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LETTER FROM GEORGE MILLER 



July 11, 1994 



The Honorable Hazel R. O'Leary 

 Secretary 



Department of Energy 

 Washington, D.C. 20585 



The Honorable Bruce Babbitt 



Secretary 



Department of the Interior 



Washington, D.C. 20240 



Dear Secretary O'Leary and Secretary Babbitt: 



I have been following with great interest the Administration's 

 efforts to protect endangered salmon in the Columbia River Basin. 

 While I have no objection whatsoever to the recent decision to 

 provide short-term financial assistance to the Bonneville Power 

 Administration for expenses related to fish mitigation, I am 

 troubled by the June 6, 1994, legal opinion prepared by 

 Bonneville's General Counsel in support of this action. I do 

 agree that legal authority may exist for Bonneville to shift 

 certain fish mitigation costs from Bonneville ratepayers to the 

 taxpayer; however, I question Bonneville's construction of its 

 authority on this matter. 



The legal opinion states that Section 4(h) (10) (c) (16 U.S.C. § 

 839b(h) (10) (C) ) of the Pacific Northwest Electric Power Planning 

 and Conservation Act (hereinafter cited as "the Act") gives the 

 Administrator of Bonneville the authority to allocate costs 

 incurred by the agency, including fish and wildlife expenditures, 

 in accordance with project purposes. Put simply, if Bonneville, 

 i.e. power, is paying for a disproportionate share of fish 

 mitigation expenditures that benefit all project purposes these 

 expenditures may be allocated to other project purposes that are 

 "non-reimbursable" and the responsibility of the taxpayer rather 

 than Bonneville ratepayers. This is a reasonable construction of 

 Section 4(h) (10) (c) and is simply a restatement of the well 

 settled principle of law that the costs of multipurpose water 

 projects shall be allocated in accordance with project purposes. 

 £££ e.g. . Sec. 9(c) Reclamation I^qject Act of 1939, 43 U.S.C. S 

 485h(b) ; Sec. 7 Bonneville Project Act, 16 U.S.C. S 832f; Sec. 5 

 Flood Control Act of 1944, 16 U.S.C. S825s. 



However, I question the next phase of Bonneville's legal analysis 

 which states that a portion of purchase power costs that 

 Bonneville incurs due to changes in water flows related to fish 

 Bitigation can be allocated to project purposes other than power. 

 This interpretation is counter to past interpretation of cost 

 allocation law by both the Bureau and the Corps. See e.g. . Army 

 Corps Policy on Cost Allocation, EP 1165-2-1, Feb. 15, 1989; 

 Interagency Agreement on Cost Allocation, Departments of the 

 Interior and Army and Federal Power Commission, March 12, 1954. 



I am unaware of any instance in the history of all the Power 

 Mar)ceting Administrations (PMAs) where, absent an explicit 

 directive from Congress, a PMA has allocated purchase power costs 

 to non-power purposes. Power is not purchased to benefit non- 

 power project purposes such as irrigation, flood control or 

 navigation. It is purchased entirely for the benefit and use of 

 Bonneville's power customers. Therefore, under the Flood Control 

 Act and Reclamation law these purchase power costs have been 

 allocated to power. 



Although Bonneville has extensive fish and wildlife 

 responsibilities under the Act it has no legal authority to 

 control river flows and consequently has no legal right to a 

 specific amount of electricity from the federal Columbia River 

 Power System (FCRPS) . River flows are controlled by the project 

 operating agencies, the Bureau of Reclamation and the Corps of 

 Engineers, in accordance with project purposes, state water law 

 and other federal law. The hydroelectricity is generated by the 



