Arizona Power Pooling Association v. Morton

No. 74-1167 (9th Cir. December 17, 1975)

The court unanimously denies defendant's petition for rehearing and suggestion for rehearing en banc. It goes on, however, to supplement and clarify its initial decision for plaintiffs, 5 ELR 20708, in this action brought by a group of consumer-owned electric utilities to enforce the preference clause in the 1939 federal reclamation law.

Counsel for Plaintiff
D. Emerson Duncan, II
Duncan, Allen & Mitchell
1775 K Street, N.W.
Washington DC 20006
(202) 833-2300

Counsel for Defendants
William G. Smitherman, U.S. Attorney
5000 Federal Building
Phoenix AZ 85025
(602) 261-3011

Other counsel are listed at 5 ELR 20708.

Before TUTTLE,^* KOELSCH, and BROWNING, Circuit Judges:

Judges Tuttle, Koelsch and Browning duly considered defendants-appellers' Petition for Rehearing and concluded to supplement the opinion with the per curiam opinion attached hereto; and thereupon voted unanimously to deny the Petition for Rehearing. Judges Koelsch and Browning further voted, and Judge Tuttle recommended, against a rehearing in banc.

The full court having been so advised and no judge of the court in active service having requested a vote on the suggestion for rehearing in benc, the Petition for Rehearing is denied, and the suggestion for rehearing in banc is rejected.

[6 ELR 20178]

(Modification of Opinion filed September 24, 1975)

PER CURIAM:

We consider it appropriate to make this modification to our opinion previously published in this case. We must, of course, consider this appeal in the posture in which it stands, which is an appeal from a summary judgment for the defendants, granted by the trial court on stated legal grounds.

In considering it we also take note of the issues posed by the parties in their respective briefs.

When we stated in the opinion that "it is undisputed that the Secretary refused to offer the Association the opportunity to become a purchaser," we probably should have stated "on a motion for summary judgment we accept as true all allegations of fact pleaded by the party against whom the judgment is sought; therefore, we must accept as true the claim of the plaintiffs that the Secretary refused to offer the Association the opportunity to become a purchaser."

Turning next to the issues that are presented on appeal, we note that the United States defendants urged only two bases for the granting of summary judgment. These two were contained in one paragraph entitled "Summary of Argument:"

"The interim power which is the subject of this action was part of the initial acquisition of electric energy for the Navaho Project, and as such the disposition of this interim power was both committed to agency discretion and approved by Congress and thus not judicially cognizable."

In granting this motion the trial court adopted the Government's grounds and argument. The Secretary argued that the provisions of 43 U.S.C. § 1523(a)¹ when coupled with § 1523(b)² gave wide-open discretion to the Scretary to consider as a part of "the most feasible plan" for acquisition any plan "to dispose" of unneeded power.

The Government then said that since the disposition of excess or lay-off power was part of "the most feasible plan" whose confection was confided to the Secretary, this official's determination to dispose of the power without giving consideration to the preference customers was a discretionary act, and thus not reviewable.

The trial court accepted this argument, together with the argument that the plan had been approved by Congress through the passage of appropriation acts, the other part of the Government's argument.

The correctness of the trial court's action is therefore what, and all, that is before us.

We hold that the direction to the Secretary to recommend "the most feasible plan" for acquiring power does not comprehend the right to sell excess power in a manner that is in conflict with the reclamation acts even though the Secretary may seek to denominate such sales as part of "the most feasible plan" which he has otherwise authority to put into effect.

For the reasons which we have already stated we hold that the disposition of excess power is subject to the restrictions 43 U.S.C. § 485h(c).³

Further, as we have stated in the opinion, we hold that there has been no modification or repeal of the preference statute as to this preject by the enactment of Congress of subsequent appropriation acts.

Thus, we conclude that the trial court erred in its holding that the action of the Secretary was not reviewable for the reasons stated both in its opinion and the reasons advanced by the Government, the movant for the summary judgment.

Moreover, the United States defendants in their brief supporting the trial court's judgment again stated their argument in similar terms:

"I.

The Secretary of the Interior in "the most feasible plan" submitted to Congress, properly exercised his discretion in effering the opportunity to purchase the Government's interim power entitlement only to those utilities which had adequate back-up capacity and transmission facilities.

II.

Congress knowingly and repeatedly approved the Secretary's interpretation and administration of the Colorado River Basin Project Act in offering the Government's interim power entitlement to private as well as to preference utilities."

It would seem, therefore, that neither the trial court nor this court has had presented to it a record which would pernit it to decide anything more than the issues which we have outlined. As to these issues, we have concluded that the preference clause applies to the disposition of power from this thermal power plant notwithstanding the Government's contention that such disposition of excess power was part of the plan in the formation of which the Secretary was given broad discretion. This discretion was limited by the affirmative requirements that any such sale must be made under the limitations contained in the reclamation acts. Since we hold that the Secretary had no discretion to ignore the limitations of this act, the actions of the Secretary are thus not denied reviewability under the "discretionary act exception."

As noted in the opinion, the preference provisions in themselves contain a grant of discretion to the Secretary. This is contained in the sentence "no contract relating to electric power or power privileges shall be made unless, in the judgment of the Secretary, it will not impair the efficiency of the project for irrigation purposes." 43 U.S.C. § 485h(c).

The record before us does not disclose, and the parties here do not contend, that the Secretary ever excreised his judgment [6 ELR 20179] with respect to this grant of discretion. This phase of the dontroversy is discussed only under the argument that the Secretary's power to make contracts for the saie of power was included within his power to recommend "the most feasible plan" for the acquisition of power, a matter which we have already disposed of.

It is elear that under the erms of the preference clause neither the plaintiffs nor any other proference customer has an automatic entitlement to the excess power that will be available for disposition by the Secretary. We act only upon the record that is now before us, and in that posture of affairs we must accept as true the plaintiffs' allegations that as preference customers they have had no opportunity to compete for this surplus power. That allegation is denied by what aniounts to a general denial in the answers filed by the defendants. Thus the issue remains open before the trial court, as do any other issues which have not been disposed of by what has now been said in this opinion as modified.

THE JUDGMENT IS REVERSED AND THE CASE IS REMANDED TO THE TRIAL COURT FOR FURTHER PROCEEDINGS NOT INCONSISTENT WITH THIS OPINION.

* The Honorable Elbert P. Tuttle, United States Circuit Judge for the Fifth Circuit, sitting by designation.

1. This section directed the Secretary "to recommend the most feasible plan for the construction and operation of hydraulic generating and transmission facilities, the purchase of electrical energy, the purchase of entitlement to electrical plant capacity . . . for the purpose of supplying the power requirements of the Central Arizona Project."

2. This section provides that ". . . when not required for the Central Arizona Project the power and energy acquired by such agreements may be disposed of intermittently by the Secretary for other purposes at such priees as he may determine . . ."

3. This section provides: ". . . in said sales or leases preference shall be given to municipalities and other public corporations or agencies . . . . No contract relating to . . . electric power or power privileges shall be made unless, in the judgment of the Secretary, it will not impair the efficiency of the project for irrigation purposes."