A federal judge dismissed a lawsuit by environmental groups Feb. 1 that challenged how the Tennessee Valley Authority contracts with local power providers.
In the ruling, Judge Thomas Parker of the U.S. District Court for the Western District of Tennessee, Western Division, sided with the TVA and said the environmental advocates lacked legal standing for their lawsuit. Memphis, Tenn.-based Protect Our Aquifer, the Alabama Center for Sustainable Energy and Appalachian Voices accused the TVA of violating federal law through its contracts. (Protect Our Aquifer, Alabama Center for Sustainable Energy, and Appalachian Voices v. Tennessee Valley Authority No. 2:20-cv-02615-TLP-atc)
The environmental groups argued the structure of the contracts the TVA offers local power companies breaches the TVA Act of 1933, the federal policy governing the power authority. The TVA Act limits contracts to 20 years. However, the contracts with the local power companies run for 20 years, automatically renew annually and require 20 years' notice to be terminated, conditions which the environmental groups said make them "never-ending."
"The practical effect of that contract structure is that, once signed, the agreements last forever," plaintiffs argued, as summarized in the order.
According to the environmental groups, the length of the contracts potentially allows the TVA to delay a clean energy transition and slow or prevent carbon emission reductions.
Parker found that the TVA "acted reasonably" under the federal law that requires it to assess the environmental impact of major projects before making decisions and found that the environmental groups lacked standing to bring their claim in part because they are not party to those contracts and had "not shown a particularized, imminent environmental injury." The judge also found that the TVA did not violate the National Environmental Policy Act, which "does not require review of every major federal action," only those closely linked to environmental effects. Instead, the judge said environmental groups' issues with the TVA were more appropriately resolved by Congress rather than the courts.
"For TVA to propose contracts laden with a twenty-year initial term, a twenty-year termination notice requirement, and an evergreen provision, some may say that big brother TVA has become a bully, while others may remark that TVA is simply using the power Congress gave it," Parker wrote. "But in the end, this court is presently without jurisdiction to address the TVA Act concerns in this suit. Congress, though, can address [it] through the legislative process."
TVA spokesperson Ashton Davies said, "We are pleased with the court's decision, which affirms that TVA followed the law in offering the long-term agreement to local power company customers." Davies added that 147 of 163 local power companies that receive electricity from the TVA had signed long-term agreements.
The Southern Environmental Law Center, which represented the plaintiffs in the case, is evaluating its legal options following the ruling.
"These highly restrictive contracts make it essentially impossible for TVA customers to have meaningful negotiations with the federal utility," Southern Environmental Law Center Tennessee Office Director Amanda Garcia said. "We, along with our clients, will continue to hold TVA accountable, push for cleaner and cheaper power options and work to ensure that TVA's 10 million customers have a voice."
The issue of the TVA's contract lengths played out recently in Memphis, where the city in 2022 weighed moving on from the federal power authority as its electricity supplier, entertaining 24 proposals before ultimately deciding to remain with the TVA, at least for now. The Memphis Light Gas and Water Division Board of Commissioners voted in December 2022 to reject the 20-year rolling contract with the TVA, citing the duration of the contract and opting to remain under a five-year rolling contract instead.
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