On May 24, 2005, the United States Court of Appeals for the Ninth Circuit held in Industrial Customers of Northwest Utilities v. Bonneville Power Administration that a determination by the Bonneville Power Administration ("BPA") to trigger a rate adjustment clause was not a final agency action subject to judicial review.
The BPA is a federal agency within the United States Department of Energy. It has marketing authority over nearly all the electric power generated by federal facilities in the Northwest, and is also charged with oversight of the federal high-voltage transmission system used to deliver that power, as well as non-federal power, to its customers. The BPA establishes its own power rates, subject to approval by the Federal Energy Regulatory Commission ("FERC"). At issue in Industrial Customers were the BPA wholesale power rates which were subject to a Safety-Net Cost Recovery Adjustment Clause. Upon the occurrence of one of two conditions, the Adjustment Clause allowed the BPA to adjust certain posted power rates upward. Those conditions were either that the BPA forecasts a fifty percent or greater probability that it will miss its next payment to Treasury or other creditor, or that the BPA has missed a payment to Treasury or other creditor. Once the BPA Administrator determined that either of those conditions existed, the BPA would propose rate adjustments, and then was required to provide notice to any affected customers and other interested parties. The BPA was also required to initiate a hearing on the adjustment.
On February 7, 2003, the BPA Administrator commenced an emergency rate adjustment pursuant to the Adjustment Clause. Hearings on the adjustment were held shortly thereafter, and the BPA filed its rate adjustment proposal with FERC on July 29, 2003, seeking interim and final approval effective October 1, 2003.
Petitioners in Industrial Customers contended that neither of the two predicate conditions existed for invocation of the Adjustment Clause, and filed petitions with the Ninth Circuit challenging the BPA’s determination that the Adjustment Clause had been triggered.
Under the Pacific Northwest Electric Power Planning and Conservation Act of 1980 ("Northwest Power Act"), 16 U.S.C. §§ 832 et seq., the Ninth Circuit has original and exclusive jurisdiction to review final actions and decisions of the BPA Administrator, including any "final rate determinations." Under the Act, rate determinations are not deemed final until "confirmation and approval by [FERC]." Petitioners pointed out, however, that FERC’s rate review was limited, and did not provide petitioners with an opportunity to challenge the BPA’s determination that the Adjustment Clause had been triggered. Nevertheless, the Ninth Circuit held that the rate determination was not final until FERC approved it, and therefore the court lacked jurisdiction to consider the petitions.
Petitioners also asserted that the court had jurisdiction pursuant to the "catch-all" jurisdictional provision in the Northwest Power Act, which provides that "[n]othing in this section shall be construed to preclude judicial review of other final actions and decisions by the Council or Administrator." 16 U.S.C. § 839f(e)(3). The court held that the BPA’s trigger determination was also not final for purposes of the "catch-all" provision, and dismissed the petitions for lack of jurisdiction.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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