Text from Snopes:
This is a real photograph of an atmospheric phenomenon known as a circumhorizon(tal) arc, the example shown above was captured on camera as it hung for about an hour across a several-hundred square mile area of sky above northern Idaho (near the Washington border) on June 2006.
In general, a circumhorizontal arc (or "fire rainbow") appears when the sun is high in the sky (i.e., higher than 58 deg; above the horizon), and its light passes through diaphanous, high-altitude cirrus clouds made up of hexagonal plate crystals. Sunlight entering the crystals' vertical side faces and leaving through their bottom faces is refracted (as through a prism) and separated into an array of visible colors. When the plate crystals in cirrus clouds are aligned optimally (i.e., with their faces parallel to the ground), the resulting display is a brilliant spectrum of colors reminiscent of a rainbow.
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