Salt Lake City v. Western Area Power Admin.

• Decision Date: 22 February 1991
• Docket Number: No. 88-1976,88-1976
• Citation: 926 F.2d 974
• Parties: SALT LAKE CITY, et al., Plaintiffs-Appellants, v. WESTERN AREA POWER ADMINISTRATION; William H. Clagett, in his capacity as Administrator of the Western Area Power Administration; The United States Department of Energy; John S. Herrington, in his capacity as Secretary of Energy of the United States, and the United States of America, Defendants-Appellees, Coalition of Consumer-Owned Power Systems, Amicus Curiae, Colorado River Energy Distributors Association, Inc., Defendant-Intervenor/Appellee, National Wildlife Federation, Grand Canyon Trust, American Rivers, Inc., Amicus Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 974

926 F.2d 974

SALT LAKE CITY, et al., Plaintiffs-Appellants, v. WESTERN AREA POWER ADMINISTRATION; William H. Clagett, in

his capacity as Administrator of the Western Area Power

Administration; The United States Department of Energy;

John S. Herrington, in his capacity as Secretary of Energy

of the United States, and the United States of America,

Defendants-Appellees,

Coalition of Consumer-Owned Power Systems, Amicus Curiae,

Colorado River Energy Distributors Association, Inc.,

Defendant-Intervenor/Appellee,

National Wildlife Federation, Grand Canyon Trust, American

Rivers, Inc., Amicus Curiae.

No. 88-1976.

United States Court of Appeals, Tenth Circuit.

Feb. 22, 1991.

Rehearing Denied April 18, 1991.

Donald B. Holbrook and William B. Bohling (Gregg I. Alvord, Elizabeth M. Haslam, and Michael Patrick O'Brien, also of Jones, Waldo, Holbrook & McDonough, Sidney G. Baucom, Gen. Counsel, Utah Power & Light Co., and Rogert F. Cutler and Bruce R. Baird, City Attys., Salt Lake City, Utah, Reed M. Richards, Weber County Atty., and Frank Warner and Douglas J. Holmes, Ogden, Utah, with them on the brief), for plaintiffs-appellants.

Rex Lee of Sidley & Austin, Washington, D.C. (Donald R. Allen, Cyndi Stich, and J. Barton Seitz of Duncan, Allen and Talmage, Washington, D.C., Dale A. Kimball, Gary A. Dodge, and Jill A. Niederhauser of Kimball, Parr, Crockett & Waddoups, Salt Lake City, Utah, with him on the brief), for intervenor-appellee Colorado River Energy Distributors Ass'n, Inc.

C. Max Vassanelli, Atty., Civ. Div., Dept. of Justice (John R. Bolton, Asst. Atty. Gen., Brent D. Ward, U.S. Atty., Dennis G. Linder, Robert S. Greenspan and Karen Stewart, Attys., Civ. Div., Dept. of Justice, of counsel Susan Earley, Western Area Power Admin., with him on the brief) Washington, D.C., for federal appellees.

S. Elizabeth Birnbaum of Nat. Wildlife Federation, Washington, D.C., filed an amicus curiae brief on behalf of Nat. Wildlife Federation, Grand Canyon Trust and American Rivers, Inc.

Clinton A. Vince and Nancy A. Wodka of Verner, Liipfert, Bernhard, McPherson and Hand, Alan H. Richardson, American Public Power Ass'n, Washington, D.C., C. Pinckney Roberts, Columbia, S.C., Wallace F. Tillman and Michael D. Oldak, Nat. Rural Elec. Coop. Ass'n, Washington, D.C., Charles L. Compton, Laurens, S.C., L. Clifford Adams, Jr., of Hurt, Richardson, Garner, Todd & Cadenhead, Atlanta, Ga., as counsel for Mun. Elec. Authority of Georgia, and Carlos C. Smith of Strang, Fletcher, Carriger, Hodge & Smith, Chattanooga, Tenn., as counsel for Tennessee Valley Public Power Ass'n, filed an amicus curiae brief on behalf of the Coalition of Consumer-Owned Power Systems.

Before LOGAN and TACHA, Circuit Judges, and THEIS, District Judge. ^*

LOGAN, Circuit Judge.

Plaintiffs, Utah Power & Light (UP & L) and more than one hundred of its subscriber cities, towns and counties in Utah and Wyoming, appeal the district court's grant of summary judgment in favor of defendants, the Western Area Power Administration (WAPA), the Department of Energy (DOE), and various officials of these agencies. The district court found that WAPA's interpretation of federal law governing preference in the sale of federal hydroelectric power was reasonable and that WAPA's decision to purchase nonfederal power in order to maximize sales of firm federal power was not ultra vires. ¹ We affirm.

I

The activities challenged in this case fall under the jurisdiction of WAPA's Salt Lake City Area office, which markets power generated from the Salt Lake City Area Integrated Projects (SLCA-IP), including the Colorado River Storage Project (CRSP). The basic statute governing power marketing from the SLCA-IP is the CRSP Act, 43 U.S.C. Secs. 620-620o. ² This Act incorporates the federal reclamation laws, including Sec. 9(c) of the Reclamation Project Act of 1939, governing preference in the sale of federal hydropower. 43 U.S.C. Sec. 620c.

WAPA sells power under long-term marketing criteria. While WAPA was formulating its Post-1989 General Power Marketing and Allocation Criteria, see 48 Fed.Reg. 38,289 (1983); 49 Fed.Reg. 34,900 (1984); and 51 Fed.Reg. 4,844 (1986), UP & L applied for federal power on behalf of its customer municipalities that had authorized it to do so. The application requested an allocation of power for the municipalities as qualified preference entities under the federal reclamation laws. The application stated that, upon receipt of an allocation of federal power, each municipality would enter into a contract with UP & L under which the latter would provide utility services at cost. UP & L also applied for a preferential allocation of federal power on its own behalf, to be resold to its customers at cost. Alternatively, UP & L argued that it should be allowed to bid for federal power. WAPA determined that neither UP & L nor its customers qualified as preference entities under applicable reclamation laws and accordingly rejected plaintiffs' applications.

A

Plaintiffs' first challenge to WAPA's refusal to allocate power to them is based on federal preference law. Section 9(c) of the Reclamation Project Act of 1939, 43 U.S.C. Sec. 485h(c), provides that in the sale of federal hydroelectric power "preference shall be given to municipalities and other public corporations or agencies...." WAPA, the DOE, and the Bureau of Reclamation before them have consistently interpreted this provision as not giving preference to every city or town that fits the dictionary definition of "municipality." Rather, they have interpreted Sec. 9(c) to give preference only to those municipalities that operate their own utility systems. WAPA terms this prerequisite for preferential status a requirement of "utility responsibility."

Plaintiffs argue that the utility responsibility requirement is contrary to the plain language of Sec. 9(c). They argue that the statutory language clearly makes every municipality a preference entity and that WAPA's contrary interpretation is entitled to no deference. Rejecting this argument, the district court applied the analysis set forth in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). The court first asked whether Congress had directly spoken to the precise question at issue, namely, whether the statutory preference given to municipalities mandates equal treatment of municipalities that own their own distribution systems and those that do not. Employing traditional tools of statutory construction, the court found no intent on this question. We agree.

Plaintiffs correctly point out that neither the court nor the defendants have controverted plaintiffs' oft-repeated assertion that the meaning of the word "municipalities" is clear. But plaintiffs' references to the Oxford English Dictionary do not make clear the meaning of a preference in the sales of power to municipalities. The question critical to this appeal, whether the preference applies only to sales directly to municipalities or also embraces indirect sales through investor-owned (i.e., for-profit) intermediaries such as UP & L, is not answered by asserting that "everybody knows ... a 'municipality' is a town or city." Plaintiffs-Appellants' Principal Brief at 13. If indirect sales are included, then the preference clause authorizes the agency to confer economic benefits upon investor-owned utilities. ³ It is not at all clear from the text of the statute that such a result was intended.

Nor do traditional tools of statutory construction yield any clear congressional intent on this issue. Defendants argue that the legislative history demonstrates that Congress intended the preference to extend only to entities capable of taking federal power directly and distributing it to consumers. Some portions of the legislative history arguably support this interpretation. See, e.g., 84 Cong.Rec. 10223 (1939) (remarks of Rep. Case); Hearings on H.R. 6773 Before the House Comm. on Irrigation and Reclamation, 76th Cong., 1st Sess. 122, 130-32 (1939) (colloquy between Rep. Winter and J. Kennard Cheadle, Bureau of Reclamation Chief Counsel). Even these isolated portions, however, are far from clear. We agree with the district court's conclusion that "[r]ead critically, the history, like the text, indicates that Congress in considering the preference clause simply did not contemplate the innovative proposal that the municipalities make here." III R. tab 233 at 40.

On the second prong of the Chevron analysis, 467 U.S. at 843, 104 S.Ct. at 2781-82, the district court found WAPA's interpretation of the preference clause "fully reasonable." III R. tab 233 at 40. We agree that WAPA's construction of the statute must be upheld.

The agency's interpretation need not be the only one it could have adopted, or the one that this court would have reached had the question initially arisen in a judicial proceeding. Chevron, 467 U.S. at 843 n. 11, 104 S.Ct. at 2782 n. 11. Indeed, the agency's interpretation is entitled to special deference when, as here, the agency is interpreting a statutory scheme that it is entrusted to administer, its interpretation has " 'involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations.' " Id. at 844, 104 S.Ct. at 2783 (quoting United States v. Shimer, 367 U.S. 374, 382, 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908 (1961)).

It is reasonable to conclude, as WAPA has, that the benefits of preferential access to federal hydroelectric power should be enjoyed by the public rather than the private sector. Plaintiffs' challenge to this interpretation, "fairly conceptualized, really centers on the wisdom of the agency's policy, rather than whether it is a reasonable choice within a gap left open by Congress...." Id. at 866, 104 S.Ct. at 2793. ...