Natural Resources Defense Council, Inc. v. Hodel

• Decision Date: 01 July 1977
• Docket Number: Civ. No. 75-344.
• Citation: 435 F. Supp. 590
• Parties: NATURAL RESOURCES DEFENSE COUNCIL, INC., the Sierra Club, Inc., Oregon Environmental Council, Washington Environmental Council, Friends of the Earth, Eugene Future Power Committee, Inc., Plaintiffs, v. Donald P. HODEL, in his official capacity as Administrator of the Bonneville Power Administration, and Cecil D. Andrus, in his official capacity as Secretary of the United States Department of the Interior, Defendants.
• Court: U.S. District Court — District of Oregon

435 F. Supp. 590

NATURAL RESOURCES DEFENSE COUNCIL, INC., the Sierra Club, Inc., Oregon Environmental Council, Washington Environmental Council, Friends of the Earth, Eugene Future Power Committee, Inc., Plaintiffs, v. Donald P. HODEL, in his official capacity as Administrator of the Bonneville Power Administration, and Cecil D. Andrus, in his official capacity as Secretary of the United States Department of the Interior, Defendants.

Civ. No. 75-344.

United States District Court, D. Oregon.

July 1, 1977.

John Roger Beers, Palo Alto, Cal., Joe D. Bailey, Hillsboro, Or., for plaintiffs.

Sidney I. Lezak, U. S. Atty., Jack G. Collins, First Asst. U. S. Atty., Thomas C. Lee, Asst. U. S. Atty., D. Or., Portland, Or., for defendants.

OPINION

SKOPIL, Chief Judge:

The plaintiffs, six environmental groups,¹ seek declaratory and injunctive relief under the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. §§ 4321 et seq. They claim that NEPA requires the defendants² to prepare an environmental impact statement (EIS) before the Bonneville Power Administration (BPA) takes any action to implement the so-called "Phase 2" of the Hydro-Thermal Power Program, a long-range cooperative plan formulated by BPA, its direct-service industrial customers, and the region's public and private utilities to meet the forecasted electrical power needs of the Pacific Northwest.

The plaintiffs have moved for summary judgment. I find that there is no genuine issue as to any material fact and that NEPA requires the defendants to prepare and EIS.

FACTS

The Bonneville Power Administration was created in 1937 by the Bonneville Project Act, 16 U.S.C. §§ 832 et seq., to market electricity generated at the Bonneville Dam on the Columbia River and to develop a transmission system for delivery of the electricity generated at this facility to its customers throughout the Pacific Northwest. Under the Act, BPA is required to give preference and priority in marketing this power to public bodies³ and cooperatives (the "preference customers").⁴ Subject to the rights of preference customers, BPA may contract to sell excess power to private agencies and persons and to dispose of such power to federal agencies for a contract period not exceeding twenty years. In the case of private utilities, any contract must provide for cancellation upon five years' notice by BPA if the power is required to meet the needs of preference customers.⁵

BPA's authority has been extended over the intervening years to the marketing of power from all federal hydroelectric projects in the Columbia River drainage basin.⁶ By 1974, twenty-seven such projects were in service. These projects (built and operated by the Corps of Engineers and the Bureau of Reclamation), plus BPA's transmission system, comprise the Federal Columbia River Power System. The system supplies about one-half of the electric power consumed and provides about four-fifths of the high-voltage bulk transmission capacity in the region.

BPA sells power to approximately 153 customers in the states of Oregon, Washington, and Idaho and the portion of Montana west of the Continental Divide.⁷ These customers include some 126 utilities (mostly preference customers plus a few private utilities), fifteen direct-service industrial customers (chiefly electroprocess companies) operating twenty-two plants, and a handful of federal agencies. In fiscal year 1974, 49 percent of BPA's power sales were to preference customers, 39 percent to direct-service industrial customers, 11 percent to private utilities, and 1 percent to federal agencies.

BPA and/or its customers participate in a number of organizations which further the common goal of planning for the region's electrical needs. The Northwest Power Pool, a voluntary organization of public and private utilities and federal power suppliers (including BPA), was established in 1942 to coordinate power operations in the northwestern United States. The Pacific Northwest Utilities Conference Committee (PNUCC) was founded several years later by West Group Area member utilities of the Northwest Power Pool and other utilities in the Pacific Northwest. Twenty-four public and private utilities are now members of the PNUCC. In addition, a 130-member Policy Committee includes representatives of most of BPA's customers who are not PNUCC members.⁸ One of the important functions performed by the PNUCC is preparation of annual long-range forecasts of power loads and resources in the West Group Area of the Northwest Power Pool.⁹ Two other organizations active in regional power planning — the Public Power Council and the Joint Power Planning Council — were both formed in 1966. The former is a voluntary organization representing 110 publicly-owned utilities and cooperatives; the latter, an ad hoc group consisting of Public Power Council members, four private utilities, and BPA.

Through the individual and collective efforts of BPA, its customers, and other government agencies, the Pacific Northwest enjoyed for several decades an abundance of low-cost hydroelectric power. By the 1960s, however, it became apparent that insufficient hydroelectric power would be available to meet the anticipated tripling of demand within the following twenty years. The deficiency would have to be met by providing new power resources for the region.

Members of the Joint Power Planning Council therefore devised in 1968 a cooperative ten-year program — known as the Hydro-Thermal Power Program (HTPP) — to meet the region's power needs through 1981.¹⁰ The program (now referred to as "Phase 1" of the HTPP contemplated a gradual transition from the use of all hydroelectric power for baseload energy to a mixed base of hydroelectric and thermal generating resources, with any new hydroelectric resources to be used to increase peaking capacity.¹¹ The controlling concept was the planning, construction, and operation of the region's power facilities as if they were under a single ownership. The utilities would build the required thermal (nuclear or coal-fired) plants; BPA would provide the necessary peaking capacity, high-voltage transmission grid, and reserves¹² and would pool the available low-cost hydro and high-cost thermal power for sale at uniform rates. The public agencies' share of the costs for construction of thermal plants would be financed through the mechanism of "net billing".¹³ The immediate goals for Phase 1 included the expansion of BPA's transmission system, the addition of new hydroelectric generators for peaking, and the construction of specified thermal plants.¹⁴

By early 1973, however, it became apparent that the HTPP would have to be modified to provide for the region's power needs beyond 1981. Planned thermal plants had experienced delays, demand had grown faster than had been forecasted, and the capacity for net billing was becoming exhausted. On March 12, 1973, the Acting Secretary of the Interior instructed the BPA Administrator to attempt to work out an appropriate plan for carrying forward the HTPP or some alternative procedure for an assured future power supply in the region.¹⁵

After extensive consultations, BPA and its customers agreed on December 14, 1973, to a cooperative plan termed "Phase 2" of the Hydro-Thermal Power Program.¹⁶ The basic concept of the HTPP remained unchanged. Under Phase 2 the utilities were to construct eight additional baseload thermal plants¹⁷ with a capacity of 7.56 million kilowatts to meet the region's power needs through 1986. (Additional resources were to be identified later to meet requirements through 1994.) The federal government was to construct facilities for additional peaking capacity, totaling approximately 3.7 million kilowatts, and BPA was to expand its transmission system.¹⁸ BPA would continue to provide such services as transmission of power, reserves, load shaping, sale of power surplus to the needs of thermal project participants, and scheduling of project output on behalf of utility project participants.

In some respects, however, the Phase 2 plan differed from Phase 1. First, net billing was to be eliminated as a financing mechanism for preference customers' share of required new generating resources. The low-cost resources available under Phase 1 through 1983 would be allocated among preference and industrial customers. Preference customers would have to meet increased baseload energy requirements beyond 1983 by participating directly or indirectly in construction of new thermal plants generating higher-cost power. Those not wishing to participate directly could have BPA act as their agent in purchasing power for them. The second major change contemplated under Phase 2 was an increasingly important role for BPA's direct-service industrial customers. In exchange for securing new 20-year contracts, these customers would agree to purchase up to 1,000 megawatts to provide extra reserves for the area (in effect guaranteeing the construction of the equivalent of one new nuclear plant). If the reserves were needed for use by utilities, the power could be withdrawn from the industrial customers under contract provisions giving them a lower grade of power than under Phase 1. To implement these changes, four new types of contracts were to be developed: (1) new 20-year Power Sales Contracts with preference customers, (2) Trust-Agency Agreements with participating preference customers, (3) agreements to provide services to thermal project participants not parties to the Trust-Agency Agreements, and (4) new 20-year Power Sales Contracts with direct-service industrial customers.

After the agreement on Phase 2 was announced in December, 1973, environmental groups and state government officials urged BPA to prepare an EIS on the Hydro-Thermal Power Program.¹⁹ As a result, BPA prepared and submitted to the Council on Environmental Quality (CEQ) on April 1, 1975, a draft EIS entitled "BPA Participation in Regional Interutility...