Moreover, if these irrigators received CVP power at the rates urged by plaintiffs, WAPA would not be able to recover its costs as required under the Reclamation Project Act, 43 U.S.C. § 485h(c), thus further frustrating Congress' intent by eliminating power revenues as a source of assistance in the repayment of costs associated with the project's irrigation functions which the Secretary has determined are beyond the ability of irrigators to repay. The CVP is a multipurpose project; it was not intended to serve only one of its authorized functions.
Plaintiffs contend next that the government's refusal to grant them special treatment or a greater preference in the sale of CVP power impairs the efficiency of the project for irrigation purposes in violation of section 9(c) of the Reclamation Project Act.
That claim, too, must fail.
A. The impairment provision is not concerned with the rates paid for or the allocation of power generated by the CVP; it deals with the question of when power may be sold -- i.e., when the sales will not impair the project's efficiency. Furthermore, if, as the Court has found, the preference clause merely places irrigators on par with other preference customers, it would be inconsistent to grant to the irrigators a super preference under the impairment clause in the same section. Principles of statutory construction require that a statute be read so as to give meaning and effect to each word used. See United States v. Menasche, 348 U.S. 528, 538-39, 99 L. Ed. 615, 75 S. Ct. 513 (1955); see generally, 2A Sutherland Statutory Construction § 46.06 (4th ed. 1984).
In any event, the economic harm which plaintiffs will allegedly suffer due to increased power rates is not the type of impairment contemplated by the Act. There is no authority in support of plaintiffs' claim that "impairment" includes economic harm. To the contrary, the statutory language and legislative history of the impairment clause
refer only to the efficiency of the project's irrigation functions -- that is, its ability to deliver water for irrigation.
Section 9(d) of the Reclamation Project Act governs the furnishing of water for irrigation, while section 9(c) deals with the furnishing of water for nonirrigation purposes as well as the sale of electric power. Section 9(c) is not concerned with irrigators (except to the extent that they qualify as preference power customers), and the impairment clause at the end of that section is intended to safeguard the water necessary to carry out the irrigation function of the project.
What case law exists in this area also supports the proposition that "impairment," as that term is used in section 9(c), encompasses only physical impairment,
and that construction of the section is also supported by the consistent and longstanding interpretation of the impairment clause by the agencies charged with the implementation of the reclamation laws.
This construction, which the Court finds is reasonable, is of course entitled to deference for the reasons and the decisions cited above.
B. Even if it be assumed arguendo that the Act recognized the type of economic harm alleged by plaintiffs, they would have failed to state a claim. Not only have plaintiffs failed entirely to present any evidence of impairment,
but the record before the Court indicates that the rate increases will not have the devastating effect that plaintiffs allege. To be sure, the new rates represent a proportionally large increase.
Yet the current CVP commercial power rate is still only one-fourth the comparable Pacific Gas and Electric Company rate,
and, according to an environmental impact statement prepared in connection with the proposed rate increase in 1977, the cost of CVP power after the rate increase will still be less than the rate for other power supplies in the area.
With respect to the impact of the new increased rates on irrigators in particular, the EIS concluded that
Irrigation districts located within the Sacramento and San Jaoquin Valleys would pass on the increased costs to the member farmers, who in turn, must charge more for their commodities. Since the power cost is a very small part of the total cost of commodities, the economic impact of the proposed power rate increase would be negligible.
EIS at 14. A second EIS completed in January of 1983 which undertook a more detailed analysis of the effect of the rate increases on irrigators reaffirmed these findings.
In any event, the language of section 9(c) vests the Secretary with discretion to determine whether WAPA's power marketing activities will impair the efficiency of the project for irrigation purposes. Even if the Secretary's discretion is limited and therefore properly subject to judicial review,
the Court could not find that the Secretary abused its discretion. The Secretary's findings that WAPA's decision to market an additional 102 MW and that the increased power rates will not impair the project's ability to perform its irrigation functions are entitled to special deference. Not only is the subject matter of the reclamation laws, and the impairment clause in particular, of a kind traditionally left to the expertise and judgment of the administrative agencies, but questions of the timing of the release of water for irrigation and power generation as well as the issue of what activities or contracts may "impair" the efficiency of the project's irrigation functions are complex and technical and not susceptible to judicial second-guessing.
This does not mean that the agency's determination of no impairment is totally unreviewable. Certainly, the Court has the authority and the duty to inquire as to whether the Secretary has exercised his discretion. See City of Santa Clara v. Andrus, 572 F.2d 660, 671-72 (9th Cir. 1978); Arizona Power Pooling Association v. Morton, 527 F.2d 721, 727-28 (9th Cir. 1975); Environmental Defense Fund, Inc. v. Morton, 420 F. Supp. 1037, 1044 (D. Mont. 1976), rev'd in part on other grounds sub. nom., Environmental Defense Fund, Inc. v. Andrus, 596 F.2d 848 (9th Cir. 1979). Here, however, plaintiffs do not allege that the Secretary did not exercise his discretion, but they state only that they "think it is inconceivable that the Secretary properly exercised his judgment in these proceedings, since his view of what may constitute 'impairment' under the 1939 Act is erroneous in the first place." Plaintiffs' Opposition Memorandum at 7. For the reasons already stated, the Court disagrees.
To the extent that there is anything left of plaintiffs' allocation complaint,
the Court finds that it, too, lacks merit. In that regard, plaintiffs make three separate but interrelated claims. First, they claim that the government's decision to market an additional 102 MW of electric power violated the reclamation laws because WAPA is authorized to sell only power produced by the project which is surplus to the project's operational requirements, plus whatever purchased energy is necessary to firm the project's reliable capacity during off peak periods of consumption. Second, they contend that the marketing of this additional 102 MW will increase the purchased power requirements of the project and thus increase the power rates of WAPA's irrigation customers. Third, they argue that the manner in which WAPA allocated the additional power -- i.e., its decision to allocate the "vast majority" of the 102 MW to nonirrigation users -- impairs the efficiency of the project for irrigation purposes in contravention of the reclamation laws.
As already indicated, plaintiffs' major objection to WAPA's decision to market the additional 102 MW is that it will increase power rates.
The present total hydroelectric generating capacity of the CVP is 1751 MW. Currently, the CVP customer load is 1152 MW, this includes the 102 MW at issue in this action.
Over the years, Congress has approved WAPA's importation of additional power from the Northwest to serve CVP's California preference customers.
Before 1964, the CVP load was 450 MW, in 1964 it was increased to 920 MW, in 1975 to 985 MW, and in 1980 up to 1050 MW. The Bureau's decisions to increase the CVP load were based upon technical considerations having to do with the operation of the CVP. Plaintiffs apparently do not contest the authority of the Bureau to purchase sufficient energy to support the CVP hydroelectric capacity of 1751 MW. Because the decision to increase the CVP customer load an additional 102 MW to 1152 MW is well within WAPA's statutory authority, plaintiffs' first ground for invalidating WAPA's allocation decision must be rejected.
With respect to the claim that the marketing of the 102 MW will increase rates, WAPA concedes that nonproject generated energy, which is considerably more expensive, will increase CVP's operating costs. Nevertheless, WAPA states that due to its multi-state transmission systems and its ability to acquire resources in other market areas, it will be able to acquire power cheaper than its customers could individually, and that it can achieve savings overall from economies of scale. Plaintiffs are not entitled to be relieved of any cost increases associated with this 102 MW any more than they are entitled to lower rates, or rates which exclude purchased power costs.
Finally, WAPA is not required to give primary consideration to the power needs of irrigators in the allocation of project power, or to afford preference to the irrigators. The preference clause in section 9(c) requires only that public entities be given preference over private entities in the marketing of power from federal reclamation projects; it does not require that all preference customers be treated equally or that all preference customers even receive an allocation. The allocation of power among the various preference customers is the type of decision that is committed to agency discretion. In fact, WAPA's decision to allocate the 102 MW is totally unreviewable because there is simply "no law to apply." City of Santa Clara v. Andrus, supra, 572 F.2d at 667-68.
One of the purposes of the Reclamation Project Act was to provide a method by which the United States may recover its construction costs on reclamation projects. The sale of power from such projects was considered an important source of revenues to defray the substantial costs incurred by the government, including those costs associated with the project's irrigation functions. Congress included the provision granting certain public entities a preference in the sale of project power to benefit a wide class of users and to ensure that private entities would not purchase all the inexpensive power and resell it at a profit.
All of the parties agree that irrigation is an important function of the CVP. However, the reclamation laws which govern the marketing of power from the CVP do not require that irrigators be given any special or greater preference than other preference customers. To require all such commercial customers to share in the costs of project power is clearly permitted by the statute and it is not inconsistent with the statutory goals or the intent of Congress. Accordingly, the motions for summary judgment filed by the government and the intervenor-defendants will be granted.