Amicus Curiae Brief — Seattle Master Builders Ass'n v. Pacific Northwest Electric Power & Conservation Planning Council

IN THE

Supreme Court of the Gnited States

OcToOBER TERM, 1986

SeaTTLeE Master BUILDERS ASSOCIATION, ef al.,

Petitioners,

v.

Pacific Nortuwest Evectrric PoweR AND

CONSERVATION PLANNING COUNCIL,

Respondent,

Untrrep STATES OF AMERICA,

'ntervenor-Respondent.

BRIEF OF AMICUS CURIAE

NATIONAL ASSOCIATION OF HOME BUILDERS

IN SUPPORT OF

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Gus BaumMaNn*

Wiuiam H. ETHIER

Gary KomMarow

National Housing Center

15th & M Streets, N.W.

Washington, D.C. 20005

(202) 822-0359

"Counsel of Record

December 12, 1986

Ce ee ent teen natant

PRESS OF BYRON & ADAMS. WASHINGTON, D.C. (202) 347-6203

TABLE OF CONTENTS

Page

ee Oe BD il siniciessssssscsnsctscnesencstensnccees ii

INTEREST OF AMICUS CURIAE ........:cccccccesssesseseeeeees 1

DAI. ccitadtncrtnantcntitnentnininsrinnnnnnsnetertecnincinesersnee l

I. THIS CASE IS VITALLY IMPORTANT TO

THE PEOPLE OF THE PACIFIC NORTH-

WEST AND, POTENTIALLY, TO EVERY

PERSON IN THE UNITED STATES ....... 1

A. The Pacific Northwest Power Planni

Council’s Actions Will Significantly An

Adversely Affect the Costs of Housing

and Electricity for Consumers in the Pa-

GER CI decnentiseqincnncecasscbenenesteneseann l

B. What Has H ned in the Pacific North-

west Could pen Elsewhere in the

ey IE adlatinnisnsabnvcsensseresmnoniccscsssnes 3

C. The Council’s Conservation Standards

Will Have a Tremendous Impact on the

Cost and Affordability of Housing if

Adopted Nationwide ..............ccccssseeeeeeeees 5

Il. THE NINTH CIRCUIT VIOLATED

SUPREME COURT PRECEDENT IN DE-

FERRING TO THE POST HOC INTER-

PRETATION OF THE ACT BY THE

COUNCIL’S ATTORNEYS. ..........:0ccessseeees 6

alate ain radiate tac iitenceiniensticssldnnsadionnd 12

TABLE OF AUTHORITIES

CASES:

ALCOA v. Central Lincoln Peoples’ Util. Dist., 467

CE, GD GD cattnssisintthainsitiiniinnn

American P. Inst., Inc. v. American Elec. Power

Service ., 461 U.S. 402 (1983) _..............

Burlington Truck Lines, Inc. v. United States, 371

is HT: ns eee

Central Lincoln Peoples’ Util. Dist. v. Johnson, 673

F.2d 1076, as amended, 686 F.2d 708 (9th Cir.

1982), rev'd on other grounds, 467 U.S. 380

CRIED. ccceccccssscnssnccsesedsenensnctentnectntsatescecuntsheenens

Chevron, U.S.A., Ine. v. Natural Resources Defense

Council, 467 U.S. 837 (1984) .......ccccccceeeeeeeees

Columbia Basin Land Protection Ass'n v. Schles-

inger, 643 F.2d 585 (9th Cir. 1981) _ .............

Dept. of Water & Power v. Bonneville Power

Administration, 759 F.2d 684 (9th Cir.

BD civniniidesscciasensnctnansiccsnnccasennsimenidenanttonnaninins

Motor Vehicle Manufacturers Ass'n of the U.S. v.

State Farm Mutual Automobile Ins. Co., 463

te 7) ee en

Seattle Master Builders Ass'n v. Pacific Northwest

Elec. Power and Conservation ning Coun-

cil, 786 F.2d 1359 (9th Cir. 1986) _ ...............

Securities and Exchange Comm'n v. Chenery Corp.,

fle | .. ee

Udall v. Tallman, 380 U.S. 1 (1965) .............0000.

Unemployment Compensation Comm'n v. Aragon,

ge BR Ye

STATUTES:

OE TEED, 0 I ciccccscneccscncccccecsescvecsnstnennnseents

BB UB... © MBCBRID) cccoccccccccccccecccccccccescsccescescese

LEGISLATIVE MATEAIALS:

H.R. Bill 3074, 99th Cong., Ist Sess. (July 24,

BOB cccccccccccccccccccccccccccccosccccccccenconsccscoscccoososes

H.R. Bill 3074 § LOGS) ........ccccegercecceenneneeenennnnenees

w

iii

Table of Authorities Continued

BE. BEE BUTE © TGGIONT) .nccncccccccccesccccsccccccsecccess

BR, ME III orecncsncinscccsaccecossonsecsconees

H.R. Bill 5766, 98th Cong., 2d Sess. (May 31,

Tl audi Midnancthiedeaccbesencsocsenancacesensseocs

I enccastcveresccsssencsescscsecsccesacees

BM I IED Sccsccccsccccccccoscsssccssecseceses

Beis MUD © BOUTIN) oxcccccccccccccccccscecccessccescess

OTHER AUTHORITIES:

U.S. Department of Commerce, Bureau of the Cen-

sus, Construction Reports, Housing Starts,

tistics, Employment & Earnings, Table B-1

ro cnsnciasuséshsoceve

United States Department of Commerce News, Bu-

reau of the Census, Table 1 (October 1,

De Nill ccntieecasseltdeccsavtidecboucccsseccees

INTEREST OF THE AMICUS CURIAE

The National Association of Home Builders repre-

sents 142,000 builder and associate members orga-

nized in approximately 800 affiliated state and local

associations in all fifty states, the District of Colum-

bia, and Puerto Rico. Its members include not only

people and firms that construct and supply single-

family homes but also apartment, condominium, com-

mercial and industrial builders, as well as land de-

velopers and remodelers. It is the voice of the

American shelter industry.

For the reasons stated below, this case is of obvious

and direct importance to both the home building in-

dustry and housing consumers.

The National Association of Home Builders has re-

ceived the parties’ written consent to file this brief

as amicus curiae in support of the petitioners and

has filed their letters of consent with the Clerk of

this Court.

ARGUMENT

I. THIS CASE IS VITALLY IMPORTANT TO THE

PEOPLE OF THE PACIFIC NORTHWEST AND,

POTENTIALLY, TO EVERY PERSON IN THE

UNITED STATES

A. The Pacific Northwest Power Planning Council's Ac-

tions Will Significantly and Adversely Affect the Costs

of Housing and Electricity for Consumers in the Pacific

Northwest

This case concerns the adoption by the Pacific

Northwest Electric Power and Conservation Planning

Council (the Council) of a Regional Electrical Power

Plan (the Plan) for the states of Washington, Oregon

and Idaho, as well as parts of Montana, California,

Nevada, Utah and Wyoming.! The Plan includes a set

of Model Conservation Standards (MCS) that are the

focal point of NAHB’s concern in this matter. These

standards will significantly affect the costs of housing

in the areas covered by the Plan. The Council itself

estimated that the MCS’ space heating requirements

alone will add $1,900 to the cost of a single-family

home west of the Cascades, and $3,000 east of the

Cascades. This comes to almost $200 million in new

single-family housing costs each year, or some $3.35

billion during the plan’s 17-year course. Pet. for Cert.

29, n.20.?

‘ The Council’s jurisdiction is defined by Section 3(14) of the

Pacific Northwest Electric Power Planning and Conservation

Act (the Act), 16 U.S.C. § 839a(14).

2 While the Petition for Certiorari concedes for the sake of

argument the correctness of the Council’s figures, the home

building industry does not in fact agree. The Council developed

alternative packages of conservation measures it believed would

meet its 4¢/kwh conservation standard. Plan Vol. II, Tables J6-

la to J6-lc. For the package of conservation measures labeled

“Type A’ in Table J6-la, in the Council’s 1,350 square foot

prototype single-family house built west of the Cascade Moun-

tains, the Council estimates increased space heating conservation

costs of approximately $1,900 in 1980 dollars. See Plan Vol. II,

Tables J6-la, K-14 & K-15.

However, the Pacific Power & Light Company’s estimate was

approximately $2,800 to $4,500; the Puget Sound Power & Light

Company's estimate was approximately $3,800, the Seattle Mas-

ter Builders Association’s estimate was approximately $4,800,

the NAHB’s estimate was approximately $4,900 and Breeden

Bros. Inc.’s estimate was approximately $7,100. Official Record

of the Northwest Power Planning Council Docs. 311/01002, 311/

00989, 321/02310 (Enclosure 6), 311/03445 & 321/02392, re-

This is a case of a governmental body of question-

able authority promulgating ill-conceived and illegal

standards. Although the Court should answer the sig-

nificant federal question of whether the Council is a

valid interstate compact or a federal agency,’ the

Court should also rule that the Council’s Plan is de-

fective and that it must be reconsidered by a properly

constituted Council and brought into compliance with

Congressional intent regarding economic feasibility for

the consumer. See Pet. for Cert. 24-30.

B. What Has Happened in the Pacific Northwest Could

Happen Elsewhere in the United States

During each of the last two Congresses, bills have

been introduced that would authorize the formation

of interstate compact agencies similar to the council.

H.R. Bill 3074, 99th Cong., 1st Sess. (July 24, 1985);

H.R. Bill 5766, 98th Cong., 2nd Sess. (May 31, 1984).

Under these bills, compact. gency members would be

spectively.

The Plan shows increased costs of approximately $3,000 for

“Type A” conservation in the Council’s prototype home east of

the Cascade Mountains in Oregon, Washington, Idaho and Mon-

tana, where the climate is more severe. See Plan Vol. II, Tables

J6-1b, J6-lc, K-14 & K-15. The NAHB’s estimate for such a

home was between approximately $7,800 and approximately

$8,200. Official Record of the Northwest Power Planning Council

Doc. 311/03445.

The NAHB has been unable to determine the Council’s per

unit estimate of increased costs of multi-family housing. The

Seattle Master Builders Association estimated that the increased

cost west of the Cascade Mountains would be approximately

$3,500. Official Record of the Northwest Power Planning Council

Doc. 321/02310 (Enclosure 6).

3 See Pet. for Cert. 11-20.

+

appointed by the States and exercise control over a

federal agency. H.R. Bill 3074 §§ 103(3), 106{eX2);

H.R. Bill 5766 §§ 103(3), 106(eX2). These bills would

allow the state-appointed agency to apply to the Fed-

eral Energy Regulatory Commission (FERC) for an

order compelling electric utilities to provide or modify

transmission services. H.R. Bill 3074 § 106(e\1); H.R.

Bill 5766 § 106(eX1). FERC would be compelled to

issue the proposed order except in very limited cir-

cumstances:

Upon receipt of an application under this

subsection, and after public notice and notice

to each affected electric utility and oppor-

tunity for an evidentiary hearing, the Com-

mission shall issue such order unless the

Commission finds that the order would un-

reasonably impair the reliability of an electric

utility affected by the order or would impair

the ability of such an electric utility to render

adequate service to its customers or con-

sumers.

H.R. Bill 3074 § 106(eX2) (emphasis added); H.R. Bill

5766 § 106(eX2) (emphasis added).

The Petition for Certiorari discusses at length the

significant constitutional issues raised by state ap-

pointment of a body which exercises control over a

federal agency. Pet. for Cert. 11-20. The above-quoted

provision of the proposed bills demonstrates the pros-

pect of continuing and expanding this type of regional

government throughout the United States. See also

33 U.S.C. § 1508(bX1) (Deep Water Ports Act) (state

governor veto over port location approved by the Sec-

retary of Transportation).

The significance of the two bills’ similarity to the

Act is this: as future interstate compact agencies are

formed, the outcome of this case could become prec-

edent affecting every person in the United States who

uses electricity, builds homes, sells building supplies,

or will buy or live in a new home—i.e., literally every-

one in the United States. Now is the time to insure

that the correct precedent is set, before other agen-

cies are created and have acted.

C. The Council’s Conservation Standards Will Have a Tre-

mendous Impact on the Cost and Affordability of Hous-

ing if Adopted Nationwide

While the Petition for Certiorari explains the re-

gional effect of the Council’s conservation standards,

Pet. for Cert. 29-30 & nn. 19-23, it does not describe

the potential effect throughout the rest of the nation.

Approximately 1,742,000 privately owned housing

units were started in the U.S. in 1985. U.S. Depart-

ment of Commerce, Bureau of the Census, Construc-

tion Reports, Housing Starts, Table 7 (August 1986).

The value of new housing units put in place by the

private sector in the United States in 1985 was

$115,974,000,000. United States Department of Com-

merce News, Bureau of the Census, Table 1 (October

i, 1986). Even an increase of just $1,900 per unit,

the Council’s estimate in 1980 dollars of the cost of

their conservation standards in single-family homes in

a moderate climate (Plan Vol. II, Tables J6-1a, K-14

and K-15) would add $3,309,800,000 to the annual

cost of privately owned housing nationwide. If

NAHB’s estimate of $4,900 is used, the total annual

added cost would be $8,535,800,000 nationwide. Of-

ficial Record of the Northwest Power Planning Coun-

cil, Doc. 311/03445. This has definite effects on the

6

housing consumer. If only $1,000 is added to the

mortgage amount for an average priced, new single-

family home, at a 10% interest rate for a 30-year

loan, then the number of American families who can

afford the average priced home drops by 1.6%, or

325,000 families. NAHB Economics, Mortgage Fi-

nance and Housing Policy Division. The potential na-

tionwide impact on the ability of people to afford

homes is dramatic.

The construction industry as a whole employed

4,687,000 people in 1985. U.S. Department of Labor,

Bureau of Labor Statistics, Employment and Earn-

ings, Table B-1 (September 1986). While the exact

number employed by the housing industry is not avail-

able, a rough estimate of the magnitude is possible

in light of the fact that private construction of new

housing units accounted for 33% of the total con-

struction in the United States in 1985. United States

Department of Commerce News, Bureau of the Census,

Table 1 (October 1, 1986). A shrinking housing mar-

ket, which would be caused by any increase in housing

costs, would seriously affect the economy in general

and employment in particular.

II. THE NINTH CIRCUIT VIOLATED SUPREME

COURT PRECEDENT IN DEFERRING TO THE

POST-HOC INTERPRETATION OF THE ACT BY

THE COUNCIL’S ATTORNEYS

The Petition for Certiorari discusses the Council’s

substitution of its interpretation of the Act for the

intent of Congress, and the Ninth Circuit’s incorrect

deference thereto. Pet. for Cert. 24-30. NAHB sub-

mits that there are other important reasons why the

Ninth Circuit should not have sustained the Council’s

actions. The Council failed to explain why it acted

contrary to its earlier interpretation of the Act’s re-

quirement that the Model Conservation Standards be

“economically feasible for consumers.” In sustaining

the Council’s actions, the Ninth Circuit erroneously

deferred to the post hoc rationalizations of the Coun-

cil’s attorneys, rather than the record before the

Council.

Until the petitioners filed this case, the Council’s

interpretation of “economically feasible for con-

sumers’’ agreed with the intent of Congress.‘ Specif-

ically, the Council indicated early and repeatedly that

it interpreted the Act to require that no cost-effective

conservation measure with a marginal cost greater

than the average cost electric rate may be required

by the Plan unless the buyers of new homes are reim-

bursed for the difference in cost.

By way of background, at the seventh of the forty-

three Council meetings leading to adoption of the

Plan, representatives of the Seattle Master Builders

Association (the Master Builders) expressed concern

that the Council would require marginal cost conser-

vation in new housing without reimbursing new home

buyers for the difference between the cost of the

marginal cost conservation measures and average cost

electric rates. Mtg. 7, T. at la-14 to 15, 1b-4 to 1b-

9 (July 13, 1981) (contained in Pet. for Cert. App.

X). The Council members were fully aware of their

statutory duty to provide such reimbursement. In-

deed, the Council members became somewhat impa-

tient with the Master Builders’ implication that the

‘The intent of Congress is explained in the Petition for

Certiorari at 24-27.

8

Council might not do as the Act requires. See Mtg.

7, T. at la-14 and 15, 1b-4 to 1b-9.

Additionally, at the thirty-sixth Council meeting, all

eight members of the Council formally voted to adopt

a position that reimbursement must be offered to con-

sumers to achieve standards set at a marginal re-

source cost level. Mtg. 36, M. at 1, 4 (December 28,

1982) (contained in Pet. for Cert. Appx. W at W-3

to W-4, adopting Staff Recommendation 3 of the Of-

ficial Record of the Power Council, Doc. 440/01494,

contained in Pet. for Cert. App. V at V-4 to V-7).

The Council knew that the Act does not allow it

to require new housing conservation measures based

upon the region’s marginal cost without reimbursing

consumers for the difference between that cost level

and average cost electric rates. However, that is pre-

cisely what the Council did. The Plan set a marginal

cost standard for conservation in new housing (Plan

Vol. I, 7-1, 10-4, 10-9 to 10-11), but after December

31, 1985, the Plan provides no reimbursement to con-

sumers for the difference between the marginal cost

of new housing conservation measures and average

cost electric rates. Plan Vol. I, 10-9 to 10-11.

Contrary to the contention of the Ninth Circuit, the

statutory interpretation to which it deferred was not

the Council’s but the interpretation of the Council’s

attorneys. Neither the Council’s actions nor the record

offer any explanation of why the Council chose to act

contrary to its previously adopted interpretation. Nei-

ther the Council’s actions nor the record contain any

supporting analysis for this action. Indeed, there is

no indication that the Council was even aware that

it was acting contrary to its own adopted interpre-

tation.

It was only after the Council’s action that an ex-

planation finally emerged in the legal brief of its

attorneys. This came in the Council’s Reply Brief at

54-57, which was not filed until Decembcr 1984.5 The

Ninth Circuit attempts to justify its position as a valid

deference to agency interpretation of its statute:

“Petitioners have not shown the Council’s definition

of economic feasibility to be unreasonable.’ Seattle

Master Builders Ass’n v. Pacific Northwest Elec.

Power and Conservation Planning Council, 786 F.2d

1359, 1369 (9th Cir. 1986). However, the cases cited

by the Ninth Circuit are totally inapposite because,

here, the interpretation was not the agency’s.® This

Court has drawn a hard line between interpretations

of administrative agencies, to which it has granted

some deference, and post hoc explanations by agency

attorneys, which the Court has rejected:

5 The Council record closed in April 1983.

*The Ninth Circuit cited the following cases to justify the

deference it granted to the interpretation. 786 F.2d at 1366-67.

The cases put the burden on the petitioners to prove the inter-

pretation is not reasonable. American Paper Inst., Inc. v. Amer-

ican Elec. Power Service Corp., 461 U.S. 402, 422-23 (1983),

quoting Udall v. Tallman, 380 U.S. 1, 16 (1965), and Unem-

ployment Compensation Comm'n v. Aragon, 329 U.S. 143, 153

(1946); Chevron, U.S.A., Inc. v. Natural Resources Defense Coun-

cil, 467 U.S. 837 (1984); ALCOA v. Central Lincoln Peoples’

Util. Dist., 467 U.S. 380 (1984); Dept. of Water & Power v.

Bonneville Power Administration, 759 F.2d 684, 690-91 (9th Cir.

1985); Central Lincoln Peoples’ Util. Dist. v. Johnson, 673 F.2d

1076, 1078, as amended, 686 F.2d 708, 710-11 (9th Cir. 1982),

rev'd on other grounds, 467 U.S. 380 (1984); Columbia Basin

Land Protection Ass'n v. Schlesinger, 643 F.2d 585, 599-600 (9th

Cir. 1981), and cases cited therein.

10

The courts may not accept appellate

counsel’s post hoc rationalizations for agency

action; [Securities and Exchange Comm’n v.

Chenery Corp., 332 U.S. 194, 196 (1947)] re-

quires that an agency’s discretionary order

be upheld, if at all, on the same basis artic-

ulated in the order by the agency itself:

“{A] simple but fundamental rule of

administrative law *** is *** that a

reviewing court, in dealing with a de-

termination or judgment which an ad-

ministrative agency alone is authorized

to make, must judge the propriety of

such action solely by the grounds in-

voked by the agency. If those grounds

are inadequate or improper, the court is

powerless to affirm the administrative

action * * *.” Id.

For the courts to substitute their or

counsel’s discretion for that of the Commis-

sion is incompatible with the orderly func-

tioning of the process of judicial review. This

is not to deprecate, but to vindicate, (see

Phelps Dodge Corp. v. Labor Board, 313 U.S.

177, 197), the administrative process, for the

purpose of the rule is to avoid “‘propel[ling]

the court into the domain which Congress has

set aside exclusively for the administrative

agency.” 332 U.S. at 196.

Burlington Truck Lines, Inc. v. United States, 371

U.S. 156, 168-69 (1962).

The Council’s failure to explain why it changed

course and acted contrary to its own interpretation

11

of the Act violates the requirement that an agency

articulate a satisfactory explanation for its actions.

In Motor Vehicle Manufacturers Ass’n of the U.S. v.

State Farm Mutual Automobile Ins. Co., 463 U.S. 29

(1983), a group of insurance companies challenged the

legality of the National Highway Traffic Safety

Administration’s (NHTSA) decision to rescind its re-

quirement that automobile manufacturers install ‘‘pas-

sive restraints,”’ such as airbags. Jd. at 35-38, 40. The

rescission was invalid because NHTSA ‘“‘failed to pres-

ent an adequate basis and explanation’”’ for its action.

Id. at 34. This Court criticized the adequacy of the

agency’s explanation of its decision to rescind one

portion of the passive restraints requirement, and

criticized the agency’s failure to give any explanation

for its decision to rescind another portion. Id. at 49-

50, 52-57. NHTSA had at least the same obligation

to explain its decision to change course and rescind

a proposed action as it did to explain a proposed

action to begin with. Id. at 42-43.

The same principle should be applied in the present

case. The Council should have at least told the public

why it was no longer going to do something it pre-

viously had acknowledged was required under its sta-

tutory mandate, and given the public the opportunity

to respond in a meaningful way prior to the change.

Administrative agencies must be held accountable

for their actions. They must abide by the standards

set by Congress, Pet. for Cert. 27, 28-29, and they

must abide by their own standards and the record

before them. Only when they have given notice of

the proposal to change their standards, given the pub-

lic an opportunity to be heard, and filed in the official

record an analysis and explanation of the changes,

12

should they be allowed to make them, and then only

if they conform to the will of Congress. To do oth-

erwise is to act arbitrarily and capriciously.

CONCLUSION

For the reasons stated above and in the Petition

for Certiorari, this Court should issue a writ of

certiorari to review the judgment and opinion of the

Ninth Circuit.

Respectfully submitted,

Gus BAUMAN*

WILLIAM H. ETHIER

GARY KOMAROW

National Housing Center

15th & M Streets, N.W.

Washington, D.C. 20005

(202) 822-0359

*Counsel of Record

December 12, 1986

CURIAE

IEF

g Supreme Court, U.S,

rine

~ |

1) DEC 28 1986

No. 86-629 JOSEPH F. SPANIOL, JR.

In The

Supreme Court of the United States

October Term, 1986

"=

a

SEATTLE MASTER BUILDERS

ASSOCIATION, et al.,

Petitioners,

Vv.

PACIFIC NORTHWEST ELECTRIC POWER

AND CONSERVATION PLANNING COUNCIL,

Respondent.

UNITED STATES OF AMERICA,

Intervenor-Respondent.

— =

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

uffh,

BRIEF AMICUS CURIAE OF

PACIFIC LEGAL FOUNDATION IN SUPPORT OF

PETITION FOR WRIT OF CERTIORARI

4

Ww

Ronatp A. ZumBrun

*Rosrs L. Rrvetrr

*CounseL or Recorp

Pacific Legal Foundation

555 Capitol Mall, Suite 350

Sacramento, California 95814

Telephone: (916) 444-0154

Attorneys for Amicus Curiae,

Pacific Legal Foundation

COCKLE LAW BRIEF PRINTING CO., (800) 228-8845 (tone) 75

or call collect (402) 342-2831

» le

a too

2242

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES CITED 0 ii

poo i ke Sh |, ne 1

AU sass csltsnhiceapeibanhan 3

STATEMENT OF THE CASE oo cceeeeceenenneen 3

Lip k Fe 4 es ek! ik | 4, Se 3

I. THE NINTH CIRCUIT HAS CREATED A

GIANT LOOPHOLE IN ENVIRONMENTAL

PROTECTION WHICH WILL LEAD TO

AVOIDANCE OF ENVIRONMENTAL LAWS 4

A. NEPA Mandates That an EIS Be Prepared:

Assessing the Northwest Power Plan ............... 8

1. The Northwest Power Planning Council

Is a Federal Agency for the Purposes of

NEPA and Should Have Filed an En-

vironmental Impact Statement ...................... 8

2. If the Council Is Not a Federal Agency

for NEPA Purposes, BPA Is, and BPA

Should Have Prepared an EIS on the

Council’s Plan Prior to Its Adoption ..... 14

3. The Ninth Cireuit’s Holding That Neither

BPA nor the Council Has Taken a Sub-

stantial Federal Action Affecting the

Human Environment Conflicts Dramat-

ically with Other Cireuits 00000 15

B. The Council Should Have Drafted a State

EIS on the Plan. The Ninth Cireuit’s Con-

trary Ruling Improperly Encroaches on a

State’s Authority to Impose Its Own Environ-

Mental Review Standards ....ccccccccccccccccssscsssssscsceesnsee 16

TNT had cel ssecisdnsicceaces ig baila ssusodscsuacasiadaeiiitibnte oe

i

TABLE OF AUTHORITIES CITED

CAsES

Ely v. Velde, 451 F.2d 1130 (4th Cir. 1971) 2. 14

Environmental Defense Fund v. Environmental

Protection Ageney, 489 F.2d 1247 (D.C. Cir. 1973) 13

Flint Ridge Development Company v. Scenic Rivers

Association of Oklahoma, 426 U.S. 776 (1976) _. a

Florida Lime and Avocado Growers v. Paul,

Ne ea RO ID ceccisicnechp cetera ecient amen eae 18

Garcia v. San Antonio Metro Transit Authority,

— U.8. —, 106 8. Ct. 1006 (1965) WG

Hart v. Denver Urban Renewal Authority,

Gx Biv: 5. Lo RR. y 5 BSMnmnnw temienma ne aeiennen 16

Hodel v. Virginia Surface Mining and

Reclamation Association, 452 U.S. 264 (1981) ........... 18

Pennsylvania v. Nelson, 350 U.S. 497 (1956) 200000. 18

Peonle v. City of South Lake Tahoe,

466 ¥’. Supp. 527 (E.D. Cal 1978) — 17,18

Portland Cement Association v. Ruckelshaus,

OG Fae Oe Cee. CR, Te oi uaa 13

Proetta v. Dent, 484 F.2d 1146 (2d Cir. 1973) 15, 16

Rice v. Santa Fe Elevator Corporation,

ee is ee EB cnctsogueatcnncseaoneennus jasiceiacanaaonaaes 19

Scientists’ Institute for Public Information, Ine.

v. Atomic Energy Commission, 481 F.2d 1079

ene I ae et ee 14

Wilson v. Lynn, 372 F. Supp. 934 (D. Mass. 1974) 15

iil

TABLE OF AUTHORITIES CITED—Continued

Page

STaTUTES

Energy Supply and Environmental Coordination

Act, 15 U.S.C. § 793(¢) (1) .......... 12

Mont. Rev. Code Ann. § 75-1-201(1)(b) (1983) 0. 18

National Environmental Policy Act,

42 U.S.C. § 4321, et seq. 4

annem inisncinceennstnieensnn 7,13

§ 4332(2)(C) ; 8

Pacific Northwest Electric Power Planning

and Conservation Act, 16 U.S.C.

§ 839, et seq. 3, 8, 12, 13, 19

ESS SEER SE en 19

NR ae ee a 5,17

al htnanenttonennso 5,17

SE ee 7

Si panic cE enone ne aaa aT 12

§ 839b(a) (3) ad ; 12

Ea ae a Miaoaeces 8

I lhc sacinscsnimnl 9,14

Ee Le 8, 9

I 9

Regional Rail Reorganization Act, 45 U.S.C. § 791(e) 12

Wash. Rev. Code Ann. § 43.31¢.030(2) (1983) 20. 18

iv

TABLE OF AUTHORITIES—Continued

Page

Unitep States ConstItutTIoNn

OE ae an hw eer ace ne Orem One 9,10

RULES

erences Cena Te: Te se eis 1

MIscELLANEOUS

Breysse, ‘‘The Health Cost of ‘Tight’ Homes,”’

Journal of the American Medical Association,

Wot. O66 at Br (ak, 1G, See) kc... 6

Bronson, ‘‘Some Like It Comfortable,’’ Forbes,

7 OR RR RR NCONCECa) IS ence Ronee me 6

Carey, Hager & Zuckerman, ‘‘ Beware ‘Sick-

Building Syndrome’ ’’ Newsweek, Jan. 7, 1986 ........... 6

H. 9866, 126 Cong. Ree. (daily ed. Sept. 29, 1980) .......... 12

House Committee on Interior and Insular Affairs,

Rep. No. 976 (Part IT), 96th Cong., 2d Sess. 70

(1980), reprinted in part in

1980 U.S. Code Cong. & Ad. News 6063 0... 11

House Committee on Interstate and Foreign

Commerce, Rep. No. 976 (Part I),

96th Cong., 2d Sess. 28, reprinted in part in

1980 U.S. Code Cong. & Ad. News 5994 .0 ww... 10

H.R. 3074, 99th Cong. Ist Sess. (1985) 20s 19

Murphy, ‘‘The Colorless, Odorless Killer,’’

IMG, OEY iy RE licorice DSR een ee ees ce 6

Sh ae eG |. | ee eee ee . BB

No. 86-629

In The

Supreme Court of the United States

October Term, 1986

SEATTLE MASTER BUILDERS

ASSOCIATION, et al.,

Petitioners,

Vv.

PACIFIC NORTHWEST ELECTRIC POWER

AND CONSERVATION PLANNING COUNCIL,

Respondent.

UNITED STATES OF AMERICA,

Intervenor-Respondent.

()

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

ft)

Vv

BRIEF AMICUS CURIAE OF

PACIFIC LEGAL FOUNDATION IN SUPPORT OF

PETITION FOR WRIT OF CERTIORARI

ft).

Vv

INTEREST OF AMICUS

Pursuant to Supreme Court Rule No. 36, Pacific

Legal Foundation respectfully submits this brief amicus

curiae in support of Seattle Master Builders’ petition for

writ of certiorari. Consent for filing this brief has been

granted by counsel for all parties. Copies of the letters

of consent have been lodged with the clerk of this Court.

Pacific Legal Foundation (PLF) is a nonprofit, tax-

exempt public interest organization with over 19,000 con-

tributors and supporters located throughout the country.

1

PLF’s principal office is located in Sacramento, Cali-

fornia, and PLF has liaison offices in Seattle, Washington,

and Anchorage, Alaska.

Since its establishment in 1973, PLF has actively en-

gaged in research and litigation over a broad spectrum of

publie interest issues. PLF advocates a balanced ap-

proach in dealing with public interest issues, and supports

the concept that governmental decisions and policies should

reflect a careful assessment of not only the benefits, but

also the social and economic costs involved. PLF has

stressed this approach in the area of land use and environ-

mental regulation.

In addition, PLF believes that governmental deci-

sions must be made pursuant to law and that the author-

itv to make such decisions must not be exercised in con-

travention of constitutional and statutory proscriptions.

It has therefore been the policy and practice of PLE to

protect individual liberties and personal property rights

against excessive or illegal government conduct.

All eitizens of the Pacifie Northwest, a number of

whom are PLF contributors and supporters, will be sig-

nificantly impacted by the decisions of the Northwest

Electric Power and Conservation Planning Council

(Council). These decisions will result in far-reaching

economic and social impacts and will also significantly

affect the quality of the environment. The power to so

substantially impact the lives of many must be exercised

in accordance with the law.

PLF submits this amicus curiae brief in order to

demonstrate that the Council is exercising its power

3

illegally by violating important principles of the environ-

mental laws of this land.

OPINION BELOW

The opinion of the United States Court of Appeals

for the Ninth Circuit is reported at 786 F.2d 1359 (1986)

and appears in Appendix A to the petition for writ of

certiorari.

STATEMENT OF THE CASE

Amicus cvriae adopts petitioners’ statement of the

ease found at Page Nos. 4 through 10 of the petition for

writ of certiorari.

ty

Vv

SUMMARY OF ARGUMENT

The Northwest Power Planning Council members are

authorized pursuant to the Pacific Northwest Electric

Power Planning and Conservation Act (Act), Pub. L.

No. 96-501, 94 Stat. 2697 (1980), 16 U.S.C. § 839, to draft

a comprehensive Northwest Conservation and Electric

Power Plan (Plan). The Plan is to be implemented by the

Bonneville Power Administration (BPA) for the entire

Pacific Northwest region. In drafting and enforcing the

Plan, the Council has considerable control over the con-

duct of BPA because BPA is directed under the Act to

pursue only those actions which are consistent with the

Plan.

The Plan was promulgated by the Council and will

direct BPA’s energy conservation and development pro-

gram over the next 20 years. This program ineludes nu-

merous actions which will significantly affect the quality

+

of the human environment. Under these circumstances,

both state and federal environmental disclosure statutes

require preparation of an environmental impact statement

(EIS) to ensure that a full disclosure of environmental

information is available for proper consideration during

decision making. Nevertheless, no EIS was prepared and

the Ninth Cireuit sanctioned the omission by ruling that

neither state nor federal law required preparation of an

EIS. In so ruling, the court misinterpreted state and fed-

eral statutes and placed the Ninth Cireuit 180° out of step

with other federal circuits.

I

THE NINTH CIRCUIT HAS CREATED

A GIANT LOOPHOLE IN ENVIRONMENTAL

PROTECTION WHICH WILL LEAD TO

AVOIDANCE OF ENVIRONMENTAL LAWS

In response to the Council’s claim that it need not

comply with either the National Environmental Policy

Act (NEPA), 42 U.S.C. § 4821, et seq., or state environ-

mental protection statutes in preparing the Northwest

Conservation and Electrie Power Plan, the Ninth Cireuit

created a giant loophole in the laws of environmental pro-

tection. The court so ruled despite the uncontroverted

facts that the Council’s actions may significantly affect

the environment. Among those facts are:

i. The Council’s Plan constitutes the primary

‘‘strategy’’ for meeting all of the ‘‘electrical energy

needs’’ of the entire Pacific Northwest Region! for the

next 20 years. Plan Vol. I at iii.

, The Pacific Northwest region is the area consisting of the

States of Oregon, Washington, and Idaho, the portion of the

State of Montana west of the Continental Divide, (continued)

4)

2. The Plan calls for a demand of between 17,834

and 26,245 megawatts -of electricity by the year 2002

which will require a combination of conservation to re-

duce the need for electricity and new electrical generation

resources.”

3. Among the specific actions identified to be taken

are: (a) directing BPA to acquire between 1,000 and

11,000 megawatts of electric energy resources throughout

the region, Plan Vol. I, Figure Nos. 5-1 to 5-4; and (b)

imposition of a mandatory conservation program as part

of the Council’s two-year action plan which includes meas-

ures in the residential sector to weatherize existing houses

and set weatherization standards for both new houses and

houses converting to electric space heating, as well as

measures in the commercial building, government, indus-

trial, and agricultural sectors, plus existing power system

efficiency improvements. Plan Vol. I, Figure No. 10-1.

Weatherization standards for residential buildings alone

could create significant health problems due to an increase

in indoor air pollutants such as carbon monoxide, partic-

ulates, formaldehyde, and radon gas which has been shown

to be carcinogenic.

‘‘('T]he present energy conservation program as it

applies to building structures and, most important,

homes involves making our habitable structures as

and such portions of the States of Nevada, Utah, and Wyoming

that are within the Columbia River drainage basin. 16 U.S.C.

§ 839a(14)(A). Parts of California are also served by BPA.

16 U.S.C. § 839a(14)(B).

2 Hydropower, geothermal, wind, solar, biomass, cogenera-

tion, nonbiomass, coal, and nuclear. Plan Vol. | at Page Nos. 8-1

through 8-6.

i)

‘tight’ as possible. There is no doubt that unless a

reasonable and logical plan is developed, the deleteri-

ous health impacts of excessive home tightening will be

enormous.’’ Breysse, ‘‘The Health Cost of ‘Tight’

Homes,’’ Journal of the American Medical Associa-

tion, Vol. 245 at 267 (Jan. 16, 1981).

‘‘What environmental scientists call ‘sick buildings’

pose a problem that cuts across, social and economic

boundaries. They have been found everywhere from

trailer parks in Texas to an Environmental Protection

Agency office in Washington. ‘We’re just beginning

to identify the problem of indoor air pollution,’ says

Hugh Kaufman, EPA hazardous waste expert and

whistle-blower. ‘But everywhere we look it is worse

than we expected.’’’ Carey, Hager & Zuckerman,

‘‘Beware ‘Sick-Building Syndrome,’’’ Newsweek,

Jan. 7, 1985, at 58. See also Murphy, ‘‘The Color-

less, Odorless Killer,’’ Time, July 22, 1985, at 72.

Cf. Bronson, ‘‘Some Like It Comfortable,’’ Forbes,

June 30, 1986, at 116.

“The key question, of course, is how serious a threat

these indoor pollutants are to health. The clearest danger

is posed by radon gas. Produced by the decay of uranium

238, a ubiquitous trace element in the earth’s crust, inert

radon does not bind to minerals and thus accumulates in

the tiny air pockets in soil. From there, it is pulled into

houses by pressure differences created by the rising of

warm indoor air. Once inside, radon decays into other ra-

dioactive elements, such as polonium, that bind to dust

and are inhaled into the lungs, where they can cause cancer.

“Extrapolating from rates of lung cancer in uranium

miners, who are exposed to known amounts of radon and

its products, researchers have calculated that 2,000 to

20,000 cases of the disease each year may be caused solely

by indoor radon pollution. The geology of Maine and

parts of Pennsylvania, Maryland, Oregon and Montana

leads to particularly high radon risks. ‘There are about a

million homes with radon levels over the recommended

standard,’ says Anthony Nero of [Lawrence Berkeley Lab-

oratories]. ‘No other environmental risk, such as toxic-

waste dumps, affects that many homes.’” Carey, Hager

& Zuckerman at 59-60.

As the nationwide scope of the above quotations sug-

gests, the danger is not limited to the people of the

Pacific Northwest. The danger is increased by the po-

tential for the Council’s conservation standards to

become models for building codes elsewhere in the United

States, without an adequate analysis of the environmental

impacts.’

Despite these significant environmental impacts the

Ninth Cireuit reached the curious conclusion that no en-

vironmental planning statutes applied to the Council or its

Plan. The court found that the member states of the

Council had not reserved rights to apply state environ-

mental laws to the Council, and neither BPA nor the

Council had taken a substantial federal action affecting

the human environment which might trigger application

of federal environmental laws. 786 F.2d at 1371. The im-

pact of this ruling is to create a giant loophole in the

environmental planning process. This was never intended

by Congress. A clear, unencumbered reading of the Act

‘‘construed in a consistent manner’’ (16 U.S.C. § 839b),

with Congress’ unequivocal direction that the EIS pro-

cess should be complied with ‘‘to the fullest extent pos-

sible’? (42 U.S.C. § 4832) demonstrates that both federal

. Also of concern to PLF is the potential liability of home

builders when people using homes built to comply with the

Council’s standards become ill or die. To the knowledge

of PLF, no appellate court has yet addressed the issue of build-

ers’ liability for injuries or illness caused by installing measures

required by law. If a negligence standard were applied, and

liability were based on fault ome builders would not be liable.

But if a strict liability standard were applied, and liability were

based on home buyers’ reasonable expectations of safety, the

nation’s home builders could face billions of dollars of liabil-

ity. At present, there is no way to tell which way *>e courts

will go.

8

and state environmental laws apply to the actions of the

Council.

A. NEPA Mandates Tuuat an EIS Be Prepared

Assessing the Northwest Power Plan

NEPA states that ‘‘all agencies of the Federal Govern-

ment shall— ... (C) include in .. . major Federal actions

significantly affecting the quality of the human environ-

ment,’’? 42 U.S.C. § 4332(2)(C), an environmental impact

statement. Adopting the Northwest Power Plan which

directs the energy production strategy over the next

20 years for the Pacific Northwest is undoubtedly a major

federal action significantly affecting the quality of the

human environment. See, supra, at 4-6. There is no ques-

tion that an EIS should have been prepared. The only

question is whether the Council, if it is a federal agency

under NEPA, or, if not, BPA which funded the Plan, was

responsible to do it.

1. The Northwest Power Planning Council

Is a Federal Agency for the Purposes

of NEPA and Should Have Filed an

Environmental Impact Statement

The Council possesses all the indicia of a federal

agency.

1. The Council and all its responsibilities are the

product of federal legislation, 16 U.S.C. § 839, et seq.

2. The Plan was developed pursuant to 16 U.S.C.

§ 839b(d)(1) for the purpose of directing the BPA, a fed-

eral agency, in its energy acquisition.

3. The Act requires the Council to follow the federal

laws applicable to the BPA in matters relating to contract

formation, financial disclosure, advisory committees, and

disclosure of information, 16 U.S.C. § 839b(a)(4).

9

4. Funding for the Council’s electric energy Plan

and its fish and wildlife program is provided by BPA,

a federal agency, 16 U.S.C. § 839b(c)(10)(A).

5. Public hearings on establishment of the Plan are

subject to Section 553 of the federal Administrative Pro-

cedure Act at a minimum, 16 U.S.C. § 839b(d) (1).

6. Even salaries of employees are limited by refer-

ence to the rate prescribed for federal officers at Step

No. 1 of Level GS-18 of the general schedule.

In every respect, the Council acts like a federal agency.

The Council has argued, though, that 16 U.S.C.

§ 839b(2)(A) exempts it from complying with NEPA re-

quirements imposed on federal agencies. The language

is not without exception, however. It reads that the Coun-

cil, ‘‘except as otherwise provided in this chapter, shall

not be considered an agency or instrumentality of the

United States for the purpose of any Federal law.’’ (Km-

phasis added.) This exception to the Council’s general

exemption from having to comply with federal laws ne-

gates the Council’s argument. The history behind this

provision explains why. The purpose of the general ex-

emption was not to eliminate federal environmental stat-

utory requirements but to avoid a violatiom of the Appoint-

ments Clause of the United States Constitution, which

requires federal officers to be appointed mot by Congress

or state governors but generally by the President.’

U.S. Const. Art. IT, § 2, el. 2. ;

’ Appointment of Council members by state governors vio-

lates the Appointments Clause. U.S. Const. Art. II, § 2, cl. 2. As

judge Beezer found in his dissent, by issuing tthe Plan, members

of the Council exercise significant federal autthority (continued)

10

On August 3, 1979, the Senate passed Senate Bill 885

(precursor of the Act) calling for five Council mem-

bers, four appointed by governors. The fifth was the

BPA administrator. By letter of October 25, 1979, the

Justice Department issued an opinion letter that this ap-

pointment process for members was unconstitutional. See

Addendum <A to Brief Amicus Curiae of Pacifie Legal

Foundation in Support of Petitioners Seattle Master

Builders Association, et al. (PLF’s Ninth Circuit Amicus

Brief).

On March 19, 1980, one of the two House Committees

to which S. 885 was referred recommended an amended

version that called for 11 Council members. All were to

be appointed by the Secretary of Energy upon the recom-

mendation of the region’s governors. House Committee on

Interstate and Foreign Commerce, Rep. No. 976 (Part 1),

96th Cong., 2d Sess. 28, reprinted in part in 1980 U.S.

Code Cong. & Ad. News 5994 (House Commerce Report).

This version of the bill did not raise any Appointments

Clause problems because, unlike the Senate version

of S. 885, Congress was conscious of the issue. Accord-

ingly, Congress eliminated gubernatorial appointments and

included language stating that the Council members were

not to be deemed officers of the United States. House

pursuant to the laws of the United States. See Beezer dissent,

786 F.2d at 1375-76, for itemization of substantive actions Coun-

cil takes under the Act which in part control the actions of the

federal Bonneville Power Administration. ‘In sum, the Planning

Act gives the Council the ability to produce significant substan-

tive effects’ on a federal agency and “[b]ecause the President

did not appoint the members of the Council, the Council’s ac-

tions are contrary to the Constitution and therefore void.” /d.

at 1376. See U.S. Const. Art. Il, § 2, cl. 2 (Appointments Clause).

Commerce Report at 4. Simultaneously, language was in-

cluded for the first time that the purposes of the Act were

consistent with applicable provisions of environmental laws.

Id. at 2.

As of September 16, 1980, the other House committee

to be referred S. 885 recommended another version. It

called for eight Council members with two each from

Washington, Oregon, Idaho, and Montana to be directly

appointed by their respective state governors. The pur-

pose of the change, according to Representative Pat Wil-

liams, was to ensure regional control over regional power

matters, and to provide a more meaningful check (i.e., con-

trol) on the BPA administrator. House Committee on

Interior and Insular Affairs, Rep. No. 976 (Part II),

96th Cong., 2d Sess. 70 (1980), reprinted in part in

1980 U.S. Code Cong. & Ad. News 6063 (House Interior

Report). But giving state governors appointment author-

ity of Council members created the inherent danger of

violating the Appointments Clause, so Congress included a

new provision in the Act. Besides reiterating that Council

members were not officers of the United States and that the

Act was to be consistent with environmental laws, the new

version of S. 885 stated that if the Council were declared

by the court to violate the Appointments Clause, the Coun-

cil would be reconstituted as a federal agency with mem-

bers once again appointed by the Secretary of Energy upon

nomination of the governors. House Commerce Report

at 41, 70-71.

By September 29, 1980, the two committee versions of

S. 885 had been reconciled and the Commerce Committee

version with minor changes eventually passed into law.

Again, Council members and employees were not to be

considered officers of the United States but, for the first

12

time, the critical exemption language earlier quoted and

relied upon by the Council for a NEPA exemption was

included with the modifying phrase ‘‘except as otherwise

provided in this Act,’’ H. 9866, 126 Cong. Ree. (daily ed.,

Sept. 29, 1980). Congress then specifically provided in the

Act the exception—the ‘‘purposes [of the Act which

ineluded providing environmental quality] are... intended

to be construed in a manner consistent with applicable en-

vironmental laws.’’ Jd. at H. 9865. Thus, Congress clearly

sought to protect the environment yet avoid a violation of

the Appointments Clause.

This course of legislative history undeniably shows

that the exclusionary language of 16 U.S.C. § 839b(a) (2)

(A) and (a)(3) was included only to try to protect the

Council from an Appointments Clause challenge and, in

fact, only after Congress became concerned about this

problem, did it expressly include the critical operative

language that the purposes of the Act are ‘‘intended to be

construed in a manner consistent with applicable environ-

mental laws,’’ 16 U.S.C. §¢ 839. Congress simply had no

intention of exempting the Council from environmental

considerations or NEPA.® No other conclusion is rea-

sonable, for to find otherwise creates the anomaly that

Congress sought to protect environmental quality by

. lf Congress had wanted to exempt the Council from NEPA

it would have done so expressly. For example, Congress ex-

empted any action taken under the Clean Air Act stating that

“{njo action . . . shall be deemed a major Federal action sig-

nificantly affecting the quality of the human environment within

the meaning of the National Environmental Policy Act of 1969.”

15 U.S.C. § 793(c)(1). Likewise in the Regional Rail Reorgani-

zation Act, Congress stated: “The provisions of section

4332(2)(C) of Title 42 [EIS requirements} shall not =e’ with

respect to any action taken under authority of this chaper .

45 U.S.C. § 791(c).

13

exempting the Council from those laws which require

environmental scrutiny in decision making. Such a con-

clusion would be preposterous.

Under these circumstances where there is no clear

congressional intent to exempt the Council, it must comply

with the environmental impact statement requirement ‘‘to

the fullest extent possible.’? 42 U.S.C. ¢ 4332. As Con-

gress stated:

‘¢«TBHjach agency of the Federal Government shall

comply with the directives set out in [§ 102(2)] unless

the existing law applicable to such agency’s operations

expressly prohibits or makes full compliance with one

of the directives impossible... .’’’ Flint Ridge De-

velopment Company v. Scenic Rivers Association of

Oklahoma, 426 U.S. 776, 787-88 (1976) (emphasis in

original); 115 Cong. Ree. 39703 (1969) (House Con-

ferences).

Unmistakably, the Act neither expressly prohibits nor

makes compliance with EIS requirements impossible. To

the contrary, the Act requires that it be ‘‘construed in a

manner consistent with applicable environmental laws.”’

16 U.S.C. § 839. The Council must be considered a federal

agency wnder NEPA and should have filed an KIS.’

7 In respondents’ brief before the Ninth Circuit, the Council

argued that its Plan, especially Chapter 9, is functionally equiva-

lent to an environmental impact statement. The argument is

baseless. The only agency allowed such an exemption has been

the Environmental Protection Agency because it is designed

specifically to protect the environment. See Portland Cement

Association v. Ruckelshaus, 486 F.2d 375 (D.C. Cir. 1973). Only

agencies “engaged primarily in the examination of environ-

mental questions’ qualify for an exemption. Environmental

Defense Fund v. Environmental Protection Agency, 489 F.2d

1247, 1257 (D.C. Cir. 1973). The Council is not an agency de-

signed to protect the environment but is engaged primarily in

planning for future energy needs. 16 U.S.C. § 839, et seq.

14

2. Ifthe Council Is Not a Federal Agency

for NEPA Purposes, BPA Is, and BPA Should

Have Prepared an EIS on the Council’s

Plan Prior to Its Adoption

BPA is required to fund the Council’s preparation of

and then implement the Northwest Power Plan. 16 U.S.C.

§ 839b(c)(10)(A). Assuming, arguendo, that the Council

is not a federal agency for NEPA purposes, BPA’s fund-

ing action sufficiently ‘‘federalizes’? the Plan so that

BPA was required to prepare an EIS prior to the Plan’s

adoption by the Council.

Federal funding of state or local programs has been

found on numerous occasions to provide the federal nexus

necessary to require the preparation of an KIS. The

rationale was explained in Scientists’ Institute for Public

Information, Inc. v. Atomic Energy Commission, 481 F.2d

1079, 1088 (D.C. Cir. 1973) :

‘“‘(T]here is ‘Federal action’ within the meaning of

the statute not only when an agency proposes to build

a facility itself, but also whenever an agency makes

a decision which permits action by other parties which

will affect the quality of the environment. NEPA/’s

impact statement procedure has been held to apply

where a federal agency approves a lease of land to

private parties, grants licenses and permits to private

parties, or approves and funds state highway projects.

In each of these instances, the federal agency took

action affecting the environment in the sense that the

agency made a decision which permitted some other

party—private or governmental—to take action affect-

ing the environment.’’ (Footnotes omitted.)

See Ely v. Velde, 451 F.2d 1130 (4th Cir. 1971) (a federal

law enforcement block grant used for the construction of

a state medical and reception center for state prisoners,

15

sufficiently federalized the project to require an EIS) ;

see also Wilson v. Lynn, 372 F. Supp. 934 (D. Mass. 1974) ;

and Proetta v. Dent, 484 F.2d 1146 (2d Cir. 1973) (pri-

vately developed housing was federalized for NEPA pur-

poses by the receipt of financial assistance through federal

housing subsidies). Consequently, even if the Council is

not characterized as a federal agency, BPA’s funding has

federalized the Plan requiring an EIS prior to its imple-

mentation. BPA did not and has not prepared an EIS

analyzing the environmental effects of the Plan, or all rea-

sonable alternatives for providing the Pacific Northwest

with the energy that will be needed over the next 20 years.

This failure clearly violates NEPA.

3. The Ninth Circuit’s Holding That Neither BPA

nor the Council Has Taken a Substantial

Federal Action Affecting the Human Environment

Conflicts Dramatically with Other Circuits

In effect the Ninth Circuit ruled that the Plan does

not constitute an action significant enough in its impacts

on the human environment to require an EIS. 786 F.2d

at 1871. It is hard to believe that a Plan which directs

for the next 20 years how the Pacifie Northwest region

of the United States will meet its projected electric en-

ergy demand does not constitute an action which may

significantly affect the human environment. The Plan

ealls for BPA to aequire 1,000 to 11,000 megawatts of

electric energy resources. It calls for the development of

conservation measures such as intensive weatherization,

as an energy source with a projected acquisition figure

of between 660 and 4,790 megawatts over a 20-year period.

This finding of the Ninth Cireuit is problematic in that

other circuits require preparation of an EIS for actions

16

invoking impacts far less serious than the Plan’s. F.g.,

Proetta v. Dent, 484 F.2d at 1146 (federal approval of loan

to finance portion of expansion of paper machinery com-

pany); Hart v. Denver Urban Renewal Authority,

551 F.2d 1178 (10th Cir. 1977) (loan and eapital grant

made by the federal Department of Housing and Urban

Development to city urban renewal authority).

The Ninth Cireuit has found that the 20-year regional

power plan for the Pacific Northwest with its inherently

significant energy conservation and resource development

requirements does not constitute substantial enough action

to call for an EIS. This finding puts this circuit out of

step with every other circuit in the United States. For

this reason alone the Supreme Court should grant the

petition for writ of certiorari.

B. The Council Should Have Drafted a

State EIS on the Plan. The Ninth

Circuit’s Contrary Ruling Improperly

Encroaches on a State’s Authority to Impose

Its Own Environmental Review Standards

The Ninth Cireuit’s facile ruling has encroached upon

the authority of Washington and Montana to adopt and

enforce laws which are the proper subject matter of state

legislation. The court has approved a model act, a model

regional planning agency, and a model regional plan, all

of which creates a model structure to avoid compliance

with state and local decision-making procedures, and en-

vironmental laws. The effect of this approval is to

invalidly sanction a governmental structure which ‘incon-

stitutionally denies states the freedom to engage in

legitimate state governmental activities. See Garcia v.

San Antonio Metro Transit Authority, — US. —,

105 8S. Ct. 1005 (1985).

The court found that the Council, as a compact,’ need

not comply with state EIS requirements. 786 F.2d

at 1371. To reach this conclusion the court relied upon a

completely incorrect analysis of People v. City of South

Lake Tahoe, 466 F. Supp. 527 (E.D. Cal. 1978). It found

that the states must ‘‘specifically reserve[] the right to im-

pose regulations which fare] more stringent than those

imposed by the compact organization itself,’’ and that

‘*fnjeither Washington nor Montana reserved such rights

2 Though for purposes of the applicability of environmental

planning statutes it is nondeterminative, it is worth noting that

the Council is not an interstate compact agency. As Judge

Beezer noted the Council lacks several classic indicia of an in-

terstate compact agency:

1. “All four states [represented on the Council] are free

to repeal their statutes unilaterally.” 786 F.2d at 1372.

2. “{T]he creation of the Council [is authorized] on the

consent of only three of the four states,” allowing the Council

to take action ‘that could have substantive effects in a non-

member state. If the Council [were] truly an interstate com-

pact agency, that result would not be possible.” Id. (footnote

omitted). (In fact, the Council’s actions do affect nonmember

states already—Nevada, Utah, Wyoming, and_ California.

16 U.S.C. § 839(a)(14)(A) and (B)).

3. The four member states establish “policy and stan-

dards, not for each other, but for a federal agency with regional

authority extending beyond those states.” 786 F.2d at 1372.

4. The Council lacks a state purpose—the purpose of the

Council is simply to guide the actions of the BPA, a federal

agency. /d. at 1373. Such characteristics plainly demonstrate

that the Council is not an interstate compact agency.

18

in their statutes agreeing to establishment of the Coun-

eil.’’ 786 F.2d at 1371.9 Not only was the Court’s appli-

eation of the City of South Lake Tahoe principle

analytically wrong,’ it totally missed the issue. That

issue is whether or not state environmental laws were

preempted by the Act. There is no question that Congress

has the authority under the Commerce Clause of the

Federal Constitution to legislate in the field of energy

production. Hodel v. Virginia Surface Mining and Recla-

mation Association, 452 U.S. 264 (1981). But before such

federal legislation can be found to preempt state law it

must be found that either:

1. Congress clearly expressed its intent to preempt

the state, Florida Lime and Avocado Growers v. Paul,

373 U.S. 132, 147-50 (1963) ;

2. the federal statutory and regulatory scheme is

so pervasive that no room is left for state regulation,

Pennsylvania v. Nelson, 350 U.S. 497, 502-04 (1956) ; or

? The court did not question that the Council could have

been required under state !aw to file an EIS for its energy plan.

As amicus demonstrated in its brief before the Ninth Circuit,

under Washington and Montana law the Council is a “state

agency” and the Plan is a “major action affecting the quality of

the environment” thus requiring an EIS under Washington and

Montana law. Wash. Rev. Code Ann. § 43.31c.030(2) (1983);

Mont. Rev. Code Ann. § 75-1-201(1)(b) (1983). See PLF’s Ninth

Circuit Amicus Brief at 36-40.

10 In City of South Lake Tahoe the court did not find an ex-

press reservation but an implied reservation by California of

the right to require the Tahoe Regional Planning Agency, an

interstate compact agency, to follow the California Environ-

mental Quality Act. The Northwest Power Act embodies an

analogous implied reservation by Washington and Montana to

require the Council to follow their environmental laws. This

is irrelevant, however, since the court’s focus should have cen-

tered on whether or not these state environmental laws were

preempted by the Act.

19

3. adherence to the state law may produce a result

inconsistent with the stated purpose of the federal stat-

ute. Rice v. Santa Fe Elevator Corporation, 331 U.S. 218,

230 (1947). None of these criteria are met by the

Act. The Act actually directs that its purposes are to be

construed in a manner consistent with applicable environ-

mental laws (16 U.S.C. § 839) and among those purposes

is ‘‘providing environmental quality’’ (16 U.S.C.

§ 839(3)(C)). Thus, the lower court’s imputed conclusion

that state environmental laws are preempted by the Act

constitutes judicial overreaching at its worst, and merits

review by this Court.

oO

CONCLUSION

The Ninth Cireuit’s decision finding the Couneil sub-

ject to neither federal nor state environmental disclosure

statutes has created a frightening abyss in the field of

environmental protection. The lower court has established

the proposition, in conflict with other cireuits, that sig-

nificant actions affecting the environment need not

follow the environmental protection planning process re-

quired by state and federal law if the actions are taken

by an interstate compact agency. Already, bills have been

introduced in Congress modeled after the Couneil which

will further expand this planning loophole. See H.R. 3074,

99th Cong., Ist Sess. (1985) (proposed Regiona! Conser-

vation and Electric Power Planning and Regulatory

20

Coordination Act of 1985). The Ninth Circuit’s decision,

allowed to stand, will turn this loophole into a schism of

monumental proportions. A writ of certiorari should issue.

DATED: December, 1986.

Respectfully submitted,

Ronautp A. ZuMBRUN

*Rosiw L. Riverr

*CouNseEL or Recorp

Pacific Legal Foundation

555 Capitol Mall, Suite 350

Sacramento, California 95814

Telephone: (916) 444-0154

Attorneys for Amicus Curiae,

Pacific Legal Foundation