Court Opinion

ID: 150852
Source: CourtListenerOpinion
Date Created: 2010-07-16 20:10:30+00
Date Added: 2024-06-11T17:24:22.673225
License: Public Domain

FILED
                             NOT FOR PUBLICATION                            JUL 16 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                             FOR THE NINTH CIRCUIT

INDUSTRIAL CUSTOMERS OF                          Nos. 09-70290, 09-70390, and 09-
NORTHWEST UTILITIES, et al.,                     70393

              Petitioners,                       BPA Nos. TRM-12-A-01
                                                          TRM-12-A-02
ALCOA INC. and NORTHWEST
REQUIREMENTS UTILITIES,
                                                 MEMORANDUM *
              Intervenors,

  v.

BONNEVILLE POWER
ADMINISTRATION and THE UNITED
STATES DEPARTMENT OF ENERGY,

              Respondents.

                     On Petition for Review of an Order of the
                        Bonneville Power Administration

                        Argued and Submitted May 4, 2010
                                Portland, Oregon

Before: KLEINFELD, BEA and IKUTA, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

                                          1
      Petitioners, the Industrial Customers of Northwest Utilities, Georgia-Pacific,

LLC, and Clatskanie People’s Utility District, seek review of the Bonneville Power

Administration’s (“BPA”) Tiered Rate Methodology, as approved via the Tiered

Rate Methodology Record of Decision. Petitioners seek a ruling by this court that

the Tiered Rate Methodology Record of Decision be vacated and this case

remanded for further proceedings. They contend the decision violates the Pacific

Northwest Electric Power Planning and Conservation Act of 1980 (the “Northwest

Power Act”). The Tiered Rate Methodology sets a new method by which BPA will

calculate future rates charged to its customers when their current contracts expire.

      It is undisputed that the Tiered Rate Methodology Record of Decision is a

“final action” within the meaning of the Northwest Power Act, 16 U.S.C.

§§ 839–839h, which vests this court with original jurisdiction to review challenges

to final actions or the implementation of final actions by the BPA. 16 U.S.C.

§ 839f(e)(5).

      First, the petitioners challenge the Tiered Rate Methodology under section

7(b)(4) of the Northwest Power Act. 16 U.S.C. § 839e(b)(4). The petitioners

contend that the Tiered Rate Methodology will result in the BPA charging the

same market-based rate for some “contracted-for or committed-to” load as it

charges for new large single loads, thus violating a statutory mandate in the

                                          2
Northwest Power Act that such rates be different. See 16 U.S.C. § 839a(13). The

petitioners also contend that the resulting rates will not be of “general application.”

See 16 U.S.C. § 839e(b)(1).

      In determining whether a challenge is ripe for review, we must distinguish

“between challenges to contractual provisions on the grounds that those provisions

will affect future rate-making and cost allocation decisions, and challenges

premised on the contention that the agency lacks statutory authority to agree to

specific contractual terms.” Pacific Northwest Generating Co-op. v. Dep’t of

Energy, 580 F.3d 792, 806 n.20 (9th Cir. 2009). The former challenges constitute

rate determinations that are not ripe until “confirmation and approval by the

Federal Energy Regulatory Commission [“FERC”].” 16 U.S.C. § 839f(e)(4)(D);

see 16 U.S.C. § 839e(m)(2). The BPA has not set rates pursuant to the new Tiered

Rate Methodology, nor has FERC approved such rates or the method of calculating

those rates.

      Because the BPA has not yet completed a rate-making proceeding, and the

petitioners’ challenge under section 7(b)(4) is based on future rate-making and cost

allocation decisions, this challenge is not ripe for review. See California Energy

Res. Conserv. & Dev. Comm’n v. Johnson, 807 F.2d 1456, 1463 (9th Cir. 1986)

(“A decision at this juncture would resolve a dispute about hypothetical rates.”).

                                           3
Similar challenges were brought to a new method of calculating rates by the BPA

in 1983, again before the actual rates were set and approved by FERC. We

dismissed those petitions for lack of jurisdiction:

      The issue is whether we have jurisdiction to consider the petitions. 16 U.S.C.
      § 839f(e)(1) provides that only “final actions” are subject to judicial review,
      and lists “final rate determinations” as being among these reviewable
      actions. 16 U.S.C. § 839f(e)(4)(D) provides that rate determinations are
      final only upon confirmation by FERC. 16 U.S.C. § 839f(e)(5) gives
      jurisdiction to courts of appeals to hear suits challenging these final actions.
      Thus, unless there was a final action as of the date the petition was filed, we
      do not have jurisdiction.

City of Seattle v. Johnson, 813 F.2d 1364, 1367 (9th Cir. 1987) (per curiam). After

FERC approved the 1983 rates, we then had jurisdiction to hear the petitions for

review challenging such rates and the method under which those rates were

calculated. CP Nat’l Corp. v. Jura, 876 F.2d 745, 747 (9th Cir. 1989).1 Because

the petitioners’ challenge is not ripe for review, there is no “case or controversy”

and thus we have no jurisdiction to review the merits of the petitions. See U.S.

Const. art III, § 2, cl. 1; see CP Nat’l Corp., 876 F.2d at 747.

      Because the BPA has not yet completed a rate-making proceeding, and the

petitioners are not challenging an actual rate made in violation of a controlling

      1
         Even when rates are set by the BPA, they are not subject to our review
until approved by FERC. See Cal. Energy Res. Conserv. & Dev. Comm’n v.
Johnson, 767 F.2d 631, 634–35 (9th Cir. 1985); Cent. Lincoln Peoples’ Util. Dist.
v. Johnson, 735 F.2d 1101, 1109–10 (9th Cir. 1984).

                                           4
statute, these particular challenges are not ripe for decision. See Cal. Energy Res.

Conserv. & Dev. Comm’n v. Johnson, 807 F.2d at 1463 (“[a] decision at this

juncture would resolve a dispute about hypothetical rates.”). Because the petitions

are not ripe for review, there is no “case or controversy” and thus we have no

jurisdiction to review the merits of the petitions. See id.

       Second, Georgia Pacific contends that the Tiered Rate Methodology effects

an unconstitutional taking. Assuming without deciding that we otherwise have

jurisdiction over this claim under the Northwest Power Act and the Tucker Act, see

16 U.S.C. § 839f(e)(5); 28 U.S.C. § 1491(a)(1), we conclude that this claim also is

unripe. It is clear that any alleged taking resulting from a change in rates will not

occur until FERC approves such rates. See City of Seattle, 813 F.2d at 1367.

Thus, Georgia Pacific’s challenge is not ripe, and we lack jurisdiction to consider

it. See id.

       Once the BPA sets the new rates and FERC approves such rates, the

petitioners may be able to file new petitions for review with this court. See Pacific

Northwest Generating Co-op., 580 F.3d at 805–06 (quoting Pub. Utils. Comm’r of

Or. v. BPA, 767 F.2d 622, 629 (9th Cir.1985), for the proposition that a challenge

to the method of calculating rates, dismissed as unripe at this stage, could become

reviewable at a later date because “[i]f FERC fails to correct any defects in the

                                           5
methodology [which affected rate setting], redress is available in the court of

appeals,” where “any . . . cognizable challenges will be fully reviewable . . . .”); see

also id. at 806 n.20.

       Finally, the Industrial Customers contend that a provision of the Tiered Rate

Methodology that provides special treatment to the Department of Energy’s facility

at Richland, Washington and to a class of yet-to-exist public utilities is arbitrary

and capricious. Specifically, the BPA reserved Tier 1 rates for some amount of

unrealized load for these entities, while declining to “set aside power at Tier 1 rates

for . . . unrealized, nonexistent load” for all other customers. Because this claim

challenges the BPA’s authority to provide such differential treatment, and neither

challenges a rate established under the Tiered Rate Methodology nor requires

analysis of hypothetical characteristics of future rates, we conclude that it is ripe.

See id. at 806 n.20. Petitioners make no claim that provision of power to the

Richland facility and other public utilities will ineluctably deprive petitioners of

Tier 1 rates.

       This claim fails on the merits, however, because the BPA did not act

arbitrarily and capriciously. The BPA explained that “issues of national security,

nuclear management, Federal agency status . . . and actual construction and timing

of the load” justified special treatment of Department of Energy’s Richland

                                            6
facility. Likewise, as to the new public utilities, the BPA noted that reserving

some lower-cost federal power for those new market entrants would ensure that

federal power was “more widely available while providing planning certainty for

the amount of power BPA may need . . . in the future.”

      The BPA’s explanations are sufficient to satisfy its burden under the

Administrative Procedure Act, 5 U.S.C. §§ 701–06. The Industrial Customers

have failed to demonstrate that the BPA “has relied on factors which Congress has

not intended it to consider” or provided an explanation “so implausible that it could

not be ascribed to a difference in view or the product of agency expertise.”

Confederated Tribes of Umatilla Indian Reservation v. Bonneville Power Admin.,

342 F.3d 924, 928 (9th Cir. 2003) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc.

v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983)).

      Accordingly, we dismiss for lack of jurisdiction the petitioners’ challenge to

the Tiered Rate Methodology Record of Decision under section 7(b)(4) of the

Northwest Power Act, 16 U.S.C. § 839e(b)(4), as well as Georgia Pacific’s takings

claim. We deny the Industrial Customers’ challenge to the Tiered Rate

Methodology as arbitrary and capricious.

      PETITION No. 09-70290 DENIED IN PART and DISMISSED IN

PART; PETITIONS Nos. 09-70390, 09-70393 DISMISSED.

                                           7
8