Industrial Customers of Northwest Utilities v. BONNEVILLE POWER ADMINISTRATION and THE UNITED STATES DEPARTMENT OF ENERGY

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
1
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
INDUSTRIAL CUSTOMERS OF
NORTHWEST UTILITIES, et al.,
Petitioners,
ALCOA INC. and NORTHWEST
REQUIREMENTS UTILITIES,
Intervenors,
v.
BONNEVILLE POWER
ADMINISTRATION and THE UNITED
STATES DEPARTMENT OF ENERGY,
Respondents.
Nos. 09-70290, 09-70390, and 09-
70393
BPA Nos. TRM-12-A-01
TRM-12-A-02
MEMORANDUM*
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.
FILED
JUL 16 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

-- 1 of 8 --

2
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 of 8 --

3
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 of 8 --

Even when rates are set by the BPA, they are not subject to our review1
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
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). Because1
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

-- 4 of 8 --

5
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 of 8 --

6
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 of 8 --

7
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 of 8 --

8

-- 8 of 8 --