ICNU v. BPA, No. 11-71368 (9th Cir. 2014)
Annotate this CaseIn consolidated appeals, two groups challenged the BPA's decision to forgo refunds after the court invalidated three sets of contractual arrangements in which BPA agreed to subsidize certain longtime industrial customers rather than sell them power directly. The court held that these subsidy arrangements were unreasonable and were contrary to BPA's authority. The court remanded to BPA regarding whether it could or should seek refunds of the improper subsidies. BPA concluded that it was contractually barred from seeking refunds as to some of the invalidated contracts; it had no legal or equitable basis for seeking refunds as to the others; and if it did pursue recovery of the subsidies, it might become mired in counterproductive, protracted litigation. Petitioners' core argument is that their power costs have been impermissibly raised by BPA's decision because, if BPA did seek refunds of the subsidies, it could pass the recovered funds to its customers as lower rates. The court rejected petitioners' contention that BPA has a duty, under either the Constitution's Appropriations Clause or BPA's governing statutes, to seek all refunds to which it may be entitled. The court concluded that BPA's decisions in most respects sufficiently and reasonably balanced its competing obligations to merit the court's deference, except in one respect. The court denied the petition for review with regard to the decision not to seek refunds with respect to the 2007 Block Contracts and the Port Townsend Contract. The court granted the petition and remanded to BPA for further proceedings with regard to recovery of subsidies paid under the Alcoa Amendment.
Court Description: Bonneville Power Administration. The panel denied in part, and granted in part, petitions for review brought by public utilities and cooperatives who buy power from the Bonneville Power Administration and industrial customers who are end-users of BPA power, challenging the BPA’s decision not to seek refunds of unlawful subsidies that the BPA previously gave to certain longtime industrial customers and which were invalidated by prior Ninth Circuit decisions. The petitioners alleged that their power costs had been impermissibly raised by BPA’s decision because, if BPA sought refunds of the subsidies, it could pass along the recovered funds to its customers as lower rates. At issue are three contractual arrangements: the 2007 Block Contracts (three way contracts between BPA, Alcoa Inc. and two other aluminum direct-service customers, and local public utilities in which BPA agreed to make payments to the aluminum companies in lieu of supplying them with actual electrical power); the Alcoa Amendments (an amended contract in which BPA again agreed to subsidize Alcoa rather than sell it power directly); and the Port Townsend Contract (an arrangement in which BPA supplied Port Townsend Paper Company, a non-aluminum direct-service customer, with its full requirements for power at a reduced rate). The panel held that the BPA had no general constitutional or statutory duty to seek a refund any time it made an unlawful payment, but an individual decision not to pursue such a refund could be arbitrary, capricious or an abuse of discretion under the Administrative Procedure Act. The panel also held that the BPA’s decisions in most respects sufficiently and reasonably balanced its competing obligations to merit the panel’s deference, but in one respect did not. Finally, the panel held that the BPA reasonably explained why the challenged refund decisions were not inconsistent with BPA’s earlier decision to seek recovery of the different payments that had been declared unlawful by the court in Portland Gen. Elec. Co. v. Bonneville Power Admin., 501 F.3d 1009 (9th Cir. 2007). The panel denied the petition for review with regard to the decision not to seek refunds with respect to the 2007 Block Contracts and the Port Townsend Contract. The panel granted the petition and remanded to the BPA for further proceedings with regard to recovery of subsidies paid under the Alcoa Amendment. Judge Reinhardt concurred in part, but dissented from section B.1.a which related to the 2007 Block Contracts. Judge Reinhardt would hold that the contractual damages waiver provision in the 2007 Block Contracts, as applied, operated in excess of the BPA’s statutory authority.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.