B-222908, OCT 17, 1986

B-222908, OCT 17, 1986

MISCELLANEOUS TOPICS - ENVIRONMENT/ENERGY/NATURAL RESOURCES - REGULATORY AGENCIES - AUTHORITY - UTILITY SERVICES - FOREIGN SOURCES DIGEST: WESTERN AREA POWER AUTHORITY (WAPA) OF THE DEPARTMENT OF ENERGY (DOE) IS NEGOTIATING ON BEHALF OF SEVERAL AMERICAN UTILITIES WITH THE PROVINCE OF MANITOBA, CANADA, FOR A POWER SUPPLY FROM A HYDROELECTRIC PLANT TO BE BUILT IN CANADA. THERE IS NO STATUTORY PROHIBITION PREVENTING WAPA FROM DEALING WITH A FOREIGN GOVERNMENT. HOWEVER, THE AUTHORITIES CITED BY DOE IN SUPPORT OF THE NEGOTIATIONS, SECTION 9(C) AND 15 OF THE RECLAMATION PROJECT ACT OF 1939, 43 U.S.C. SECS. 485H(C) AND 485I, AND SECTIONS 102(10) AND 646 OF THE DOE ORGANIZATION ACT, 42 U.S.C. SECS. 7112(10) AND 7256, DO NOT AUTHORIZE WAPA TO CONTRACT FOR POWER ON BEHALF OF THE UTILITIES.

THE HONORABLE GEORGE MILLER:

CHAIRMAN, SUBCOMMITTEE ON WATER AND

POWER RESOURCES

COMMITTEE ON INTERIOR AND INSULAR

AFFAIRS

HOUSE OF REPRESENTATIVES

YOUR LETTER OF APRIL 18, 1986, QUESTIONS THE AUTHORITY OF THE WESTERN AREA POWER ADMINISTRATION (WAPA), DEPARTMENT OF ENERGY (DOE), TO CONTRACT WITH THE PROVINCE OF MANITOBA, CANADA, FOR A LONG-TERM POWER SUPPLY THAT WAPA WOULD DISTRIBUTE TO SEVERAL UTILITIES. IN PARTICULAR, YOU REQUEST OUR OPINION AS TO WHETHER EITHER THE RECLAMATION LAWS OR THE DEPARTMENT OF ENERGY ORGANIZATION ACT PROVIDES THIS AUTHORITY.

DOE OFFICIALS HAVE STATED TO YOU THAT WAPA'S AUTHORITY TO MARKET THE POWER IS FOUND IN SECTIONS 9(C) AND 15 OF THE RECLAMATION PROJECT ACT OF 1939 (PROJECT ACT), 43 U.S.C. SECS. 485H(C) AND 485I. THEY FURTHER SAY THAT THE AUTHORITY TO DEAL WITH THE PROVINCE OF MANITOBA IS BASED ON SECTIONS 102(10) AND 646 OF THE DEPARTMENT OF ENERGY ORGANIZATION ACT (DOE ACT), 42 U.S.C. SECS. 7112(10) AND 7256.

INFORMATION SUPPLIED TO YOU BY DOE AT A HEARING HELD ON FEBRUARY 20, 1986, AND IN RESPONSE TO YOUR SUBSEQUENT QUESTIONS INDICATES THAT WAPA HAS BEEN NEGOTIATING WITH PROVINCIAL REPRESENTATIVES FOR A LONG-TERM POWER SUPPLY FROM A HYDROELECTRIC POWER PLANT WHICH IS PROPOSED TO BE BUILT ON THE NELSON RIVER IN CANADA. WAPA HAS BEEN ACTING ON BEHALF OF A GROUP OF UTILITIES, NO SINGLE UTILITY HAVING SUFFICIENT INTEREST TO PURSUE THE EFFORT ALONE. THE PROVINCIAL REPRESENTATIVES HAVE EXPRESSED A PREFERENCE FOR DEALING WITH ONE ENTITY (WAPA). THE IMPORTED POWER, TO BE PAID FOR BY THE UTILITIES, WOULD BE TRANSMITTED TO THEM THROUGH THE WAPA TRANSMISSION SYSTEM. WE REQUESTED COMMENTS ON THIS MATTER FROM THE SECRETARY OF ENERGY, BUT HAVE NOT RECEIVED A REPLY. HOWEVER, WE UNDERSTAND THAT THE CONSIDERATION OF THE USE OF POWER FROM MANITOBA HAS NOT ADVANCED TO THE POINT OF CONTRACT PREPARATION.

WE HAVE LOOKED AT THE PROVISIONS CITED BY DOE AS SUPPORTING ITS AUTHORITY TO ENTER INTO AN AGREEMENT WITH MANITOBA. WE ARE UNABLE TO FIND THE AUTHORITY IN THESE PROVISIONS EITHER SINGLY, OR TAKEN TOGETHER, FOR WAPA TO ENTER INTO AN AGREEMENT FOR MARKETING CANADIAN POWER TO AMERICAN UTILITIES TO PROVIDE THEM WITH A LONG-TERM POWER SUPPLY. WE WILL ADDRESS EACH PROVISION IN ORDER.

THE PROJECT ACT

SECTION 9(C) OF THE PROJECT ACT, GIVES WAPA, AS THE SUCCESSOR AGENCY TO THE BUREAU OF RECLAMATION OF THE DEPARTMENT OF INTERIOR, AUTHORITY TO CONTRACT TO FURNISH WATER FOR MUNICIPAL WATER SUPPLY OR MISCELLANEOUS PURPOSES, AND TO SELL ELECTRIC POWER OR LEASE POWER PRIVILEGES IN CONNECTION WITH OPERATION OF A RECLAMATION PROJECT, PROVIDED THIS DOES NOT IMPAIR THE EFFICIENCY OF THE PROJECT FOR IRRIGATION PURPOSES.

THIS PROVISION RECOGNIZES THAT THE PRODUCTION OF ELECTRIC POWER IS AN APPROPRIATE PURPOSE FOR A RECLAMATION PROJECT AND SPECIFICALLY GRANTS THE AUTHORITY TO SELL THE POWER GENERATED AT RECLAMATION PROJECTS. NOWHERE IN THE STATUTE OR ITS LEGISLATIVE HISTORY IS THERE INDICATION OF A GRANT OF AUTHORITY TO SELL OR DISTRIBUTE POWER NOT ORIGINATING AT THESE PROJECTS. THERE IS A LIMITED AUTHORITY TO PURCHASE POWER WHEN CONDITIONS PREVENT THE HYDROELECTRIC FACILITIES OF THE RECLAMATION PROJECTS FROM SATISFYING THEIR NEEDS. UNITED STATES V. SACRAMENTO MUNICIPAL UTILITY DISTRICT, 652 F.2D 1341 (9TH CIR. 1981). THE MARKETING OF CANADIAN POWER WOULD NOT APPEAR TO FALL WITHIN SUCH PURPOSE.

SECTION 15 OF THE ACT, 43 U.S.C. SEC. 485I, ALSO CITED BY DOE, PROVIDES DOE WITH AUTHORITY TO PERFORM ACTS AND TO MAKE RULES AND REGULATIONS NECESSARY AND PROPER TO CARRY OUT THE ACT'S PROVISIONS. THIS PROVISION DOES NOT ENLARGE WAPA'S MARKETING AUTHORITY.

THE DOE ACT

ONE PURPOSE OF THE DOE ACT IS FOR THE DEPARTMENT TO ESTABLISH AND IMPLEMENT POLICIES REGARDING INTERNATIONAL ENERGY ISSUES WHICH DIRECTLY IMPACT AMERICAN ENERGY SUPPLIES. 42 U.S.C. SEC. 7112(10). IF THIS GENERAL PURPOSE PROVISION WERE A GRANT OF AUTHORITY, IT MIGHT ARGUABLY PROVIDE A STATUTORY BASIS FOR A POWER SUPPLY AGREEMENT BETWEEN DOE AND MANITOBA ON BEHALF OF A NUMBER OF UTILITIES. HOWEVER, AS A STATEMENT OF PURPOSE, IT DOES NOT CONSTITUTE A GRANT OF AUTHORITY. A GENERAL STATUTORY SECTION SETTING FORTH LEGISLATIVE POLICY AND PURPOSES DOES NOT PROVIDE PROGRAM AUTHORITY. COUNCIL OF HAWAII HOTELS V. AGSALUD, 594 F.SUPP. 499 (D. HAWAII (1984)). SEE ALSO, NATIONAL WILDLIFE FEDERATION V. MARSH, 721 F.2D 767 (11TH CIR. 1984), AND SUTHERLAND STAT. CONST. SECS. 20.03 AND 20.12 (4TH ED.). CLEARLY, THIS PURPOSE PROVISION WOULD BE USEFUL IN THE INTERPRETATION OF A DEFINITE GRANT OF AUTHORITY. HOWEVER, AS ALREADY NOTED, THE PROJECT ACT DOES NOT SUPPLY THE NECESSARY GENERAL AUTHORITY TO COVER A MARKETING AGREEMENT.

ANOTHER SECTION OF THE DOE ACT CITED BY DOE, 42 U.S.C. SEC. 7256, MERELY PROVIDES AUTHORITY TO ENTER INTO CONTRACTS, LEASES, COOPERATIVE AGREEMENTS OR OTHER SIMILAR TRANSACTIONS TO CARRY OUT FUNCTIONS VESTED IN THE SECRETARY OF DOE. THIS SECTION BY ITS TERMS DOES NOT PROVIDE PROGRAM AUTHORITY NOT ELSEWHERE PROVIDED.

DEALING WITH A FOREIGN COUNTRY

AS TO YOUR CONCERN ABOUT WAPA DEALING WITH THE PROVINCE OF MANITOBA, CANADA, IF WAPA AND DOE WERE AUTHORIZED TO ENTER INTO A MARKETING AGREEMENT WITH MANITOBA, THERE WOULD APPEAR TO BE NO LEGAL BAR TO THE AGREEMENT SOLELY BECAUSE MANITOBA IS A PROVINCE OF CANADA. FOR EXAMPLE, NEITHER THE AUTHORITY TO PERFORM ACTS TO CARRY OUT THE PROVISIONS OF THE RECLAMATION PROJECT ACT FOUND IN SEC. 15, NOR SEC. 646 OF THE DOE ACT WHICH AUTHORIZES THE SECRETARY TO ENTER INTO CONTRACTS OR OTHER TRANSACTIONS TO CARRY OUT THE FUNCTIONS VESTED IN HIM, EXCLUDE DEALING WITH FOREIGN ENTITIES.

WE NOTE THAT UNDER SEC. 1 OF EXECUTIVE ORDER NO. 10485, SEPT. 3, 1953, 18 F.R. 5397, AS AMENDED BY EXECUTIVE ORDER NO. 12308, FEB. 3, 1978, 43 F.R. 4957, THE PRESIDENT HAS DELEGATED TO THE SECRETARY OF ENERGY THE AUTHORITY TO GRANT PERMITS (WITH THE FAVORABLE RECOMMENDATIONS OF THE SECRETARIES OF STATE AND DEFENSE) FOR THE CONSTRUCTION, OPERATION, MAINTENANCE OR CONNECTION, AT THE BORDERS OF THE UNITED STATES, OF FACILITIES FOR THE TRANSMISSION OF ELECTRIC ENERGY BETWEEN THIS COUNTRY AND ANOTHER COUNTRY. THIS POWER, HOWEVER, DOES NOT ENCOMPASS MARKETING TO UTILITY COMPANIES POWER OBTAINED FROM A FOREIGN NATION. WHILE THE PROPOSED AGREEMENT WOULD BE SUBJECT TO DOE LICENSING, THIS FACT CLEARLY DOES NOT IMPLY CONTRACTING AUTHORITY IN DOE ON BEHALF OF THE UTILITIES WHO WISH TO RECEIVE CANADIAN POWER.

CONCLUSION

UNDER THE RECLAMATION PROJECT ACT WAPA HAS THE AUTHORITY TO SELL AND DISTRIBUTE POWER FROM RECLAMATION PROJECTS. INCIDENT TO THIS AUTHORITY IT MAY ALSO PURCHASE NON-PROJECT POWER NECESSARY TO THE FUNCTIONING OF RECLAMATION PROJECT FACILITIES. BUT, NOWHERE IN THE PROJECT ACT HAVE WE BEEN ABLE TO FIND THE AUTHORITY FOR WAPA TO CONTRACT FOR AND MARKET THE POWER TO THE UTILITIES WHICH WILL USE THE POWER FOR THEIR OWN PURPOSES. FURTHER, NEITHER THE DOE ACT NOR THE CITED EXECUTIVE ORDERS GRANTS THIS AUTHORITY. HOWEVER, THE FACT THAT THE AGREEMENT IS WITH A FOREIGN COUNTRY DOES NOT MAKE IT LEGALLY OBJECTIONABLE.

IN CONCLUSION, ALTHOUGH, AS NOTED EARLIER, WE HAVE NOT HAD THE BENEFIT OF DOE'S ANALYSIS OF THIS QUESTION, WAPA APPEARS TO LACK AUTHORITY TO ENTER INTO THE PROPOSED AGREEMENT WITH THE PROVINCE OF MANITOBA, CANADA, TO SUPPLY POWER FROM THAT PROVINCE, TO SEVERAL AMERICAN UTILITIES TO PROVIDE THEM WITH A LONG-TERM POWER SUPPLY.