black:

To do what?

Malcolm Y. Marshall:

Did not intend to exclude the Tazewells.

There’s difference between —

Hugo L. Black:

Is that not a finding of fact or —

Malcolm Y. Marshall:

As to con —

Hugo L. Black:

Does this depend on what Congress intended in that Act?

In your judgment, does this decision in this case depend on what Congress intended to do in that Act with reference to the decision?

Malcolm Y. Marshall:

Broadly, yes, but as to the Tazewells, Congress had no intention.

You can read the legislative history.

The Tazewells are not mentioned.

Hugo L. Black:

How can we decide this without a finding of facts by the trial judge?

You’ve got to — (Inaudible)

Malcolm Y. Marshall:

Mr. Justice, we —

Hugo L. Black:

— it differs between this — to the facts?

Malcolm Y. Marshall:

No.

Not as to the facts.

We completely agree where we had service and where we had facilities.

TVA does not disagree with us on that character of fact.

Hugo L. Black:

But that doesn’t determine where the boundary is.

Malcolm Y. Marshall:

We say that it does and perhaps, I should come now to a statement of the basic issue between them.

That’s where we’re headed.

Hugo L. Black:

Now, (Inaudible) if it was.

I have — (Inaudible).

Malcolm Y. Marshall:

Alright sir.

It is KU’s position that when you define the primary service area of TVA or any other utility you can only do so in relation to facilities and customers on whatever the given date is.

That is done if that standard is accepted, there’s no question in this lawsuit.

Hugo L. Black:

That would be accepting the standard that what the service that one of them has today.

It has somehow surrendered its right to expand it —

Malcolm Y. Marshall:

That’s the —

Hugo L. Black:

And it’s settled on that alternative.

Malcolm Y. Marshall:

That’s exactly what the 1959 Act does.

It says, there shall not be anymore extension — expansion where you have a service area today, that is it.

That’s the purpose of the 1959 —

Hugo L. Black:

Where is that language published in one of the briefs — of the Act?

Malcolm Y. Marshall:

The Act itself?

Hugo L. Black:

It — as the language to which you refer.

Malcolm Y. Marshall:

Find the page?

I can quote it for you.

It says, “TVA, substituting TVA for the corporation shall make no contracts for the sale or delivery of power which would have the effect of making TVA or its distributors a source of power supply outside the area, outside the area for —

Hugo L. Black:

Outside of what area?

Malcolm Y. Marshall:

The area for which TVA or its distributors were the primary source of power supply on July 1, 1957.

That’s the statutory language.

Now TVA —

Abe Fortas:

In such additional area, would you go again?

Malcolm Y. Marshall:

And such additional area as maybe necessary, Your Honor —

Abe Fortas:

Oh, wait a minute.

Malcolm Y. Marshall:

— are on the first (Voice Overlap) —

Abe Fortas:

Just go ahead with the exact language in reference to Mr. Justice White’s question as well as that of Mr. Justice Black.

Malcolm Y. Marshall:

(Inaudible)

Hugo L. Black:

Where is that appendix?

Abe Fortas:

It’s in the Government’s brief —

Malcolm Y. Marshall:

Alright.

William J. Brennan, Jr.:

In the Government‘s brief —

Abe Fortas:

Page 43 —

Malcolm Y. Marshall:

Page 43 of the Government’s — and such additional area extending not more than five miles around the periphery of such area and here is the language I was basing my answer to Mr. Justice White on, as maybe necessary to care for the growth of the corporation and its distributors within said primary area.

Abe Fortas:

Yes.

I perhaps misunderstood you but the statute does say to care for the growth of TVA and its distributors within the said area, is that right?

Malcolm Y. Marshall:

Yes sir.

Now, I would point out to you that that five mile provision is also subject to itself to an exception that it cannot include any part of any area, any municipality served by another source and that would be the Tazewells.

So TVA does not base any claim.

It disclaims any right under this provision we’re just now reading.

William J. Brennan, Jr.:

May I ask you Mr. Marshall at page 321, (Inaudible) said this.

The history of the 1959 Act supports the finding of the TVA Board, it was the finding of the TVA Board that Tazewell and New Tazewell where within the primary area served by TVA and its supplier as of July 1, 1957.

We do not believe that Congress of the 1959 Act can be construed to two Tazewells and the primary service centers served by TVA and its suppliers as of the July 1, 1957.

Is there anything in the way of a finding on this thing whether you discussed, whether the judge (Inaudible) or if he’s just saying the ‘59 Act authorize the Board to make this determination inclined with the determination by the Board to (Inaudible).

Malcolm Y. Marshall:

I would say not the former.

The Sixth Circuit indicated some doubt as to whether Judge Taylor had given particular weight to the TVA Board determination.

William J. Brennan, Jr.:

Well, I know (Inaudible) the finding of the Board was made in good faith and supported by substantial evidence.

That’s rather charging this (Inaudible) in the administrative agency determination plainly reviewed by the courts?

Malcolm Y. Marshall:

Yes sir.

All through the trial of this action however, Judge Taylor indicated clearly that he was deciding this case de novo.

TVA recognized that when it went to the Sixth Circuit, TVA and its brief in the Sixth Circuit stated the questions whether the District Court answered yes, we answer no type.

But if the statement in TVA’s brief in the Sixth Circuit was, is the District Court after this Board determination to try this matter de novo and they said, the District Court answered the matter, yes, we think no, we should not try de novo.

Malcolm Y. Marshall:

Now the Sixth Circuit indicated as I say, some doubt as to what Judge Taylor had done, what he meant by the language you’ve quoted.

William J. Brennan, Jr.:

What do you think of that?

Malcolm Y. Marshall:

I think Judge Taylor — well, I know Judge Taylor made his independent determination because he indicated very clearly earlier in his opinion as well as throughout the trial that he was going to decide this case de novo and he did not have to pay attention to the finding by the TVA Board.

And I think he supported his decision by reference to the determination of the TVA Board.

William J. Brennan, Jr.:

But his determination was that whatever power regions, service areas or whatever they may be, his determination was that the Tazewells found within the area of TVA, is that it?

Malcolm Y. Marshall:

His conclusion was that he did not make a factual determination that they fail within any periphery.

His conclusion was, yes, that they were in the primary area.

And the Circuit Court, the Sixth Circuit said, if that is to be construed as a finding of fact, it was clearly erroneous and such it is we submit to you.

I would like to get back to Mr. Justice Black because there is a very key issue here that would not been able to develop.

What is TVA’s position as to how its primary area is to be determined?

TVA says that even where there is a sharp, well-defined boundary as there is here and I would emphasize to Mr. Justice Fortas what we mean by the corridor.

Powell Valley’s lines come to the boundary, they do not come in.

KU’s facilities are inside, they come to the boundary, they do not go out.

That has been the historical development and that is the factual situation now.

That is the corridor.

Now TVA says, even where there is such a sharp boundary with a private utility on one side and TVA on the other side of this boundary, TVA can relate some undefined part of its service area to a part of the private utilities service area and then on the basis that the part of TVA’s area is larger than the selected part of the private utilities defined area, TVA can take this part.Now I know that’s a long sentence.

Let me illustrate it in this way.

If you would consider for a moment the entire TVA service area of some 80,000 square miles, it’s defined let’s say.

Then consider above it, KU’s entire service area in which KU serves and TVA does not.

Now, take the two and consider them as one entirety.

TVA then says based on this word primary.

In this totality, we’re primary because we’re bigger.

Hugo L. Black:

Cause we are what?

Malcolm Y. Marshall:

Bigger and we don’t deny that TVA is bigger than we are.

And if you take their principle, they would say that they could take our entire service area because in this total, they are primary.

Now that’s all they’ve done here.

Hugo L. Black:

The only dispute here was referenced to Tazewells.

Malcolm Y. Marshall:

You say, is there only dispute?

Hugo L. Black:

Is that their only dispute you have involved in this case?

Malcolm Y. Marshall:

Tazewell and New Tazewell, yes sir.

Hugo L. Black:

That’s all you have.

Malcolm Y. Marshall:

That’s all we have legally.

Hugo L. Black:

That depends that no judgment as to who was giving the service to Tazewell and New Tazewell in July the 1st, 19 — whatever that date is?

Malcolm Y. Marshall:

I would not answer quite that limited.

It depends in part on who is giving service there but I will accept TVA’s statement of the problem as one to define its periphery and then say to you that on the facts, TVA’s —

Hugo L. Black:

What do periphery has to do with Tazewell?

Malcolm Y. Marshall:

Its TVA’s entire case sir.

They say, the periphery of their area is to be drawn across the Kentucky-Tennessee —

Hugo L. Black:

Who is serving Tazewell and New Tazewell on the crucial date mentioned in that Act?

Malcolm Y. Marshall:

Kentucky Utilities Company?

Hugo L. Black:

Anybody else serving it?

Malcolm Y. Marshall:

5% Powell Valley, 95% KU.

Hugo L. Black:

That’s the way it was.

Malcolm Y. Marshall:

Yes sir.

Hugo L. Black:

So neither one of them had it exclusively at that time.

Malcolm Y. Marshall:

Not absolutely.

No sir.

Now TVA —

Abe Fortas:

Now the real — I just want to go back to your statement that you included that TVA could include –TVA area and Kentucky Utility area and say that TVA is bigger in that whole area so that whole area is a primary area of TVA.

That is not my understanding of their position and they can help me on it.

As I understand it, what TVA is saying is that there is this area marked out by the pink lines on the map there in which TVA is a major supplier that within that area in the case at bar there is the sort of packet of Tazewell and New Tazewell which is served by Kentucky Utilities.

If that pocket, being within the total primary area that TVA may supply power to its distributor that may supply Tazewell consistently with the statute.

And it is my statement of that position wrong as you understand.

Malcolm Y. Marshall:

No, I think that’s their position and it leads you to this analysis of how they get there.

They say it is a pocket.

Factually, it is not a pocket.

Their periphery has grown on their own 10 maps made before this litigation started, there’s not — these are not our map (Inaudible).

Their periphery does not cut across the Tennessee state line as they now do it.

Their periphery —

Abe Fortas:

I’m very leery of that card as was drawn in there and because —

Malcolm Y. Marshall:

I didn’t draw it.

TVA drew it, excuse me.

Abe Fortas:

No, TVA didn’t draw it.

TVA drew that but I do not know what it was for but it certainly doesn’t represent anything realistic in terms of the utility industry that I know of.

And I’m sure you’re not going to suggest that there was a valid binding division of territory between Powell Valley and Kentucky Utilities.

I’m sure that Kentucky Utilities wouldn’t engage in any said practice.

Malcolm Y. Marshall:

You’re suggesting an antitrust problem sir?

Abe Fortas:

No, I’m suggesting whatever that suggests to your mind.

But I don’t think you to suggest —

Malcolm Y. Marshall:

I don’t.

Abe Fortas:

— you’re taking that position but is there anything in the legislative history that indicates one way or the other whether the Congress intended that this statute would mean that pockets of private utility operation within the general area of TVA operation should be reserved to the private — to private utilities and free from competition by TVA and its distributors.

Malcolm Y. Marshall:

Yes sir.

There were —

Abe Fortas:

And that’s a very plain question.

Malcolm Y. Marshall:

Yes sir.

And I’ll tell you what is — I will first preface my answer by saying, we don’t have that factual situation here but here is the answer to your question.

This Act accepts from TVA’s prohibition against service, 12 named municipalities and says that despite the prohibition, you can serve this 12.

Eight of the 12 are equally within and completely surrounded by TVA service.

There would be absolutely no reason for this provision that says to TVA, you can go serve this eight surrounded by your service area if they could do it anyway.

The TVA says, this just came about by accident.

That’s not supported by the legislative history.

These communities were added just before the bill was finally adopted in its last stages in the Senate —

Abe Fortas:

Alright, no, I think we’re getting something that accurate that you got to grip on because your position is then, as I understand it, that what ex — with the exception of the specifically named communities, Congress intended that within the general operating area of the TVA and its pipeline that where there is a pocket served by a private utility, 95% or 100%, that that pocket will continue so long as this legislation is on the books, break from competition by TVA and its distributors.

Malcolm Y. Marshall:

Yes sir, and if that were not so, there are some 80,000 private utility customers that TVA could take.

That was all pointed out in the legislative history.

But once again, the basic position of TVA here is that its periphery and that’s not my term, its TVAs, that its periphery must be drawn across the Kentucky-Tennessee state line.

We say factually that cannot be a part of TVA’s periphery.

When KU and only KU have facilities, customers and service on both sides of that periphery, the periphery must get down to exclude KU service area as it does on every one of their maps.

And I’m completely neglecting administrative discretion.

So far as administrative discretion is concerned, I think I’ll ignore the cases and simply characterize what determination by the TVA Board we are talking about.

Malcolm Y. Marshall:

Mr. Marquis tells you and they suggest in their briefs that we’re talking about a determination made in February 1960.

At that time, a meeting was held among representatives of the Kentucky town of Middlesborough, one man from Tazewell, the TVA Board and other representatives of TVA.

The principal subject of the meeting was Middlesborough.

At that time, the TVA Board made no determination or whatever.

It did not even make a statement.

Mr. McCarthy, TVA’s former general counsel was present at the meeting.

And he told the District Court that the Tazewell man was told, “In the presence of the TVA Board” that there was no legal inhibition.

The TVA Board didn’t tell the Tazewell man anything.

It didn’t make a determination.

That statement is at the Record 576.

There is no minute of the February 1960 action of the TVA Board because it didn’t take any.

There was a memorandum kept by its director of power marketing, that’s the only memorandum of this meeting as far as we know it.

He also said that TVA representatives, not the TVA Board told Tazewell.

Now in August 1961, there was a subsequent meeting in which — with TVA at which their subject was discussed.

TVA was represented by responsible officials and including a lawyer from its legal department and at that meeting, there were three significant statements made in 1961.

First, due to present territorial limitations in the TVA Act, it is not now believed that TVA power could be furnished to Cumberland Gap.

Now they tell you the periphery should be drawn so that they can serve Cumberland Gap.

1961, they didn’t think so and the Act is not been changed.

Second, further study and consideration will be necessary for TVA to decide whether or not they can supply power in Tazewell and New Tazewell.

If the TVA Board have resolved that question in 1960, no further study would have been necessary in 1961.

Any consideration of administrative discretion in this case has to be confined to action which the TVA Board did take on August 26, 1964.

The defendant started taking our customers in October 1963.

The lawsuit was filed November 1963.

On August 12, 1964, five weeks before trial of the action in the District Court, we took the deposition of Mr. Wesnar (ph), TVA’s Manager of Power.

In that deposition, Mr. Wesnar (ph) admitted that he did not even know where the Cumberland Gap was in Claiborne County, Tennessee.

More significantly, Mr. Wesnar (ph) admitted that TVA had not undertaken to locate its boundary as related to Claiborne County and then he did not even know how you would go about fixing that boundary.

That testimony in Mr. Wesnar (ph) deposition on August 12, 1964, undoubtedly suggested two things to those in TVA in charge of the conduct of this lawsuit.

First, it suggested a weakness in their position in the lawsuit.

They have determined that they could take the Tazewells but they have not fixed the periphery which they now say is all important.

Second, it undoubtedly occurred to them that an administrative discretion defense could be developed because in the two weeks following, Mr. Wesnar’s (ph) deposition, they prepared two memoranda for the TVA Board.

Malcolm Y. Marshall:

And on August 26, 1964, TVA made it only determine — TVA Board made the only determination it ever made in this matter.

That determination was made nine and one half months after the suit have been filed.

It was made two weeks after Mr. Wesnar’s (ph) deposition and it was made three and one half weeks before trial of the action in the District Court.

The Sixth Circuit course — Court twice accurately characterized this determination as having been “adopted” to sustain its position in this lawsuit and second, as made for the purpose and on the eve of trial and it unquestionably was.

TVA says that in this case, so much expertise, knowledge and information, is necessary that its Board is the only one who could make this determination fixing its periphery.

As I say, the Board determination was made nine and a half months after the lawsuit had been filed.

Interrogatories, depositions had been exchanged and taken.

All of the map exhibits have been exchanged.

A wealth of information including the more than hundred exhibits in this file had been developed and it was known to everybody.

The TVA Board was given a very minute fraction of that information although it was readily available and it made its determination.

Mr. Wesnar (ph) and TVA’s then general counsel each in their two memoranda acknowledged that there are two areas in the county where KU and only KU has served.

One over here in (Inaudible) in the west part of the county, another one Harrogate, (Inaudible), Cumberland Gap, customer south of the Powell River which is in our corridor crosses it and the Tazewells.

Despite having acknowledged those facts as to service area, TVA’s general counsel, his memorandum includes the following.

The closer question is whether the periphery should be drawn to include all of Claiborne County or should dip down to exclude Mingle Hollow and again to exclude the area in the vicinity of Cumberland Gap, having acknowledged the fact that he then said that this is a matter for the Board to decide.

Well, it isn’t a matter for the Board to decide.

It’s a matter of fact as to where their area was and they went through the motion and made a determination as the Sixth Circuit repeatedly stated contrary to the fact.

Abe Fortas:

Aren’t you going to say something about standing?

Malcolm Y. Marshall:

Yes sir.

(Inaudible)

Alright sir, we had understood that their principal reliance was on administrative discretion rather than standing.On standing to sue and I think the basic premise for all of these is that the 1959 statute was enacted by Congress for the purpose of protecting the private utilities.

This question of standing under this particular statute has been before six federal judges.

The four who heard this case, Judge Henry Brooks in the Western District of Kentucky and Judge Smith in Georgia.

Each of the six has concluded without question, without dissent that standing exists.

Judge Brooks on that matter of purpose of the legislative history of the Act leaves no doubt but that the provision was passed for the protection of private utilities.

The Sixth Circuit said the same thing.

I think rather than what TVA does not really dispute at that point, it’s acknowledged in effect on its brief.

I would come to what I think to be their prin — would you like the citation, sir?

Abe Fortas:

No, no —

Malcolm Y. Marshall:

I’m sorry.

Abe Fortas:

I — they still press the point —

Malcolm Y. Marshall:

They —

Abe Fortas:

(Inaudible)

Malcolm Y. Marshall:

They press the point of standing but not —

Abe Fortas:

Yes.

Malcolm Y. Marshall:

— the underlying matter as to the purpose of the statute.

On page 10 of their current brief, they acknowledge, to be sure a desire to afford some protection to adjoining utilities appears to have been one of the factors.

And then they say, a purpose to protect is not the equivalent of the creation of a private right.

They acknowledge the purpose of the statute.

Now all of the judges have found that as I say all six have found standing.

I think TVA’s basic argument on standing to sue is what we consider to be a definitely superficial argument.

You’re all familiar with the decisions in Alabama Power against Ickes and the other electric utility standing cases where the plaintiffs were really challenging some underlying loan activity.

They were — the plaintiffs in those cases who were challenging the propriety or legality of the actions of the lending officials to make the loans or the funds.

And the courts in those cases said, the plaintiffs as to that matter are simply members of the general public.

They have no standing to question the legality of the action of the REA Administrator making a loan, that character of defense.

Now TVA tries to get under those cases by saying that we’re not here complaining of competition by TVA.

We’re complaining of competition by the cities, by the towns of Tazewell and New Tazewell and even Powell Valley.

Well, there are two ways in which Congress itself entered that defense.

This statute first prohibits contracts which would have the effect of making TVA or its distributors the source of power supply outside this described area.

Second, to give even more certain effect to its intention, Congress prohibited contracts which would have the effect of making TVA or its distributors directly or indirectly a source of power supply outside its area.

We’re not complaining of competition from the towns.

We’re complaining of TVA power in our area.

That is the very thing which is prohibited by the 1959 Act.

The Act was enacted for the very purpose of protecting the nine private utilities around TVA by keeping TVA power out of their area.

The statute was enacted for that purpose, it prohibits that activity.

The activity complained of is itself here unlawful.

The National Bank Cases, the Frost Case, all of these are directly in point.

We are not complaining of what the town is doing, we’re complaining of what TVA is doing.

It’s violating the statute.

It’s violating the expressed prohibition.

Now TVA tells you that it had to act when the Tazewells came to it.

Malcolm Y. Marshall:

That necessitated action on its part.

But anytime, anybody comes to an administrative officer or agency and request that it do a prohibited act or do an act in excess of its authority, obviously, it has to make a decision whether or not to exceed to that request.

And the necessity of making that character of the decision, certainly does not make the decision binding on the courts if in fact it is exceeding its authority, if in fact, it is acting contrary to an expressed prohibition in the statute.

I think in all the standing cases, the most significant question that the Court asked is whether the statute in question was enacted for the purpose of protecting the plaintiff or a small class of which the plaintiff was a party or for the purpose of simply — some broad pronouncement of congressional policy.

If the former situation is concluded to be the fact as to the statute than an individual injured by a violation of the statute has standing to enforce the statutory provision.

As that —

Abe Fortas:

That doesn’t always follow, does it?

Malcolm Y. Marshall:

I would have to answer you this way.

I don’t know any single case in which the courts have held that there is no standing when these things exist and that’s what we have here.

First, we have a charge that the competition complained of is itself unlawful.

Second, the very competition in question not just some remote underlying activity is expressly prohibited by the statute and third, the statute was enacted for the purpose of protecting the plaintiff in litigation against the very act complained of.

Now, I’m — had not found any case where those elements were present where standing was denied.

On standing, TVA makes one other point.

They say that because the statute is silent, it does not give an express right of civil action non-exists.

I think on that, we just simply cite to you this Court’s decision in Stark against Wickard where the Court held that where all of the element of standing exist, the right, the violation, certainly where its — one expressly prohibited by statute.

There’s a right of action to enforce the statutory provision even though the statute is silent.

I would like in the remaining couple of minutes to go back and make plain what I think to be the key matter on the merits which I don’t believe have managed to make claim yet — I think I failed in that.

TVA says that somehow by use of this word primary, it may go — it may draw its periphery out somewhere beyond the outermost limits where its facilities and customers and those of its distributors exist.

It says that it may include within its area, facilities and customers of another utility because of the word primary.

That word primary came in the statute, clearly under the legislative history for this reason where lines of — an adjacent utility and those of TVA distributors in fact interlace in the manner indicated.

It is impossible to draw a boundary at any location without including facilities and customers are one in the service area of the other.

That’s what primary means.

Here, we don’t have that factual situation.

We have a sharp boundary with TVA and its distributors on one side and KU on the other throughout this entire — I’m reluctant to use the word corridor, peninsula of service area.

Where that situation exist, there is nothing in the legislative history or words of the statute which would permit TVA to go beyond the outermost area where it has facilities and customers and relate a part of our area by use of this word primary and take it.

I’m sure that you always hear from every respondent that the Circuit Court decided the case directly and gave it utmost care and attention.

We feel very earnestly that that’s true in this case.

In the Sixth Circuit, the eight other utilities whose service areas like ours adjoin TVA, has joined with us.

They all join with me in this plea that you leave intact this decision which we feel is the only way of giving meaning to the protection, the needed protection which Congress enacted for our benefit.

Robert H. Marquis:

Mr. Chief Justice and may it please the Court.

Earl Warren:

May I ask, Mr. Welch are you going to —

Robert H. Marquis:

I beg your pardon.

James S. Welch:

No Your Honor, Mr. Marquis would (Inaudible).

Earl Warren:

I see.

Very well.

James S. Welch:

I think (Inaudible)

Earl Warren:

Oh, yes, a couple of minutes reserved.

Very well.

Mr. Marquis.

Robert H. Marquis:

Thank you.

Earl Warren:

You may proceed.

Robert H. Marquis:

Mr. Chief Justice, please the Court.

I first want to deal with this question of specific municipalities because there is in the statute 15d an expressed provision relating to them.

And it starts again with the language nothing shall prevent service to certain named municipalities.

Now the way that got into the legislation was this.

Those — most of those were added in the House at a time when it adopted the Benson Amendment with its service area limitation.

When the matter came before the Senate Committee, other municipalities appeared with their Congressman, their Senators and I think just about everybody who asked for such a specific exception got one.

Now, the Senate Committee reported out its version of the bill with those exceptions still there.

And it was logical that they should because there is no assurance of that time what final — what form the bill was going to take.

Should it for example go to conference?

It is logical therefore to preserve those exceptions.

Further, if I understand KU’s brief correctly, it admits that the Senate Committee version of the bill would permit us to exercise the discretion that we have exercised and to serve the Tazewells.

Well, all of those exceptions were included in the bills as were reported out by the Senate Committee.

Hugo L. Black:

What discretion do you have a right to (Inaudible)?

Robert H. Marquis:

I think Your Honor that we have the right to determine the periphery of that area for which we were the primary source of power supply, the chief supplier or the principal supplier.

Hugo L. Black:

But were you the primary source of supplier in Tazewell?

Robert H. Marquis:

No sir but I think we were in Cumberland County as a whole and I think that the Tazewells were islands inside that primary area.

Now with reference to these maps, we did prepare as Mr. Marshall said, a number of maps.

And I think if you look at them, you will see that they are virtually artist’s renderings.

They had nothing to do with the question as presented here.

Robert H. Marquis:

And they just didn’t take into account that sort of thing.

Now, if we are going like — by something like that, I might in reply say that before the House Committee, KU presented a map.

Its sheet 8(b) of Exhibit Volume 1 and it shows the Tazewells within what they call the TVA service area.

I don’t think that the situation can be decided by maps that were not prepared without reference to the question at hand.

The only such map as Exhibit 91 and the accuracy of that has nowhere been challenged.

Now they talk about the Roe-Osborn map.

That map was prepared in 1960 by two local managers of KU and Powell Valley respectively.

It was never accepted by the Powell Valley Cooperative.

In fact, when KU presented KU with the 1961 proposed agreement which called for a territory agreement based on those maps, Powell Valley refused to accept it.

Moreover, on that Roe-Osborn map if the Court will examine it and it is Number 14.

That map itself shows that there is a separation between what KU claims are two of its areas of service.

That separation occurs right here where the line of Powell Valley crosses, so that their, it seems to me under any theory of the case, we incidentally had a large blow off of that so that the Court could see it more clearly and we outlined in pink so that it could and you will notice that there is a separation just at that point between their so-called corridors so that under area (Inaudible).

This is an island inside the TVA periphery whether it’s drawn there or whether it’s drawn where we finally drew up here at the state line.

Hugo L. Black:

May I ask you one more question —

Robert H. Marquis:

Certainly, Your Honor.

Hugo L. Black:

— on your position on the island.

Is it your position that either you or the power company have a right to sell power in the Tazewells?

Robert H. Marquis:

Yes, Your Honor.

Hugo L. Black:

Both of them.

Robert H. Marquis:

That’s correct.

Hugo L. Black:

And that it’s the purpose to leave those islands open to competition —

Robert H. Marquis:

That —

Hugo L. Black:

— in the two?

Robert H. Marquis:

That’s exactly correct Your Honor.

That is precisely the kind of adjustment within the periphery that the Senate Committee spoke of.

Hugo L. Black:

How do your rates compare?

Robert H. Marquis:

Well, our rates are lower than theirs.

That of course is where the towns would prefer to have TVA power.

Hugo L. Black:

It would reserve, I presume eventually in the TVA getting — selling all those islands completely, would it not?

Robert H. Marquis:

In those islands?

Robert H. Marquis:

Probably so, quite possible.

Earl Warren:

Did you say that the rates in the company were two and a half times your rate —

Robert H. Marquis:

For an electrically heated home of average size, their rates were two and a half times as high.

Yes, Your Honor.

Hugo L. Black:

Now why do you claim that the Congress intended to leave those open to competition?

Robert H. Marquis:

Because Your Honor, they spoke and the legislative history clearly shows it that they intended that there be adjustments around the periphery and within the periphery.

Now the only kind of adjustments they could possibly mean were a transfer of one kind of service to another.

And again, I would like to read this language from the Senate Report.

Within the general area receiving TVA power, there are small areas served by private power entirely surrounded by the lines of TVA distributors.

That is the exact situation here in the Tazewell.

Hugo L. Black:

That describes in the situation in Tazewell.

Robert H. Marquis:

Precisely, Your Honor.

Hugo L. Black:

Now what did they — what policy?

What did they have — cite that for?

What is the purpose of making that statement?

Robert H. Marquis:

Because it explained, if I read it correctly, the kind of adjustments within the periphery of our area that they anticipated would take place and should take place.

Hugo L. Black:

In the periphery you say?

Robert H. Marquis:

Inside the periphery.

Hugo L. Black:

What side — what size do you think a periphery is?

Robert H. Marquis:

What size?

Hugo L. Black:

What size is the periphery?

Robert H. Marquis:

Well, we would say Your Honor that the periphery is a more accurately drawn — of line around our — the area in which we are the chief supplier and that would approximate the line on that big map although it is exactly accurate.

There was reference to this, Senator Randolph himself who proposed the amendment that finally became law, said in the very last part of his supplemental views of course consistent with this view, and the view he’s talking about is that we ought to be more limited in the peripheral area.

Of course, consistent with this view, TVA should be encouraged to serve any islands which now exist within its geographical operating area as it existed on July 1st, 1957.

Hugo L. Black:

Who said that?

Robert H. Marquis:

Senator Randolph, Your Honor, and he proposed the amendment on the Senate floor, it was finally adopted.

Hugo L. Black:

He proposed the very legislation on which they rely?

Robert H. Marquis:

That is correct Your Honor.

William O. Douglas:

Tell me Mr. Marquis.

Robert H. Marquis:

Certainly Your Honor.

William J. Brennan, Jr.:

What is the — I gather you concede that one purpose of (Inaudible) to this legislation was to protect the five —

Robert H. Marquis:

Yes Your Honor.

William J. Brennan, Jr.:

— utilities or something.

Now what is (Inaudible) under your views in this area?

Robert H. Marquis:

In this area?

William J. Brennan, Jr.:

Yes.

Robert H. Marquis:

Well, I don’t concede that it was the purpose of Congress in anyway to protect the islands within our perimeter.

Now it was to afford though —

William J. Brennan, Jr.:

(Inaudible) my question.

What (Voice Overlap) —

Robert H. Marquis:

I’m sorry.

William J. Brennan, Jr.:

In what way they were being protected?

I’m not sure I follow.

Robert H. Marquis:

In the — they were to be protected by confining TVA service within the periphery of the primary area plus the five-mile belt around it plus the third area I mentioned —

William J. Brennan, Jr.:

Well —

Robert H. Marquis:

— in any particular towns that might be involved.

William J. Brennan, Jr.:

It could be the (Voice Overlap)?

Can you give me a (Voice Overlap) —

Robert H. Marquis:

Oh, surely Your Honor.

William J. Brennan, Jr.:

It’s protected (Inaudible).

Robert H. Marquis:

It’s protected Middlesborough.

The TVA Board decided it couldn’t serve it.

They’re protected over here as to Jackson Purchase when the TVA Board decided it couldn’t serve it and where we were (Voice Overlap)–

Abe Fortas:

I will put this very simply in a rough language.

Your view of it as if Congress said that TVA now — there has to be a determination of the area of the TVA service.

Now within that area, you may clean up the situation —

Robert H. Marquis:

Precisely.

Abe Fortas:

In the sense of cleaning out — providing competition to pockets which are — may now be served by private utility companies but then stay in that area and don’t go outside of it except for the five-mile limitation.

That’s —

Robert H. Marquis:

That’s —

Abe Fortas:

— where you look at it.

Robert H. Marquis:

That’s exactly correct Your Honor.

But its —

Byron R. White:

Oh, do you agree with the — with your opponent that in that so-called corridor, what if — would you tell us that or not or however wide or narrow it is, within that corridor outside Tazewell, the TVA may not serve customers which are now served by KU.

Robert H. Marquis:

No Your Honor, I certainly do not.

The TVA Board finally drew the line of the state line.

So, no earthly way to draw any corridor.

Byron R. White:

Alright, but that’s on a different basis.

That’s a —

Robert H. Marquis:

Yes.

Byron R. White:

— there — but now let’s assume that they — that you agreed that the KU — that you do have a boundary line inside with them, that that corridor does exist that that is the boundary line between KU and TVA.

What about the operation of the five-mile rule —

Robert H. Marquis:

We would —

Byron R. White:

— outside Tazewell?

Robert H. Marquis:

We would contend Your Honor that the five-miles would take in everything except for the town of Cumberland Gap.

The reason for that is —

Byron R. White:

And Tazewell?

Robert H. Marquis:

No, not Tazewell for the reason of the five miles.

We think the five — that Tazewell has to be inside the perimeter when it’s drawn up here, here, or here.

The reason for that is that the five-mile peripheral area does not permit us to serve within municipalities.

Byron R. White:

I understand that but do you think if — do you think it is just an open invitation, an open right to expand beyond your perimeter of five miles except in (Voice Overlap) —

Robert H. Marquis:

Yes Your Honor.

We read differently than does Mr. Marshall, this business about distributors within the area.

Byron R. White:

Okay.

Robert H. Marquis:

I will simply say that I think that’s just a descriptive word.

It started out communities in the area and the Congress deliberately changed it to TVA and its distributors including cooperatives, so I don’t think it can possibly have the meaning that he ascribes to it.

Now, I would also like to mention Judge — Mr. Justice Brennan raised the question of the District Court’s findings.

The District Court had done a judgment which it said included its findings of fact and conclusions of law within the course of the — four corners of the opinion.

And Judge Taylor in that —

Byron R. White:

(Inaudible)

Robert H. Marquis:

Yes.

Yes Your Honor.

And one thing that Judge Taylor said was maps show that the lines of Powell Valley crossed the lines of KU at one point in the so-called corridor.

He also said the finding of the Board, TVA Board, was made in good faith and supported by substantial evidence.

Now, on the discretion point, it seems to us that Congress said to TVA, one, before this Act was passed, you must serve a preference customer if you legally can serve.

Those are that — that provision is in Section 10 and Section 12 of the TVA Act.

Then it said to us here, confine yourself within the periphery of the area for which you are the primary, the chief, or principal supplier plus the peripheral area and so on.

It seems to us that under such circumstances when a preference customer comes to us whether it’s the Tazewells, whether it’s Middlesborough, whether it’s Jackson Purchase, that the TVA Board must make a determination one way or the other.

It’s his job.

It’s got to do it in carrying on its functions under the TVA Act.

Now Mr. Marshall indicated that no determination was made until 1964.

Well, certainly, the Tazewells were told in 1960 that they could be served.

And in 1962, the TVA Board certainly made a determination when it constructed TVA staff to give Powell Valley assurance that TVA would supply the necessary power to serve the Tazewells even though that might mean TVA is spending $750,000 for additional transmission.

Now, I found incidentally in connection with that discretion point, the paragraphs that I was looking for in the Senate Committee report.

I have only a minute in the relation of the standard.

It seems to me that this indicate that clearly that Congress intended to ride a herd so to speak on the TVA Board, and that our duty was owed to the Government, not the private litigants.

The Committee said — the Committee believes that the TVA Board would not be reckless in utilizing the authority to provide additional service which actually amounts to less than one mile around the periphery or the present area in which TVA power is used.

It were properly used such authority to supply isolated communities from contiguous areas extension to rural areas and expanded municipal areas, and minor and necessary adjustments around the periphery and within the area in which power is now supplied.

HR3460 where the Amendments proposed by the Committee does not change the basic administrative premise of the TVA Act.

The TVA Board will continue to be held fully responsible by the Congress for the results of its operations and will have corresponding administrative authority in the discharge of this responsibility.

The actions of the Board will be subject to annual review by the Congress.

And of course they’re also subject every five years because Congress gives us an increase in bond authorization that will last for about that period of time and then we have to come back.

Under those circumstances, it’s our position as I indicated in Perkins against Lukens Steel, I think is the case closest to it that the duty owed by TVA is due to the Government, is owed to the Government and not to private litigants and that there was no intention to confer a standing.

Thank you very much Your Honors.

Earl Warren:

Very well.

We’ll adjourn.