Source: https://law.justia.com/cases/federal/appellate-courts/F2/891/748/175837/
Timestamp: 2019-05-22 12:39:57
Document Index: 146515178

Matched Legal Cases: ['§ 832', '§ 839', '§ 839', '§ 839', '§ 837', '§ 837', '§ 839', '§ 839', '§ 839', '§ 824', '§ 300', '§ 839', '§ 839', '§ 839', '§ 839', '§ 839', '§ 839', '§ 839', '§ 825', '§ 839', '§ 839', '§ 839', '§ 839', '§ 839', '§ 839', '§ 839', '§ 839']

Aluminum Company of America; Arco Metals Company; Columbiafalls Aluminum Company, Petitioners,association of Public Agency Customers, Petitioner-intervenor, v. Bonneville Power Administration; Federal Energy Regulatorycommission, Respondents,portland General Electric Company; Puget Sound Power &light Company; Public Generating Pool (pgp),respondents-intervenors.california Energy Commission, Petitioner, v. Bonneville Power Administration; Federal Energy Regulatorycommission, Respondents.public Utilities Commission of the State of California;southern California Edison Company; Pacific Gas Andelectric Company; San Diego Gas & Electric Company;department of Water and Power of the City of Los Angeles, Etal., Petitioners, v. Bonneville Power Administration; Federal Energy Regulatorycommission, Respondents, 891 F.2d 748 (9th Cir. 1989) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1989 › Aluminum Company of America; Arco Metals Company; Columbiafalls Aluminum Company, Petitioners,associ...
Aluminum Company of America; Arco Metals Company; Columbiafalls Aluminum Company, Petitioners,association of Public Agency Customers, Petitioner-intervenor, v. Bonneville Power Administration; Federal Energy Regulatorycommission, Respondents,portland General Electric Company; Puget Sound Power &light Company; Public Generating Pool (pgp),respondents-intervenors.california Energy Commission, Petitioner, v. Bonneville Power Administration; Federal Energy Regulatorycommission, Respondents.public Utilities Commission of the State of California;southern California Edison Company; Pacific Gas Andelectric Company; San Diego Gas & Electric Company;department of Water and Power of the City of Los Angeles, Etal., Petitioners, v. Bonneville Power Administration; Federal Energy Regulatorycommission, Respondents, 891 F.2d 748 (9th Cir. 1989)
US Court of Appeals for the Ninth Circuit - 891 F.2d 748 (9th Cir. 1989)
Argued and Submitted March 9, 1989. Decided Dec. 11, 1989
BPA is a self-financing power marketing agency within the United States Department of Energy. The rates BPA receives for electricity and its transmission are BPA's only sources of revenue. Central Lincoln Peoples' Util. Dist. v. Johnson, 735 F.2d 1101, 1116 (9th Cir. 1984). Various federal acts require the BPA administrator periodically to revise rates to recover the capital costs and expenses associated with the Columbia River power system. 16 U.S.C. §§ 832f, 838g, 839e(a) (1) (1982). BPA is required to meet all interest and amortization payments owed to the United States Treasury for federal investments in BPA power and transmission systems. 16 U.S.C. §§ 839(4), 839e(a) (1).
BPA's combined generation and transmission facilities are known as the Federal Columbia River Power System. See 16 U.S.C. § 839a(10) (A). BPA also purchases energy from other utilities and accumulates it through conservation measures. Currently, BPA markets power generated at thirty federal hydroelectric projects and two nuclear plants, WPPSS Plant No. 2 and Trojan. The primary marketing area is the Pacific Northwest, comprised of the states of Washington, Oregon, and Idaho; Montana west of the Continental Divide; and the parts of Utah, Wyoming, and Nevada that are within the Columbia River drainage. 16 U.S.C. § 839a(14). BPA also markets power outside the Pacific Northwest, but only if it has the surplus energy to do so. 16 U.S.C. § 837a (1982). This energy is referred to as "nonfirm" energy, to distinguish it from the "firm" energy that BPA is required to provide to its Pacific Northwest customers first, pursuant to the Pacific Northwest Consumer Power Preference Act of 1964 (the Regional Preference Act), 16 U.S.C. §§ 837-837h (1982). Department of Water and Power of Los Angeles v. Bonneville Power Admin., 759 F.2d 684, 687 (9th Cir. 1985).
In Opinion No. 250, the full Commission modified and reversed the decision of the ALJ in part, and approved and confirmed NF-1 and 2 rates precisely as BPA had originally filed them. U.S. Dep't of Energy--Bonneville Power Admin., 36 F.E.R.C. p 61,335 (1986). Rate determinations become final upon confirmation and approval by FERC. 16 U.S.C. § 839e(a) (2); Central Lincoln, 735 F.2d at 1105. In Opinion No. 250-A, the Commission denied a petition for a rehearing.
The Regional Act provides a specific standard of review for final determinations of electric rates. This court must affirm the rates if "substantial evidence in the rulemaking record" supports BPA's determination. 16 U.S.C. § 839f(e) (2); Central Lincoln, 735 F.2d at 1116. We must also affirm the agency's action unless it is arbitrary, capricious, an abuse of discretion, or in excess of statutory authority. 16 U.S.C. § 839f(e) (2); California Energy Resources Conservation and Dev. Comm'n v. Bonneville Power Admin., 831 F.2d 1467, 1472 (9th Cir. 1987), cert. denied, --- U.S. ----, 109 S. Ct. 58, 102 L. Ed. 2d 36 (1988).
We defer to the interpretation of a statute by the agencies charged with administering it. Southern Cal. Edison Co. v. FERC, 770 F.2d 779, 782 (9th Cir. 1985). Because BPA drafted the Regional Act, its interpretation is to be given "great weight" and should be upheld if reasonable. Aluminum Co. of America v. Central Lincoln Peoples' Util. Dist., 467 U.S. 380, 389-90, 104 S. Ct. 2472, 2479, 81 L. Ed. 2d 301 (1984); California Energy Resources Conservation and Dev. Comm'n v. Johnson, 807 F.2d 1456, 1459 (9th Cir. 1986). In a complex ratemaking case such as this, we also defer to FERC's substantial expertise in approving and confirming BPA's rates. See Papago Tribal Util. Auth. v. FERC, 773 F.2d 1056, 1058 (9th Cir. 1985) (deference given to FERC in ratemaking under the Federal Power Act, 16 U.S.C. §§ 824 et seq.), cert. denied, 475 U.S. 1108, 106 S. Ct. 1515, 89 L. Ed. 2d 913 (1986). However, the courts are the final authorities on issues of statutory construction. They must reject administrative constructions of a statute that are inconsistent with the statutory mandate or that frustrate the policy Congress sought to implement. Southern Cal. Edison, 770 F.2d at 782.
BPA argues the California utilities do not have standing because they saved a windfall $1.5 billion by voluntarily purchasing BPA surplus energy. This contention is without merit. To have standing, a petitioner must show the challenged action caused them "injury in fact;" that the injury was within the "zone of interests" to be protected by the statutes that were allegedly violated, Starbuck v. City and County of San Francisco, 556 F.2d 450, 458 (9th Cir. 1977) (citing Sierra Club v. Morton, 405 U.S. 727, 733, 92 S. Ct. 1361, 1365, 31 L. Ed. 2d 636 (1972)), and that the relief sought would cure the injury. Id. at 458 (citing Warth v. Seldin, 422 U.S. 490, 505, 95 S. Ct. 2197, 2208, 45 L. Ed. 2d 343 (1975); Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 96 S. Ct. 1917, 1924, 48 L. Ed. 2d 450 (1976)).
While BPA agrees the California utilities' claims are within the "zone of interests" to be protected by section 7(k) of the Regional Act, it claims the utilities lack standing because they failed to allege any injury. However, the California utilities do allege an injury: excessive electricity rates due to costs that should not have been included in the NF-1 and 2 rate schedules. There is harm in paying rates that may be excessive, no matter what the California utilities may have saved. Further, if the utilities are correct, the relief sought would cure their injury: they will receive a refund of overpayments with interest. 18 C.F.R. § 300.20(c) (2) (1984). Therefore, the utilities have standing.
As we see it, there are four arguments against FERC's authority to hold a separate evidentiary hearing. First, subsection (i) describes the procedures the BPA Administrator must follow to establish rates. 16 U.S.C. § 839e(i). The subsection requires BPA to hold one or more hearings "to develop a full and complete record." 16 U.S.C. § 839e(i) (2). No party disputes that these hearings are to be evidentiary. See 16 U.S.C. §§ 839e(i) (2) (A), (B); 16 U.S.C. § 839e(i) (3). The rates are then proposed by BPA and published in the Federal Register, after which additional hearings subject to the same procedures may be held. 16 U.S.C. § 839e(i) (4). Then, the BPA Administrator makes a final decision based on the record, which "shall include a full and complete justification of the final rates...." 16 U.S.C. § 839e(i) (5). Therefore, section 7(k)'s statement that FERC review shall be based upon "the record of proceedings established under subsection (i) of this section" limits FERC review to the BPA record.
Second, this court's review is to be based solely on the BPA record. Section 839f(e) (2) of the Regional Act specifies that the scope of our review of "final determinations regarding rates under section 839e of this title shall be supported by substantial evidence in the rulemaking record required by section 839e(i) of this title considered as a whole." 16 U.S.C. § 839f(e) (2) (emphasis added). It would be anomalous for this court to consider another record established by FERC given this statutory mandate.
United States v. City of Fulton, 475 U.S. 657, 663, 106 S. Ct. 1422, 1426, 89 L. Ed. 2d 661 (1986). Although City of Fulton does not interpret section 7(k), but rather section 5 of the Flood Control Act of 1944, 16 U.S.C. § 825s, this decision provides some guidance on FERC's role in reviewing proposed rates. City of Fulton describes how hydroelectric rates are developed by the Power Marketing Administrations (PMAs)8 and are then approved on an interim basis by the Assistant Secretary of Energy before final confirmation and approval by FERC. Id. at 662-63, 106 S. Ct. at 1425-26.
On the other hand, a literal reading of the last sentence of section 7(k) appears to allow an evidentiary hearing before FERC, because the additional hearing section 7(k) provides for under the procedures of the Federal Power Act is a de novo proceeding in which FERC takes evidence. Southern Cal. Edison, 770 F.2d at 784 n. 3. However, this interpretation is at odds with the statement that FERC review "shall be based on the record of [the BPA proceedings]." 16 U.S.C. § 839e(k). It does not comport with FERC's limited role to approve and confirm BPA's rates, especially when it may lead to the introduction of evidence that BPA did not consider. A "basic rule of statutory construction is that one provision should not be interpreted in a way which is internally contradictory or that renders other provisions of the same statute inconsistent or meaningless." Hughes Air Corp. v. Public Util. Comm'n, 644 F.2d 1334, 1338 (9th Cir. 1981).
Although the Regional Act is no model of clarity, and the question is close and very difficult, we are persuaded that FERC should not have held this evidentiary hearing upon review of the nonfirm rates because FERC thought the BPA record was inadequate and wanted to supplement it. See 23 F.E.R.C. p 61,469, at 62,024. Congress designed the Act to prevent protracted legal challenges to BPA's ratemaking decisions. Central Lincoln, 735 F.2d at 1114. This objective is not served by multiple evidentiary hearings at different agencies. FERC's interpretation is unreasonable in light of the Act as a whole, because that interpretation renders meaningless the Regional Act's provisions for BPA to develop "a full and complete record," 16 U.S.C. § 839e(i) (2); for BPA to come to a final decision based on the record, which includes a complete justification for the rates, 16 U.S.C. § 839e(i) (5); and for FERC review and approval "based on the record of [BPA's] proceedings established under [16 U.S.C. § 839e(i) ]." 16 U.S.C. § 839e(k).11
Our interpretation will also prevent parties from sitting out the BPA hearings, as happened here, in contravention of the Regional Act. Moreover, this interpretation does not make insignificant the requirement that BPA develop a complete record for FERC review, or render meaningless the additional hearing before FERC provided for by section 7(k). See Hughes Air Corp., 644 F.2d at 1338; Ruiz v. Morton, 462 F.2d 818, 820 (9th Cir. 1972) ("statutes are to be given, wherever possible, 'such effect that no clause, sentence or word is rendered superfluous, void, contradictory or insignificant' " (quoting Rockbridge v. Lincoln, 449 F.2d 567, 571 (9th Cir. 1971)), aff'd, 415 U.S. 199, 94 S. Ct. 1055, 39 L. Ed. 2d 270 (1974). It does not alter FERC's scope of review. We note that the House Committee Report on section 7(k) states that: "FERC's review will be based on the BPA record and on any subsequent FERC proceedings." H.R.Rep. No. 976, 96th Cong., 2d Sess., pt. 1, at 70 (1980), U.S.Code Cong. & Admin.News 1980, p. 5989. See 23 F.E.R.C. p 61,469, at 62,025 n. 2.
The California parties present the same arguments on appeal that FERC has decided. They cite to nothing in the statute that requires the alternatives to BPA's cost allocation they propose, nor have they demonstrated that FERC's decisions were either unreasonable or were unsupported by evidence in the record. In light of section 7(k)'s mandate that rates be set with regard to the recovery of the cost of generation and transmission of electric energy, FERC's approval of BPA's decision to charge full costs to nonregional customers was reasonable and was amply supported by the record. Thus, the California parties may not complain that they are not getting the protection from BPA bias that section 7(k) was enacted to prevent. As long as an agency has considered all the relevant factors and has rationally exercised its discretion in deciding matters of law, there is no reason to disturb its conclusions. Pacific Gas and Elec. Co. v. FERC, 746 F.2d 1383, 1386 (9th Cir. 1984).
FERC determined that Congress wanted the costs of this subsidy to be borne by the direct service industrial customers. It found that although the Act itself did not specify which customers should share in the cost of the program, legislative history stated Congress' preference: "The loss in revenue to the Administrator is in effect returned by the higher direct service industry rates." 36 F.E.R.C. p 61,335, at 61,812 (quoting H.R.Rep. No. 96-976, pt. I, p. 29 (1980)). This court has also observed that " [t]he cost of this 'money-losing program' ... is largely borne by BPA's direct-service industrial customers." California Energy, 807 F.2d at 1460 (citing 16 U.S.C. § 839e(c) (1)). Therefore, we find that the costs of the residential exchange program are not to be assessed against nonfirm energy customers. We adopt FERC's findings and conclusions on this issue.
The Northwest parties contend the Regional Act mandates BPA to design rates in such a way as to recover its costs. They argue the rates should allow for above-cost rates to offset any sales that are below cost. Otherwise, they claim, the firm customers of BPA are forced to subsidize the nonfirm customers, because less is subtracted from total system costs to determine the firm customers' final share. The Northwest parties contend the Regional Act precludes firm customers from having to subsidize nonfirm customers by limiting firm rates to the cost of resources needed to serve their loads. See 16 U.S.C. § 839e(b) (1). The Northwest parties seek a declaration that section 7(k) requires BPA to recover its cost of service, market conditions permitting.
The main issue is whether and to what extent the Regional Act and the Acts incorporated in 7(k) limit BPA's authority to design nonfirm energy rates that may lose money. The ALJ for FERC concluded that there "was no excuse for BPA not designing its nonfirm rates so as to recover the costs fairly allocated to nonfirm energy from nonfirm energy users." 29 F.E.R.C. p 63,039, at 65,113. He concluded that " [t]his failure was a violation of the statutory standard respecting 'the lowest possible rates to consumers consistent with sound business principles.' " Id.
The Regional Act does not set forth how BPA must design its rates to conform to the four standards it must follow, or how costs are to be allocated between regional and nonregional customers. In the absence of a clear legislative command, we must consider whether BPA's rates for nonfirm energy " 'represent [ ] a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute.' " City of Fulton, 475 U.S. at 667, 106 S. Ct. at 1428 (quoting Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 845, 104 S. Ct. 2778, 2783, 81 L. Ed. 2d 694 (1984)). BPA has three conflicting obligations under the prior statutes that section 7(k) incorporates. First, it must protect consumers by ensuring that power is " 'sold at the lowest possible rates ... consistent with sound business principles.' " Id. 475 U.S. at 668, 106 S. Ct. at 1428 (quoting United States v. Tex-La Elec. Co-op, Inc., 693 F.2d 392, 399-400 (5th Cir. 1982)). Second, BPA must "protect the public fisc by ensuring that federal hydroelectric programs recover their own costs and do not require subsidies from the federal treasury." Id. (citing the legislative history of the Bonneville Project Act). Third, BPA must encourage the most widespread use of energy. The Regional Act does not state that any one of these obligations is more important than the others.
The residential exchange program provides that any Northwest utility with high system costs may sell power to BPA at their average system cost, then purchase from BPA an equal quantity of low cost federal power. The benefits are to be passed on directly to the residential customers. California Energy Resources Conservation and Dev. Comm'n v. Johnson, 807 F.2d 1456, 1460 (9th Cir. 1986). The cost is borne by BPA's direct-service industrial customers. Id. (citing 16 U.S.C. § 839e(c) (1))
" [FERC] has also specified that the nonregional rates it reviews under Section 7(k) must be 'fair and reasonable.' " California Utilities Opening Brief at 19.
BPA is the "biggest and most important" of the five PMAs. United States v. Tex-La Elec. Co-op., Inc., 693 F.2d 392, 394 n. 3 (5th Cir. 1982)
FERC responded " [t]here may be merit to BPA's argument that such an additional hearing need not be an evidentiary hearing and that the mandate of [section 7(k) ] may be fulfilled, instead, by providing the parties with the opportunity to file briefs of written comments." 23 F.E.R.C. p 61,469, 62,024 (1983). Nevertheless, FERC decided to hold an evidentiary hearing to supplement the record, attempting to avoid duplication of the BPA record. Id
The opinion FERC cites, Pacific Gas & Elec. Co. v. FERC, 746 F.2d 1383 (9th Cir. 1984), to show that FERC has discretion to decide the type of hearing, is distinguishable. That case arose under the interpretation of a contract for transmission service, not under section 7(k)