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Santa Clara, City of v. Andrus

Citation: 8 ELR 20313
No. Nos. 77-1110 et al., (9th Cir., 02/01/1978)

The City of Santa Clara brought this action for injunctive and declaratory relief, challenging the Secretary of the Interior's decision to withdraw power from the city and to deny it an allocation of nonwithdrawable power. The power in question is generated by the Central Valley Project (CVP), a federal reclamation project consisting of dams and hydroelectric power plants. Because of an existing contract with the Pacific Gas and Electric Co. (PG&E), Santa Clara, a preference customer for federal power under § 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. § 485h(c), was unable to take power from CVP in the early 1960s, but the Secretary kept the city's application on file. Asserting that its contract with PG&E was nonbinding, the city, in 1965, contracted with the Secretary for a supply of 75,000 kilowatts of CVP power on a withdrawable basis, while agreeing with PG&E that the utility would supply the city with the power it needed beyond the CVP allotment. The allotment was revised upwards several times, but after 1970, the Secretary began withdrawing power from the city to meet the needs of older preference customers. As additional power became available, the Secretary held it for preference customers already receiving nonwithdrawable allotments rather than offering it to customers with withdrawable allotments such as Santa Clara. In 1972, the Secretary informed Santa Clara that he would not then or ever allocate nonwithdrawable power to the city.

After trial, the district court, in City of Santa Clara v. Kleppe, 418 F. Supp. 1243 (N.D. Cal. 1976), held, inter alia, that the Secretary was not required to file an environmental impact statement before withdrawing power from the city because the Secretary's marketing decisions are not major federal actions under the National Environmental Policy Act (NEPA). On appeal, the city argued that the Secretary's decision to refuse to sell it nonwithdrawable power will force it to construct its own generating facilities and cause industries to relocate to communities where electricity is available at a lower cost, thus having a significant deleterious effect on the environment.

The court affirms the grant of federal defendants' motion for summary judgment on the NEPA claim. Because the amount of low-cost CVP power is finite, demand will likely outstrip supply in the future, and the environmental consequences will be the same regardless of whether it is Santa Clara or another preference entity that is forced to look elsewhere for additional electric power. Furthermore, even "accepting as true Santa Clara's rather fanciful hypotheses concerning the likely impact of the Secretary's decision on its small piece of the environment," the court found it "highly improbable that one allocation scheme will have a more deleterious impact than any other when the total geographic area served by the CVP is considered." In deciding whether a major federal action will significantly affect the quality of the environment, an agency must consider "the absolute quantitative adverse environmental effects of the action itself." Hanly v. Kleindienst, 471 F.2d 823, 830, 2 ELR 20717, 20720 (2d Cir. 1972), cert. denied, 412 U.S. 908 (1973). The court concluded that no such absolute effects are threatened by the decision to allocate CVP power in one way rather than another.

The full text of this opinion is available from ELR (24 pp. $3.00, ELR Order No. C-1149).

Counsel for Appellant Pacific Gas & Electric Company
Terry J. Houlihan
McCutchen, Doyle, Brown & Enersen
3 Embarcadero Center, San Francisco CA 94111
(415) 393-2000

Counsel for Federal Appellants
C. Max Vassanelli
Civil Division
Department of Justice, Washington DC 20530
(202) 739-4478

Counsel for Appellee City of Santa Clara
Fredrick D. Palmer
Duncan, Brown, Weinberg & Palmer
Suite 777, 1700 Pennsylvania Ave. NW, Washington DC 20006
(202) 296-4325

Duniway, J., with Carter & Burns, JJ.