Opinion ID: 3054141
Heading Depth: 2
Heading Rank: 1

Heading: introduction

Text: At their origins during the New Deal, the Bonneville Project’s hydroelectric operations in the Pacific Northwest, administered by the Bonneville Power Administration (“BPA”), were promoted as spreading the benefits of affordable federal power widely, to “the farmer and the factory, and 16522 PACIFIC NORTHWEST GENERATING v. DOE all of you and me.”2 At the same time, the Project gave a vital boost to the aluminum industry of the Pacific Northwest. Indeed, in the early days of the Project, what was good for BPA was good for the aluminum industry, and what was good for the aluminum industry was good for BPA. Aluminum manufacturers received low-cost federal hydroelectric power to operate energy-intensive smelting operations in the Pacific Northwest, and BPA gained a reliable market for a supply of electric power that otherwise greatly exceeded demand in a region where rural electrification was still a work in progress. See H.R. Rep. No. 96-976, pt. 2, at 27 (1980), as reprinted in 1980 U.S.C.C.A.N. 6023. BPA’s synergistic relations with the aluminum industry during this early period were widely seen as a public good. The aluminum manufacturers and the region’s nascent aviation industry, which they supplied, not only brought many high-wage jobs to the Pacific Northwest, but also served as a vital strategic asset for the United States during World War II and the Cold War decades that followed.3 Times have changed. Public utilities and electrical cooperatives serve a larger regional population with greater needs for electrical power, see id., to which they are statutorily guaranteed preferential access. See 16 U.S.C. § 832c(a).4 Rising 2 WOODY GUTHRIE, Grand Coulee Dam, on THE COLUMBIA RIVER COLLECTION (Smithsonian Folkways, 1988). Guthrie was commissioned by the federal Works Progress Administration in 1941 to write songs to promote the Bonneville Project. 3 “Now in Washington and Oregon you can hear the factories hum, making chrome and making manganese and light aluminum. And there roars the Flying Fortress now to fight for Uncle Sam, spawned upon the King Columbia by the big Grand Coulee Dam.” Guthrie, supra note 1. The aluminum-bodied B-17 “Flying Fortress” was the world’s first massproduced large aircraft, with wartime production levels in Boeing’s Seattle plant reaching a never-again-equaled sixteen planes per day. See ROBERT J. SERLING, LEGEND & LEGACY: THE STORY OF BOEING AND ITS PEOPLE 55 (1992). 4 Unless otherwise noted, all statutory citations are to Title Sixteen of the United States Code. PACIFIC NORTHWEST GENERATING v. DOE 16523 energy prices have made the relatively inexpensive federal power generated by BPA more attractive than ever, not only to BPA’s regional “ ‘preference’ customers,” Aluminum Co. of America v. Central Lincoln Peoples’ Util. Dist. (“Alcoa”), 467 U.S. 380, 384 (1984), but also to utilities outside the Pacific Northwest.5 At the same time, due to a variety of factors — among them higher energy costs — the region’s aluminum industry has fallen on hard times. The smelting operations of the major aluminum manufacturers, which traditionally ran on electric power purchased directly from BPA, are generally being operated at reduced capacity, and in some cases, have shut down entirely. This case centers on how much BPA can or must do, under the authority and mandate conferred upon it by Congress, to aid its longtime, but now ailing, customers. The assistance largely at issue here consists of three threeparty contracts BPA executed in June 2006, each with a local public utility company and one of the aluminum companies that are “direct service industrial” customers (“DSIs”) of BPA. In the contracts, BPA committed itself to make payments to the aluminum company DSIs (“aluminum DSIs”) totaling a maximum of $59 million per year for five years in lieu of supplying them with actual electrical power, while retaining the option to sell them physical power instead in the final two years. In addition, in September 2006, BPA arranged for the sale of physical power to Port Townsend Paper Company (“Port Townsend”), the sole existing DSI that is not an aluminum manufacturer, via a contract between BPA and a local utility company, Public Utility District Number 1 of Clallam County (“Clallam”), for the sale of physical 5 Numerous opinions of this Court “chronicle the history of BPA and describe the tangle of statutes that govern its operations.” Golden Nw. Aluminum, Inc. v. BPA, 501 F.3d 1037, 1041 (9th Cir. 2007) (citing cases). Accordingly, we confine our discussion to the particular facts relevant to this appeal. 16524 PACIFIC NORTHWEST GENERATING v. DOE power, which Clallam would then supply to Port Townsend. Challenges to these four contracts by aluminum DSI Alcoa; the Pacific Northwest Generating Cooperative, an organization of electrical cooperatives that are preference customers of BPA (collectively, “Cooperative”); and Industrial Customers of Northwest Utilities, an organization of firms which purchase electricity from utility companies, rather than directly from BPA (collectively, “Industrial Customers”), form the basis of the seven petitions that have been consolidated in this case. Both Port Townsend and the Public Power Council, an association of consumer-owned utilities, have intervened as interested parties.