City of Santa Clara, Cal. v. Andrus

Citation572 F.2d 660
Decision Date01 February 1978
Docket Number77-1189 and 76-3670,77-1270,Nos. 77-1110,s. 77-1110
Parties, 8 Envtl. L. Rep. 20,313 CITY OF SANTA CLARA, CALIFORNIA, Appellant, v. Cecil ANDRUS, Individually and as Secretary of the Interior, and R. Keith Higginson, Individually and as Commissioner of the Bureau of Reclamation, United States Department of Interior, Appellees. Cecil ANDRUS, Individually and as Secretary of the Interior, and R. Keith Higginson, Individually and as Commissioner of the Bureau of Reclamation, United States Department of Interior, Appellants, v. CITY OF SANTA CLARA, CALIFORNIA, Appellee. PACIFIC GAS & ELECTRIC COMPANY, Appellant, v. CITY OF SANTA CLARA, CALIFORNIA, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Terry J. Houlihan (argued), San Francisco, Cal., for appellant, cross appellee.

Fred Palmer (argued), Washington, D. C., C. Max Vassanelli (argued), of Dept. of Justice, Washington, D. C., for appellees, cross appellants.

Appeal from the United States District Court for the Northern District of California.

Before DUNIWAY and CARTER, Circuit Judges, and BURNS, * District Judge.

DUNIWAY, Circuit Judge:

This case concerns sales by the Secretary of the Interior of low-cost hydroelectric power generated by the Central Valley Project in California. The city of Santa Clara filed this action for declaratory and injunctive relief, challenging the Secretary's decisions to withdraw power from the City and to deny it an allocation of "firm" (non-withdrawable) power. The Pacific Gas and Electric Company (PG&E) was allowed to intervene and counterclaim for certain funds being held in an escrow. All parties moved for summary judgment. The district court granted the Secretary's motion as to Santa Clara's National Environmental Policy Act (NEPA) claim, denied the other motions, and "remanded" the case to the Secretary for the promulgation of rules and procedures concerning the marketing power generated by the Central Valley Project. The court's judgment also dismissed the action without prejudice. All parties appeal. We affirm in part, reverse in part, and remand in part.


The Central Valley Project (CVP) is a multipurpose federal reclamation project consisting of numerous dams, hydroelectric power plants, transmission lines, and irrigation canals, located in the Central Valley of California and its surrounding mountains. 1 While production of hydroelectric power is not the primary purpose of the CVP, a substantial amount of electricity is generated by the project and ultimately sold to a large and varied group of users in Northern and Central California.

The Secretary of the Interior, through the Bureau of Reclamation, sells the power generated by the CVP at a price substantially lower than that charged by private utilities such as PG&E. 2 Consequently, CVP power does not lack for willing purchasers. Section 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. § 485h(c), provides that in sales or leases of electric power or power privileges, made by the Secretary, "preference shall be given to municipalities and other public corporations or agencies" and REA cooperatives.

Santa Clara first sought an allocation of CVP power on June 1, 1960, although it was then under contract to buy power from PG&E and so could not then take power from CVP. In 1962, the Secretary informed Santa Clara and others that 250,000 kilowatts of firm power would become available to preference customers upon completion of the Trinity River Division of the CVP, and invited applications for this new power. Santa Clara renewed its request for power on February 19, 1962, acknowledging that it would be unable to receive the power until the expiration, on August 27, 1967, of its requirements contract with PG& E. The Secretary responded that while he would not commit himself to such a future allocation, Santa Clara's application would be kept on file for consideration nearer the time when the City could actually begin purchasing federal power. When the Trinity River Division of the CVP came on line in early 1963, the additional power which became available was allocated to other preference customers which were able to take it immediately.

Between 1963 and 1964, CVP's generating capacity increased further. Notice of the availability of additional power was sent to all preference entities, Santa Clara among them, asking for estimates of present load requirements and future load growth. The additional power was ultimately allocated to then existing preference customers and Santa Clara was again excluded because of its inability to take power immediately.

Concerned that all CVP power was fast becoming spoken for, Santa Clara telegraphed the Secretary in July, 1964, asserting that its contract with PG&E was not binding and requesting an immediate allocation of power, on a withdrawable basis if necessary. The Secretary replied that, while all anticipated power was committed to meet the growth needs of other preference customers, 75,000 kilowatts could be offered to the City on a withdrawable basis.

On November 30, 1965, Santa Clara finally contracted with the Secretary for the supply of 75,000 kilowatts of CVP power on a withdrawable basis. At the same time, Santa Clara entered into an agreement with PG&E which required the utility to supply the City with sufficient electricity to meet any power requirements not satisfied by the CVP allotment.

Santa Clara's original allotment of 75,000 kilowatts was revised upward several times after 1965 by contract amendment. The City's allotment peaked at 120,000 kilowatts in 1970, after which the Secretary, by unilateral contract amendment, began withdrawing power from Santa Clara to meet the needs of its older preference customers. Between 1971 and 1974, the City's allotment was cut back from 120,000 kilowatts to 71,450 kilowatts. This amount is likely to During the period when Santa Clara was receiving all of its power requirements from the CVP, it continued to ask the Secretary for a nonwithdrawable allocation. However, as additional power became available, the Secretary decided to hold it for preference customers already receiving nonwithdrawable allotments, rather than to offer it to customers with withdrawable allocations such as Santa Clara. On February 4, 1972, the Secretary finally informed Santa Clara by letter that he would not allocate nonwithdrawable power to the City, then or at any time.

dwindle still further if the Secretary has his way.

In 1971, when the government began withdrawing power from Santa Clara, PG&E began monthly billings for that portion of the City's requirements not met by the CVP allocation and supplied by PG&E. Contending that the withdrawals were unlawful and consequently ineffective, Santa Clara insisted that its power needs were still being fully supplied by the Secretary. The City began paying the moneys demanded by PG&E into an escrow account and has done so ever since.


On July 25, 1975, Santa Clara filed this action against the Secretary and the Commissioner of the Bureau of Reclamation (the federal defendants), seeking declaratory and injunctive relief. In its complaint the City challenged the withdrawal of CVP power and the Secretary's refusal to supply it with a nonwithdrawable allocation. PG&E intervened as a party-defendant, counterclaiming for declaratory relief with respect to the funds held in escrow. All parties moved for summary judgment.

On July 23, 1976, the district court issued its opinion, City of Santa Clara v. Kleppe, N.D.Cal., 1976, 418 F.Supp. 1243, holding as follows: (1) Santa Clara's action is not barred by sovereign immunity; (2) the Secretary's contractual relationship with PG&E does not violate the reclamation laws; (3) the Secretary's decisions allocating CVP power are reviewable; (4) Congress has not approved the existing allocation scheme; (5) the Secretary violated the Administrative Procedure Act (APA) by failing to promulgate and publish rules of procedure governing the allocation of CVP power; (6) the Secretary's actions denied Santa Clara due process; and (7) the National Environmental Policy Act (NEPA) did not require the Secretary to file an environmental impact statement before withdrawing power from the City. The district court's opinion contained no ruling on defendants' claim that Santa Clara's action was untimely and barred by laches.

Although the trial court held that the Secretary's marketing decisions were reviewable, it did not pass on the lawfulness of the existing allocation scheme. Instead, it remanded the action to the Secretary with instructions to remedy the due process and APA violations. With regard to PG&E's counterclaim, the court ruled that the utility's right to be reimbursed by Santa Clara would depend upon the allocation scheme adopted by the Secretary on remand. The court therefore ordered that the disputed funds remain temporarily in escrow. 3 It also dismissed the action without prejudice.


Although the dismissal of the action "in its entirety" is "without prejudice," we find that the judgment based upon it is a final judgment, appealable under 28 U.S.C. § 1291. The language "without prejudice" avoids the "on the merits" effect of Rule 41(b), F.R.Civ.P., and permits the filing of a new action by any party dissatisfied with the Secretary's action on remand. It is still true, however, that the judgment disposes We have jurisdiction. See Gueory v. Hampton, 1974, 167 U.S.App.D.C. 1, 4, 510 F.2d 1222, 1225; Hines v. D'Artois, 5 Cir., 1976, 531 F.2d 726, 730.

of the action. Moreover, the remand is, in substance, a mandatory injunction requiring certain action by the Secretary, and so appealable under 28 U.S.C. § 1292(a)(1) assuming, but not deciding, that it is not a final judgment under § 1291.



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