Charles Starbuck et al., Plaintiffs-appellants, v. City and County of San Francisco et al., Defendants-appellees, 556 F.2d 450 (9th Cir. 1977)

The present appeal gives renewed vitality to the long-time dispute over the delivery of hydroelectric power from the Hetch Hetchy Valley to the Bay Area. Appellants, residents, taxpayers, and consumers of electricity in San Francisco, allege that San Francisco's present "wheeling" arrangement with the Pacific Gas and Electric Company violates Section 6 of the Raker Act of December 19, 1913, ch. 4, 38 Stat. 242, establishing the Hetch Hetchy Valley as a resource of water and electric power. Appellees are the City and County of San Francisco ("San Francisco"), Pacific Gas and Electric Company ("PG&E") and the Secretary of The Interior ("the Secretary"). The district court granted San Francisco's and PG & E's motion to dismiss for failure to state a claim because it concluded that the Raker Act did not create a private cause of action in favor of appellants. It also granted summary judgment in favor of the Secretary with respect to appellants' claims under the Administrative Procedure Act, 5 U.S.C. §§ 701, 702 (1967), and the mandamus statute, 28 U.S.C. § 1361 (1976). The district court determined that these claims were barred by the doctrine of sovereign immunity and were unreviewable decisions within the Secretary's discretion. We affirm the lower court's result, but we disagree with its reasoning.

Appellants' claims arise in the context of a unique statutory framework. The Raker Act opened the doors of the Hetch Hetchy Valley's abundant water and hydroelectric resources to the residents of the Bay Area. Many groups were involved in the drafting of this legislation including the Bay Cities, environmentalists, local water and utility companies, and California farmers and irrigation districts. The culmination of their efforts was a statute that creates a delicate balance between federal interests in the use of federal public lands and state interests in the supply and distribution of water and energy to its citizens. Although appellants' Raker Act allegations raise a potpourri of complex federal jurisdictional issues,¹  we need not decide them because the Raker Act does not create a private cause of action in favor of appellants.

The Raker Act does not expressly authorize consumers and residents of San Francisco to enforce its provisions. This omission does not foreclose the implication of a private cause of action. The Supreme Court has recently considered the question of the propriety of implying a private cause of action in Nat'l Railroad Passenger Corp. v. Nat'l Ass'n. of Railroad Passengers ("Amtrak") (1974) 414 U.S. 453, 94 S. Ct. 690, 38 L. Ed. 2d 646 (suit to enjoin discontinuance of allegedly uneconomic routes under the Rail Passenger Act of 1970), and its progeny. (See, Securities Investor Protection Corp. v. Barbour ("SIPC") (1975) 421 U.S. 412, 95 S. Ct. 1733, 44 L. Ed. 2d 263 (suit to compel SIPC to provide financial relief to customers of failing broker-dealer); Cort v. Ash (1975) 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (stockholder damages action against corporate directors for making illegal campaign contributions); Blue Chip Stamps v. Manor Drug Stores (1975) 421 U.S. 723, 95 S. Ct. 1917, 44 L. Ed. 2d 539 (10b-5 suit for damages brought by nonpurchaser or seller of securities).) The language in these cases, while suited to the statutory schemes therein involved, provides an ill-fitting pattern against which to measure the provisions of the Raker Act. Unlike the administrative schemes involved in those cases, the Raker Act's administration depends on a finely-tuned interplay of the Secretary's discretion²  and a balance of state and federal control over the use of Hetch Hetchy water and power.³  Cort v. Ash, supra, provides the most appropriate, albeit imperfect standard⁴  to apply to the question of an implied cause of action under the idiosyncratic Raker Act. In Cort v. Ash, the Court stated the following criteria:

". . . First, is the plaintiff 'one of the class for whose especial benefit the statute was enacted,' . . . that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? . . . Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? . . . And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?" (422 U.S. at 78, 95 S. Ct. at 2088.)

Appellants' basic complaint is that San Francisco's use of PG&E's transmission lines to deliver Hetch Hetchy power to its residents violates Section 6 of the Raker Act.⁵  They contend that they satisfy the first criterion in Cort v. Ash because they are the direct beneficiaries of the prohibitions of Section 6. More specifically, appellants note that Section 6 was intended to establish the Hetch Hetchy power resource as a competitor of private monopolistic suppliers of electric power to the Bay Area. Given this introduction of competition, electric rates would decrease for Bay Area consumers. Appellants find verbal nourishment for their position from a prior battle in the courts over the Hetch Hetchy grant. In United States v. City and County of San Francisco (1940), 310 U.S. 16, 60 S. Ct. 749, 84 L. Ed. 1050, the Court held that Section 6 requires the "sale and distribution of Hetch Hetchy power exclusively by San Francisco . . . directly to consumers in the belief that consumers would thus be afforded power at cheap rates in competition with private power companies, particularly Pacific Gas & Electric Company." (Id. at 26, 60 S. Ct. at 755.) The case documents Congress' intent in drafting the Raker Act to free San Francisco residents from the "galling bondage to a merciless taskmaster" and the "thralldom . . . (of) a remorseless private monopoly." (50 Cong.Rec. 4110 (1913) (remarks by Rep. Bailey).) (See, 310 U.S. at 22, 60 S. Ct. 749. ("From the congressional debates on the passage of the Raker Act can be read a common understanding both on the part of sponsors of the Bill and its opponents that the grant was to be so conditioned as to require municipal performance of the function of supplying Hetch-Hetchy water and electric power directly to the ultimate consumers, and to prohibit sale or distribution of that power and water by any private corporation or individual." (footnote omitted).); and 51 Cong.Rec. 343-47 (1913) (remarks of Sen. Norris)⁶ .)

The fact that Congress may have included the inhabitants of San Francisco among the beneficiaries of the Act does not imply that Congress intended to create a private cause of action in favor of those inhabitants. The legislative history of the Act reveals a careful consideration of the enforcement mechanism for the many conditions in the Hetch Hetchy grant. The primary concern of the debates was the relationship of the Federal Government vis-a-vis the State of California. That is, how should the Federal Government ensure that California would comply with the conditions to its grant of federal lands? Many congressmen suggested that an automatic forfeiture provision should be included in the grant. (See, 50 Cong.Rec. 4103-04 (1913).) But the suggestion was rejected as too harsh. (See, id. at 4105 ("(F)or heaven's sake, let us not add a clause so that if a horse takes a drink out of a creek or some one uses a little water or does something it may afford an excuse for some superserviceable United States attorney to jump in and declare forfeiture." (remarks by Rep. Taylor).).) The compromise that evolved was an amendment offered by Senator Raker himself which became Section 9(u) of the Act. That section provides that the Attorney General, at the request of the Secretary, may commence suit to enforce the Act if the grantee violates any of the conditions to the grant.⁷  An eleventh hour amendment offered by Representative Mondell, an opponent of the bill, which would have given "any party in interest" a right to enforce the Act⁸  was rejected with little debate. (See, 50 Cong.Rec. 3986-88 (1913).)⁹ 

Parallel to the legislative development of Section 9(u) was the concern over the protection of the pre-existing rights of certain irrigation districts. (See, 51 Cong.Rec. 297 (1913) (remarks by Sen. Borah); 50 Cong.Rec. 4109-11 (1913).) Section 10 of the Act¹⁰  was thus included to give those irrigation districts a specific cause of action to enforce their rights. At this juncture, Representative Mondell concluded that the enforcement provisions in the Act ruled out any other private cause of action:

"Now, there are conditions in this bill in which various parties will be interested; individuals, corporations, water districts, municipalities, and everybody in interest ought to have an opportunity to get into court and compel the enforcement of the provisions. The amendment offered by . . . (Mr. Raker) unfortunately would preclude or attempt to preclude them. So far as it has any force to prevent any party in interest from bringing suit unless they could persuade the Secretary of the Interior to bring a suit in their behalf it is wrong." (Id. at 4109.)

Appellants discount Representative Mondell's comments by arguing that his remarks arose in the context of an automatic forfeiture proposal; and as such, do not indicate any congressional intent to preclude their cause of action. The argument gives too little significance to Representative Mondell's assertions. While automatic forfeiture was considered as a device to enforce the Act, it was only one of several such devices. Senator Raker's amendment represents a compromise in light of all the possible means of enforcing the Act that were considered.¹¹  Representative Mondell's remarks were not merely a response to the automatic forfeiture proposal, but also to the administrative scheme ultimately chosen by Congress; i. e., Sections 9(u) and 10. The second criterion in Cort v. Ash thus denies the implication of a cause of action in favor of appellants.

Appellants' averments, read in the light of historical events that followed the passage of the Raker Act, reveal that appellants cannot meet the third and fourth criteria of Cort v. Ash. In 1913, Congress anticipated that San Francisco would shortly build its own transmission lines and that direct service to consumers would provide consumers with abundant power more cheaply than that supplied by private utilities. The congressional assumptions might have come true had the taxpayers seen it Congress' way in the decades that followed the Raker Act. But the taxpayers repeatedly refused to approve bond issues that would have supplied the revenue to build the transmission facilities.¹²  In the meantime, energy shortages, inflation and escalating costs of rights of way, of construction, and of the debt service have obliterated Congress' rosy vision of San Francisco's energy future. Even if we could reasonably assume that Bay Area taxpayers would now be willing to assume the debt burden to build these facilities, we cannot infer that energy delivered over those newly constructed lines would be cheaper than energy delivered over PG & E's lines. The rate structure for direct delivery would necessarily reflect the enormous costs involved in building the system. If any inference would be permissible, it would be that the cost of energy to the consumers would be more, not less, than that available under the present wheeling arrangements. In short, the dominant cheaper energy purpose of the Raker Act would be defeated, rather than fulfilled, if appellants were to be given the remedy they seek.

Of perhaps greater moment, the Act establishes a cooperative effort of the United States, acting through the Secretary, and the State of California in providing water and power to Bay Area inhabitants. Interpretation of the Raker Act and the use of federal lands is not an area "traditionally relegated to state law," but the Act's regulation of water and power delivery solely within the State of California legislates in an "area basically the concern of the States." As such, it speaks against implying a federal cause of action under the fourth criterion in Cort v. Ash. We are not insensitive to the appellants' concern that the Raker Act may have been violated, but we cannot ignore our duty under Cort v. Ash. Our weighing of the factors in that case necessitates our holding that appellants have no cause of action under the Raker Act.¹³ 

Appellants alternatively seek review under the Administrative Procedure Act ("APA"), which provides that a person "adversely affected or aggrieved by agency action within the meaning of a relevant statute" (5 U.S.C. § 702 (1967)) may seek judicial review of the agency action, unless such review is expressly precluded by statute or the "agency action is committed to agency discretion by law." (Id. at § 701(a).) Appellants claim that they are entitled to APA review of the Secretary's decision not to commence a suit against San Francisco under the enforcement powers given him by Section 9(u) of the Act. Appellants rely on the holding in United States v. City and County of San Francisco, supra, to allege that San Francisco is violating Section 6 of the Act and that the Secretary has no discretion; he has solely the duty to enforce the conditions in Section 6.¹⁴ 

Despite the sympathetic appeal of appellants' claim, appellants cannot prevail. They are not within the class of persons encompassed by the term of art, "a person aggrieved." The concept of "a person aggrieved" is a close relative of the doctrine of standing. (See Ass'n of Data Processing Organizations, Inc. v. Camp (1970) 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184; Sierra Club v. Morton (1972) 405 U.S. 727, 731-32, 92 S. Ct. 1361, 31 L. Ed. 2d 636; Hart and Wechsler, The Federal Courts and the Federal System, pp. 178-80 (2d ed. 1973). Claimants cannot be persons aggrieved unless "the challenged action had caused them 'injury in fact,' . . . (and) the alleged injury was to an interest 'arguably within the zone of interests to be protected or regulated' by the statutes that the agencies were claimed to have violated." (Sierra Club v. Morton, supra, at p. 733, 92 S. Ct. at p. 1365 (footnote omitted).)

Assuming, arguendo, that appellants can satisfy the "zone of interests" test as consumers of electric energy, they cannot allege an "injury-in-fact." Appellants claim that they have been injured by the Secretary's refusal¹⁵  to enforce Section 6 because their electricity rates would be lower if San Francisco did not use PG & E facilities to transmit Hetch Hetchy power.¹⁶  Although appellants may be injured by an increase in their utility rates, appellants must still show that the remedy they seek would cure the injury of which they complain. (See, Warth v. Seldin (1975) 422 U.S. 490, 505, 95 S. Ct. 2197, 2208, 45 L. Ed. 2d 343 (". . . When a governmental prohibition . . . imposed on one party causes specific harm to a third party, harm that a . . . statute was intended to prevent, the indirectness of the injury does not necessarily deprive the person harmed of standing to vindicate his rights. . . . But it may make it substantially more difficult to meet the minimum requirement of Art. III: to establish that, in fact, the asserted injury was the consequence of the defendants' actions, or that prospective relief will remove the harm."); Simon v. Eastern Kentucky Welfare Rights Organization (1976) 426 U.S. 26, 38, 96 S. Ct. 1917, 1924, 48 L. Ed. 2d 450 ("(W)hen a plaintiff's standing is brought into issue the relevant inquiry is whether . . . the plaintiff has shown an injury to himself that is likely to be redressed by a favorable decision. Absent such a showing, exercise of its power by a federal court would be gratuitous and thus inconsistent with the Art. III limitation." (footnote omitted).).)

Appellants have not made any showing that their rates would decrease if they were successful in this action. For the reasons that we have previously stated, we do not believe that the essential showing can be made. "Plaintiffs may not rely on 'the remote possibility, unsubstantiated by allegations of fact, that their situation . . . might improve were the court to afford relief.' " (Bowker v. Morton (9th Cir. 1976) 541 F.2d 1347, 1349.)

Similarly, appellants cannot show the essential causal link between their injury and the Secretary's alleged inaction. As the Supreme Court has recently said: "(T)he 'case and controversy' limitation of Art. III still requires that a federal court act only to redress injury that fairly can be traced to the challenged action of the defendant, and not injury that results from the independent action of some third party not before the court." (Simon v. Eastern Kentucky Welfare Rights Organization, supra, at pp. 41-42, 96 S. Ct. at p. 1926.) (See also, Warth v. Seldin, supra, at p. 509, 95 S. Ct. 2197; Bowker v. Morton, supra, at p. 1349 (". . . Compactly put, the test for standing . . . is that the plaintiffs must have alleged (a) a particular injury (b) concretely and demonstrably resulting from defendants' action (c) which injury will be redressed by the remedy sought." (footnote omitted).); Harrington v. Bush (D.C. Cir. 1977), 180 U.S.App.D.C. 45, 553 F.2d 190, 205-206, n. 68.) We cannot ignore the reality that the consumers' costs of energy are far more attributable to national and international forces of supply and demand than they are to the Secretary's actions and omissions in respect of Hetch Hetchy power. Nor do we have any basis to assume that appellants' energy woes will be cured by the remedy that appellants ask us to compel.

Our holding does not foreclose all avenues of relief from the Secretary's alleged inaction or from the claimed violation of the Raker Act. As we have seen in the Palo Alto case (9th Cir. 1977) 548 F.2d 1374, the Bay Cities may bring suit to enforce the Act if they otherwise present a justiciable claim.¹⁷  Appellants have made out what, at best, can be described as a tenuous allegation of "injury in fact." While that minimal showing might provide standing sufficient to challenge administrative action under another statutory scheme, it will not suffice under the Raker Act. Almost every section of that Act evidences the uneasy federal-state partnership controlling water and power delivery within California. Draftsmen of the Act established this delicate alliance and created a balance between federal and state control. To allow appellants to interfere with this schema on the basis of a minimal showing of injury would unnecessarily endanger the fragile structure that Congress built in the Raker Act.¹⁸ 

AFFIRMED.