Opinion ID: 2735161
Heading Depth: 3
Heading Rank: 2

Heading: The Alcoa Amendment (PNGC II)

Text: As it turned out, the physical power sale option in the Block Contracts was never exercised. Instead, after PNGC I, BPA entered into an amended contract with Alcoa (“the Alcoa Amendment”) in which it again agreed to subsidize Alcoa rather than sell it power directly. Specifically, “BPA agreed voluntarily to make a nearly $32 million cash ‘benefit’ payment” to Alcoa during fiscal year 2009, which Alcoa could use to “purchase power from one of BPA’s competitors.” PNGC II, 596 F.3d at 1068–69.3 BPA argued that this subsidy was necessary to avoid interruption of Alcoa’s smelter operations; would assure the continued existence of the DSI load (which had historically benefitted BPA in various ways); and was only an interim fix before BPA could carry out the full administrative process needed to respond to the remand issues in PNGC I. Id. at 1081–84. Once again, BPA’s priority customers filed a legal challenge, and once again we invalidated the subsidy, holding 3 BPA entered into a substantially similar amended contract with CFAC, not challenged before this court. ICNU V. BPA 15 that “BPA’s justifications for this unusual transaction . . . [did] not demonstrate that the transaction was ‘consistent with sound business principles,’ as required by BPA’s governing statutes.” Id. at 1068–69. We rejected BPA’s proffered rationales as irrelevant to BPA’s statutory mandate, unsupported by record evidence, or illogical. As clarified by PNGC I, we stated, BPA has no obligation to contract with Alcoa at all, much less “to provide [a] voluntary gift [to Alcoa] that will lead to higher rates for its other customers” and effectively subsidize its competitors. Id. at 1080–84. We went on to explain that protecting jobs within the region, however laudable a goal, is not among the purposes that Congress has authorized BPA to pursue. Id. at 1082. We suggested, however, that a “decision to sell physical power to Alcoa,” as opposed to merely providing monetary benefits, “might produce a different result.” Id. at 1085. Finally, like the earlier PNGC I opinion, PNGC II declined to compel BPA to recover any payments it had already made to Alcoa. See id. at 1086. Instead, in part because the PNGC I remand remained pending, we remanded “to BPA to determine whether and how it [would] seek a refund from Alcoa.” Id.