Apac v. Bpa

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ASSOCIATION OF PUBLIC AGENCY No. 11-73178

CUSTOMERS,

Petitioner,

OPINION

v.

BONNEVILLE POWER

ADMINISTRATION,

Respondent,

CITIZENS UTILITY BOARD OF

OREGON; EUGENE WATER &

ELECTRIC BOARD; IDAHO POWER

COMPANY; NORTHWEST

REQUIREMENTS UTILITIES; PUGET

SOUND ENERGY, INC.; PACIFICORP;

PACIFIC NORTHWEST GENERATING

COOPERATIVE; PUBLIC POWER

COUNCIL; PUBLIC UTILITY

COMMISSION OF OREGON; PUBLIC

UTILITY DISTRICT NO. 1 OF COWLITZ

COUNTY, WASHINGTON; PUBLIC

UTILITY DISTRICT NO.1 OF

SNOHOMISH COUNTY, WASHINGTON;

PUBLIC UTILITY DISTRICT NO. 1 OF

BENTON COUNTY, WASHINGTON;

THE CITY OF SEATTLE,

Respondents-Intervenors.

2 APAC V. BPA

On Petition for Review of an Order of the

Bonneville Power Administration

Argued and Submitted

February 19, 2013—Portland, Oregon

Filed October 28, 2013

Before: Arthur L. Alarcón, Stephen S. Trott,

and Richard A. Paez, Circuit Judges.

Opinion by Judge Paez;

Dissent by Judge Alarcón

SUMMARY*

Bonneville Power Administration

The panel denied a petition for review of a decision of the

Bonneville Power Administration adopting the Residential

Exchange Program Settlement Agreement, which set terms

for refunding energy customers who were previously

overcharged and set new rate terms for the next seventeen

years.

The panel held that the Association of Public Agency

Customers, a group whose members were not direct

customers of the Bonneville Power Administration (“BPA”),

had constitutional and prudential standing to challenge the

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

APAC V. BPA 3

Settlement, due to the “pass-through” contracts under which

its members paid rates that directly reflected the rates that the

BPA charged its direct customers. Concerning the merits, the

panel held that the Settlement complied with the relevant

statutory requirements of the Pacific Northwest Electric

Power and Conservation Act, the Bonneville Project Act, and

regulations of the Federal Energy Regulatory Commission,

and with the court’s prior decisions in Portland Gen. Elec.

Co. v. BPA, 501 F.3d 1009 (9th Cir. 2007), and Golden Nw.

Aluminum, Inc. v. BPA, 501 F.3d 1037 (9th Cir. 2007). The

panel also held that the Settlement did not improperly bind

non-settling parties to the Agreement. Finally, the panel held

that the BPA Administrator’s adoption of the Settlement in

the Record of Decision was not arbitrary and capricious.

Judge Alarcón dissented because he would hold that

Association of Public Agency Customers lacked Article III

standing, and therefore the court lacked jurisdiction to reach

the merits of the case.

COUNSEL

Kathleen M. Sullivan (argued), Quinn Emanuel Urquhart &

Sullivan, LLP, New York, New York; Michael Alcantar and

Donald Brookhyser, Alcantar & Kahl, LLP, Portland,

Oregon; Michael N. Kunselman, Alston & Bird, LLP,

Washington, D.C.; John M. Rochefort, Alston & Bird, LLP,

Los Angeles, California; Judith Endejan, Graham & Dunn,

PC, Seattle, Washington; Jason N. Poulos, Weinberg Wheeler

Hudgins Gunn & Dial, Atlanta, Georgia, for Petitioner.

4 APAC V. BPA

Kurt R. Casad (argued), Special Assistant United States

Attorney, S. Amanda Marshall, United States Attorney,

Stephen J. Odell, Assistant United States Attorney, Richard

A. Greene, Special Assistant United States Attorney,

Portland, Oregon; Randy A. Roach and Timothy A. Johnson,

Bonneville Power Administration, Portland, Oregon, for

Respondent.

Jay T. Waldron (argued) and Sara Kobak, Schwabe

Williamson & Wyatt, PC, Portland, Oregon; Donald G. Kari

and Jason Kuzma, Perkins Coie, LLP, Bellevue, Washington;

Michael G. Andrea, Avista Corporation, Spokane,

Washington; Scott G. Seidman, Tonkon Torp, LLP, Portland,

Oregon; Dan L. Bagatell, Perkins Coie, LLP, Phoenix,

Arizona; Ryan L. Flynn, Pacificorp, Portland, Oregon; R.

Blair Strong, Paine Hamblen, LLP, Spokane, Washington, for

Intervenors PacificCorp., et al.

Paul M. Murphy (argued), Murphy & Buchal, LLP, Portland,

Oregon; Sarah Dennison-Leonard, Portland, Oregon, for

Intervenors Northwest Requirements Utilities, et al.

Stephanie Andrus, Assistant Attorney General, Salem,

Oregon; Donald L. Howell, II, Deputy Attorney General,

Boise, Idaho; G. Catriona McCracken and Raymond W.

Myers, Citizens’ Utility Board of Oregon, Portland, Oregon,

for Intervenors Idaho Public Utilities Commission, et al.

APAC V. BPA 5

OPINION

PAEZ, Circuit Judge:

In this opinion, we consider whether a settlement

agreement between the Bonneville Power Administration

(“BPA”) and a large number of its customers is lawful. We

invalidated a previous settlement between BPA and a class of

customers because it did not comply with the Pacific

Northwest Electric Power Planning and Conservation Act

(“NWPA”). See Portland Gen. Elec. Co. v. BPA, 501 F.3d

1009, 1036–37 (9th Cir. 2007) (“PGE”); Golden Nw.

Aluminum, Inc. v. BPA, 501 F.3d 1037, 1048 (9th Cir. 2007)

(“Golden Nw.”). On remand, BPA initiated a complex rate-

making process, under which it calculated both (1)

overcharges resulting from the unlawful settlement, and (2)

new rates, intended to comply with PGE and Golden

Northwest. Its customers, in turn, filed numerous petitions

for review in this court, challenging various aspects of BPA’s

rate-making.1

In the face of potentially unending litigation, BPA and a

large number of its customers entered into the Residential

Exchange Program Settlement Agreement (“REP-12

Settlement Agreement” or “Settlement”). Record of Decision

(“ROD”) 14.2 The Settlement sets terms for refunding

1

At the time of the BPA Administrator’s final decision in this case,

there were 56 petitions pending before the Ninth Circuit “on issues related

to BPA’s establishment of its power rates.” Record of Decision 13.

2

The REP-12 Record of Decision is contained in BPA’s supplemental

excerpts of record, filed with the court. It is also available at

6 APAC V. BPA

customers who were previously over-charged, as well as

setting terms—including a new rate-making methodology—

for the next seventeen years. After a thorough evaluation, the

BPA Administrator issued the REP-12 Record of Decision, a

final agency action, in which he adopted the Settlement and

committed BPA to abide by its terms.

In its petition for review, the Association of Public

Agency Customers (“APAC”) challenges the Settlement,

alleging that it violates several provisions of the NWPA,

16 U.S.C. §§ 839c(c), 839e(b), the Bonneville Project Act,

16 U.S.C. § 832d(a), regulations of the Federal Energy

Regulatory Commission, 18 C.F.R. §§ 300.1(b)(6),

300.21(e)(1), and this court’s decisions in PGE and Golden

Northwest.3 In response, BPA and the intervening parties

argue, in part, that APAC’s members lack standing to bring

this challenge, because they are merely the customers of

BPA’s customers, not direct customers themselves.4 We

conclude that APAC has standing to challenge the Settlement,

due to the “pass-through” contracts under which its members

pay rates that directly reflect the rates BPA charges its direct

http://www.bpa.gov/Finance/ResidentialExchangeProgram/Pages/defau

lt.aspx. We cite to the page numbers of the Record of Decision, rather

than to the parties’ supplemental excerpts of record.

3

APAC’s petition was initially consolidated with Alcoa Inc. v. BPA, No.

11-73161. However, BPA and Alcoa later reached a settlement of their

dispute and agreed to dismiss that action under Rule 42(b) of the Federal

Rules of Appellate Procedure. We dismissed Alcoa’s petition with

prejudice on December 18, 2012.

4

The intervening parties are: a group of investor-owned utilities

(“IOUs”), a group of consumer-owned utilities (“COUs”), and the

Citizens’ Utility Board of Oregon. All intervening parties urge the court

to dismiss or deny APAC’s petition.

APAC V. BPA 7

customers. With respect to the merits, however, we conclude

that the Settlement complies with the relevant statutory

requirements and with our prior decisions, and we therefore

deny APAC’s petition for review.

I. BACKGROUND

We have previously chronicled the history of BPA, a

federal agency that markets power generated by federal

hydroelectric projects in the Columbia River Basin. See, e.g.,

Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d 774, 779

(9th Cir. 2012); Pac. Nw. Generating Co-op. v. Dep’t of

Energy, 580 F.3d 792, 797–800 (9th Cir. 2009); Golden Nw.,

501 F.3d at 1041; PGE, 501 F.3d at 1013–16; Pub. Power

Council, Inc. v. Bonneville Power Admin., 442 F.3d 1204,

1206 (9th Cir. 2006); M-S-R Pub. Power Agency v.

Bonneville Power Admin., 297 F.3d 833, 836–37 (9th Cir.

2002) (as amended); Ass’n of Pub. Agency Customers, Inc. v.

Bonneville Power Admin., 126 F.3d 1158, 1163–65 (9th Cir.

1997) (“APAC”). Nevertheless, because of the complexity of

the case, we begin with a brief review of the relevant history

of the agency and provisions of the NWPA, one of “the tangle

of statutes that govern [BPA’s] operations.” Golden Nw.,

501 F.3d at 1042.5 We then discuss the specific facts relevant

to this appeal.

5

“BPA’s authority to market power is derived from four separate acts:

the Bonneville Project Act; the Regional Preference Act of 1964,

16 U.S.C. §§ 837–837k (2000); the Federal Columbia River Transmission

System Act, 16 U.S.C. §§ 838–838k (2000); and the [NWPA], 16 U.S.C.

§§ 839–839h (2000).” PGE, 501 F.3d at 1014 n.2. BPA “originally

operated under an annual congressional appropriation, but was

restructured as a self-financed agency in 1974.” Id. at 1014.

8 APAC V. BPA

A.

Congress created BPA, an agency within the Department

of Energy, in 1937. PGE, 501 F.3d at 1013. The agency was

initially “tasked with marketing the power generated by

federally owned dams on the Columbia River.” Id. For the

first thirty years of its existence—from the 1930s through the

1960s—BPA had sufficient resources to meet the power

demands of two classes of customers. Id. at 1014. First, BPA

provided power to “preference utilities,” also known as

“consumer-owned utilities” or “COUs.” This class consists

of publicly-owned utilities, cooperatives, and federal

agencies, who are accorded priority to federal power under

the Bonneville Project Act. Id.; see also 16 U.S.C. § 832c(a),

(d). Second, BPA provided power to “non-preference

utilities.” PGE, 501 F.3d at 1014. This class of customers is

made up of two sub-classes: (1) investor-owned utilities

(“IOUs”), who purchase power for re-sale, and (2) direct

service industrial customers (“DSIs”), who purchase power

for direct consumption. Id.; see also APAC, 126 F.3d at

1164.

As demand for low-cost federal power rose in the 1970s,

BPA forecast that it would be unable to meet all of its

customers’ power needs by the end of the decade. PGE,

501 F.3d at 1014. An “uncertain and unstable” period

followed, during which BPA advised non-preference

customers—and, later, preference customers—of its looming

inability to provide them with power. APAC, 126 F.3d at

1165; see also PGE, 501 F.3d at 1014. As a result, many

non-preference customers were forced to purchase power

elsewhere, “at a severe cost disadvantage in the marketplace.”

Id.

APAC V. BPA 9

B.

In response to the pending energy crisis, Congress

enacted the NWPA in 1980. The NWPA “transformed BPA

from an agency that merely sold whatever power was

available from generating facilities in the Federal Columbia

River Power System to one charged with the responsibility of

meeting the region’s future power needs.” APAC, 126 F.3d

at 1165. Of particular importance here, the statute authorizes

BPA to “exercise greater control over its power supply and to

augment that supply by purchasing electric power in the

market.” PGE, 501 F.3d at 1014. It also authorizes the BPA

Administrator to “establish and revise the rates at which

BPA’s power is sold,” and—subject to certain limitations—to

“enter into contracts, agreements, and settlements of claims

and contractual obligations.” Id. Two of the provisions

granting BPA such authority, section 5, 16 U.S.C. § 839c, and

section 7, 16 U.S.C. § 839e, are at issue in this appeal.

1.

Section 5(c) of the NWPA makes low-cost power

available to IOUs, one of the classes of non-preference

customers. Under this provision, IOUs are entitled to

“exchange power they have purchased or generated for lower-

cost power generated by BPA.” PGE, 501 F.3d at 1015; see

also 16 U.S.C. § 839c(c)(1); Golden Nw., 501 F.3d at 1047.

This process, known as the Residential Exchange Program

(“REP”), “essentially acts as a cash rebate to the IOUs,”

allowing the IOUs to benefit from BPA’s low rates even

when BPA cannot itself provide them with power. PGE,

501 F.3d at 1015 (explaining that the “‘exchange’ is a paper

10 APAC V. BPA

transaction”).6 The IOUs, in turn, are required to pass on this

financial benefit to their customers. 16 U.S.C. § 839c(c)(3);

see also Cal. Energy Res. Conservation & Dev. Comm’n v.

Johnson, 807 F.2d 1456, 1460 (9th Cir. 1986) (explaining

that without the REP, “consumers living in areas served by

private utilities faced higher power prices than consumers

living in areas served by public utilities”).

The traditional formula for deciding if an IOU is entitled

to a “REP Benefit” is as follows: first, the IOU offers to sell

power to BPA at its “average system cost” (“ASC”) for

producing power.7 Second, BPA calculates the “PF Exchange

rate,” which is the sum of a base rate for power, see 16 U.S.C.

§ 839e(b)(1), plus any supplemental charges triggered by the

“rate ceiling,” see id. at (b)(3), discussed infra. If the PF

Exchange rate is lower than the ASC, the IOU is entitled to a

REP Benefit, which will be the difference between those two

6

Section 5(c) technically makes REP benefits available to any qualified

utility, including COUs. See 16 U.S.C. § 839c(c)(1). But it was intended

primarily to benefit the IOUs, and the Settlement guarantees REP benefits

only to IOUs. See Washington Utilities & Transp. Comm’n (WUTC) v.

F.E.R.C., 26 F.3d 935, 936–37 (9th Cir. 1994) (“The exchange program

is designed to eliminate the disparities between electric rates paid by

residential customers of IOUs and the lower rates paid by customers of

publicly-owned utilities”). For these reasons, and for the sake of clarity,

we refer to “IOUs,” rather than “utilities,” as the relevant beneficiaries of

section 5(c).

7

BPA determines an IOU’s ASC “on the basis of methodology

developed for this purpose in consultation with the [Pacific Northwest

Electric Power and Conservation Planning] Council, the Administrator’s

customers, and appropriate State regulatory bodies in the region.”

16 U.S.C. § 839c(c)(7). The ASC methodology is subject to review and

approval by the Federal Energy Regulatory Commission (“FERC”).

BPA’s current methodology was developed in 2008 and approved by

FERC in 2009. ROD 3.

APAC V. BPA 11

amounts, multiplied by the IOU’s residential load. See

16 U.S.C. § 839c(c)(1) (stating that the Administrator “shall

acquire by purchase such power and shall offer, in exchange,

to sell an equivalent amount of electric power” (emphasis

added)); ROD 2.

2.

While section 5 provides low-cost power to the IOUs,

section 7 ensures that the preference customers—i.e., the

COUs—will not bear the cost of this benefit. See PGE,

501 F.3d at 1015 (“The legislative history of the NWPA

suggests that Congress viewed the NWPA as a compromise

between the preference and non-preference utilities”).

Section 7 governs the rates that BPA charges its customers,

Golden Nw., 501 F.3d at 1041, and it contains two relevant

restrictions.

First, BPA may not charge its preference customers

higher rates than it would in the absence of the REP.

16 U.S.C. § 839e(b)(2)(C).8 In order to ensure this does not

happen, BPA is required to perform a “rate test,” through

which it compares the “PF Public rate”—i.e. the projected

rate for the COUs—to a hypothetical rate based on five

assumptions, including the assumption that no exchanges

were made through the REP. Id. at (A)–(E). If the “rate test”

shows that the PF Public rate is higher than the hypothetical

rate, BPA must adjust the PF Public rate downward by the

8

The rate that BPA charges its preference customers is the “Priority

Firm Public rate,” or “PF Public rate.” See ROD xi, 180, 185, 330; see

also 16 U.S.C. §§ 839c(b), 839e(b); Pac. Nw. Generating Co-op.,

580 F.3d at 802. This rate is also referred to as the “PF Preference rate.”

ROD 7; see also ROD 203.

12 APAC V. BPA

amount of the difference. This is called the “rate ceiling”

trigger.

The triggering of the “rate ceiling” leads to the second

restriction: if the PF Public rate is adjusted downward, the

cost of making such an adjustment must be recovered from all

of the other rates BPA charges for power, including the PF

Exchange rate that BPA sets for the IOUs. Id. at (b)(3). This

brings us somewhat full circle: the practical effect of adding

a supplemental charge to the PF Exchange rate charged to

IOUs is simply a reduction in REP Benefits for the IOUs.

See PGE, 501 F.3d at 1015.

C.

Put simply, the REP is complicated. It was the source of

“almost continuous litigation” in the 1980s, during which

period many IOUs chose to settle with BPA rather than

actively participate in the program. ROD 5; see also Cal.

Energy Res. Cons. & Dec. Comm’n v. Johnson, 807 F.2d

1456, 1458 (9th Cir. 1986). And it was at the heart of the

2000 REP Settlement Agreement, which this court struck

down in PGE and Golden Northwest.

In the 2000 REP Settlement Agreement, BPA attempted

to settle its REP obligations to the IOUs for fiscal years

2002–2011. Golden Nw., 501 F.3d at 1047. It then adjusted

the rates for the COUs upward, in order to recover the costs

associated with the settlement. Id. at 1048. We held that

BPA’s actions were contrary to the NWPA. In PGE, we

held—contrary to BPA’s argument—that BPA must comply

with sections 5 and 7 “whenever [it] engages in a purchase

and exchange of power,” including in settlement agreements.

501 F.3d at 1032 (emphasis added). We concluded that BPA

APAC V. BPA 13

had failed to do so, because the settlement did not rely on the

IOUs’ current ASCs—that is, the rates at which the IOUs

offer to sell power to BPA—when calculating their REP

settlement benefits. Id. at 1033; see also id. at 1037

(concluding that the settlement did not “resemble the REP

program created in §§ 5(c) and 7(b) that it purports to be

settling”).9 And in PGE’s companion case, Golden

Northwest, we further held that it was a violation of

section 7(b) for BPA to distribute the costs of the settlement

to its preference customers. 501 F.3d at 1048. We remanded

both cases to BPA to set rates in accordance with our

opinions.

On remand, BPA initiated proceedings to set new rates in

compliance with PGE and Golden Northwest. This resulted

in several final decisions: (1) the “WP-07 Supplemental

Record of Decision,” which set a refund schedule for past

over-charges from the unlawful 2000 settlement, (2) the

“2008 Residential Purchase and Sale Agreement Record of

Decision,” which applied specifically to IOUs, and (3) the

“WP-10 Record of Decision,” which established future rates

for 2010–2011. The details of these decisions do not matter

here. What does matter is that each of these decisions

resulted in an onslaught of appeals to this court, which have

been stayed pending the outcome of this case. ROD 29.

9

We explained that BPA had erroneously relied on a “set of

assumptions . . . [that] served to enlarge the group of IOUs eligible for the

settlement and to increase the benefits of those already qualified for the

REP,” including (1) the possibility of a legal challenge to the methodology

for rate-making, despite the lack of any such existing challenge, (2) the

possibility of a challenge to the PF Exchange rate, and (3) future

fluctuations in the energy market. PGE, 501 F.3d at 1033.

14 APAC V. BPA

D.

Against this backdrop, we turn to the subject of this

appeal: the REP-12 Record of Decision. In the face of

“seemingly endless litigation” over the REP, a large number

of BPA’s customers entered into settlement negotiations.10

This resulted in the REP-12 Settlement Agreement, which

was signed by parties representing 94 percent of the total load

that BPA serves.11 The Settlement was then submitted to the

BPA Administrator, who conducted a seven-month

evaluation to determine if it was reasonable and if it complied

with BPA’s statutory mandates, as well as with PGE and

Golden Northwest. After concluding that the Settlement was

lawful and reasonable, the BPA Administrator adopted it and

committed BPA to abide by its terms. ROD 419. The REP-

12 Record of Decision replaces the Administrator’s previous

REP-related decisions. See ROD 20; 29.

Although the Settlement includes “many complicated

formulas and terms,” ROD 29, its three key elements can be

described succinctly. First, the Settlement sets a lump sum of

REP benefits to be paid to the IOUs as a class over the

seventeen-year term of the settlement.12 These lump sums are

10

The BPA Administrator publicly urged customers to work toward a

settlement that would “provide greater long-term certainty” and “greater

political equity” than what BPA could provide on its own. ROD xvii.

11

The settling parties consist of all six regional IOUs, three public utility

commissions, several customer representative groups, the Citizens’ Utility

Board of Oregon, and 89.1 percent (by load) of the COUs.

12

The lump sum allocated to the IOUs reflects the resolution of all

disputed claims arising from fiscal years 2002–2011, as well as the IOUs’

entitlement to REP benefits for fiscal years 2012–2028. Id.

APAC V. BPA 15

broken down by year—for example, in FY 2012, the IOUs

will collectively be paid $182.1 million, and in FY 2028, they

will collectively be paid $286.1 million. ROD 30. Although

the yearly lump sums are fixed, the payments to any

particular IOU are not. Rather, the individual IOUs will still

be required to file their ASCs with BPA every two years.

Pursuant to section 5(c), if an IOU’s ASC does not exceed the

applicable exchange rate for a particular period, that IOU will

not receive REP benefits for that period.13 The BPA

Administrator, in his analysis of the Settlement, concluded

that the net present value of the REP benefits under the

Settlement—$2.05 billion—is approximately $1 billion less

than the net present value of the projected REP benefits over

the same period of time, should BPA continue to pay out REP

benefits without the Settlement. ROD 59.

Second, the Settlement sets a new “rate test” methodology

to meet the requirements of section 7(b). Under its traditional

approach, BPA conducts a “rate test” every two years to

determine the rate ceiling (i.e. the maximum rate that can be

charged to COUs) and the PF Exchange rate. See 16 U.S.C.

§ 839e(b)(2). But under the Settlement, BPA prospectively

conducted the rate test for each year of the Settlement. Thus,

it ran seventeen separate rate tests, under which it determined

the prospective cost of REP benefits (and the rate ceiling) for

fiscal years 2012–2028, should the Settlement not take effect.

In addition, it ran these tests using twenty-six different

scenarios, to account for a range of different rate levels and

litigation outcomes in the absence of the Settlement. BPA

13

The Settlement sets forth a specific formula for determining whether

an individual IOU qualifies for REP benefits, and if so, what amount of

REP benefits it should receive. See ROD Appendix A 19–20. We discuss

this formula infra, in Part III.A.1.b.

16 APAC V. BPA

then compared the projected cost of REP benefits under these

rate tests to the cost of REP benefits under the Settlement. It

concluded that the COUs’ interests were adequately

protected, because in twenty-three of the twenty-six

scenarios, the Settlement results in lower rates for the

preference customers than would be allowed by the section

7(b)(2) rate ceiling absent the Settlement.14

Third, the Settlement provides a schedule of refunds to

the COUs, who were overcharged under the terms of the 2000

REP Settlement Agreement. See Golden Nw., 501 F.3d at

1048. The Settlement provides that the COUs can retain the

refunds they have already received from BPA—which total

$587 million, for the period fiscal years 2008–2011—without

further dispute.15 It also provides that BPA will continue to

refund the COUs during fiscal years 2012–2019, paying a

total of $612 million over the course of eight years. ROD

253. The mechanism for making these refunds is to withhold

a certain amount of the IOUs’ REP benefits, which the IOUs

have agreed can be used to “pay for” the refunds to which the

COUs are entitled.

E.

APAC is an “unincorporated ad hoc organization.” It is

composed of six member groups, all of whom own and

14

The three scenarios in which the COUs’ rates were higher under the

Settlement were scenarios that presumed the COUs would prevail on all

their major contested legal issues and the IOUs would prevail on none;

BPA deemed this unlikely. ROD 80–81.

15

These refunds are referred to by the parties as “Lookback Amounts,”

and are the subject of numerous pending petitions before this court. See

ROD 13–15.

APAC V. BPA 17

operate industrial facilities in the Pacific Northwest.16 The

member groups are not customers of BPA; rather, they

purchase electricity from BPA’s preference customers, the

COUs. On appeal, APAC submitted an affidavit from the

director of energy procurement at Georgia-Pacific LLP

(“GP”), stating that GP contracts to buy power from two

different COUs, the Clatskanie Public Utility District

(“CPUD”) and the Central Lincoln Public Utility District

(“CLPUD”).17 The affidavit describes the contractual

relationship between GP and CPUD as follows:

The electrical contract between BP and CPUD

is a cost-based pass-through contract

according to which GP buys power from

CPUD at CPUD’s cost to purchase the power

16

These groups are Georgia-Pacific LLC, Grays Harbor Paper LP, JR

Simplot Co., Longview Fibre Paper and Packaging, Inc., Ponderay

Newsprint Company, and Weyerhaeuser Company.

17

APAC filed this affidavit with our court in order to establish standing.

“Because Article III’s standing requirement does not apply to agency

proceedings, petitioners had no reason to include facts sufficient to

establish standing as a part of the administrative record. We therefore

consider the affidavit[] not in order to supplement the administrative

record on the merits, but rather to determine whether petitioners can

satisfy a prerequisite to this court’s jurisdiction.” Nw. Envtl. Def. Ctr. v.

Bonneville Power Admin., 117 F.3d 1520, 1527–28 (9th Cir. 1997).

APAC also submitted an affidavit from the general manager of a

group called “Grays Harbor PUD.” This affidavit addresses the former

contractual relationship between “Grays Harbor Paper Company” and a

COU, but suggests that Grays Harbor Paper Company no longer exists.

It also fails to state whether Grays Harbor Paper Company is or was a

member of APAC. Because we can resolve the question of standing on

the basis of the affidavit from Georgia-Pacific LLP, we do not rely on the

affidavit from Grays Harbor PUD.

18 APAC V. BPA

from BPA and other sources, plus additional

charges for overhead. Thus the rates and

charges incurred by CPUD to purchase power

from BPA for the Wauna mill are recovered

by GP.

The affidavit describes GP’s contractual relationship with

CLPUD in nearly identical terms.18 As a result of these “pass

through” contracts, GP claims to be “directly impacted

financially by any rate increases or decreases adopted by

BPA.”

II. JURISDICTION AND STANDARD OF REVIEW

A. Standing

We have jurisdiction to review the REP-12 Record of

Decision, because it is a final agency action. See 16 U.S.C.

§ 839f(e)(5); PGE, 501 F.3d at 1023. At the outset, however,

we must address an important threshold question: does

APAC, a group whose members are not direct customers of

BPA, have standing to challenge the Settlement? Our answer

to this question requires two separate inquiries. First, we ask

if at least one of APAC’s members has “suffered sufficient

injury to satisfy the ‘case or controversy’ requirement of

Article III.” Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174

(9th Cir. 2004). Second, if APAC has established Article III

standing, we “ask whether a statute has conferred ‘standing’

on [at least one of APAC’s members],” id. at 1175, such that

the member is “within [its] zone of interests,” thereby

18

In its description of GP’s contractual relationship with CLPUD, the

affidavit replaces “CPUD” with “CLPUD,” deletes the phrase “and other

sources,” and replaces “Wauna mill” with “Toledo plant.”

APAC V. BPA 19

meeting the requirements for prudential standing, Cent. Ariz.

Water Conservation Dist. v. U.S. E.P.A., 990 F.2d 1531, 1538

(9th Cir. 1993).19 We conclude that APAC has met the

requirements for both constitutional and prudential standing,

for the reasons explained below.

1. Constitutional Standing

The requirements for Article III standing are familiar.

First, the petitioner must show that it has suffered “an injury

in fact,” i.e., “an invasion of a legally protected interest which

is (a) concrete and particularized, and (b) actual or imminent,

not conjectural or hypothetical.” Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560 (1992) (quotation marks and

citations omitted). Second, it must show that the injury is

“fairly traceable to the challenged action of the defendant,”

and is not “the result of the independent action of some third

party not before the court.” Id. (quotation marks and

alternations omitted). Finally, “it must be likely, as opposed

to merely speculative, that the injury will be redressed by a

favorable decision.” Id. at 561 (quotation marks omitted).

19

We consider the standing of APAC’s individual members because an

organization has standing to sue on behalf of its members if “‘(a) its

members would otherwise have standing to sue in their own right; (b) the

interests it seeks to vindicate are germane to the organization’s purpose;

and (c) neither the claim asserted nor the relief requested requires the

participation of individual members in the lawsuit.’” Smith v. Pac.

Properties & Dev. Corp., 358 F.3d 1097, 1101–02 (9th Cir. 2004)

(quoting Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343

(1977)); see also Ocean Advocates v. U.S. Army Corps of Engineers,

402 F.3d 846, 859–61 (9th Cir. 2005) (concluding that organization had

standing because one of its members had standing). BPA and the

intervenors do not contend—nor do we have any reason to believe—that

the latter two requirements are not satisfied.

20 APAC V. BPA

We address each requirement in turn, focusing on whether it

has been satisfied by one of APAC’s members, GP.

a. Injury in Fact

The alleged injury in this case is economic: according to

APAC, its members will “suffer the burden” of over-inflated

power rates, which BPA will set in order to ensure it can

make the required REP payments to the IOUs.20 Put another

way, the Settlement will cause BPA to set higher rates for the

COUs, who will in turn set higher rates for members of

APAC. The intervening IOUs counter that “because APAC’s

members’ rates are set by COUs, not BPA, they have no legal

right to any particular rate under the NWPA,” and thus do not

have a legally protected interest in non-inflated rates.21 We

disagree.

First, we must clarify that a petitioner’s “legally protected

interest” need not be a statutorily created interest.22 Thus, to

20

APAC also argues that the Settlement fails to reimburse the COUs for

illegal overcharges resulting from the 2000 REP Settlement Agreement,

which we struck down in PGE and Golden Northwest.

21

BPA does not dispute that APAC’s members may suffer an injury in

fact; it instead focuses on the second and third requirements for

constitutional standing, arguing that “any burden imposed on APAC’s

members comes from the COUs that sell power to them,” and any remedy

must also come from the COUs. See infra, at Part III.A.1.b–c.

22

The intervening IOUs confuse two separate inquiries: (1) the Article

III “legally protected interest” inquiry, which is a part of establishing

“injury-in-fact,” and (2) the prudential standing inquiry, which looks to

whether a relevant statute confers a right to sue upon a particular plaintiff.

But it is only after determining that “a plaintiff has suffered sufficient

injury to satisfy Article III” that the court “ask[s] whether a statute has

APAC V. BPA 21

the extent the parties and the dissent focus on whether

APAC’s members have a “right to any particular rate under

the [NWPA],” Dissent at 67, their focus is too narrow.23 We

have previously held that “economic injury is generally a

legally protected interest.” Cent. Ariz., 990 F.2d at 1537; see

also Montana Shooting Sports Ass’n v. Holder, 727 F.3d 975,

980 (9th Cir. 2013) (“The economic costs of complying with

a licensing scheme can be sufficient for standing.”); San

Diego Cnty. Gun Rights Comm. v. Reno, 98 F.3d 1121, 1130

(9th Cir. 1996) (“Economic injury is clearly a sufficient basis

for standing.”); Aluminum Co. of Am. v. Bonneville Power

Admin., 903 F.2d 585, 590 (9th Cir. 1989) (“There is harm in

paying rates that may be excessive . . . .”). And we have

found standing where the petitioners’ economic interest in an

agency’s action was created by contract, rather than by

statute.24 Cent. Ariz., 990 F.3d at 1537–38.

conferred ‘standing’ on that plaintiff” as part of the prudential standing

inquiry. Cetacean Cmty., 386 F.3d at 1175 (emphasis added); see also

Salmon Spawning & Recovery Alliance v. Gutierrez, 545 F.3d 1220,

1224–25 (9th Cir. 2008).

23

The exact requirements for a “legally protected interest” are far from

clear. See, e.g., In re Special Grand Jury 89-2, 450 F.3d 1159, 1172 (10th

Cir. 2006) (explaining that the term has “generated some confusion,” but

concluding that the interest need not be “protected by law . . . so long as

it is the sort of interest that courts think to be of sufficient moment to

justify judicial intervention); Judicial Watch, Inc. v. U.S. Senate, 432 F.3d

359, 363 (D.C. Cir. 2005) (Williams, Senior J., concurring) (expressing

“puzzlement” over the requirement and discussing the “powerful reasons”

it should be interpreted to “simply reformulate[] pre-existing

requirements, particularly that the interest affected be a cognizable one”).

24

The dissent misconstrues our explanation here that a legally protected

interest need not be a statutorily created interest as a suggestion that it is

“inappropriate to examine the statute in the context of a legally cognizable

interest.” See Dissent at 66, n.9. We make no such suggestion. Our

22 APAC V. BPA

For example, in Central Arizona—a case with strikingly

similar facts—the EPA had promulgated a rule requiring the

owners of a power generating system to take steps to reduce

its SO2 emissions. Id. at 1533–34. The petitioners, who

purchased electricity from those owners, claimed “an

economic interest in the Final Rule,” arguing that they

“[would] be required, due to [their] contractual relationship

with the [owners], to repay a major portion of . . . the costs of

installing and maintaining the emission controls required by

the Final Rule.” Id. at 1534. We held that the petitioners had

standing to sue EPA, concluding, in part, that their pecuniary

injury was “clearly a sufficient basis” upon which to establish

an “injury in fact,” as required by Lujan.25 Id. at 1537

(quotation marks omitted).

Likewise, in Maricopa-Stanfield Irrigation and Drainage

District v. United States, we held that the plaintiffs had

point is only that a legally protected interest can derive from a source

other than a statute.

25

The dissent asserts that Central Arizona is distinguishable because in

that case EPA was acting in its regulatory capacity while in this case BPA

acted “within its power to contract [with the COUs] by adopting the REP-

12 Settlement Agreement.” Dissent at 71. This distinction makes no

difference. Central Arizona is analogous because, just as the pecuniary

impact of EPA’s regulations passed through to the purchasers of power

from the generating system, the pecuniary impact of BPA’s actions passed

through to GP. The pass-through contracts that GP has with the two

COUs discussed in GP’s affidavit forms the basis for APAC’s Article III

standing. BPA’s own authority to enter into a contractual relationship

with the COUs does not somehow render GP a mere downstream

customer without standing, as the dissent argues. Nor does it mean that

GP seeks to establish standing by asserting the rights of a third party. See

Dissent at 72–73. There is a direct correlation between the REP-12

Settlement and the costs that GP will shoulder. The alleged injury is GP’s

own, not that of the COUs or any other third party.

APAC V. BPA 23

established “injury in fact” when the alleged unlawful act

deprived them of rights they held under contract, not by

statute. 158 F.3d 428, 435 (9th Cir. 1998). There, the

plaintiffs were irrigation districts who claimed that the San

Carlos Apache Tribe Water Rights Settlement Act of 1992

(the “SCAT Act”) had resulted in the government taking their

rights to certain water without just compensation. Id. at 433.

We concluded that the plaintiffs had standing to bring the

lawsuit, explaining in part:

The Districts allege that, by reallocating the

excess Ak-Chin water to the [Central Arizona

Project], the Ak-Chin Settlement Act

automatically reallocated that water to the

non-Indian agricultural pool, which water the

Districts had purchased under their 1984

subcontracts. If the Districts are correct in

their assertion that the excess Ak-Chin water

[should have] defaulted to them, then the

SCAT Act’s reallocation of the excess Ak-Chin

water . . . indirectly deprived the Districts of

water due to them in their subcontracts.

Because a higher-priority right to a CAP

water allocation is more valuable than a

lower-priority right to the same water, the

Districts adequately have alleged that the

SCAT Act deprived them of their legal rights

to the excess Ak-Chin water allocation.

Id. at 434 (emphasis added). Here, as in Central Arizona and

Maricopa-Stanfield, GP has an interest in receiving whatever

it is guaranteed under its contracts with the COUs. By

alleging that the Settlement will directly affect the rates it is

24 APAC V. BPA

charged, resulting in economic harm, GP has sufficiently

established an invasion of a legally protected interest.26

But our inquiry does not end there. GP still must show

that its harm is “concrete and particularized” and “actual or

imminent, not conjectural or hypothetical.” Lujan, 504 U.S.

at 560 (quotation marks omitted). The COUs argue that GP

cannot meet these requirements, because APAC’s members

are not entitled to “any particular rate under the NWPA.” We

disagree.

The record shows that the “pass-through” contracts are

just what their name suggests: under these contracts, GP’s

affidavit explains, GP “buys power from [the COUs] at [the

COUs’] cost to purchase the power from BPA,” such that

“the rates and charges incurred by [the COUs] to purchase

power from BPA . . . are recovered from” GP. Thus, BPA’s

argument that “any burden imposed on APAC’s members

comes from the COUs that sell power to them,” and not from

BPA, relies on technicalities at the expense of common sense.

Under the terms of the Settlement, GP will almost certainly

be charged a rate that directly reflects the rates BPA charges

the COUs. See Clapper v. Amnesty Int’l USA, 133 S. Ct.

1138, 1150 n.5 (2013) (“Our cases do not uniformly require

26

The dissent devotes an extensive part of its discussion to confronting

arguments on which we do not rely to hold that APAC has standing. For

instance, we do not hold that APAC has standing because its members are

“significant purchasers” of BPA power. See Dissent at 69. Nor do we

hold that all downstream consumers of energy, including residential

customers, have standing to challenge the Settlement or any other action

by BPA. See Dissent at 67–68. Our holding is limited to the unique facts

of this case. Further, because APAC filed an affidavit on behalf of GP,

which is uncontested, we do not need to address the “burden of

production” issue raised by the dissent. See Dissent at 62, n. 7.

APAC V. BPA 25

plaintiffs to demonstrate that it is literally certain that the

harms they identify will come about.”). Although “the extent

of [GP’s] economic harm is not readily determinable,” Cent.

Ariz., 990 F.2d at 1538 (emphasis added), the record reveals

that if APAC prevails on the merits of its claims, “the

[Settlement] will likely cause [GP] some amount of pecuniary

harm,” id., due to the pass-through provisions in its contracts.

See Maricopa-Stanfield, 158 F.3d at 434 (“If the SCAT Act

reallocated water that became the Districts’ property under

the Ak-Chin Settlement Act, then the harm is certain even

though its precise valuation may not be.”); see also Bennett

v. Spear, 520 U.S. 154, 168 (1997) (“Given petitioners’

allegation that the amount of available water will be reduced

and that they will be adversely affected thereby, it is easy to

presume specific facts under which petitioners will be injured

. . . .”). We therefore conclude that the evidentiary showing

by APAC is sufficient to establish an actual, concrete harm

that is neither conjectural nor hypothetical. See Lujan,

504 U.S. at 560.

b. Fairly Traceable to Actions of BPA

We next turn to the second requirement for constitutional

standing: that the alleged injury be “fairly traceable to the

challenged action of the defendant,” rather than to “the

independent actions of some third party not before the court.”

Id. (alterations and quotation marks omitted). To satisfy this

requirement, APAC need not show that BPA’s actions are

“the very last step in the chain of causation.” Bennett,

520 U.S. at 169. Rather, APAC must show only that there are

no independent actions of third parties that break the causal

link between BPA’s allegedly unlawful act—i.e., its adoption

of the Settlement—and GP’s economic harm. If there are no

such independent actions, BPA’s challenged actions may be

26 APAC V. BPA

understood to have had a “determinative . . . effect upon the

action” of the third party, which in turn will cause harm to

GP. Id.; see also Maya v. Centex Corp., 658 F.3d 1060, 1070

(9th Cir. 2011) (“A causal chain does not fail simply because

it has several ‘links,’ provided those links are ‘not

hypothetical or tenuous’ and remain ‘plausible.’” (quoting

Nat’l Audubon Soc., Inc. v. Davis, 307 F.3d 835, 849 (9th Cir.

2002)) (internal alteration omitted)).

Here, again, we find guidance in Central Arizona. As we

explained there, the fact that the petitioners’ “contractual

obligations may provide the basis for its economic liability

for the increased costs imposed by the Final Rule . . . hardly

means that the Final Rule itself is not the direct cause of that

liability.” 990 F.2d at 1538. This statement rings even more

true here, where the pass-through contracts directly pass on

to GP whatever rates BPA charges the COUs. Indeed, it is

difficult to imagine a causal chain in which the defendant’s

actions are more “determinative” of the actions of a third

party—and, in turn, of the alleged harm done to GP. See

Bennett, 520 U.S. at 169. To consider the COUs’ rate-setting

an “independent action,” separate from BPA’s rate-setting,

simply “misses the point.” Cent. Ariz., 990 F.2d at 1538.

Nor does it matter, as the dissent suggests, that the COUs

may be able to depart from their contractual arrangements

with APAC members. See Dissent at 74–75. This does not

change the fact that the contractual rates GP will pay are

directly correlated to the Settlement Agreement. We

therefore conclude that APAC has shown that GP’s alleged

economic injury is “fairly traceable” to the challenged action

of BPA—i.e., the adoption of the Settlement —such that its

has satisfied the second requirement for Article III standing.

APAC V. BPA 27

c. Redressability

Finally, we consider the third requirement for Article III

standing: “it must be likely, as opposed to merely

speculative, that the injury will be redressed by a favorable

decision.” Lujan, 504 U.S. at 561 (quotation marks omitted).

We conclude that GP has satisfied this requirement for the

same reasons it has satisfied the “fairly traceable” causation

requirement. If the Settlement turned out to be unlawful, we

would invalidate the REP-12 Record of Decision; as a result,

it could no longer be the source of any economic harm to GP.

GP has therefore satisfied the third requirement for Article III

standing, and as a result, we conclude that APAC has

constitutional standing to challenge the Settlement.

2. Prudential Standing

We turn to the second standing inquiry: the “judicially

self-imposed” requirement of prudential standing.27 “For a

27

APAC argues that BPA has waived any challenge to APAC’s

prudential standing by failing to raise it during the REP-12 proceedings

before the agency. Unlike Article III standing, the issue of a party’s

prudential standing can be waived if not raised in a timely manner. See

Pershing Park Villas Homeowners Ass’n v. United Pac. Ins. Co., 219 F.3d

895, 899 (9th Cir. 2000). But here, BPA had no reason to challenge

APAC’s prudential standing before filing its answering brief, since REP

proceedings are not subject to standing requirements. See Overton Power

Dist. No. 5 v. O’Leary, 73 F.3d 253, 257 (9th Cir. 1996) (“[I]t does not

necessarily follow that a party able to participate in administrative

proceedings therefore has standing to challenge agency decisions.”); see

also 16 U.S.C. § 839(3)(B) (stating that one of the purposes of the NWPA

is “to provide for the participation and consultation of the Pacific

Northwest States, local governments, consumers, customers, users of the

28 APAC V. BPA

plaintiff to have prudential standing under the APA, the

interest sought to be protected by the complainant must be

arguably within the zone of interests to be protected or

regulated by the statute in question.” Nat’l Credit Union

Admin. v. First Nat. Bank & Trust Co., 522 U.S. 479, 488

(1998) (internal quotation marks and alteration omitted); see

also Cetacean Cmty., 386 F.3d at 1176 (“When a plaintiff

seeks to challenge federal administrative action, section 10(a)

[of the Administrative Procedure Act (‘APA’)] provides a

mechanism to enforce the underlying substantive statute.”).28

To satisfy this requirement, “all that is required is a rough

correspondence of the plaintiff’s interests with the statutory

purpose.” Bernhardt v. Cnty. of Los Angeles, 279 F.3d 862,

870 (9th Cir. 2002). The test “‘is not meant to be especially

demanding’ . . . keeping with Congress’s ‘evident intent’

when enacting the APA ‘to make agency action

presumptively reviewable.’” Match-E-Be-Nash-She-Wish

Band of Pottawatomi Indians v. Patchak, 132 S. Ct. 2199,

2210 (2012) (quoting Clarke v. Securities Industry Assn.,

479 U.S. 388, 399 (1987)); see also id. (noting that “the

benefit of any doubt goes to the plaintiff”).

Columbia River System . . . and the public at large within the region” in

“facilitating the orderly planning of the region’s power system”). Thus,

BPA has not waived this challenge.

28

The “zone of interest” requirement derives from section 10 of the

APA, which provides that “[a] person suffering legal wrong because of

agency action, or adversely affected or aggrieved by agency action within

the meaning of a relevant statute, is entitled to judicial review thereof.”

5 U.S.C. § 702. The Supreme Court has “interpreted § 10(a) of the APA

to impose a prudential standing requirement in addition to the

requirement, imposed by Article III of the Constitution, that a plaintiff

have suffered a sufficient injury in fact.” Nat’l Credit Union Admin.,

522 U.S. at 488.

APAC V. BPA 29

Here, the interests of APAC’s members clearly line up

with the statutory purposes of the NWPA.29 APAC’s

members have an interest in purchasing low-cost power,

which allows them to operate their businesses. The statute,

in turn, states that one of its purposes is “to provide that the

customers of the [BPA] and their consumers continue to pay

all costs necessary to produce, transmit, and conserve

resources to meet the region’s electric power requirements.”

16 U.S.C. § 839(4) (emphasis added); see also 16 U.S.C.

§ 838g (explaining that “rate schedules . . . shall be fixed and

established . . . with a view to encouraging the widest

possible diversified use of electric power at the lowest

possible rates to consumers consistent with sound business

principles” (emphasis added)); § 839a(5) (defining

“consumer” as “any end user of electric power”). The

legislative history of the NWPA also shows that Congress

intended for the customers of COUs to benefit from its

protections. See H.R. Rep. No. 96-976, pt. 2, at 36 (1980),

reprinted in 1980 U.S.C.C.A.N. 6023, 6034 (“As an added

protection against preference utilities and their customers

suffering adverse economic consequences as a result of this

legislation, section 7(b)(2) establishes a ‘rate ceiling.’”

29

In addition to arguing that the Settlement is unlawful because it

violates the NWPA, APAC also argues that the Settlement is unlawful

because it violates the Bonneville Power Act and related FERC

regulations. However, this argument is wrapped into APAC’s argument

that the Settlement violates the NWPA, insofar as the NWPA incorporates

the relevant provisions of Bonneville Project Act. 16 U.S.C. § 839c(a)

(stating that all power sales conducted pursuant to section 5 of the NWPA

are “subject at all times to the preference and priority provisions of the

Bonneville Project Act of 1937 (16 U.S.C. § 832 and following) and, in

particular, sections 4 and 5 thereof [16 U.S.C. §§ 832c, 832d]”). We

therefore need not separately consider whether APAC’s interests line up

with the statutory purposes of the Bonneville Power Act.

30 APAC V. BPA

(emphasis added)). On this basis, we conclude that the

interests of APAC’s members are more than “marginally

related” to the purposes of the NWPA, and therefore they

have satisfied the requirements for prudential standing. See

Match-E-Be-Nash-She-Wish, 132 S. Ct. at 2210.

In sum, we conclude that APAC has constitutional and

prudential standing to challenge the Settlement. We therefore

turn to the merits of the petition for review.

B. Standard of Review

“Our review of BPA’s actions is governed by the [APA].”

PGE, 501 F.3d at 1023; see also 16 U.S.C. § 839f(e)(2).

Thus, we will set aside the Record of Decision only if it is

“arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law.” 5 U.S.C. § 706(2)(a). “In

determining whether BPA has acted in accordance with law,

we defer to BPA’s reasonable interpretations of its governing

statutes.” Golden Nw., 501 F.3d at 1045; see also

Confederated Tribes of Umatilla Indian Reservation v.

Bonneville Power Admin., 342 F.3d 924, 928 (9th Cir. 2003)

(“Due to the complex subject matter and BPA’s factual and

legal expertise, we give special, substantial deference to

BPA’s interpretation of the [NWPA].”).

III. ANALYSIS

A. NWPA Section 5(c)

One of APAC’s main arguments is that the Settlement

does not comply with section 5(c) of the NWPA, which

governs the process by which BPA implements the REP. See

16 U.S.C. § 839c(c). First, APAC argues that setting a lump

APAC V. BPA 31

sum of REP benefits, rather than calculating REP benefits “on

an individual IOU-by-IOU basis,” violates section 5(c)(1).

Second, APAC argues that BPA’s waiver of the “in lieu”

provision of section 5(c), 16 U.S.C. § 839c(c)(5), is unlawful.

We conclude that the Settlement does not violate section 5(c)

on either ground.

1. Section 5(c)(1)

We begin by clarifying the process for setting REP

benefits. This is a three-step process: first, BPA estimates

the aggregate amount of REP benefits to be paid to the IOUs

for a given year, pursuant to section 7(b)(2); second, BPA

uses that estimate to set the PF Exchange rate for a given

year; third, BPA uses the PF Exchange rate to determine an

individual IOU’s REP Benefit, pursuant to section 5(c)(1).

Thus, contrary to APAC’s characterization of the process,

BPA must always calculate the aggregate amount of REP

benefits to be paid out in a given year prior to setting the PF

Exchange rate for that year. See 16 U.S.C. § 839e(b)(2)(C).

This is not a novel concept invented by the Settlement. As

the BPA Administrator explained, “[i]f BPA does not know

the total permissible cost of the REP after running the 7(b)(2)

rate test, then BPA has no way of setting the PF Exchange

rate.” ROD 93.

What is a novel concept is that the Settlement obligates

BPA to actually pay out the total amount of REP benefits it

estimates under section 7(b). Put another way, estimating the

aggregate amount of REP benefits to be paid is fundamentally

different from actually setting that amount. We acknowledge

that this is an important difference. But we fail to see how

setting an aggregate amount of REP benefits is a violation of

section 5(c), so long as the amount that is set is less than the

32 APAC V. BPA

maximum possible REP benefits that could be distributed

pursuant to section 7. As the BPA Administrator explained,

“it is section 7(b) that ultimately establishes the amount of the

REP costs that BPA may recover in rates, while section 5(c)

. . . establishes how the REP benefits are distributed among

the REP participants.” ROD 93 (emphasis added). We find

this explanation helpful, as it clearly isolates what we must

decide here: so long as the amount of REP benefits under the

Settlement is lawful—a question we address infra in Part

III.B—all that we must decide is whether the process for

setting and distributing those benefits among the individual

IOUs complies with section 5(c).

a. Setting REP Benefits for Individual IOUs

We therefore turn to section 5(c). Under this provision,

there are two requirements that BPA must follow when

setting REP benefits for any given IOU. First, “the

Administrator shall acquire by purchase” the power that a

utility “offers to sell . . . at [its] average system cost [ASC].”

16 U.S.C. § 839c(c)(1). Second, “the Administrator shall . . .

sell an equivalent amount of power to such utility” in return.

Id. As APAC reads section 5(c), these two directives

necessarily require BPA to calculate an individual IOU’s REP

Benefit using the following formula, which we will call the

“traditional section 5 formula”:

[(ASC - PF Exchange Rate) x (load)] = REP Benefit

Thus, according to APAC, section 5(c) requires BPA to first

calculate the PF Exchange rate, and then—on the basis of that

rate, together with an IOU’s ASC and load—calculate the

APAC V. BPA 33

IOU’s REP Benefit.30 But by setting a lump sum of REP

benefits, APAC argues, the Settlement allows BPA to “back[]

into the rate[] to produce [the] guaranteed REP benefits.”

APAC claims that this is a violation of section 5(c).

We disagree. Although the traditional section 5 formula

satisfies the requirements of section 5(c), it is not the only

formula that would do so. Of critical importance here,

section 5(c) does not specify the rate at which BPA must sell

power back to qualifying utilities; as the Administrator noted,

“[s]ection 5(c) is notably silent on what rate BPA must use to

sell its power to the utility.” ROD 93. Thus, although BPA

has traditionally calculated the REP Benefit using the PF

Exchange rate, all that section 5 actually requires is for BPA

to make the following calculation, where both italicized terms

are variables:

[(ASC - Rate Charged by BPA) x (load)] = REP Benefit

If BPA uses this basic formula with the goal of calculating

the maximum REP benefit for any given IOU, it will

effectively use the traditional section 5 formula—that is, it

will figure out the PF Exchange rate, and it will base the REP

Benefit on that rate. How do we know this? We know

because the PF Exchange rate is the sum of BPA’s base rate

for power, 16 U.S.C. § 839e(b)(1), plus any supplemental

charges triggered by the “rate ceiling,” id. at (b)(3). Thus, the

PF Exchange rate is the lowest rate that BPA can charge the

IOUs. And, as the lowest rate possible, it necessarily creates

30

Put in more mathematical terms, APAC argues that the value of the

“REP Benefit” must be the dependent variable in the formula derived from

section 5(c).

34 APAC V. BPA

the largest possible difference with the ASC—which, in turn,

results in the maximum possible REP Benefit.

But an IOU does not have to accept the maximum

possible REP Benefit. See, e.g., United States v. Mezzanatto,

513 U.S. 196, 201 (1995) (“[A]bsent some affirmative

indication of Congress’ intent to preclude waiver, we have

presumed that statutory provisions are subject to waiver by

voluntary agreement of the parties.”). We agree with the

Administrator that the IOUs are not prohibited from “taking

fewer REP benefits than any otherwise would be entitled to

under the law.” ROD 91. And if an IOU accepts less than

the maximum REP Benefit, the effect is simply that BPA will

charge a higher rate to that IOU, in order to create a smaller

difference between the ASC and the rate charged. Nothing in

section 5 suggests that this is unlawful. See ROD 119

(concluding that “allowing the IOUs to waive their statutory

rights to full REP benefits . . . results in lower rates for all

COU ratepayers”). We therefore conclude that setting a pre-

determined REP Benefit, as required by the Settlement, is not

a violation of section 5 so long as the pre-determined benefit

is lower than the maximum REP Benefit that would result

from using the PF Exchange rate.31 See 16 U.S.C.

§ 839e(b)(2) (stating that the rates charged to the COUs “may

not exceed” a certain rate, but not setting a minimum rate);

see also ROD 94 (“Section 7(b)(2) creates only a cap—not a

floor—on the aggregate amount of REP benefits that BPA

31

This, of course, raises the “critical question” of “whether the

aggregate REP benefits provided under the Settlement exceed what the

[NWPA] permits.” ROD 116. We address that question infra in Part

III.B.

APAC V. BPA 35

must pay to the exchanging utilities and include in rates.”).32

Here, the BPA Administrator concluded that the pre-

determined REP benefits under the Settlement amount to

approximately $1 billion less than what the IOUs would be

entitled to without the Settlement, and therefore setting such

a lump sum is not a violation of section 5(c)(1).

b. Distributing REP Benefits Among the IOUs

Our inquiry could end there if we knew that every IOU

would qualify for REP benefits for each of the seventeen

years covered by the Settlement. If so, it would logically

follow that no IOU could receive REP benefits beyond what

they would be entitled to in the absence of the Settlement.33

But here, it is not a foregone conclusion that every settling

IOU will qualify for REP benefits in a given year. Rather,

under the Settlement, each IOU is required to file its ASC

32

We also reject APAC’s argument that reference to “a Pacific

Northwest electric utility,” 16 U.S.C. § 839c(c)(1) (emphasis added), is

evidence of “Congress’ intent to provide benefits only on an IOU-specific

basis.” First, section 5(c)(1) is silent with respect to “calculating the

exchange benefits for the IOUs as a class.” ROD 92. We therefore defer

to the Administrator’s reasonable interpretation of section 5(c)(1), which

allows BPA to settle its REP obligations. Id.; see also ROD 98

(explaining that under APAC’s interpretation of section 5(c), “BPA has no

choice but to implement the traditional REP,” and in that case “there could

be no settlement of the REP”); PGE, 501 F.3d at 1037 (“BPA has broad

authority to settle claims under the NWPA.”). Second, even under the

Administrator’s interpretation of section 5(c), BPA still must provide

benefits on an IOU-specific basis, for the reasons discussed in this section.

33

Put another way, if we start from two premises—first, that the total

amount of aggregate REP benefits is lawful, and second, that the REP

benefits are distributed proportionately among all IOUs—we must

necessarily conclude that the total amount of REP benefits distributed to

any particular IOU is lawful.

36 APAC V. BPA

with BPA every two years, consistent with BPA’s current

methodology. ROD 111. BPA will then determine if the

IOU qualifies for REP benefits by comparing the IOU’s ASC

to the “utility-specific exchange rate” established for that

IOU. ROD 112. If the ASC is higher than the “utility

specific exchange rate,” BPA will calculate the IOU’s REP

benefits using the following formula, set forth in section 6 of

the Settlement:

([(ASC - Base Rate) x (load)] X [(Total REP Settlement Benefits) /

(3((ASC - Base Rate) x Load))]) + 6.2 Adjustment = REP Benefit

ROD Appendix A 19–20; see also ROD 376–77. Although

complicated, this formula essentially serves one main

purpose: it ensures that each qualifying IOU will receive an

amount of REP benefits proportional to the difference

between its ASC and the base rate for power.34

34

The formula is best understood when broken into sub-parts. First,

BPA will calculate the difference between an individual IOU’s ASC and

the base rate for power in that fiscal year, and multiply that amount by the

IOU’s power load:

(ASC - Base Rate) x (Load) = A

The value of “A” will be different for each IOU, since it is dependent on

that IOU’s particular ASC and load.

Second, BPA will divide the total amount of REP settlement benefits

in a given year—that is, the lump sum provided for all IOUs in that

year—by the total sum of all of the “A” values, as calculated for each IOU

using the formula above:

APAC V. BPA 37

APAC argues that it is unlawful for BPA to use a

“formula not specified in the statute,” for two reasons: first

“BPA cannot assure that it will pay REP benefits only to

those qualified IOU’s that qualify for such a benefit,” and

second, it cannot assure that it will pay REP benefits “only in

(Total REP Settlement Benefits) = B

3((ASC - Base Rate) x Load))

This creates a scaled value that will be the same for all IOUs, since it does

not rely on any IOU-specific values.

Third, BPA will multiply A times B:

([(ASC - Base Rate) x (Load)] X [(Total REP Settlement

Benefits)/( 3((ASC - Base Rate) x Load))]) = C

This third step serves to divide the aggregate REP benefits among the

IOUs in a way that is proportional to their ASCs: a higher ASC results in

a greater difference between the ASC and the base rate, which results in

a greater value for “A,” which in turns results in a greater value for “C.”

Finally, BPA will add the amount of any “6.2 adjustment,” resulting

in the final REP Benefit for that IOU:

C + [Section 6.2 adjustment] = REP Benefit

This final step involves a “reallocation” of REP benefits among the IOUs,

which reflects the fact that the IOUs have not received equal refund

payments from BPA thus far. ROD 120. Thus, “some [IOUs] have

agreed to take a larger amount of rate protection in the calculation of their

PF Exchange rate, while others have agreed to take less.” ROD 121. This

internal reallocation of benefits among the IOUs does not affect any other

class of BPA ratepayers. See id. (concluding that “[n]othing in section

5(c), section 7(b)(2), or section 7(b)(3) prohibits the IOUs from waiving

their rights to have rate protection dollars allocated on a pro rata basis

among the PF Exchange rates”).

38 APAC V. BPA

the amount to which each qualified IOU is entitled under § 5(c).”

With respect to APAC’s first argument, we agree that

some IOUs could qualify for REP benefits under the

Settlement even though they would not qualify for benefits

absent the Settlement. The formula used in the Settlement

requires BPA to calculate only “(ASC - Base Rate) x (Load),”

as opposed to “(ASC - PF Exchange Rate) x (Load),” when

deciding if an IOU qualifies for benefits. Because the base

rate for power is necessarily lower than the PF Exchange rate,

the former formula will allow more IOUs to qualify for REP

benefits than the latter formula.35

But this is not unlawful. Although BPA has traditionally

calculated REP benefits using the PF Exchange rate, section

5(c) does not prohibit BPA from selling power to the IOUs at

rates lower than the PF Exchange rate. See ROD 94

(“Section 7(b)(2) does not require BPA to either pay the IOUs

or charge the COUs in rates the exact amount of REP benefits

established by a comparison of the utilities’ ASCs and BPA’s

PF Exchange rate.”). Rather, under its traditional approach,

BPA has done so in order to ensure that the COUs’ interests

are protected under section 7. But once BPA has fulfilled its

obligations under section 7, as it has under the Settlement,36

section 5 does not impose any additional restrictions on the

rate at which BPA must sell power to the IOUs. See ROD

35

Consider, for example, a scenario where an IOU’s ASC is 40.00, the

base rate for power is 30.00, and the PF Exchange rate is 50.00. Under the

formula used in the Settlement, the IOU would qualify for some portion

of the REP benefits. Under the formula traditionally used, however the

IOU would not qualify for any REP benefits, because 40 - 50 = -10.

36

See discussion infra Part III.B.

APAC V. BPA 39

115 (“Aggregate REP costs are determined pursuant to

sections 7(b)(1) and 7(b)(2) of the Northwest Power Act.

Once the size of the aggregate REP is determined, BPA will

use ASCs, PF Exchange rates, and qualifying exchange load

to determine each utility’s REP benefits, whether under the

Settlement or under no settlement.”). Thus, even though

more IOUs may qualify for REP Benefits under the

Settlement than otherwise would qualify, the formula that

BPA uses to determine eligibility still complies with section

5.

The same reasoning leads us to reject APAC’s second

argument, that some IOUs may receive a greater share of

REP benefits than they are “entitled” to under section 5(c).

Yet again, we agree with the factual premise of APAC’s

argument: if the total amount of REP benefits is a pie, and

not every IOU gets a slice of the pie, the other IOUs will

simply get corresponding bigger slices of pie.37 Or, as APAC

frames it, “each qualifying IOU will receive its proportional

share of the fixed total annual amount of REP benefits

provided in the Settlement regardless of the actual difference

between its ASC and Exchange Rate.” And we understand

the intuitive concern that a particular IOU should not receive

greater benefits under the Settlement than it would otherwise.

But here, again, we conclude that so long as the total

amount of REP benefits distributed does not violate section

7, there is no statutory restriction on what share of those

benefits any particular IOU may receive. As the

Administrator explained, if “the IOUs wish to share among

themselves a smaller amount of REP benefits through a fixed

37

This would occur if one or more of the IOUs did not qualify for REP

benefits under the formula set forth in the Settlement.

40 APAC V. BPA

payment stream that settles future uncertainties . . . there is

nothing in section 5(c) . . . that prohibits BPA from honoring

such a decision.” ROD 94. Thus, so long as “the aggregate

level of REP benefits provided under the Settlement”

comports with section 7, and “the distribution of those

payments is being administered in a manner that closely

resembles the REP envisioned by Congress in section 5(c),”

the Settlement is “consistent with BPA’s statutory authority

and is consistent with law.” ROD 115; see also PGE,

501 F.3d at 1037 (striking down the 2000 Settlement because

it did not “resemble” the REP program created in section 5).

And given the meticulous calculations that BPA will use to

distribute the REP benefits proportionately among the IOUs,

we too are “frankly at a loss as to how the Settlement . . .

could be closer to the[] statutory requirements” of section

5(c).38 ROD 115. We therefore agree with the Administrator

that the Settlement’s lump sum of REP benefits does not

violate section 5(c)(1). See Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 843 (1984).

2. Section 5(c)(5) (“in lieu” powers)

We also reject APAC’s argument that BPA violated

section 5(c) by waiving its ability to make in lieu purchases

pursuant to section 5(c)(5). See 16 U.S.C. § 839c(c)(5).39

38

We further note that BPA staff “worked with the parties to test the

formulas in the Settlement to ensure they would function over time,”

which included identifying a potential “anomalous scenario” that could

occur if “BPA’s cost of power was higher than all of the IOUs’ cost of

power.” ROD 116–17.

39

The in-lieu provision of section 5 provides: “Subject to the provisions

of sections 839b and 839d of this title, in lieu of purchasing any amount

of electric power offered by a utility under paragraph (1) of this

APAC V. BPA 41

The in lieu provision of section 5 permits BPA, “in its

discretion, [to] sell the IOUs actual power purchased from

other sources in lieu of participating in the REP so long as

BPA’s cost for purchasing such power is less than the IOUs’

cost to produce or secure their own power.” PGE, 501 F.3d

at 1022. Thus, in theory, BPA can reduce the costs of the

REP by engaging in in lieu transactions, which involve the

actual sale of power, rather than paper transactions.40 We

agree with the BPA Administrator’s conclusion that BPA did

not violate section 5(c) by waiving this authority. See ROD

129–34.

First, we agree with the Administrator that BPA’s

decision to engage, or not engage, in in-lieu transactions is

entirely discretionary. See ROD 133. Indeed, the statute

itself says only that BPA “may” engage in in-lieu

transactions. 16 U.S.C. § 839c(c)(5) (emphasis added). “The

permissive language and the absence of any legislative

history lead us to conclude that the implementation of section

5(c)(5) is completely within the discretion of the BPA.” Cal.

Energy, 807 F.2d at 1462. Thus, the Administrator has

interpreted section 5 as presenting “no statutory impediment”

to BPA’s waiving its in-lieu authority, so long as BPA

provides “a reasoned decision for withholding [its] discretion

subsection, the Administrator may acquire an equivalent amount of

electric power from other sources to replace power sold to such utility as

part of an exchange sale if the cost of such acquisition is less than the cost

of purchasing the electric power offered by such utility.” 16 U.S.C.

§ 839c(c)(5).

40

In practice, however, BPA has never actually exercised this power.

ROD 132; see also Cal. Energy, 807 F.2d at 1461 (explaining that in-lieu

purchases are “but a minor feature of the exchange program created in

section 5,” with “only a very limited usefulness”).

42 APAC V. BPA

under the Settlement.” ROD 131; see also ROD 133

(explaining that the “discretionary decision to engage in in-

lieu transactions,” pursuant to section 5(c)(5), is not “part of

BPA’s obligation to protect the rates of COUs under section

7(b)(2)”).

This is not to say that it is always permissible for BPA to

waive its in-lieu authority. As APAC points out, we have

previously held—albeit under markedly different facts—that

BPA would have “abused its discretion under 5(c)(5)” if it

had “completely precluded itself from ever making in-lieu

purchases.” Cal. Energy, 897 F.2d at 1462 (concluding that

the petitioner had not shown that the contract actually

contained such a “complete ban on in-lieu sales of power”).

In California Energy, however, the contracts at issue did not

contain any limit on the amount of REP benefits that utilities

might receive, meaning that the risk of waiving the in-lieu

power—which is a means of keeping REP benefits in

check—were much higher than in this case. This is

consistent with the Administrator’s observation that “[i]n a

world where the IOUs’ REP payments are determined rate

case by rate case, it makes sense for the Administrator to

retain his rights to engage in in lieu transactions to damper

otherwise unknown REP costs.” ROD 130.

Here, unlike in California Energy, there is a cap on the

total amount of REP benefits the IOUs can receive under the

Settlement, meaning that the cost of REP benefits will not

suddenly spike in an unexpected way, as it could absent the

Settlement. And BPA has provided a reasoned decision for

waiving its in-lieu authority, taking into account the costs and

benefits of doing so. Its primary reason for waiving this

authority is “to achieve the substantial cost protections

afforded by the Settlement,” ROD 130, the certainty of which

APAC V. BPA 43

would be undermined if BPA retained the power to add

another variable to its rate calculations. Essentially, BPA has

waived one way of controlling REP costs—the ability to

engage in in-lieu transactions—for another, greater way of

controlling REP costs, i.e., the Settlement. ROD 132–33.

We agree with the BPA Administrator that this is a

reasonable trade-off. Furthermore, we note that because the

amount of REP benefits is set under the Settlement, the only

effect of an in-lieu transaction would be to “adjust the

amounts paid to each IOU,” as opposed to creating “cost

savings to BPA or any other ratepayers.” ROD 131. This

further supports BPA’s decision to waive its in-lieu authority,

because doing so does not deprive other ratepayers of a

benefit they might otherwise receive. We therefore conclude

that, under these facts, it was reasonable, and not unlawful,

for BPA to waive its authority to engage in in-lieu

transactions.

We likewise reject APAC’s second argument, that “BPA,

as a member of the executive branch,” cannot contract away

the powers given to it by Congress. Here, BPA is “acting as

a private contracting party,” and as a result, its “rights and

duties are governed by law applicable to private parties

unaltered by the government’s sovereign status.” Kimberly

Assocs. v. United States, 261 F.3d 864, 869 (9th Cir. 2001);

see also PGE, 501 F.3d at 1029 n.17 (“Unlike many

regulatory agencies, ‘Congress endowed the Administrator

with broad-based powers to act in accordance with BPA’s

best business interests,’ allowing BPA ‘to function more like

a business than a governmental regulatory agency.’” (quoting

APAC, 126 F.3d at 1170)). BPA therefore did not err by

waiving its ability to exercise one of its discretionary powers.

44 APAC V. BPA

B. NWPA Section 7(b)

APAC also argues that the Settlement does not comply

with section 7(b) of the NWPA, under which BPA must

calculate a “rate ceiling” to protect the COUs. See 16 U.S.C.

§ 839e(b)(2)–(3). Here, rather than challenging the “lump

sum” term of the Settlement, APAC challenges the new

methodology for running the “rate test” under section 7(b).

As explained supra, under the Settlement, BPA ran the “rate

test” prospectively for each year of the Settlement.

APAC argues that under section 7(b), BPA cannot use

rate projections “that extend beyond five years,” and

therefore it cannot rely on its prospective rate tests for the

entire term of the seventeen-year settlement. In support of

this argument, APAC cites to the requirement that BPA must

calculate the rate ceiling for any given year using projected

power costs for that year, “plus the ensuing four years.”

16 U.S.C. § 839e(b)(2); see also id. at (C) (explaining that

BPA must calculate the rate ceiling by assuming that no REP

benefits are paid out “during such five-year period”). This

requirement, according to APAC, imposes “time constraints

. . . which were designed to ensure that REP benefits must be

based on current cost and load data.” We disagree.

As APAC concedes, section 7(b) is silent with respect to

how far in advance BPA can run the rate test for any given

year. And the language APAC cites requires only that BPA

use information from five separate years—the year in

question, plus the following four years—to set rates for a

single year. This requirement does not impose a restriction

on running the section 7(b)(2) rate test in advance of a

particular year; to the contrary, it supports the conclusion that

BPA can rely on projected rates when running its rate tests.

APAC V. BPA 45

In the absence of clear statutory language regarding how

far in advance BPA can run its rate tests, we accord

substantial deference to BPA’s interpretation of section 7.

See PGE, 501 F.3d at 1025. Here, the Administrator

concluded that since BPA unquestionably has the legal

authority to settle REP disputes, see id. at 1030, it must also

be able to satisfy its section 7(b)(2) obligations by running

the rate test for the term of the settlement. ROD 173–74.

Otherwise, “there could never be a meaningful REP

settlement,” or at least not one that settled the dispute for

longer than a five-year period. ROD 174. The Administrator

thus explained:

In a normal ratemaking context, where BPA

revises its rates every two years in a contested

environment, BPA conducts the 7(b)(2) rate

test for the rate period plus four years to

determine two-year rates. A REP settlement,

however, resolves REP disputes for a longer

term than a single rate period . . . . Therefore

a REP settlement must satisfy section 7(b)(2)

in a different manner from the rate test used to

establish rates for a single rate period.

ROD 173. We conclude that this is a reasonable

interpretation of section 7(b)(2). See Chevron, 467 U.S. at

843 & n.11 (“[I]f the statute is silent or ambiguous with

respect to the specific issue, the question for the court is

whether the agency’s answer is based on a permissible

construction of the statute. The court need not conclude that

the agency construction was the only one it permissibly could

have adopted to uphold the construction . . . .”). As BPA

argues in its answering brief, section 7(b)(2) is not “a

straitjacket that effectively prohibits settlement of the REP.”

46 APAC V. BPA

And the mere fact that BPA has traditionally calculated the

rate ceiling on a two-year cycle does not mean that is the only

legal method for running the test.41 Rather, it makes sense

that BPA would run the rate test for a two-year period when

setting rates for the upcoming two years, and for a seventeen-

year period when setting rates for the upcoming seventeen

years.

Nor does BPA’s method of running the section 7(b)(2)

rate test under the Settlement render the test “superfluous,” as

APAC argues. The purpose of the rate test is not to ensure

that BPA charges the COUs the exact amount at which the

rate ceiling is set; the purpose is to ensure they are charged an

amount no higher than the rate ceiling. See 16 U.S.C.

§ 839e(b)(2). Thus, contrary to APAC’s argument, it does

not matter if “the result of the § 7(b)(2) rate test can be

directly, arithmetically linked” to the COUs’ rates, so long as

those rates to do not exceed the rate ceiling. The section

7(b)(2) rate test plays an important role in the Settlement,

insofar as it requires BPA to compare the lump sum of REP

benefits to the projected rate ceilings, in order to ensure that

the COUs would not be charged rates higher than the rate

ceiling. And to the extent the Settlement “pre-determine[s]

the rate ceiling” by setting a lump sum of REP benefits, as

APAC argues, it pre-determines a lower rate ceiling than

would otherwise be set under section 7(b)(2). This is not a

violation of section 7(b)(2).

41

Furthermore, as the BPA Administrator explained, the argument that

“the duration of the 2012 Settlement . . . is unprecedented” not only fails

to show that the Settlement is unlawful, it is also “simply wrong . . . .

During the 1980s and 1990s, BPA negotiated REP settlement agreements

and paid benefits under such agreements to 33 exchanging utilities,

including all of BPA’s exchanging preference customers, for terms up to

15 years.” ROD 201.

APAC V. BPA 47

In addition to challenging the method of applying the

section 7(b)(2) rate test, APAC also challenges its result.

Thus, it argues that the Settlement violates section 7 because

“the projected costs under some of the various scenarios in

[BPA’s] analysis did, in fact, exceed the § 7(b)(2) rate test.”

It is true that in three of the twenty-six scenarios, the COUs

would not receive greater rate protection under the Settlement

than they would without the Settlement.42 But these three

scenarios involved “extreme instance[s] where the COUs

prevail on multiple major contested issues and the IOUs

succeed in virtually none of their issues.” ROD 59; 198.

Although we recognize the narrow possibility that a violation

of section 7(b)(3) could occur if one of these scenarios

presented itself, we are satisfied with the Administrator’s

conclusion that these “extreme” scenarios are unlikely to

occur. ROD 80–81. “This is not to say that BPA could act

contrary to a clear statutory directive in settling, but if there

is room for doubt, we ought not to resolve it in a manner that

sends the parties back to litigation.” Util. Reform Project v.

Bonneville Power Admin., 869 F.2d 437, 443 (9th Cir. 1989).

Such is the case here.

42

These twenty-six scenarios consisted of “four scenarios to analyze

uncertainty in BPA’s costs and [twenty-two] scenarios to analyze the

possible impact of the litigation outcomes.” ROD 56–58. As the

Administrator noted, “the lower projected costs of the REP . . . are not

mere ethereal guesswork.” ROD 60. In making these projections, BPA

considered “multiple variations on the key drivers of future REP benefits,

i.e., ASCs, exchange loads, BPA’s costs, litigation risks, and market

variations.” ROD 64. Thus, although the very nature of forecasting

implies some uncertainty, the rates that BPA forecast cannot fairly be

characterized as, in APAC’s words, “pure speculation and conjecture.”

48 APAC V. BPA

C. Cost Recovery Adjustment Clause

APAC next argues that the Settlement is unlawful because

it does not permit BPA to apply a Cost Recovery Adjustment

Clause (“CRAC”) to the REP benefit levels. The CRAC is a

rate mechanism by which BPA can adjust customers’ rates

when “changes in costs and revenues vary substantially from

what BPA was projecting when setting rates,” so that BPA is

able to recover all of its costs. ROD 138; see also Indus.

Customers of Nw. Utilities v. Bonneville Power Admin.,

408 F.3d 638, 642 (9th Cir. 2005) (“The CRACs were created

to allow the BPA to address any financial shortfalls without

having to raise base rates.”). APAC argues that by

“guaranteeing the IOUs a fixed amount of REP benefits that

BPA cannot adjust,” the Settlement “excuses IOU customers

from the CRAC,” which means that other customers will bear

the burden of assuring that BPA recovers its costs. We agree

with the factual premise that BPA cannot apply a CRAC to

the IOUs’ REP benefit levels under the Settlement, even if

BPA’s costs are higher than expected. See ROD 134. We

nevertheless reject APAC’s argument, for two reasons.

First, as the BPA Administrator explained “CRACs are

not required by the [NWPA].” Rather, they are a mechanism

by which BPA exercises its statutory authority to “recover . . .

the cost associated with the acquisition, conservation, and

transmission of electric power.” 16 U.S.C. § 839e(a)(1); see

also Cal. Energy Comm’n, 909 F.2d at 1303 (explaining that

section 7 “requires BPA, in marketing federal power, to

establish rates that will produce sufficient revenues to ensure

BPA’s fiscal independence”). BPA thus has broad authority

to determine if and how to apply a CRAC. See, e.g., Pub.

Power Council, 442 F.3d at 1211 (explaining that a CRAC is

APAC V. BPA 49

“entirely bound up with BPA’s rate making responsibilities,

and we owe deference to the BPA in that area”).

Second, to the extent APAC challenges BPA’s exercise of

this discretion, we reject this challenge. The BPA

Administrator concluded that it was reasonable to insulate the

IOUs from a potential CRAC for two reasons: first, the IOUs

“will not receive any upside benefits during a rate period” if,

for example, BPA is unexpectedly able to charge lower rates

than expected; and second, “because the REP benefits are

fixed, the IOUs’ REP benefits payments would never be a

contributing factor” to any unexpected costs that might

trigger a CRAC. ROD 135; see also ROD 137. Thus, “the

lack of a CRAC mechanism in the Settlement . . . [is] simply

one of the trade-offs” of the Settlement, counter-balanced by

other terms that are less beneficial to the IOUs. ROD 136.

And while “COU customers may feel the brunt of a CRAC in

a future rate case,” the BPA Administrator concluded that

“the discount the IOUs are taking in their REP benefits under

the Settlement would . . . more than make-up for the small

amount of CRAC contributions the IOUs would have

provided under a no-settlement alternative.” ROD 139. This

was a reasonable conclusion. See Pac. Nw. Generating Co-

op., 580 F.3d at 806 (“[W]e have identified the question of

how best to further BPA’s business interests consistent with

its public mission as a statutory gap that Congress has left to

BPA to fill.” (quotation marks omitted)); Pub. Power

Council, 442 F.3d at 1209 (“[W]e may not substitute our own

judgment for that of BPA; we must simply assess whether

BPA relied on improper factors, failed to consider an

important aspect of the question, offered an explanation for

its decision that runs counter to the evidence before it, or

rendered a decision that is so implausible that it could not be

ascribed to a difference in view or the product of agency

50 APAC V. BPA

expertise.” (quotation marks and alterations omitted)). We

therefore conclude that the Administrator’s decision to

approve the Settlement without including a CRAC

mechanism was neither unlawful nor unreasonable.

D. Bonneville Power Act and FERC Regulations

1.

In addition to arguing that the Settlement violates the

NWPA, APAC also argues that the Settlement violates the

Bonneville Project Act, 16 U.S.C. § 832d, and applicable

FERC regulations, 18 C.F.R. §§ 300.1(b)(6), 300.21(e)(1), by

setting rates for a period that exceeds five years.43

These sources require that contractual rates be equitably

adjusted no less than once every five years. See 16. U.S.C.

§ 832d(a) (“Contracts entered into under this subsection shall

contain . . . such provisions as the administrator and

purchaser agree upon for the equitable adjustment of rates at

appropriate intervals, not less frequently than once in every

five years . . . .” (emphasis added)); 18 C.F.R. § 300.1(b)(6)

(“Proposed rate approval period means the period for which

confirmation and approval of the rate schedules is requested.

This period must not exceed five years.”); § 300.21(e)(1)

(stating that rate-approval periods are “not to exceed a five-

year period” unless FERC deems it appropriate). But, as

BPA argues, “establishing costs is not the same as setting

43

All power sales conducted pursuant to section 5 of the NWPA are

“subject at all times to the preference and priority provisions of the

Bonneville Project Act of 1937 (16 U.S.C. 832 and following) and, in

particular, sections 4 and 5 thereof [16 U.S.C. §§ 832c, 832d].” 16 U.S.C.

§ 839c(a).

APAC V. BPA 51

rates.” Here, the Settlement sets a fixed amount of REP

benefits that BPA will be required to pay over the term of the

Settlement, but it does not set any rates, meaning the five-

year limit on rate-setting is inapplicable. As the BPA

Administrator explained,

Establishing rates and establishing costs are

two substantively different things. The

Settlement establishes the amount of REP

benefits provided to the IOUs over the

Settlement term and thus the amount of REP

costs included in preference customers’ rates

during that term. The Settlement does not

establish rates.

ROD 203. Rather, the Settlement resolves disputes about

REP costs and rate-making methodology, neither of which

“must be revised every five years” by statute or regulation.

ROD 202.

Furthermore, although the Settlement “pre-determines”

REP benefits, that does not mean that it also pre-determines

rates. As the Administrator explained, “ratemaking involves

many steps, including a forecast of loads and resources; a

determination of BPA’s total revenue requirement; a forecast

of market prices; an analysis of risk and its mitigation; a cost

of service analysis; a rate design analysis; and additional

steps.” ROD 202. The Settlement itself likewise makes clear

that BPA will continue to engage in ongoing rate-setting

throughout the term of the Settlement. See, e.g., ROD

Appendix A 19 (“For each Fiscal Year, BPA will develop

rates, in the Rate Proceeding for the applicable Rate Period,

such that each IOU will be paid its IOU-Specific REP

Settlement Benefit Amount as calculated for such Fiscal Year

52 APAC V. BPA

pursuant to this section 6.”). Indeed, after the Administrator

approved the Settlement, BPA conducted the “BP-12” rate

proceeding to “establish[] power and transmission rates for

FY 2012–2013.” ROD 25. We thus conclude that the

Settlement sets only costs, not rates, and therefore does not

violate the five-year rate-setting limitations established by the

Bonneville Power Act and FERC regulations.

2.

Next, APAC argues that the Settlement violates the

Bonneville Power Act, 16 U.S.C. § 832d(a), because it does

not permit BPA to cancel any contract with five years’ notice.

The Bonneville Power Act provides the following

cancellation requirements for contracts:

[I]n the case of a contract with any purchaser

engaged in the business of selling electric

energy to the general public, the contract shall

provide that the administrator may cancel

such contract upon five years’ notice in

writing if in the judgment of the administrator

any part of the electric energy purchased

under such contract is likely to be needed to

satisfy the requirements of the said public

bodies or cooperatives referred to in this

chapter, and that such cancelation [sic] may

be with respect to all or any part of the

electric energy so purchased under said

contract to the end that the preferential rights

and priorities accorded public bodies and

cooperatives under this chapter shall at all

times be preserved.

APAC V. BPA 53

16 U.S.C. § 832d(a) (emphasis added). We conclude that

APAC’s argument fails because such cancellation can occur

only if “any part of the electric energy purchased under [the]

contract is likely to be needed.” But the Settlement does not

deny the COUs’ access to power, because the Settlement

guarantees only REP benefits, not actual power, for the IOUs.

See generally Util. Reform Project, 869 F.2d at 443–44

(concluding that a particular power exchange between BPA

and certain IOUs was “properly viewed as an exchange,

rather than a sale, of power,” such that the five-year

cancellation clause did not apply, because “BPA’s right to

obtain exchange energy” meant there would be “no net

diminution to the federal system” and BPA would “therefore

continue to have the ability to meet its preference customers’

needs”). Thus, there is no possibility that, under the terms of

the Settlement, BPA will be required to provide power to the

IOUs, much less power that is needed elsewhere.

E. Compliance with PGE and Golden Northwest

In addition to challenging the Settlement terms that

provide benefits to the IOUs, APAC also raises a challenge to

the terms that provide refunds to the COUs. APAC argues

that the Settlement “fails to fulfill the mandate” of PGE and

Golden Northwest because it “neither calculates the past

overcharges nor provides for refunds with interest.”44 We

find no merit to this argument. First, the Settlement

addresses the overcharges by providing refunds for the

COUs, in an amount totaling $612 million over eight years.

44

APAC also argues that the Settlement does not comply with PGE and

Golden Northwest. because it violates section 5 and section 7 of the

NWPA. We reject this argument for the reasons explained in our analysis

of those provisions, supra.

54 APAC V. BPA

As the Administrator explained, this amount “reflects BPA’s

calculation of the outstanding Lookback Amount payments

($511 million), adjusted for interest earned over eights

years.” ROD 253.45 Second, the very nature of a settlement

is that the parties forego certain benefits or rights to which

they may have a cognizable legal claim, in exchange for

something else—here, guaranteed refunds, future certainty,

and the end to ongoing litigation. Short of arguing that the

parties to the Settlement have no right to settle, APAC cannot

plausibly claim that the Settlement is invalid because it does

not provide for the full amount of refunds to which the COUs

may have been entitled, absent the Settlement. “An agency’s

discretion is at its zenith when it is fashioning policies,

remedies and sanctions . . . .” Pub. Utils. Comm’n of State of

Cal. v. F.E.R.C., 462 F.3d 1027, 1053 (9th Cir. 2006)

(emphasis added) (internal quotation marks and alteration

omitted). We therefore will not disturb the Settlement’s

refund schedule for the COUs, which all settling parties

agreed to and which the BPA Administrator approved.

F. Enforcement of Settlement on Non-Binding Parties

APAC next argues that the Settlement is only a “partial

settlement,” which “does not resolve all claims between all

adverse parties” and cannot bind the non-signatories. This is

true: the Settlement cannot, and does not, bind any parties

that have not signed it. But this does not mean that BPA is

45

After our decisions in PGE and Golden Northwest, but before the

Administrator approved the Settlement, BPA provided partial refunds to

the COUs for over-charges under the 2000 Settlement. Adding these

refunds to the $612 million guaranteed under the Settlement, “the total

refund payments BPA will have made to the COUs will be approximately

$1.2 billion.” ROD 253.

APAC V. BPA 55

prohibited from setting the same rates for signing and non-

signing parties. As BPA argues, it has the statutory authority

to set rates and to recover costs through those rates, pursuant

to section 7 of the NWPA. See 16 U.S.C. § 839e. So long as

the Settlement complies with the relevant statutory

authority—as we have concluded that it does—BPA does not

need its customers to unanimously agree to the rates it sets in

accordance with the Settlement. We agree with the

Administrator’s explanation of the Settlement:

Non-signers are bound only in the sense that

they will pay in rates the REP benefits

provided under the Settlement, but only after

BPA has independently found that the

Settlement satisfies the requirements and

protections set forth in the [NWPA]. This is

not the same thing, though, as treating non-

signers as if they have executed the

Settlement. For example, pursuant to section

7.10 of the Settlement, signers may not

“directly or indirectly challenge, either in

whole or in part, the legality of the Settlement

Agreement or any REP Settlement

Implementation Agreement.” Non-signers are

not so limited.

56 APAC V. BPA

ROD 348.46 In other words, our conclusion that BPA can

lawfully set the same rates for signing and non-signing parties

does not necessarily preclude non-signing parties from

challenging those rates going forward. Cf. ROD 325 (“[A]s

a legal matter, BPA’s decision to execute the Settlement (and

therefore become a ‘Party’), and BPA’s decision to replace its

previous disputed decisions with the Settlement and this

ROD, may have an effect on [parties’] pending claims.”). We

therefore conclude that the Settlement does not improperly

bind non-settling parties to the Settlement.

G. Fairness and Reasonableness of the Settlement

Finally, APAC argues that the Settlement is neither fair

nor reasonable, and that the Administrator’s conclusion to the

contrary is “arbitrary and capricious.” See 5 U.S.C. § 706(2)

(providing that a court shall “hold unlawful and set aside

agency actions, findings, and conclusions” that are “arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law”). APAC essentially re-caps the same

arguments we have rejected supra, arguing, inter alia, that the

COUs have “forfeited” the protections of the section 7(b)(2)

rate test, that several of the tested scenarios did not result in

46

See also ROD 322 (“In terms of whether the Settlement provides

equity to non-settling parties, BPA believes the non-settling parties are

being treated equitably under the Settlement because they will benefit

from the return of the Refund Amounts and resolution of the past refund

payments.”); ROD 361 (“The conclusion is that under most possible future

results of the rate test, rates for COUs would be higher than the rates under

the Settlement . . . . Thus, BPA is not imposing rates on non-signing

customers that would deny such customers their statutory 7(b)(2)

protection.”); ROD 372 (“Because the Settlement is consistent with BPA’s

ratesetting directives, the statutory protections of non-settling entities are

not being violated by the Settlement.”).

APAC V. BPA 57

lower REP benefits under the Settlement than would be

distributed without the Settlement, that the Settlement

improperly projects costs over a seventeen year period, that

the Settlement improperly waives BPA’s in-lieu power and

prevents it from allocating CRAC costs to the IOUs, and that

the Settlement’s value to the COUs is “overstated,” since the

COUs are entitled to greater refunds pursuant to PGE and

Golden Northwest. We reject these arguments for the reasons

provided supra. The Settlement is lawful. Furthermore, the

BPA Administrator engaged in an exhaustive evaluation of

the Settlement, providing thorough analyses and conclusions

for countless challenges raised during the administrative

proceedings. We therefore conclude that the BPA

Administrator’s adoption of the REP-12 Settlement in the

REP-12 Record of Decision was not arbitrary or capricious.

IV. CONCLUSION

For the foregoing reasons, APAC’s petition for review is

DENIED.

58 APAC V. BPA

ALARCÓN, Circuit Judge, dissenting:

I respectfully dissent.

In this matter, we must initially determine whether

APAC,1 a group whose members are not direct customers of

BPA, has standing to challenge the REP-12 Settlement

Agreement. BPA and the intervening parties,2 some of whom

supply electricity to APAC’s members, contend that APAC’s

members lack standing to bring this challenge because they

are not direct customers of BPA. APAC counters that it has

standing on account of its members’ cost-based pass-through

contracts with the COUs.3 I would deny the petition because

1

APAC is the only party challenging the REP-12 Settlement Agreement.

APAC’s petition initially was consolidated with Alcoa Inc. v. Bonneville

Power Administration, No. 11-73161. BPA and Alcoa later settled their

dispute and agreed to dismiss that action under Rule 42(b) of the Federal

Rules of Appellate Procedure. This Court dismissed Alcoa’s petition with

prejudice on December 18, 2012.

2

Three groups of intervenors sought and were granted permission to

intervene and file answering briefs: (1) Joint COUs; (2) Joint IOUs; and

(3) State Commissions. These parties joined in BPA’s arguments. The

Joint IOUs separately challenge APAC’s standing in their answering brief.

APAC filed a motion to supplement the record with affidavits, which the

court granted. BPA filed a response to APAC’s motion to supplement the

record with affidavits, contending that although it did not oppose APAC’s

motion, APAC’s evidence failed to establish standing.

3

APAC has previously challenged BPA’s determinations in this Court.

See, e.g., Ass’n of Pub. Agency Customers, Inc. v. Bonneville Power

Admin. (APAC), 126 F.3d 1158, 1163 (9th Cir. 1997); Pub. Utils. Comm’n

of Cal. v. FERC, 814 F.2d 560 (9th Cir. 1987); Aluminum Co. of Am. v.

Bonneville Power Admin. (Alcoa), 903 F.2d 585, 587 (9th Cir. 1989). Of

those cases, BPA disputed APAC’s standing only in APAC. 126 F.3d at

1183 n.9. There, the Ninth Circuit declined to decide whether APAC had

APAC V. BPA 59

it is my view that we lack the power to review its merits

because APAC has failed to demonstrate that it has Article III

standing. Accordingly, I am persuaded I lack the power to

comment on the majority’s opinion regarding the merits of

APAC’s petition.

I

Because standing was not at issue in the agency

proceeding below, we must consider the question in the first

instance. Stormans, Inc. v. Selecky, 586 F.3d 1109, 1119 (9th

Cir. 2009) (“Questions of standing . . . may be raised and

considered for the first time on appeal, including sua sponte.”

(citations omitted)). We must first consider whether at least

one of APAC’s members “suffered sufficient injury to satisfy

the ‘case or controversy’ requirement of Article III.”4

Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004).

If APAC establishes Article III standing, we next would be

required to determine whether one of its members has

standing to challenge BPA’s final actions because it was uncontested that

two other petitioners raising the same challenges in the proceeding had

standing. See id. A ruling on APAC’s standing is necessary here,

however, because APAC is the only party challenging the REP-12

Settlement Agreement.

4

An association like APAC has standing to bring suit on behalf of its

members if: (1) at least one of its members had standing to bring this

petition on its own; (2) by bringing this petition APAC sought to protect

interests germane to its purpose; and (3) neither the claim brought nor

relief sought by APAC requires individual members to participate in the

lawsuit. See Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333,

343 (1977). Neither BPA nor the intervenors argue, nor is there any

reason to believe, that APAC fails to satisfy the second and third elements

of this test. The only inquiry, then, is whether at least one of APAC’s

individual members has standing under Article III.

60 APAC V. BPA

prudential standing—“whether a statute has conferred

‘standing’” on at least one of APAC’s members, id. at 1175,

such that the member falls “within [the statute’s] zone of

interests,” Cent. Ariz. Water Conservation Dist. v. EPA,

990 F.2d 1531, 1538 (9th Cir. 1993) (internal quotation marks

omitted).

A

Article III of the United States Constitution limits the

power of the courts to the resolution of actual “Cases” and

“Controversies.” U.S. Const., art. III, § 2; Valley Forge

Christian Coll. v. Ams. United for Separation of Church &

State, Inc., 454 U.S. 464, 471 (1982). “[T]he irreducible

constitutional minimum of standing contains three elements”:

(1) injury in fact, (2) causation, and (3) redressability. Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). Thus,

the party seeking to establish standing must show the “actual

or imminent” “invasion of a legally protected interest” that

is “fairly traceable to the challenged action” and is “likely . . .

to be redressed by a favorable decision.” Id. at 560–61

(emphasis added) (alterations, citations, and quotation marks

omitted). The party seeking to establish jurisdiction—here,

APAC—bears the burden of demonstrating standing.

DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 & n.3

(2006); Lujan, 504 U.S. at 561. When, as here, the party

seeking to establish standing “is not himself the object of the

government action or inaction he challenges, standing is not

precluded, but is ordinarily ‘substantially more difficult’ to

establish.” Lujan, 504 U.S. at 562 (quoting Allen v. Wright,

468 U.S. 737, 758 (1984)).

APAC V. BPA 61

1

Both BPA and APAC rely on the NWPA’s language and

legislative history in making their respective standing

arguments. Additionally, APAC supplemented the record on

appeal with two affidavits.5 Though slightly different, the

affidavits establish that two of APAC’s members purchase

electricity from BPA’s COU customers, which purchase

power from BPA directly. Two of APAC’s members have

operated in the past6 or currently operate facilities in the

Pacific Northwest that manufacture goods from forest

products. Georgia-Pacific LLC’s (“GP”) paper mill in

Wauna, Washington accounts for approximately 70% of the

total load served by its COU supplier, and its Toledo

packaging and container-board mill accounts for

approximately 40% of the load served by its COU supplier.

APAC’s members’ agreements with the COUs are “cost-

based pass-through” contracts by which members purchase

power from the COUs at the COUs’ cost of purchasing power

from BPA—and, in some cases, other sources—plus any

additional charges for overhead. As a result of these pass-

5

We consider APAC’s affidavits solely to determine whether APAC has

standing. While a party may not supplement the record on appeal from an

agency decision, this rule does not apply when a party attempts to

establish standing. See Nw. Envtl. Def. Ctr. v. Bonneville Power Admin.,

117 F.3d 1520, 1527–28 (9th Cir. 1997) (“Because Article III’s standing

requirement does not apply to agency proceedings, petitioners had no

reason to include facts sufficient to establish standing as a part of the

administrative record.”). Standing was not at issue in the earlier

proceedings. Accordingly, APAC may establish standing during the

briefing phase. Id. at 1528.

6

The Lovely Affidavit repeatedly uses the past tense when describing

APAC’s member. I accordingly assume this member is no longer in

operation and no longer has a contract with the COU.

62 APAC V. BPA

through contracts, “the rates and charges incurred by [the

COUs] to purchase power from BPA . . . are recovered from

[APAC’s members].” And, while at least one member’s

supplier had the “right to depart from this arrangement upon

giving the contractually required notice,” the COU supplier

“did not do so during the contract term.” The affidavits state

that APAC’s members consequently “are directly impacted

financially by any rate increases and decreases adopted by

BPA.”

BPA has not refuted or submitted supplemental evidence

controverting these facts, though it argues they are

insufficient to confer standing on APAC. Thus, the only

question regarding APAC’s standing is whether it submitted

sufficient admissible evidence to support each element of

standing by a substantial probability.7

7

The Ninth Circuit has not explicitly articulated the appropriate burden

of production that a petitioner bears when directly appealing an agency

decision, but suggested in Northwest Environmental Defense Center that

the appropriate standard is a summary judgment standard. 117 F.3d at

1528–29; Lujan, 504 U.S. at 561 (“[F]acts that must be averred (at the

summary judgment stage) [and] proved (at the trial stage) in order to

establish standing . . . .”); cf. Didrickson v. U.S. Dep’t of Interior,

982 F.2d 1332, 1340 (9th Cir. 1992) (applying a summary judgment

burden of production to an intervenor’s evidence of standing submitted for

the first time on appeal, where the challenged decision was resolved at

summary judgment). The Court of Appeals for the District of Columbia,

which handles a large docket of direct agency appeals, has adopted a

summary judgment burden of production for petitioners seeking review of

administrative actions. See Sierra Club v. EPA, 292 F.3d 895, 899 (D.C.

Cir. 2002). Under this standard, the petitioner must demonstrate each

element of standing “by a substantial probability” and “may carry its

burden of production by citing any record evidence relevant to its claim

of standing and, if necessary, appending to its filing additional affidavits

or other evidence sufficient to support its claim.” Id. at 899, 900–01; see

also Lujan, 504 U.S. at 561 (stating that a plaintiff “must set forth by

APAC V. BPA 63

2

To establish Article III standing, APAC must first

demonstrate by a substantial probability that at least one of its

members suffered or will suffer a injury in fact—the invasion

of a legally protected interest that is concrete and

particularized, and actual or imminent. Lujan, 504 U.S. at

560–61. APAC has not satisfied this burden.8

affidavit or other evidence specific facts” to support standing to survive

a motion for summary judgment).

8

I note that APAC’s participation in the underlying agency proceeding

does not confer standing because Article III’s standing requirements do

not apply to agency proceedings. See Summers v. Earth Land Inst.,

555 U.S. 488, 496 (2009); Nw. Envtl. Def. Ctr., 117 F.3d at 1528. The

rules governing standing to participate in agency proceedings are almost

universally more permissive than the requirements for constitutional

standing. See, e.g., Office of Commc’n of the United Church of Christ v.

FCC, 359 F.2d 994 (D.C. Cir. 1966) (holding listening public’s interest in

programming content was sufficient to confer standing to intervene in

FCC adjudicatory proceeding involving license renewal); Scenic Hudson

Preservation Conference v. Fed. Power Comm’n, 354 F.2d 608 (2d Cir.

1965) (holding the “private attorney general” concept justifies intervention

in agency hearing by those without a direct personal or economic interest

in agency decision). Historically, courts and agencies have broadened

public participation in agency proceedings on the theory that broad public

participation allows interested persons and groups to express their views

before agency policies are announced and implemented, eases the

enforcement of administrative programs relying upon public cooperation,

satisfies judicial demands that agencies observe the highest procedural

standards, and increases public confidence in the fairness of administrative

hearings. See Barry B. Boyer, Funding Public Participation in Agency

Proceedings: The Federal Trade Commission Experience, 70 Geo. L.J.

51, 52 & n.6 (1981) (“[N]umerous legal and administrative victories . . .

established broad rights of public participation in agency proceedings.”);

Roger C. Cramton, The Why, Where and How of Broadened Public

Participation in the Administrative Process, 60 Geo. L.J. 525, 530–33

64 APAC V. BPA

APAC claims the REP-12 Settlement harms its “concrete

economic interests” in two ways: (1) it creates future harm by

providing “unlawfully inflated” REP benefits to the IOUs;

and (2) it perpetuates past harm by failing to redress the

overcharges the COUs incurred (and in turn passed on to

APAC’s members) as a result of the 2000 REP Settlement.

As to the former, APAC contends BPA recovers the cost of

the REP benefits in the Settlement by increasing the COUs’

rates, which pass through to APAC’s members pursuant to

their contracts with certain COUs. As to the latter, APAC

notes that the REP-12 Settlement Agreement reimburses the

COUs for overpayments by providing billing credits, or

“Refund Amounts,” in an attempt to cure the overcharges the

Ninth Circuit declared improper in Golden Northwest

Aluminum, Inc. v. Bonneville Power Administration, 501 F.3d

1037 (9th Cir. 2007), and Portland General Electric Co. v.

Bonneville Power Administration (PGE), 501 F.3d 1009 (9th

Cir. 2007). APAC asserts these Refund Amounts are an

“illusory fiction” and consequently fail to redress its

members’ past harm. APAC contends that if it cannot

challenge the REP-12 Settlement Agreement, its members

will never have an opportunity “to remedy those past

wrongs.”

It is undisputed that APAC’s members do not contract

with BPA for their power but instead contract with third-

parties that in turn contract with BPA—here, some of BPA’s

(1972); Reuel E. Schiller, Enlarging the Administrative Polity:

Administrative Law and the Changing Definition of Pluralism,

1945–1970, 53 Vand. L. Rev. 1389, 1417 (2000) (starting in the 1940s,

federal courts “chang[ed] a variety of administrative law doctrines in ways

that increased judicial scrutiny of the administrative process and opened

that process up to parties that it believed were systematically excluded”).

APAC V. BPA 65

COU customers. APAC contends that it has demonstrated

that its members’ rates directly rise and fall with the COUs’

rates as a result of the “cost-based pass-through contracts”

they have with the COUs, under which “[APAC] buys power

from [a COU] at [the COU]’s cost to purchase the power

from BPA, plus additional charges for overhead.” BPA and

the Joint IOUs argue these pass-through contracts are

insufficient to confer standing. Specifically, BPA contends

that APAC “has no relationship with BPA to support standing

in this case” because its members are not BPA customers and

do not have a direct relationship with BPA. As a result, BPA

is not the party that sets the rates APAC’s members pay,

rather, the COUs do.

The general harm APAC claims—economic—has been

recognized as a type of legally cognizable harm because

paying excessive rates, either in the past or the future, is a

concrete injury. See Alcoa, 903 F.2d at 590 (“There is harm

in paying rates that may be excessive . . . .”); see also Sierra

Club, 405 U.S. at 733–34 (“[E]conomic injuries have long

been recognized as sufficient to lay the basis for standing

. . . .”). While APAC identifies a legally cognizable type of

harm, it nevertheless has failed to establish a legally

cognizable interest because it cannot point to any right that

would entitle its members to a particular rate. APAC

maintains that its members’ pass-through contracts with the

COUs confer statutory and contractual rights. APAC asserts

that its members’ contracts with the COUs entitle those

members to the rights the COUs enjoy pursuant to the NWPA

and their direct contracts with BPA.

66 APAC V. BPA

I first consider APAC’s claimed statutory rights9 under

the NWPA. The NWPA identifies the three customer

groups—COUs, IOUs, and DSIs—that fall within its purview

and establishes guidelines and methodologies for calculating

those customers’ rates.10 The NWPA requires BPA to

promulgate these three groups’ rates in compliance with

certain statutory obligations. 16 U.S.C. §§ 839c(c)(5),

e(b)(2). These statutory mandates do not, however, constrain

the rates of downstream end users like APAC’s members.

See id. § 839e(b)(2) (providing guidelines for ratesetting

relating to BPA’s three direct customer groups).

Furthermore, the NWPA distinguishes between a “customer,”

which it defines as “anyone who contracts for the purchase of

power from the Administrator,” id. § 839a(7) (emphasis

added), and a “consumer,” which it defines as “any end user

9

The majority suggests that it is inappropriate to examine the statute in

the context of a legally cognizable interest, and that instead we should

look to the statute only when analyzing prudential standing. This Court’s

and the Supreme Court’s jurisprudence suggest otherwise. See, e.g., Linda

R.S. v. Richard D., 410 U.S. 614, 617 n.3 (1973) (“It is, of course, true

that Congress may not confer jurisdiction on Article III federal courts to

render advisory opinions. But Congress may enact statutes creating legal

rights, the invasion of which creates standing, even though no injury

would exist without the statute.” (citation and internal quotation marks

omitted)); Fulfillment Servs. Inc. v. United Parcel Serv., Inc., 528 F.3d

614, 618–19 (9th Cir. 2008) (same); Maricopa-Stanfield Irrigation &

Drainage Dist. v. United States, 158 F.3d 428, 435 (9th Cir. 1998) (stating

that in construing a water district’s subcontracts with the United States,

this Court “must interpret them ‘against the backdrop of the legislative

scheme that authorized them, and . . . in light of the policies underlying

the controlling legislation.’” (quoting Peterson v. U.S. Dep’t of Interior,

899 F.2d 799, 807 (9th Cir. 1990))).

10

While BPA may make sales to other parties under limited

circumstances, APAC does not allege it purchased power from BPA under

any of these circumstances.

APAC V. BPA 67

of electric power,” id. § 839a(5). Customers are entitled to

specified rate protections, while “consumers” under the Act,

like APAC’s members and residential customers, are not.

The NWPA refers to “consumers” in the “Congressional

declaration of purpose,” but one reference merely describes

BPA’s general policy of including an array of parties in its

administrative proceedings,11 including the “public at large,”

id. § 839(3), and a second states only that BPA’s customers

and their consumers should continue to bear the costs of

administering the region’s electric power requirements, id.

§ 839(4). Because the NWPA groups all “end users” into the

broad “consumers” category—including end users like

residential consumers—these brief references do not establish

that APAC’s members have the right to any particular rate

under the Act.

Additionally, while the NWPA contemplates the

involvement of consumers of BPA power in its administrative

proceedings and recognizes that the NWPA may benefit

many parties (including the general public), it does not

provide protections to these indirect consumers in its rate-

setting provisions. For example, the NWPA requires that the

IOUs pass through their REP benefits to their residential

customers. 16 U.S.C. § 839c(c)(3); see PGE, 501 F.3d at

1015. Thus, individual residential consumers of BPA power

enjoy pass-through benefits from the IOUs, much as APAC’s

members enjoy pass-through rates from the COUs through

their contracts. Thus, to the extent the majority would rest

APAC’s standing on the pass-through nature of its members’

contracts, individual residential purchasers of BPA power

11

As noted above, the underlying policy favoring the inclusion of a

broad range of parties in administrative proceedings does not apply to

Article III courts. See supra note 8.

68 APAC V. BPA

would also have standing based on the same pass-through

nature of their rates.

In addition, nothing in the NWPA’s legislative history

suggests that Congress, in insuring that the benefits flowing

from BPA’s direct customers’ rates would pass to end users,

intended to confer a right on the end users of BPA power,

including all residential customers. For example, while

Congress expressed a desire to protect “the customers of

preference utilities” by implementing the Rate Ceiling,12

Congress also stated repeatedly that it intended to benefit the

IOUs’ residential customers by implementing the REP.13

Like the NWPA’s statutory language, the Act’s legislative

history—which also recognizes the NWPA’s benefit to

indirect consumers—does not establish that indirect

consumers have the right to any particular rate under the

NWPA. Put differently, Congress’s placement of restrictions

on the rates that BPA’s direct customers charge their

12

See H.R. Rep. No. 96-976(II), at 35–36 (1980), reprinted in

1980 U.S.C.C.A.N. 6023, 6033.

13

Id. at 36 (noting that while the REP program broadened residential

customers’ access to less expensive BPA power, the concurrent

implementation of the rate ceiling “added protection against preference

utilities and their customers suffering the adverse and economic

consequences as a result of [the NWPA]) (emphasis added); see also PGE,

501 F.3d at 1016; Pub. Util. Comm’n of Or. v. Bonneville Power Admin.,

767 F.2d 622, 624 (9th Cir. 1985) (“One of the goals of the Act is to

ensure that residential customers served by the Northwest IOU’s have

wholesale rate parity with residential customers served by publicly owned

utilities and public cooperatives, BPA’s preference customers.” (emphasis

added)).

APAC V. BPA 69

customers does not confer a right on those indirect customers

to challenge BPA’s contracts with its direct customers.14

APAC responds that it is not just another downstream

consumer of BPA power, but rather a “significant purchaser”

of BPA power. To support this argument, APAC submits

evidence, inter alia, that one of its members, GP, purchases

70% of the total load served by one of BPA’s COUs, which

in turn purchases 80% of its power from BPA. APAC’s

evidence, though scant, likely establishes that it is a

“significant purchaser” of BPA power. But being a

“significant purchaser” of BPA power does not itself establish

that at least one of APAC’s members has suffered a legally

cognizable injury. This Court used the term “significant

purchaser” of power in Public Utility District No. 1 of

Douglas County v. Bonneville Power Administration (PUD),

947 F.2d 386, 390 n.1 (9th Cir. 1991). There, in a footnote,

we found that the intervenors–customers of certain public

utilities alleged a sufficient injury where uncompensated

losses to public utilities directly affected the customers’ rates.

Id. In reaching that conclusion, we noted that the entities

were “significant purchasers of [BPA] power,” but also relied

on the intervenors–customers’ statutory right,15 under certain

circumstances, to obtain compensation for monetary costs and

power losses. Id. APAC similarly argues that BPA’s

adoption of the REP-12 Settlement Agreement will increase

the COUs’ rates, which in turn will increase the rates of

APAC’s members who are “significant purchasers” of BPA

14

See infra note 19 and accompanying text.

15

This case and others belie the majority’s suggestion that this Court

does not examine statutory rights when analyzing the injury-in-fact

element. See also supra note 9.

70 APAC V. BPA

power. Unlike the customers in PUD, however, APAC does

not (and cannot) point to a statutory guarantee that its

members will be charged a certain rate or a statutory mandate

that the COUs pass on credits or refunds to APAC’s

members. Having pass-through contracts and being a

“significant purchaser” without more, does not establish a

legally cognizable injury.

APAC similarly cites In re California Power Exchange

Corp., 245 F.3d 1110 (9th Cir. 2001), for the proposition that

“end-use (or retail) customers have standing when their

serving utility’s costs are increased.” However, the holding

in California Power Exchange was not so broad. There, the

intervenor–city petitioned for mandamus to compel the FERC

to take action on California wholesale power purchasers’

requests for refunds. In re Cal. Power Exch. Corp., 245 F.3d

at 1119. This Court addressed the city’s standing in a

footnote, holding that the city—a public utility

customer—had standing because it had been injured by

“unjust and unreasonable short-term rate conditions in

California (in the form of higher electricity bills), and any

refunds owed to [the utility] would redress the City’s injury,

insofar as such refunds would flow through to [the utility’s]

customers in the form of rate reductions.” Id. at 1124 n.14.

The injury there was not speculative—we could conclude

with certainty that any refunds to the utilities “would flow

through” to the city because a state statute so provided. See

id. (quoting and citing Cal. Pub. Util. Code § 332.1(2)).

Thus, like the holding in PUD, the California Energy court’s

holding was narrow and relied on the petitioners’ statutory

right to compensation to establish certainty of injury and

APAC V. BPA 71

redressability.16 APAC has pointed to no such statutory right

here.

Nor does APAC allege a legally cognizable injury arising

from a contractual right. The majority’s reliance on Central

Arizona Water Conservation District v. EPA, 990 F.3d 1531

(9th Cir. 1993) is misplaced. In Central Arizona, this Court

held that the petitioners—a water district and four related

irrigation districts—had standing to challenge an EPA

regulation that required a generating station to reduce sulfur

dioxide emissions by 90%. Id. at 1537–38. We held the

petitioners, as direct customers of the generating station,

established an injury in fact where they were “contractually

required” to repay the generating station “the major portion

of” costs relating to the station’s compliance with the EPA

order. Id. at 1534, 1537–38. APAC argues, and the majority

opinion suggests, that EPA and BPA are analogous in that

both engaged in agency determinations that affected indirect

parties and consequently that these indirect parties both have

standing to challenge the agency determination. However,

this comparison ignores that in this instance BPA occupies a

role that is distinct from the EPA’s regulatory role, in that

BPA was acting within its power to contract by adopting the

REP-12 Settlement Agreement. Accordingly, BPA is

analogous to the generating station that directly contracted

with the water and irrigation districts. In contrast to those

directly contracting customers, APAC’s members are merely

downstream retail customers.

16

While APAC cites to the Rate Ceiling Test and provisions of the

NWPA to demonstrate that its members enjoy various protections under

the NWPA, for the reasons set forth above, these provisions do not confer

rights on consumers like APAC, but rather only on BPA’s direct

customers.

72 APAC V. BPA

The facts here are also distinguishable from the second

contractual case on which the majority relies, Maricopa-

Stanfield, where the Ninth Circuit held that the plaintiffs

established “injury in fact.” 158 F.3d at 435. There, the

plaintiffs were irrigation districts who claimed that adoption

of the San Carlos Apache Tribe Water Rights Settlement Act

of 1992 (“SCAT Act”) resulted in the government taking

their rights to certain water without just compensation. Id. at

433. There, we concluded that irrigation district alleged a

legally cognizable injury. However, the irrigation districts’

legal rights arose from their direct contracts with the United

States. See id. at 431 (“Each of the Districts entered into a

subcontract with the United States Department of the Interior

. . . .” (emphasis added)), 434 (noting that the districts

demonstrated a legally cognizable injury because they alleged

that “the SCAT Act’s reallocation . . . indirectly deprived the

Districts of water due to them in their subcontracts”

(emphasis added)). Unlike the irrigation districts in

Maricopa-Stanfield, APAC’s members cannot point to an

entitlement in a direct contract with an agency of the United

States. And, contrary to the majority’s suggestion otherwise,

neither Central Arizona nor Maricopa-Stanfield stand for the

proposition that a downstream retail customer can establish

an injury in fact.

“It is . . . a fundamental restriction on our authority that in

the ordinary course, a litigant must assert his or her own legal

rights and interests, and cannot rest a claim to relief on the

legal rights or interests of third parties.” Hollingsworth v.

Perry, 570 U.S. ___, ___, 133 S. Ct. 2653, 2663 (2013)

(emphasis added) (internal quotation marks and alteration

omitted). APAC attempts here to assert the COUs’ statutory

and contractual rights, where APAC’s members lack their

own. This Court has never found standing under such

APAC V. BPA 73

circumstances. I would not extend standing here and would

hold that APAC has failed to demonstrate that its members

suffered a legally cognizable injury.

3

Similarly, I would conclude that APAC also has failed to

demonstrate causation and redressability by a substantial

probability. “Traceability and redressability are linked

causation requirements that look in different directions.”

Donald Doernberg & C. Keith Wingate, Federal Courts,

Federalism and Separation of Powers: Cases and Materials

54 (2d ed. 2000). “Traceability” or causation is backward-

looking and refers to whether a party’s injury arises from the

alleged wrongful conduct. Id.; see also M-S-R Pub. Power

Agency v. Bonneville Power Admin., 297 F.3d 833, 843 (9th

Cir. 2002) (stating that to demonstrate causation, a party must

establish that its injury is “fairly traceable to the challenged

action of the [agency], and not the result of the independent

action of some third party not before the court” (quoting

Bennett v. Spear, 520 U.S. 154, 167 (1997)).

“Redressability,” on the other hand, is forward-looking and

considers whether the relief requested is likely to improve the

situation for the party requesting it. Doernberg & Wingate,

supra, at 54. Thus, APAC must demonstrate that a favorable

decision here would create “a significant increase in the

likelihood that [APAC’s members] would obtain relief that

directly redresses the injury suffered.” Utah v. Evans,

536 U.S. 452, 464 (2002). APAC fails to establish causation

and redressability because of a fatal flaw common to both

queries—the COUs independent decisions have a significant

effect on APAC’s members’ alleged harm and prevent this

Court from redressing that alleged harm.

74 APAC V. BPA

When an alleged injury arises from government action

relating to a third party, as here, “standing is not precluded,

but it is ordinarily substantially more difficult to establish.”

Lujan, 504 U.S. at 562 (internal quotation marks omitted);

Clapper v. Amnesty Int’l USA, 568 U.S. ___, ___, 133 S. Ct.

1138, 1150 (2013) (“We decline to abandon our usual

reluctance to endorse standing theories that rest on

speculation about the decisions of independent actors.”).

Indeed, “it becomes the burden of the plaintiff to adduce facts

showing that those choices have been or will be made in such

manner as to produce causation and permit redressability of

injury.” Lujan, 504 U.S. at 562. APAC has not met its

burden here.

BPA and the Joint IOUs contend that the lack of a direct

contractual relationship between APAC and BPA renders

APAC unable to establish causation and redressability. BPA

argues that “any burden imposed on APAC’s members comes

from the COUs that sell power to them,” rather than from

BPA. Similarly, the Joint IOUs assert that APAC’s alleged

injury will not be redressed by a favorable decision here

because such redress would depend on the actions of third

parties—the COUs with whom APAC contracts. In response,

APAC argues, and the majority agrees, that the “pass-through

nature” of its members’ contracts with the COUs prevents the

COUs from acting as “independent” third parties. As such,

APAC claims a favorable ruling here would redress its

members’ harm by restoring their pre-Settlement rates.

Contrary to the majority’s conclusion, the COUs’

“independent decisions” do have a “significant effect” on

APAC’s members’ alleged harm. See Allen, 468 U.S. at 759.

As noted above, at least one member’s contract with its COU

supplier allowed the COU to depart from the parties’

APAC V. BPA 75

contractual arrangement by providing notice. Furthermore,

as direct BPA customers, the COUs are statutorily entitled to

enter into contracts with BPA, including contracts that settle

rate disputes with BPA and waive their rights to BPA benefits

to which they otherwise would be entitled under the NWPA.

See PUD, 947 F.2d at 396 (“[N]othing in the statute suggests

that a non-Federal project cannot waive its right to

compensation.”); Avista Corp. v. Bonneville Power Admin.,

380 F. App’x 652, 654–55 (9th Cir. 2010) (holding that IOUs

can waive their REP benefits because nothing in § 5

“preclude[s] waiver of benefits”). It makes little sense that

the statute would allow the COUs to waive such rights, but

also allow the COUs’ customers to challenge such waivers.

When entering into settlement agreements, parties often give

up rights to which they otherwise would be entitled in

exchange for predictability. This Settlement is a compromise

by which the contracting parties agreed to give up the

possibility, inter alia, of more REP benefits, lower rates, or

more refunds—in exchange for greater certainty and lower

litigation costs. That is precisely what APAC’s COU

suppliers17 did here—they waived their rights to potentially

higher reimbursements of past overcharges.18 The rights the

17

All of the Joint COUs entered into the REP-12 Settlement Agreement.

“[S]ome of the Joint COUs” supply power to APAC. Thus, at least

“some” of APAC’s COU suppliers agreed to the REP-12 Settlement

Agreement and also intervened in this action to oppose APAC’s petition.

18

In their brief, the Joint COUs explain why they joined the REP-12

Settlement and gave up potential rights in exchange for certainty:

APAC also claims [the REP-12 Settlement] is

unreasonable because all the risk is on the side of the

COUs. This assertion is not credible. The

COUs—who, unlike APAC, have a direct stake in the

settlement—overwhelmingly supported and joined the

76 APAC V. BPA

COUs gave up are valuable, but so is predictability. APAC’s

members cannot now step into the COUs’ shoes to challenge

the Settlement.19

Settlement. No COU has challenged the Settlement

here as being unreasonable or inconsistent with its

statutory rights. In supporting the Settlement before

BPA, the COUs explained the serious risks they faced

in the absence of the Settlement and their belief that

settlement was the only reasonable way for them to

achieve, within a reasonable time frame, the certainty

regarding the REP they need to conduct their business.

19

The parties rely on principles of contract law in their briefs. Although

not explicitly adopting the term “intended beneficiary,” the parties appear

to present differing views regarding whether APAC, on account of its

pass-through contracts, is an intended third-party beneficiary of BPA’s

agreements with the COUs. Since the parties rely on principles of contract

law in making their arguments, contract law relating to third-party

beneficiaries is instructive here. First, state law applies to a determination

of whether APAC is a third-party beneficiary of the COUs’ contracts with

BPA. See Snohomish Cnty. Pub. Util. Dist. No. 1 v. Pacificorp (SCPUD),

745 F. Supp. 1581, 1584 (D. Or. 1990). In Oregon and Washington,

courts have held that intent to include a third-party beneficiary in a

contract must appear from the terms of the contract construed as a whole

and in light of the circumstances in existence at the time the contract was

entered into. See Aetna Cas. & Surety Co. v. Or. Health Scis. Univ.,

773 P.2d 1320, rev. allowed 781 P.2d 1214 (Or. Ct. App. 1989);

Postlewait Constr., Inc. v. Great Am. Ins. Co., 720 P.2d 805, 806–07

(Wash. 1986). The parties to a contract must intend that the promisor

assume a direct obligation to the intended beneficiary. Postlewait,

720 P.2d at 806. In the absence of this direct benefit, the third-party

beneficiary is merely an “incidental” beneficiary that acquires no rights

under the contract. Id. Failure to name the third-party beneficiary, while

not dispositive, is a strong indication that the promisee did not intend to

confer a benefit on that party. Nw. Airlines v. Crosetti Bros., 483 P.2d 70,

73 (Or. 1971).

APAC V. BPA 77

APAC is not the correct party to adjudicate the claims in

this petition. “[T]he standing inquiry requires careful judicial

examination of [the facts supporting standing] to ascertain

whether the particular plaintiff is entitled to an adjudication

of the particular claims asserted.” Allen, 468 U.S. at 752

(emphasis added); see Hollingsworth, 570 U.S. at ___,

133 S. Ct. at 2663 (“It is . . . a fundamental restriction on our

authority that in the ordinary course, a litigant must assert his

or her own legal rights and interests, and cannot rest a claim

to relief on the legal rights or interests of third parties.”

(emphasis added) (internal quotation marks and alterations

omitted)). APAC’s remedy, if any, lies with the COUs with

which its members contract. APAC’s statement that “BPA’s

preference customer utilities are fiduciaries for their

customers who actually incurred costs resulting from BPA’s

unlawful treatment of the REP costs pursuant to the 2007

Decisions” only supports the conclusion that APAC’s remedy

is not against BPA—which has no duty to APAC—but rather

against the COUs, which (according to APAC) owe fiduciary

duties to its members.

Here, APAC has not argued or offered evidence that the COUs’

contracts with BPA name APAC’s members as beneficiaries, nor is there

any indication from the contract terms or circumstances that BPA and the

COUs intended to confer rights on the COUs’ customers. At most, the

statutory language indicates APAC members could be construed as

incidental beneficiaries that acquire no enforceable rights. See SCPUD,

745 F. Supp. at 1584 (holding a local utility district lacked standing to

bring a declaratory relief action in a contract dispute between an IOU and

a joint operating agency because the utility failed to demonstrate a

cognizable injury or a personal stake in the contracts at issue; the fact that

the local utility districts might “receive the benefit of lower rates due to

[the IOUs] participation” in the contracts was not sufficient to confer

third-party standing or to establish an injury in fact).

78 APAC V. BPA

Moreover, APAC has not established that the perpetuation

of APAC’s past harm is fairly traceable to BPA. APAC’s

evidence demonstrates that the rates BPA charges its utilities

pass through to the utilities’ customers, but does not

demonstrate that any credits or refunds for past overcharges

also pass from the utilities to APAC’s members. This is

important because APAC’s alleged past harm arises from

these overcharges and the perpetuation of this harm arises

from the Settlement’s alleged failure to remedy this harm.

Unlike the indirect customers in California Power Energy

and PUD, APAC does not point to a statute that would entitle

its members to such refunds. And, unlike the direct

customers in Maricopa-Stanfield, it cannot rely on a

contractual right with BPA that would entitle its members to

such refunds. If the COUs are able to amend their contracts,

retain these refunds, or account for them in a manner that

would not directly lower APAC’s members’ rates, any action

by this Court would not redress APAC’s harm. Given that at

least one of APAC’s member’s supplier was able to alter the

terms of the pass-through contract upon notice, APAC has not

established by a substantial certainty that a favorable ruling

here would provide its members with the relief they seek.

APAC carries the burden of supporting each element of

standing with admissible evidence and has failed to do so.

I conclude that APAC has failed to establish standing

under Article III of the United States Constitution because it

has not demonstrated by a substantial probability that at least

one of its members has a legally cognizable injury that is

fairly traceable to BPA’s adoption of the REP-12 Settlement,

or that granting this petition would redress its harms. For

these reasons, I would hold that this Court lacks jurisdiction

to reach the merits of APAC’s contentions.

APAC V. BPA 79

CONCLUSION

As I would conclude that APAC lacks standing, I would

deny APAC’s petition for review.