Opinion ID: 1790923
Heading Depth: 2
Heading Rank: 2

Heading: whether the federal rural electrification act preempts mississippi's electric power association act.

Text: ¶ 27. TVEPA argues that Congress' promulgation of 7 U.S.C. § 930 and the legislative history of REAct indicate that TVEPA is authorized by federal law to invest in ServicePlus. TVEPA alleges that the Miss. Elec. Act serves to frustrate the purposes of the federal act, and that this Court should find that, to the extent its provisions conflict with the REAct, the Miss. Elec. Act is preempted. ¶ 28. The United States Supreme Court has held that REAct is enabling legislation which affords substantial deference to state statutory and regulatory authority. See Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv. Comm'n, 461 U.S. 375, 103 S.Ct. 1905, 76 L.Ed.2d 1 (1983). Nothing in the [federal] Rural Electrification Act expressly preempts state rate regulation of power cooperatives financed by the REA. Id. at 385-86, 103 S.Ct. 1905. In explaining that the REAct established a lending agency and not a regulatory body, the Supreme Court stated: the legislative history ... makes abundantly clear ... that, although the REA was expected to play a role in assisting the fledgling rural power cooperatives in setting their rate structures, it would do so within the constraints of existing state regulatory schemes. Id. at 386, 103 S.Ct. 1905 (citing 80 Cong. Rec. 5316 (Rep.Lea); Hearing on S. 3483 before the House Committee on Interstate and Foreign Commerce, 74th Cong., 2d Sess., 30, 37, 51, 52 (1936)). ¶ 29. Neither does the REAct implicitly preempt the Miss. Elec. Act. The Fifth and Tenth Circuit Courts of Appeal have held that state regulatory acts are not preempted by conflicting federal regulations promulgated by the Secretary of Agriculture under the federal REAct. See In re Cajun Elec. Power Co-op., Inc., 109 F.3d 248 (5th Cir.1997) (holding that REAct nor its regulations expressly or impliedly preempt Louisiana regulations governing operation of electric cooperatives); City of Stilwell v. Ozarks Rural Elec. Co-op. Corp., 79 F.3d 1038 (10th Cir.1996) (stating that the RE Act ... does not purport to regulate the operation of rural electric cooperatives; it merely assists their operation by offering low interest financing. The [Oklahoma law regulating electric cooperatives] establishes the framework under which the RE act-spawned rural cooperatives can operate.... To argue that [the state law's limits on powers conferred to rural cooperatives] somehow frustrates the purpose of the RE Act is to contend that state regulations should empower rural cooperatives witnout limitations. Such a position is untenable.). ¶ 30. Furthermore, the language of 7 U.S.C. § 904, which authorizes the Secretary of Agriculture to provide loans under the REAct provides, in part: The Secretary is authorized and empowered... to make loans for rural electrification to persons, corporations, States, Territories, and subdivisions and agencies thereof ... organized under the laws of any State or Territory of the United States, for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing and improving of electric service to persons in rural areas.... Such loans shall be on such terms and conditions... as the Secretary shall determine... except that no loan ... shall be made unless the consent of the State authority having jurisdiction in the premises is first obtained. (emphasis added). This language acknowledges that the creation and organization of rural electric associations is left to the states and that the state must give its consent in order for loans to be received. Section 940b is permissive in nature, allowing a recipient of federal funds to invest 15% of its revenue in non-Act purposes. The Miss. Elec. Act does not authorize this action. Absent legislative amendment, the actions of TVEPA exceed its statutory authority.