Association of Public Agency Customers v. Bonneville Power Administration
733 F.3d 939
9th Cir.2013Background
- Bonneville Power Administration (BPA) markets federal hydro power in the Columbia River Basin and administers the Residential Exchange Program (REP) under the Northwest Power Act (NWPA). Disputes over a 2000 REP settlement were invalidated in PGE and Golden Northwest (9th Cir. 2007), prompting new rate proceedings.
- BPA and a large group of customers (covering ~94% of load) negotiated the REP-12 Settlement Agreement: a 17-year package that (1) fixes annual lump-sum REP benefits to IOUs, (2) prescribes a prospective methodology for §7(b) rate tests over the settlement term, and (3) provides refunds to preference customers (COUs) for prior overcharges.
- Association of Public Agency Customers (APAC), representing industrial end-users who buy from COUs (not directly from BPA), challenged the REP-12 Record of Decision (ROD) approving the Settlement, arguing it violated NWPA §§5(c) and 7(b), the Bonneville Project Act, FERC rules, and prior Ninth Circuit decisions.
- APAC supported standing with affidavits showing “cost-based pass-through” contracts: COUs pass BPA charges directly to APAC members. BPA and intervenors argued APAC lacks Article III standing because its members are indirect customers.
- The Ninth Circuit majority held APAC had constitutional and prudential standing based on pass-through contracts, but rejected APAC’s statutory and APA claims and upheld the REP-12 Settlement as lawful and not arbitrary or capricious. Judge Alarcón dissented, concluding APAC lacked Article III standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (Article III / prudential) | APAC: pass-through contracts make its members directly injured by BPA rates so APAC has standing | BPA/Intervenors: APAC members are indirect customers; injury flows from COUs, not BPA; no statutory right | Majority: APAC has standing (pass-through makes injury concrete, traceable, redressable; interests within NWPA zone). Dissent: APAC lacks standing (injury not a legally cognizable right; COUs’ independent choices break causation/redressability) |
| §5(c) — lump-sum REP benefits & IOU-specific calculation | APAC: Statute requires IOU-by-IOU calculation (traditional ASC - PF Exchange) and lump-sum violates §5(c) | BPA: §5(c) does not specify the exact rate formula; parties can accept less than maximum benefits; distributing a lawful aggregate among IOUs is permitted | Upheld: Lump-sum is lawful so long as aggregate REP does not exceed §7 limits and individual IOU distribution follows the settlement formula proportional to ASCs; agencies get Chevron deference |
| §5(c)(5) — waiver of in-lieu purchases | APAC: BPA unlawfully waived its §5(c)(5) authority to buy power in-lieu of exchanges (a statutorily available cost-control tool) | BPA: §5(c)(5) is discretionary (“may”); waiver is reasonable given capped aggregate benefits and trade-offs in settlement | Upheld: Waiver is within BPA discretion and reasonable here because the Settlement provides fixed aggregate protections and certainty; not an abuse of discretion |
| §7(b) — rate-test methodology and multi-year (17-year) projections | APAC: §7(b)(2) rate test must be done using five-year projections only; running 17-year prospective tests violates statute and can make the rate test superfluous | BPA: §7(b) silent on how far in advance tests can be run; agency reasonably ran prospective tests for the settlement term to assess protection for COUs | Upheld: BPA’s interpretation is reasonable under Chevron; prospective multi-year rate tests for settlement term are permissible; small unlikely adverse scenarios do not render the ROD unlawful |
| CRAC & cost-recovery protections | APAC: Settlement locks IOU REP benefits and prevents applying CRAC to those benefits, shifting risk to others | BPA: CRACs are discretionary rate tools, not statutory requirements; insulating IOUs from CRAC is a permissible trade-off given overall concessions | Upheld: Agency reasonably exercised discretion to exclude CRAC application to the fixed IOU benefits as part of settlement trade-offs |
Key Cases Cited
- Portland Gen. Elec. Co. v. Bonneville Power Admin., 501 F.3d 1009 (9th Cir. 2007) (struck 2000 REP settlement for failing to comply with §§5 and 7 of NWPA)
- Golden Northwest Aluminum, Inc. v. Bonneville Power Admin., 501 F.3d 1037 (9th Cir. 2007) (companion to PGE addressing improper cost allocation to preference customers)
- Central Ariz. Water Conservation Dist. v. U.S. EPA, 990 F.2d 1531 (9th Cir. 1993) (economic pass-through via contract can supply standing)
- Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837 (1984) (agencies get deference when statute ambiguous)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements: injury in fact, causation, redressability)
- Bennett v. Spear, 520 U.S. 154 (1997) (traceability/redressability principles for standing)
- Pub. Power Council v. Bonneville Power Admin., 442 F.3d 1204 (9th Cir. 2006) (deference to BPA’s ratemaking expertise)
- Cal. Energy Res. Conservation & Dev. Comm’n v. Johnson, 807 F.2d 1456 (9th Cir. 1986) (discussing in-lieu purchases and REP mechanics)