Nric v. Npcc ( 2013 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NORTHWEST RESOURCE No. 10-72104
INFORMATION CENTER, INC.,
Petitioner,
v. OPINION
NORTHWEST POWER AND
CONSERVATION COUNCIL,
Respondent,
NORTHWEST RIVERPARTNERS;
BONNEVILLE POWER
ADMINISTRATION; PUBLIC POWER
COUNCIL,
Respondents-Intervenors.
Appeal from the
Northwest Power and Conservation Council
Argued and Submitted
June 7, 2013—Seattle, Washington
Filed September 18, 2013
2 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
Before: Arthur L. Alarcón, Ronald Lee Gilman*,
and Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Gilman;
Partial Concurrence and Partial Dissent by Judge Ikuta
SUMMARY**
Northwest Power Act
The panel affirmed the Sixth Northwest Power Plan,
adopted by the Northwest Electric Power and Conservation
Council, concerning a “due consideration” challenge to the
accommodation of fish and wildlife interests with
hydropower interests in the Columbia River Basin, and
remanded on a limited basis for additional consideration.
Petitioner, an environmental group, alleged that the
Council failed to give “due consideration” to the
accommodation of fish and wildlife interests in the Columbia
River Basin when the Council adopted the Plan that laid out
biological objectives, principles, and strategies designed to
benefit fish and wildlife but did not prescribe specific
operations. The panel held that it would not second-guess the
due consideration that the Council gave to fish and wildlife
interests in the adoption of the Plan where plaintiffs did not
*
The Honorable Ronald Lee Gilman, Senior Circuit Judge for the U.S.
Court of Appeals for the Sixth Circuit, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 3
point to any part of the Pacific Northwest Electric Poser
Planning and Conservation Act that required the Council to
reconsider fish and wildlife measures in light of its evaluation
of the regional power system from the subsequent power-
planning process. The panel remanded the Plan to the
Council for the limited purposes of allowing public notice
and comment on the proposed methodology for determining
quantifiable environmental costs and benefits, and
reconsidering the inclusion in the Plan of a market price-
based estimate of the cost of accommodating fish and wildlife
interests.
Judge Ikuta concurred in part and dissented in part. Judge
Ikuta agreed with the majority to the extent it remanded the
Plan to the Council to correct its error in failing to circulate
the statutorily required methodology section for notice and
comment, and agreed with the majority's conclusion that the
Council gave due consideration to the accommodation of fish
and wildlife interests in the Columbia River Basin when it
adopted the Plan. Judge Ikuta dissented from the remainder
of the majority's decision.
COUNSEL
Stephen D. Mashuda (argued) and Kevin E. Regan,
Earthjustice, Seattle, Washington, for Petitioner.
John L. Shurts (argued) and Sandra L. Hirotsu, Northwest
Power and Conservation Council, Portland, Oregon, for
Respondent.
Beth S. Ginsberg (argued) and Jason T. Morgan, Stoel Rives,
LLP, Seattle, Washington, for Respondents-Intervenors.
4 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
OPINION
GILMAN, Senior Circuit Judge:
The present case is the latest round of environmental
litigation in the 33-year history of the Pacific Northwest
Electric Power Planning and Conservation Act (the Power
Act), 16 U.S.C. §§ 839–839h. That statute established the
Northwest Power and Conservation Council (the Council), an
interstate agency composed of state-appointed representatives
from Idaho, Montana, Oregon, and Washington that Congress
tasked with promulgating both “a regional conservation and
electric power plan” and “a program to protect, mitigate, and
enhance fish and wildlife.” 16 U.S.C. § 839b(d)(1),
839b(h)(1)(A).
The Power Act was designed to resolve the conflict
between the Columbia River Basin’s two great natural
resources: hydropower and salmon. Nw. Res. Info. Ctr. v.
Nw. Power Planning Council, 35 F.3d 1371, 1375, 1377 (9th
Cir. 1994). Over the years, the Council’s efforts to fulfill its
duties have been challenged in federal court by various
regional stakeholders, including environmental groups, power
companies, state governments, Indian nations, and power-
consuming industrial interests. See id.; Seattle Master
Builders Ass’n v. Pac. Nw. Elec. Power & Conservation
Planning Council, 786 F.2d 1359 (9th Cir. 1986).
This case presents a challenge by an environmental group,
the Northwest Resource Information Center (NRIC), to the
Sixth Northwest Power Plan (the Plan) that the Council
adopted in May 2010. NRIC’s key complaint is that the
Council failed to give due consideration to the
accommodation of fish and wildlife interests when it adopted
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 5
the Plan. For the reasons set forth below, we AFFIRM the
Plan with respect to NRIC’s “due-consideration” challenge,
but REMAND the Plan to the Council for the limited
purposes of (1) allowing public notice and comment on the
proposed methodology for determining quantifiable
environmental costs and benefits, and (2) reconsidering the
inclusion in the Plan of a market-price-based estimate of the
cost of accommodating fish and wildlife interests.
I. BACKGROUND
A. Statutory background
Prior decisions of this court have discussed the history,
purpose, and operation of the Power Act. See, e.g., Nw.
Envtl. Def. Ctr. v. Bonneville Power Ass’n, 117 F.3d 1520,
1525–26, 1530–31 (9th Cir. 1997); Nw. Res. Info. Ctr.,
35 F.3d at 1377–79. The key source of conflict is that the
extensive system of hydroelectric dams in the Columbia
River Basin has been “a major factor in the decline of some
salmon and steelhead runs to a point of near extinction.” Nw.
Res. Info. Ctr., 35 F.3d at 1376 (quoting 126 Cong. Rec.
H10687 (1980)). Hydroelectric dams have a destructive
cumulative effect on salmon and steelhead fish (collectively
referred to as “anadromous fish” because they spawn in
freshwater, reach maturity in saltwater, and then return to
freshwater to reproduce) mostly because they impede the path
of juvenile fish to the ocean. Id. at 1376 & n.5.
The “devastating losses of salmon and steelhead in the
mid-1970s” prompted Congress to enact the Fish and Wildlife
Coordination Act, 16 U.S.C. §§ 661–666c, in 1976. Nw. Res.
Info. Ctr., 35 F.3d at 1377. But that statute’s mandate of
giving “equal consideration” to fish and wildlife on the one
6 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
hand and hydropower projects on the other proved
inadequate. Id. Congress also began considering revisions to
the electric-power policies in the Northwest region because
of “forecasts predicting serious power shortages during
critical water years expected in the 1980’s.” Id. The Power
Act, enacted in 1980, was a legislative response to both
issues. It “marked an important shift in federal policy” by
creating a “new obligation on the region and various Federal
agencies to protect, mitigate, and enhance fish and wildlife”
while not jeopardizing “an adequate, efficient, economical,
and reliable power supply.” Id. at 1377–78 (internal
quotation marks omitted).
Under the Power Act, the Council must first develop and
adopt a fish and wildlife program. See 16 U.S.C.
§ 839b(h)(2)–(9) (mandating the process for adopting a fish
and wildlife program before finalizing a conservation and
electric power plan). The Council, in doing so, must seek
recommendations from federal and state fish and wildlife
agencies and from the region’s Indian tribes concerning
(1) measures that can be implemented to advance fish and
wildlife interests; (2) objectives for the development and
operation of hydroelectric projects in the Columbia River
Basin that promote such interests; and (3) research and
development to, among other things, protect “anadromous
fish at, and between, the region’s hydroelectric dams.” Id.
§ 839b(h)(2)(A)–(C). Federal and regional water-
management agencies, regional electric-power-producing
agencies and customers, and the general public may also
submit recommendations to the Council. Id. § 839b(h)(3).
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 7
After these recommendations undergo a public notice-
and-comment process, see 16 U.S.C. § 839b(h)(4), the
Council is required to develop a fish and wildlife program
based on the recommendations, public commentary, and
consultations with the federal and state fish and wildlife
agencies, the “appropriate Indian tribes,” the federal agencies
responsible for operating or regulating hydroelectric facilities
in the region, and “any customer or other electric utility
which owns or operates any such facility.” See id.
§ 839b(h)(5) (referring back to the “agencies, tribes, and
customers” listed in § 839b(h)(4)(A)). One of the key federal
agencies involved in this process is the Bonneville Power
Administration (BPA), a power-marketing agency within the
United States Department of Energy that is charged with
implementing conservation measures and acquiring resources
in accordance with the Council’s power plan. See Aluminum
Co. of Am. v. Bonneville Power Admin., 903 F.2d 585, 588
(9th Cir. 1989) (describing the BPA); 16 U.S.C. § 839d(a)
(setting forth the BPA’s role in implementing the Council’s
power plan).
In the event that stakeholder recommendations conflict,
the Council is charged with resolving any inconsistency by
“giving due weight to the recommendations, expertise, and
legal rights and responsibilities of the Federal and the
region’s State fish and wildlife agencies and appropriate
Indian tribes.” 16 U.S.C. § 839b(h)(7). The Council may
reject any recommendations made by such agencies and
tribes, but it must justify the rejection with a written
explanation of why the recommendation does not comport
with the objectives of the fish and wildlife program as
outlined in the Power Act or why the recommendation would
be less effective than the adopted recommendations. Id.
8 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
Congress also set forth in the Power Act a substantive
mandate for the fish and wildlife program: “The program
shall consist of measures to protect, mitigate, and enhance
fish and wildlife affected by the development, operation, and
management of [hydroelectric] facilities while assuring the
Pacific Northwest an adequate, efficient, economical, and
reliable power supply.” 16 U.S.C. § 839b(h)(5). The Council
must include such measures that it determines will
(A) complement the existing and future
activities of the Federal and the region’s State
fish and wildlife agencies and appropriate
Indian tribes;
(B) be based on, and supported by, the best
available scientific knowledge;
(C) utilize, where equally effective alternative
means of achieving the same sound biological
objective exist, the alternative with the
minimum economic cost;
(D) be consistent with the legal rights of
appropriate Indian tribes in the region; and
(E) in the case of anadromous fish—
(i) provide for improved survival of such
fish at hydroelectric facilities located on the
Columbia River system; and
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 9
(ii) provide flows of sufficient quality and
quantity between such facilities to improve
production, migration, and survival of such
fish as necessary to meet sound biological
objectives.
16 U.S.C. § 839b(h)(6).
The fish and wildlife program exists apart from, but is
also mandatorily incorporated into, the regional conservation
and electric power plan that the Power Act requires the
Council to adopt. See 16 U.S.C. § 839b(e)(3)(F) (requiring
that a power plan include a fish and wildlife program).
Similar to § 839b(h)’s requirements for the fish and wildlife
program, the Power Act sets forth procedural and substantive
requirements for the hydroelectric power plan. See id.
§ 839b(d)–(e).
Procedurally, the Council must review its power plan at
least once every five years. 16 U.S.C. § 839b(d)(1). The
power plan may also “be amended from time to time.” Id.
Public hearings must precede any adoption of a power plan or
any “substantial, nontechnical amendments” thereto and must
conform to the section of the Administrative Procedure Act
governing rulemaking. Id. § 839b(d)(1) (referencing 5 U.S.C.
§ 553). Once adopted, all conservation and resource
acquisitions undertaken by the BPA must be consistent with
the Council’s power plan (unless otherwise specified in the
Power Act). Id. § 839b(d)(2).
The Power Act also prescribes general substantive
requirements for the power plan, starting with prioritizing
resources into a hierarchy. “Priority shall be given: first, to
conservation; second, to renewable resources; third, to
10 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
generating resources utilizing waste heat or generating
resources of high fuel conversion efficiency; and fourth, to all
other resources.” 16 U.S.C. § 839b(e)(1). Resources that the
Council determines to be “cost-effective,” a term defined
elsewhere in the Power Act, id. § 839a(4)(A), are given
priority over resources that are not cost-effective, id.
§ 839b(e)(1).
The power plan must also establish a “general scheme”
for the BPA to meet its power-providing obligations through
conservation and resource acquisition. 16 U.S.C.
§ 839b(e)(2). This scheme must reflect the Council’s “due
consideration” for the following:
(A) environmental quality, (B) compatibility
with the existing regional power system,
(C) protection, mitigation, and enhancement
of fish and wildlife and related spawning
grounds and habitat, including sufficient
quantities and qualities of flows for successful
migration, survival, and propagation of
anadromous fish, and (D) other criteria which
may be set forth in the plan.
Id.
The Power Act then lists seven specific items that the
power plan must include: (1) an energy conservation
program that includes model conservation standards,
(2) research and development recommendations, (3) “a
methodology for determining quantifiable costs and benefits,”
(4) “a demand forecast of at least twenty years . . . and a
forecast of power resources estimated by the Council to be
required to meet the [BPA’s] obligations,” (5) “an analysis of
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 11
reserve and reliability requirements and cost-effective
methods of providing reserves designed to insure adequate
electric power at the lowest probable cost,” (6) the fish and
wildlife program adopted pursuant to § 839b(h), and (7) a
methodology for calculating surcharges recommended under
§ 839b(f), if any. 16 U.S.C. § 839(b)(e)(3). Congress left to
the Council’s discretion the level of detail that the power plan
provides with respect to these seven elements. Id.B. The Sixth Northwest Power Plan (the Plan)
In December 2007, the Council published a paper that
identified the major issues for consideration in its next power
plan. The Council also asked for stakeholder feedback on
those issues and other relevant topics. Meanwhile, the
Council’s primary focus was on the fish and wildlife
program, culminating in the June 2009 adoption of a new
program (the 2009 Program).
Unlike past programs, the 2009 Program did not include
plans of detailed hydrosystem operations for fish and wildlife
because the federal agencies that operate and regulate the
federal dams in the Columbia River Basin had already
produced detailed plans for the operations of each facility
intended to improve conditions for fish and wildlife affected
by the hydrosystem. These plans, set forth and reviewed in
biological opinions from the National Oceanic and
Atmospheric Administration Fisheries and the U.S. Fish and
Wildlife Service, focus on benefitting fish populations listed
as threatened or endangered under the Endangered Species
Act.
12 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
Rather than prescribe specific operations, the 2009
Program lays out biological objectives, principles, and
strategies designed to benefit fish and wildlife. These
strategies included transporting and providing safe bypasses
for fish around dams, as well as spilling water over dams to
allow for their passage. NRIC did not submit any
recommendations or comments during the public process that
led to the 2009 Program, nor did it seek judicial review once
the 2009 Program was adopted.
In September 2009, the Council issued a draft version of
the Plan. A period for public comments followed, and the
Council held public hearings in Idaho, Montana, Oregon, and
Washington. The Plan notes that the Council consulted “with
various governments, entities and individuals in the region,
and accepted and considered substantial written and oral
comments.” In February 2010, the Council voted to adopt the
Plan, and notice of that adoption was published on May 4,
2010.
Pursuant to the Power Act, the Plan incorporates by
reference the 2009 Program and provides a power-demand
forecast, an assessment of current and potential resources, a
conservation program, an analysis of reserve and reliability
requirements, and an appendix describing a methodology for
determining quantifiable environmental costs and benefits.
The methodology appendix, however, did not appear in the
September 2009 draft version of the Plan, an omission first
brought to light by public comments.
Although not required by the Power Act, the Plan also
includes the BPA’s market-price-based estimate of the
financial cost of the fish and wildlife measures adopted in the
2009 Program. The BPA’s cost estimate, which is
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 13
$750–$900 million annually, appeared in the draft version of
the Plan, but it was part of a lengthy explanation of (1) an
alternative method for estimating the cost of the 2009
Program that was substantially lower, and (2) the several
purposes served by providing such a cost estimate. Using a
“replacement resource cost” methodology, the draft version
of the Plan estimated the 2009 Program’s cost at $300 million
annually, less than half of the cost estimate provided by the
BPA. Neither that specific estimate nor any mention of other
cost-estimate methodologies appear in the final version of the
Plan.
C. Procedural background
NRIC timely filed its petition to challenge the Plan in this
court after the Council published its notice of adoption. See
16 U.S.C. §§ 839f(e)(1)(A), 839f(e)(5) (providing that the
adoption of a power plan is a final action subject to judicial
review and that suits to challenge final actions of the Council
are to be brought in the federal court of appeals for the
region). This court allowed the BPA, Northwest
RiverPartners (an interest group of regional utilities, ports,
businesses, and farmers), and the Public Power Council (a
trade association representing regional consumer-owned
utilities) to intervene and file response briefs in addition to
the brief filed by the Council.
II. ANALYSIS
A. Standard of review
The Administrative Procedure Act, 5 U.S.C. §§ 701–06,
governs review of actions taken by the Council. Seattle
Master Builders Ass’n v. Pac. Nw. Elec. Power &
14 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
Conservation Planning Council, 786 F.2d 1359, 1366 (9th
Cir. 1986); 16 U.S.C. § 839f(e)(2). The Council’s adoption
of the Plan will not be set aside unless the Plan is found to be
“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” See 5 U.S.C. § 706; Seattle Master,
786 F.2d at 1366.
In contrast, this court generally reviews de novo any legal
questions arising from an agency decision, such as the proper
interpretation of a statutory provision. Seattle Master,
786 F.2d at 1366. “[W]e look first to the statute’s language,”
which “must ordinarily be regarded as conclusive.” Nw. Res.
Info. Ctr. v. Nw. Power Planning Council, 35 F.3d 1371,1383
(9th Cir. 1994) (internal quotation marks omitted). But
substantial deference is accorded “to the interpretation given
statutes by the officers or agency charged with their
administration.” Nw. Envtl. Def. Ctr. v. Bonneville Power
Admin., 117 F.3d 1520, 1530 (9th Cir. 1997) (internal
quotation marks omitted).
B. Due consideration
NRIC first argues that the Plan fails to give “due
consideration . . . for . . . protection, mitigation, and
enhancement of fish and wildlife” as the Power Act requires.
See 16 U.S.C. § 839b(e)(2). “Due consideration,” according
to NRIC, obligates the Council to independently consider and
give significant weight to the needs of anadromous fish when
formulating a power plan. NRIC contends that this obligation
stands separate from the requirement that a power plan
incorporate a fish and wildlife program. See id.
§ 839b(e)(3)(F). The upshot of NRIC’s interpretation is that
if the Council learns through developing a power plan that
existing or future power resources, including the
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 15
implementation of conservation measures, create the capacity
for further fish and wildlife enhancements, then the Council
must consider whether such enhancements would serve the
Power Act’s goal of furthering fish and wildlife interests
while maintaining an adequate, efficient, economical, and
reliable power supply.
The Council agrees with NRIC “that the consideration
due under the [Power] Act is a serious substantive obligation”
and in the past has recognized that such consideration is in
addition to the Power Act’s mandate of adopting a fish and
wildlife program. But it rejects NRIC’s contention that the
Power Act requires, or even allows, the Council to revisit the
fish and wildlife measures adopted in the 2009 Program. The
Council instead argues that it gave fish and wildlife interests
due consideration in three ways: (1) through the evaluation
of two of the many alternative power-resource scenarios
analyzed for inclusion in the Plan, (2) by developing a
resource plan that accommodates the 2009 Program’s fish and
wildlife measures, and (3) by considering the impact of
potential new power resources both on environmental quality
and on fish and wildlife.
But the Council’s first and second suggested methods for
providing due consideration to fish and wildlife interests miss
the mark. The first method is easily dismissed because the
Council fails to show how its evaluation of two particular
power-resource scenarios was at all relevant to its due-
consideration obligation, particularly with respect to
providing “sufficient quantities and qualities of [river] flows
for successful migration, survival, and propagation of
anadromous fish.” See 16 U.S.C. § 839b(e)(2). One of these
resource scenarios posited removing the four federal dams in
the lower Snake River (a major tributary in the Columbia
16 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
River Basin), while the other considered the hypothetical
retirement of a number of coal-fired plants throughout the
region.
The Council contends that its due-consideration
obligation did not require an analysis of either scenario. It
further argues that it is not authorized to include in a power
plan’s resource scheme a recommendation to shut down an
existing power resource. But an analysis of resource
scenarios that the Council claims is beyond its power to adopt
has only a tenuous bearing on the Council’s duty to set forth
a resource scheme that gives due consideration to fish and
wildlife interests. The Council itself notes that “[t]he
resource scheme actually adopted by the Council in the power
plan did not call for or assume that the events would happen;
these alternative scenarios (and others) were developed to
provide useful information to the region to inform further
thinking and planning.” In other words, the alternative
scenarios were not developed to give due consideration to
fish and wildlife interests in the resource scheme actually
adopted. A post-hoc reliance on these alternative-scenario
analyses is thus unavailing.
The Council’s second argument—that it provided due
consideration to fish and wildlife enhancements through its
adoption of the 2009 Program—is likewise inadequate.
Developing a resource plan that accommodates the fish and
wildlife program satisfies the two statutory mandates listed
below and thus cannot constitute complying with the due-
consideration mandate if that mandate is properly understood
as an independent obligation. See Kenaitze Indian Tribe v.
Alaska, 860 F.2d 312, 317 (9th Cir. 1988) (declining to adopt
a statutory interpretation that would render one portion of the
statute redundant when “another interpretation . . . avoids
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 17
such redundancy”). Those other statutory mandates are
(1) the requirement that the power plan include a fish and
wildlife program, 16 U.S.C. § 839b(e)(3)(F), and (2) the
requirement that the plan’s power-demand forecast account
for the effects of the fish and wildlife program on the
availability of power resources, id. § 839(b)(e)(3)(D).
The Council further argues that the 2009 Program places
“hard nonpower constraints on the hydrosystem,” thus
demonstrating the Council’s due consideration. But the two
separate Power Act provisions identified above already
require building the power plan around those measures.
Moreover, the fish and wildlife measures in the 2009 Program
account for the Power Act’s command that fish and wildlife
protection not jeopardize an efficient and reliable power
supply. See 16 U.S.C. § 839b(h)(5). The Power Act does not
authorize the Council to adopt a fish and wildlife program
that maximizes fish protection in an absolute sense, but rather
requires the Council to adopt the best measures possible in
light of the Power Act’s energy goals. See id. § 839b(h)(5).
So while the Council equates accounting for the measures
in the 2009 Program with providing due consideration for fish
and wildlife interests, those measures in fact are already
limited by the Power Act’s countervailing interest in assuring
that the region has appropriate power resources.
Characterizing those measures as “hard nonpower constraints
on the hydrosystem” thus belies the fact that the measures
themselves already reflect both fish and wildlife interests and
power interests.
18 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
Finally, the Council suggests that it provided due
consideration to fish and wildlife interests and to
environmental quality by assessing the impact that potential
new power resources might have on those interests. The
Council’s “primary example” of this method of due
consideration is the “Protected Areas” policy, which guards
44,000 miles of regional streams against new hydroelectric
development. But that policy, as the citation in the Council’s
response brief indicates, is part of the 2009 Program. The
Council does not explain how one aspect of the 2009 Program
can satisfy an obligation in the power-plan process that the
Council has recognized is separate from its duty to adopt and
incorporate a fish and wildlife program into the power plan.
Putting the Protected Areas policy aside, however, the
Council’s basic point holds true: The Power Act’s due-
consideration requirement is aimed specifically at new
power-resource acquisitions, not at existing resources. This
is reflected in the statute’s requirement that “[t]he plan shall
set forth a general scheme for implementing conservation
measures and developing resources pursuant to section 839d
. . . with due consideration by the Council for . . . protection,
mitigation, and enhancement of fish and wildlife.” 16 U.S.C.
§ 839b(e)(2) (emphasis added). Section 839d, in turn,
governs the BPA’s conservation measures and resource
acquisitions. Id. § 839d(a)–(b) (ordering the BPA to
implement conservation measures and acquire resources in
accordance with the Council’s power plan).
The language of 16 U.S.C. §§ 839b(e)(2) and 839d thus
forecloses NRIC’s argument that the Council must reconsider
the fish and wildlife measures adopted in the 2009 Program
in order to satisfy the due-consideration requirement. Those
measures concern adjustments to the existing hydrosystem,
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 19
whereas the Power Act ties the due-consideration requirement
specifically to future conservation and resource acquisition.
To be sure, the Power Act does not appear to prohibit such
reconsideration, see id. § 839b(h)(9) (providing the time
frame within which “[t]he Council shall adopt such program
or amendments thereto” (emphasis added)), but the Council’s
duty of providing due consideration to fish and wildlife
interests in setting a general agenda for future conservation
and resource acquisition does not require reconsideration of
the 2009 Program.
NRIC has shown why consideration of additional fish and
wildlife measures in the existing hydrosystem is not an
unreasonable proposition. From the Fifth Northwest Power
Plan to the current Plan, the amount of power that the Council
estimates that the region can conserve in a cost-effective
manner has doubled from approximately 2,950 average
megawatts to 5,900 average megawatts, such that
conservation alone can meet 85 percent of the region’s
demand growth for the next 20 years. In comparison, fish
and wildlife measures in the 2009 Program “reduce
hydroelectric generation by about 1,200 average megawatts
relative to operation with no constraints for fish and wildlife.”
The increase in estimated conservation capacity from the last
power plan to the current Plan is therefore more than double
the power impact that current fish and wildlife measures have
on the hydrosystem.
Assuming that the new conservation estimates were
unknown to the Council when formulating the 2009 Program,
that program underestimated the degree to which the region
could accommodate fish and wildlife measures while
maintaining an adequate power supply. The Plan itself notes
that fish and wildlife measures must take into account the
20 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
region’s power supply, but that evaluations of the power
system are “necessarily preliminary” during the consideration
of the fish and wildlife program. And although total
electricity demand is not the only relevant factor when
evaluating the power system—the Council must account for
variables like peak demand periods and fluctuating wind
generation—a substantial increase in potential conservation
should nonetheless be relevant to fish and wildlife planning.
But articulating a retroactive approach that the Council
chose not to follow is insufficient to meet NRIC’s burden of
showing that the Council acted in a manner that was
“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” See 5 U.S.C. § 706. NRIC has not
pointed to any part of the Power Act that requires the Council
to reconsider fish and wildlife measures in light of its
evaluation of the regional power system from the subsequent
power-planning process. Absent such a showing, we will not
second-guess the due consideration that the Council gave to
fish and wildlife interests in the adoption of the Plan.
C. Methodology
NRIC next argues that the Council’s failure to include a
methodology for evaluating environmental costs and benefits
in the draft version of the Plan was both contrary to the Power
Act and arbitrary and capricious. It also contends that the
methodology included in Appendix P of the final version of
the Plan “fails to provide a rational method for calculating
environmental costs and benefits of resources or measures
necessary to meet the goals of the [Power] Act.”
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 21
“The choice of methodology is a highly technical question
which falls within the unique expertise of the Council.”
Seattle Master Builders Ass’n v. Pac. Nw. Elec. Power &
Conservation Planning Council, 786 F.2d 1359, 1370 (9th
Cir. 1986) (upholding the Council’s methodology for
determining the cost-effectiveness of conservation measures).
“Unless an abuse of discretion is demonstrated, this court will
not substitute its judgment on particular . . . methodology.”
Id.One of the required elements of a power plan is “a
methodology for determining quantifiable environmental
costs and benefits under section 839a(4) of this title.”
16 U.S.C. § 839b(e)(3)(C). As with the other elements listed
in § 839b(e)(3), the Power Act instructs the Council to set
forth the methodology “in such detail as the Council
determines to be appropriate.” Section 839a(4) provides the
definition of “cost-effective,” which calls for comparing
resources on the basis of “incremental system cost,” where
the “system cost” of a resource is an “estimate of all direct
costs . . . , including . . . quantifiable environmental costs and
benefits.” Id. § 839a(4)(A)–(B).
1. Procedural challenge
No methodology for determining quantifiable
environmental costs and benefits appeared in the draft plan,
and the Council did not submit for public comment the
methodology it included in Appendix P to the final version of
the Plan. The Council acknowledges that the omission of its
methodology from the draft plan was an “unfortunate error,”
but characterizes the omission as an irrelevant procedural
point. Essentially, the Council asks us to find that its error
was harmless. This court has held that “[a]n agency may rely
22 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
on harmless error only when its mistake is one that clearly
had no bearing on the procedure used or the substance of
[the] decision reached.” Sagebrush Rebellion, Inc. v. Hodel,
790 F.2d 760, 765 (9th Cir. 1986) (ellipsis and internal
quotation marks omitted).
Omission of the methodology from the draft plan was
harmless, the Council argues, because its methodology was
self-evident from the draft plan. The Council, however, has
cited no part of the draft plan to support that assertion.
Rather, the citations to the record in the Council’s brief
reflect the Council’s recognition of the omission and its
decision to include the methodology as an appendix to the
final version of the Plan.
The Council likewise contends that no amount of
additional public notice and comment would have led the
Council to adopt the type of methodology that NRIC argues
is appropriate. But that post-hoc litigation position, even if
true, is insufficient to demonstrate that the error “clearly had
no bearing on the procedure used or the substance of [the]
decision reached.” See Sagebrush Rebellion, 790 F.2d at 765(internal quotation marks omitted).
Including the methodology in the draft version of the
Plan, which draft went through the notice-and-comment
process, might not have produced any substantial differences
from the methodology that appears in the final version of the
Plan, but the Council has not clearly established that this is
so. See Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479,
1487 (9th Cir. 1992) (explaining that “harmless error analysis
in administrative rulemaking must . . . focus on the process as
well as the result” because otherwise “an agency could
always claim that it would have adopted the same rule even
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 23
if it had complied with the APA procedures”). For this
reason, we will remand the Plan to the Council for the limited
purpose of adopting a methodology through the appropriate
notice-and-comment process. See 16 U.S.C. § 839b(d)(1)
(outlining the process for adopting any significant changes to
the power plan).
2. Substantive challenge
NRIC also challenges the substance of the methodology
adopted by the Council, arguing that the methodology “fails
to provide a rational method for calculating environmental
costs and benefits of resources or measures necessary to meet
the goals of the [Power] Act.” Because we hold that this
aspect of the Plan must be remanded to remedy the
procedural defect, and because the notice-and-comment
process might result in a change to the substantive
methodology, we decline to address NRIC’s challenge based
on the current wording of Appendix P.
D. Inclusion of the BPA’s cost estimate
NRIC’s final challenge to the Plan centers on the
Council’s decision to include the BPA’s estimate that the cost
of the 2009 Program totals $750 – $900 million per year.
That estimate, based in part on market prices applied to
foregone power generation, appears in the Plan at least four
times. No other estimate of the financial cost of the fish and
wildlife program to the BPA’s operation of the hydrosystem
appears in the Plan. NRIC argues that the inclusion of what
it calls an “inflated” cost estimate will influence the Council’s
and the public’s perception of what fish and wildlife
measures are possible while maintaining a power supply that
is economical.
24 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
In contrast, the draft version of the Plan included a much
lower estimate of the 2009 Program’s cost ($300 million),
which reflects “a long-term amortized replacement resource
cost.” The draft of Appendix M then noted that assessing the
costs in terms of market prices is “sometimes” important,
such as when the BPA calculates the credit it receives for
expenses made for nonpower-related operations. Finally, the
draft noted that “[t]he traditional ‘market price’ calculation of
the total effect on generation from fish and wildlife
operations is essentially irrelevant to the power plan’s
resource development efforts.”
The reason for removing the discussion of fish and
wildlife costs from Appendix M, according to the Council,
was that the discussion elicited contentious comments on a
subject that the Council deemed irrelevant. Concentrating on
the cost issue arguably “threatened to interfere with the
Council’s focus on . . . the resource strategy.” But that
reasoning does not explain why the Council retained the
BPA’s cost estimate in Appendix M and also inserted it
elsewhere in the Plan. The Council provides no reasoned
basis, either in the record or in its brief, for why it eliminated
the lower, resource-replacement cost estimate but mentioned
the BPA’s higher, market-rate estimate multiple times.
A decision by an agency is arbitrary when it fails to
“articulate a satisfactory explanation for its action[,]
including a rational connection between the facts found and
the choice made.” Motor Vehicle Mfrs. Ass’n of the U.S., Inc.
v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983)
(internal quotation marks omitted). Rather than articulate a
rationale for its decision to retain the BPA’s cost estimate, the
Council argues that the estimate had no bearing on the
development of the Plan. From that premise, the Council
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 25
concludes that including the estimate in the Plan was not
unreasonable or arbitrary. The Council’s argument, however,
conflates the issue of whether the inclusion of the BPA’s
estimate was arbitrary with the question of the estimate’s
ultimate effect on the Plan, and no legal authority is cited to
support its argument.
To be sure, “we must take ‘due account’ of the harmless
error rule” when we review agency final actions under the
Administrative Procedure Act. California Wilderness Cal. v.
U.S. Dep’t of Energy, 631 F.3d 1072, 1090 (9th Cir. 2011);
see 5 U.S.C. § 706 (requiring a reviewing court to take “due
account . . . of the rule of prejudicial error”). As noted above,
this court has defined “harmless error” in the administrative-
rulemaking context as an error that “clearly had no bearing on
the procedure used or the substance of [the] decision
reached.” Sagebrush Rebellion, Inc. v. Hodel, 790 F.2d 760,
765 (9th Cir. 1986) (internal quotation marks omitted).
Although the burden is on the party attacking the agency
decision to show that the error was harmful, Cal. Wilderness,
631 F.3d at 1091, we “must exercise great caution in applying
the harmless error rule in the administrative rulemaking
context” because “[h]armless error is more readily abused
there than in the civil or criminal context,” id. at 1090(internal quotation marks omitted). “‘[T]he “burden” of
showing that an error was harmful is not . . . a particularly
onerous requirement.’” Id. (quoting Shineski v. Sanders,
556 U.S. 396, 410 (2009)).
The Council argues that it “did not consider or rely on
how [the BPA] reports the costs of the Council’s fish and
wildlife program in developing or adopting the resource
strategy or other required elements of the Sixth Power Plan.”
But even if we assume that assertion to be true, the decision
26 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
is nonetheless harmful because the final action that we are
obligated to review under 5 U.S.C. § 706 is the adoption of
the Plan as a whole, not merely the Plan’s “resource strategy”
or its “other required elements.”
As much as the Council stresses both in the Plan and in its
brief before this court that the financial cost of the 2009
Program was irrelevant to the development of the Plan’s
resource decisions, assessing that cost remains important.
The Council itself identified “at least four different purposes
for assessing the cost of fish and wildlife operations” in the
draft of the Plan that was submitted for public comment.
Moreover, the overarching purpose of the Power Act is the
protection of fish and wildlife while maintaining an adequate
and economical power supply. See Nw. Res. Info. Ctr. v. Nw.
Power Planning Council, 35 F.3d 1371, 1378–79 (9th Cir.
1994).
The Council’s implicit endorsement of a cost estimate of
fish and wildlife measures that is more than double the
estimate produced by an alternative methodology is directly
relevant to the fundamental balance that the Power Act
commands the Council to achieve. Whether those measures
cost $750 million annually rather than $300 million annually
will quite likely affect where that balance is struck when the
Council and the region’s stakeholders develop future fish and
wildlife programs and power plans. The Council’s contention
that the BPA cost estimate had “no bearing” on the Plan as a
whole thus rings hollow when in fact the Council
incorporated the estimate multiple times into both the Plan’s
body and Appendix M.
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 27
Because the Council has provided no basis for adopting
the BPA’s cost estimate throughout the Plan, and because
“[w]e may not supply a reasoned basis for the agency’s action
that the agency itself has not given,” Motor Vehicle Mfrs.
Ass’n of the U.S., Inc. v. State Farm Mut. Auto Ins. Co.,
463 U.S. 29, 43 (1983), the Council’s unsupported decision
was arbitrary. NRIC, moreover, has borne its relatively light
burden of showing that the Council’s arbitrary decision was
harmful. See Shineski, 556 U.S. at 410.
This conclusion, however, does not require setting aside
the entire Plan. On remand, the Council must reconsider the
parts of the Plan that contain the BPA’s cost estimate. The
Council is not foreclosed from including that estimate in the
Plan, but it must develop a reasoned basis for doing so. Nor
is the Council required to include the resource-replacement
cost estimate developed in the draft of Appendix M, but the
decision to include or exclude that estimate must be grounded
in reasoning reflected in a record that this court may review.
See, e.g., Ariz. Cattle Growers’ Ass’n v. U.S. Fish & Wildlife,
Bureau of Land Mgmt., 273 F.3d 1229, 1236 (9th Cir. 2001)
(explaining that “[t]he reviewing court may not substitute
reasons for agency action that are not in the record,” and that
“[j]udicial review is meaningless” if the court cannot “review
the record to ensure that agency decisions are founded on a
reasoned evaluation of the relevant factors” (internal
quotation marks omitted)).
As a final note, we respectfully disagree with the partial
dissent’s characterization of our analysis on this issue as one
of “passion” and “zeal” to edit the Council’s work product.
We instead view the Council’s unexplained inclusion of the
BPA’s cost estimate to the exclusion of the substantially
lower resource-replacement cost estimate as both an implicit
28 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
finding of fact under 5 U.S.C. § 706(2) of the Administrative
Procedure Act and a “fail[ure] to consider an aspect of the
problem” under Great Yellowstone Coalition v. Lewis,
628 F.3d 1143, 1148 (9th Cir. 2010). We thus agree with our
dissenting colleague’s closing comment that “[w]e are not yet
commissioned to serve as a Judicial Editorial Review Board,”
but we find the comment inapposite.
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the
Plan with respect to NRIC’s due-consideration challenge, but
REMAND the Plan to the Council for the limited purposes of
(1) allowing public notice and comment on the proposed
methodology for determining quantifiable environmental
costs and benefits, and (2) reconsidering the inclusion in the
Plan of the BPA’s estimate of the 2009 Program’s cost to
hydrosystem operations. Each party will bear its own costs
on appeal.
IKUTA, Circuit Judge, concurring in part and dissenting in
part:
“No passion in the world is equal to the passion to alter
someone else’s draft.”1 This passion has proven irresistible
to the majority, who today claims the power to edit out a
factual statement in an agency’s work product if it suspects
the statement or turn of phrase might subtly promote a
particular point of view.
1
Attributed to H.G. Wells. See A Letter from the Publisher, Time
Magazine, Sep. 25, 1972.
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 29
The work product at issue here is a regional conservation
and electric power plan, which Congress has directed the
Pacific Northwest Electric Power and Conservation Planning
Council (the Council) to prepare and adopt. 16 U.S.C.
§ 839b(d)(1). Under the Northwest Power Act, the Council
must prepare a plan that provides a scheme “for
implementing conservation measures and developing
resources . . . with due consideration by the Council for . . .
[the] protection, mitigation, and enhancement of fish and
wildlife.” Id. § 839b(e)(2)(C). The plan must include a
number of elements, including a program “to protect,
mitigate, and enhance fish and wildlife” on the Columbia
River, id. §§ 839b(h)(1)(A), (e)(2)(F), and “a methodology
for determining quantifiable environmental costs and
benefits,” id. § 839b(e)(3)(C). Once the plan is adopted, it
controls all actions of the Bonneville Power Administration
(BPA), which administers the electric power generated by
federal facilities in the Pacific Northwest. Ass’n of Pub.
Agency Customers, Inc. v. Bonneville Power Admin.,
126 F.3d 1158, 1163 (9th Cir. 1997).
The majority detects three errors in the plan. First, the
majority correctly concludes that the Council failed to
circulate the statutorily required methodology section for
notice and comment. Maj. Op. at 22–23. Although this error
was undoubtedly harmless, our case law requires us to
presume prejudice when there is a procedural error that
results in lack of notice and comment. See Cal. Wilderness
Coal. v. U.S. Dep’t of Energy, 631 F.3d 1072, 1090 (9th Cir.
2011). Therefore, I agree with the majority to the extent it
remands the plan to the Council to correct its error.
30 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
But the majority then proceeds to fault the Council for its
decision to report BPA’s estimates of the costs associated
with the environmental program that must be included in the
plan. The plan states:
Bonneville estimates that the total financial
effect of replacing lost hydropower capability
and funding direct fish and wildlife program
expenditures totals from $750 million to $900
million per year (a range affected by, among
other things, water conditions and electric
prices). The power system is less economical
as a result of fish and wildlife program costs,
but still economical in a broad affordability
sense when compared to the costs of other
reliable and available power supplies.
It is not surprising that the appellant here, Northwest
Resource Information Center (NRIC), objects to BPA’s cost
estimate for the environmental program. After all, NRIC
asserts that its “corporate function and purposes and
continued existence depend substantially on the salmon’s
continued survival and eventual restoration,” and describes
itself as a major player in the struggle to protect anadromous
salmon and steelhead in the Columbia River. An
organization founded in response to threats to the Northwest
region’s salmon population may rightly be concerned that
BPA’s cost estimate will have a “chilling effect” on efforts to
expand the Council’s fish and wildlife program beyond its
current scope.
But the Council’s decision to report BPA’s cost estimate
is well within the scope of editorial choices an agency may
make when writing a congressionally mandated plan, and any
NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL 31
inferences this language raises are irrelevant to judicial
review under the Administrative Procedures Act. Our review
extends only to “agency action, findings, and conclusions.”
5 U.S.C. § 706(2). The Council’s report of the BPA’s cost
estimate is none of these.
The majority struggles to find a rationale for invalidating
the Council’s report of BPA’s cost estimate, asserting the
Council’s action was arbitrary because it “will quite likely
affect where [the] balance is struck when the Council and the
region’s stakeholders develop future fish and wildlife
programs and power plans.” Maj. Op. at 26. This speculative
prediction, whether or not true, does not give the majority a
legal basis for requiring the Council to edit the statement out.
A federal court may reverse agency action under the APA
standard only if “the agency relied on factors Congress did
not intend it to consider, entirely failed to consider an aspect
of the problem, or offered an explanation that runs counter to
the evidence before the agency or is so implausible that it
could not be ascribed to a difference in view or the product of
agency expertise.” Greater Yellowstone Coalition v. Lewis,
628 F.3d 1143, 1148 (9th Cir. 2010). Given that the Council
did not rely on the BPA’s cost estimate, but merely quoted it,
there is no basis for reversal regardless whether NRIC thinks
the estimate is bunk.
In short, despite the majority’s editorial zeal, a federal
court cannot strike down a sentence in an agency’s report
because it does not like its spin. We are not yet
32 NW RES. INF. CTR. V. NW POWER & CONSERV. COUNCIL
commissioned to serve as a Judicial Editorial Review Board.
Therefore, I dissent from the rest of the majority’s decision.2
2
I also disagree with the majority’s failure to accord the proper
deference to the Council’s explanation of how it provided due
consideration for fish and wildlife in the plan. The Council stated that it
provided due consideration by incorporating the environmental program
required by § 839b(h)(1)(A) into the plan, considering “the potential
effects of new wave energy developments on near-shore fish and wildlife
resources,” and analyzing two hypothetical alternative resource scenarios
(removing federal dams and shutting down coal-fired power plants). The
statute does not define due consideration or explain what the Council must
do to satisfy this obligation, and I see no obvious reason why the
Council’s interpretation is not reasonable. Because “[t]he preparation and
consideration of the plan is a matter within Council authority over which
the Act accords the Council considerable flexibility,” Seattle Master
Builders Ass’n v. Pac. Nw. Elec. Power & Conservation Planning
Council, 786 F.2d 1359, 1367 (9th Cir. 1986), the majority should have
deferred to the Council’s reasonable interpretation here.