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<br />
<br />0015c.9
<br />
<br />1982]
<br />
<br />HOOYER DAM ENERGY
<br />
<br />933
<br />
<br />The primary issue is whether the Act's preference for states and other
<br />political entities as contractors for. Hoover power39 takes precedence over
<br />the right of renewal provided for existing contractors by the statute.40 This
<br />apparent conflict can be seen in sections 617d(b) and (c) of the BCPA.41
<br />The resolution of this issue requires a determination of the extent of the
<br />Secretary's discretion to modify either the right of renewal or the prefer-
<br />ence right and the extent to which the awarding of contracts to preference
<br />customers is subject to the Act's public interest criteria.42
<br />Section 617d(b) of the BCPA, the right of renewal clause asserted by
<br />California to provide an absolute right of renewal for current power con-
<br />tract holderg43, provides:
<br />The holder of any contract for electrical energy shall be entitled
<br />to a renewal thereof upon such terms and conditions as may be au-
<br />thorized or required under the then existing laws and regulations,
<br />unless the property of such holder dependent for its usefulness on a
<br />continuation of the contract be purchased or acquired and such
<br />holder be compensated for damages to its property, used and useful
<br />in the transmission and distribution of such electrical energy and not
<br />taken, resulting from the termination of the supply.44
<br />This subsection directs that the contracts for electrical energy be renewed,
<br />unless the holder is in default on the contract or unless compensation is,
<br />paid for the taking or damaging of property used in transmitting and dis-
<br />tributing the Hoover energy.4S The renewal clause was intended to protect
<br />the contractors' investments in distribution facilities for Hoover power and
<br />their customers, who depended on the continued flow of this energy.46
<br />Given the BCP A's requirement that power revenues pay for the project ,
<br />and that allottees receive no interest in the dam or power plant,47 the right
<br />of renewal was accorded both to encourage power interests to contract for
<br />Hoover power and to protect their massive investments in transmission
<br />lines and other facilities.48
<br />
<br />39. See 43 U.S.C. 6617d(c) (1976). The BCPA provides that preference shall be given in
<br />accordance with the policy of the Federal Power Act. Id The Federal power Act gives preference
<br />to states and municipalities. 16 U.S.C. fi 800(a) (1976). The BCPA modifies this slightly by giving
<br />states priority over all other preference customers. 43 U.S.C. fi 617d(c)(1976). Thus, preference is
<br />given in sales of Hoover power first to states and then to municipalities, including irrigation.
<br />electrical. and water districts. See id fi 617k.
<br />40. See 43 U.S.C. fi 617d(b) (1976). This conflict has been caused by the original allocation
<br />of power to Southern California Edison, a nonpreference customer. If thiS allocation is renewed,
<br />the terms of th:: preference clause will be violated. See supra notes 22-35 and accompanying text
<br />41. 43 U.S.C. fi 617d(b) &. (c) (1976).
<br />42. See id !i 617d(c). This section incorporates the public interest policy regarding conflict-
<br />ing applications for power licenses expressed in the Federal Power Act, 16 U.S.C.ji 800 (1976).
<br />43. See infra notes 126-44 and accompanying text'
<br />44. 43 U.S.C. fi 617d(b) (1976). '
<br />45. See id,
<br />46. Citizens Utils. Co. v. United States, 1491". Supp. 158, 162 (Ct. CI. 1957), cer/..denied, 355
<br />U.S. 892 (1958) (extending right of renewal to an Arizona utility which had entered into a tempo-
<br />rary contract for Hoover power allotted to but unused by the Metropolitan Water District). See
<br />infra notes 136-42 and accompanying text
<br />47. See 43 U.S.C. 66 617c(b), d &.e (1976 &. Supp.IV 1980); California Brief, supra note 7, at
<br />14; supra note 13-20 and accompanying text,'
<br />48. See Citizens Utils. Co. v. United States, 149 F. Supp.,,158. 162 (Ct. Cl. 1957); California
<br />Brief, supra note 7, at 13-15. 43 U.S.C. 6 617d(d) (1976) requires that any agency receiving over
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