APAC v. BPA

Bonneville Power Administration has the authority to enter into settlement agreements that pay certain funds in lump sums, waive BPA's authority to purchase power through in lieu purchases, modify "rate ceiling" calculations intended to protect preference customers, and set costs; these actions do not require BPA to provide power illegitimately, do not improperly bind non-signatories to a settlement, are not adverse to Ninth Circuit precedent, and were not arbitrarily or capriciously applied in this case.

The Bonneville Power Administration (“BPA”) has been working to enter a settlement with a certain class of its customers. The Ninth Circuit had invalidated a previous settlement between BPA and these customers. BPA’s current settlement intended to refund previous overcharges and set a new rate-making methodology. The Association of Public Agency Customers (“APAC”) challenged the current settlement, arguing that it violated Northwest Electric Power Planning and Conservation Act (“NWPA”) provisions, the Bonneville Project Act, Federal Energy Regulatory Commission (“FERC”) regulations, and Ninth Circuit precedent. APAC is an “ad hoc” organization consisting of the owners of certain industrial facilities located in the Pacific Northwest. APAC members enjoy “cost-based pass-through” contracts with “preference customers” of BPA. Initially, the majority of the panel held that APAC had both constitutional and prudential standing to challenge this settlement. APAC claimed the settlement violated certain procedural requirements of Section 5(c) of the NWPA. The panel held that Congress did not speak as to the specific procedures affected by the settlement and upheld BPA’s statutory authority to pay certain funds in lump sums and waive BPA’s authority to make in lieu purchases of power. The panel held that BPA did not fail, either in substance or procedure, as to its Section 7(b) duty to “calculate a ‘rate ceiling’ to protect [preference customers].” The panel held that neither the BPA nor FERC were violated because the settlement “sets only costs, not rates” and doesn’t require power be provided illegitimately. Finally, the panel held that the settlement did not improperly bind non-signatories, that APAC’s claims under Ninth Circuit precedent were without merit, and that BPA’s “exhaustive evaluation of the [s]settlement” was not arbitrary or capricious. PETITION DENIED.