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?

Media for Hardin v. Kentucky Utilities Company

Audio Transcription for Oral Argument - December 13, 1967 in Hardin v. Kentucky Utilities Company

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.