Arizona Power Authority v. Morton
| Decision Date | 17 January 1977 |
| Docket Number | No. 2,P,No. 75-2141,2,75-2141 |
| Citation | 549 F.2d 1231 |
| Parties | ARIZONA POWER AUTHORITY et al., Plaintiffs-Appellants, Electrical Districtinal County, Arizona, Intervenor-Plaintiff- Appellant, v. Rogers C. B. MORTON, Individually and as Secretary of the United States Department of the Interior, and Ellis L. Armstrong, Individually and as Commissioner of the Bureau of Reclamation, United States Department of the Interior, Defendants-Appellees. Northern Division Power Association, Inc., Intervenor-Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Melvin Richter (argued), Washington D. C., for plaintiffs-appellants.
Robert L. Klarquist, U.S. Dept. of Justice, Washington, D.C., for defendants-appellees.
George K. Fadel (argued), Bountiful, Utah, for intervenors-defendants-appellees.
Before BROWNING and WALLACE, Circuit Judges, and FERGUSON, * District Judge.
Water is the precious lifeblood of the Southwest. 1 In recognition of this fact, Congress has authorized several extensive projects for the development of the water resources of the Colorado River Basin, the principal drainage system of the region. One of these projects is authorized by the Colorado River Storage Project Act (CRSP), ch. 203, 70 Stat. 105 (1956), as amended, 43 U.S.C. §§ 620 et seq. A critically important incident of the damming and construction of storage reservoirs along the upper Colorado River pursuant to CRSP is the generation of hydroelectric power. We are called upon in this case to determine if and when the exercise of the Secretary of the Interior's authority under CRSP to contract for the sale of hydroelectric power is judicially reviewable.
On March 9, 1962, the Secretary of the Interior (Secretary) issued General Power Marketing Criteria (Marketing Criteria) which allocated the greater part of the power generated at CRSP hydroelectric plants to public utilities in the states of Colorado, Utah, New Mexico and Wyoming. Arizona Power Authority and eight other Arizona public utilities (referred to jointly as Arizona Power) brought suit against the Secretary 2 challenging this geographic preference. Both Arizona Power and the Secretary moved for summary judgment. In support of its motion and in opposition to the Secretary, Arizona Power contended first that the implementation of the geographic preference was beyond the Secretary's authority and, second, assuming that it was within his authority, that the Marketing Criteria were arbitrary and unreasonable as a matter of law. Arizona Power also argued that there were material issues of fact in dispute on its second contention that precluded granting the Secretary's motion for summary judgment. The district court rejected these arguments and granted summary judgment in favor of the Secretary. 3
On appeal, the Secretary specifically articulates a new argument: the issuance of the Marketing Criteria was agency action committed to agency discretion by law and thus not judicially reviewable under the Administrative Procedure Act § 10, 5 U.S.C. § 701(a)(2). We agree and therefore vacate the judgment of the district court.
CRSP was enacted with reference to several interstate compacts and federal reclamation projects which involve the Colorado River Basin. As a result, CRSP is complex and its interpretation presents difficult issues that can be highlighted by briefly outlining federal and multi-state activity in the basin.
Comprehensive development of the Colorado River Basin requires the cooperation of seven states. The Colorado River begins in the mountains of Colorado and flow southwesterly for approximately 1,400 miles through Colorado, Utah, Arizona, along the Arizona-Nevada and Arizona-California boundaries before entering Mexico and emptying into the Gulf of California. Tributaries originating in Wyoming, Colorado, Utah, Nevada, New Mexico and Arizona define the boundaries of the basin, which comprises an area about 900 miles long from north to south and 300 to 500 miles wide from east to west approximately one-twelfth the area of the contiguous United States. The basin is arid and has historically been dependent upon water management practices in order to be productive and inhabitable. H.R.Rep. No. 1312, 90th Cong., 2d Sess. 5-6 (1968), reprinted in 1968 U.S.C.Cong. & Admin.News, pp. 3666, 3671-72; Arizona v. California, 373 U.S. 546, 552, 83 S.Ct. 1468, 10 L.Ed.2d 542 (1963).
With the rapid settlement and development of the basin at the end of the nineteenth century it became clear that small scale diversion works would not be sufficient to provide a dependable year-round water supply. The erratic nature of the river flows which could bring either drought or flood, the problem of land erosion and silt deposits, and the physical impediments of deep canyons and long distances from river to community were barriers too great for small groups of farmers or even individual states to surmount. It was soon recognized that the task of constructing storage dams, canals and various irrigation and power works required the economic and engineering resources of the federal government. 4
While the prospect of federal intervention and funding was appealing to all of the basin states, it brought to the forefront the competition between the upper and lower basin states for the beneficial use of Colorado River water. Because the prevailing water law of the western states was prior appropriation, rather than riparian rights or equitable allotment, rights to Colorado River water would likely be based on a "first in time, first in right" principle. 5 The upper basin states thus feared that the surplus waters stored by federal projects would initially be diverted to the more rapidly growing lower basin states, principally California, and thereby permanently appropriated to the exclusion of any future use to meet increased demands in the upper basin states. The states therefore agreed to negotiate an interstate compact for allocation of the water. 6 Congress consented to the negotiations, Act of August 19, 1921, ch. 72, 42 Stat. 171, and in 1922 the states completed an agreement termed the Colorado River Compact. 70 Cong.Rec. 324 (1928) (text of agreement).
The Compact failed to allocate the waters on a state-by-state basis but did achieve a compromise position. The basin was divided into two parts at Lee's Ferry, a point on the Colorado River in northernmost Arizona. Art. II(e)-(g). What is referred to as the upper basin is drained by the Colorado River and its tributaries above Lee's Ferry and includes parts of Wyoming, Colorado, Utah, New Mexico and the northeast corner of Arizona. The Compact defines the lower basin as parts of Nevada, California, New Mexico, Utah and substantially all of Arizona. 7 The upper and the lower basin were each apportioned the exclusive beneficial consumptive use of 7,500,000 acre-feet of water a year. Art. III(a). 8
The Compact did not at first achieve the required unanimous ratification by the seven states because of Arizona's failure formally to approve. 9 Congress nevertheless consented to the Colorado River Compact and waived the seven-state approval requirement of the Compact when it enacted the Boulder Canyon Project Act (BCPA). Ch. 42, §§ 4(a) & 13, 45 Stat. 1058, 1064 (1928), 43 U.S.C. §§ 617c(a) & 617l (a). California and five states approved the Compact pursuant to the conditions of the BCPA, and the BCPA thereafter became effective by presidential proclamation. 46 Stat. 3000 (1929). 10
Section 1 of the BCPA, 43 U.S.C. § 617, authorized the Secretary to construct a Boulder or Black Canyon Dam 11 and other projects in the lower basin for flood control reclamation and production of hydroelectric power. Importantly, the BCPA resulted in an allocation of mainstream waters among the lower basin states of Nevada, California and Arizona. 12 This allocation had the effect of facilitating development of lower basin water resources by removing an issue of controversy among the lower basin states. 13
Lower basin development proceeded at a rapid pace. The lakes behind Parker Dam and Davis Dam 14 on the lower Colorado River joined Lake Mead behind Hoover (Boulder) Dam 15 as major storage reservoirs. These projects provide water and power for large metropolitan areas (such as Los Angeles and San Diego) and extensive agricultural districts in southern California and Arizona. S.Rep. No. 1983, 83d Cong., 2d Sess. 2 (1954).
Development in the upper basin, however, moved more slowly. The erratic flow of the river, fluctuating between periods of drought and flood, made it impractical to meet the annual 7,500,000 acre-feet obligation to the lower basin states without river control on a long-term holdover basis. The necessity of holdover storage reservoirs was accentuated by the fact that the periods of high flows do not occur when the demands for the water are greatest. Without such reservoirs, development in the upper basin was limited to small irrigation projects usually constructed by private groups. H.R.Rep. No. 1774, 83d Cong., 2d Sess. 10-11 (1954).
A significant barrier to comprehensive upper basin development was overcome by ratification of the Upper Colorado River Basin Compact in 1948. 16 This compact apportioned among the states of Arizona, Colorado, New Mexico, Utah and Wyoming the consumptive use of waters allocated to the upper basin by the Colorado River Compact. Over 99 per cent of the upper basin allotment was divided among the so-called upper division states 17 of Colorado, New Mexico, Utah and Wyoming. 18 This apportionment made possible the Colorado River Storage Project Act in 1956. See Friends of the Earth v. Armstrong, 485 F.2d 1, 4-6 (10th Cir. 1973), cert. denied, 414 U.S. 1171, 94 S.Ct. 933, 39 L.Ed.2d 120 (1974).
CRSP provided a plan for long-term development. It authorized construction...
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