Opinion ID: 810192
Heading Depth: 3
Heading Rank: 5

Heading: Alcoa’s Challenge to the Initial Period

Text: [9] Having rejected the petitioners’ challenges to the terms of the Initial Period, we now turn to Alcoa’s challenge, namely, that it is arbitrary and capricious for BPA to refuse to sell power to DSIs at the statutorily mandated IP rate unless those sales will net at least as much profit as an open-market sale would achieve. Alcoa’s position rests on flawed factual and legal premises. First, there is no support in the record for Alcoa’s contention that BPA has refused to sell power unless the IP rate equals or exceeds the market rate for power. Indeed the petitioners claim that BPA could have sold the same surplus power on the open market for a higher price. 12 Section 832a(f) provides: Subject only to the provisions of this chapter, the Administrator is authorized to enter into such contracts, agreements, and arrangements, including the amendment, modification, adjustment, or cancel[l]ation thereof and the compromise or final settlement of any claim arising thereunder, and to make such expenditures, upon such terms and conditions and in such manner as he may deem necessary. ALCOA, INC. v. BPA 12413 [10] Second, BPA has no obligation to sell to Alcoa at all; if it decides to do so, it must exercise its judgment in accord with sound business principles, see PNGC I, 580 F.3d at 811-12. While in certain extreme circumstances we may conclude that BPA has strayed too far afield from businesslike operations, see PNGC II, 596 F.3d at 1073-74, in the ordinary case we will not usurp BPA’s judgment regarding whether to sell surplus power to DSIs, or on what terms. [11] The terms of the Initial Period here are within BPA’s discretion. Because BPA did not act arbitrarily and capriciously in entering into such terms, we need not decide whether the Equivalent Benefits Test, as an abstract proposition, is wholly in accord with BPA’s governing statutes. Moreover, we doubt that courts are well-suited to making such a categorical ruling; instead, we must evaluate whether BPA has violated its statutory obligation to adhere to sound business principles on a case-by-case basis. See Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 66 (2004). [12] Having considered all the petitioners’ and Alcoa’s specific challenges to the terms of the Initial Period, we conclude that BPA did not exceed its statutory authority, and therefore did not act arbitrarily and capriciously, by entering a contract under the terms prescribed for the Initial Period. We therefore deny the petitions for review insofar as they challenge the Initial Period of the agreement.