Opinion ID: 810192
Heading Depth: 3
Heading Rank: 4

Heading: Waiver of Damages Provision

Text: Next, ICNU and PPC challenge the waiver-of-damages provision in the Alcoa Agreement which provides that, in the event a court renders any part of the agreement void or unenforceable, both BPA and Alcoa waive any right to seek damages or restitution. ICNU and PPC assert that BPA is constitutionally obligated to sue for any damages to which it is entitled, pursuant to Royal Indem. Co. v. United States, 313 U.S. 289 (1941), and Fansteel Metallurgical Corp. v. United States, 172 F. Supp. 268 (Ct. Cl. 1959).11 Petitioners are mistaken, however, as neither case involved a waiver of the right to seek damages. Royal Indemnity dealt with an IRS agent’s decision to release a surety bond before a taxpayer had paid his obligation in full. 313 U.S. at 292-93. The Court held that Congress alone holds the “[p]ower to release or otherwise dispose of the rights and property of the United States,” and that subordinate officers, such as the revenue agent at issue in the case, accordingly lacked the power to do so unless granted that power by the legislature. Id. at 294. In Fansteel (a nonprecedential district court case), the court held that the government has an obligation to recoup an unlawful overpayment for goods from a vendor. 172 F. Supp. at 270. [8] Neither case dealt with the situation present here, where an agency determined that a mutual release of future liability was in its interest. As BPA noted in its ROD, the BPA Administrator has broad powers to enter and modify contracts, including the power to compromise or settle claims. 11 PPC also asserts that BPA acted arbitrarily and capriciously by not determining whether Alcoa owed a refund to BPA under the prior contracts with Alcoa which were invalidated by PNGC I and II. We previously held that BPA’s failure to seek a refund from Alcoa on a prior contract was not a basis for invalidating a subsequent contract. PNGC II, 596 F.3d at 1081 n.11, 1086. Because the facts here are substantially identical to the facts at issue in PNGC II, we reach the same conclusion and reject PPC’s argument here. 12412 ALCOA, INC. v. BPA See 16 U.S.C. § 832a(f);12 see also id. § 839f(a); APAC, 126 F.3d at 1170-71. Because the damage waiver provision in the Alcoa Contract falls within such claim-settling authority, it does not violate either statutory or constitutional provisions. See Util. Reform Project v. BPA, 869 F.2d 437, 443 (9th Cir. 1989). We likewise reject ICNU’s argument that there is no basis for BPA’s conclusion that such a waiver is in BPA’s interest. The ROD states that the waiver will protect BPA from any damages claims that Alcoa might otherwise choose to pursue against BPA in the event of cancellation. It is not our place to second-guess the agency’s considered judgment regarding the balance of risks embodied in a damage waiver or similar release or settlement provision. See Cal. Wilderness Coal., 631 F.3d at 1084.