Alcoa, Inc. v. Bonneville Power Administration
698 F.3d 774
| 9th Cir. | 2012Background
- BPA entered into a contract with Alcoa, a Direct Service Industrial customer, pricing sales to Alcoa at the IP rate; the contract included an Initial Period followed by a potential Second Period.
- Petitioners (PNGC, ICNU, PPC, Northwest Requirements Utilities, Canby Utility) challenge the Alcoa Contract as inconsistent with sound business principles and statutory rate requirements.
- Alcoa separately petitions, arguing the court should reject the Equivalent Benefits standard as a precedent for the Second Period.
- The Initial Period priced power at the IP rate and BPA projected a modest net benefit (~$10,000) under the Equivalent Benefits framework.
- The May 2012 amendments eliminated references to the Second Period, and petitioners also challenge NEPA, the waiver of damages, and standing related to the Second Period.
- The court ultimately denied review of the Initial Period challenges, dismissed the Second Period challenge for lack of standing, and held BPA acted within its statutory authority and with respect to NEPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Initial Period challenges are moot | PNGC/ICNU argue the Initial Period is arbitrary and capricious | BPA contends the dispute is capable of repetition but evading review | Not moot; capable of repetition but evading review supports merits review |
| Whether BPA violated sound business principles by selling IP-rate power during the Initial Period | Petitioners contend IP-rate sale forewent market profits and harmed ratepayers | BPA exercised discretion under statutory framework; IP rate sale can be within sound business principles | No violation; BPA reasonably balanced costs and benefits; IP-rate sale upheld |
| Whether petitioners have standing to challenge the Second Period | Petitioners will be injured if Second Period begins, through higher rates | Contingent future event; no imminent injury; Second Period deleted by amendment | Petitioners lack standing; Second Period challenge dismissed |
| Whether BPA violated NEPA or fell within a categorical exclusion | NEPA requires an EIS; contract not categorically excluded | Record supports categorical exclusion; no significant environmental impact | NEPA claim rejected; categorical exclusion applicable |
| Whether the waiver of damages provision is lawful | BPA cannot waive recovery of damages | Agency has authority to settle claims and limit damages under contract | Waiver clause upheld as within agency authority |
Key Cases Cited
- Pacific Northwest Generating Coop. v. Dep’t of Energy (PNGC I), 580 F.3d 792 (9th Cir. 2009) (sets framework for sound business principles and IP-rate duties; BPA must recover costs and cannot subsidize DSIs)
- Pacific Northwest Generating Coop. v. Dep’t of Energy (PNGC II), 596 F.3d 1065 (9th Cir. 2010) (modifies earlier standard; discusses pay-to-Alcoa and monetary subsidies; emphasizes IP-rate floor and statutory limits)
- Ass’n of Pub. Agency Customers, Inc. v. BPA (APAC), 126 F.3d 1158 (9th Cir. 1997) (describes BPA’s marketing authority and statutory framework)
- Aluminum Co. of Am. v. BPA, 903 F.2d 585 (9th Cir. 1990) (limits BPA to cost-based rates and sound business principles within statutory framework)
- California Energy Res. Conservation & Development Comm. v. BPA, 754 F.2d 1470 (9th Cir. 1985) (discusses mootness and BPA contract challenges (environmental review context))