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Virgin Islands Hotel Association Inc. v. Virgin Islands Water & Power Authority

decided: June 28, 1972.


Staley, Aldisert and Hunter, Circuit Judges.

Author: Staley


STALEY, Circuit Judge.

Appellant, Virgin Islands Water & Power Authority, appeals from a judgment of the District Court of the Virgin Islands, 54 F.R.D. 377, enjoining the collection of electric power charges pursuant to an increased electric power rate schedule. The action for the injunction was brought by appellee, Virgin Islands Hotel Association, Inc., a nonprofit corporation whose membership consists of most of the hotels located in the Virgin Islands.

The instant litigation was precipitated by a press release on November 10, 1971, announcing an electric rate increase approximating 20%.*fn1 Public hearings were held on the several major islands beginning on November 16, 1971. On December 3, 1971, appellant's Governing Board heard the report on the public hearings and voted to place the new rate schedule into effect. The instant action was initiated on the same day and resulted in the district court's entry of judgment on February 4, 1972, enjoining the collection of power charges under the new rates but staying the injunction for a period of ten months. During the ten month period, appellant is to conduct new hearings and make a new rate study in order to redetermine the propriety of its proposed rates. If the current increases are determined to be reasonable, they will be continued. If reductions are required in these rates, the consumers will be reimbursed or credited with the difference between the current rates and whatever rates are determined, to be computed from December 1, 1971. If the appellant determines that certain rates would require even a greater increase than was announced on November 10, 1971, then such rates will become effective pursuant to the statutory procedure for setting new rates.

Appellant asserts, inter alia, that appellee has no standing to challenge the actions of the Authority, that the actions of the Authority in establishing a general rate schedule are not subject to judicial review by the District Court of the Virgin Islands, that the Authority fully complied with the procedures required by statute in determining the new rate schedule, and that there is no evidence on the record that appellant's actions were arbitrary or unreasonable or that the new rate schedule is unreasonable.

We must first examine appellant's argument that the district court had no jurisdiction over the subject matter of this action. This argument begins with the contention that the appellant is an autonomous governmental instrumentality and under the statutes of the Virgin Islands is vested with exclusive and plenary authority to operate and manage its utility system. Appellant asserts that this authority was specifically delegated as a legislative function of the Virgin Islands Legislature. Appellant argues that since it is, by law, not subject to the jurisdiction of other agencies, departments, officers, and persons, and since it exercises delegated legislative authority, its action in adopting the rate increase was not subject to judicial review by the District Court of the Virgin Islands.

The applicable statute, 30 V.I.C., § 101 et seq., makes no provision for judicial review of the Authority's actions. Generally, however, a strong presumption exists in favor of review which can be overcome only by clear and convincing evidence that the Legislature intended otherwise. See, e.g., Barlow v. Collins, 397 U.S. 159, 167, 90 S. Ct. 832, 25 L. Ed. 2d 192 (1970); Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967).

In support of its contention, appellant relies on Langevin v. Chenango Court, Inc., 447 F.2d 296 (C.A.2, 1971); and Hahn v. Gottlieb, 430 F.2d 1243 (C.A.1, 1970), both dealing with judicial review of FHA approved rent increases. In both Langevin and Hahn the court ruled that FHA decisions approving rent increases by private corporations receiving Federal subsidies were not subject to judicial review. We note that in each case the circuit court was considering a Federal agency action and applying the Administrative Procedure Act, specifically § 702 of that Act. (Title 5, United States Code.) Each court held, based on different rationales, that judicial review was not available. In the instant case, however, we are confronted with an administrative arm of a territorial legislature.

It was undisputed at oral argument that changes in the general rate structure could have been made by the Virgin Islands Legislature, and it is clear that the Authority exercised delegated legislative power when it acted to increase the rates. On the basis of the rationale of Judge Coffin's opinion in Hahn v. Gottlieb, supra, we rule that the judgment or expertise of the Authority in setting the electric power rates is a matter committed to its discretion by law and is not subject to judicial review. See also, Huntt v. Government of the Virgin Islands, 382 F.2d 38, 44 (C.A.3, 1967).

However, in both Langevin v. Chenango Court, Inc., 447 F.2d at 304, and Hahn v. Gottlieb, 430 F.2d at 1251, the court expressly stated that its holding of nonreviewability did not extend to "those rare cases where the FHA has ignored a plain statutory duty, exceeded its jurisdiction, or committed constitutional error." In the instant case, the plaintiff alleged and the district court found that appellant had ignored a statutory duty to provide a proper and meaningful hearing, and that appellant had committed constitutional error by denying plaintiff due process of law.

In our view, this appeal involves one of "those rare cases" where, because noncompliance with its statutory duties and constitutional infringement are alleged against the Authority, judicial review is available.

Appellant next denies the standing of appellee Hotel Association to challenge its actions. It contends that the Association is a nonprofit corporation which does not use electric power, is not a taxpayer, and in fact conducts no business in the Virgin Islands. It asserts that the Hotel Association has failed to establish that it will sustain injury as a result of the electric rate increase and therefore lacks standing to challenge the increase.

Appellant's argument is without merit. An organization whose members are "injured" may represent those members in a proceeding for judicial review. NAACP v. Button, 371 U.S. 415, 428, 83 S. Ct. 328, 9 L. Ed. 2d 405 (1963). The complaint in the instant case specifically asserted that the individual member hotels would suffer irreparable economic injury by virtue of the electric rate increases. Indeed, in its most recent opinion on the point at issue. Sierra Club v. Morton, 405 U.S. 727, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972), the Supreme Court made it clear that individual harm to an organization's members would give the organization standing to challenge an administrative action. In addition, the district court found, and we agree, that the interest sought to be protected here by the Association is ...

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