Industrial Customers of Northwest Utilities v. Bonneville Power Administration , 388 F. App'x 586 ( 2010 )


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  •                                                                            FILED
    NOT FOR PUBLICATION                            JUL 16 2010
    MOLLY C. DWYER, CLERK
    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS
    FOR THE NINTH CIRCUIT
    INDUSTRIAL CUSTOMERS OF                          Nos. 09-70290, 09-70390, and 09-
    NORTHWEST UTILITIES, et al.,                     70393
    Petitioners,                       BPA Nos. TRM-12-A-01
    TRM-12-A-02
    ALCOA INC. and NORTHWEST
    REQUIREMENTS UTILITIES,
    MEMORANDUM *
    Intervenors,
    v.
    BONNEVILLE POWER
    ADMINISTRATION and THE UNITED
    STATES DEPARTMENT OF ENERGY,
    Respondents.
    On Petition for Review of an Order of the
    Bonneville Power Administration
    Argued and Submitted May 4, 2010
    Portland, Oregon
    Before: KLEINFELD, BEA and IKUTA, Circuit Judges.
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by 9th Cir. R. 36-3.
    1
    Petitioners, the Industrial Customers of Northwest Utilities, Georgia-Pacific,
    LLC, and Clatskanie People’s Utility District, seek review of the Bonneville Power
    Administration’s (“BPA”) Tiered Rate Methodology, as approved via the Tiered
    Rate Methodology Record of Decision. Petitioners seek a ruling by this court that
    the Tiered Rate Methodology Record of Decision be vacated and this case
    remanded for further proceedings. They contend the decision violates the Pacific
    Northwest Electric Power Planning and Conservation Act of 1980 (the “Northwest
    Power Act”). The Tiered Rate Methodology sets a new method by which BPA will
    calculate future rates charged to its customers when their current contracts expire.
    It is undisputed that the Tiered Rate Methodology Record of Decision is a
    “final action” within the meaning of the Northwest Power Act, 16 U.S.C.
    §§ 839–839h, which vests this court with original jurisdiction to review challenges
    to final actions or the implementation of final actions by the BPA. 16 U.S.C.
    § 839f(e)(5).
    First, the petitioners challenge the Tiered Rate Methodology under section
    7(b)(4) of the Northwest Power Act. 16 U.S.C. § 839e(b)(4). The petitioners
    contend that the Tiered Rate Methodology will result in the BPA charging the
    same market-based rate for some “contracted-for or committed-to” load as it
    charges for new large single loads, thus violating a statutory mandate in the
    2
    Northwest Power Act that such rates be different. See 16 U.S.C. § 839a(13). The
    petitioners also contend that the resulting rates will not be of “general application.”
    See 16 U.S.C. § 839e(b)(1).
    In determining whether a challenge is ripe for review, we must distinguish
    “between challenges to contractual provisions on the grounds that those provisions
    will affect future rate-making and cost allocation decisions, and challenges
    premised on the contention that the agency lacks statutory authority to agree to
    specific contractual terms.” Pacific Northwest Generating Co-op. v. Dep’t of
    Energy, 
    580 F.3d 792
    , 806 n.20 (9th Cir. 2009). The former challenges constitute
    rate determinations that are not ripe until “confirmation and approval by the
    Federal Energy Regulatory Commission [“FERC”].” 16 U.S.C. § 839f(e)(4)(D);
    see 16 U.S.C. § 839e(m)(2). The BPA has not set rates pursuant to the new Tiered
    Rate Methodology, nor has FERC approved such rates or the method of calculating
    those rates.
    Because the BPA has not yet completed a rate-making proceeding, and the
    petitioners’ challenge under section 7(b)(4) is based on future rate-making and cost
    allocation decisions, this challenge is not ripe for review. See California Energy
    Res. Conserv. & Dev. Comm’n v. Johnson, 
    807 F.2d 1456
    , 1463 (9th Cir. 1986)
    (“A decision at this juncture would resolve a dispute about hypothetical rates.”).
    3
    Similar challenges were brought to a new method of calculating rates by the BPA
    in 1983, again before the actual rates were set and approved by FERC. We
    dismissed those petitions for lack of jurisdiction:
    The issue is whether we have jurisdiction to consider the petitions. 16 U.S.C.
    § 839f(e)(1) provides that only “final actions” are subject to judicial review,
    and lists “final rate determinations” as being among these reviewable
    actions. 16 U.S.C. § 839f(e)(4)(D) provides that rate determinations are
    final only upon confirmation by FERC. 16 U.S.C. § 839f(e)(5) gives
    jurisdiction to courts of appeals to hear suits challenging these final actions.
    Thus, unless there was a final action as of the date the petition was filed, we
    do not have jurisdiction.
    City of Seattle v. Johnson, 
    813 F.2d 1364
    , 1367 (9th Cir. 1987) (per curiam). After
    FERC approved the 1983 rates, we then had jurisdiction to hear the petitions for
    review challenging such rates and the method under which those rates were
    calculated. CP Nat’l Corp. v. Jura, 
    876 F.2d 745
    , 747 (9th Cir. 1989).1 Because
    the petitioners’ challenge is not ripe for review, there is no “case or controversy”
    and thus we have no jurisdiction to review the merits of the petitions. See U.S.
    Const. art III, § 2, cl. 1; see CP Nat’l 
    Corp., 876 F.2d at 747
    .
    Because the BPA has not yet completed a rate-making proceeding, and the
    petitioners are not challenging an actual rate made in violation of a controlling
    1
    Even when rates are set by the BPA, they are not subject to our review
    until approved by FERC. See Cal. Energy Res. Conserv. & Dev. Comm’n v.
    Johnson, 
    767 F.2d 631
    , 634–35 (9th Cir. 1985); Cent. Lincoln Peoples’ Util. Dist.
    v. Johnson, 
    735 F.2d 1101
    , 1109–10 (9th Cir. 1984).
    4
    statute, these particular challenges are not ripe for decision. See Cal. Energy Res.
    Conserv. & Dev. Comm’n v. 
    Johnson, 807 F.2d at 1463
    (“[a] decision at this
    juncture would resolve a dispute about hypothetical rates.”). Because the petitions
    are not ripe for review, there is no “case or controversy” and thus we have no
    jurisdiction to review the merits of the petitions. See 
    id. Second, Georgia
    Pacific contends that the Tiered Rate Methodology effects
    an unconstitutional taking. Assuming without deciding that we otherwise have
    jurisdiction over this claim under the Northwest Power Act and the Tucker Act, see
    16 U.S.C. § 839f(e)(5); 28 U.S.C. § 1491(a)(1), we conclude that this claim also is
    unripe. It is clear that any alleged taking resulting from a change in rates will not
    occur until FERC approves such rates. See City of 
    Seattle, 813 F.2d at 1367
    .
    Thus, Georgia Pacific’s challenge is not ripe, and we lack jurisdiction to consider
    it. See 
    id. Once the
    BPA sets the new rates and FERC approves such rates, the
    petitioners may be able to file new petitions for review with this court. See Pacific
    Northwest Generating 
    Co-op., 580 F.3d at 805
    –06 (quoting Pub. Utils. Comm’r of
    Or. v. BPA, 
    767 F.2d 622
    , 629 (9th Cir.1985), for the proposition that a challenge
    to the method of calculating rates, dismissed as unripe at this stage, could become
    reviewable at a later date because “[i]f FERC fails to correct any defects in the
    5
    methodology [which affected rate setting], redress is available in the court of
    appeals,” where “any . . . cognizable challenges will be fully reviewable . . . .”); see
    also 
    id. at 806
    n.20.
    Finally, the Industrial Customers contend that a provision of the Tiered Rate
    Methodology that provides special treatment to the Department of Energy’s facility
    at Richland, Washington and to a class of yet-to-exist public utilities is arbitrary
    and capricious. Specifically, the BPA reserved Tier 1 rates for some amount of
    unrealized load for these entities, while declining to “set aside power at Tier 1 rates
    for . . . unrealized, nonexistent load” for all other customers. Because this claim
    challenges the BPA’s authority to provide such differential treatment, and neither
    challenges a rate established under the Tiered Rate Methodology nor requires
    analysis of hypothetical characteristics of future rates, we conclude that it is ripe.
    See 
    id. at 806
    n.20. Petitioners make no claim that provision of power to the
    Richland facility and other public utilities will ineluctably deprive petitioners of
    Tier 1 rates.
    This claim fails on the merits, however, because the BPA did not act
    arbitrarily and capriciously. The BPA explained that “issues of national security,
    nuclear management, Federal agency status . . . and actual construction and timing
    of the load” justified special treatment of Department of Energy’s Richland
    6
    facility. Likewise, as to the new public utilities, the BPA noted that reserving
    some lower-cost federal power for those new market entrants would ensure that
    federal power was “more widely available while providing planning certainty for
    the amount of power BPA may need . . . in the future.”
    The BPA’s explanations are sufficient to satisfy its burden under the
    Administrative Procedure Act, 5 U.S.C. §§ 701–06. The Industrial Customers
    have failed to demonstrate that the BPA “has relied on factors which Congress has
    not intended it to consider” or provided an explanation “so implausible that it could
    not be ascribed to a difference in view or the product of agency expertise.”
    Confederated Tribes of Umatilla Indian Reservation v. Bonneville Power Admin.,
    
    342 F.3d 924
    , 928 (9th Cir. 2003) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc.
    v. State Farm Mut. Auto Ins. Co., 
    463 U.S. 29
    , 43 (1983)).
    Accordingly, we dismiss for lack of jurisdiction the petitioners’ challenge to
    the Tiered Rate Methodology Record of Decision under section 7(b)(4) of the
    Northwest Power Act, 16 U.S.C. § 839e(b)(4), as well as Georgia Pacific’s takings
    claim. We deny the Industrial Customers’ challenge to the Tiered Rate
    Methodology as arbitrary and capricious.
    PETITION No. 09-70290 DENIED IN PART and DISMISSED IN
    PART; PETITIONS Nos. 09-70390, 09-70393 DISMISSED.
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