# Petition — Pacific Gas & Electric Co. v. City of Santa Clara > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_1289%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1978 - **Citation:** 439 U.S. 859 ## Text ee ee eS i i} JUL 3 j978 S| In the Supreme Court ofthe. .., United States —_—— Paciric Gas anp ELectric Company, Petitioner, VS. City or Santa Cuara, CALIFoRNIA, Respondent. Petition for Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit Terry J. HouLtinan Three Embarcadero Center San Francisco, California 94111 Attorney for Petitioner Pacific Gas and Electric Company Morris M. DoyLe Cuar.es A. Fercuson McCutcuHen, Dove, Brown & Enersen Of Counsel Joun C. Morrissey Matcotm H. Fursvsy THeEopoRE L. LinpBerG, JR. Of Counsel TABLE OF CONTENTS Page RE ONL TCE Se 1 cc cecesseee 2 oo etc gh OOS SST eo 2 EE Se 2 coc ccceeencsecerseencneen 3 Ee 5 Reasons for Granting the Writ 00000000 10 I. The Court of Appeals’ Interpretation of the Pref- erence Clause Is Contrary to a Reasonable Ad- ministrative Construction, and thus Presents Im- portant Questions Not Settled by the Supreme Court which Affect the Distribution of Federal Power to Millions of People 200.000.000.000. 11 II. The Court of Appeals’ Ruling Concerning the Retroactive Effects of a Decision in This Case Conflicts with Applicable Decisions of the Ee 15 III. Petitioner Seeks Review of Issues Fundamental to the Further Conduct of this Lawsuit: Hence, a Writ of Certiorari Should Issue ...... 19 Ee Bisa! 21 TABLE OF AUTHORITIES CITED CASES Pages Allen v. State Board of Elections, 393 U.S, 544 (1969) 17 Arizona Power Pooling Assoc. v. Morton, 527 F.2d 721 (9th Cir. 1975), cert. denied 425 U.S. 911 (1976) ........ 7 Arizona Power Authority v. Morton, 549 F.2d 1231 (Oth Cir, 1977) .-.ncecccscncsonsnsnscsecsnsoseserensnscccnsecnnvocnsnsvesoooses 7 Atlantic Richfield Co. v. Hickel, 432 F.2d 587 (10th Cig, TOTO) sonconccncsanccscctsccacecscsonnenessennceneseteonevenstevensasasesosonsers 17 Bentex Pharmaceuticals, Ine. v. Richardson, 463 F.2d 363 (4th Cir. 1977), rev’d on other grounds, 412 U.S. MES sR 8 RBIS Sa cemanre seeseeennennneeen essen 17 Bowles v. Seminole Rock Co., 325 U.S. 410 (1945) ........ 11 Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) ..........--.--. 17 Cipriano v, City of Houma, 395 U.S. 701 (1969) ............ 18 City of Portland v. Munro, Civil Nos. 77-928 and 77-929 (D. Ore 1978) seseesennnnnnnnnnnnnnensntnnvnnneneenenceneresesstit 7 Corniel-Rodriguez v. ILN.S., 532 F.2d 301 (2d Cir. ; 0 en We teacnaaly 16, 17 Dugan v. Rank, 372 U.S. 609 (1963) ...2.2.----.seeseseseeeeeeees 5) Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 CLIT) ccc ececsecibeciaecaneenstenprcenenesanmiannreincnomnmeionceniadenian 16 Fuel Cost Adjustment Clauses in Wholesale Rate Schedule, Docket No. R-479, Order No. 517, 3 Federal Power Service 5-36 (November 13, 1974) .................... 13 Fuel Cost Adjustment Tariff Provisions and Pro- cedures, California Publie Utilities Commission Case No. 9886, Decision No. 85731 (April 27, 1976) ............ 13 Gillespie v. United States Steel Corp., 379 U.S. 148 » CRG ED aoncsccnenscecssccccsachnuniesibse nas splecoemeneaseseeananaenninimestecetanrnnt 20 Griggs v. Duke Power Co., 401, U.S. 424 (1971) ............ 11 Hanover Shoe v. United Shoe Machinery Corp., 392 Uy, OBR CRO) cine alctertcones 17 TABLE oF AvuTHoRITIES CITED ili Pages Heirs of Denena v. Communication, Splicing and Engineering Co., 474 F.2d 1249 (3d Cir. ss } ne 17 INS v. Hibi, 414 U.S. 5 (1978) once ccceccccecesccsssoecoccececoeees 17 Ivanhoe Irrigation District v. MeCracken, 357 U.S. epi ceca, BN ee Ne ae ce NE Nee a 5 Land v. Dollar, 330 U.S, 731 (1947) oooccccccccccccccceeceoeee----. 20 Larson v. Domestic & Foreign Commerce Corp., 337 eS, pheketi Te inet RE Le eee 20 Lemon v. Kurtzman, 411 U.S. 192 DRED we 17 Linkletter v. Walker, 381 U.S, 618 (1965) ..................... 18 McLaren vy. Fleischer, 256 U.S. 477 PRED) cerca ot, 11 Montana v. Kennedy, 366 U.S. 308 (1961) ................ 17 Moore vy. N.Y. Cotton Exchange, 270 U.S, 593 (1926) .... 9 Moser v. United States, 341 U.S. 41 CID esscrciercnsinesnes 16 Power Reactor Co. v, Electricians, 367 U.S, 396 (1961) 11 Santiago vy. LN.S., 526 F.2d 488 (9th Cir. 1975), cert. dented 425 U.S. 971 (1976) ......ccccccceccecoececoecosoeeee.-....... 17 Schlesinger v, Councilman, 420 U.S, 738 CREED eisssaccreas 20 Thompson v, Washington, 551 F2d 1316 (D.C. Cir. cl, ER EIS ER SL ROL ra ase 18 Train v. Natural Resources Def. Council, 421 U.S. NI ihe re aN 11 Ulman y. United States, 558 F.2d 1, 201 Ct. Cl. 888 ae ag: AEN STE Cn Sea 17 United States vy. City of Chicago, 400 U.S. 8 (1970) .... 11 United States v. General Motors Corp., 323 U.S. 373 On OPER a Ried enth Ace ao aa 20 United States v. Gerlach Live Stock Co., 339 U.S. 725 acs ole ctr EASIER Ae che 5 16 U.S.C. 16 U.S.C. § 16 U.S.C. § 16 U.S.C. 28 U.S.C. 28 U.S.C. 28 U.S.C. 28 U.S.C. § 42 U.S.C. TaBLEe OF AvuTHORITIES CITED $ 1361 EEE EE EEE EEE EEE EEE EEE TEETER EEE HEHEHE OOD EEE EEE EEE EEE EE EEE REEL REEL E EEE EEE REEDS OS eee eee eee ee eee eee eee eee PPeeeee ee eee eee eee eee eee ee eee STATUTES Pages Atomic Energy Act of 1954, 42 U.S.C. § 2064 .............. 5 Bonneville Project Act, 16 U.S.C. § 832¢ .....22------ eee 3 Boulder Canyon Project Act, 43 U.S.C. § 617d(e) ........ 5) Colorado River Storage Project Act, 43 U.S.C. § 620¢ .. ) Eklutna Project Act of 1950, P.L. 81-628, 64 Stat. 382 .. 5) Faleon Dam Act of 1954, P.L. 83-406, 68 Stat. 255 ....... 5) Federal Water Power Act of 1920, 16 U.S.C. § S00 ........ 5) Flood Control Act of 1944, 16 U.S.C. § 825s -...........-...-.-- 5) Fort Peck Project Act, 16 U.S.C. § 833¢ .0002.0......ceeceseees 5) Niagara Project Act, 16 U.S.C. § 836(b)(1) -...........-.-.-- 5) Raker Act of 1913, P.L. 63-41, 38 Stat. 242 .................... ) Reclamation Act of 1906, 48 U.S.C. § 522-000. 5, 14 Reclamation Project Act of 1939, 4° U.S.C. § 485h(e) — 1, 2, d, 9, 13 Rural Flectrification Act of 1936, 7 U.S.C. § 904 ........-... 3, 5 Salt River Project Act of 1922, 43 U.S.C. § 598 .............- 5) Tennessee Valley Authority Act, 16 U.S.C. §§ 831i, } .. 5 Water Conservation and Utilization Act of 1940, 16 WSC. © SOO B Tai 5 United States Code 7 USC. § 9h Wee 5 16 U.S.C. §00@e-7 See 5 16 U.S.C. SO0(@) eee 5) 16 U.S.C. § SOO cnc 5 16 UBC. § SBGe cnc eee Bs) annmm oocirc TABLE oF AvtTHorities CiTED : Pages 43 U.S.C. § 485h(e) 123,56 |) Se EE aoa » 2) 3, 0, 9, 10, 1 a a) a | Se Tee ann ; 5) Soe (aay). t( ag“ eee eee 5 LEGISLATIVE MATERIALS 84 Cong. Ree. 10224-6 (J ae ae 13, 14 S. Rep. 758, 76th Cong. Ist Sess., reprinted 84 Cong. Rec. 9369 (July 18, 1939) 15 MISCELLANEOUS 30 Op. Att’y. Gen. 197 (1913) 14 K. Davis, Administrative Law Treatise, Section 17,02 a8 IEE SAE ah oa 16 In the Supreme Court of the United States Paciric Gas anv Evectrric ComMPAany, Petitioner, VS. Crry or Santa Cuara, CALIFORNIA, Respondent. Petition for Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit PRAYER Petitioner, Pacific Gas and Electric Company (“PGandE” or “the Company”) asks that a writ of certiorari issue to review a portion of the judgment and opinion below of the United States Court of Appeals for the Ninth Cireuit in this case. PGandE seeks review of two rulings by the Court of Appeals: first, that certain electric power transactions between PGandE and the United States sureau of Reela- mation violate the preference clause of the Reclamation Act of 1939, 43 U.S.C. § 485h(e), unless excepted from the coverage of that clause, and, second, that PGandE had no immediate right to receive over $50,000,000 held in escrow. 2 OPINIONS BELOW The opinion of the Court of Appeals as amended on April 4, 1975 is reported at 572 F.2d 660;* a copy is ap- pended hereto as Appendix A. The order of the Court of Appeals denying Santa Clara’s petition for rehearing, granting PGandE’s and the government's petitions for re- hearing or modification in part, and amending the Feb- ruary 1, 1978 opinion is unreported; a copy is appended as Appendix B. The District Court’s first opinion is re- ported at 418 F. Supp. 1243; a copy is appended as Appen- dix C. The District Court’s opinion modifying its original opinion is reported at 428 F. Supp. 315: a copy is ap- pended as Appendix D. JURISDICTION An opinion and judgment of the Court of Appeals was entered on February 1, 1978. Petitions for rehearing were timely filed by Santa Clara and PGandF, and the govern- ment moved for modification. On April 4, 1978 the Court of Appeals denied Santa Clara’s petition but granted the eovernment’s motion and granted PGandk’s petition in part (Appendix B). This petition is being filed within 90 days of April 4, 1978. This Court has jurisdiction to review the judgment in question by writ of certiorari pursuant to 28 U.S.C. § 1254(1). STATUTE INVOLVED The preference clause of the Reclamation Project Act of 1939, 43 U.S.C. § 485h(c), is the relevant statutory pro- vision: *The Federal Reporter advance sheet version of the opinion is ipeorrect in that it ineludes a sentence ordered deleted by the Court o: Appeals on rehearing. The third sentence in the second full para- graph on page 672 of the advance sheet reporter should have been deleted. See Appendix B at 42, paragraph 4. 3 “(e) ... Any sale of electric power or lease of power privileges, made by the Seeretary in connection with the operation of any project or division of a project, shall be for such periods, not to exceed forty years. and at such rates as in his judgment. will produce power revenues at least sufficient to cover an appro- priate share of the annual operation and maintenance cost, interest on an appropriate share of the construe- tion investment at not less than 3 per centum per annum, and such other fixed charges as the Secretary deems proper: Provided further, That in said sales or leases preference shall be given to municipalities and other public corporations or agencies: and also to cooperatives and other nonprofit organizations financed in whole or in part by loans made pursuant to the Rural Electrification Act of 1936 and anv amend- ments thereof. Nothing in this subsection ‘shall he applicable to provisions in existing contracts, made pursuant to law, for the use of power and miscel- laneous revenues of a project for the benefit of users of water from such project. The provisions of this subsection respecting the terms of sales of electric power and leases of power privileges shall be in addition and alternative to any authority in existing laws relating to particular projects. No contract relat. ing to municipal water supply or miscellaneous pur- poses or to electric power or power privileges shall be made unless, in the judgment of the Secretary, it will not impair. the efficiency of the project for irrigation purposes. (emphasis added) 53 Stat. 1194-95, 43 U.S.C. § 485h(¢). QUESTIONS PRESENTED 1. The preference clause of the Reclamation Act of 1939, 43 U.S.C. § 485h(e), requires that a preference be given to certain entities in the sale of federal hydroelectric power generated at reclamation project dams. | 7 Should the preference clause be broadly construed to prohibit the federal government from delivering power to a non-preference entity under a conditional sale arrangement which results in the later repurchase and delivery of power to preference customers, which is necessary to enable the government to meet the long-term needs of those preference customers, and which generates no profit to the non-preference entity? 2, The Court of Appeals held that because completed power sales violated the preference clause they were “void” and “of no effect.” 572 F.2d at 677; Appendix A at 535. The Court of Appeals went on to suggest that such sales should be rescinded and retroactively reallocated to a preference customer, even though the power had been resold by the purchaser at cost to its customers. Whether, consistently with this Court’s decisions governing the award of retroactive equitable relief, a federal court may, after declaring unlawful a fed- eral agency’s completed power sales to a good faith purehaser who resold low-cost power at cost to non- parties to the lawsuit, a) declare void and order rescinded the ageney’s com- pleted power sales to the good faith purchaser, b) recognize the agency’s allegedly unlawful refusal to sell power to a third-party to the lawsuit as an equitable defense to the good faith purchaser’s con- tract claim for higher cost replacement power sold to and consumed by the third-party, and ce) place upon the good faith purchaser the burden of seeking relief against the federal agency for the $50,000,000 difference in value between the lower cost and higher cost power. 3] STATEMENT OF THE CASE This case began, and at base remains, a dispute among preference customers over the allocation of low-cost federal electric power generated at the Central Valley Projeet in California (“CVP”). PGandE, as a mechanism for the transmission of CVP power and a purchaser on an interim basis of some power destined for future delivery to certain preference customers, is caught in the middle of this struggle. The formation, functions, and purposes of the Central Valley Project are described in the opinions of the courts below and in Jranhoe Irrigation District +. McCracken. 3o0¢ U.S. 275 (1958); United States v. Gerlach Live Stock Co., 339 U.S. 725 (1950), and Dugan +. Rank, 372 U.S. 609 (1963). Briefly, the CVP is a water reclamation project subject to “the provisions of the reclaination law.” 50 Stat. 850 (1937), 16 U.S.C. $ 695(d). As an adjunet to water reclamation, CVP generates electric power at various dams and sells the power not required for its own water pump- ing needs. The preference clause of the Reclamation Act of 1939, 43 U.S.C. § 485h(e). requires that a preference be given public entities, such as municipalities, in the sale of CVP power.* *There are other, not necessarily identical, clauses in manv federal statutes governing federal power sales. Preference clauses have been included in the following enactments: the Reclamation Act of 1906, 43 U.S.C. § 522; the Raker Act of 1913, P.L. 63-41 38 Stat. 242; the Federal Water Power Act of 1920 16 USC § 800; the Salt River Project Act of 1922, 43 U.S.C. $598: the Boulder Canyon Project Act, 43 U.S.C. § 617d(c); the Veiseense Valley Authority Act, 16 U.S.C. §§ 831i.j: the Rural Electrification Act of 1936, 7 U.S.C. § 904: the Bonneville Project Act 16 U.S.C § 832c; the Fort Peck Project Act, 16 U.S.C. § 833c; the Reclama tion Project Act of 1939, 43 U.S.C. § 485h (ec): the Water Consery tion and Utilization Act of 1940, 16 U.S.C. § 5902-7: the Flood Control Act of 1944, 16 U.S.C. § 825s: the Eklutna Project (et of 1950, PI. 81-628, 64 Stat. 382; the Faleon Dam Act of 1954 PI 83.406, 68 Stat. 255; Atomic Energy Act of 1954, 42 US C. § 2064. le Niagara Project Act, 16 U.S.C. § 836(b) (1) - the rado River Storage Project Act, 43 U.S.C. i" on moe 6 The instant case concerns the plan developed by the Secretary of the Interior, a party to this case below, for marketing CVP power. The Secretary's marketing plan in- eludes a power exchange arrangement with PGandk by which PGandE acts as a “bank” for electric power de- livered to it by the government, Under this arrangement, set forth in the contract between the government and PGandk referred to below as “Contract 20484," PGandk purchases federal electric power subject to a commitment to resell an equal amount of power in the future to the government for delivery to preference customers of the CVP. The CVP power exchange arrangement was developed by the Secretary in 1964 to enable CVP to serve the full demand of then existing CVP preference customers through 1980, even though the power requirements of those cus- tomers would grow to exceed the capacity of CVP in the latter part of that time period. The arrangement enables CVP to serve the future needs of these customers which it eould not otherwise meet. Among other reasons for adopt- ing this plan was the government's belief that supplving all the needs of these CVP customers until 1980 would provide them with the time and savings to enable them to develop their own sources of power independent of PGandF. It is impossible to store the power “hanked” with PGandE. Accordingly, the power conveyed to PGandE by the government is immediately delivered hv PGandF to its own customers, For accounting purposes, the power is deemed sold to PGandE (subject to the government's right to repurchase an equal amount later) and is then resold by PGandE to its own 4,000,000 customers throughout northern and central California, under rates which require that the power he resold at PGandk’s cost. Tn other words, PGandE makes no profit when it resells the federal power. 7 CVP power facilities are integrated with the PGandE system. Power from these plants flows into the PGandE transmission system along with power from PGandF plants and other resources. CVP customers take power from the PGandE transmission system, not directly from CVP plants. All customers thus receive a mix of power, but those who have received a preference allotment from CVP are deemed to have purchased CVP> power transmitted or “wheeled” by PGandFk. CVP power is cheap.* When PGandE buys federal power for banking and resells it at rates which pass on its low cost, PGandE spreads that benefit among all its customers. PGandE customers include a number of municipal power systems and other entities which qualify as “preference” customers, but which do not purchase their power require- ments directly from the government. The City of Santa Clara, California (“Santa Clara”) is a CVP customer and qualifies for preference in the sale of power. The government did not, however, undertake to supply all of Santa Clara’s needs through 1980. The goy- ernment was able to supply all of Santa Clara’s load from December, 1965 until August, 1971. Thereatter. the govern- *As the cost of energy from non-hydroelectrie sources grows and the value of preferential treatment inereases, litigation is unlikely to diminish. Recently suits have been filed in the United States District Court for the District of Oregon by the City of Portland against the Administrator of the Bonneville Power Administration. the Secretary of Energy and 150 other defendants challenging the contracts for the marketing of Columbia River power by the Bonne- ville Power Administration. City of Portland v. Munro, Civil Nos. 77-928 and 77-929 in that court. Other very recent eases challenging the marketing of federal power are Arizona Power Pooling v. Morton, 527 F.2d 723 (9th Cir, 1975), cert. denied 425 U.S. 911 (1976), and Arizona Power Authority v. Morton, 549 FP2d 1231 (9th Cir, 1977). Thus far this Court has not provided principles of decision for disposing of eases arising under any of the various preference clauses, 8 ment gradually reduced the amount of CVP power sold to Santa Clara. PGandE has a contract with Santa Clara requiring the Company to supply the City’s electric power needs when- ever they are not met by the federal government. As the amount of federal power sold to Santa Clara has diminished and as the City’s load has grown, PGandk has, in compli- ance with its contract, delivered power to Santa Clara to meet the City’s needs. Santa Clara refuses to pay for the PGandE power, claiming that the government's withdrawal of power from the City was illegal and that the power de- livered to Santa Clara should therefore be deemed CVP power. The disputed funds, essentially the difference in cost between PGandii power and CVP power, have been placed in an escrow account by Santa Clara pending the resolution of its controversy with the government. During the same period that the government has refused to meet Santa Clara’s full demand, the government has sold power to PGandE for banking. The quantity of power sold to PGandk did in some months equal or exceed the amount necessary to make up the difference hetween the limited amount of CVP power sold to Santa Clara and the City’s total demand. Suit was brought on July 25, 1975 by Santa Clara against the Secretary of the Interior and the Commissioner of the Bureau of Reclamation seeking declaratory and injunctive relief against the reduction in the amount of CVP power sold to Santa Clara. Essentially Santa Clara claimed that it had been unfairly treated and discriminated against in the allocation of power among preference customers. Juris- diction of the district court was properly inioked pursuant to 28 U.S.C. § 1346(2), 28 U.S.C. $1361, and 28 U.S.C. § 2201. 9 PGandE was permitted to intervene as a defendant and counterclaimant. The Company's counterclaim alleged that since August 1971 the Company had fulfilled the obligation imposed on it by its contract with Santa Clara to supply electric power to the City but that Santa Clara had not paid PGandE for the power so supplied. PGandE requested the money due it—the funds in escrow. The district court had jurisdiction over PGandk’s claim. Moore v. N.Y. Cotton Exchange, 270 U.S. 593 (1926). The district court issued its first opinion on July 23, 1976 on motions of the federal government for summary judg- ment on all issues and of PGandE and Santa Clara for summary judgment on specific issues. (Giranting Santa Clara’s summary judgment motion in part, the district court remanded the case to the Secretary of the Interior for administrative hearings to review CVP allocations among preference customers and entered a judgment of dismissal. The distriet court did rule, among other things, that the “hanking” transactions with PGandE do not violate the preference clause of the Reclamation Project Act of 1939. 43 U.S.C. $485h(ce). With respect to PGandFE’s claim against Santa Clara, the district court ruled that PGandE’s right to he reimbursed for electrie power supplied by it to the City would depend on whether a new allocation schenie for CVP power was developed by the federal government during administrative hearings ordered by the court. On November 12, 1976, the district court issued a second written opinion denying PGandF’s motion for reconsidera- tion.* *The trial court did recognize that the sum of monies plaeed in escrow by Santa Clara was more than enough to preserve Santa Clara’s rights against the federal defendants and consequently it ordered the City to have 25% of the funds in escrow dishursed to PGandE and to pay 25% of all future PGandE electric power bills directly to the Company. The original judgment was amended accordingly. 10 All parties appealed the district court’s judgment to the Ninth Cireuit Court of Appeals. In its opinion the Ninth Cireuit reversed most of the district court's rulings. The Court of Appeals ruled that there was no ground for the distriet court's order that the government hold administra- tive hearings concerning how CVP power would be allocated among preference customers. The Court of Appeals also reversed the district court’s ruling as to the validity of the Secretary's banking transactions with PGandF. Mistakenly assuming that PGandE makes a_ profit or benefits by purchasing power under the bank account pro- visions of Contract 2948 A, the Ninth Cireuit held that bank- ing power with PGandE would contravene the preference clause if Santa Clara were ready, willing, and able to pur- chase banked power, unless banking was necessary to maxi- mize the efficiency of the CVP for irrigation purposes. The exception to the Court of Appeals’ ruling was thought to be required by the last sentence of 45 U.S.C. § 485h(e) which prohibits power sales that “impair the efficiency of the project for irrigation purposes.” With respect to PGandE’s counterclaim, the Ninth Cireuit ruled that banking trans- actions would be void if unlawful and “suggested” a retro- active restructuring of the transactions hetween the government, PGandF, and Santa Clara. With this unique combination of rulings and “suggestions” the case was ordered remanded to the district court for further proceed- ings. REASONS FOR GRANTING THE WRIT T. The Court of Appeals’ interpretation of the prefer- ence clause is contrary to a reasonable administrative eon- struction, and thus presents important questions of federal 11 law not settled by the Supreme Court which affect the dis- tribution of federal power to millions of people. II. The Court of Appeals’ ruling concerning the retro- active effects of « decision in this ease eonfliets with applicable decisions of the Supreme Court and threatens serious financial impact to an innocent third party. IIT. Petitioner seeks review of issues fundamental to the further conduct of this lawsuit, hence a writ of certiorari should issue. I. The Court of Appeals’ Interpretation of the Preference Clause Is Contrary to a Reasonable Administrative Construction, and Thus Presents Important Questions Not Settled by the Su- preme Court Which Affect the Distribution of Federal Power to Millions of People. This Court has ruled that a reasonable interpretation given a statute by the government official charged with its administration should not be rejected by a federal court for some other “reasonable” construction which the court deems preferable. Train v. Natural Resources Def. Council, 421 U.S. 60, 87 (1975); Grigas v. Duke Power Co.. 401 U.S. 424, 435-34 (1971); United States v. City of Chicago, 400 U.S. 8, 10 (1970); Power Reactor Co. v. Electricians, 367 US. 396, 408 (1961); Bowles +. Seminole Rock Co.. 325 U.S. 410, 417-18 (1945); WeLaren v. Fleischer, 256 U.S. 477. 480-81 (1921). This is especially so where the statute covers a complex matter, where no one interpretation of the statute exists which ean be said to be “correct.” and where others have relied on the government official’s interpretation. Train v. Natural Resources Def. Council, supra, 421 U.S. at 87: see also McLaren v. Fleischer, supra, 256 U.S. at 481. In such circumstances this Court will uphold a “reasonable” inter- pretation of a statute by the agency assigned to administer it and prohibit a Court of Appeals from substituting its interpretation for that of the ageneyv. Train v. Natural Re- sources Def. Council, supra, 421 U.S. at 87. 12 The Secretary's interpretation is a reasonable interpreta- tion demonstrably consistent with the Congressional pur- pose and scheme which the Court of Appeals should have left undisturbed. The district court held that sales of power to PGandE do not violate the preference clause since it was necessary to make provision in the Secretary’s marketing scheme for some sort of power banking arrangement and the arrange- ment involved conditional as opposed to unconditional “sales” of power to PGand. 418 F.Supp. at 1251; Appen- dix C at 58-59. Furthermore, the Court of Appeals itself recognized that the “goal of the banking arrangement is consonant with the preference clause, inasmuch as all CVP power is ultimately committed to meet the needs of public entities.” 572 F.2d at 671; Appendix A at 18. The Secretary’s application of the preference clause in this case was reasonable in part because he was not choos- ing between two equal offers from PGandF and Santa Clara. The sale to PGandFE was a conditional sale. That condition, that PGandE agree to act as a bank for the Secretary, was a condition Santa Clara could not and would not meet. It has no generating facilities and no source of power to enable it to resell purchased power back to CVP. PGandE assumed an obligation that Santa Clara could not meet. Only if Santa Clara had offered the same terms and the Secretary had nonetheless sold the power to PGandE would the requirement of “preference” have heen violated. Under the circumstances the decision to sell to PGandE was not only reasonable, it was consistent with the intent of Congress in passing the preference clause. A basic concept hehind the preference clause was to preclude private profit from the purchase of federal hyvdroelectrie power where dis- 13 tribution of the benefits of such power directly to the public was possible. As explained during the debate on the adop- tion of this specifie clause in the Reclamation Act: “the provisions of this amendment are merely prudent provi- sions in order to prevent some intermediary corporation from taking advantage of this publicly developed power and charging an additional amount to the ultimate con- sumer... .” 84 Cong. Ree. 10224 (July 27, 1939). Sales of federal power to PGandE for hanking purposes are con- sistent with this rationale. The power conditionally sold to PGandF, ultimately goes to preference customers without any profit to PGandE.* Thus, the Secretary's interpretation did not contradict the intent of the Congress. The legislative history of the Reclamation Act of 1939 also indicates that Congress intended to hestow on the Secretary the discretion to sell power to a non-preference entity which offered more favorable terms than a prefer- ence entity. When the bill containing the preference clause was reported out of the Conference Committee to the House (which had previously stricken the preference clause), Representative Leavy of Washington told the House: ~ “Tt has heen the poliev of the Reclamation Service, made so by the act itself, the basic law. that they may give preference to municipalities and publie eorpora- tions in the purchase of power, This amendment goes one step further and includes cooperatives and rural *Both the PGandE retail rates and wholesale rates contain fuel adjustment clauses whose coverage imeludes energy cost Savings achieved through power purchase transactions. There is thus a direct pass through to PGandE’s customers of any savings obtained by PGandE through power purehase transactions. See e.g. Fuel Cost Adjustment Clauses in Wholesale Rate hedule, Docket No. R-479, Order No. 517, 3 Federal Power Serviee 5-36, 5-38 (Noy. 13, 1974): Fuel Cost Adjustment Tariff Provisions and Proc cedures, California Public Utilities Commission Case No. 9886, Decision No. 85731 (April 27, 1976). 14 electrification projects. The gentleman from South Dakota [Mr. Case] ... is under a misapprehension when he says that this law will require that such pret- erence be given irrespective of the bid. That is not the fact. If a private corporation makes a better bid, then, under this law, it will become the duty of the Commis- sioner of Reclamation to consider that fact, but when the two make bids that are equal, it becomes his duty then to give preference to the public corporation, or cooperative, whether it be a city, town, cooperative, or rural electrification project.” S4 Cong. Reeord 10225 (July 27, 1939). The conference report was thereupon agreed to by the House. 84 Cong. Record 10226 (July 27, 1939). Further evidence of the reasonableness of the Secretary's construction of the “preference” requirement may be found in the Attorney General’s construction of a similar provi- sion in an earlier statute. The first reclamation law, the Act of April 16, 1906 (84 Stat. 116, 117; 48 U.S.C. § 522 provided, inter alia, that the Secretary of the Interior could lease surplus power from irrigation projects “giving preference to municipal purposes.” Tn 1915 the Attorney General rendered an opinion interpreting this original preference proviso in which he stated: “The duty to prefer municipal purposes in the making of leases is secondary and incidental. If, where a sur- plus of power became available, opportunities should oceur to dispose of it for municipal uses, and the terms offered in return were at least as advantageous to the project as the terms offered in behalf of other uses, it would be the duty of the Secretary to make the lease for the municipal uses, but not so if, in his judgment, the contract would prove more profitable if made in the other way.” 30 Op. Att’y. Gen. 197, 201-2 (1913). 15 When the Senate Committee on Irrigation and Reclamation considered the preference clause in the 1939 Aet it noted its continuation of existing preference policy in reporting to the Senate: “This proviso is considered by the committee to be in accord with the policy of Congress first incorporated into law in the Act of April 16, 1906 (34 Stat. 116, 117), and re-enacted in the Act of February 24, 1911 (36 Stat. 930). The proviso in question does not change this lonq- continued policy under which surplus power from ree- lamation projects has been disposed of to the mutual satisfaction of privately and publicly owned utilities. ... It is therefore deemed appropriate that this proviso be ineluded.” (emphasis added) S. Rep. 758, 76th Cong., Ist Sess., reprinted 84 Cong. Record 9369 (July 18, 1939). Thus the district court, Congress and the Attorney General all support the conclusion that the interpretation of the preference clause adopted by the Secretary was reasonable. Under the decisions of this Court it should have been allowed to stand. II. The Court of Appeals’ Ruling Concerning the Retroactive Effects of a Decision in This Case Conflicts with Applicable Decisions of the Supreme Court. The Court of Appeals ruled in this case that past, com- pleted sales of CVP power to PGandE are “void if unlaw- ful, for administrative actions taken in violation of statu- tory authorization or requirement are of no effect.” 572 F.2d at 677; Appendix A at 33. The court went on to “sug- gest” a retroactive reconstruction of completed transactions between the government, PGandE, and Santa Clara. Both the ruling and the suggestion appear contrary to controlling decisions of this Court. They raise important questions con- Roem aes 16 cerning the award of retroactive equitable relief, and should thus be reviewed. The Court of Appeais’ ruling that unlawful CVP power sales to PGandE would be void conflicts with this Court’s holding in Moser v. United States, 341 U.S. 41 (1951), that a federal agency’s action, though it exceeds statutory authority, may nonetheless be binding on the ageney if the other party affected by the action has acted in “justifiable reliance” on the action. 7d. at 46. In the ease at bar, as in Moser, the petitioner has relied to its detriment on ageney actions which subsequently have been held to exceed statu- tory authority. PGandE has not profited by these trans- actions and is an innocent bystander to the clash between the government and Santa Clara. PGandE has resold the CVP power at rates reflecting its costs to customers who have consumed the power. Those sales, to millions of indi- viduals not parties to the suit, cannot be undone. Tf the sales of CVP power to PGandE are retroactively declared void, and accounts between the parties reallocated, PGandE is relegated to claims against the United States instead of against the escrow fund. PGandE has relied justi- fiably and to its detriment on the Secretary's decision to refuse CVP power to Santa Clara and instead to sell the power to PGandF for banking. To support its unqualified assertion that all unauthorized administrative actions are retroactively void, the Court of Appeals cited Federal Crop Insurance Corp, v. Merrill, 332 U.S. 380 (1947). The Merrill ease preceded Moser, however, As the Second Cireuit has observed, the decision in Verrill was “substantially undermined” by the subsequent decision in Moser. Corniel-Rodriquez v. I.N.S.. 532 F.2d 301, 350 n. 15 (2d Cir, 1976). See K. Davis, Administrative Law Treatise $17.02 (1958). The Court of Appeals’ failure to 17 recognize the more recent applicable decisions of this Court should be reviewed.* Not only has the Court of Appeals ruled that completed unlawful sales of CVP power are, ipso facto, void, the court also suggested the award of retroactive equitable rescission and reallocation of these completed transactions. This Court, however, recognizing that statutory “rules of law are hard facts on which people must rely in making decisions and in shaping their conduct,” has frequently invoked a “dloetrine of non-retroactivity” to prevent the retroactive application of its holdings regarding the interpretation or constitutionality of a statute. Lemon v. Kurtzman, 411 U.S. 192, 197, 199 (1973); Chevron Oil Co. v. Iluson, 404 U.S, 97, 105-07 (1971). The principles governing the application of the doctrine of non-retroactivity are set forth in detail in Chevron Oil Co. v. Huson, supra, 404 U.S. at 106 (1971). Retroactivity is not appropriate where: (1) the decision establishes a “new principle of law” either by overruling past precedent or by deciding an issue of first impression whose resolution was not predictable, see Hanover Shoe v. United Shoe Ma- chinery Corp., 392 U.S. 481, 496 (1968), Allen v. State Board *In INS v. Hibi, 414 US. 5. 8 (1973) and Montana v. Ke nnedy, 366 U.S. 308, 314-15 (1961), the Court reserved the question whether, on an estoppel theory, a person's reliance on unauthorized conduct of government officials should be recognized. In the absence of guidanee from this Court, the federal] cireuit courts and the Court of Claims have taken conflicting views of the propriety of estoppel against the U.S. government and. the standard to be applied. See Corniel-Rodriquez, supra (2d Cir.) : Heirs of Denena v. Communication, Splicing and Engineering Co., 474 F.2d 1249 (3d Cir. 1973); Benter Pharmace uticals, Ine. v. Richardson, 463 F.2d 363 (4th Cir. 1972), rew'd on other grounds, 412 U.S, 645 (1973); Santiago v. ILNS., 526 F.2d 488 (9th Cir. 1975), cert. denied, 425 U.S. 971 (1976): Atlantic Richfield Co. v. Hickel, 432 F.2d 587 (10th Cir. 1970): Timan v. United States, 558 F.2d 1, 201 Ct. Cl. 888 (1977). 18 of Elections, 393 U.S. 544, 572 (1969); (2) the purpose and effect of the new principle of law will not be advanced by its retroactive application, see Linkletter v. Walker, 381 U.S. 618, 629, 636-39 (1965); and (3) a retroactive applica- tion of the new principle of law would create a substantial inequitable result, for “[wlhere a decision of this Court eould produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the ‘injustice or hardship’ by a holding of nonretroactivity.” Cipriano v. City of Touma, 395 U.S. 701, T06 (1969), The application of those factors to this case mandates a decision favorable to PGandki with respect to its ecounter- claim, even if the Court of Appeals’ interpretation of 48 U.S.C. $ 485h(e) as prohibiting the Seecretary’s banking transactions is correct. In the court below, petitioner care- fully explained how it had relied in good faith and to its detriment on the Secretary’s actions vis-a-vis Santa Clara. But the Court of Appeals, though it recognized that PGandFE was an “innocent third party caught between the claims of Santa Clara and the position of the Secretary,” 572 F.2d at 678, simply asserted that if the Secretary could not prove that the banking of power desired by Santa Clara was within his statutory power his unauthorized actions are retroactively “void” and “of no effeet”, id. at 677. That simplistic reasoning directly conflicts with the analysis followed by this Court when determining whether to afford retroactivity to its decisional law. As illustrated by this Court’s decisions cited above, the basie question is no longer whether the law would approve of a banking transaction if it were a new one, but rather whether those who have relied on past transactions should be permitted to continue to rely on them given the partieu- lar cirenmstances of the transactions. See Thompson v. 19 Washington, 551 F.2d 1316, 1319 (D.C. Cir. 1977). By choosing to regard PGandE’s counterclaim as if PGandk’s right to the funds held in escrow are dependent on the validity of banking transactions in the abstract. the Court of Appeals has brought itself into direct conflict with the applicable line of cases from this Court cited above. Such a decision should be reviewed. TTT. Petitioner Seeks Review of Issues Fundamental to the Further Con- duct of This Lawsuit; Hence, a Writ of Certiorari Should Issue. It is necessary to confront these issues only on account of the Court of Appeals’ decision to vaeate the district court’s earlier decision upholding the legality of the bank- ing arrangement. The practical result of the Court of Appeals’ ruling is to allow the eserow fund to continue to grow ata rate of approximately $2,000,000 per month until the distriet court ean try these issues. Tf the result on remand is adverse to petitioner, petitioner will he forced to wait for the ease to progress through the Cireuit Court of Appeals a second time before it can finally seek review by this Court of the points presented in this petition, vinless. of course, this Court should grant this petition. The escrow fund currently contains over $50,000,000, Tf this petition is not granted, the escrow will surely more than double hefore petitioner will be at this level of appel- late review again. Meanwhile, petitioner must continue to borrow at a higher rate of interest than the escrow returns to replace the monies held in escrow, As the Court of Appeals observed, PGandE is “an inno- cent third party, canght between the conflicting elaims of Santa Clara and the position of the Secretary.” 572 F.2d at 20 678; App. A at 55. The district court tried to mitigate the harsh effects of the dispute en PGandk by erde: ing a por- tion of the escrow disbursed to PGandE and ordering Santa Clara to pay PGandE at least a specified portion of all future PGandE bills. The Court of Appeals considered the suit of such importance as to afford it expedited treatment, notwithstanding—or even perhaps bhecause—the district court ordered the controversy remanded to the Secretary for further proceedings. Petitioner respectfully requests this Court to afford a similar opportunity to avoid extended proceedings that may not be necessary at all. Tt is not uncommon fox this Court to review a case despite its interlocutory status where there is an issue involved which is “fundamental to the further conduct of the ease.” United States v. General Motors Corp., 323 U.S. 373, 377 (1945): see also Gillespie v. United States Steel Corp. 379 U.S. 148, 158 (1964). A writ has been issued even where a Court of Appeals has remanded the case for further pro- ceedings, see Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 685 n. 3 (1949): Land v. Dollar, 330 U.S. 731, 734 n. 2 (1947). More recently, important ques- tions concerning the proper exercise of equitable juris- diction by a federal court were considered sua sponte by this Court, without prior consideration by the lower courts, in Schlesinger v. Councilman, 420 U.S. 738, 745 (1975). Since the only issues which remain to he considered hy the district court coneern the legality of the PGandE. banking transactions and the award of retroactive relief, the Court of Appeals’ rulings of which we seek review ean fairly be deseribed as fundamental to the further conduct of this ease. We respectfully submit that this Court should issue the writ. 9] P IV. CONCLUSION A writ of certiorari should issue to review the portion of the judgment and opinion of the United States Court of Appeals for the Ninth Cireuit deseribed in this petition. Respectfully submitted, Terry J. HovtiHan Attorney for Petitioner Pacific Gas and Electric Company Morris M. Dove CHartes A. Fercuson McCutcuen, Doytr, Brown & ENErRSEN Of Counsel Joun (. Morrissey Matcoitm H. Fursvsn Tueopore L. Lryppere, JR. Of Counsel ewer wes —— ———— Appendix A City of Santa Clara, California, Appellant, v. Cecil Andrus, Individually and as Secre- tary of the Interior, and R. Keith Hig- ginson, Individually and as Commis- sioner of the Burean of Reclamation, United States Department of Interior, Appellees. Cecil Andrus, Individually and as Secre- tary of the Interior, and R. Keith Hig- ginson, Individually and as Commis- sioner 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. Nos, 77-1110, 77-1270, 77-1189 and 76-3670. United States Court of Appeals, Ninth Circuit. Feb. 1, 1978. As Amended on Denial of Rehearing and Rehearing En Bane April 4, 1978. Appeal from the United States District Court for the Northern District of California. Appendix sefore DUNTIWAY and CARTER, Circuit Judges, and BURNS.* District Judge. DUNIWAY, Circuit Judge: This case concerns sales by the Secretary of the Interior le 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-withdrawab.e) power. The Pacifie 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 dis- missed the action without prejudice. All parties appeal. We affirm in part, reverse in part, and remand in part. FACTS The Central Valley Project (CVP) is a multipurpose federal reclamation project consisting of numerous dams, hvdroelectrie power plants, transmission lines, and irriga- tion canals, located in the Central Valley of California and its surrounding mountains.’ While production of hydroelec- trie power is not the primary purpose of the CVP, a *The Honorable James M. Burns. United States District Judge for the District of Oregon, sitting hy designation. 1. The CVP is deseribed in detail in Jvanhoe Irrigation District v. McCracken, 1958, 357 U.S. 275, 280-83, 78 S.Ct. 1174, 2 L.Ed.2d 1313. Appendir 3 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? Consequently, CVP power does not lack for willing purchasers. Section 9(e) of the Recla- ination Project Act of 1939, 48 U.S.C. § 485h(¢), 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 trom PG&E and so could not then take power from CVP. In 1962, the Seeretary 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 applica- tions 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 re juirements contract with PG&E. The Secretary responded that while he would not commit himself to such a future allocation, Santa Clara’s applica- tion 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 2. In 1976, the price of CVP power ($.005 per kilowatt hour) was roughly one-fourth of that charged by PG&E ($.019 per kilo- watt hour). + Appendix available was allocated to other preference customers which were able to take it immediately. Between 1963 and 1964, CVP’s generating capacity in- creased further. Notice of the availability of additional power was sent to all preference entities, Santa Clara among them, asking for estimates of present load require- ments 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 elec- tricity 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 amend- ment. 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 Appendix 3 from 120,000 kilowatts to 71,450 kilowatts. This amount is likely to dwindle still further if the Secretary has his way. 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 non- withdrawable allotments, rather than to offer it to custom- ers 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. 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 allo- eation and supplied hy PG&F. Contending that the with- drawals were unlawful and consequently ineffective, Santa Clara insisted that its power needs were stil] heing fully supplied by the Seeretary. The City began paving the moneys demanded by PG&E into an escrow account and has done so ever since. PROCEEDINGS IN THE TRIAL COURT On July 25, 1975, Santa Clara filed this action against the Secretary and the Commissioner of the Bureau of Reclama- tion (the federal defendants), seeking declaratory and injunctive relief. In its complaint th City challenged the withdrawal of CVP power and the Secretary’s refusal to supply it with a nonwithdrawable allocation. PG&E inter- vened as a party-defendant, counterclaiming for declara- tory relief with respect to the funds held in escrow. Al] - parties moved for summary judgment, = me 2he En gb AE pete oe ge 6 Appendix On July 23, 1976, the district court issued its opinion, City of Santa Clara v. Kleppe, N.D.Cal., 1976, 418 F.Supp. 1245, holding as follows: (1) Santa Clara’s action is not barred by sovereign immunity; (2) the Seeretary’s con- tractual relationship with PG&E does not violate the recla- mation laws: (5) the Seeretary’s decisions allocating CVP power are reviewable; (4) Congress has not approved the existing allocation scheme: (5) the Seeretary violated the Administrative Procedure Act (APA) by failing to pro- mulgate and publish rules of procedure governing the allo- eation of CVP power: (6) the Secretary’s actions denied Santa Clara due process; and (7) the National Environ- mental Policy Act (NEPA) did not require the Secretary to file an envircnmental 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 Seeretary’s market- ing decisions were reviewable, it did not pass on the lawful- ness 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&F’s counterclaim, the court ruled that the utility’s right to be reimbursed by Santa Clara would depend upon the alloea- tion scheme adopted by the Secretary on remand. The court therefore ordered that the disputed funds remain tempo- rarily in eserow.* Tt also dismissed the action without prejudice. 3. The court later modified this decision, ordering that one quar- ter of the funds in escrow be disbursed to PG&E to enable the utility to recoup the costs inevrred in purchasing the power ultimately resold to Santa Clara. See City of Santa Clara v. Kleppe, N.D.Cal.. 1976, 428 F.Supp. 315. Appendix 7 I. JURISDICTION ON APPEAL 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 mer- its” effect of Rule 41(hb), F.R.Civ.P., and permits the filing of a new action by any party dissatisfied with the Secre- tary’s action on remand. Tt is still true, however. that the judgment disposes of the action. Moreover, the remand is, in substance, a mandatory injunction requiring certain ac- tion 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, We have jurisdiction. See Gueory v. Hampton, 1974, 167 U.S.App.D.C. 1, 4, 510 F.2d 1222, 1295: Hines x. D’ Artois, ) Cir., 1976, 531 F.2d 726, 730. II. LACHES AND THE STATUTE OF LIMITATIONS The federal defendants argue that this action is barred by either the six-year statute of limitations, 28 U.S.C. §2401(a), or the doctrine of laches. These arguments are hased on the assumption that Santa Clara’s claim for relief arose no later than 1965 when the City entered into a con- tract with the Secretary for the supply of withdrawable CVP power. Long after 1965, however, the Secretary, through the regional director of the Bureau of Reclamation, continued to assure Santa Clara that its applications for nonwith- drawable power would receive due consideration in the future. It was not until 1972 that the Secretary informed Sey ates great ere 8 Appendix the City by letter that all firm CVP power was committed to meet the growth needs of other preference customers. Until that date, the City could reasonably have believed that it could, in future, secure an allocation of firm power. We therefore conclude that Santa Clara’s claim for relief did not arise until 1972, when the Secretary finally told the City, in unequivocal terms, that its applications for non- withdrawable power would not be considered, then or later. TTT. REVIEWABILITY OF THE SECRETARY'S DECISIONS PG&E and the federai defendants assert that the Secre- tary’s decisions concerning the allocation of CVP power are immune from judicial review. Specifically, they contend that the Secretary’s marketing decisions are actions “com- mitted to ageney discretion by law” within the meaning of the APA, 5 U.S.C. § 701(a) (2). Judicial reviewability of administrative action is the rale and nonreviewability a narrow exception, the existence of which must be clearly demonstrated. Arizona Power Pool- ing Ass’n v. Morton, 9 Cir., 1975, 527 F.2d 721, 727, cert. denied, 1976, 425 U.S. 911, 96 S.Ct. 1506, 47 L.F.d.2d 761. The Supreme Court has stated that review is precluded only “in those rare instances where ‘statutes are drawn in such broad terms that in a given case there is no law to apply.’ ” Citizens To Preserve Overton Park v. Volpe, 1971, 401 U.S. 402, 410, 91 S.Ct. 814, 821, 28 L.F.d.2d 136. See also, Ness Investment Corp. v. United States Department of Aqricul- ture, Forest Service, 9 Cir., 1975, 512 F.2d 706, 713. Tf. how- ever, no law fetters the exercise of administrative discre- tion, the courts have no standard against which to measure the lawfulness of agenev action. In such eases no issues sus- Appendix 9 ceptible of judicial resolution are presented and the courts are accordingly without jurisdiction. Arizona Power Au- thority v. Morton, 9 Cir., 1977, 549 F.9d 1231, 1239, cert. denied, 1977, ...... 1p . Sato »98S.Ct. 124, 54 L.d.2d 97, In considering whether administrative action is “com- nitted to ageney discretion by law” within the meaning of the APA, the test “is not whether a statute viewed in the abstract lacks law to be applied, but rather, whether ‘in a given case’ there is no law to be applied.” Strickland , Morton, 9 Cir., 1975, 519 F.2d 467, 470 (emphasis in origi- nal). Thus the existence of some law generally applicable to the subject matter in question will not necessarily remove administrative action from the “eommitted to agency dis- cretion” rubric. There is “law to apply,” only if a specific statute limits the agenev’s discretion to act in the manner which is challenged, A. The Refusal to Contract with Santa Clara for Firm Power. Santa Clara says that two statutes provide “law to ap- ply” in evaluating the Seeretary’s decisions eoncerning the sale of power generated by the CVP to Santa Clara. The first is the Central Valley Project Authorization Act. 50 Stat. 850, which incorporates generally the provisions of the reclamation laws. Section 9(e) of the Reclamation Proj- ect Act of 1939, 43 T.S.C. $ 485h(e), defines a class of cus- tomers which are to receive a preference in the sale of power generated by federal reclamation projects, The class of preference customers includes “municipalities and other public corporations or agencies.” Our recent decision in the ease of Arizona Power An- thority v. Morton, sapra, forecloses Santa Clara’s arewment that the Secretary, by“providing other public entities with 10 Appendix nonwithdrawable power allocations while denying sueh a “firm” allocation to Santa Clara, thereby violated the terms of the preference clause, In that case a group of preference customers for power in Arizona challenged the Seeretary’s decision to alloeate most of the power produced by Colorado River Storage Project (CRSP) generating facilities to preference customers located in the “upper basin” states of Wyoming, Colorado, Utah and New Mexico. We held that the Secretary was obliged to market power generated by CRSP facilities to preference customers in accord with the dictates of the Reclamation Project Act of 1939, 43 U.S.C. § 485h(¢), but concluded that the preference clause permit- ted the Secretary to discriminate against some preference entities in favor of others. “[T]t would appear in light of his broad discretion that the Secretary may adopt whatever geographic preference he desires and that we have no juris- diction to review his action.” 549 F.2d at 1241. The preference clause requires only that publie entities be given a preference over private entities in the marketing of power generated by federal reclamation projects. Ari- zona Power Pooling Ass’n ». Morton, supra, 527 F.2d at 726-28, It does not require that all preference customers be treated equally or that all potential preference customers receive an allotment. Arizona Power Authority v. Morton, supra, 549 F.2d at 1241, 1252. Where, as here, one prefer- ence entity challenges the Secretary's decision to diserimi- nate against it in favor of other preference entities, the reclamation laws provide no law to apply to the dispute. Tf he so chooses, the Secretary can market al] available CVP power to a single public entity without running afoul of the preference clause. In Arizona v. California, 1963, 373 U.S. 546, 83 S.Ct. 1468, 10 L.Fd.2d 542, the Court considered the seope of the Seere- Appendix 11 tary’s authority to allocate the waters of the Colorado River pursuant to the Boulder Canyon Project Act. The Court stated: The general authority to make contracts normally in- cludes the power to choose with whom and upon what terms the contracts will be made. When Congress in an Act grants authority to contract, that authority is no less than the general authority, unless Congress has placed some limit on it... . |W Je are persuaded that had Congress intended . . . to feter the Secretary’s discretion, it would have done so in clear and unequivo- eal terms... 373 U.S. at 580, 83 S.Ct. at 1487. Nothing in the legislative history of the Reclamation Pro}- ect Act of 1939 suggests that Congress intended to limit the Secretary’s discretion to interpret the preference clause in making decisions as to whether or how or on what terms he will sell power to particular preference customers as com- pared to other preference customers. Santa Clara also relies on Section 5 of the Flood Control Act of 1944, 16 U.S.C. § 825s, as providing an alternative standard against which the Secretary's marketing decisions can be measured. In pertinent part, seetion 5 provides that power is to be disposed of “in sueh manner as to encourage the most widespread use thereof consistent with sound business principles.” By its terms this directive governs only the sale of power generated by flood control projects operated by the Department of the Army. The standard’s applicability: to the sale of power generated by the CVP, which is operated by the Burean of Reclamation, is there- fore questionable. Santa Clara maintains that the federal defendants themselves, as a matter of departmental pohiey, have long regarded the provisions of the Flood Control Act 12 Appendix as applicable to the marketing of CVP power. We find it unnecessary to decide whether the Flood Control Act does apply to the sale of power generated by the CVP because the standard that it contains, even if applicable, is too vague and general to provide law to apply. The Flood Control Act’s directive to market power in such a way as to “encourage the most widespread use there- of” could be interpreted in many different ways, such as to require that power be sold to as many different preference entities as possible, thereby fostering the most widespread geographic use of the power, or to mandate sale of the power to those preference entities whose customers present the most diversified mix of agricultural, industrial or resi- dential users, or to require sale of federal power to those preference entities which serve the largest number of ulti- mate consumers, Clearly, the “most widespread use” standard is suscepti- ble of widely divergent interpretations. As we said of another law in Strickland v. Morton, supra, “[t]he provi- sions of this statute breathe discretion at every pore.” 519 F.2d at 469. The statute permits the exercise of the widest administrative discretion by the Secretary. It does not sup- ply “law to apply.” See Arizona Power Authority v. Mor- ton, supra, S49 F.2d at 1252. Tn Panama Canal Co, v. Grace Lines, Inc., 1958, 356 U.S. 309, TS S.Ct. 752, 2 L.led.2d 788, the Court was asked to review the federally chartered Canal Company’s decision to require ships passing through the Canal to pay particular tolls. While the applicable statute set out in some detail the criteria to be considered by the Company in prescribing tolls, the Court concluded that the Company's diseretion in interpreting the statute was so broad as to bring it within 5 U.S.C. § 701(a)(2) (formerly § 1009) and thus to preclude judicial reviews: Appendix 13 Where the matter is peradventure clear, where the agency is clearly derelict in failing to act, where the inaction or action turns on a mistake of law, then judi- cial relief is often available ... But where the duty to act turns on matters of doubtful or highly debatable inference from loose statutory terms, the very con- stri«tion of the statute is a distinet and profound exer- cise of diseretion, 356 U.S. at 318, 78 S.Ct. at 757. We conclude that the Seeretary’s refusal to allocate non- withdrawable power to Santa Clara is unreviewable because there is “no law to apply.” The preference clause contained in the Reclamation Project Act of 1939 does not prevent the Secretary from discriminating against some preference entities to the benefit of others. The Flood Control Act of 1944, while arguably applicable to the sale of power gener- ated by the CVP, is so imprecise that its interpretation requires a “profound exercise of discretion” of the sort deseribed in the Panama Canal ease. The trial court’s find- ing that the Secretary's marketing decisions as to the terms on which he will market power to preference customers are reviewable is in error. Decisions concerning the proper allocation of CVP power among preference entities are “action committed to ageney diseretion by law” within the meaning of the APA and as such are unreviewable/ 4. Although the argument was not raised in the trial] court, Santa Clara now argues on appeal that inclusion of the Folsom Dam in the CVP network mandates application of a power market- ing standard similar to that contained in the Flood Control Act, Section 4 of the American River Act of 1949, 63 Stat. O82, directs the Seeretary of the Interior to operate Folsom Dam “in such manner as will effectuate the fullest and most economic utilization of the land and water resources of the Central Valley project of California for the widest publie benefit.” This marketing standard is as imprecise as that contained in the Flood Control Act and we reject the argument that it provides law. to apply to the instant dispute. 14 Appendic B. The Sale of Power to PG&E. Santa Clara challenges the Secretary's decision to sell massive quantities of CVP power to PG&E, a privately owned utility While we have concluded that the preference clause contained in section 9(¢) of the Reclamation Project Act of 1959 does not provide law to apply to the Secretary’s decision to allocate CVP power among preference customers in one fashion rather than another, the statute clearly does provide a standard against which the propriety of sales to non-preference entities such as PG&E can be measured. Arizona Power Pooling Ass’n v. Morton, suprae PG&E and the federal defendants do not argue other- wise. They concede the applicability of the preference clause but contend that the present marketing scheme does not violate the clause because power is not sold outright to PG&E but is rather “banked” temporarily with the utility pursuant to government contract. The contract provides that all CVP power which is sold to PG&E is subject to the 5. As we said in East Oakland-Fruitvale Planning Couneil v. Rumsfeld, 9 Cir., 1972, 471 F.2d 524: Agency action is made unreviewable by 5 U.S.C. § 701(a) (2) only “to the extent” that it is committed to ageney diseretion. . An “all or nothing” approach to reviewability would, in specifie cases, either be unfair to persons aggrieved by ageney action, or impose an unwise burden upon the ageney or the courts. Accordingly, separable issues appropriate for judicial determination are to be reviewed, though other aspects of the agency action may be committed to the agency's expertise and discretion. If a statute or regulation establishes a rule governing the conduct of the ageney with respect to an aspect of the agency action, a court may determine whether the agency has eom- plied with that rule, although the court still may not review other aspects of the ageney action as to which there are no reasonably fixed rules to apply. The presence of a judicially enforceable rule both justifies judicial review, and limits its scope. 471 F.2d at 533-34. Appendix 15 Secretary's right to repurchase at a later date, at the origi- nal price plus a “handling charge,” plus the difference in cost to PG&E of producing the power sold to the Secretary over PG&E's similar cost at the time it bought. The Secretary maintains that this arrangement is de- signed to enable him to supply the growth needs of selected preference customers until 1980, By “banking” power with PG&E during periods when the total output of the CVP exceeds the demands of these selected customers, the Sec- retary creates an “account” which he can draw on to satisfy their requirements when demand outstrips supply. It is more accurate to state that the contract requires that an account be kept of all power sold to PG&E and that the Secretary may thereafter purchase power, up to that amount, from PG&E. PG&E sells the power that it buys from the Seere- tary to its customers at its price. To describe this arrange- ment as “banking” is to use an inaccurate and somewhat misleading figure of speech. The relationship between the Secretary and PG&E and the Secretary’s preference customers such as Sar ta Clara is further complicated by two facts. The first is that CVP power is fed into PG&E’s distribution system and is trans- mitted by PG&E over its lines to preference customers and to PG&E's own customers. At the same time. power pro- duced by PG&E is also fed into the same distribution sys- tem. Once that happens, it is physically impossible, or at least not practicable, to identify any particular unit of power as CVP power or as PG&E power. Thus, in theory, PG&E receives CVP power from CVP and transmits it (or “wheels” it) to Santa Clara over PG&E's lines. In fact, the transinitted power cannot be and is not so identified. The problem is solved by bookkeeping. Track is kept of the amount of CVP power that enters the PG&E system. The 16 Appendix Secretary tells PG&E how much of it is for each preference customer. PG&E supplies that amount of power to each. The Secretary then bills each preference customer for that power at the Secretary's price. CVP power received by PG&E and not treated as transmitted to preference cus- tomers of the Secretary is treated as sold by the Secretary to PG&E and PG&E pays the Seeretary for it. This is the power that is said to be “banked” under the PG&E contract with the Secretary. The second fact is that there is now being fed into the PG&Ir system more government produced power than is being produced by CVP power plants. This is because of the creation of the Northwest intertie, whereby substantial amounts of power are being transmitted to the CVP area from the Northwest. The PG&E contract with the Secretary relates to that power as well as to CVP power. It is sug- gested that the Northwest power never would have been available to preference customers in the CVP area without the cooperation of PG&i* embodied in the contract with the Secretary. We assume that this is true, but that fact cannot diminish the Secretary’s legal obligation to sell to prefer- ence customers. Neither the Secretary nor PG&E argues that the full “Project Dependable Capacity” as defined in the contract, paragraphs 9(a) and (i) and 11, is not subject to the preference clause. Their only argument is that the “banking” provisions of the contract satisfy the require- ments of the preference clause. The trial court coneluded that the “banking” of CVP power with PG&E was not violative of the preference clause. We conclude that the present marketing scheme in- volves the sale of power to PG&E and that the terms of the preference provisions are not satisfied by the government's repurchase right. Appendix 17 The preference clause states a clear legislative intent and requirement that the Secretary shall favor public entities in the sale of power generated by federal reclamation projects. As we noted recently in Arizona Power Pooling Ass'n v. Morton, supra, “[t]he text of the preference provi- sion is couched in mandatory terms, stating that ‘preference shall be given’ (emphasis added) to certain public entities in governmental sales or leases of electric power or power privileges.” 527 F.2d at 727. The Secretary is thus given a very specific directive to market federal power to preference customers if any are ready and willing to purchase it. Tt is only if the available supply exceeds the demands of inter- ested preference customers that the Secretary may offer federal power to private entities. 41 Op.A.G. 236, 1955, Disposition of Surplus Power Generated At Clark ITill Reservoir Preject® In this case the Secretary has marketed CVP power to PG&E, a non-preference entity, during times when a prefer- ence customer was having its allotment gradually reduced, 6. In advising the Secretary as to the propriety of his proposed scheme for allocating power generated by the Clark Hill Reservoir Project, Attorney General Brownell was ealled upon to interpret the Flood Control Act of 1944, whieh contains a preference clause almost identical to that contained in the Reclamation Project Act of 1939. The Attorney General construed the preference provision to require that “when the Secretary of the Interior has before him two competing offers to purchase power, one by a preference cus- tomer, and the former does not have at the time the physical means to take and distribute the power, he must contract with the preter- ence customer on condition that such customer will, within a rea- sonable time to be fixed by the Secretary, obtain the means for taking and delivering the power.” Disposition of Surplus Power Generated At Clark Hill Reservoir Project, supra, 41 Op.A.G. at 243-44. Thus, in Attorney General Brownell’s estimation. even ‘the present inability of a preference customer to take federal power is insufficient to justify a decision by the Seeretary to permanently commit the power to a non-preference customer. Here, of course Santa Clara is able to take its full power requirements from the CVP and has done so in the past. . c 1 Appendix over its objection. It is claimed that PG&E’s allotment was more than adequate to satisfy Santa Clara’s full require- ments.’ Nevertheless, the Secretary has, since 1971, pro- gressively reduced Santa Clara’s withdrawable allocation. In defense of the Secretary's arrangement with PG&E, gD he maintains that he is storing up power with the utility for the future benefit of selected preference customers. In the meantime, however, to the extent that Santa Clara could have purchased the power, a private utility is profiting from the low cost of federal power at the expense of a preference entity. This result, we think, does violence to the plain meaning and intent of the preference provision. While the stated goal of the banking arrangement is con- sonant with the preference clause, inasmuch as all CVP power is ultimately committed to meet the needs of public entities, the propriety of the goal cannot save the scheme if its interim effects are violative of the statute. That may be the case here. Congress intended publie entities, when- ever possible, to benefit from the sale of low cost federal 7. The following is a comparison of the CVP power sold to Santa Clara as compared to the amount sold to PG&E [in kilo- watts]: SANTA CLARA PG&E BOUED accncttisiivindasmenanan 71,490 282.183 cae AIRES TIS. 78.863 198,063 } NT ER 89,367 81,377 WIRED wvicknccinmicnmaieeteaatae 92,031 79,713 POD cxcimasnicsacnessscibaiaaeannie 106,128 55,944 FOO ccntsininciiamcadiauaae 116,471 26,406 |; f ani HPS NINES 112,696 278,724 BPE niccssnsitiemepeemdalaea 89,200 382,000 BOE acicwscncinsen eee 86.550 382,000 [| RMN er we te 73,300 387,786 j | eames FCT, 73,800 337,000 The sales to PG&E are in such high quantity that this nonprefer- ence customer has become the Bureau’s largest customer. (Opening Brief of Santa Clara, pp. 4445). These figures are not disputed by the Secretary or by PG&E. Appendix 19 power. An arrangement which enables a nonpreference entity to reap a benefit which Congress sought to bestow upon public entities, even temporarily, flies in the face of that intent. It is no answer for the Secretary to say that he is merely “banking” power with the utility, rather than selling it out- right. A sale is no less a sale because the buyer is obliged, upon the seller’s demand, to resell an equivalent amount to the seller. The plain fact is that the power which is con- veyed to PG&E does not sit idly in storage, awaiting with- drawal by the government. Instead it is resold by PG&E to its own customers at a substantial mark up. This is a sale, regardless of the verbiage employed to characterize the arrangement. In United States v. City and County of San Francisco, 1940, 310 US. 16, 60 S.Ct. 749, 84 L.Ed. 1050 the Court considered a challenge to the sale by San Francisco to PG&E of power generated from the Heteh Hetchy project in Yosemite National Park Section 6 of the Raker Act, 38 Stat. 242, which governed disposition of the power by San Francisco, prohibited the City “from ever selling or letting to any corporation or individual, except a municipality or municipal water district or irrigation district, the right to sell or sublet the water or the electric energy soid or given to it” by the United States. San Francisco argued that although it conveyed power to PG&E, section 6 was not violated because the power was “consigned” and not sold, to the utility, which acted as “agent” for the City in transmit- ting and selling the power. The court concluded that San Francisco's contractual relationship with PG&E contra- vened the legislative intent behind the Raker Act regardless of the words used to describe it: 20 Appendix Terminology of consignment of power, rather than of transfer by sale, and verbal description of the power Company as the City’s agent or consignee, are not suffi- cient to take the actions of the parties under the con- tract out of $6. Congress, in effect trustee of public lands for all the people, has by this Act sought to pro- tect and control the disposition of a section of the public domain. The City has in fact followed a course of conduct which Congress, by § 6, has forbidden. Mere words and ingenuity of contractual expression, what- ever their effect between the parties, cannot by descrip- tion make permissible a course of conduct forbidden by law. When we look behind the word description of the arrangement between the City and the power Com- pany to what was actually done, we see that the City has—contrary to the terms of § 6—abdicated its con- trol over the sale and ultimate distribution of Hetch- Hetechy power. 310 U.S. at 28, 60 S.Ct. at 756. While the preference clause directs the Secretary to extend a preterence to public entities in the sale of power generated by federal reclamation projects, that mandate is qualified slightly by the following proviso: No contract relating to... electric power or power privileges shall he made unless, in the judgment of the Secretary, it will not impair the efficieney of the project for irrigation purposes. 43 U.S.C. § 485h(e). Thus the Secretary is prohibited from selling CVP power to a preierence entity if, in his estimation, to do so would have the effect of cutting back on the power necessary to operate the project’s pumping facilities. Before the trial court, the Secretary sought to justify the sale of power to PG&E on the sole ground that the gov- Appendix 21 ernment’s right to repurchase power “banked” with the utility satisfied the preference clause. The issue of the CVP’s efficiency for irrigation purposes, and the likely im- pact of the present marketing scheme, or of Santa Clara’s attack upon it, on that efficiency, were not addressed by any of the parties in their moving papers upon which the trial court rendered its decision. In light of the paucity of information adduced on this key issue, we are loathe to hold the sale of power to PG&E at Santa Clara’s expense flatly invalid. Tt is conceivable that the Secretary’s decision to favor PG&E over Santa Clara in the marketing of CVP power could be justified as a measure designed to maximize the project’s efficiency for its primary purpose, which is irrigation. PG&E and the Seeretary argue that during at least part of the period beginning in 1972, when the Secretary was gradually reducing Santa Clara’s allotment, CVP did not have the energy necessary to supply Santa Clara, and Santa Clara was not willing or able to take such intermit- tent power as was being sold to PG&E. Tt is also claimed that some of the power sold by the Secretary to PG&E may not have heen subject to the preference clause. The trial court did not decide these questions. They can be consid- ered on remand, as can the issue of CVP’s efficiency for irrigation purposes if the Secretary chooses to raise it. C. Congressional Approval. The federal defendants argue that Congress ratified the existing power allocation scheme when it appropriated moneys for the construction of an extra high voltage inter- tie hetween the Pacifie Northwest and Pacifie Southwest. To show ratification, the government must sustain the heavy burden of demonstrating congressional knowledge 22 Appendix of the precise course of action alleged to have been aequi- esced in. United States v. Beebe, 1901, 180 U.S. 348, 354, 21 S.Ct. 871, 45 Led. 563; United States v. Georgia-Pacific Co., 9 Cir, 1970, 421 F.2d 92, 102 n. 28. We fully agree with the distriet court’s determination that the record in this case “does not support a finding of congressional knowledge of the exclusion of post-1964 pref- erence customers from receiving nonwithdrawable CVP power sufficient to equate passage of the appropriations hills with ratification of the exclusion.” City of Santa Clara vr. Kleppe, supra, 418 F.Supp. at 1256. Similar efforts to infer congressional approval of specific ageney actions from the enactment of general appropriations measures proved unsuccessful in Arizona Power Pooling Ass'n v. Morton, supra, 527 F.2d at 725-26. See also, Associated Electric Cooperative Inc. v. Morton, 1974, 165 U.S.App.D.¢. 844, 951-52, 507 F.2d 1167, 1174-75, cert. denied. 1975, 423 TLS. 830, 96 S.Ct. 49, 46 L.ed.2d 47. We think that those decisions are controlling here. IV. RULE MAKING AND THE ADMINISTRATIVE PROCEDURE ACT Santa Clara urges, and the district court found. that the procedures followed by the Secretary in arriving at his marketing decisions failed to comport with certain provi- sions contained in the APA. While we have concluded that the Seeretary’s scheme for allocating CVP power among preference customers is substantially unreviewable, the adequacy of the procedures utilized in formulating the marketing scheme is a separable issue. Faust Oakland-F ruit- vale Planning Council v. Rumsfeld, 9 Cir.. 1972, 471 F.9d 524, 555-35, See also, Moore-McCormack Lines. Ine. v. Appendix 23 United States, Ct.Cl., 1969, 413 F.2d 568, 581; Saferstein, “Nonreviewability: A Functional Analysis of ‘Committed to Agency Discretion,’ ” 82 Harv.L.Revy. 367, 272 (1968), The rule making section of the APA, 5 U.S.C. § 553, re- quires federal agencies to notify the public, conduct hear- ings, and consider the input of interested parties, before promulating new substantive rules. However, that section expressly exempts from the rule making requirements all matters “relating to... public property.” 5 U.S.C. § 553(a) (2). Power generated hy federal reclamation projects is certainly public property: hence the Secretary, in deciding how to allocate CVP output, is not hound to follow the procedures mandated by 5 U.S.C. § 553. Associated Electric Cooperative, Inc. v. Morton, supra, 165 U.S. App.D.C. at 394-55, 507 F.2d at 1177-78. Northern California Power Agency «. Morton, D.D.C.. 1975, 396 F.Supp. 1187, 1191 n. 6, aff'd 1976, 176 U.S.App.D.C. 241, 339 F.2d 243. Santa Clara nonetheless argues, and the trial eourt held, that 5 U.S.C. § 552, the “Public Information” section of the APA, requires the Secretary to promulgate rules to be followed in arriving at power marketing decisions. In pertinent part, 5 U.S.C. $552(a)(1) provides that each agency shall publish in the Federal Register: (B) statements of the general course and method by which its functions are channeled and determined .. . (C) rules of procedure... (D) substantive rules of general applicability adopted as authorized by law, and statements of general poliey or interpretation of general applicability formulated and adopted by the agency . . As amended in 1966, section 352 also provides that “[felx- cept to the extent that a person has actual and timely notice 24 Appendix of the terms thereof, a person may not in any manner be required to resort to, or be adversely affected by, a matter required to be published in the Federal Register and not so published.” On its face, section 552 requires only the publication of existing rules and not the promulgation of new ones. The section requires agencies to make “available” proce- dures by which their functions “are channeled and deter- mined,” and the substantive rules and general policies which have been “adopted” or “formulated and adopted.” This interpretation is bolstered by the existence of an entirely separate section, $553, headed “rule making,” and by the legislative history of the APA itself. The legisla- tive history suggests that in enacting § 552, Congress was concerned exclusively with the dearth of published deserip- tions concerning agency structure, function, and procedure. In 1941, the Senate Judiciary Committee held extensive hearings on the soon to be enacted APA. During those hearings, spokesmen for numerous agencies repeatedly voiced that fear that the publica’ion provisions contained in the proposed law might be construed to require them to develop new rules and regulations, Dean Acheson, Chair- man of the Committee appointed by President Roosevelt to make recommendations for improving administrative procedure, addressed these fears in a formal statement to the Senate Judiciary Committee. Of the predecessor provision of section 552, Acheson said: . . [I]n order that persons may know what the policies and interpretations of an agency are, we suggest in section 201(2) that all such policies and interpretations, and the procedures whether formal or informal, and the forms of an ageney be made available. Appendix 25 There has been some misunderstanding about the scope of this subsection (2). It is not intended to require agencies to make up policies and interpreta- tions of law, or procedures, out of whole cloth merely for the sake of making them. Rather this section is intended to require agencies to make available to the public those policies and procedures which have he- come crystallized, which through experience have been formulated and adopted. Hearings before a subeom- mittee of the Senate Judiciary Committee on S, 674, S. 675 and S. 918, 77th Cong., Ist Sess. 829 (1941) The House and Senate Reports on the APA likewise suggest that Congress, in enacting § 552. sought only to insure that those administrative rules which had “erys- tallized” would be made available to the publie: The public information requirements of section 2 are In many ways the most important, far-reaching, and useful provisions of the bill. For the information and protection of the public wherever located, these provisions require agencies to take the mystery out of administrative procedure by stating it. The section has been drawn upon the theory that administrative operations and procedures are public property which the general public, rather than a few specialists or lobbyists, is entitled to know or to have the ready means of knowing with definiteness and assurance. Senate Committee on the Judiciary, Administrative Procedure Act, S.Rep.No. 752, 79th Cong., Ist Sess. 198 (1945). See also House Committee on the Judici- ary, Administrative Procedure Act, H.Rep. No. 1980, 79th Cong., 2d Sess, 255 (1946), Santa Clara cites Vorton +. Ruiz, 1974, 415 U.S. 199, 94 S.Ct. 1055, 39 L.ed.2d 270, for the proposition that § 552 requires not simply the publication of established rules but 26 Appendir also the formulation of new ones. In that case the Bureau of Indian Affairs (BIA) refused to provide general assist- ance benefits to an Indian couple who had left their reserva- tion to settle in a nearby Indian community. In summarily denying the couple’s application for benefits, the BIA cited a provision contained in its Indian Affairs Manual, an internal operations brochure, which restricted benefits to Indians remaining on the reservation. The Court held that this restriction was based on an impermissible construction of the act which established the assistance program and on this basis the Court held it invalid. The Conrt went on to announce in dicta that even if the restriction were consonant with congressional intent, section 552 required publication of the eligibility requirements for receiving benefits. The policy of restricting benefits to on-reservation Indians involved in orton v. Ruiz had clearly “crystallized.” Indeed, it was enshrined in an in- ternal operations manual. Because the rule had already been formulated by the BIA and was routinely applied by the ageney, section 552 required publication, Here, in contrast, it is not alleged that the Secretary has formulated any rules, substantive or procedural, for the allocation of CVP power. That being so, there is apparently nothing to publish. While some may deplore this state of affairs, the rule making section of the APA, § 553, mani- fests a clear legislative intent to permit ad hoc decision making in the distribution of publie property. Senate Com- mittee on the Judiciary, Administrative Procedure Act, S.Rep.No. 752, 79th Cong., Ist Sess. 199 (1945).8 Duke City 8. With regard to the publie property exemption to the rule making requirement, the Senate Report on the APA states: The exception of proprietary matters is included because the principal consideration in most such cases relate to mechanics and interpretations or policy, and it is deemed wise to encour- Appendix 27 Lumber Co, v. Butz, D.D.C., 1974, 382 F.Supp. 362, 373, aff'd, 176 U.S.App.D.C, 218, 539 F.2d 220, cert. denied, 1977, 429 U.S. 1039, 97 S.Ct. 737, 50 L.Fd.2d 751. We cannot read a rule making requirement into $552, or interpret the section in such a way as to render meaningless the publie property exemption contained in § 553. In Gonzalez v. Freeman, 1964, 118 U.S.App.D.C. 180, 334 F.2d 570, and W. G. Cosby Transfer & Storage Corp. v. Froehlke, 4 Cir., 1973, 480 F.2d 498, 5 U.S.C. $552 was interpreted to require agencies to promulgate rules and procedures which had not theretofore been “erystallized.” The actual holding in each case was that the agency involved could not terminate a business relationship existing be- tween the agency and the plaintiff without affording a due process type hearing. In each case there is language to the effect that $552 required the agency to formulate and adopt rules describing the grounds upon which the agency would act and the procedures that it would follow. But in neither case did the court do what the trial court did here, order the agency to formulate and adopt such rules. To the extent that these cases can be said to stand for the proposi- tion that $552 requires an agency to formulate and adopt rules, we decline to follow them. The trial court’s decision in this case, insofar as it reqnires the Secretary to form- ulate and adopt rules governing his decisions in marketing power to preference customers, is in error, age and facilitate the issuance of rules by dispensing with all mandatory procedural requirements. None of these exceptions however, is to be taken as encouraging agencies not to adopt voluntary public rule making procedures where useful to the agency or beneficial to the public. The exceptions merely confer a complete diseretion upon agencies to decide what. if any, public rule making procedures they will adopt in a given situation. ... ; S.Rep.No. 752, 79th Cong., Ist Sess., at 199 (1945), 28 Appendix V. DUE PROCESS Santa Clara argues that it has a sufficient property interest in CVP power to entitle it to due process protee- tion. The trial court agreed, and further held that the federal defendants had failed to accord Santa Clara that process which was due. The court therefore ordered the federal defendants, infer alia, to (1) re-evaluate the present power allocation scheme with an eye toward possible revi- sion: (2) announce the standards used in devising the allocation scheme then proposed; (38) afford all interested parties an opportunity to comment on the proposed market- ing plan: (4) hold a public hearing on the proposed market- ing plan; and (5) announce the specifie findings relied on in devising the plan ultimately adopted. City of Santa Clara v. Kleppe, supra, 418 F.Supp. at 1261-62. PG&E argues that Santa Clara is not a “person” entitled to due process protection under the Fifth Amendment. PG&E relies primarily on South Carolina ve Katzenbach, 1966, 383 U.S. 301, 323-24, 86 S.Ct. 803, 15 L.ld.2d 769, where the Court held that a state is not a “person” entitled to due process protection, reasoning that a municipality eannot be a “person” if its progenitor, the state, is not. We are by no means convinced that PG&E's argument is eorrect. See Township of River Vale v. Town of Orange- town, 2 Cir., 1968, 403 F.2d 6S4, 686, holding that “a munici- pal corporation like any other corporation is a ‘person within the meaning of the [Constitution!.” See also, Aquavyo v. Richardson, 2 Cir. 1973, 478 F.2d 1090, 1100-01, cert. denied, 1974, 414 U.S. 1146, 94 S.Ct. 900, 39 L.ed.2d 101. We need not decide the question. For the purpose of this case, we assume that Santa Clara is a “person.” Appendix 29 PG&E and the federal defendants assert that Santa Clara has no protectible “property” interest in CVP power. The trial court based its holding that Santa Clara has such an interest on the City’s status as a preference customer under the reclamation laws. In so holding, the trial court was speaking of an interest of Santa Clara vis-a-vis other actual and potential preference eustomers. The court had already held that sales of CVP power to PG&E under the contract between it and the Secretary did not violate the preference clause. Thus the court had no occasion to decide whether Santa Clara had a “property” interest vis-a-vis PG&E. We first consider “property” interest as against other preference entities. While the test for identifying a prop- erty interest sufficient to merit invocation of the Due Proc- ess clause “is not clearly defined,” Pence v. Kleppe, 9 Cir., 1976, 529 F.2d 135, 141, the Supreme Court has stated that: To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. Board of Regents v. Roth. 1972, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548. ~ See also, Geneva Towers Tenants Organization v. Fed- erated Mortgage Investors, 9 Cir., 1974, 504 F.2d 483 at 489, The exact perimeters of the “entitlement” concept are as yet unclear. See Note, “Statutory Entitlement and the Concept of Property,” 86 Yale L.J.No. 4. p. 695 (1977). After reviewing the Supreme Court’s recent decisions con- cerning statutorily created property interests, the author of the note concluded that “a statute will create an entitle- ment to a governmental benefit either if the statute sets 30 Appendix out conditions under which the benefit must be granted or if the statute sets out the only conditions under which the benefit may be denied.” 86 Yale L.J. at 696 (emphasis in original). Under this test, Santa Clara has no “entitlement” to CVP power, as against other preferred entities. We think that Roth itself is dispositive of this phase of the ease. There the Court held that an untenured teacher had no property interest in being rehired because his employment contract gave his employer unbridled discretion to refuse to renew after one vear. The employer did not have to justify its decision not to renew the contract by showing “sufficient cause.” Thus Roth had only an “abstract concern in being rehired,” rather than a legitimate claim of entitle- ment. Roth v. Board of Regents, supra, 408 U.S. at 578, 92 S.Ct. 2701. Having completed a vear of teaching, Roth, like Santa Clara, could differentiate himself from others who sought the government benefit in question. However, Roth’s desire to be rehired, his eligibility for contract renewal, and his special status as a former employee, were all insufficient to clothe him with a “legitimate claim of entitlement.” Be- eause the Board of Regents could refuse to rehire Roth for any reason whatsoever, Roth’s interest did not rise to the level of an entitlement. Santa Clara’s situation vis-a-vis other preferred entities is comparable. While the City enjoys a statutory preference under the reclamation laws, the Secretary remains free to allocate the total power output of the CVP to other pref- erence users. The Secretary need not justify his decision to discriminate against some preference entities in favor of others and, as we hold today, his decision to so discrimi- nate is not judicially reviewable, Given the discretion which the reclamation laws vest in the Secretary in this respect, Appendix 31 we cannot accept Santa Clara’s contention that it has any “entitlement” to power generated by the CVP as against other preferred entities. The trial court’s holding that Santa Clara’s status as a preference entity supported a claim of entitlement as against other preferred entities is erroneous. The City has no “property” interest in CVP power as against other preferred entities and consequently no procedural safeguards are constitutionally required in deciding between them. We next consider “property” interest as against non- preference entities such as PG&E. It is clear that Santa Clara does have such an interest. In essence, our decision in Arizona Power Pooling Ass’n v. Morton, supra, so holds. To similar effect is Pence v. Kleppe, supra. There we held that Alaska natives, seeking allotments under the Alaska Native Allotment Act, had sufficient property interests to entitle them to due process. 529 F.2d at 140-42. What process is due? We have held in part TIT B, supra, that it is a violation of the preference clause for the Secre- tary to sell CVP power to PG&E to the extent that he is refusing to sell it to an eligible preference entity that has offered to buy it and is ready, willing and able to receive it. There is but one justification possible for a refusal to sell to such a preference entity while selling to a non-preference entity: that, in the judgment of the Secretary, to sell to the preference entity will “impair the efficiency of the project for irrigation purposes,” 43 U.S.C. § 485h(e). It is not disputed that Santa Clara is a preferred entity that has asked for the power. The Secretary and PG&E claim that Santa Clara was not willing or able to receive what the Secretary could sell to it, and that during certain times the Secretary did not have power available to sell to Santa Clara. The Secretary may also claim that selling to 32 Appendix Santa Clara would or will impair the efficiency of the project for irrigation purposes. All of these claims can be considered and decided by the trial court. We see no need to remand this case to the Secretary for a due process type hearing. VL. PG&E’S COUNTERCLAIM In 1971, the Secretary began withdrawing power from Santa Clara, gradually cutting back on the City’s 1970 allotment of 120,000 kilowatts. Pursuant to a contract be- tween PG&E and Santa Clara, executed in 1969, PG&E. is obligated to supply Santa Clara’s power requirements to the extent that they are not met by the Secretary. Taking the position that the Secretary’s attempted withdrawals were illegal and therefore ineffective, Santa Clara refused after 1971 to pay PG&E for any of the power purportedly supplied by it. Because, as we have seen, PG&E transmits CVP power over its own lines pursuant to government contract, so that it is not possible to differentiate CVP power from PG&E power except by reference to written records, Santa Clara took the position that the power purportedly furnished by PG&E was actually CVP power coming in over PG&E’s transmission lines. Since 1971, the money claimed by PG&E has been paid into an escrow account which as of March 1, 1977, contained nearly $30,000,000. PG&E and the Secretary both argue that regardless of the result in this case, PGCE is entitled to all of the money in the escrow. As we have seen, the trial court has, as an interim measure, awarded one-fourth of the money in the escrow to PGCE. (note 3, supra) If, as we surmise, the government cannot justify the marketing of power to PG&E while denying it to Santa Appendts 33 Clara as a measure designed to safeguard the CVP’s efficiency for irrigation purposes, then the past sales to ~ PG&E of so much power as Santa Clara sought and was refused exceeded the Secretary’s statutory authority under the reclamation laws. These past sales are void if unlawful, for administrative actions taken in violation of statutory authorization or requirement are of no effect. Utah Power & Light Co. v. United States, 1917, 248 U.S. 389, 410, 37 S.Ct. 387, 61 Led. 791; Federal Crop Insurance Corp. v. Merrill, 1947, 332 U.S. 380, 384, 68 S.Ct. 1, 92 L.Ed. 10; Federal Maritime Commission v. Anglo-Canadian Shipping Co., 9 Cir., 1964, 335 F.2d 255, 258. The trial court decided that PG&E's right to the disputed funds hinges on the lawfulness of the Secretary’s decision to sell power to PG&E while refusing to allocate as much power to Santa Clara as that City requested. Consequently, the court concluded, the fate of the escrow account must await action by the district court on remand. PG&E and the Secretary vigorously attack this ruling. Their position, as stated by counsel for PG&E, is that power cannot be retroactively allocated to Santa Clara because “[a]t all times pertinent to this case all commer- cially available CVP power was sold to someone... . Accordingly, any retroactive reallocation of CVP power would necessarily entail either a whole or partial recission of some or even all of the sales transactions between the United States and its CVP customers from Angust 1971 to the present.” Opening Brief of PG&E at 17. We think, however, that a reallocation of power to Santa Clara, retro- active to 1971 when the withdrawals began, can be ae- complished without affecting past sales to other CVP customers. This is so because the Secretary has, over the years, and pursuant to his contract with PG&E, built up a 34 Appendix sizeable “bank account” with PG&E. Presumably, that bank account is now available to retroactively satisfy the City’s power needs. Should the district court conelude on remand that the marketing of power to PG&E cannot be justified by ref- erence to the reclamation laws, the government’s “bank account” can simply be adjusted downward to reflect past sales to Santa Clara of so much power as the City sought unsuccessfully in the vears after 1971. Such a readjustment of the bank account need affect neither past sales of power to other CVP users nor prior transactions between PG&E and its customers, aside from Santa Clara. Without intending to bind the trial court to our sug- gestions, it seems to us that the consequences would be substantially as follows: First, PG&E would be entitled to draw from the escrow the full amount (less, of course, what it has already re- ceived) that Santa Clara would have paid to the Secretary for the power that it is “receiving” retroactively. PG&E has paid the Secretary for that power, thereby discharging what should have been Santa Clara’s dutv. In addition, because it is Santa Clara that withheld the money, PG&E should receive interest at a reasonable rate on the moneys paid to it from the dates when those moneys should have been paid. (See 28 U.S.C. § 1961.) The remaining money in the escrow would go to Santa Clara. Second, the power reallocated to Santa Clara should be treated as drawn from the Secretary’s “bank account” with PG&E, thereby diminishing the amount of the power that the Secretary is entitled, under the PG&E contract, to repurchase. Third, because PG&E will have received for the power sold by it to Santa Clara only the price that Santa Clara Appendix 35 would have paid to the Seeretary if he had allocated that power to Santa Clara, but that power is being treated as drawn by the Secretary from the “bank account,” it would appear that PG&E will have a claim against the Seeretary. Presumably, that claim would be for the contract price applicable under the Secretary's contract with PG&E at the times as of which reallocation is made, less the price PG&E will have received from Santa Clara, plus reasonable interest for late payment. (See 28 U.S.C. § 2411(b) and $ 2516.) Ifowever, PG&E has countereclaimed only against Santa Clara. It has not filed any claim for relief against the Secretary. We express no opinion as to whether such a claim against the Secretary can be filed or considered by the trial court, see 28 U.S.C. § 1346(a) (2), Lowell O. West Lumber Sales +. United States, 9 Cir., 1959, 270 F.2d 12, 19-20, or in the Court of Claims, see 28 U.S.C. § 1491. We base our assumptions as to interest upon a further assumption that PG&E is an innocent third party, ecanght between the conflicting claims of Santa Clara and the posi- tion of the Secretary. These suggestions are in line with the ancient and favorite maxim of equity, that equity regards that as done which ought to be done. It is readily applicable here, be- cause all parties to the contracts that are involved, PG&E, the Secretary, and Santa Clara, are before the court, and because what we suggest does not invalidate or violate either contract. The contract between PG&E and the Seere- tary expressly provides that the Secretary is to supply all of his preferred customers before sclling to PG&E. Tt also expressly provides for the so-called banking arrangement. The contract between PG&E and Santa Clara requires sale by PG&E and purchase by Santa Clara of only that amount 36 Appendix of power that exceeds the amount sold by the Secretary to Santa Clara. The foregoing suggestions are just that: they are not directions because we recognize that the questions giving rise to them have not been fully considered up to now, and all parties should have an opportunity to present their views about them to the trial court. That court is to arrive at its own decision, tating into account, but not being bound by, our suggestions. VI. SOVEREIGN IMMUNITY On October 21, 1976, Congress enacted Public Law 94- 574, amending 5 U.S.C. § 702, to remove the defense of sovereign immunity in an action seeking relief other than money damages and stating a claim that an agency or officer or employee thereof acted or failed to act in an official capacity or under color of legal authority. In Hill v. United States, 9 Cir., 1978, 571 F.2d 1098 at 1102 (Slip op., page 45 at 49) we held that this amendment is applicable to a pending action. This statute would have the effect of removing the defense of sovereign immunity, if it were otherwise available in this case. However, it is not neces- sary to rely on that statute here. It has long been established that sovereign immunity poses no bar to a suit against a federal officer who is alleged to have acted unconstitutionally or in excess of his statutory authority. Larson v. Domestic & Foreign Commerce Corp., 1949, 337 U.S. 682, 689, 69 S.Ct. 1457, 93 L.Ed. 1628; Starbuck v. City and County of San Francisco, 9 Cir., 1977, 556 F.2d 450, 457 n. 14: Washington v. Udall, 9 Cir., 1969, 417 F.2d 1310, 1314. Appendix 37 PG&E and the federal defendants concede that Santa Clara’s various claims fall squarely within these exceptions to the general rule that an action cannot be maintained against the soverign, absent consent. However, they cite Larson v. Domestic & Foreign Commerce Corp., supra, for the proposition that . a suit may fail, as one against the sovereign, even if it is claimed that the officer being sued has acted unconstitutionally or beyond his statutory powers, if the relief requested cannot be granted by merely ordering the cessation of the conduct complained of but will require affirmative action by the sovereign or disposition of unquestionably sovereign property. 337 U.S, at 691, n. 11, 69 S.Ct. at 1462. This court has never interpreted Larson as an absolute bar to every action against the sovereign in which affirma- tive relief or the recovery of government property is sought. Washington +. Udall, supra, 417 F.2d at 1317-18. We have construed the case more narrowly to mean “not that a suit must fail but only that it may fail if the relief sought would work an intolerable burden on the eovern- ment which outweighs any considerations of private harm.” De Lao v. Califano, 9 Cir., 1977, 560 F.2d 1384 at 1391. The retroactive power allocation which Santa Clara seeks would not, we think, work an intolerable burden on govern- mental functioning. As noted above, the relief requested by the City can be granted by simply adjusting the govern- ment’s bank account with PG&E. Such an adjustment would not affect prior transactions between the government and its other CVP customers, It would merely hasten depletion of the bank account and so would aceclerate the date upon which customer demand for CVP power will exceed the 3 available supply. Inasmueh as all of the banked power w Appendix is ultimately committed te preference users, depletion of the account with PG&E is, in any event, inevitable. We do not think that the government will bear an intolerable burden if it is forced to repurchase banked power at an earlier date than was initially anticipated. Balancing the economie injury which Santa Clara has suffered by virtue of its partial exclusion from the CVP against the minimal inconvenience which the government will experience if the Secretary is foreed to alter slightly his long-range market- ing plan, we conclude that this action is not barred on grounds of sovereign immunity. VIII. THE NATIONAL ENVIRONMENTAL POLICY ACT Santa Clara argued below and reiterates here that the Secretary violated NEPA, 42 U.S.C. $ 4821 et seq., by fail- ing to file an environmental impact statement before denying the City’s requests for firm power and initiating power withdrawals, NEPA, which requires agencies to file environmental impact statements whenever “major Federal actions” are contemplated, defines those actions as ones “significantly affecting the quality of the human environ- ment.” 42 U.S.C. § 4332(2)(C). The trial court concluded that the Secretarv’s marketing decisions were not major Federal actions of this kind and because no factual dispute was presented with respect to that key issue, granted the federal defendants’ motion for summary judgment. Seeking to bring the Secretarw’s allocation decisions within NEPA’s definition of major Federal action, Santa Clara alleges that the government’s refusal to sell it firm power will (1) foree the City to construct its own generat- Appendir 39 ing facilities, and (2) cause industries to relocate to ecom- munities where electricity is available at lower cost. These effects, the City claims, will have a significant deleterious impact on the environment. Because the amount of low cost CVP power is finite, demand will likely outstrip supply in the future as it has in the past. Regardless of whether it is Santa Clara or some other preference entity that forced to look to private sources for the supply of eleetric power, the environmental consequences will be similar. Tf the demand for power exceeds the available supply, then new generating facilities must be constructed somewhere, if not in Santa Clara. Even accepting as true Santa Clara’s rather fanciful hypotheses concerning the likely impact of the Secretary’s decisions on its small piece of the environment, we think it highly improbable that one allocation scheme will have a more deleterious impact than any other when the total geographic area served by the CVP is considered. As the court stated in HTanly v. Nleindienst, 2 Cir., 1972, 471 F.2d 825, 850, cert. denied, 1973 412 U.S. 908, 93-S.Ct. 2290, 36 L.Ed.2d 974, an agency must consider “in deciding whether a major federal action will ‘significantly’ affect the quality of the human environment ... the absolute quantitative adverse environmental effects of the action itself.” No such absolute effeets are threatened by the Secretary’s decision to allocate CVP power in one way rather than another. CONCLUSION The summary judgment against Santa Clara on its claim under the National Environmental Policy Act is affirmed. The judgment dismissing the action is reversed, The decision that the Seeretary’s aetions in deciding the terms on which he will sell power to one preference 40 Appendix customer as compared to others are reviewable is reversed. The decision that the Secretary’s sale of power to PG&E does not violate the preference clause is vacated. The decision that the Secretary is required to formulate and adopt rules governing the sale of CVP power is reversed. The remand of the action to the Secretary for that purpose is reversed. In all other respects the decision of the trial court is affirmed. The case is remanded to the trial court for further proceedings consistent with parts ITI B, V, and VI of this opinion. Appendix B United States Court of Appeals lor the Ninth Circuit City of Santa Clara, California, Appellant, Vs. Cecil Andrus, Individually and as Secretary of the Interior, and R. Keith Higginson, Indi- vidually and as Commissioner of the Bureau of Reclamation, United States Department of the Interior, Appellees. Cecil Andrus, Individually and as Secretary of the Interior, and R. Keith Iligginson, Indi- vidually and as Commissioner of the Bureau of Reclamation, United States Department of the Interior, Appellants, City of Santa Clara, California, Appellee. Pacific Gas & Electric Company, Appellant, Vs. City of Santa Clara, California, Appellee. Nos. 77-1110, 77-1270, No. 77-1189, No. 76-3670 ORDER Before: DUNIWAY and CARTER, Circuit Judges, and BURNS, District Judge . This court’s opinion of February 1, 1978 (1978 Slip Opinions at 339), is amended as follows: 42 Appendix 1. The first full paragraph on page 351 of the slip opinion is amended to read: In this case the Secretary has marketed CVP power to PG&E, a non-preference entity, during times when a preference customer was having its allotment grad- ually reduced, over its objection. It is claimed that PG&E’s allotment was more than adequate to satisfy Santa Clara’s full requirements. Nevertheless, the Secretary has, since 1971, progressively reduced Santa Clara’s withdrawable allocation. 2. The second sentence of the first full paragraph in the right-hand column of page 351 is amended to read as follows: In the meantime, however, to the extent that Santa Clara could have purchased the power, a private utility is profiting from the low cost of federal power at the expense of a preferred entity. 3. The sentence in the first line on page 352 is amended to read: That may be the case here. 4. The third sentence of the second full paragraph on page 353, beginning with the words “Because we think,” is stricken. 3. A new paragraph is added, in the first column on page 353, immediately preceding the heading “C. Congressional Approval,” reading as follows: PG&E and the Secretary argue that during at least part of the period beginning in 1972, when the Secre- tary was gradually reducing Santa Clara’s allotment, CVP did not have the energy necessary to supply Santa Clara, and Santa Clara was not willing or able to take such intermittent power as was being sold to PG&E. It is also claimed that some of the power sold by the Secretary to PG&E may not have been subject Appendir 43 to the preference clause. The trial court did not decide these questions. They can be considered on remand, as can the issue of CVP’s efficiency for irrigation pur- poses if the Secretary chooses to raise it. 6. The first full paragraph in the second column on page 358, beginning with the words “Here, the Secretary does not deny,” is stricken, and a new paragraph is inserted reading as follows: It is not disputed that Santa Clara is a preferred entity that has asked for the power. The Secretary and PG&E claim that Santa Clara was not willing or able to receive what the Secretary could sell to it. and that during certain times the Secretary did not have power available to sell to Santa Clara. The Secretary may also claim that selling to Santa Clara would or will impair the efficiency of the project for irrigation purposes. All of these claims can be con- sidered and decided by the trial court. We see no need to remand this case to the Secretary for a due process type hearing. 7. The footnote signal “9” at the top of page 361, and the footnote at the hottom of that page, are stricken. 8. At the top of page 361, immediately following the heading “SOVEREIGN IMMUNITY,” a new paragraph is inserted reading as follows: On October 21, 1976, Congress enacted Publie Law 94-574, amending 5 U.S.C. § 702, to remove the defense of sovereign immunity in an action seeking relief other than money damages and stating a claim that an agency or officer or emplovee thereof acted or failed to act in an official capacity or under color of legal authority. In Hill v. United States, 9 Cir.. 1978, gt Ee (Slip op., page 45 at 49) we held that this amendment is applicable to a pending action. This 44 Appendix Statute would have the effect of removing the defense of sovereign immunity, if it were otherwise available in this case. However, it is not necessary to rely on that statute here. Il. The statement of amici curiae City of Palo Alto, et al., may be filed. Except as they have been granted in part by the foregoing amendments, the Petition for Rehearing of Pacific Gas and Electric Company and the Federal Defendants-Appellees’, Cross-Appellants’ Motion for Modi- fication are denied. The Petition for Rehearing of the City of Santa Clara is denied. The Suggestion of a Rehearing In Banc by the City of Santa Clara has been transmitted by the Clerk to all judges of the court who are in regular active service, and no judge in reguiar active service, or who was a member of the panel that rendered the decision, has requested a vote on such suggestion. The suggestion of a rehearing in banc is rejected. Appendix C City of Santa Clara, California, Plaintiff, v. Thomas Kleppe, Individually and as Secretary of the Interior, and Gilbert Stamm, Indi- vidually and as Commissioner of the Bureau of Reclamation, United States Department of the Interior, Defendants, Paciric Gas & Evecrric Co., Intervenor-Def endant. No. C-75-1574. United States District Court, N. D. California. July 23, 1976. DECISION CONTI, District Judge. This case brings for judicial resolution a controversy over low cost federal hydroelectric power emanating from the Bureau of Reclamation’s Calitornia Central Valley Project (CVP). The principal parties are the California City of Santa Clara on one side and the U. S. Department of the Interior and its Bureau of Reclamation on the other. Pacific Gas & Electric, a private utility company, has inter- vened as party defendant. Simply stated, Santa Clara wants more low cost federal power than the federa [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_1289%3A1. Public record. Not legal advice.