Opinion ID: 432207
Heading Depth: 1
Heading Rank: 2

Heading: ukiah's substantive claim

Text: 8 Ukiah contends that the Commission's decision to grant Sonoma the permit was not supported by substantial evidence. Ukiah disputes the Commission's finding that Sonoma's contractual relation with the Corps gives Sonoma a comparative advantage in power generation. Ukiah argues instead that both applicants can produce essentially the same amount of power and that it, as the first-filed applicant, therefore deserves the permit. 9 Sonoma's contract will afford it an advantage in power generation if three conditions exist. First, Sonoma must have excess water in its storage space that could be released for nonconsumptive purposes. Second, the contract must give Sonoma the discretion to release its stored water for nonconsumptive purposes. Third, there must be no significant economic disincentive discouraging Sonoma from releasing its stored water for nonconsumptive purposes. 10 The first condition is an empirical concern and may be disposed of briefly. All parties to this litigation agree that Sonoma County probably will not require consumptive use of Sonoma's stored water until the 1990's. The last block of Sonoma's stored water is not scheduled for use until approximately 2010. J.A. 64. Thus, for about twenty-five years at least a portion of the stored water will be available for nonconsumptive releases. 7 11 The second two conditions require an examination of Sonoma's contract and the Water Supply Act of 1958, 43 U.S.C. Sec. 390b (1976) (Water Supply Act). Both inquiries may be considered questions of law. Danks v. Fields, 696 F.2d 572, 575 (8th Cir.1982) (interpretation of a written document is question of law). We therefore are not limited to, and do not employ, the deferential arbitrary and capricious standard in reviewing these issues of law. Office of Communication of United Church of Christ v. FCC, 707 F.2d 1413, 1422-23 n. 12 (D.C.Cir.1983). 12 Implicit in the Commission's decisions that Sonoma's contractual relations allowed it to produce more power than Ukiah is the view that the 1964 and 1982 contracts permitted Sonoma to direct water releases for nonconsumptive purposes. 18 FERC (CCH) p 61,108, at 61,203-04; 21 FERC (CCH) p 61,133; 22 FERC (CCH) p 61,063. We review this finding only with regard to the 1982 contract which superseded the 1964 contract. 8 Article 1(b)(2) of Sonoma's 1982 contract gives Sonoma the right to withdraw water from the lake, or to order releases ... by the Government ... subject to ... Article 1(c) and to the extent of water the aforesaid storage space will provide .... J.A. 344. In Article 1(c), the government in turn reserves the right to control Sonoma's discretion to release its stored water essentially for four purposes: (1) flood control, (2) to meet authorized Project purposes such as maintenance of the Dam and fish population, (3) to preserve life and/or property, and (4) to ensure the repayment provisions of the contract are consistent with the Water Supply Act. 9 J.A. 345. The contract, by its terms, does not prevent Sonoma from releasing stored water for nonconsumptive purposes. We see no reason to require the Commission to read into Sonoma's contract a prohibition against releases for nonconsumptive purposes generally or for power generation specifically. 10 We therefore sustain the Commission's finding that Sonoma's contract gives it the discretion to release its stored water for nonconsumptive purposes, including power generation. 13 Finally, we address the Commission's conclusion that there is no economic disincentive that discourages Sonoma from releasing its excess water for power generation. As noted earlier, the Commission found no economic disincentive because the 1982 contract does not directly link Sonoma's repayment schedule with the actual date Sonoma first uses its stored water. 11 See supra p. 795. Ukiah argues, however, that even if no economic disincentive derives from the 1982 contract, the Water Supply Act requires repayment upon Sonoma's release of stored water for power generation. 12 Ukiah's argument is based on section 390b(b), which provides in pertinent part: 14 [T]he entire amount of the construction costs ... allocated to water supply shall be repaid within the life of the project but in no event to exceed fifty years after the project is first used for the storage of water for water supply purposes, except that (1) no payment need be made with respect to storage for future water supply until such supply is first used, .... 15 43 U.S.C. Sec. 390b(b) (emphasis added). Ukiah contends that Sonoma's release for power generation would constitute first use of such supply, and thereby trigger Sonoma's initial repayment obligation. Brief for Petitioner at 61-69. 16 Sonoma, on the other hand, argues that section 390b(b)(1) refers to the first use of stored water for consumptive purposes only. Any other reading, Sonoma argues, would render the provision unduly restrictive. That is, if release of the stored water for nonconsumptive purposes triggered the repayment obligations, then releases for flood control, recreation, or downstream fish would bring heavy financial burdens upon Sonoma. The Commission implicitly agreed with Sonoma's position when it concluded, after considering Ukiah's arguments, that Sonoma's releases for power generation would not trigger repayment. 17 Sonoma's view of section 390b(b)(1) is supported both by the language and the context of the provision. The ambiguity in the text lies with whether the last two words of section 390b(b)(1) refer to use of the stored water for any purpose whatsoever: (1) no payment need to be made with respect to storage for future water supply until such supply is first used. (Emphasis added). We believe that first use refers only to use for consumptive purposes. Our view derives from the fact that the Water Supply Act continually links repayment for storage space with use of the project for purposes of water supply. 13 For instance, immediately preceding the disputed phrase, the statute provides that the fifty-year repayment period will not begin to run until the water is first stored for water supply purposes, as opposed to storage for any purpose. 14 Section 390b(b)(1) itself speaks of first use of storage for future water supply, not storage generally. This implies, we believe, that first use refers to the time when stored water is released for supply purposes and not for nonconsumptive purposes. 15 In sum, we find no evidence that Congress wished to tie initial repayment to use generally and not to use for consumption. 18 This reading promotes the purpose of section 390b(b)(1) as indicated by its context. Section 390b(b) requires repayment for the construction of storage reservoirs for consumptive water supply within fifty years of the plant-in-service date. 16 Subsection (1) of section 390b(b) eases the burden of repaying such construction costs within fifty years by providing that repayment need not begin until the stored water is used for its primary purpose of consumption. We will not read subsection (1) to increase Sonoma's financial burdens by accelerating its repayment obligation upon releases for nonconsumptive purposes. 19 In short, section 390b(b)(1) does not require Sonoma to begin paying for its storage space when it releases water for nonconsumptive purposes, including power generation. The Water Supply Act therefore imposes no economic disincentive that would discourage Sonoma from making discretionary releases of its stored water for power generation. 17 20 We thus conclude that Sonoma has excess stored water to release for power generation, that Sonoma's contract allows it to release stored water for power generation, and that no severe economic disincentive would discourage Sonoma from making these releases. 18 Given these three conditions, we find substantial evidence to support the Commission's conclusion that Sonoma's contract provides [it] with the operational flexibility to enhance power generation at the dam in amounts significantly greater than Ukiah. 21 FERC (CCH) p 61,133.