Court Opinion

ID: 4078919
Source: CourtListenerOpinion
Date Created: 2016-10-03 15:01:28.765727+00
Date Added: 2024-06-11T14:33:15.186927
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

    PACIFIC GAS AND ELECTRIC COMPANY,
  SOUTHERN CALIFORNIA EDISON COMPANY,
    SAN DIEGO GAS & ELECTRIC COMPANY,
PEOPLE OF THE STATE OF CALIFORNIA EX REL.
 EDMUND G. BROWN JR., ATTORNEY GENERAL
  OF THE STATE OF CALIFORNIA, CALIFORNIA
 DEPARTMENT OF WATER RESOURCES, BY AND
      THROUGH ITS CALIFORNIA ENERGY
     RESOURCES SCHEDULING DIVISION,
              Plaintiffs-Appellants

                           v.

                  UNITED STATES,
                  Defendant-Appellee
                ______________________

                      2015-5082
                ______________________

    Appeal from the United States Court of Federal
Claims in Nos. 1:07-cv-00157-SGB, 1:07-cv-00167-SGB,
1:07-cv-00184-SGB, Judge Susan G. Braden.
                ______________________

                    October 3, 2016
                ______________________

    CARTER GLASGOW PHILLIPS, Sidley Austin LLP, Wash-
ington, DC, argued for plaintiffs-appellants. Also repre-
2                        PACIFIC GAS AND ELECTRIC CO.   v. US

sented by TOBIAS SAMUEL LOSS-EATON, QUIN M.
SORENSON; MARIE L. FIALA, San Francisco, CA; STAN
BERMAN, Seattle, WA.

    JANE IRENE RYAN, Steptoe & Johnson, LLP, Washing-
ton, DC for plaintiff-appellant Southern California Edison
Company. Also represented by HEATHER HORNE.

    MARK FOGELMAN, Friedman & Springwater, LLP, San
Francisco, CA, for plaintiff-appellant San Diego Gas &
Electric Company. Also represented by RUTH STONER
MUZZIN.

    GARY ALEXANDER, Office of the Attorney General, Cal-
ifornia Department of Justice, San Francisco, CA, for
plaintiffs-appellants People of the State of California Ex
Rel. Edmund G. Brown, Jr., Attorney General of the State
of California, California Department of Water Resources.

    JAMES R. SWEET, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washing-
ton, DC, argued for defendant-appellee. Also represented
by BENJAMIN C. MIZER, ROBERT E. KIRSCHMAN, JR.,
MARTIN F. HOCKEY, JR.; MARK WILLIAM PENNAK, Appellate
Staff, Civil Division, United States Department of Justice,
Washington, DC.

    CANDACE J. MOREY, California Public Utilities Com-
mission, San Francisco, CA, for amicus curiae Public
Utilities Commission of the State of California. Also
represented by AROCLES AGUILAR.

   JAMES BRADFORD RAMSAY, National Association of
Regulatory Utility Commissioners, Washington, DC, for
amicus curiae National Association of Regulatory Utility
Commissioners.
                 ______________________
PACIFIC GAS AND ELECTRIC CO.   v. US                      3

    Before NEWMAN, DYK, and WALLACH, Circuit Judges.
    Opinion for the court filed by Circuit Judge DYK.
   Dissenting opinion filed by Circuit Judge NEWMAN.
DYK, Circuit Judge.
    Pacific Gas and Electric Company, Southern Califor-
nia Edison Company, San Diego Gas & Electric Company,
and the state of California (collectively, “appellants”),
brought suit against the United States claiming that two
federal government agencies selling electricity (the West-
ern Area Power Administration and the Bonneville Power
Administration) (collectively, “the government”) over-
charged appellants for electricity.
     The United States Court of Federal Claims (the
“Claims Court”) dismissed their breach of contract action
for lack of standing. Appellants appeal. We conclude that
appellants lack privity of contract or any other relation-
ship with the government that would confer standing.
Because appellants lack standing, we affirm. This does
not, however, suggest that appellants were without a
remedy for the alleged overcharges against the parties
with whom they are in contractual privity—two California
electricity exchanges—or that the exchanges lacked a
breach of contract remedy for overcharges against the
government agencies that sold them electric power.
                       BACKGROUND
                               I
    Under the Tucker Act, the Claims Court has jurisdic-
tion over contract cases in which the government is a
party. See 28 U.S.C. § 1491(a)(1); Gonzales & Gonzales
Bonds & Ins. Agency v. Dept. of Homeland Sec., 490 F.3d
940, 943 (Fed. Cir. 2007). Normally, a contract between
the plaintiff and the United States is required to establish
4                         PACIFIC GAS AND ELECTRIC CO.   v. US

standing to sue the government on a contract claim. S.
Cal. Fed. Sav. & Loan Ass’n v. United States, 422 F.3d
1319, 1328 (Fed. Cir. 2005) (“A plaintiff must be in privity
with the United States to have standing to sue the sover-
eign on a contract claim.”).
    This case involves the purchase and sale of electricity
in the California market. Appellants contend that they
were overcharged for electricity during the period from
October 2, 2000, to June 20, 2001 (“the 2000–2001 peri-
od”), and seek to recover the overcharges from the United
States based on sales by two federal government agen-
cies—the Western Area Power Administration (“WAPA”)
and the Bonneville Power Administration (“BPA”). Two
exchanges were involved in these transactions—the
California Power Exchange (“Cal-PX”) and the California
Independent System Operator (“Cal-ISO”). These ex-
changes were responsible for acquiring and distributing
electricity between producers and consumers in California
and setting prices for the electricity. The basic question is
whether purchase and sale contracts existed between the
exchanges, on the one hand, and the appellants and
defendant government agencies, on the other, or whether
the contracts were between the appellants and the gov-
ernment agencies—the consumers and producers of
electric power. If the contracts were between the ex-
changes and market participants individually, appellants’
remedy is against the exchanges. If the contracts were
between the consumers and producers of electricity,
appellants’ remedy is against the government producers.
    Appellants contend that a contract existed between
two groups—one group consisting of all consumers of
electricity (including appellants) and the other group
consisting of all producers of electricity (including the
government agencies) in California. Under appellants’
theory, appellants and all other power consumers are in
privity of contract with all producers in the California
PACIFIC GAS AND ELECTRIC CO.   v. US                     5

markets, including the government sellers. The govern-
ment, on the other hand, contends that the contracts were
only between the middleman entities that facilitated and
operated the California electricity markets—Cal-PX and
Cal-ISO—and the consumers and producers individually.
Under the government’s theory, appellants are in privity
of contract with Cal-PX and Cal-ISO, and the government
is also in privity of contract with Cal-PX and Cal-ISO, but
appellants are not in privity with the government.
                               II
    On the face of it, the only contracts here were between
the exchanges—Cal-PX and Cal-ISO—and individual
market participants (the consumers and producers). Both
of these exchanges entered into individual contracts with
each of the consumers and producers of electricity. The
basis for appellants’ alternative theory requires some
understanding of the background.
    In the late 1990s, California restructured and deregu-
lated its energy market. In 1996, California established
two non-profit organizations to acquire and distribute
electricity and to otherwise organize and supervise all of
the wholesale energy transactions in the state. One non-
profit, Cal-PX, was designed to facilitate and conduct all
wholesale electric power transactions for the state of
California. Cal-PX’s responsibilities included, inter alia,
collecting supply and demand bids from sellers and buy-
ers of wholesale electricity respectively, processing those
bids to develop aggregate supply and demand curves from
the total pool of bids received, setting a market clearing
price based on the intersection point of the aggregate
supply and demand curves, preparing financial settle-
ments by issuing statements to all market participants,
establishing a calendar for payment, and settling pay-
ment individually with each market participant by debit-
ing or crediting its Cal-PX account. Cal-PX was also
6                        PACIFIC GAS AND ELECTRIC CO.   v. US

responsible for determining the proper distribution of
funds in the event of an overpayment, collecting the
overpaid funds from the overpaid participants, and remit-
ting those funds to the market participants who overpaid.
    The other exchange, Cal-ISO, was established to as-
sume operational control over all of California’s electric
transmission facilities and ensure supply and demand on
a real-time basis. Cal-ISO was responsible for, inter alia,
operating the transmission grid, ensuring the necessary
supply of energy, maintaining nondiscriminatory access to
the grid, purchasing and providing ancillary services, and
maintaining a real-time spot market for electricity to
balance out any last-minute disparities between supply
and demand in the Cal-PX market. In this regard, Cal-
ISO operated as a back-up to the primary Cal-PX market
for wholesale energy.
    Cal-PX and Cal-ISO filed tariffs with the Federal En-
ergy Regulatory Commission (“FERC”), the independent
federal agency with regulatory authority over the inter-
state sale of all wholesale electricity and transmission
service. The tariffs (“Cal-PX Tariff” and “Cal-ISO Tariff,”
respectively) established the terms and conditions of
service and rates for the California markets. The Cal-PX
Tariff and the Cal-ISO Tariff both contained clauses
known in the industry as Memphis clauses, which pre-
served the ability of consumers and producers in the
California markets to exercise their rights under the
Federal Power Act (“FPA”) to petition FERC for a change
in the terms or rates of the tariffs.
    All consumers and producers of wholesale energy in
the California markets entered into individual agree-
ments with Cal-PX and Cal-ISO, known as participation
agreements.     Every Cal-PX participation agreement
incorporated the Cal-PX Tariff, and every Cal-ISO partic-
ipation agreement incorporated the Cal-ISO Tariff. None
PACIFIC GAS AND ELECTRIC CO.   v. US                     7

of the consumers and producers of wholesale energy
purported to contract directly with one another; rather,
all participants in the California markets executed sepa-
rate participation agreements with Cal-PX and Cal-ISO
only. Indeed, individual contracts between consumers
and producers were not feasible since electricity is fungi-
ble, and purchases and sales of electricity could not be
traced to particular consumers and producers in the
California markets.
    Appellants entered into participation agreements
with Cal-PX and Cal-ISO shortly after California deregu-
lated the market to purchase electricity. WAPA and BPA,
the defendant federal power-producing administrations,
also executed participation agreements with Cal-PX and
Cal-ISO. No agreements were executed between appel-
lants and the federal agencies. In 1999, the government
agencies began selling energy into the California markets
through Cal-PX and Cal-ISO, along with many other
sellers. Appellants were among the many consumers of
that energy.
    To transact energy in California, potential consumers
and producers submitted bids to Cal-PX to buy or sell
wholesale electric power. Based on all of the bids re-
ceived, Cal-PX compiled supply and demand curves to
calculate a “market price” that it then applied uniformly
to all transactions within a given market. Consumers
paid Cal-PX, which organized and disbursed the funds to
sellers in proportion to the amount of energy each sup-
plied. Consumers never paid producers directly. Cal-ISO
operated in a similar fashion. In this way, Cal-PX and
Cal-ISO served as exchanges or centralized clearinghous-
es, acquiring electric power from producers and distrib-
uting it to consumers and otherwise facilitating wholesale
energy transactions for market participants pursuant to
the conditions and constraints imposed by the governing
tariffs.
8                         PACIFIC GAS AND ELECTRIC CO.   v. US

    As a result of the method of pricing in the California
energy market, appellants contend that they and each of
the many other consumers were overcharged for purchas-
es during the 2000–2001 period, allegedly as a result of
improper pricing mechanisms. Cal-PX set prices on an
hourly basis to satisfy short-term demand for “spot mar-
kets.” While Cal-PX also set prices over a larger period
for long-term or “forward contract” markets, most pur-
chases and sales were in the spot markets. Pac. Gas &
Elec. Co. v. United States, 122 Fed. Cl. 315, 322–23
(2015). Appellants and other consumers became subject
to unstable spot market purchases. “Sellers quickly
learned that the California spot markets could be manipu-
lated by withholding power . . . to create scarcity and then
demanding extremely high prices when scarcity was
probable.” Pub. Utilities Comm’n of Cal. v. FERC, 462
F.3d 1027, 1039 (9th Cir. 2006). By May 2000, the price
of wholesale power in the California markets doubled.
Blackouts rolled across the state as it descended into an
energy crisis.
     By August 2000, appellants and all other consumers
were charged prices three to four times greater than the
market rates of less than a year earlier. Appellants
believed the rates established by the exchanges were
unjust and unreasonable. Appellants sought relief by
filing a complaint with FERC, which, with respect to non-
government entities, has the authority to set an effective
date, determine whether rates charged after that date are
unjust and unreasonable, and order refunds for rates
charged after that date if it determines that they are
unjust and unreasonable. Here, FERC set an effective
date of October 2, 2000, determined that rates charged
after that date were unjust and unreasonable, and or-
dered that refunds be paid by all sellers in the California
market.
    A series of appeals to the Ninth Circuit ensued. As is
PACIFIC GAS AND ELECTRIC CO.   v. US                       9

relevant here, the Ninth Circuit held that FERC lacked
jurisdiction to order the government to pay refunds,
Bonneville Power Admin. v. FERC, 422 F.3d 908, 926 (9th
Cir. 2005), a determination that is not now contested.
This was so because government agencies are not subject
to FERC jurisdiction, as § 201(f) of the Federal Power Act
makes clear: “No provision of this subchapter shall apply
to . . . the United States . . . or any agency, authority, or
instrumentality [thereof].” 16 U.S.C. § 824(f); see also
Bonneville, 422 F.3d at 920. Although FERC lacked the
authority to order the government to pay refunds, the
Ninth Circuit upheld FERC’s ability to find the rates
charged by all sellers, including the government agencies,
to be unjust and unreasonable. See City of Redding v.
FERC, 693 F.3d 828, 841 (9th Cir. 2012) (explaining that
to the extent that FERC revised or reset the market rate
for the 2000–2001 period, this was within FERC’s author-
ity, as it “necessarily involved reevaluating the price
previously charged by all market participants because the
market clearing price was the same for all of them”).
    Since FERC lacked jurisdiction to order refunds by
the government, 1 appellants brought this breach of con-
tract action in the Claims Court, alleging that the gov-
ernment producers had breached agreements between the
consumers and producers by overcharging appellants and
all other consumers and by failing to pay a refund for
unjust and unreasonable prices charged during the 2000–

    1    Later, in August 2005, Congress passed legisla-
tion to amend FERC’s § 206 refund authority, extending it
to cover certain federal entities if they voluntarily make
short-term sales of electricity of more than 8 million MWh
per year. See Energy Policy Act of 2005, Pub. L. No. 109-
58, § 1286, 119 Stat. 594, 981; see also Bonneville, 422
F.3d at 921 n.10. This legislation is inapplicable here.
10                        PACIFIC GAS AND ELECTRIC CO.   v. US

2001 period.
    After a trial, Judge Smith found in favor of appel-
lants. See Pac. Gas & Elec. Co. v. United States, 105 Fed.
Cl. 420, 440 (2012). Judge Smith held that “the facts at
trial showed that the Agencies contracted with and owe
contract obligations to [appellants].” Id. at 432. In his
view, Cal-PX and Cal-ISO “were pass-through entities or
clearinghouses” only, and he therefore concluded that “the
payment obligations were between the buyer [consumer]
and seller [producer].” Id. at 432–33. Judge Smith fur-
ther held that the government had breached its contract
with appellants by failing to pay refunds. See id. at 439–
40.
     Before the damages-phase proceedings began, Judge
Smith retired from the bench. His successor, Judge
Braden, vacated Judge Smith’s opinions and dismissed
the case for, inter alia, lack of standing. Pacific Gas, 122
Fed. Cl. at 329–335, 343. Judge Braden held that while
appellants were in privity of contract with the exchanges,
they lacked privity with the government. See id. at 331.
Judge Braden further held that appellants failed to
demonstrate the existence of an agency relationship
between the government and the exchanges, see id. at
334–35, and failed to demonstrate that appellants were
third-party beneficiaries of the government’s contracts
with the exchanges, see id. at 332–34. 2 This appeal
followed. We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(3).

     2  Judge Braden additionally held that the Claims
Court lacked subject matter jurisdiction, see id. at 336–37,
and that, assuming appellants have standing, appellants’
breach of contract claim failed on the merits, see id. at
341–43. In light of our resolution based on standing, we
need not address these other issues.
PACIFIC GAS AND ELECTRIC CO.   v. US                      11

                        DISCUSSION
                               I
    Appellants first contend that Judge Braden violated
the law of the case doctrine by vacating Judge Smith’s
rulings.
    According to appellants, the law of the case doctrine
“counsels particular caution when one judge is asked—or,
as here, decides sua sponte—to reconsider her predeces-
sor’s decisions.” Br. of Appellants at 32–33. Appellants
assert that this case should be remanded because Judge
Braden’s decision to reconsider Judge Smith’s decisions
constituted an abuse of discretion.
    But the dispositive issue addressed on reconsideration
here—standing—is a pure issue of law, which we review
de novo. See S. Cal. Fed. Sav. & Loan Ass’n, 422 F.3d
1319, 1328 (Fed. Cir. 2005). 3 And the question of stand-
ing here depends on contract interpretation, which also is
a question of law that we review de novo. See, e.g., S.
Nuclear Operating Co. v. United States, 637 F.3d 1297,
1301 (Fed. Cir. 2011). Indeed, appellants agree that
“Judge Braden’s specific errors in interpreting the con-
tracts and the Ninth Circuit’s decisions were purely legal,
and are therefore subject to plenary review.” Br. of Appel-
lants at 62 n.11. Judge Smith’s contract interpretation
was also legal in character. Judge Smith made no rele-

    3    See also DaimlerChrysler Corp. v. Cuno, 547 U.S.
332, 340 (2006) (Every court has an “obligation to assure
[itself] of litigants’ standing under Article III.” (internal
quotation marks and citation omitted)); Am. Canoe Ass’n
v. Murphy Farms, Inc., 326 F.3d 505, 515 (4th Cir. 2003)
(“Article III standing in particular . . . represents perhaps
the most important of all jurisdictional requirements.”
(internal quotation marks and citation omitted)).
12                        PACIFIC GAS AND ELECTRIC CO.   v. US

vant findings of fact with respect to interpretation of the
contract provisions at issue. 4 See, e.g., Thatcher v. Kohl’s
Dept. Stores, Inc., 397 F.3d 1370, 1373 (Fed. Cir. 2005).
Accordingly, even if appellants could demonstrate that
Judge Braden erred in reconsidering Judge Smith’s
interlocutory decisions, they have suffered no prejudice,
since our review of both decisions of the Claims Court is
de novo. We thus proceed to consider the issue of stand-

     4   Appellants contend that “evidence of trade prac-
tice and custom plays an important role in contract inter-
pretation,” Metric Constructors, Inc. v. Nat’l Aeronautics
& Space Admin., 169 F.3d 747, 752 (Fed. Cir. 1999), and
therefore that Judge Smith’s consideration of testimony
regarding the “industry’s established understanding of
the tariff language,” in particular with respect to the
Memphis clauses, is owed deference. Reply Br. of Appel-
lants at 6. Appellants rely heavily on testimony of their
former employees and former employees of Cal-PX as to
the significance of various tariff provisions, but appellants
point to no testimony that establishes “a contract term
having an accepted industry meaning different from its
ordinary meaning” of the sort required for evidence of
trade practice to be relevant in contract interpretation.
See, e.g., TEG-Paradigm Envtl., Inc. v. United States, 465
F.3d 1329, 1338 (Fed. Cir. 2006) (internal quotation
marks and citation omitted).
    The extrinsic evidence presented in this case simply
established that the Memphis clauses were understood in
the industry as meaning what they said: market partici-
pants retained authority to petition FERC for a determi-
nation of whether the prices charged were just and
reasonable, a finding that is not relevant to the issue
before us, as discussed below. The issue of contract
interpretation here remains a pure question of law which
we review de novo.
PACIFIC GAS AND ELECTRIC CO.   v. US                      13

ing. S. Cal. Fed. Sav. & Loan Ass’n, 422 F.3d at 1328.
                               II
     As noted above, typically “[t]o have standing to sue
the sovereign on a contract claim, a plaintiff must be in
privity of contract with the United States,” Anderson v.
United States, 344 F.3d 1343, 1351 (Fed. Cir. 2003), and
“[s]tanding is a threshold jurisdictional issue that impli-
cates Article III of the Constitution.” S. Cal. Fed. Sav. &
Loan Ass’n, 422 F.3d at 1328. “Not only is privity a
fundamental requirement of contract law, but it takes on
even greater significance in cases such as this, because
the ‘government consents to be sued only by those with
whom it has privity of contract.’” Id. (quoting Erickson
Air Crane Co. of Wash. v. United States, 731 F.2d 810, 813
(Fed. Cir. 1984)). “The effect of finding privity of contract
between a party and the United States is to find a waiver
of sovereign immunity.” Cienega Gardens v. United
States, 194 F.3d 1231, 1239 (Fed. Cir. 1998). We do not
lightly presume that the government’s actions give rise to
contractual obligations when the government is not a
named party to the contract in dispute. See United States
v. Algoma Lumber Co., 305 U.S. 415, 421 (1939).
    Limited exceptions to the privity requirement have
been recognized when a “party standing outside of privity
by contractual obligation stands in the shoes of a party
within privity,” such as when a party can demonstrate
that it was an intended third-party beneficiary under the
contract, see, e.g., First Hartford Corp. Pension Plan & Tr.
v. United States, 194 F.3d 1279, 1289 (Fed. Cir. 1999), or
when a party can demonstrate that a prime contractor
acted as purchasing agent on behalf of the government in
contracting with a subcontractor. See Nat’l Leased Hous.
Ass’n v. United States, 105 F.3d 1423, 1435–36 (Fed. Cir.
1997); United States v. Johnson Controls, Inc., 713 F.2d
1541, 1551 (Fed. Cir. 1983).
14                        PACIFIC GAS AND ELECTRIC CO.   v. US

                            III
    We first address the issue of contractual privity, ad-
dressing later in this opinion appellants’ alternative
theories of agency and third-party beneficiary. The
government argues that the only contracts for the pur-
chase and sale of electricity here were between each
market participant and the exchanges. We agree. There
is no question that each of the many buyers and sellers
entered into contracts with the exchanges. Each individ-
ual participant in the California markets executed a
contract with one or both exchanges incorporating the
relevant tariff. Each contract described the parties as
being the individual participant and the exchange only.
For example, BPA’s contract with Cal-PX explicitly pro-
vided that “THIS AGREEMENT . . . is entered into, by
and      between:     (1)     BONNEVILLE         POWER
ADMINISTRATION . . . and (2) THE CALIFORNIA
POWER EXCHANGE CORPORATION.” J.A. 424. No
parties other than the individual participant and the
relevant exchange were listed on any contract.
    While the Uniform Commercial Code (“UCC”) does not
apply directly to government contracts, see, e.g., GAF
Corp. v. United States, 932 F.2d 947, 951 (Fed. Cir. 1991),
the UCC “provides useful guidance in applying general
contract principles,” Hughes Commc’ns Galaxy, Inc. v.
United States, 271 F.3d 1060, 1066 (Fed. Cir. 2001); see
also Diversified Energy, Inc. v. Tenn. Valley Auth., 339
F.3d 437, 446 n.9 (6th Cir. 2003); Tech. Assistance Int’l,
Inc. v. United States, 150 F.3d 1369, 1372 (Fed. Cir.
1998). The parties appear to agree that the provision of
electricity involves the sale of a good which would invoke
the UCC. See, e.g., Br. of Appellants at 41 (“Here . . . the
Agencies sold the power itself—which is personal property
under [41 U.S.C.] § 7102(a)(4) . . . .”). Indeed, we would
lack jurisdiction under the Contract Disputes Act if the
contracts were interpreted as involving the provision of
PACIFIC GAS AND ELECTRIC CO.   v. US                        15

services rather than goods. See 41 U.S.C. § 7102(a).
Under the Supreme Court’s decision in United States v.
Eurodif, S.A., the fact that electricity is fungible suggests
that the exchanges bought from and sold electricity to
market participants, rather than merely facilitating a
transfer between producers and consumers. See 555 U.S.
305, 319–20 (2009) (explaining that a transaction involv-
ing a fungible product is more likely to be viewed as the
sale of a good as opposed to the sale of a service). 5
     On the face of the agreements, the exchanges were
performing a typical middleman function with respect to
transactions in goods as described in commentary on the
UCC. See Lary Lawrence, 2 Lawrence’s Anderson on the
Uniform Commercial Code, §§ 2-103:18, 103:44 (3d ed.
2012). Under typical middleman contracts, “courts will
treat as a buyer [and seller] a middleman who contracts
for the sale of goods to be delivered to a third person.”
Lawrence, at § 2-103:18; see also id. at §§ 2-103:19,
103:44–45. Though the title to the electricity passes
directly from producers to consumers, the UCC makes
quite clear that this is not inconsistent with a middleman
contract for purchase and sale. “A middleman making a
contract . . . is a ‘seller’ for the purpose of Article 2, even
though the middleman does not have, [nor] will ever have,
title to the goods, as title is to pass directly from the

    5    Some cases suggest that the provision of water or
electricity involves the provision of services, see, e.g.,
Mattoon v. City of Pittsfield, 775 N.E.2d 770, 783 (Mass.
App. Ct. 2002) (water); Sterling Power Partners, L.P. v.
Niagara Mohawk Power Corp., 657 N.Y.S.2d 407, 407
(App. Div. 1997) (electricity), but often such suggestion
arises only because courts have concluded that the provi-
sion of water or electricity involves both a service and a
good. E.g., Mattoon, 775 N.E.2d at 783.
16                        PACIFIC GAS AND ELECTRIC CO.   v. US

supplier to the customer of the middleman.” Id. at § 2-
103:45.
      The incorporated tariffs confirm this reading. On
their face the tariffs contemplate that the exchanges will
acquire energy from the producers and transfer it to the
consumers. See, e.g., S.A. 15 (“[Cal-PX] shall . . . allocate
to PX Participants costs incurred by the PX under this
Tariff and the ISO Tariff in . . . buying or selling Energy
. . . .” (emphasis added)); S.A. 119 (“The PX shall settle
with each PX Participant for Energy traded . . . . Each PX
Seller shall be credited with an amount equal to its
scheduled sales of Energy . . . . Each PX Buyer shall be
debited by the PX with an amount equal to its scheduled
purchase of Energy . . . .” (emphasis added)); S.A. 337
(Cal-ISO “shall purchase Ancillary Services capacity.”
(emphasis added)); S.A. 513 (“Unstructured Imbalance
Energy attributable to each [market participant] for each
Settlement Period in the relevant Zone shall be deemed to
be sold or purchased, as the case may be, by the ISO . . . .”
(emphasis added)); S.A. 519; S.A. 339; S.A. 381.
    The tariffs do not just contemplate that the exchanges
will provide and distribute electric power; rather, they
also contemplate that the exchanges will set the price of
the electricity itself. See, e.g., J.A. 456. The tariffs were
also clear that in the event of an overcharge by the pro-
ducers (the allegation here), the producers were obligated
to make payment to the exchange, not the consumers
directly. See, e.g., S.A. 59 (“Each PX Participant acknowl-
edges that it incurs separate financial obligations to the
PX in respect to its PX Core Market Transactions . . . .
All PX Participants shall honor their obligations to pay all
of the amounts owed to the PX in a timely manner.” (em-
phasis added)); S.A. 60 (“If for any reason a PX Creditor
receives on any Payment Date more than the amount to
which it is entitled under the PX Tariff, . . . [it] shall
forthwith pay the excess amount into a PX Account speci-
PACIFIC GAS AND ELECTRIC CO.   v. US                       17

fied by the PX.” (emphasis added)); S.A. 528–29 (“If for
any reason . . . a [market participant] receives an over-
payment . . . [it] shall forthwith pay the overpayment into
an ISO Account specified by the ISO.”); S.A. 529 (“The
ISO shall be responsible for payment to those entitled to
the sum which has been overpaid.”).
    This arrangement is confirmed by other provisions of
the tariffs concerning settlement obligations. With re-
spect to payment, for example, the Cal-PX Tariff explains
that “[t]he PX shall settle with each PX Participant for
Energy traded in the PX Markets in the manner set forth
in Schedule 6.” J.A. 466 (emphasis added). Neither tariff
contemplates direct payment from consumers to produc-
ers, or vice versa; indeed, such payment would be impos-
sible because specific buyers were never matched with
and could not be identified by specific sellers. Instead,
Cal-PX allocated payment and energy in proportion to the
bids submitted by each participant. Cal-PX was responsi-
ble for calculating, collecting, and disbursing all payments
for energy on the market. “The PX shall (1) calculate the
prices at which trades in Energy are transacted in the PX
Markets, (2) settle trades in Energy between PX Partici-
pants, (3) . . . allocate to PX Participants costs incurred by
the PX under this Tariff . . . [and] (4) prepare and dis-
tribute to PX Participants invoices . . . .” J.A. 456. The
same was true with respect to Cal-ISO.
     Appellants argue that these participant/exchange con-
tracts nonetheless should not be interpreted as contracts
for the purchase and sale of goods because of two types of
provisions appearing in the tariffs. First, there is a
provision in the Cal-PX Tariff which purports to limit the
exchange’s role in the energy transactions: Cal-PX “will
not be, and shall not be deemed to be, a counterparty to
18                        PACIFIC GAS AND ELECTRIC CO.   v. US

any trade transacted through the PX Markets.” J.A. 457. 6
The meaning of this provision in the Cal-PX Tariff is
unclear. “Counterparty” is defined as “the party with
whom one is consummating a contract.” Counterparty,
Black’s Law Dictionary (10th ed. 2014). But it is undis-
puted here that Cal-PX contracted directly with each
market participant. In saying that the exchange is not a
counterparty to any “trade,” the above provision appears
only to provide that Cal-PX did not take title to any of the
energy transferred. As described, this is consistent with
Cal-PX’s role as a middleman. See Lawrence, at § 2-
103:44.
     In any event, the counterparty provision cannot be
read to bar the existence of a purchase and sale contract
between the exchanges and each individual market par-
ticipant, because such a provision would directly conflict
with all of the provisions discussed above which clearly
contemplate that Cal-PX, as middleman, contracted for
the purchase and sale of electricity. When there is an
apparent conflict between contractual provisions, we
“enforce the clause[s] relatively more important or princi-
pal to the contract.” 11 Williston on Contracts § 32:15
(4th ed. 2016). Thus, for example, in Oleson v. Bergwell,
283 N.W. 770 (Minn. 1939), the court held that a contract
containing many provisions contemplating the outright
sale of stock should be construed to provide for a sale even
though the agreement stated that it “shall be deemed and
considered by the parties as an option to purchase.” Id. at

     6  As discussed below in section VIII, there are also
provisions that are claimed to create an agency relation-
ship. These provisions do not prevent the existence of
purchase and sale contracts between the exchanges and
individual market participants, but rather form the basis
of appellants’ argument regarding agency.
PACIFIC GAS AND ELECTRIC CO.   v. US                       19

772 (emphasis added). Because “the principal purpose of
this contract was to effectuate a sale,” id. at 773, the court
treated the contract as a sales contract. See id.; see also
Nicholas Acoustics & Specialty Co. v. H & M Constr. Co.,
695 F.2d 839, 843 (5th Cir. 1983) (enforcing the “domi-
nant” of two conflicting contract provisions by considering
the “tenor” of the agreement as a whole).
    Here, the lone provision cited by appellants purport-
ing to limit Cal-PX’s role is vastly outweighed in both
number and significance by the other provisions of the
tariff, which clearly establish Cal-PX’s role as a middle-
man purchasing and selling electricity. Accordingly, we
do not read the counterparty provision as disclaiming the
existence of a middleman contract for the purchase and
sale of electricity. There is, moreover, no similar provi-
sion in the Cal-ISO Tariff.
    Second, appellants rely on provisions that appear to
contemplate that suits may be brought by one participant
against another. Significantly, as described below, these
provisions do not suggest that the groups of all consumers
and producers are collectively liable to each other, as
appellants contend. In any case, these provisions hardly
suggest that suits may not be brought by participants
against the exchanges or that there are no purchase and
sale contracts between the market participants and the
exchanges. Indeed, as described below, the tariffs make
clear that the exchanges had remedies against defaulting
participants. 7

    7   There are also provisions in the tariffs which limit
the exchanges’ liability to acts of negligence or intentional
wrongdoing. See S.A. 30 (Cal-PX “shall not be liable in
damages to any PX Participant for any losses, damages,
claims, liability, costs or expenses (including legal ex-
20                        PACIFIC GAS AND ELECTRIC CO.   v. US

    We conclude that the contracts between the exchang-
es and the participants are middleman contracts for the
purchase and sale of electricity.
                            IV
    Appellants nonetheless contend that the above events
should be construed as involving contracts directly be-
tween the groups of purchasers and consumers of electric-
ity in the California markets. Appellants concede that
there are no individual agreements between consumers
and producers. The only documents that purport to be
contractual agreements are the agreements between the
exchanges and the consumers and producers of electricity.
As discussed, those agreements on their face are agree-
ments between a particular consumer or producer and
each exchange. Appellants’ theory is instead that the
agreement of each of the consumers and producers to
abide by the tariff creates an agreement between all
consumers, on the one hand, and all producers, on the
other. No written document purports to be such an
agreement, and the various provisions on which appel-
lants rely cannot be read to create such an agreement.
    Appellants originally argued that the Memphis claus-
es in the Cal-PX and Cal-ISO tariffs (incorporated into
each individual contract) somehow established a contrac-
tual obligation by the government agencies to pay refunds
in accordance with the FERC order to appellants. Appel-

penses) arising from the performance or non-performance
of its obligations under this Tariff, except to the extent
that they result from negligence or intentional wrongdo-
ing on the part of [Cal-PX].”); S.A. 550 (same for Cal-ISO).
We need not decide what limitations these provisions
might impose on the ability of the consumers to recover
from the exchanges.
PACIFIC GAS AND ELECTRIC CO.   v. US                    21

lants have now abandoned this argument, and wisely so.
The Memphis clauses simply provide that “[n]othing
contained in this Tariff or any service or participation
agreement shall be construed as affecting, in any way, the
ability of any PX Participant receiving service under this
Tariff to exercise its rights under Section 206 of the FPA
and pursuant to FERC’s rules and regulations promulgat-
ed thereunder.” J.A. 471; see also J.A. 1040 (Cal-ISO
Tariff). While the Memphis clauses preserve the market
participants’ rights to petition FERC to limit unjust and
unreasonable rates pursuant to the FPA, such rights do
not extend from one market participant to another, and
cannot be construed as the source of any contractual
obligation between market participants.
    Instead of relying on the Memphis clauses, appellants
now primarily rely on the overpayment provisions. See
S.A. 60 (“The PX shall be responsible for ascertaining the
identity of those PX Participants entitled to receive
amounts overpaid to another PX Participant and for
disbursing those funds to the persons entitled to them
promptly after they are returned in accordance with
Section 4.3.3 above.”); S.A. 529 (“The ISO shall be respon-
sible for payment to those entitled to the sum which has
been overpaid.”). But such provisions provide that a
payment obligation exists only between the market partic-
ipants and the exchanges, not between consumers and
producers directly. As discussed above, if a market partic-
ipant learned that it had received excess payment, the
tariffs make clear that it was obligated to return those
funds “into a PX Account specified by the PX.” J.A. 501;
see also J.A. 1015–16 (Cal-ISO Tariff). In other words,
excesses owed were to be paid back to Cal-PX or Cal-ISO,
not to the parties directly. Thus, it was the exchanges
that were “responsible for ascertaining the identity of
those PX Participants entitled to receive amounts over-
paid” and for “disbursing those funds to the persons
22                          PACIFIC GAS AND ELECTRIC CO.   v. US

entitled to them,” J.A. 501, not the other market partici-
pants, see also J.A. 1015–16 (Cal-ISO Tariff). Cal-PX and
Cal-ISO were solely responsible for collecting from the
overpaid participant and remitting proportionately to all
owed participants. Contrary to appellants’ characteriza-
tion, this arrangement creates no obligations directly
between buyers and sellers.
    Nor do the provisions of the tariffs concerning possible
legal action between market participants suffice to create
a contract. At most there are provisions in the Cal-ISO
Tariff which contemplate suit between market partici-
pants. See S.A. 529 (“Each ISO Creditor shall give notice
to the ISO before instituting any action or proceedings in
any court against an ISO Debtor to enforce payments due
to it.”); S.A. 530 (“The ISO shall, on request, certify in
writing the amounts owed by an ISO Debtor that remain
unpaid and the ISO creditors to whom such amounts are
owed and shall provide [a certificate which] . . . may be
used as prima facie evidence of the amount due by an ISO
Debtor to ISO Creditors in any legal proceedings.”). The
Cal-PX Tariff contains no such provision, but provides
that Cal-PX will identify a defaulting market participant
to other affected participants. See S.A. 64 (Cal-PX “will
identify the defaulting Participant to all other affected PX
Participants by the most expeditious means available.”).
These provisions do not purport to create a right of action
by one market participant against another, nor do they
create any payment obligation between market partici-
pants. These provisions do not support appellants’ theory
of collective liability, and fall well short of creating obliga-
tions between consumers and producers.
    Finally, the tariffs explicitly grant the exchanges
remedies against a defaulting participant. “If the PX
Participant fails to pay any sum or to perform any other
obligation to the PX . . . when due, then the PX may, in its
sole discretion and without further notice to the default-
PACIFIC GAS AND ELECTRIC CO.   v. US                     23

ing PX Participant or regard to formalities of any kind,
pursue all remedies under [this] Section,” J.A. 504–05
(emphasis added), including the right to “recoup, set-off
and apply any amount to which any defaulting PX Partic-
ipant is entitled towards satisfaction of any of that PX
Participant’s debts,” S.A. 68. See also J.A. 501–03; J.A.
1013–14 (Cal-ISO Tariff). The tariffs provide that Cal-PX
“and PX Participants . . . may be parties to a dispute [in
arbitration]” arising under the contracts, arbitration
being the specified dispute resolution mechanism. S.A.
141; see also S.A. 536 (Cal-ISO). Accordingly, these
provisions concerning possible legal action between con-
sumers and producers do not create a contract between
groups of consumers and producers.
     Quite apart from the lack of any written document re-
flecting an agreement between buyers and sellers, the
alleged agreements cannot satisfy the requirement of
reasonable certainty applicable to the essential terms of
all contracts. See Restatement (Second) of Contracts
§ 131 (Am. Law. Inst. 1981) (a contract within the Statute
of Frauds must “state[] with reasonable certainty the
essential terms of the unperformed promises in the con-
tract,” and the “parties must be reasonably identified”); 10
Williston on Contracts, § 29:8 (a contract “must contain
the essential or material terms . . . including the parties,
the subject matter, a description of the property or goods
affected, and in at least some jurisdictions, the price or
consideration and an indication that the parties have
mutually assented to the terms of the agreement”); see
also U.C.C. § 2-201 (Am. Law Inst. & Unif. Law Comm’n
1977) (“[A] contract for the sale of goods . . . is not en-
forceable . . . unless there is some writing sufficient to
indicate that a contract for sale has been made between
the parties and signed by the party against whom en-
forcement is sought.”). Although under the UCC an
omitted term does not necessarily render a sales contract
24                        PACIFIC GAS AND ELECTRIC CO.   v. US

unenforceable, see § 2-204(3), “it is still necessary for the
person claiming the benefit of the contract to establish
that, in fact, there was a contract and to establish its
terms,” 2 Lawrence, § 2-201:15. There is no basis here for
determining the groups that are supposed parties to the
contracts at any particular time or the particular obliga-
tions that each group owes to the other. Nor is there any
basis for determining the duration or other material
terms of the alleged agreement(s). The certainty required
for the existence of a contract is simply lacking.
                             V
    Appellants additionally argue by analogy to the law of
stock exchanges that “participants in an exchange may
assert claims against one another based on provisions of
the governing contract.” Br. of Appellants at 45. The two
cases upon which appellants rely, Muh v. Newburger,
Loeb & Co., 540 F.2d 970 (9th Cir. 1976), and Coenen v.
R.W. Pressprich & Co., 453 F.2d 1209 (2d Cir. 1972), do
not support such a broad proposition. In Muh, the Ninth
Circuit held that the arbitration provision of a stock
exchange’s constitution was binding in a lawsuit brought
by one member of the exchange against another member
for breach of a separate contract. Muh, 540 F.2d at 973.
There was no dispute in Muh that the members were in
privity of contract with respect to the contract involved in
the action for breach. See id. at 971–72. Similarly, in
Coenen the Second Circuit held that an arbitration provi-
sion of a stock exchange’s constitution applied to a lawsuit
brought by one member against another for refusal to
allow the transfer of certain shares of stock under a
separate agreement. Coenen, 453 F.2d at 1210–11. There
was also no dispute in Coenen that the members were in
privity with respect to the separate agreement. See id.
Thus in neither case was the constitution of the stock
exchange itself the source of privity between the parties
in suit. Rather the courts simply read into the explicit
PACIFIC GAS AND ELECTRIC CO.   v. US                      25

separate contracts between exchange members a clause of
the exchanges’ governing constitutions.
    It is well-settled that the constitution of a stock ex-
change does not automatically confer privity upon all
those who transact in the exchange. In the analogous
context of suits brought by purchasers of stock against
insider traders, courts have recognized that there is no
direct privity of contract in the traditional sense between
buyers and sellers on the exchange. See, e.g., William H.
Painter, Inside Information: Growing Pains for the Devel-
opment of Federal Corporation Law Under Rule 10b-5, 65
Colum. L. Rev. 1361, 1372–73 (1965); see also Cochran v.
Channing Corp., 211 F. Supp. 239, 245 (S.D.N.Y. 1962);
Joseph v. Farnsworth Radio & Television Corp., 99 F.
Supp. 701, 706 (S.D.N.Y. 1951), aff’d, 198 F.2d 883 (2d
Cir. 1952). It was for this very reason that the implied
private right of action under section 10(b) of the Securities
Exchange Act was fashioned to avoid any requirement of
traditional privity to bring suit.        See Veronica M.
Dougherty, A [Dis]semblance of Privity: Criticizing the
Contemporaneous Trader Requirement in Insider Trading,
24 Del. J. of Corp. L. 83, 89–90 (1999). Because there is
no private right of action upon which appellants can rely
here, appellants’ argument by analogy to the law of stock
exchanges is unavailing.
    Appellants also rely on one court decision holding a
contracting party liable as a result of the incorporation of
a tariff into a separate contract. See Alliant Energy v.
Neb. Pub. Power Dist., 347 F.3d 1046 (8th Cir. 2003).
Alliant Energy does not lend support to the notion that
buyers and sellers in an energy exchange are in contrac-
tual privity. In that case, there was a contract for the
provision of services between parties to an energy ex-
change. See Alliant Energy, Inc. v. Neb. Pub. Power Dist.,
No. 00-2139 ADM/FLN, 2001 WL 1640132, at *1 (D.
Minn. Oct. 18, 2001). A tariff governed the terms of those
26                        PACIFIC GAS AND ELECTRIC CO.   v. US

services. See id. at *1–2. The court held that a FERC
finding that the rates charged for those services were
discriminatory required a refund under the contract. See
Alliant Energy, 347 F.3d at 1049–50 (“When a contract
provides that its terms are subject to a regulatory body,
all parties to that contract are bound by the actions of the
regulatory body.” (emphasis added)). The court in Alliant
Energy did not find privity in the absence of an explicit
contract.
    Nor is this a situation in which appellants are entitled
to step into the shoes of the exchanges and sue the gov-
ernment directly. Indeed, appellants make no such
argument. It is well-settled that a party cannot step into
the shoes of another party to pursue a contract claim
absent explicit assignment of the claim or assignment by
operation of law under equitable subrogation. See, e.g.,
Lumbermens Mut. Cas. Co. v. United States, 654 F.3d
1305, 1312–13 (Fed. Cir. 2011). There has been no sug-
gestion here that the contracts between the exchanges
and market participants were assigned or that appellants
are subrogated to the rights of the Cal-PX and Cal-ISO.
Nor could there be. We have held that equitable subroga-
tion is a narrow exception to the traditional privity re-
quirement, and we have only found equitable subrogation
in the surety context. See Ins. Co. of the W. v. United
States, 243 F.3d 1367, 1370 (Fed. Cir. 2001); Admiralty
Constr., Inc. v. Dalton, 156 F.3d 1217, 1222 (Fed. Cir.
1998).
                            VI
    Significantly, both FERC and the Ninth Circuit un-
derstood that the contracts between individual market
participants and the exchanges were middleman contracts
for the purchase and sale of electricity, and that no con-
tractual privity existed between market participants. In
a related proceeding, FERC explained that “[i]n these
PACIFIC GAS AND ELECTRIC CO.   v. US                     27

circumstances, we believe it is reasonable to construe both
the bidding participants and the PX to be engaged in sales
of electric energy. Accordingly, we conclude that the
bidding PX participants will be engaged in sales of electric
energy at wholesale to the PX, who will then resell that
energy to wholesale and retail customer participants.” S.
Cal. Edison Co., 80 FERC 61,262, 61,946 (1997) (empha-
sis added). FERC described that Cal-PX “will be the
intermediary that contracts with the entities that sell into
the PX as well as with the wholesale and retail customers
that purchase from the PX.” Id. (emphasis added). Simi-
larly, in a related proceeding, FERC held that “there are
no sales contracts between sellers and buyers of electricity
sold into the PX.” S. Cal. Edison Co., 80 FERC at 61,945
(1997) (emphasis added). FERC further explained, “[i]n
this proceeding, we are faced with a new market institu-
tion in which sellers and buyers of electric energy will not
contract directly with one another, as has been traditional-
ly done in the industry, but instead will contract with the
PX.” Id. (emphasis added). Indeed, FERC understood
that, as a consequence of this lack of privity between
buyers and sellers, any refunds due as a result of a FERC
refund order would be paid to the exchanges, not directly
to the underpaid market participants. See San Diego Gas
& Elec. v. Sellers of Energy & Ancillary Servs., 102 FERC
61,317, 62,079–80 (2003). These interpretations were
echoed by the Ninth Circuit. See S. Cal. Edison Co. v.
Lynch, 307 F.3d 794, 800 (9th Cir. 2002) (holding that
market participant SoCal Edison “is in privity with the
California Power Exchange Corporation, not with [other
market participants]”).
                            VII
     Finally, appellants argue that it would be unfair to
deny appellants a remedy for the government’s over-
charges and to allow the government to retain the wind-
fall profits. Appellants assert that, without a finding of
28                        PACIFIC GAS AND ELECTRIC CO.   v. US

privity between consumers and producers here, “the
[government] [is] wholly immunized from public or pri-
vate accountability.” Br. of Appellants at 71. But the
absence of an agreement between consumers and produc-
ers hardly suggests the lack of a remedy. It may well be
that the producers of electric power would have been
liable to the exchanges for any overcharges, and that the
exchanges in turn would have been liable to the appellant
consumers. The procedural mechanisms for such suits
clearly exist under the tariffs.
    Although interpleader, which is ordinarily the remedy
for a party in appellants’ position, is not available here
because the government is a party, see Gonzales, 490 F.3d
at 943, appellants could have sought recovery from the
exchanges, with which they are in direct privity of con-
tract, as is clearly contemplated by the arbitration dispute
resolution procedures established by the tariffs. See S.A.
141, 535. The exchanges in turn could have sought con-
tribution from the government under the same arbitration
procedures, which may have provided for a mechanism
similar to traditional interpleader. 8 Appellants failed to
pursue this course, however, and instead would have us
manufacture privity among all buyers and sellers in the
California markets where there is none. This we decline
to do.
                           VIII
    Alternatively, appellants contend that they have
standing under an agency theory. Appellants argue that,

     8  We have no occasion to decide here whether the
arbitration remedy would now be foreclosed by the pas-
sage of time, or by waiver. Nor do we decide whether the
exchanges could have recovered in arbitration against the
federal government defendant agencies.
PACIFIC GAS AND ELECTRIC CO.   v. US                    29

even if the only contracts are between the exchanges and
market participants, the exchanges acted as agents for all
consumers and producers in the California markets in
every energy transaction. Under certain circumstances,
an entity not in direct contractual privity with another
party may nevertheless sue if it contracted with a third
entity, and an agency relationship is demonstrated be-
tween that third entity and the defendant. See Nat’l
Leased Hous. Ass’n v. United States, 105 F.3d 1423, 1435–
36 (Fed. Cir. 1997); United States v. Johnson Controls,
Inc., 713 F.2d 1541, 1551 (Fed. Cir. 1983).
    “The relationship of principal and agent is created by
a manifestation of assent by both parties.” 12 Williston
on Contracts § 35:1 (4th ed. 2016). “The consent of both
principal and agent is necessary to create an agency.” Id.
“[T]he principal must intend for the agent to act for the
principal, and the agent must intend to accept the author-
ity and act on it; and the intention of the parties must
find expression either in words or other conduct between
them.” Id. As a “general rule, the party asserting the
agency has the burden of proving both the existence of the
relationship and the authority of the agent.” 12 Williston
on Contracts at § 35:2; see also Restatement (Third) of
Agency § 1.02(d) (Am. Law Inst. 2006) (“The party assert-
ing that a relationship of agency exists generally has the
burden in litigation of establishing its existence.”).

    Here, appellants rely on two provisions of the tariffs
that they argue created an agency relationship between
all consumers on the one hand and all producers on the
other, with the exchanges acting as agent for both groups.
Appellants cite the Cal-PX Tariff, which provides that
“the PX acts as an Agent for the PX Participants and its
inclusion in a Payment Flow does not infer that it is a
principal in the financial transaction,” J.A. 1846, and the
Cal-ISO Tariff, which provides that “[i]n contracting for
30                        PACIFIC GAS AND ELECTRIC CO.   v. US

Ancillary Services and Imbalance Energy the ISO will not
act as principal but as agent for and on behalf of the
relevant [market participants],” J.A. 753. 9
    Even if those provisions are read to address an agency
relationship for the purchase and sale of electricity, it is
well established that parties’ statements in a contract are
not dispositive as to the existence of an agency relation-
ship. “Whether a relationship is characterized as agency
in an agreement between parties or in the context of
industry or popular usage is not controlling.” Restate-
ment (Third) of Agency § 1.02; see also, e.g., Matter of
Carolin Paxson Advert., Inc., 938 F.2d 595, 598 (5th Cir.
1991). The key to the existence of an agency relationship
is not any characterization in a contract, 10 but rather is
set forth in section 1.01 of the Restatement of Agency. An
agency relationship “arises when one person (a ‘principal’)
manifests assent to another person (an ‘agent’) that the
agent shall act on the principal’s behalf and subject to the
principal’s control, and the agent manifests assent or
otherwise consents to so act.” Restatement (Third) of

     9  The Cal-ISO Tariff also provides that “[Cal-]ISO
may bring proceedings against any [market participant]
on behalf of those [market participants] who have indicat-
ed to the ISO their willingness for the ISO first so to act,
for the recovery of any amounts due by that [market
participant].” S.A. 530.
    10  Appellants additionally rely on statements made
by a Vice President for one of the government agencies
suggesting that the exchanges acted as an “agent.” See
Br. of Appellants at 60, J.A. 3726–27. But the fact that
various individuals participating in the process may have
characterized the relationship as an agency similarly does
not establish an agency relationship as a matter of law.
Restatement (Third) of Agency § 1.02.
PACIFIC GAS AND ELECTRIC CO.   v. US                     31

Agency § 1.01. Agency thus requires “control” by the
principal. See Hollingsworth v. Perry, 133 S. Ct. 2652,
2666 (2013) (“An essential element of agency is the prin-
cipal’s right to control the agent’s actions.” (internal
quotation marks and citations omitted)). “[T]he princi-
pal’s right to control the agent . . . differentiates . . .
agency relationships from nonagency relationships.”
Restatement (Third) of Agency § 1.01 cmt. e. Here the
requisite control is clearly deficient.
    “A relationship is not one of agency within the com-
mon-law definition unless the agent consents to act on
behalf of the principal, and the principal has the right
throughout the duration of the relationship to control the
agent’s acts.” Id. at § 1.01 cmt. c (emphasis added). It is
for this reason that a mere “middleman” is not typically
an agent. Id. at cmt. h. The control necessary to demon-
strate an agency relationship requires that “a principal
[have] the right to give interim instructions or directions
to the agent once their relationship is established.” Id. at
cmt. f; see also Clackamas Gastroenterology Assocs., P.C.
v. Wells, 538 U.S. 440, 448 (2003).
    Judge Braden recognized that, notwithstanding the
provisions purporting to create an agency relationship, no
agency relationship exists because, inter alia, the gov-
ernment lacked sufficient control over the exchanges. See
Pacific Gas, 122 Fed. Cl. at 334. We agree. 11

   11   Appellants contend that the government conceded
that an agency relationship exists with respect to Cal-
ISO. While the government’s position regarding Cal-ISO
is confusing and appears to be self-contradictory, compare
Br. of Appellees at 37–38 (“Even though the ISO (as
opposed to the PX) was an agent of the scheduling coordi-
nators, the Buyers do not have standing to pursue claims
32                        PACIFIC GAS AND ELECTRIC CO.   v. US

    Here, the alleged principals—the buyers and sellers—
lack any meaningful control over the exchanges. The
tariffs provide that the exchanges have plenary control
over, inter alia, setting prices; charging, collecting, and
remitting payments; ensuring the transfer of the appro-
priate amount of energy from each transaction; and
collecting and remitting money in the event of overpay-
ment. Indeed it is the exchanges that are explicitly
empowered with the ability to issue instructions, detail-
ing, inter alia, settlement and payment obligations to the
buyers and sellers, not the other way around. Appellants
point to no provision of the tariffs that affords the gov-
ernment meaningful control over the exchanges. Without
such evidence of the alleged principal’s control over the
alleged agent, there can be no agency relationship. 12

upon the ISO contracts on their own.”), with id. at 40
(“the ISO cannot be an agent”), the absence of an agency
relationship is clear for both exchanges. We have an
independent obligation to address standing regardless of
any position the government has taken in the case. See,
e.g., Nat’l Org. for Women, Inc. v. Scheidler, 510 U.S. 249,
255 (1994); see also Gonzalez v. Thaler, 132 S. Ct. 641, 648
(2012).
     12 See, e.g., Transamerica Leasing, Inc. v. La Repub-
lica de Venezuela, 200 F.3d 843, 848–50 (D.C. Cir. 2000)
(a subsidiary corporation was not the agent of its parent
because the parent did not exercise “control over the
subsidiary in a manner more direct than by voting a
majority of the stock in the subsidiary or making ap-
pointments to the subsidiary’s Board of Directors”); John-
ston v. Warren Cty. Fair Ass’n, 110 F.3d 36, 38 (8th Cir.
1997) (holding that the lack of evidence of the alleged
principal’s control over the alleged agent “precludes the
finding of an agency relationship”); Matter of Carolin
PACIFIC GAS AND ELECTRIC CO.   v. US                     33

    Nothing in this court’s decisions contemplating an
agency exception to the privity requirement suggest that
control is not required for agency. Indeed, those cases,
which     have     been     limited   to    the      prime-
contractor/subcontractor context, hold that a subcontrac-
tor cannot sue the government directly unless, inter alia,
there is an explicit provision in the contract which pro-
vides that the government will be “directly liable to the
vendors for the purchase price.” Nat’l Leased Housing,
105 F.3d at 1436 (quoting Johnson Controls, 713 F.2d at
1551). Even assuming that this situation was comparable
to the prime-contractor/subcontractor context, it is undis-
puted that there is no such provision in the contracts
here.
    We conclude that the agreements cannot be interpret-
ed as creating agency relationships.
                               IX
    Finally, appellants contend that they have standing to
sue the government because they are third-party benefi-
ciaries of the government’s contracts with Cal-PX and
Cal-ISO. One of the “[l]imited exceptions” to the general
privity requirement for standing is when the plaintiff can
demonstrate that it was an intended third-party benefi-
ciary under the contract. S. Cal. Fed. Sav. & Loan Ass’n,
422 F.3d at 1328; First Hartford, 194 F.3d at 1289.
    “Third party beneficiary status is an ‘exceptional priv-
ilege,’” Glass v. United States, 258 F.3d 1349, 1354 (Fed.
Cir. 2001) (quoting German All. Ins. Co. v. Home Water
Supply Co., 226 U.S. 220, 230 (1912)), and the require-

Paxson, 938 F.2d at 598–99 (finding no agency relation-
ship for lack of sufficient control because the alleged
principals had “no control over the method by which” the
alleged agent performed its duties).
34                       PACIFIC GAS AND ELECTRIC CO.   v. US

ments to demonstrate third-party beneficiary status are
“stringent,” Anderson, 344 F.3d at 1352. “Before a
stranger can avail himself of the exceptional privilege of
suing for a breach of an agreement to which he is not a
party, he must, at least, show that it was intended for his
direct benefit.” German All., 226 U.S. at 230. To demon-
strate third-party beneficiary status, therefore, a party
must prove that “the contract not only reflects the express
or implied intention to benefit the party, but that it
reflects an intention to benefit the party directly.”
Flexfab, L.L.C. v. United States, 424 F.3d 1254, 1259 (Fed.
Cir. 2005) (quoting Glass, 258 F.3d at 1354). Third-party
beneficiary status is not established “merely because [a]
contract would benefit [a party].” Fed. Deposit Ins. Corp.
v. United States, 342 F.3d 1313, 1319 (Fed. Cir. 2003).
    As the Restatement makes clear, typical third-party
beneficiary situations arise when, for example, one party
promises another to pay a debt to a third party. In such
circumstances, the third party is a third-party beneficiary
with standing to sue on the contract. Restatement (Sec-
ond) of Contracts § 302 illus. 1 (Am. Law Inst. 1981).
While a third-party beneficiary need not always be named
explicitly in the contract, have the “direct right to com-
pensation[,] or the power to enforce that right against the
promisor,” the contract must demonstrate a clear intent to
benefit a third-party beneficiary “personally, independent
of his or her status” as a member of a group generally
benefited by a contract’s performance. Anderson, 344
F.3d at 1352 (internal quotation marks and citations
omitted); see also Castle v. United States, 301 F.3d 1328,
1338 (Fed. Cir. 2002). In other words, at a minimum
there must be a particular, identifiable benefit that was
clearly intended to flow to the third party.
    Anderson v. United States is instructive. In Anderson
we held that two individuals were not third-party benefi-
ciaries of an alleged contract with the government simply
PACIFIC GAS AND ELECTRIC CO.   v. US                       35

because they were named beneficiaries of a trust which
was owed certain contractual obligations from the gov-
ernment. See 344 F.3d at 1351–52. We explained that,
“[u]nder the contract, every promise the government
allegedly failed to keep . . . pertains to the regulatory
treatment of [the Trust]. Nothing suggests that the
government made any promises expressly intended to
benefit [the individuals] personally, independently of
their status as beneficiaries of the Trust.” Id. at 1352.
Similarly, in Glass v. United States we held that share-
holders of a corporation were not third-party beneficiaries
of a contract between the corporation and the government
because the contract manifested no intent to benefit the
shareholders individually, independent of their status as
shareholders. 258 F.3d at 1354–55.
     Here appellants contend that they are third-party
beneficiaries based on the overpayment provisions of the
tariffs. But, as discussed, the overpayment provisions
create obligations and remedies for Cal-PX and Cal-ISO,
not the market participants. Contrary to appellants’
assertion that these provisions gave appellants “an explic-
it contractual right to a refund by sellers of any overpay-
ments [appellants] made when purchasing electricity,” Br.
of Appellants at 58, the very text quoted by appellants
reveals that the overpayment procedures hold Cal-PX and
Cal-ISO solely responsible for collecting and disbursing
overpayments. “The PX shall be responsible for ascertain-
ing the identity of those PX Participants entitled to re-
ceive amounts overpaid to another PX Participant and for
disbursing those funds to the persons entitled to them
promptly.” J.A. 501; see also J.A. 1016 (Cal-ISO Tariff).
There is no specific, identifiable benefit that flows directly
from producer to consumer under the tariffs.
    The only opinion appellants cite in which we have
recognized third-party beneficiary standing is H.F. Allen
Orchards v. United States, 749 F.2d 1571, 1576 (Fed. Cir.
36                        PACIFIC GAS AND ELECTRIC CO.   v. US

1984). In H.F. Allen, the plaintiffs were farmers in the
State of Washington who were members of water-user
associations. See H.F. Allen Orchards v. United States, 4
Cl. Ct. 601, 603 (1984). Those associations contracted
with the federal government regarding a federal water
project. See id. In 1943, a federal district court entered a
consent decree setting forth the allotment of water from
the federal project to the water-user associations. Id. The
plaintiff farmers later brought suit against the federal
government for an alleged breach of the consent decree.
H.F. Allen Orchards, 749 F.2d at 1572. The Claims Court
held that plaintiffs lacked standing to sue the govern-
ment. Id. On appeal, we disagreed. See id. at 1576. We
explained that the water-user associations “act[ed] as a
surrogate for the aggregation of farmers.” Id. The farm-
ers themselves held a “property right in the water to the
extent of their beneficial use thereof,” and a specific,
identifiable benefit flowed from the government to each
farmer under the consent decree. Id. Accordingly, we
held that the farmers were the “true parties in interest” to
sue under the decree. Id.
    Here there is no identifiable benefit flowing from the
particular government agencies to the particular appel-
lants. Appellants were simply some of the many partici-
pants on the buy-side of the California wholesale energy
market, and it is impossible to trace the transfer of elec-
tric power from producers to consumers. Appellants
cannot demonstrate any particular benefit flowing to
them from the government agencies, let alone that the
exchanges’ contracts with the government intended to
benefit them specifically, independent of all other market
participants. Accordingly, appellants fail to establish the
“stringent” requirements to demonstrate the “exceptional
privilege” of third-party beneficiary status. Anderson, 344
F.3d at 1352; Glass, 258 F.3d at 1354. As such, appel-
lants lack third-party beneficiary standing.
PACIFIC GAS AND ELECTRIC CO.   v. US                     37

                               X
    Because appellants are not in direct privity of contract
with the government, fail to demonstrate an agency
relationship, and do not qualify as third-party beneficiar-
ies on the contract, appellants lack standing to sue the
government on the contract claims asserted here. Accord-
ingly, we affirm the decision of the Claims Court dismiss-
ing appellants’ suit for lack of standing.
                       AFFIRMED
                          COSTS
   Costs to the United States.
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

    PACIFIC GAS AND ELECTRIC COMPANY,
  SOUTHERN CALIFORNIA EDISON COMPANY,
    SAN DIEGO GAS & ELECTRIC COMPANY,
PEOPLE OF THE STATE OF CALIFORNIA EX REL.
 EDMUND G. BROWN JR., ATTORNEY GENERAL
  OF THE STATE OF CALIFORNIA, CALIFORNIA
 DEPARTMENT OF WATER RESOURCES, BY AND
      THROUGH ITS CALIFORNIA ENERGY
     RESOURCES SCHEDULING DIVISION,
              Plaintiffs-Appellants

                            v.

                   UNITED STATES,
                   Defendant-Appellee
                 ______________________

                       2015-5082
                 ______________________
NEWMAN, Circuit Judge, dissenting.
    The United States does not dispute that it over-
charged the plaintiffs for electric power, and that it is
required to repay the overcharge in accordance with the
FERC rate schedule and the governing federal statutes.
Nonetheless, the United States’ position is that it will not
comply with this law, for nobody can sue it to enforce the
law. We agree that FERC, a federal agency, cannot order
a refund of the overages charged by the United States,
but that does not insulate the United States from suit by
2                          PACIFIC GAS AND ELECTRIC CO.   v. US

the overcharged buyers of electric power from the United
States. My colleagues on this panel strain to find a reme-
dy, by announcing that maybe these buyers can recover
something from the exchanges that brokered the over-
charged transactions—but my colleagues hold that there
is no other remedy for the government’s refusal to comply
with the statute that the government admits to have
violated.
    The first assigned judge of the Court of Federal
Claims rejected this position, on proceedings that lasted
seven years. However, the successor judge of that court
discarded the prior adjudication, and held that the court
is helpless to act. The Federal Circuit now agrees. I
respectfully dissent.
    Legal protection of property rights is a cor-
    nerstone of our government
    No person shall . . . be deprived of life, liberty, or
    property, without due process of law; nor shall
    private property be taken for public use, without
    just compensation.
U.S. CONST. amend. V.
    Government is instituted to protect property of
    every sort; as well that which lies in the various
    rights of individuals, as that which the term par-
    ticularly expresses. This being the end of gov-
    ernment, that alone is a just government, which
    impartially secures to every man, whatever is his
    own.
The Complete Madison at 45 (Saul K. Padover ed. 1953),
letter to James Monroe, Oct. 15, 1786 (emphasis in origi-
nal).
   Our court is reminded of this high obligation by these
watchwords of the Nation’s duty to citizens, carved on the
PACIFIC GAS AND ELECTRIC CO.   v. US                      3

wall of this courthouse, welcoming those who seek justice
in suit against the government:
   It is as much the duty of government to render
   prompt justice against itself, in favor of citizens,
   as it is to administer the same between private
   individuals.
President Abraham Lincoln, First Annual Message Before
the U.S. Senate and House of Representatives (Dec. 3,
1861); engraved in the Lobby of the Howard T. Markey
National Courts Building, 717 Madison Place, NW, Wash-
ington, DC 20439.
    These obligations are formalized in the Tucker Act
and other implementing legislation, and are assigned to
this court.
   The overcharge and the statutory refund ob-
   ligation are not disputed
    The overcharge is not disputed: the plaintiffs paid
money to the federal power agencies at prices set by
FERC-regulated auction markets, and the federal sellers
of power and others made windfall profits. FERC then
required that these profits be refunded, on the basis of
just and reasonable market clearing prices. All of the
FERC-ordered refunds to the affected purchasers have
been paid by the obligated entities, with the exception of
the federal agencies the Bonneville Power Administration
(BPA) and the Western Area Power Administration
(WAPA) (collectively, the Power Administrators). 1
    Both the BPA and the WAPA had agreed, as a condi-
tion of participating in the California power market

   1 This suit is concerned only with the BPA and
WAPA and their power sales in California.
4                          PACIFIC GAS AND ELECTRIC CO.   v. US

(CalPX and ISO) to accept FERC-regulated tariffs. How-
ever, BPA and WAPA have refused to make the designat-
ed repayments in accordance with the FERC-ordered
retroactive market clearing prices, which, as the Ninth
Circuit held, reach the entirety of the market, not just a
portion of the market transactions. City of Redding v.
FERC, 693 F.3d 828, 842 (9th Cir. 2012). My colleagues
hold that the courts cannot require such compliance with
law. This cannot be, for compliance with law is the judi-
cial role, and federal compliance is assigned to the Court
of Federal Claims and the Federal Circuit.
    The Power Administrators acknowledge the over-
charges, and do not disagree that the statute requires
them to refund the overcharges. The overpayment is not
disputed by the government. The panel majority provides
details, see Maj. Op. 8 (“By August 2000, appellants and
all other consumers were charged prices three to four
times greater than the market rates of less than a year
earlier . . . . FERC . . . ordered that refunds be paid by all
sellers in the California market.”).
    The Ninth Circuit upheld FERC’s authority to find
the rates charged by all sellers, including the federal
agencies, to be unjust and unreasonable. City of Redding,
693 F.3d at 842 (“[FERC’s] July 2001 Order ‘reset’ the
market clearing prices in the CalPX and ISO spot mar-
kets during the refund period to just and reasonable
levels for the purpose of calculating the amount of refund
due [from FERC-regulated entities]. This calculation
necessarily involved reevaluating the price previously
charged by all market participants because the market
clearing price was the same for all of them.”).
    It is not disputed that the overage charges are able to
be determined, and the refunds properly allocated. The
charges, overages, refund allocations, and the like have
already been litigated, settled, or otherwise disposed of
PACIFIC GAS AND ELECTRIC CO.   v. US                     5

via FERC’s California Refund Proceeding and related
litigation, much of which has received judicial review in
the Ninth Circuit. See, in summary, FEDERAL ENERGY
REGULATORY COMMISSION, THE COMMISSION’S RESPONSE
TO THE CALIFORNIA ELECTRICITY CRISIS AND TIMELINE FOR
DISTRIBUTION       OF      REFUNDS        (available     at
www.ferc.gov/legal/staff-reports/comm-response.pdf); see
also, e.g., 102 FERC ¶ 61120 (establishing a mitigated
market clearing price (“MMCP”)). “Under the MMCP
methodology, refunds were to be determined by the differ-
ence between the market clearing price, which was the
price charged by all electricity suppliers at a given time,
and the MMCP calculated for each hour of the Refund
Period, subject to certain adjustments.” PUC v. FERC,
462 F.3d 1027, 1043 (9th Cir. 2006)).
    Yet the BPA and the WAPA refuse to make the re-
funds, stating that neither FERC nor the courts have
jurisdiction to force them to meet these obligations.
BPA/WAPA Br. at 8 (“FERC has no . . . jurisdiction over
[the agencies].”); Id. at 18 (“The Court of Federal
Claims . . . does not possess jurisdiction.”); Id. at 58
(“Court of Federal Claims had no jurisdiction.”). Howev-
er, that is incorrect. Jurisdiction is indeed possessed by
the Court of Federal Claims and this court.
   The Constitution and the Tucker Act provide
   remedy, whether on a theory of contract or
   taking of property
    My colleagues hold that no court or agency possesses
authority to enforce payment of the refunds due from the
United States to the Appellants. The court refuses to
apply the standard that FERC requires and enforces of
private actors in the same position. All power generators
and power purchasers affected by the rates that FERC
corrected on the California energy markets are bound by
this standard. The Tucker Act formalizes the judicial
6                         PACIFIC GAS AND ELECTRIC CO.   v. US

authority whereby this standard is enforced against the
federal suppliers of power. The Tucker Act provides
jurisdiction to render judgment upon any claim against
the United States “founded either on the Constitution, or
any Act of Congress or any regulation of an executive
department, or any express or implied contract with the
United States, or for liquidated or unliquidated damages
in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1).
    (a) The contract claim
    My colleagues hold that since there was an “ex-
change” acting as broker between the federal power
sellers and the state power purchasers, the purchasers
can sue only the exchange on the federal overcharges. My
colleagues hold that only the broker “middle-man” is in
privity with the government. This is not the law of con-
tracts. The exchange was not a principal in these trans-
actions, it had explicitly disclaimed any counterparty
status, and the electric power was not the property of the
exchange. The exchange simply acted as a broker and
passed the sales proceeds to the sellers who provided the
power. My colleagues err in holding that the exchanges
alone are liable for payment of the overcharges that were
charged by the federal sellers of power.
    The court is correct that claims against the BPA and
WAPA are separate from the FERC statutory jurisdiction.
The BPA and the WAPA were not obligated to sell power
in areas covered by the CalPX and ISO, but, in choosing
to do so, they agreed, as a condition of their participation
in that market, to be held to the rules and price-setting
mechanisms of the FERC-regulated tariffs. In doing so,
the BPA and the WAPA agreed to the Memphis clause,
which my colleagues hold has no role in the resolution of
this case. Maj. Op. at 21. The majority correctly states
that the Memphis clause does not serve as a “source of
any contractual obligation between market participants,”
PACIFIC GAS AND ELECTRIC CO.   v. US                      7

id., but this means only that prices charged under the
tariff contract are not “fixed,” but rather are subject to
review and change by FERC. These are the prices
charged by suppliers like the BPA and the WAPA to the
consumers like PG&E, through the CalPX and ISO.
     The Memphis clause binds the price charged to FERC
determinations; the tariff binds the parties to use the
CalPX and ISO for sale/purchase of energy; the parties,
conducting sales through the CalPX and ISO to pur-
chase/supply energy amongst themselves, are bound to
each other through their market transactions, the rules of
the tariff, and the FERC regulations. “When a contract
provides that its terms are subject to a regulatory body,
all parties to that contract are bound by the actions of the
regulatory body.” Alliant Energy v. Neb. Pub. Power Dist.,
347 F.3d 1046, 1050 (8th Cir. 2003). See Inter-City Gas
Corp. v. Boise Cascade Corp., 845 F.2d 184, 187 (8th Cir.
1988) (holding that parties to a contract which provided
that its rates “may be approved, ordered or set by any
valid law, order, rule or regulation of any . . . regulatory
authority . . . having jurisdiction,” were bound by a FERC
rate determination, even though they were not directly
subject to FERC’s jurisdiction). The sellers and buyers of
power achieved privity through the sale and purchase of
electricity, brokered by the exchange.
    FERC has the statutory authority to determine the
“just and reasonable” rate on and after the Refund Effec-
tive Date, and all parties had previously agreed to be
bound by such rates. The Ninth Circuit recognized that
FERC could not order the United States to pay these
mandated refunds. Bonneville Power Admin. v. FERC,
422 F.3d 908, 926 (9th Cir. 2005). This is where the
Tucker Act comes in, for this contractual obligation be-
tween the federal power sellers and the state purchasers.
8                          PACIFIC GAS AND ELECTRIC CO.   v. US

    (b) Other Tucker Act Authority
    In addition to the contractual relation between the
Power Administrators, as sellers, and the Appellants, as
buyers, the Tucker Act also provides remedy on a Consti-
tution-based theory of property taking, just compensation,
and/or illegal exaction. An illegal exaction arises when
“the plaintiff has paid money over to the Government,
directly or in effect, and seeks return of all or part of that
sum” that “was improperly paid, exacted, or taken from
the claimant in contravention of the Constitution, a
statute, or a regulation.” Eastport S.S. Corp. v. United
States, 372 F.2d 1002, 1007 (Ct. Cl. 1967). This cause
arises when “some specific provision of law commands
expressly or by implication the payment of money, upon
proof of conditions he is said to meet.” City of Manassas
Park v. United States, 633 F.2d 181, 183 (Ct. Cl. 1980).
    When overcharges were made and required by the
government, this may support a takings claim. And when
the overcharges were designated by FERC as illegal and
repayment was ordered, their exaction became illegal. On
either theory, the Fifth Amendment provides for recovery
of the overpayment. Even on the theory that there was no
contractual relationship between the federal power sellers
and the state power buyers, repayment of the overcharge
is required, for it is not disputed that “the Government
has the citizen’s money in its pocket,” money to which the
government concedes it has no right. Clapp v. United
States, 117 F. Supp. 576, 580 (Ct. Cl. 1954).
    The claimant must demonstrate that the statute or
provision causing the exaction provides, either expressly
or by “necessary implication,” that “the remedy for its
violation entails a return of money unlawfully exacted.”
Cyprus Amax Coal Co. v. United States, 205 F.3d 1369,
1373 (Fed. Cir. 2000). The Power Administrators imposed
an “unjust and unreasonable” price on the appellants,
PACIFIC GAS AND ELECTRIC CO.   v. US                      9

who “paid money over to the Government, . . . and seek[]
return of all or part of that sum” that “was improperly
paid . . . in contravention of [statute and regulation].”
Eastport S.S. Corp., 372 F.2d at 1007. This standard is
met here, and the remedy laid out by statute is refund of
the overpayment.
     The court has previously addressed similar issues. In
Ontario Power Generation, Inc. v. United States this court
recognized that “there are some circumstances under
which jurisdiction exists even though the plaintiff did not
pay money directly to the government.” 369 F.3d 1302
(Fed. Cir. 2004). In Camellia Apartments, Inc. v. United
States, 334 F.2d 667 (Ct. Cl. 1964), the court held that
Tucker Act jurisdiction existed even though the plaintiff
had not paid the exacted sums directly to the government.
In that case, the Federal Housing Administration re-
quired that the plaintiff pay a “prepayment premium
charge” to its mortgagees as a precondition to refinance
its properties with private lenders. Id. at 669. The mort-
gagees then transmitted the premium to the Federal
Housing Administration. In rejecting the government’s
motion to dismiss for lack of jurisdiction, the court said:
   The fact that the FHA acted through the mortga-
   gees in requiring the payments of which plaintiffs
   complain is immaterial; under the pertinent regu-
   lation, the mortgagees were required to collect
   these funds and to remit them to the Commission-
   er. Therefore, we do not think that defendant can
   seriously deny plaintiffs’ allegation that the mort-
   gagees acted solely as the FHA’s agents in so do-
   ing.
Id. Similarly here, the BPA and the WAPA collected the
overcharges through the CalPX and ISO. “Under deci-
sions of the Supreme Court and this court, a compensable
taking does not occur unless the government’s actions on
10                        PACIFIC GAS AND ELECTRIC CO.   v. US

the intermediate third party have a ‘direct and substan-
tial’ impact on the plaintiff asserting the takings claim.”
Casa De Cambio Comdiv S.A. De C.V. v. United States,
291 F.3d 1356, 1361 (Fed. Cir. 2002). It cannot be denied
that the retention of the “unjust and unreasonable” rate
charges by the government has, and continues to have, a
“direct and substantial impact” on the Appellants.
    Whether under either a theory of contract or taking,
the Court of Federal Claims has jurisdiction of this claim
against the government, as it initially held.
     Conclusion
    It is contrary fundamental law to exclude this claim
from access to judicial review and remedy. “The govern-
ment of the United States has been emphatically termed
a government of laws, and not of men. It will certainly
cease to deserve this high appellation, if the laws furnish
no remedy for the violation of a vested legal right.” Mar-
bury v. Madison, 5 U.S. (1 Cranch) 137, 163 (1803). The
judicial obligation and authority is to remedy the “unjust
and unreasonable” rate charges as determined by FERC
and confirmed on Ninth Circuit review. The remedy is
assigned to the Court of Federal Claims and to the Feder-
al Circuit.
    I respectfully dissent from the court’s rejection of that
assignment.