David Holbrook v. Tennessee Valley Authority

Majority - Richardson, Circuit Judge

Yes, the Tennessee Valley Authority's (TVA) ratemaking authority is 'committed to agency discretion by law' under 5 U.S.C. § 701(a)(2), thereby precluding judicial review of claims related to its ratemaking, including those framed as breach of contract or unlawful exaction. The court's decision hinged on a two-part inquiry to determine if agency action is committed to discretion: first, whether it is the kind of action traditionally committed to agency discretion, and second, whether Congress provided clear guidelines to limit that discretion. The court found TVA ratemaking to be an action traditionally committed to agency discretion. This finding was supported by several factors: 1) TVA price setting is a complicated balancing act involving numerous factors (e.g., self-sufficiency, equitable service, capacity building, Treasury repayment, consumer support) that demand significant agency expertise in resource allocation; 2) price setting is not coercive, as it involves agreed-upon rates rather than the exercise of power over individual liberty or property rights; and 3) there is a long, unbroken history (dating back to before the APA's enactment) of federal courts declining to review TVA ratemaking, indicating a tradition of non-reviewability. This historical deference, particularly for government-owned utility ratemaking, strongly suggests it is an area where judicial review is inappropriate. Furthermore, the court determined that Section 11 of the TVA Act does not provide clear guidelines or limits sufficient to overcome the presumption against judicial review. The language in Section 11—such as 'so far as practical,' 'primarily,' 'economically,' and 'sufficiently'—is inherently fuzzy and grants the agency broad discretion rather than imposing a clear directive. The phrasing 'This policy is further declared to be...' linked to the 'so far as practical' clause suggests that the entire policy is subject to practical limitations, the determination of which is left to the agency. The aspirational language that industrial sales 'will permit domestic and rural use at the lowest possible rates' indicates an expectation or hope from Congress, not a specific command or methodology requiring the TVA to subsidize consumers from industrial revenue. Regarding the breach of contract claim, the court affirmed its dismissal by reasoning that a suit alleging breach of contract based on boilerplate statutory language is, in essence, an attempt to enforce the statute itself. Since Section 11 of the TVA Act provides no private cause of action, Holbrook, as a third-party beneficiary, could not use the contract claim to circumvent Congress's decision not to include a statutory cause of action. The statutory and contractual obligations were deemed 'one and the same,' making the contract claim non-cognizable. Finally, the unlawful exaction claim was dismissed because voluntary payments for electricity services do not constitute an illegal exaction (a taking of property without due process). Furthermore, TVA's rates were not illegal given its broad ratemaking discretion as established by the court's review of the APA claim.