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

Heading: BPA’s Allegedly Erroneous Calculations

Text: We next consider petitioners’ claims that BPA’s determination that it will net a $10,000 profit during the Initial Period is based on faulty calculations and a flawed methodology. Petitioners challenge BPA’s methodology on four main grounds: (1) BPA relied on faulty data regarding weather and water flows; (2) BPA erred in calculating the value of Alcoa’s power reserves; (3) BPA ignored forward market prices; and (4) BPA’s calculations erroneously relied on a “demand shift,” that is, the concept that by supporting Alcoa’s operations, BPA increases the demand for power, which in turn raises the price of power and increased BPA’s revenues from sales in the market. According to petitioners, these errors cast doubt on BPA’s cost-benefit calculations and indicate that BPA will fall grievously short of the breakeven point, thereby violating the Equivalent Benefits standard. We again approach these methodological challenges with deference to BPA’s decisionmaking. In reviewing agency decisions, we are “ ‘not empowered to substitute [our] judgment for that of the agency.’ ” Ranchers Cattlemen Action Legal Fund United Stockgrowers of Am. v. U.S. Dep’t of Agric., 415 F.3d 1078, 1093 (9th Cir. 2005) (quoting Ariz. Cattle Growers’ Ass’n v. U.S. Fish & Wildlife Serv., 273 F.3d 1229, 1236 (9th Cir. 2001)). “Deference to the informed discretion of the responsible federal agencies is especially appropriate, where, as here, the agency’s decision involves a high level of technical expertise.” Id.; see also Ctr. for Biological Diversity, 588 F.3d at 710-11. We begin by considering the challenges to BPA’s reliance on weather and water flow data. ICNU argues it was unreasonable for BPA to assume it would have a power surplus in every month of the Initial Period, given the unpredictability of weather and water levels. PNGC builds on these arguments. Although the Alcoa Contract was executed December 21, 2009, PNGC claims that later-collected water flow data ALCOA, INC. v. BPA 12409 (from May 2010) show that BPA’s estimates of likely power surpluses were inaccurate, thereby making it very likely that BPA will lose money during the Initial Period. PNGC also points to evidence from National Weather Service (NWS) reports that are not part of the Administrative Record, but we cannot consider new evidence on appeal that was not presented to BPA. In addition, PNGC cites NWS reports from December 17, 2009 (three days after Alcoa signed the contract and four days before BPA did so) and January 2010 that show increasingly severe water-flow conditions. The record reveals that BPA gave adequate consideration to these matters. The agency forecast that it would be able to supply Alcoa’s needs from its existing inventory (which otherwise would constitute surplus power), in all weather and flow conditions except “critical” situations. In so forecasting, it relied extensively on the 2009 Pacific Northwest Loads and Resources Study (2009 White Book) and BPA’s 2010 Loads and Resources Study (WP-10 Study). Both studies supported BPA’s prediction that it would have sufficient average power to serve the DSIs’ needs (though BPA acknowledged the possible need to make additional “balancing” purchases based on month-to-month assessments of loads and resources). Nor did BPA erroneously ignore potential El Niño weather conditions when making its forecasts, because the model it used to generate those predictions considered dry, normal, and wet weather patterns alike. [6] In sum, BPA’s analysis of these issues was thorough. No factor or argument identified by the petitioners went unaddressed in the ROD, and all of BPA’s explanations are plausible and rationally connected to the facts that were before it at the time. Moreover, to the extent PNGC’s claims are rooted in data that did not exist at the time BPA executed the contract, such data provides no support to PNGC’s argument that BPA failed to consider relevant information. See 16 U.S.C. § 839f(e)(2) (“The record upon review of such final actions shall be limited to the administrative record compiled in 12410 ALCOA, INC. v. BPA accordance with this chapter.”); Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985) (“[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.” (alteration in original) (quoting Camp v. Pitts, 411 U.S. 138, 142 (1973))); Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 519, 553-54 (1978).10 The petitioners fail to establish that BPA’s dry-weather projections omitted important information or that BPA erred in not placing greater weight on those projections. Accordingly, we reject the argument that BPA was arbitrary and capricious in its consideration of how weather and water flows would affect its profits during the Initial Period. [7] Second, PNGC argues that the terms of the Initial Period require BPA to subsidize Alcoa’s rate by providing a credit for Alcoa’s provision of contingency power reserves to BPA, even though BPA has a much larger, more efficient pool of power to draw on in an emergency: the Northwest Power Pool Reserves Sharing Group. Moreover, according to PNGC, Alcoa’s reserves may not even comply with mandatory quality standards. BPA also addressed these issues. It analyzed benefits from Alcoa’s required contribution to BPA’s power reserves according to a reasonable formula, and determined that the reserves complied with industry reliability criteria. The value to BPA of the power reserves it extracts from DSI customers is the kind of issue within the particular expertise of BPA and not easily susceptible to judicial second-guessing. See PNGC II, 596 F.3d at 1085. We are therefore unpersuaded by this challenge to BPA’s evaluation of power reserves. 10 We therefore deny as moot Alcoa’s motion to strike the portion of PNGC’s opening brief that presented this evidence. ALCOA, INC. v. BPA 12411