Sierra Club v. Hodel, 74-3366

• Decision Date: 26 October 1976
• Docket Number: No. 74-3366,74-3366
• Parties: , 7 Envtl. L. Rep. 20,008 SIERRA CLUB et al., Plaintiffs-Appellants, v. Donald P. HODEL, as Administrator of the Bonneville Power Administration, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1036

544 F.2d 1036

9 ERC 1449, 7 Envtl. L. Rep. 20,008

SIERRA CLUB et al., Plaintiffs-Appellants, v. Donald P. HODEL, as Administrator of the Bonneville Power

Administration, Defendant-Appellee.

No. 74-3366.

United States Court of Appeals, Ninth Circuit.

Oct. 26, 1976.

William D. Rives (argued), of Davis, Wright, Todd, Riese & Jones, Seattle, Wash., for plaintiffs-appellants.

Larry A. Boggs, Atty. (argued), of Dept. of Justice, Washington, D. C., for defendant-appellee.

Before KOELSCH and TRASK, Circuit Judges, and MURPHY, ^* District Judge.

TRASK, Circuit Judge:

This action was begun when the Sierra Club, the Washington Environmental Council, and the Colville Valley Environmental Council (hereafter referred to collectively as Sierra Club, plaintiff, or appellant) filed a complaint in the United States District Court for the Western District of Washington. Donald P. Hodel, Administrator of the Bonneville Power Administration (hereafter Administrator), was named as defendant. The suit sought a declaratory judgment that a contract entered into by the Administrator to supply electric power to Northwest Alloys' proposed magnesium plant at Addy, Washington, was unlawful because it was executed in violation of the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 et seq., and Executive Order No. 11514. It further sought injunctive relief, costs, and attorneys' fees.

The complaint alleged the interest of the plaintiffs in some detail, and their standing has not been questioned. The Bonneville Power Administration (BPA) is a federal agency created pursuant to the Act of August 20, 1937, 16 U.S.C. § 832 et seq. BPA is under the jurisdiction of the Department of the Interior. ¹

Because the action was based upon the National Environmental Policy Act and regulations issued pursuant thereto, jurisdiction was asserted under 28 U.S.C. § 1331 (federal question).

The contract complained of was one executed December 7, 1970, but amendatory of an earlier contract between the same parties dated June 15, 1967. The earlier agreement was between the United States Department of the Interior, acting by and through the Bonneville Power Administrator, and the Aluminum Company of America (ALCOA). It was for the sale and delivery of modified firm power by the Administrator to ALCOA for use by the purchaser at its Wenatchee and Vancouver, Washington, plants. The amendatory agreement was for the sale and delivery of interruptible power by the Administrator to a plant which ALCOA proposed to build near Addy, Washington, to be used for the production of ferro-silicon and magnesium. ²

In December 1973, after construction had begun, Sierra Club filed this action. It asserted that the Administrator was in violation of NEPA because he had not issued an environmental impact statement (EIS) for the contract, and had not reevaluated the decision to perform the contract against its environmental costs. ³

In June 1974, the district court heard and granted Bonneville's motion for summary judgment. In October 1974, plaintiff's motion for reconsideration was denied and a judgment of dismissal was entered.

This appeal was filed in October 1974, with appellant seeking an injunction pending appeal which was denied. Appellant then sought an injunction pending appeal in this court. In February 1975, we granted appellant's motion in part by enjoining Bonneville from continuing with new clearing work on the power line corridor until a regular panel hearing this case orders otherwise.

I. THE CONTRACT

We turn to section 102 of the National Environmental Policy Act as a point of departure for our examination. That section provides, in part, as follows:

"The Congress authorizes and directs that, to the fullest extent possible: . . . (2) all agencies of the Federal Government shall

"(C) include in every recommendation or report on proposals for . . . major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on

"(i) the environmental impact of the proposed action,

"(ii) any adverse environmental effects which cannot be avoided should the proposal be implemented,

"(iii) alternatives to the proposed action,

"(iv) the relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity, and

"(v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented."

We have emphasized, as have other courts, the language of the statute that requires all agencies "to the fullest extent possible" to include in every proposal significantly affecting the quality of the human environment a detailed statement of its impact and effects. Lathan v. Brinegar, 506 F.2d 677 (9th Cir. 1974).

The contract here under examination has three principal provisions: (1) it requires the sale of a large amount of electric power to ALCOA; (2) it requires ALCOA to construct a magnesium smelter in an agricultural area; and (3) it requires Bonneville to construct a transmission line at its expense to the plant site. ⁴

With respect to the power requirements, in the amendatory contract Bonneville agrees to deliver up to 124,000 kilowatts of interruptible power to the ALCOA plant. There are three categories of power available, each based on its particular priority. Firm power is first preference power and is to be continuously available to a purchaser; modified-firm power is second preference power and is subject to curtailment if necessary to prevent or minimize a restriction on firm power. Interruptible power carries the lowest priority and may be curtailed in whole or in part at the discretion of Bonneville; it is always subject to availability and the superior right of firm or modified-firm customers. ⁵

Much of the emphasis of appellant's argument is directed to the great power requirements of the smelter and the effect of the drain of hydroelectric power consumed there on the Bonneville system. It argues that "(n)either Bonneville, nor anyone else, has prepared an environmental impact statement which considers any of the impacts of the ALCOA power sales contract on energy resources" in the Northwest. It contends that if Bonneville chose not to sell power to ALCOA, the electricity could be sold to the utilities in the Northwest to reduce possible massive energy deficits or even could sell it to the Southwest through an intertie transmission line system connecting the Pacific Northwest with the Southwest. Thus, "(b)ecause of the ALCOA contract, Bonneville's ability to send power to the Southwest will be substantially reduced." Again, this contract "will cause the construction of thermal and nuclear generating plants" with the effect that the public will somehow subsidize the primary metal producers by having to purchase higher cost and more polluting thermal power.

In sum, the appellant principally challenges the policy decisions of the Administrator not on the basis of any direct or perceptible effect on the environment but on possible but quite speculative effects on the other parts of the BPA system. Appellant's reasoning in part is that there may be massive deficits in hydroelectric power for the system due to water scarcity or construction delay; Bonneville would have to sell power to smelters rather than to utilities for municipal use; because of lack of power utilities would have to resort to thermal or nuclear sources; those sources would cause pollution; pollution affects the environment. It is the contract itself and its ultimate effect on energy resources in the entire Northwest Region (and, to an extent, the Southwest) that gives rise to appellant's objection. ⁶ It is apparent from the nature of appellant's argument that even in the absence of the necessity to construct a transmission line, or for ALCOA to construct its plant, appellant would have contested the contract itself. This reduces the Administrator to the uncertain position of either requiring an EIS to be prepared before any contract for the sale of hydroelectric power, firm or otherwise, is executed, or defend in litigation; or worse, to prepare both the contract and the EIS and still suffer the litigation. It appears to us, as it appeared to the trial court, that this is not a result contemplated or within the meaning of the Act. An EIS need not discuss remote and conjectural consequences. Trout Unlimited v. Morton, 509 F.2d 1276, 1283 (9th Cir. 1974).

The argument is not only tainted by uncertainty and remoteness, but is also predicated upon an inaccurate assumption of fact. The particular consequence described by appellant could not develop from a power shortage because all that the contract provides for is interruptible power. Interruptible power has no priority over the firm power to be delivered to cities; if there is no hydroelectric power remaining after prime and second-preference power commitments have been filled, then there is no interruptible power available and none is delivered.

While the court held that the Amendatory Agreement was major federal action significantly affecting the quality of human environment, requiring compliance with section 102(2)(C) of NEPA, it also stated that "the contract itself is not in violation of public policy or statute." Read in conjunction with the transcribed record of oral proceedings on the motion for summary judgment, it is clear that the court was referring to and rejecting the argument that the contract was in violation of NEPA because it was not accompanied by an environmental statement showing the interrelationship between the power allotment to ALCOA and other power allotments to users in other regions of the system, and even to those outside the system under the Pacific Northwest-Southwest intertie agreement. This is the principal contention of appellant under its three-part argument. No case law has been submitted which supports this...